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STOCK PURCHASE AGREEMENT
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Between
THE STOCKHOLDERS OF ERVIN CABLE CONSTRUCTION, INC.
and
DYCOM INDUSTRIES, INC.
Dated as of March 12, 1999
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DISCLOSURE SCHEDULE
The Disclosure Schedule shall include the following Sections:
3.01 Organization and Qualification of the Company
3.03 Capitalization
3.05 No Conflict
3.06 Government Consents and Approvals
3.07 Reference Balance Sheet
3.08 No Undisclosed Liabilities
3.09 Receivables
3.11 Conduct in the Ordinary Course; Absence of Certain Changes, Events and
Conditions
3.12 Litigation
3.13 Certain Interests
3.14 Compliance with Laws
3.15 Environmental Matters
3.16 Material Contracts
3.18 Real Property
3.18(a) for Owned Real Property
3.18(b) for Leased Real Property
3.19 Tangible Personal Property
3.20 Assets
3.21 Customers
3.22 Employee Benefit Matters
3.23 Labor Matters
3.24 Key Employees
3.25 Taxes
3.26 Insurance
4.02 Ownership
6.01 Conduct of Business Prior to the Closing
TABLE OF CONTENTS
Section Page
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ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms...................................................1
ARTICLE II
PURCHASE AND SALE
2.01. Purchase and Sale of the Shares........................................10
2.02. Purchase Price.........................................................10
2.03. Closing................................................................10
2.04. Closing Deliveries by the Sellers......................................10
2.05. Closing Deliveries by the Purchaser....................................10
2.06. Escrow ................................................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.01. Organization and Qualification; Absence of Subsidiaries................12
3.02. Certificate of Incorporation and By-Laws...............................12
3.03. Capitalization.........................................................13
3.04. Corporate Books and Records............................................13
3.05. No Conflict............................................................13
3.06. Governmental Consents and Approvals....................................14
3.07. Financial Information, Books and Records...............................14
3.08. No Undisclosed Liabilities.............................................14
3.09. Receivables............................................................15
3.10. Inventories............................................................15
3.11. Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions...............................................15
3.12. Litigation.............................................................18
3.13. Certain Interests......................................................18
3.14. Compliance with Laws...................................................19
3.15. Environmental Matters..................................................19
3.16. Material Contracts.....................................................20
3.17. Intellectual Property..................................................22
3.18. Real Property..........................................................22
3.19. Tangible Personal Property.............................................25
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3.20. Assets ................................................................26
3.21. Customers..............................................................26
3.22. Employee Benefit Matters...............................................27
3.23. Labor Matters..........................................................29
3.24. Key Employees..........................................................30
3.25. Taxes ................................................................30
3.26. Insurance..............................................................31
3.27. Full Disclosure........................................................32
3.28. Brokers................................................................33
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS
4.01. Authority of the Sellers...............................................33
4.02. Ownership..............................................................33
4.03. Private Placement......................................................34
4.04. Full Disclosure........................................................34
4.05. Brokers................................................................34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.01. Organization and Authority of the Purchaser............................35
5.02. No Conflict............................................................35
5.03. Governmental Consents and Approvals....................................35
5.04. Investment Purpose.....................................................36
5.05. Litigation.............................................................36
5.06. Capitalization.........................................................36
5.07. SEC Filings; Financial Statements......................................36
5.08. Brokers................................................................37
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Conduct of Business Prior to the Closing...............................37
6.02. Access to Information..................................................38
6.03. Confidentiality........................................................38
6.04. Regulatory and Other Authorizations; Notices and Consents..............40
6.05. No Solicitation or Negotiation.........................................41
6.06. Notification of Certain Matters........................................42
6.07. Non-Competition........................................................42
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6.08. Public Announcements...................................................43
6.09. Resale Restrictions....................................................43
6.10. Release of Indemnity Obligations.......................................44
6.11. Further Action.........................................................44
6.12. Stock Splits...........................................................44
6.13. Disclosure Schedule....................................................44
ARTICLE VII
TAX MATTERS
7.01. Indemnity..............................................................45
7.02. Returns and Payments...................................................45
7.03. Refunds................................................................46
7.04. Contests...............................................................46
7.05. Time of Payment........................................................47
7.06. Cooperation and Exchange of Information................................48
7.07. Section 338(h)(10) Election............................................48
7.08. Miscellaneous..........................................................49
ARTICLE VIII
CONDITIONS TO CLOSING
8.01. Conditions to the Obligations of Each Party............................50
8.02. Conditions to Obligations of the Sellers...............................50
8.03. Conditions to Obligations of the Purchaser.............................51
ARTICLE IX
INDEMNIFICATION
9.01. Survival of Representations and Warranties.............................53
9.02. Indemnification........................................................54
9.03. Tax Matters............................................................56
9.04. Limits on Indemnification..............................................56
9.05. Exclusive Remedy.......................................................56
ARTICLE X
TERMINATION AND WAIVER
10.01. Termination...........................................................56
10.02. Effect of Termination.................................................57
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10.03. Waiver................................................................58
ARTICLE XI
GENERAL PROVISIONS
11.01. Expenses..............................................................58
11.02. Notices...............................................................58
11.03. Headings..............................................................59
11.04. Severability..........................................................59
11.05. Entire Agreement......................................................59
11.06. Assignment............................................................60
11.07. No Third Party Beneficiaries..........................................60
11.08. Amendment.............................................................60
11.09. Miscellaneous.........................................................60
11.10. Governing Law.........................................................61
11.11. Jurisdiction and Service of Process...................................61
11.12. Counterparts..........................................................61
11.13. Specific Performance..................................................61
11.14. Waiver of Jury Trial..................................................61
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SCHEDULES
Disclosure Schedule
EXHIBITS
Exhibit 2.06 Form of Escrow Agreement
Exhibit 7.07(b) Form of 338 Election Allocation
Exhibit 8.02(e) Form of Registration Rights Agreement
Exhibit 8.02(f) Form of Opinion of Purchaser's Counsel
Exhibit 8.03(c)(i) Form of Opinion White and Williams LLP
Exhibit 8.03(c)(ii) Form of Opinion of the Sellers' Kentucky
Counsel
STOCK PURCHASE AGREEMENT, dated as of March 12, 1999 by and
among Gary E. Ervin, Timothy W. Ervin and Robert W. Ervin (collectively, the
"Sellers", and each, a "Seller"), and Dycom Industries, Inc., a Florida
corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Sellers collectively own all of the 300 issued
and outstanding shares (the "Shares") of common stock, no par value per share
(the "Common Stock"), of Ervin Cable Construction, Inc., a Kentucky corporation
(the "Company"); and
WHEREAS, the Sellers wish to sell to the Purchaser, and the
Purchaser wishes to purchase from the Sellers, the Shares, upon the terms and
subject to the conditions set forth herein;
WHEREAS, each of the Sellers and certain other individuals are
concurrently entering into a merger agreement dated as of the date hereof (the
"Apex Merger Agreement") providing for the merger of Dycom Acquisition
Corporation III, a Kentucky corporation and a wholly owned subsidiary of the
Purchaser, with and into Apex Digital TV, Inc., a Kentucky corporation ("Apex").
NOW, THEREFORE, in consideration of the promises and the
mutual agreements and covenants hereinafter set forth, the Purchaser and each of
the Sellers, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Acquisition Documents" has the meaning specified in Section
9.01.
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, (a)
any other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such specified Person or (b) any other Person that owns, directly or indirectly,
5% or more of such specified Person's voting stock or any executive officer or
director of any such specified Person or other Person or, with respect to any
natural Person, any
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Person having a relationship with such Person by blood, marriage or adoption not
more remote than first cousin.
"Agreement" or "this Agreement" means this Stock Purchase
Agreement, dated as of March 12, 1999, among the Sellers and the Purchaser
(including the Exhibits and the Disclosure Schedule) and all amendments hereto
made in accordance with the provisions of Section 11.08 hereto.
"Allocation" has the meaning specified in Section 7.07(b).
"Apex" has the meaning set forth in the recitals to this
Agreement.
"Apex Merger Agreement" has the meaning set forth in the
recitals to this Agreement.
"Assets" has the meaning specified in Section 3.20.
"Business" means the business of building and installing new
telecommunications systems and providing repair and expansion services to
existing telecommunications systems and all other business conducted by the
Company as of the date hereof.
"Business Day" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
the City of New York.
"Closing" has the meaning specified in Section 2.03.
"Closing Date" means the later of the Initial Closing Date and
the Final Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended
through the date hereof.
"Common Stock" has the meaning specified in the recitals to
this Agreement.
"Company" has the meaning specified in the recitals to this
Agreement.
"Company's Accountants" means York, Neel & Co.-Owensboro, LLP.
"Company Intellectual Property" has the meaning specified in
Section 3.17.
"Confidentiality Agreement" means the Confidentiality
Agreement, dated as of March 1, 1999, among the Company, the Sellers, Apex and
the Purchaser.
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"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Disclosure Schedule" means the Disclosure Schedule delivered
to the Purchaser by the Sellers pursuant to Section 6.13.
"due inquiry" means due inquiry among the officers, executives
and state and regional managers of the Company.
"Election" has the meaning specified in Section 7.07(a).
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Environment" means surface waters, ground waters, surface
water sediment, soil, subsurface strata and ambient air.
"Environmental Claims" means any and all actions, suits,
demands, demand letters, claims, liens, notices of non-compliance or violation,
notices of liability or potential liability, investigations, proceedings,
consent orders or consent agreements relating in any way to any Environmental
Law, any Environmental Permit or any Hazardous Material or arising from any
alleged injury or threat of injury to health, safety or the Environment.
"Environmental Law" means any Law, now or hereafter in effect
and as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to pollution or protection of the Environment, health or safety or to
the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required to operate the
Business or the Real Property under any applicable Environmental Law.
"ERISA" has the meaning specified in Section 3.22(a).
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"Escrow Agent" means Wilmington Trust Company.
"Escrow Agreement" has the meaning specified in Section 2.06.
"Escrow Shares" means the shares of Purchaser Common Stock
delivered to the Escrow Agent.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Final Closing Date" has the meaning set forth in Section
2.03.
"Financial Statements" has the meaning specified in Section
3.07(a).
"GAAP" means United States generally accepted accounting
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.
"GBCL" means the General Business and Corporation Law of the
State of Kentucky.
"Governmental Authority" means any United States federal,
state or local or any foreign government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hazardous Materials" means (a) petroleum and petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (b) any other
chemicals, materials or substances regulated as toxic or hazardous or as a
pollutant, contaminant or waste under any applicable Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvement
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" means, with respect to any Person, (a) all
indebtedness of such Person, whether or not contingent, for borrowed money, (b)
all obligations of such Person for the deferred purchase price of property or
services, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations of such Person as
lessee under leases that have been or should be, in accordance with GAAP,
5
recorded as capital leases, (f) all obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any capital stock of such Person or any warrants, rights or
options to acquire such capital stock, valued, in the case of redeemable
preferred stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (h) all Indebtedness of others
referred to in clauses (a) through (f) above guaranteed directly or indirectly
in any manner by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (ii)
to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (iv) otherwise to assure
a creditor against loss, and (i) all Indebtedness referred to in clauses (a)
through (f) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Encumbrance on
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness.
"Initial Closing Date" has the meaning set forth in Section
2.03.
"Intellectual Property" means (a) trademarks, service marks,
trade dress, logos, trade names and corporate names, including all common law
rights, and registrations and applications for registration thereof, and all
rights therein provided by international treaties or conventions, (b) copyrights
(registered or otherwise) and registrations and applications for registration
thereof, and all rights therein provided by international treaties or
conventions, (c) computer software, including, without limitation, source code,
operating systems and specifications, data, data bases, files, documentation and
other materials related thereto, (d) trade secrets and confidential, technical
and business information (including ideas, formulas, compositions, inventions,
and conceptions of inventions whether patentable or unpatentable and whether or
not reduced to practice), (e) whether or not confidential, technology (including
know-how), research and development information, drawings, specifications,
designs, plans, proposals, technical data, financial, marketing and business
data, pricing and cost information, business and marketing plans and customer
and supplier lists and information, (f) copies and tangible embodiments of all
the foregoing, in whatever form or medium, (g) issued patents and patent
applications, (h) all rights to obtain and rights to apply for patents and to
register trademarks and copyrights, (i) licenses or sublicenses in connection
with any of the foregoing, and (j) all rights to sue and recover and retain
damages and costs and attorneys' fees for present and past infringement of any
of the foregoing.
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"Inventories" means all inventory, merchandise, goods, raw
materials, packaging, supplies and other personal property related to the
Business maintained, held or stored by or for the Company before the Closing
Date and any prepaid deposits for any of the same.
"IRS" means the Internal Revenue Service of the United States.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Leased Real Property" means the real property leased by the
Company as tenant, together with, to the extent leased by the Company, all
buildings and other structures, facilities or improvements currently located
thereon, all fixtures, systems, equipment and items of personal property of the
Company attached or appurtenant thereto, and all easements, licenses, rights and
appurtenances relating to the foregoing.
"Liabilities" means any and all Indebtedness, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law (including, without limitation, any Environmental Law),
Action or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Loss" has the meaning specified in Section 9.02(a).
"Material Adverse Effect" means any circumstance, change in,
or effect on the Business or the Company that, individually or in the aggregate
with any other circumstances, changes in, or effects on, the Business or the
Company: (a) is, or would reasonably be expected to be, materially adverse to
the business, operations, assets or Liabilities, employee relationships,
customer or supplier relationships, results of operations or the financial
condition of the Company or (b) would be reasonably expected to adversely affect
the ability of the Purchaser or the Company to operate or conduct the Business
in the manner in which it is currently operated or conducted by the Company.
"Material Contracts" has the meaning specified in Section
3.16(a).
"Maximum Amount" means $11,000,000.
"Maximum Share Value" means $42.625.
"Minimum Amount" means $9,000,000.
"Minimum Share Value" means $34.875.
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"Multiemployer Plan" has the meaning specified in Section
3.22(b).
"Multiple Employer Plan" has the meaning specified in Section
3.22(b).
"Owned Real Property" means the real property owned by the
Company, together with all buildings and other structures, facilities or
improvements currently located thereon, all fixtures, systems, equipment and
items of personal property of the Company attached or appurtenant thereto and
all easements, licenses, rights and appurtenances relating to the foregoing.
"Payment Shares" has the meaning specified in Section 2.02.
"Permits" means any health and safety and other permits,
licenses, authorizations, certificates, exemptions and approvals of Governmental
Authorities.
"Permitted Encumbrances" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) liens for taxes, assessments and governmental
charges or levies not yet due and payable which are not in excess of the amount
accrued therefor on the Reference Balance Sheet; (b) Encumbrances imposed by
law, such as materialmen's, mechanics', carriers', workmen's and repairmen's
liens and other similar liens arising in the ordinary course of business
securing obligations that (i) are not overdue for a period of more than 30 days
and (ii) are not in excess of $25,000 in the case of a single property or
$100,000 in the aggregate at any time; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations; and (d) survey exceptions, reciprocal easement
agreements and other customary encumbrances on title to real property that (i)
were not incurred in connection with any Indebtedness, (ii) do not render title
to the property encumbered thereby unmarketable and (iii) do not, individually
or in the aggregate, materially adversely affect the value or use of such
property for its current and anticipated purposes.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.
"Plans" has the meaning specified in Section 3.22(a).
"Purchase Price" has the meaning specified in Section 2.02.
"Purchase Price Bank Account" means a bank account in the
United States to be designated by the Sellers' Representative in a written
notice at least five Business Days before closing.
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"Purchaser" has the meaning specified in the preamble to this
Agreement.
"Purchaser Common Stock" means the voting common stock, par
value $0.33 1/3 per share, of the Purchaser.
"Purchaser Preferred Stock" has the meaning specified in
Section 5.06.
"Purchaser Termination Revocation Date" has the meaning
specified in Section 10.01(e).
"Purchaser's Business" has the meaning specified in Section
6.07(a).
"Real Property" means the Leased Real Property and the Owned
Real Property.
"Receivables" means any and all accounts receivable, notes and
other amounts receivable by the Company from third parties, including, without
limitation, customers, arising from the conduct of the Business or otherwise
before the Closing Date, whether or not in the ordinary course, together with
all unpaid financing charges accrued thereon.
"Reference Balance Sheet" means the unaudited balance sheet
(including the related notes and schedules thereto) of the Company, dated as of
December 31, 1998, a copy of which is set forth in Section 3.07(a) of the
Disclosure Schedule.
"Reference Balance Sheet Date" means December 31, 1998.
"Registration Rights Agreement" has the meaning set forth in
Section 8.02(e).
"Regulations" means the Treasury Regulations (including
Temporary Regulations) promulgated by the United States Department of Treasury
with respect to the Code or other federal tax statutes.
"Release" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and
the like into or upon any land or water or air or otherwise entering into the
Environment.
"Remedial Action" means any investigation, assessment,
monitoring, treatment, excavation, removal, remediation or cleanup of Hazardous
Materials in the Environment.
"Returns" has the meaning specified in Section 7.02(a).
"Securities Act" means the Securities Act of 1933, as amended.
9
"SEC" means the United States Securities and Exchange
Commission.
"SEC Reports" has the meaning specified in Section 5.07(a).
"S Election" has the meaning specified in Section 3.25(l).
"Seller" or "Sellers" has the meaning specified in the
preamble to this Agreement.
"Seller Termination Revocation Date" has the meaning specified
in Section 10.01(d).
"Sellers' Representative" has the meaning specified in Section
11.09.
"Share Value Amount" means the closing price of Purchaser
Common Stock on the trading day which occurs two days before the Closing Date.
"Shares" has the meaning specified in the recitals.
"Sophisticated Person" means a person who has sufficient
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of its investments in the shares of Purchaser
Common Stock and is capable of bearing the economic risk of such investment.
"Subsidiaries" means any and all corporations, partnerships,
joint ventures, associations and other entities controlled by the Company
directly or indirectly through one or more intermediaries.
"Tangible Personal Property" has the meaning specified in
Section 3.19(a).
"Tax" or "Taxes" has the meaning set forth in Section 3.25.
"Third Party Claims" has the meaning specified in Section
9.02(c).
"Threshold Amount" has the meaning specified in Section 9.04.
"Waiting Period" has the meaning specified in Section 10.01(d)
ARTICLE II
PURCHASE AND SALE
10
SECTION 2.01. Purchase and Sale of the Shares. Upon the terms
and subject to the conditions of this Agreement, at the Closing, the Sellers
shall sell to the Purchaser, and the Purchaser shall purchase from the Sellers,
the Shares.
SECTION 2.02. Purchase Price. Subject to the adjustments set
forth in Section 2.05, the aggregate purchase price (the "Purchase Price") for
the Shares shall be $31,750,000, of which $21,750,000 is payable by the
Purchaser in cash, and of which $10,000,000 is payable by the Purchaser in
shares of newly issued Purchaser Common Stock in accordance with Section 2.05.
The shares of Purchaser Common Stock paid as consideration for the Shares in
accordance with Section 2.05 are referred to herein as the "Payment Shares". In
lieu of issuing a fraction of a Payment Share, the Purchaser shall round the
number of shares to be delivered to the Sellers pursuant to Section 2.05 to the
nearest whole number.
SECTION 2.03. Closing. Upon the terms and subject to the
conditions of this Agreement, the sale and purchase of the Shares contemplated
by this Agreement shall take place at a closing (the "Closing") to be held at
the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York at
10:00 A.M. New York time on the fifth Business Day (the "Initial Closing Date")
following the later to occur of (i) the expiration or the receipt of written
notification of the termination of all applicable waiting periods under the HSR
Act and (ii) satisfaction or waiver of all other conditions to the obligations
of the parties set forth in Article VIII, or at such other place or at such
other time or on such other date as the Sellers and the Purchaser may mutually
agree upon in writing; provided that if either the Sellers' Representative or
the Purchaser delivers a written notice of termination pursuant to Section
10.01(d) or Section 10.01(e), as the case may be, the Closing shall be held or
deemed to be held on the day (the "Final Closing Date") following the Seller
Termination Revocation Date or the Purchaser Termination Revocation Date, if
applicable.
SECTION 2.04. Closing Deliveries by the Sellers. At the
Closing, the Sellers shall deliver or cause to be delivered to the Purchaser:
(a) stock certificates evidencing the Shares duly endorsed in
blank, or accompanied by stock powers duly executed in blank, in form
satisfactory to the Purchaser and with all required stock transfer tax
stamps affixed;
(b) the certificates, legal opinions and other documents
required to be delivered pursuant to Section 8.03; and
(c) a receipt for the Purchase Price (executed by the Sellers'
Representative).
SECTION 2.05. Closing Deliveries by the Purchaser. (a) If the
Share Value Amount is less than or equal to the Maximum Share Value but not less
than the Minimum Share Value, at the Closing, the Purchaser shall:
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(i) pay to Gary E. Ervin $7,250,000 by wire transfer in
immediately available funds to the Purchase Price Bank Account and
deliver stock certificates evidencing 86,022 Payment Shares;
(ii) pay to Timothy W. Ervin $7,250,000 by wire transfer in
immediately available funds to the Purchase Price Bank Account and
deliver stock certificates evidencing 86,022 Payment Shares; and
(iii) pay to Robert W. Ervin $7,250,000 by wire transfer in
immediately available funds to the Purchase Price Bank Account and
deliver stock certificates evidencing 86,022 Payment Shares;
(b) If the Share Value Amount exceeds the Maximum Share Value,
at the Closing, the Purchaser shall:
(i) pay to Gary E. Ervin $7,250,000 by wire transfer in
immediately available funds to the Purchase Price Bank Account and
deliver stock certificates evidencing the number of Payment Shares
equal to 1/3 of the Maximum Amount divided by the Share Value Amount;
(ii) pay to Timothy W. Ervin $7,250,000 by wire transfer in
immediately available funds to the Purchase Price Bank Account and
deliver stock certificates evidencing the number of Payment Shares
equal to 1/3 of the Maximum Amount divided by the Share Value Amount;
and
(iii) pay to Robert W. Ervin $7,250,000 by wire transfer in
immediately available funds to the Purchase Price Bank Account and
deliver stock certificates evidencing the number of Payment Shares
equal to 1/3 of the Maximum Amount divided by the Share Value Amount;
(c) If the Share Value Amount is less than the Minimum Share
Value, at the Closing, the Purchaser shall:
(i) pay to Gary E. Ervin $7,250,000 by wire transfer in
immediately available funds to the Purchase Price Bank Account and
deliver stock certificates evidencing the number of Payment Shares
equal to 1/3 of the Minimum Amount divided by the Share Value Amount;
(ii) pay to Timothy W. Ervin $7,250,000 by wire transfer in
immediately available funds to the Purchase Price Bank Account and
deliver stock certificates evidencing the number of Payment Shares
equal to 1/3 of the Minimum Amount divided by the Share Value Amount;
12
(iii) pay to Robert W. Ervin $7,250,000 by wire transfer in
immediately available funds to the Purchase Price Bank Account and
deliver stock certificates evidencing the number of Payment Shares
equal to 1/3 of the Minimum Amount divided by the Share Value Amount;
and
(d) At the Closing, the Purchaser shall deliver to the
Sellers' Representative the certificates, legal opinion and other documents
required to be delivered pursuant to Section 8.02.
SECTION 2.06. Escrow. Prior to the Closing, the Sellers and
the Purchaser shall enter into an Escrow Agreement with the Escrow Agent
substantially in the form of Exhibit 2.06 (the "Escrow Agreement").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As an inducement to the Purchaser to enter into this
Agreement, the Sellers hereby, jointly and severally, represent and warrant to
the Purchaser as follows:
SECTION 3.01. Organization and Qualification; Absence of
Subsidiaries. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Kentucky and has the requisite
power and authority to own, lease and operate the properties and assets now
owned, leased and operated by it and to carry on the Business as it is currently
being conducted. The Company is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the operation
of the Business makes such qualification or licensing necessary or desirable and
all such jurisdictions are set forth in Section 3.01 of the Disclosure Schedule.
The Company does not have, nor at any time has had, any Subsidiaries or any
direct or indirect ownership or equity interest in any partnership or joint
venture or other similar interest in any other entity. For purposes of
clarification of the immediately preceding sentence, direct ownership by any of
the Sellers shall not be deemed to be "indirect ownership" by the Company.
SECTION 3.02. Certificate of Incorporation and By-Laws. The
Sellers have heretofore delivered to the Purchaser a true and correct copy of
the Certificate of Incorporation and the By-Laws of the Company, each as in
effect on the date hereof. Such Certificate of Incorporation and By-Laws are in
full force and effect. All corporate actions taken by the Company have been duly
authorized, and the Company has not taken any action that in any respect
conflicts with, constitutes a default under or results in a violation of any
provision of its Certificate of Incorporation or By-Laws.
13
SECTION 3.03. Capitalization. (a) The authorized capital stock
of the Company consists of 1,000 shares of Common Stock. As of the date of this
Agreement, (i) 300 shares of Common Stock are issued and outstanding, all of
which are validly issued, fully paid and nonassessable, and (ii) no shares of
Common Stock are held in the treasury of the Company. None of the issued and
outstanding shares of Common Stock was issued in violation of any preemptive
rights. There are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of, or any other interest in, the Company or
obligating any of the Sellers or the Company to issue or sell any shares of
capital stock of, or other interest in, the Company. The Company is not a party
to any agreement granting registration rights to any Person with respect to any
securities of the Company. There are no outstanding contractual obligations of
the Company to repurchase, redeem or otherwise acquire any shares of Common
Stock. The Company does not directly or indirectly own, and has not agreed to
purchase or otherwise acquire, any of the capital stock of, or any interest
convertible into or exchangeable or exercisable for the capital stock of, any
corporation, partnership, joint venture or other business association or entity.
Except as set forth in Section 3.03(a) of the Disclosure Schedule, there are no
outstanding contractual obligations of the Company to provide funds to, or make
any investment (in the form of a loan, capital contribution or otherwise) in,
any Person.
(b) The stock register of the Company accurately records: (i)
the name and address of each Person owning shares of capital stock of the
Company and (ii) the certificate number of each certificate evidencing shares of
capital stock issued by the Company, the number of shares evidenced by each such
certificate, the date of issuance thereof and, in the case of cancellation, the
date of cancellation.
SECTION 3.04. Corporate Books and Records. The minute books of
the Company contain accurate records of all meetings and accurately reflect all
other actions taken by the shareholders, the Board of Directors and all
committees of the Board of Directors of the Company. Complete and accurate
copies of all such minute books and of the stock register of the Company have
been provided by the Sellers to the Purchaser.
SECTION 3.05. No Conflict. Assuming that all consents,
approvals and other actions described in Section 3.06 of the Disclosure Schedule
have been obtained and all filings and notifications listed in Section 3.06 of
the Disclosure Schedule have been made, the execution, delivery and performance
of this Agreement and the Escrow Agreement by the Sellers do not and will not
(a) violate, conflict with or result in the breach of any provision of the
Certificate of Incorporation or By-Laws of the Company, (b) conflict with or
violate (or cause an event which could have a Material Adverse Effect as a
result of) any Law or Governmental Order applicable to any Seller, the Shares,
the Company or any of the Company's assets, properties or businesses, including,
without limitation, the Business, or (c) except as set forth in Section 3.05(c)
of the Disclosure Schedule or where such conflict, breach or default would not
reasonably be expected to have a Material Adverse Effect, conflict with, result
in any breach of,
14
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, or result in the creation of any Encumbrance on
any of the Shares or on any of the assets or properties of any Seller or the
Company pursuant to, any note, bond, mortgage or indenture, contract, agreement,
lease, sublease, license, permit, franchise or other instrument or arrangement
to which any Seller or the Company is a party or by which any of the Shares or
any of the Company's assets or properties is bound or affected.
SECTION 3.06. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement by the Sellers do not and
will not require any consent, approval, authorization or other order of, action
by, filing with or notification to any Governmental Authority, except (a) as
described in Section 3.06 of the Disclosure Schedule and (b) the notification
requirements of the HSR Act.
SECTION 3.07. Financial Information, Books and Records. (a)
True and complete copies of (i) the audited balance sheet of the Company for
each of the three fiscal years ended as of December 31, 1997, December 31, 1996,
and December 31, 1995, and the related audited statements of income,
stockholders' equity and cash flow of the Company, together with all related
notes thereto, accompanied by the reports thereon of the Company's Accountants
(collectively, the "Financial Statements") and (ii) the unaudited balance sheet
of the Company as of December 31, 1998 (the Reference Balance Sheet, a copy of
which is set forth in Section 3.07(a) of the Disclosure Schedule), and the
related statements of income, stockholders' equity and cash flow of the Company,
together with all related notes, have been delivered by the Sellers to the
Purchaser. The Financial Statements and the Reference Balance Sheet (i) were
prepared in accordance with the books of account and other financial records of
the Company, (ii) present fairly the financial condition and results of
operations of the Company as of the dates thereof or for the periods covered
thereby, (iii) have been prepared in accordance with GAAP applied on a basis
consistent with the past practices of the Company and (iv) include all
adjustments (consisting only of normal recurring accruals) that are necessary
for a fair presentation of the financial condition of the Company and the
results of the operations of the Company as of the dates thereof or for the
periods covered thereby.
(b) The books of account and other financial records of the
Company: (i) reflect all items of income and expense and all assets and
Liabilities required to be reflected therein in accordance with GAAP applied on
a basis consistent with the past practices of the Company, (ii) are in all
material respects complete and correct, and do not contain or reflect any
material inaccuracies or discrepancies and (iii) have been maintained in
accordance with good business and accounting practices.
SECTION 3.08. No Undisclosed Liabilities. There are no
Liabilities of the Company, other than Liabilities (i) reflected or reserved
against on the Reference Balance Sheet,
15
(ii) disclosed in Section 3.08 of the Disclosure Schedule or (iii) incurred
since the date of the Reference Balance Sheet in the ordinary course of
business, consistent with past practice, of the Company and which do not and
would not reasonably be expected to have a Material Adverse Effect. Reserves are
reflected on the Reference Balance Sheet against all Liabilities of the Company
in amounts that have been established on a basis consistent with the past
practices of the Company and in accordance with GAAP.
SECTION 3.09. Receivables. Section 3.09 of the Disclosure
Schedule sets forth an aged list of the Receivables of the Company as of the
Reference Balance Sheet Date showing separately those Receivables that as of
such date had been outstanding (i) 29 days or less, (ii) 30 to 59 days, (iii) 60
to 89 days, (iv) 90 to 119 days and (v) more than 119 days. Except as disclosed
in Section 3.09 of the Disclosure Schedule and except to the extent, if any,
reserved for on the Reference Balance Sheet, all Receivables reflected on the
Reference Balance Sheet arose from, and the Receivables existing on the Closing
Date will have arisen from, the sale of services to Persons not affiliated with
any Seller or the Company and in the ordinary course of the Business consistent
with past practice and, except as reserved against on the Reference Balance
Sheet, constitute or will constitute, as the case may be, only valid, undisputed
claims of the Company not subject to valid claims of set-off or other defenses
or counterclaims other than normal cash discounts accrued in the ordinary course
of the Business consistent with past practice.
SECTION 3.10. Inventories. As of the date of the Reference
Balance Sheet, the Company had no Inventory required to be recorded in
accordance with GAAP on the Reference Balance Sheet.
SECTION 3.11. Conduct in the Ordinary Course; Absence of
Certain Changes, Events and Conditions. Since the Reference Balance Sheet Date,
except as disclosed in Section 3.11 of the Disclosure Schedule, the business of
the Company has been conducted in the ordinary course and consistent with past
practice. As amplification and not limitation of the foregoing, except as
disclosed in Section 3.11 of the Disclosure Schedule, since the Reference
Balance Sheet Date, the Company has not:
(i) amended, restated or otherwise changed the Certificate of
Incorporation or By-Laws (or other organizational documents) of the
Company;
(ii) issued, sold or pledged, or authorized the issuance, sale
or pledge of, any shares of its capital stock or any notes, bonds or
other securities, or any option, warrant or other right to acquire the
same, of, or any other interest in, the Company;
(iii) declared, set aside, made or paid any dividend or other
distribution (whether in cash, securities, property or otherwise) with
respect to any of its capital stock or otherwise;
16
(iv) reclassified, combined, split, subdivided or redeemed,
purchased or otherwise acquired, directly or indirectly, any of its
capital stock;
(v) permitted or allowed any of the assets or properties
(whether tangible or intangible) of the Company to be subjected to any
Encumbrance, other than Permitted Encumbrances and Encumbrances that
will be released at or prior to the Closing;
(vi) merged with, entered into a consolidation with or
acquired (including, without limitation, by merger, consolidation, or
acquisition of stock or assets) any interest in any Person or any
assets or any business of any Person or any division or of business
thereof, or otherwise acquired any material assets, other than in the
ordinary course of business consistent with past practice;
(vii) failed to pay any creditor any amount owed to such
creditor when due;
(viii) made any capital expenditure or commitment for any
capital expenditure in excess of $50,000 individually or $100,000 in
the aggregate;
(ix) agreed to make any purchases involving exchanges in value
in excess of $50,000 individually or $100,000 in the aggregate;
(x) sold, transferred, leased, subleased, licensed or
otherwise disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible
assets), other than the sale of Inventories in the ordinary course of
business consistent with past practice;
(xi) amended, terminated, canceled or compromised any material
claim of the Company or waived any other rights of substantial value to
the Company;
(xii) entered into any contract or agreement material to its
business, results of operations or financial condition other than in
the ordinary course of business, consistent with past practice;
(xiii) failed to maintain the Assets in accordance with good
business practice and in good operating condition and repair;
(xiv) allowed any Permit or Environmental Permit that was
issued or relates to the Company or otherwise relates to any Asset to
lapse or terminate or failed to renew any such Permit or Environmental
Permit or any insurance policy that is scheduled to terminate or expire
within 45 calendar days of the Closing Date;
17
(xv) incurred any Indebtedness that will not be repaid prior
to Closing, in excess of $50,000 individually or $100,000 in the
aggregate;
(xvi) (A) granted any increase, or announced any increase, in
the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by the Company to any of its employees,
including, without limitation, any increase or change pursuant to any
Plan or (B) established or increased or promised to increase any
benefits under any Plan, in either case except as required by Law or
any collective bargaining agreement or involving ordinary increases
consistent with the past practices of the Company;
(xvii) taken any action, other than reasonable and usual
actions in the ordinary course of business and consistent with past
practice, with respect to accounting policies or procedures (including,
without limitation, procedures with respect to the payment of accounts
payable and collection of accounts receivable);
(xviii) made any express or deemed tax election or settled or
compromised any liability, with respect to Taxes of the Company;
(xix) except in the ordinary course of business consistent
with past practice, discharged or otherwise obtained the release of any
Encumbrance or paid or otherwise discharged any Liability, other than
current liabilities reflected on the Reference Balance Sheet and
current liabilities incurred in the ordinary course of business
consistent with past practice since the Reference Balance Sheet Date;
(xx) made any loan to, guaranteed any Indebtedness or
otherwise incurred any Indebtedness on behalf of any Person;
(xxi) amended, modified or consented to the termination of any
Material Contract or the Company's rights thereunder;
(xxii) suffered any casualty loss or damage with respect to
any of the Assets which in the aggregate have a replacement cost of
more than $25,000, whether or not such loss or damage shall have been
covered by insurance;
(xxiii) disclosed any trade secrets or confidential, technical
or business information or permitted to lapse or go abandoned any
Intellectual Property of the Company;
(xxiv) made any material changes in the customary methods of
operations of the Company, including, without limitation, practices and
policies relating to manufacturing, purchasing, Inventories, marketing,
selling and pricing;
18
(xxv) entered into any agreement, arrangement or transaction
with any of its directors, officers, employees or shareholders (or with
any relative, beneficiary, spouse or Affiliate of such Person);
(xxvi) suffered any Material Adverse Effect;
(xxvii) written down or written up (or failed to write down or
write up in accordance with GAAP consistent with past practice) the
value of any Inventories or receivables or revalued any assets of the
Company other than in the ordinary course of business consistent with
past practice and in accordance with GAAP;
(xxviii) terminated, discontinued, closed or disposed of any
facility or business operation, or laid off any employees (other than
layoffs of less than 25 employees in any six-month period in the
ordinary course of business consistent with past practice) or
implemented any early retirement, separation or program providing early
retirement window benefits within the meaning of Section 1.401(a)-4 of
the Regulations or announced or planned any such action or program for
the future;
(xxix) made any charitable contribution; or
(xxx) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 3.11 or grant any options to
purchase, rights of first refusal, rights of first offer or any other
similar rights or commitments with respect to any of the actions
specified in this Section 3.11, except as expressly contemplated by
this Agreement.
SECTION 3.12. Litigation. Except as set forth in Section 3.12
of the Disclosure Schedule (which, with respect to each Action disclosed
therein, sets forth: the parties, nature of the proceeding, date and method
commenced, amount of damages or other relief sought and, if applicable, paid or
granted), there are no Actions by or against the Company (or by or against any
of the Sellers or any Affiliate thereof and relating to the Business or the
Company), or affecting any of the Assets, pending before any Governmental
Authority (or, to the best knowledge of the Sellers after due inquiry,
threatened to be brought by or before any Governmental Authority). None of the
matters disclosed in Section 3.12 of the Disclosure Schedule has or has had a
Material Adverse Effect or would reasonably be expected to affect the legality,
validity or enforceability of this Agreement or the Escrow Agreement or the
consummation of the transactions contemplated hereby or thereby. Except as set
forth in Section 3.12 of the Disclosure Schedule, none of the Company, the
Assets and the Sellers is subject to any Governmental Order (nor, to the best
knowledge of the Sellers after due inquiry, are there any such Governmental
Orders threatened to be imposed by any Governmental Authority) which has had or
would reasonably be expected to have a Material Adverse Effect.
19
SECTION 3.13. Certain Interests. (a) Except as disclosed in
Section 3.13(a) of the Disclosure Schedule, no Seller and no officer or director
of the Company and no relative or spouse (or relative of such spouse) who
resides with, or is a dependent of, any Seller or officer or director (i) has
outstanding any Indebtedness to or from the Company, (ii) has any direct or
indirect financial interest in any competitor, supplier or customer of the
Company, provided, however, that the ownership of securities, representing no
more than one percent of the outstanding voting power of any competitor,
supplier or customer, and which are listed on any national securities exchange
or traded in the over-the-counter market, shall not be deemed to be a "financial
interest" so long as the Person owning such securities has no other connection
or relationship with such competitor, supplier or customer or (iii) owns,
directly or indirectly, in whole or in part, or has any other interest in any
tangible or intangible property which the Company uses or has used in the
conduct of the Business or otherwise.
(b) Except as disclosed in Section 3.13(b) of the Disclosure
Schedule, the Company has no Liability or any other obligation of any nature
whatsoever to any officer, director or shareholder of the Company or to any
relative or spouse (or relative of such spouse) who resides with, or is a
dependent of, any such officer, director or shareholder.
SECTION 3.14. Compliance with Laws. (a) Except as set forth in
Section 3.14(a) of the Disclosure Schedule, the Company has conducted and
continues to conduct the Business in accordance with all Laws and Governmental
Orders applicable to the Company or any of the Assets or the Business, including
all Environmental Laws, and the Company is not in violation of any such Law or
Governmental Order except for such failure to comply or violations that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(b) Section 3.14(b) of the Disclosure Schedule sets forth a
brief description of each Governmental Order directed to or, to the best
knowledge of the Sellers after due inquiry, applicable to the Company or any of
the Assets or the Business, and no such Governmental Order has or has had or
would reasonably be expected to have a Material Adverse Effect.
SECTION 3.15. Environmental Matters. (a) Except as disclosed
in Section 3.15(a) of the Disclosure Schedule and as would not reasonably be
expected to have a Material Adverse Effect:
(i) There are no underground or aboveground storage tanks or
any surface impoundments, septic tanks, pits, sumps or lagoons in which
Hazardous Materials are being or have been treated, stored or disposed
on any of the Owned Real Property or, to the best knowledge of the
Sellers after due inquiry, any of the Leased Real Property during the
Company's ownership or occupation of such property or any property
formerly owned, leased or occupied by the Company.
20
(ii) The Company has not, and, to the best knowledge of the
Sellers after due inquiry, no other Person has, Released Hazardous
Materials on any of the Real Property or on any property formerly
owned, leased or occupied by the Company.
(iii) To the best knowledge of the Sellers after due inquiry,
there is no asbestos or asbestos-containing material on any of the Real
Property.
(iv) To the best knowledge of the Sellers after due inquiry,
none of the Real Property adjoins any property that is listed or
proposed for listing on the National Priorities List under the federal
Comprehensive Environmental Response, Compensation, and Liability Act.
(b) The Company has provided the Purchaser with copies of (i)
all environmental assessment or audit reports and other similar studies or
analyses conducted by or on behalf of the Company or otherwise in the possession
of the Company relating to the Real Property or the operations of the Company
and (ii) all insurance policies issued at any time that may provide coverage to
the Company for environmental matters.
(c) To the best knowledge of the Sellers after due inquiry,
except as disclosed in Section 3.15(c) of the Disclosure Schedule, neither the
execution of this Agreement nor the consummation of the transactions
contemplated in this Agreement will require any Remedial Action or notice to or
consent of Governmental Authorities or any third party pursuant to any
applicable Environmental Law or Environmental Permit.
SECTION 3.16. Material Contracts. (a) Section 3.16(a) of the
Disclosure Schedule lists each of the following contracts and agreements of the
Company (such contracts and agreements, together with all contracts, agreements,
leases and subleases concerning the management or operation of any Real Property
(including, without limitation, brokerage contracts) listed or otherwise
disclosed in Section 3.16(a) or 3.16(b) of the Disclosure Schedule to which the
Company is a party and all agreements relating to Intellectual Property set
forth in Section 3.17 of the Disclosure Schedule, being "Material Contracts"):
(i) each contract and agreement (other than agreements with
subcontractors entered into in the ordinary course of business) under
the terms of which the Company: (A) is reasonably expected to pay or
otherwise give consideration of more than $50,000 in the aggregate
during the calendar year ending December 31, 1999, (B) is likely to pay
or otherwise give consideration of more than $100,000 in the aggregate
over the remaining term of the contract or (C) cannot be canceled by
the Company without penalty or further payment and without more than 30
days' notice;
(ii) each contract and agreement for the furnishing of
services by the Company which: (A) is reasonably expected to involve
consideration of more than $250,000 during
21
the calendar year ending December 31, 1999, (B) is reasonably expected
to involve consideration of more than $500,000 in the aggregate over
the remaining term of the contract or (C) cannot be canceled by the
Company without penalty or further payment and without more than 30
days' notice;
(iii) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) to which the
Company is a party and which are not cancellable without penalty or
further payment and without more than 30 days' notice;
(iv) all broker, distributor, dealer, franchise, agency, sales
promotion, market research, marketing consulting and advertising
contracts and agreements to which the Company is a party;
(v) all contracts and agreements relating to Indebtedness of
the Company;
(vi) all contracts and agreements with any Governmental
Authority to which the Company is a party;
(vii) all contracts and agreements that limit or purport to
limit the ability of the Company to compete in any line of business or
with any Person or in any geographic area or during any period of time;
(viii) all contracts and agreements between or among the
Company and any Seller or any Affiliate of any Seller currently in
effect and in effect within the years ended December 31, 1998, 1997 and
1996, setting forth the amount of revenue recorded on the Company's
financial statements pursuant to such contract or agreement;
(ix) all contracts and agreements providing for benefits under
any Plan; and
(x) all other contracts and agreements, whether or not made in
the ordinary course of business, which are material to the Company or
the conduct of the Business or the absence of which would have a
Material Adverse Effect.
For purposes of this Section 3.16 and Sections 3.18, 3.19 and
3.20, the term "lease" shall include any and all leases, subleases,
sale/leaseback agreements or similar arrangements.
(b) Except as disclosed in Section 3.16(b) of the Disclosure
Schedule, each Material Contract: (i) is valid and binding on the respective
parties thereto and is in full force and effect and (ii) upon consummation of
the transactions contemplated by this Agreement and the Escrow Agreement, except
to the extent that any consents set forth in Section 3.06 of the Disclosure
Schedule are not obtained, shall continue in full force and effect without
penalty or
22
other adverse consequence. The Company is not in breach of, or default under,
any Material Contract.
(c) Except as disclosed in Section 3.16(c) of the Disclosure
Schedule, to the best knowledge of the Sellers after due inquiry, no other party
to any Material Contract is in breach thereof or default thereunder.
(d) Except as disclosed in Section 3.16(d) of the Disclosure
Schedule, there is no contract, agreement or other arrangement granting any
Person any preferential right to purchase, other than in the ordinary course of
business consistent with past practice, any of the properties or assets of the
Company.
SECTION 3.17. Intellectual Property. There are no items of
Intellectual Property that are material to the Company or the Business except
the Company's trade name, "Ervin Cable Construction, Inc." (the "Company
Intellectual Property"). To the best knowledge of the Sellers after due inquiry,
the rights of the Company in or to the Company Intellectual Property do not
conflict with or infringe on the rights of any other Person and none of the
Sellers or the Company has received any claim or written notice from any Person,
to such effect.
SECTION 3.18. Real Property. (a) Section 3.18(a) of the
Disclosure Schedule lists: (i) the street address of each parcel of Owned Real
Property, (ii) the date on which each parcel of Owned Real Property was
acquired, (iii) the current owner of each such parcel of Owned Real Property,
(iv) information relating to the recordation of the deed pursuant to which each
such parcel of Owned Real Property was acquired and (v) the current use of each
such parcel of Owned Real Property.
(b) Section 3.18(b) of the Disclosure Schedule lists: (i) the
street address of each parcel of Leased Real Property, (ii) the identity of the
lessor, lessee and current occupant (if different from lessee) of each such
parcel of Leased Real Property, (iii) the term (referencing applicable renewal
periods) and rental payment terms of the leases (and any subleases) pertaining
to each such parcel of Leased Real Property and (iv) the current use of each
such parcel of Leased Real Property.
(c) Except as described in Section 3.18(c) or 3.14(a) of the
Disclosure Schedule, there is no violation of any Law (including, without
limitation, any building, planning or zoning law) relating to any of the Real
Property that would reasonably be expected to have a Material Adverse Effect.
The Sellers have made available to the Purchaser true and complete copies of
each deed for each parcel of Owned Real Property and, to the extent the Sellers
or the Company have the following documents within their possession, for each
parcel of Leased Real Property and all the title insurance policies, title
reports, surveys, certificates of occupancy, environmental reports and audits,
appraisals, Permits, other title documents and other documents relating to or
otherwise affecting the Real Property, the operations of the Company thereon or
23
any other uses thereof. The Company is in peaceful and undisturbed possession of
each parcel of Real Property and there are no contractual or legal restrictions
that preclude or restrict the ability to use the premises for the purposes for
which they are currently being used. All existing water, sewer, steam, gas,
electricity, telephone or other utilities required for the construction, use,
occupancy, operation and maintenance of the Real Property are adequate for the
conduct of the Business as is currently conducted. Except as set forth in
Section 3.18(c) of the Disclosure Schedule, the Company has not leased or
subleased any parcel or any portion of any parcel of Real Property to any other
Person, nor has the Company assigned its interest under any lease or sublease
listed in Section 3.18(b) of the Disclosure Schedule to any third party.
(d) The Sellers have, or have caused to be, delivered to the
Purchaser true and complete copies of all leases and subleases listed in Section
3.18(b) of the Disclosure Schedule and any and all ancillary documents
pertaining thereto (including, but not limited to, all amendments, consents for
alterations and documents recording variations and evidence of commencement
dates and expiration dates). With respect to each of such leases and subleases:
(i) such lease or sublease, together with all ancillary
documents delivered pursuant to the first sentence of this Section
3.18(d), is legal, valid, binding, enforceable and in full force and
effect and represents the entire agreement between the respective
landlord and tenant with respect to such property;
(ii) except as otherwise set forth in Section 3.18(d) of the
Disclosure Schedule, such lease or sublease will not cease to be legal,
valid, binding, enforceable and in full force and effect on terms
identical to those currently in effect as a result of the consummation
of the transactions contemplated by this Agreement, nor will the
consummation of the transactions contemplated by this Agreement
constitute a breach or default under such lease or sublease or
otherwise give the landlord a right to terminate such lease or
sublease;
(iii) except as otherwise disclosed in Section 3.18(d) of the
Disclosure Schedule, with respect to each such lease or sublease: (A)
none of the Sellers and the Company has received any notice of
cancellation or termination under such lease or sublease and no lessor
has any right of termination or cancellation under such lease or
sublease except upon a breach or default by the Company thereunder, (B)
none of the Sellers and the Company has received any notice of a breach
or default under such lease or sublease, which breach or default has
not been cured, and (C) none of the Sellers or the Company has granted
to any other Person any rights, adverse or otherwise, under such lease
or sublease; and
(iv) neither the Company nor (to the best knowledge of the
Sellers after due inquiry) any other party to such lease or sublease is
in breach or default in any material respect, and, to the best
knowledge of the Sellers after due inquiry, no event has occurred
24
that, with notice or lapse of time, would constitute such a breach or
default or permit termination, modification or acceleration under such
lease or sublease.
(e) There are no condemnation proceedings or eminent domain
proceedings of any kind pending or, to the best knowledge of the Sellers after
due inquiry, threatened against the Real Property.
(f) All the Real Property is occupied under a valid and
current certificate of occupancy or similar permit, the transactions
contemplated by this Agreement will not require the issuance of any new or
amended certificate of occupancy and, to the best knowledge of the Sellers after
due inquiry, there are no facts that would prevent the Real Property from being
occupied by the Company at any time within 90 days after the Closing in the same
manner as occupied by the Company immediately prior to the Closing.
(g) All improvements on the Real Property constructed by or on
behalf of the Company or, to the best knowledge of the Sellers after due
inquiry, constructed by or on behalf of any other Person were constructed in
compliance with all applicable Laws (including, but not limited to, any
building, planning or zoning Laws) affecting such Real Property.
(h) No improvements on the Owned Real Property and none of the
current uses and conditions thereof violate any applicable deed restrictions or
other applicable covenants, restrictions, agreements, existing site plan
approvals, zoning or subdivision regulations or urban redevelopment plans as
modified by duly issued variances, and no permits, licenses or certificates
pertaining to the ownership or operation of all improvements on the Owned Real
Property, other than those which are transferable with the Owned Real Property,
are required by any Governmental Authority having jurisdiction over the Owned
Real Property.
(i) All improvements on any Owned Real Property are wholly
within the lot limits of such Owned Real Property and do not encroach on any
adjoining premises, and there are no encroachments on any Owned Real Property by
any improvements located on any adjoining premises.
(j) The rental set forth in each lease or sublease of the
Leased Real Property is the actual rental being paid, and there are no separate
agreements or understandings with respect to the same.
(k) The Company has the full right to exercise any renewal
options contained in the leases and subleases pertaining to the Leased Real
Property on the terms and conditions contained therein and upon due exercise
would be entitled to enjoy the use of each Leased Real Property for the full
term of such renewal options.
25
SECTION 3.19. Tangible Personal Property. (a) Section 3.19(a)
of the Disclosure Schedule lists each item or distinct group of machinery,
equipment, tools, supplies, furniture, fixtures, personalty, vehicles, aircraft,
rolling stock and other tangible personal property (the "Tangible Personal
Property") used in the Business or owned or leased by the Company.
(b) The Sellers have, or have caused to be, delivered to the
Purchaser true and complete copies of all leases and subleases for Tangible
Personal Property and any and all material ancillary documents pertaining
thereto (including, but not limited to, all amendments, consents and evidence of
commencement dates and expiration dates). With respect to each of such leases
and subleases:
(i) such lease or sublease, together with all ancillary
documents delivered pursuant to the first sentence of this Section
3.19(b), is legal, valid, binding, enforceable and in full force and
effect and represents the entire agreement between the respective
lessor and lessee with respect to such property;
(ii) except as set forth in Section 3.19(b) of the Disclosure
Schedule, such lease or sublease will not cease to be legal, valid,
binding, enforceable and in full force and effect on terms identical to
those currently in effect as a result of the consummation of the
transactions contemplated by this Agreement, nor will the consummation
of the transactions contemplated by this Agreement constitute a breach
or default under such lease or sublease or otherwise give the lessor a
right to terminate such lease or sublease;
(iii) except as otherwise disclosed in Section 3.19(b) of the
Disclosure Schedule, with respect to each such lease or sublease: (A)
none of the Sellers and the Company has received any notice of
cancellation or termination under such lease or sublease and no lessor
has any right of termination or cancellation under such lease or
sublease except upon a breach or default by the Company thereunder, (B)
none of the Sellers or the Company has received any notice of a breach
or default under such lease or sublease, which breach or default has
not been cured, and (C) none of the Sellers or the Company has granted
to any other Person any rights, adverse or otherwise, under such lease
or sublease; and
(iv) neither the Company nor (to the best knowledge of the
Sellers after due inquiry) any other party to such lease or sublease is
in breach or default in any material respect, and, to the best
knowledge of the Sellers after due inquiry, no event has occurred that,
with notice or lapse of time would constitute such a breach or default
or permit termination, modification or acceleration under such lease or
sublease.
(c) The Company has the full right to exercise any renewal
options contained in the leases and subleases pertaining to the Tangible
Personal Property on the terms and
26
conditions contained therein and upon due exercise would be entitled to enjoy
the use of each item of leased Tangible Personal Property for the full term of
such renewal options.
SECTION 3.20. Assets. (a) Except as disclosed in Section
3.20(a) of the Disclosure Schedule, the Company owns, leases or has the legal
right to use all the properties and assets, including, without limitation, the
Company Intellectual Property, the Real Property and the Tangible Personal
Property, used or intended to be used in the conduct of the Business or
otherwise owned, leased or used by the Company and, with respect to contract
rights, is a party to and enjoys the right to the benefits of all contracts,
agreements and other arrangements used or intended to be used by the Company or
in or relating to the conduct of the Business (all such properties, assets and
contract rights being the "Assets"). The Company has good and marketable title
to, or, in the case of leased or subleased Assets, valid and subsisting
leasehold interests in, all the Assets, free and clear of all Encumbrances,
except (i) as disclosed in Section 3.18(a), 3.18(b), 3.18(c), 3.18(d), 3.19(a),
3.19(b) or 3.20(a) of the Disclosure Schedule and (ii) Permitted Encumbrances.
(b) The Assets constitute all the properties, assets and
rights forming a part of, used, held or intended to be used in, and all such
properties, assets and rights as are necessary in the conduct of, the Business.
At all times since the Reference Balance Sheet Date, the Company has caused the
Assets to be maintained in accordance with good business practice, and all the
Assets are in good operating condition and repair and are suitable for the
purposes for which they are used and intended.
(c) Following the consummation of the transactions
contemplated by this Agreement, the Company will continue to own, pursuant to
good and marketable title, or lease, under valid and subsisting leases, or
otherwise retain its respective interest in the Assets without incurring any
material penalty or other material adverse consequence, including, without
limitation, any increase in rentals, royalties, or licenses or other fees
imposed as a result of, or arising from, the consummation of the transactions
contemplated by this Agreement. Immediately following the Closing, the Company
shall own and possess all documents, books, records, agreements and financial
data used by the Company in the conduct of the Business.
SECTION 3.21. Customers. Listed in Section 3.21 of the
Disclosure Schedule are the names and addresses of the ten most significant
customers (by revenue) of the Company for the twelve month period ended on the
Reference Balance Sheet Date and the amount for which each such customer was
invoiced during such period. Except as disclosed in Section 3.21 of the
Disclosure Schedule, none of the Sellers or the Company has received any notice
that any significant customer of the Company has ceased, or will cease, to use
the products, equipment, goods or services of the Company, or has substantially
reduced, or will substantially reduce, the use of such products, equipment,
goods or services at any time.
27
SECTION 3.22. Employee Benefit Matters. (a) Plans and Material
Documents. Section 3.22(a) of the Disclosure Schedule lists (i) all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and all bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree medical or
life insurance, supplemental retirement, severance or other benefit plans,
programs or arrangements, and all employment, termination, severance or other
contracts or agreements, whether legally enforceable or not, to which the
Company is a party, with respect to which the Company has any obligation or
which are maintained, contributed to or sponsored by the Company for the benefit
of any current or former employee, officer or director of the Company (other
than offer of employment letters relating to employment at-will relationships),
(ii) each employee benefit plan for which the Company could incur liability
under Section 4069 of ERISA in the event such plan has been or were to be
terminated, (iii) any plan in respect of which the Company could incur liability
under Section 4212(c) of ERISA and (iv) any contracts, arrangements or
understandings (other than offer of employment letters relating to
employment-at-will relationships) between any Seller and any employee of the
Company, including, without limitation, any contracts, arrangements or
understandings relating to the sale of the Company (collectively, the "Plans").
Except as set forth in Section 3.22(a) of the Disclosure Schedule, each Plan is
in writing and the Sellers have furnished the Purchaser with a complete and
accurate copy of each Plan and a complete and accurate copy of each material
document prepared in connection with each such Plan including, without
limitation, (i) a copy of each trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the most
recently filed IRS Form 5500, (iv) the most recently received IRS determination
letter for each such Plan, and (v) the most recently prepared actuarial report
and financial statement in connection with each such Plan. Except as disclosed
on Section 3.22(a) of the Disclosure Schedule, there are no other employee
benefit plans, programs, arrangements or agreements, whether formal or informal,
whether in writing or not, to which the Company is a party, with respect to
which the Company has any obligation or which are maintained, contributed to or
sponsored by the Company for the benefit of any current or former employee,
officer or director of the Company. The Company does not have any express or
implied commitment, whether legally enforceable or not, (i) to create, incur
liability with respect to or cause to exist any other employee benefit plan,
program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Plan, other than with respect to a modification, change or
termination required by ERISA or the Code.
(b) Absence of Certain Types of Plans. None of the Plans is a
multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA)
(a "Multiemployer Plan") or a single employer pension plan (within the meaning
of Section 4001(a)(15) of ERISA) for which the Company could incur liability
under Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). None of the
Plans provides for the payment of separation, severance, termination or
similar-type benefits to any Person or obligates the Company to pay separation,
severance, termination or similar-type benefits solely as a result of any
transaction contemplated by this
28
Agreement or as a result of a "change in control", within the meaning of such
term under Section 280G of the Code. None of the Plans provides for or promises
retiree medical, disability or life insurance benefits to any current or former
employee, officer or director of the Company. Each of the Plans is subject only
to the laws of the United States or a political subdivision thereof.
(c) Compliance with Applicable Law. Each Plan is now and
always has been operated in all respects in accordance with the requirements of
all applicable Laws, including, without limitation, ERISA and the Code, and, to
the best knowledge of the Sellers after due inquiry, all persons who participate
in the operation of such Plans and all Plan "fiduciaries" (within the meaning of
Section 3(21) of ERISA) have always acted in accordance with the provisions of
all applicable Law, including, without limitation, ERISA and the Code, except
where the failure to comply or act has not had, individually or in the
aggregate, a Material Adverse Effect. The Company has performed all obligations
required to be performed by it under, is not in any respect in default under or
in violation of, and has no knowledge of any default or violation by any party
to, any Plan. No legal action, suit or claim is pending or, to the best
knowledge of the Sellers after due inquiry, threatened with respect to any Plan
(other than claims for benefits in the ordinary course) and, to the best
knowledge of the Sellers after due inquiry, no fact or event exists that could
give rise to any such action, suit or claim.
(d) Qualification of Certain Plans. Except as set forth in
Section 3.22(d) of the Disclosure Schedule, each Plan which is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and each trust established in connection with any Plan which is intended to be
exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and to the
best knowledge of the Sellers after due inquiry, no fact or event has occurred
since the date of such determination letter from the IRS to adversely affect the
qualified status of any such Plan or the exempt status of any such trust. Except
as set forth in Section 3.22(d) of the Disclosure Schedule, each trust
maintained or contributed to by the Company which is intended to be qualified as
a voluntary employees' beneficiary association and which is intended to be
exempt from federal income taxation under Section 501(c)(9) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and so exempt, and, to the best knowledge of the Sellers after due inquiry, no
fact or event has occurred since the date of such determination by the IRS to
adversely affect such qualified or exempt status.
(e) Absence of Certain Liabilities and Events. There has been
no prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Plan. The Company has not incurred any
liability for any penalty or tax arising under Section 4971, 4972, 4980, 4980B
or 6652 of the Code or any liability under Section 502 of ERISA, and, to the
best knowledge of the Sellers after due inquiry, no fact or event exists which
could give rise to any such liability. The Company has not incurred any
liability under, arising
29
out of or by operation of Title IV of ERISA (other than liability for premiums
to the Pension Benefit Guaranty Corporation arising in the ordinary course),
including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan, and no fact or event exists which could give rise to any such liability.
No complete or partial termination has occurred within the five years preceding
the date hereof with respect to any Plan. No reportable event (within the
meaning of Section 4043 of ERISA) has occurred or is reasonably expected to
occur with respect to any Plan subject to Title IV of ERISA. No Plan had an
accumulated funding deficiency (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived, as of the most recently ended
plan year of such Plan. None of the assets of the Company is the subject of any
lien arising under Section 302(f) of ERISA or Section 412(n) of the Code; the
Company has not been required to post any security under Section 307 of ERISA or
Section 401(a)(29) of the Code; and, to the best knowledge of the Sellers after
due inquiry, no fact or event exists which could give rise to any such lien or
requirement to post any such security.
(f) Plan Contributions and Funding. All contributions,
premiums or payments required to be made with respect to any Plan have been made
on or before their due dates. All such contributions have been fully deducted
for income tax purposes and no such deduction has been challenged or disallowed
by any government entity and no fact or event exists which could give rise to
any such challenge or disallowance. As of the Closing Date, no Plan which is
subject to Title IV of ERISA will have an "unfunded benefit liability" (within
the meaning of Section 4001(a)(18) of ERISA).
(g) Certain Employee-Benefits Assets. There are no guaranteed
investment contracts and other funding contracts with any insurance company that
is held by any of the Plans or any annuity contracts purchased by (i) any of the
Plans or (ii) any pension benefit plans (as defined in Section 3(2) of ERISA)
that provided benefits to any current or former employees of the Company.
SECTION 3.23. Labor Matters. Except as set forth in Section
3.23 of the Disclosure Schedule, (a) the Company is not a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company, and currently, to the best knowledge of the
Sellers after due inquiry, there are no organizational campaigns, petitions or
other unionization activities seeking recognition of a collective bargaining
unit which could affect the Company; (b) there are no controversies, strikes,
slowdowns or work stoppages pending or, to the best knowledge of the Sellers
after due inquiry, threatened between the Company and any of its employees, and
the Company has not experienced any such controversy, strike, slowdown or work
stoppage within the past three years; (c) the Company has not breached or
otherwise failed to comply with the provisions of any collective bargaining or
union contract and, to the best knowledge of the Sellers after due inquiry,
there are no grievances outstanding against the Company under any such agreement
or contract which could have a Material Adverse
30
Effect; (d) there are no unfair labor practice complaints pending against the
Company before the National Labor Relations Board or any other Governmental
Authority involving employees of the Company which could have a Material Adverse
Effect; (e) the Company is currently in compliance with all applicable Laws
relating to the employment of labor, including those related to wages, hours,
collective bargaining and the payment and withholding of taxes and other sums as
required by the appropriate Governmental Authority except for such failures to
be in compliance which, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect and has withheld and paid to the
appropriate Governmental Authority or is holding for payment not yet due to such
Governmental Authority all amounts required to be withheld from employees of the
Company and is not liable for any arrears of wages, taxes, penalties or other
sums for failure to comply with any of the foregoing; (f) the Company has paid
in full to all its employees or adequately accrued for in accordance with GAAP
all wages, salaries, commissions, bonuses, benefits and other compensation due
to or on behalf of such employees; (g) there is no claim with respect to payment
of wages, salary or overtime pay that has been asserted or is now pending or, to
the best knowledge of the Sellers after due inquiry, threatened before any
Governmental Authority with respect to any Persons currently or formerly
employed by the Company; (h) the Company is not a party to, or otherwise bound
by, any consent decree with, or citation by, any Governmental Authority relating
to employees or employment practices; (i) there is no charge or proceeding with
respect to a violation of any occupational safety or health standards that has
been asserted or is now pending or, to the best knowledge of the Sellers after
due inquiry, threatened with respect to the Company; and (j) there is no charge
of discrimination in employment or employment practices, for any reason,
including, without limitation, age, gender, race, religion or other legally
protected category, which has been asserted or is now pending or, to the best
knowledge of the Sellers after due inquiry, threatened before the United States
Equal Employment Opportunity Commission, or any other Governmental Authority in
any jurisdiction in which the Company has employed or currently employs any
Person.
SECTION 3.24. Key Employees. Section 3.24 of the Disclosure
Schedule lists the name, place of employment, the current annual salary rates,
bonuses, deferred or contingent compensation, pension, accrued vacation, "golden
parachute" and other like benefits paid or payable (in cash or otherwise) in
1998 and 1997, or payable under a contract, agreement or Plan in any year
subsequent to 1998, the date of employment and a description of position and job
function of each current salaried employee, officer, director, consultant or
agent of the Company.
SECTION 3.25. Taxes. Except as disclosed in Section 3.25 of
the Disclosure Schedule, (a) all returns and reports in respect of Taxes
required to be filed with respect to the Company have been timely filed; (b) all
Taxes required to be shown on such returns and reports or otherwise due from the
Company have been timely paid; (c) all such returns and reports (insofar as they
relate to the activities or income of the Company) are true, correct and
complete in all material respects; (d) no material adjustment relating to such
returns has been proposed formally or informally by any Tax authority (insofar
as either relates to the activities or income of
31
the Company or could result in liability of the Company on the basis of joint
and/or several liability) and, to the best knowledge of the Sellers after due
inquiry, no basis exists for any such material adjustment; (e) there are no
pending or, to the best knowledge of the Sellers after due inquiry, threatened
actions or proceedings for the assessment or collection of Taxes against the
Company; (f) no consent under Section 341(f) of the Code has been filed with
respect to the Company; (g) there are no Tax liens on any assets of the Company;
(h), on the Reference Balance Sheet, reserves and allowances have been provided
which are adequate to satisfy all material Liabilities for Taxes payable by the
Company for periods through the Closing Date; (i) the Company is not doing
business in or engaged in a trade or business in any jurisdiction in which it
has not filed any applicable income or franchise tax return; (j) there are no
proposed reassessments of any property owned by the Company or other proposals
that are reasonably expected to materially increase the amount of property tax
to which the Company would be subject; (k) the Company has not been a member of
any affiliated group with any company and has not filed a Tax return on a
consolidated, combined or unitary basis with any company; (l) at all times since
January 1, 1990, the Company has had in effect (i) a valid election under
Section 1362(a) of the Code (or a comparable election under any successor
provision) to be taxed as an S Corporation for federal income tax purposes (an
"S Election") (or comparable election under state or local law), (ii) a
comparable state law election in each state in which it conducts business, and
(iii) a comparable local law election in each locality in which it both conducts
business and is subject to a local income tax; (m) the Company has not received
and is not aware of any proposal from the IRS or any state or local tax
authority to disallow such S Election (or comparable state or local law
election) for any taxable year; and (n) the Company has not been and is not
subject to Taxes imposed by (i) Section 1371 of the Code, (ii) Section 1375 of
the Code, or (iii) Section 1374 of the Code. For purposes of this Agreement,
"Tax" or "Taxes" means any and all taxes, fees, levies, duties, tariffs, imposts
and other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amount imposed with respect thereto) imposed by
any government or taxing authority on the Company, including, without
limitation: taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added or gains taxes; license,
registration and documentation fees; and customs duties, tariffs and similar
charges.
SECTION 3.26. Insurance. (a) Section 3.26(a) of the Disclosure
Schedule sets forth the following information with respect to each insurance
policy (including policies providing property, casualty, liability, workers'
compensation and bond and surety arrangements) under which the Company has been
an insured, a named insured or otherwise the principal beneficiary of coverage
at any time within the past three years:
(i) the name, address and telephone number of the agent or
broker;
32
(ii) the name of the insurer and the names of the principal
insured and each named insured;
(iii) the policy number and the period of coverage; and
(iv) the type, scope (including an indication of whether the
coverage was on a claims made, occurrence or other basis) and amount
(including a description of how deductibles, retentions and aggregates
are calculated and operate) of coverage.
(b) With respect to each such insurance policy: (i) the policy
is legal, valid, binding and enforceable in accordance with its terms and,
except for policies that have expired under their terms in the ordinary course,
is in full force and effect; (ii) the Company is not in breach or default
(including any breach or default with respect to the payment of premiums or the
giving of notice), and, to the best knowledge of the Sellers after due inquiry,
no event has occurred which, with notice or the lapse of time, would constitute
such a breach or default or permit termination or modification, under the
policy; and (iii) no party to the policy has repudiated, or given notice of an
intent to repudiate, any provision thereof.
(c) Section 3.26(c) of the Disclosure Schedule sets forth all
risks against which the Company is self-insured or which are covered under any
risk retention program in which the Company participates, together with details
for the last five years of the Company's loss experience with respect to such
risks.
(d) At no time subsequent to December 31, 1995 has the Company
(i) been denied any insurance or indemnity bond coverage which it has requested,
(ii) made any material reduction in the scope or amount of its insurance
coverage, or, except as set forth in Section 3.26(d) of the Disclosure Schedule,
received notice from any of its insurance carriers that any insurance premiums
will be subject to increase in an amount materially disproportionate to the
amount of the increases with respect thereto (or with respect to similar
insurance) in prior years or that any insurance coverage listed in Section
3.26(a) of the Disclosure Schedule will not be available in the future
substantially on the same terms as are now in effect or (iii) suffered any
extraordinary increase in premium for renewed coverage. To the best knowledge of
the Sellers after due inquiry, since December 31, 1995, no insurance carrier has
canceled, failed to renew or materially reduced any insurance coverage for the
Company or given any notice or other indication of its intention to cancel, not
renew or reduce any such coverage.
(e) At the time of the Closing, all insurance policies
currently in effect will be outstanding and duly in force.
(f) No insurance policy listed in Section 3.26(a) of the
Disclosure Schedule will cease to be legal, valid, binding, enforceable in
accordance with its terms and in full force
33
and effect on terms identical to those in effect as of the date hereof as a
result of the consummation of the transactions contemplated by this Agreement.
SECTION 3.27. Full Disclosure. No representation or warranty
of any of the Sellers in this Agreement, nor any statement or certificate
furnished or to be furnished to the Purchaser by the Company or any Seller or
any of their representatives pursuant to this Agreement, or in connection with
the transactions contemplated by this Agreement or the Escrow Agreement,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
SECTION 3.28. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of any Seller.
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As an inducement to the Purchaser to enter into this
Agreement, each Seller, as to themselves and not to the other Sellers, hereby
represents and warrants to the Purchaser as follows:
SECTION 4.01. Authority of the Sellers. Each Seller is an
individual and has all requisite right, power and authority and full legal
capacity to execute and deliver this Agreement, the Escrow Agreement and the
closing documents contemplated by Section 2.04, to perform his or her
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. This Agreement has been, and upon execution the
Escrow Agreement will be, duly and validly executed and delivered by such
Seller, and this Agreement constitutes, and upon its execution the Escrow
Agreement will constitute, a legal, valid and binding obligation of each such
Seller enforceable against such Seller in accordance with its terms. The failure
of the spouse of any Seller to be a party or signatory to this Agreement or the
Escrow Agreement shall not (i) prevent any such Seller from performing his or
her obligations and from consummating the transactions contemplated hereunder
and thereunder or (ii) prevent this Agreement from constituting the legal, valid
and binding obligation of any such Seller enforceable against any such Seller in
accordance with its terms. No spouse of any Seller has any rights whatsoever in
respect of the Shares.
SECTION 4.02. Ownership. Each of the Sellers owns the number
of Shares set forth next to such Seller's name in Section 4.02 of the Disclosure
Schedule, and, except as set
34
forth in Section 4.02 of the Disclosure Schedule, (i) such Seller has good and
marketable title to such Shares, free and clear of any Encumbrance of any kind,
and (ii) except for the Shares set forth next to each Seller's name in Schedule
4.02 of the Disclosure Schedule, each such Seller does not own any other shares
of capital stock of the Company. All the Shares set forth next to each Seller's
name in Schedule 4.02 of the Disclosure Schedule have been duly authorized,
validly issued, and are fully paid and nonassessable and have been accorded full
voting rights. Upon consummation of the transactions contemplated by this
Agreement and registration of the Shares in the name of the Purchaser in the
stock records of the Company, the Purchaser, assuming it shall have purchased
the Shares for value in good faith and without notice of any adverse claim, will
own all the issued and outstanding capital stock of the Company free and clear
of all Encumbrances and the Shares will be fully paid and nonassessable. There
are no voting trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of the
Shares.
SECTION 4.03. Private Placement. (a) Each of the Sellers
understands that (i) the offering and sale of the shares of Purchaser Common
Stock are intended to be exempt from registration under the Securities Act
pursuant to Section 4(2) of the Securities Act and (ii) there can be no
assurance that such Sellers will be able to sell or dispose of such shares
purchased by them pursuant to this Agreement. Each of the Sellers represents
that any Purchaser Common Stock acquired by such Seller pursuant to this
Agreement shall be acquired by such Seller for such Seller's own account and not
as nominee or agent for any other person and not with a view to, or for offer or
sale in connection with any distribution thereof within the meaning of the
Securities Act that would violate the securities laws of the United States of
America or any state thereof.
(b) Each of the Sellers is (i) a natural person whose
individual net worth, or joint net worth with such Seller's spouse, if any, on
the Closing Date exceeds $1,000,000 or (ii) a natural person who had an
individual income in excess of $200,000 in each of the two most recent years or
joint income with such Seller's spouse, if any, in excess of $300,000 in each of
those years and has a reasonable expectation of reaching the same income level
in the current year.
(c) Each Seller is a Sophisticated Person.
(d) Each Seller has consulted with and has received advice
from its legal counsel in connection with the entering into of this Agreement,
including regarding the transfer restrictions on the shares of Purchaser Common
Stock to be issued in connection with the transaction contemplated by this
Agreement.
SECTION 4.04. Full Disclosure. No representation or warranty
of any of the Sellers in this Agreement, nor any statement or certificate
furnished or to be furnished to the Purchaser by the Company or any Seller or
any of their representatives pursuant to this
35
Agreement, or in connection with the transactions contemplated by this Agreement
or the Escrow Agreement, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading.
SECTION 4.05. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of any Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Sellers to enter into this Agreement,
the Purchaser hereby represents and warrants to the Sellers as follows:
SECTION 5.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida and has all necessary corporate power and
authority to enter into this Agreement and the Escrow Agreement, to carry out
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Escrow Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and thereunder and the consummation by the Purchaser
of the transactions contemplated hereby and thereby have been duly authorized by
all requisite action on the part of the Purchaser. This Agreement has been, and
upon its execution, the Escrow Agreement will be, duly executed and delivered by
the Purchaser, and (assuming due authorization, execution and delivery by the
Sellers) this Agreement constitutes, and upon its execution the Escrow Agreement
will constitute, a valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms.
SECTION 5.02. No Conflict. Assuming compliance with the
notification requirements of the HSR Act and the making and obtaining of all
filings, notifications, consents, approvals, authorizations and other actions
referred to in Section 5.03, except as may result from any facts or
circumstances relating solely to any of the Sellers, the execution, delivery and
performance of this Agreement and the Escrow Agreement by the Purchaser do not
and will not (a) violate, conflict with or result in the breach of any provision
of the Certificate of Incorporation or By-laws of the Purchaser, (b) conflict
with or violate any Law or Governmental Order applicable to the Purchaser or (c)
conflict with, or result in any breach of, constitute a default (or event which
with the giving of notice or lapse or time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation, or cancellation of, or result
in the creation of any
36
Encumbrance on any of the assets or properties of the Purchaser pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to which the
Purchaser is a party or by which any of such assets or properties are bound or
affected which would have a material adverse effect on the ability of the
Purchaser to consummate the transactions contemplated by this Agreement and by
the Escrow Agreement.
SECTION 5.03. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement and the Escrow Agreement
by the Purchaser do not and will not require any consent, approval,
authorization or other order of, action by, filing with, or notification to, any
Governmental Authority, which the failure to obtain would prevent or delay
consummation of the transactions contemplated by this Agreement, or otherwise
prevent the Purchaser from performing its respective obligations under this
Agreement, except for the notification requirements of the HSR Act.
SECTION 5.04. Investment Purpose. The Purchaser is acquiring
the Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
SECTION 5.05. Litigation. Except as disclosed in a writing
given to the Sellers by the Purchaser on the date of this Agreement, no claim,
action, proceeding or investigation is pending or, to the best knowledge of the
Purchaser after due inquiry, threatened, which seeks to delay or prevent the
consummation of, or which would be reasonably likely to materially adversely
affect (i) the Purchaser's ability to consummate, the transactions contemplated
by this Agreement or (ii) the business of the Purchaser and its subsidiaries,
taken as a whole.
SECTION 5.06. Capitalization. The authorized capital stock of
the Purchaser consists of (a) 50,000,000 shares of Purchaser Common Stock and
(b) 1,000,000 shares of preferred stock, par value $1.00 per share ("Purchaser
Preferred Stock"). As of March 1, 1999, (i) 22,250,472 shares of Purchaser
Common Stock were issued and outstanding, all of which were validly issued,
fully paid and nonassessable and (ii) no shares of Purchaser Common Stock are
held in the treasury of the Purchaser. As of the date of this Agreement, no
shares of Purchaser Preferred Stock were issued and outstanding. Except for (i)
stock purchase rights issued pursuant to the Stockholder Rights Plan dated June
1, 1992 between Purchaser and First Union National Bank of North Carolina, as
agent, and (ii) the stock option plans of the Purchaser and its subsidiaries,
there are no warrants or other rights, agreements, arrangements or commitments
of any character relating to the issued or unissued capital stock of Purchaser
or any of its subsidiaries or obligating Purchaser or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in,
Purchaser or any of its subsidiaries. The Purchaser Common Stock, when issued
pursuant to this Agreement, will be duly authorized, validly issued, fully paid
and nonassessable. Other than pursuant to the Registration Rights Agreement and
the Agreement and Plan of Merger, dated as of July 7, 1997, among the Purchaser,
Dycom
37
Acquisitions, Inc., Communications Construction Group, Inc., George Tamasi and
Thomas Polis, no person has demand or other rights to cause the Company to file
any registration statement under the Securities Act relating to any securities
of the Company or any right to participate in any such registration.
SECTION 5.07. SEC Filings; Financial Statements. (a) The
Purchaser has filed all forms, reports and documents required to be filed by it
with the SEC since December 31, 1997 through the date of this Agreement
(collectively, the "SEC Reports"). The SEC Reports (i) at the time they were
filed, complied as to form in all material respects, with the requirements of
the Securities Act or the Exchange Act, as the case may be, and (ii) did not at
the time they were filed contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. No subsidiary of the Purchaser is required to
file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with GAAP (except as may be indicated in the notes thereto) and each
presented fairly, in all material respects, the consolidated financial position
of the Purchaser and its consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated therein except as otherwise
named therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments).
(c) To the knowledge of the Purchaser, no event has occurred
within the 15 days immediately prior to the date hereof which is required to be
reported on Form 8-K under the Securities Act.
SECTION 5.08. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Conduct of Business Prior to the Closing. (a)
The Sellers covenant and agree that, except as described in Section 6.01(a) of
the Disclosure Schedule, between the date hereof and the time of the Closing,
the Sellers shall cause the Company not to conduct its business other than in
the ordinary course and consistent with the Company's prior practice. Without
limiting the generality of the foregoing, except as described in Section 6.01(a)
38
of the Disclosure Schedule, the Sellers shall cause the Company to (i) continue
its pricing and purchasing policies, in accordance with past practice; (ii) not
shorten or lengthen the customary payment cycles for any of its payables or
receivables; (iii) use its best efforts to (A) preserve intact its business
organization, (B) keep available to the Purchaser the services of the employees
of the Company, (C) continue in full force and effect without material
modification all existing policies or binders of insurance currently maintained
in respect of the Company and the Business and (D) preserve its current
relationships with its customers, suppliers and other persons with which it has
significant business relationships; (iv) exercise, but only after notice to the
Purchaser and receipt of the Purchaser's prior written approval, any rights of
renewal pursuant to the terms of any of the leases or subleases set forth in
Section 3.18(b) of the Disclosure Schedule which by their terms would otherwise
expire; and (v) not engage in any practice, take any action, fail to take any
action or enter into any transaction which could cause any representation or
warranty of any of the Sellers to be untrue or result in a breach of any
covenant made by the Sellers in this Agreement.
(b) Except as described in Section 6.01(b) of the Disclosure
Schedule, the Sellers covenant and agree that, prior to the Closing, without the
prior written consent of the Purchaser, none of the Sellers will cause the
Company to do any of the things enumerated in the second sentence of Section
3.11 (including, without limitation, clauses (i) through (xxx) thereof).
SECTION 6.02. Access to Information. (a) From the date hereof
until the Closing, upon reasonable notice and during normal business hours, the
Sellers shall cause the Company and each of the Company's officers, directors,
employees, agents, representatives, accountants and counsel to afford the
Purchaser and its representatives reasonable access to the offices, properties,
other facilities, books and records of the Company and to those officers,
directors, employees, agents, accountants and counsel of the Company who have
any knowledge relating to the Company or the Business and furnish to the
Purchaser and its representatives such additional financial and operating data
and other information regarding the assets, properties and goodwill of the
Company and the Business (or legible copies thereof) as the Purchaser or its
representatives may from time to time reasonably request.
(b) In order to facilitate the resolution of any claims made
against or incurred by the Sellers prior to the Closing, for a period of seven
years after the Closing, the Purchaser shall (i) retain the books and records of
the Company relating to periods prior to the Closing and (ii) during such
seven-year period, upon reasonable notice, afford the officers, employees and
authorized agents and representatives of the Sellers reasonable access
(including the right to make, at the Sellers' expense, photocopies), during
normal business hours, to such books and records.
(c) In order to facilitate the resolution of any claims made
by or against or incurred by the Purchaser or the Company after the Closing or
for any other reasonable purpose, for a period of seven years following the
Closing, each of the Sellers shall (i) retain the books
39
and records which relate to the Company and its operations for periods prior to
the Closing and which shall not otherwise have been delivered to the Purchaser
or the Company and (ii) during such seven-year period, upon reasonable notice,
afford the officers, employees and authorized agents and representatives of the
Purchaser or the Company reasonable access (including the right to make
photocopies, at the expense of the Purchaser or the Company), during normal
business hours, to such books and records.
SECTION 6.03. Confidentiality. (a) Each of the Sellers agrees
to, and shall cause its agents, representatives and Affiliates and the Company's
agents, representatives, Affiliates, employees, officers and directors to: (i)
treat and hold as confidential (and not disclose or provide access to any Person
to) all information relating to trade secrets, processes, product development,
price, customer and supplier lists, pricing and marketing plans, policies and
strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, new personnel
acquisition plans and all other confidential information with respect to the
Business or the Company, (ii) in the event that any Seller or any such agent,
representative, Affiliate, employee, officer or director becomes legally
compelled to disclose any such information, provide the Purchaser with prompt
written notice of such requirement so that the Purchaser or the Company may seek
a protective order or other remedy or waive compliance with this Section 6.03,
(iii) in the event that such protective order or other remedy is not obtained,
or the Purchaser waives compliance with this Section 6.03, furnish only that
portion of such confidential information which is legally required to be
provided and exercise its best efforts, at the Purchaser's expense, to obtain
assurances that confidential treatment will be accorded such information, (iv)
promptly furnish (prior to, at, or as soon as practicable following, the
Closing) to the Company or the Purchaser any and all copies (in whatever form or
medium) of all such confidential information then in the possession of such
Seller or any of his agent, representative, Affiliate, employee, officer and
director and, except as otherwise required by Section 6.02(c), destroy any and
all additional copies then in the possession of such Seller or any such agent,
representative, Affiliate, employee, officer and director of such information
and of any analyses, compilations, studies or other documents prepared, in whole
or in part, on the basis thereof; provided, however, that this sentence shall
not apply to any information that (x) is or becomes generally available to the
public other than as a result of a disclosure by any of the Sellers or their
representatives not permitted by this Agreement, (y) was available to the
Sellers on a nonconfidential basis prior to its disclosure by the Purchaser or
its representatives or (z) becomes available to the Sellers on a nonconfidential
basis from a person other than the Purchaser or its representatives who is not
otherwise bound by a confidentiality agreement with the Purchaser or any of its
representatives, or is not otherwise under an obligation to the Purchaser or any
of its representatives not to transmit the information to the Sellers. Each of
the Sellers agree and acknowledge that remedies at law for any breach of its
obligations under this Section 6.03(a) are inadequate and that in addition
thereto the Purchaser shall be entitled to seek equitable relief, including
injunction and specific performance, in the event of any such breach.
40
(b) The Purchaser agrees to, and shall cause its agents,
representatives and Affiliates to: (i) treat and hold as confidential (and not
disclose or provide access to any Person to) all information relating to trade
secrets, processes, product development, price, customer and supplier lists,
pricing and marketing plans, policies and strategies, details of client and
consultant contracts, operations methods, product development techniques,
business acquisition plans, new personnel acquisition plans and all other
confidential information with respect to the Sellers, (ii) in the event that the
Purchaser or any such agent, representative, Affiliate, employee, officer or
director becomes legally compelled to disclose any such information, provide the
Sellers with prompt written notice of such requirement so that the Sellers may
seek a protective order or other remedy or waive compliance with this Section
6.03, (iii) in the event that such protective order or other remedy is not
obtained, or the Sellers waives compliance with this Section 6.03, furnish only
that portion of such confidential information which is legally required to be
provided and exercise its best efforts, at the Sellers' expense, to obtain
assurances that confidential treatment will be accorded such information, (iv)
promptly furnish (prior to, at, or as soon as practicable following the Closing)
to the Sellers any and all copies (in whatever form or medium) of all such
confidential information then in the possession of the Purchaser or any such
agent, representative, Affiliate, employee, officer and director and, except as
otherwise required by Section 6.02(c), destroy any and all additional copies
then in the possession of the Purchaser or any such agent, representative,
Affiliate, employee, officer and director of such information and of any
analyses, compilations, studies or other documents prepared, in whole or in
part, on the basis thereof; provided, however, that this sentence shall not
apply to any information that (x) is or becomes generally available to the
public other than as a result of a disclosure by the Purchaser or its
representatives not permitted by this Agreement, (y) was available to the
Purchaser on a nonconfidential basis prior to its disclosure by the Purchaser or
its representatives or (z) becomes available to the Purchaser on a
nonconfidential basis from a person other than the Sellers or their
representatives who is not otherwise bound by a confidentiality agreement with
the Sellers or any of their representatives, or is not otherwise under an
obligation to the Sellers or any of their representatives not to transmit the
information to the Purchaser. The Purchaser agrees and acknowledges that
remedies at law for any breach of its obligations under this Section 6.03(b) are
inadequate and that in addition thereto the Sellers shall be entitled to seek
equitable relief, including injunction and specific performance, in the event of
any such breach.
(c) In the event of any inconsistency between the terms of
this Agreement and the terms of the Confidentiality Agreement, the terms of this
Agreement shall control. Upon termination of this Agreement pursuant to Section
10.01, the obligations of the parties with respect to confidential information
shall be governed by the Confidentiality Agreement.
SECTION 6.04. Regulatory and Other Authorizations; Notices and
Consents. (a) The Sellers shall use their best efforts to obtain (or cause the
Company to obtain) all authorizations, consents, orders and approvals of all
Governmental Authorities and officials that may be or become necessary for its
execution and delivery of, and the performance of its obligations pursuant to,
this Agreement and the Escrow Agreement and will cooperate fully with
41
the Purchaser in promptly seeking to obtain all such authorizations, consents,
orders and approvals. Each party hereto agrees to make an appropriate filing, if
necessary, pursuant to the HSR Act with respect to the transactions contemplated
by this Agreement within five Business Days of the date hereof and to supply as
promptly as practicable to the appropriate Governmental Authorities any
additional information and documentary material that may be requested pursuant
to the HSR Act.
(b) The Sellers shall or shall cause the Company to give
promptly such notices to third parties and use its or their best efforts to
obtain such third party consents and estoppel certificates as the Purchaser may
in its sole and absolute discretion deem necessary or desirable in connection
with the transactions contemplated by this Agreement.
(c) The Purchaser shall cooperate and use all reasonable
efforts to assist the Sellers in giving such notices and obtaining such consents
and estoppel certificates; provided, however, that the Purchaser shall have no
obligation to give any guarantee or other consideration of any nature in
connection with any such notice, consent or estoppel certificate or to consent
to any change in the terms of any agreement or arrangement which the Purchaser
in its sole and absolute discretion may deem adverse to the interests of the
Purchaser, the Company or the Business.
(d) None of the Sellers knows of any reason why all the
consents, approvals and authorizations necessary for the consummation of the
transactions contemplated hereby will not be received.
(e) Each of the Sellers and the Purchaser agree that, in the
event any consent, approval or authorization necessary or desirable to preserve
for the Business or the Company any right or benefit under any lease, license,
contract, commitment or other agreement or arrangement to which any such Seller
or the Company is a party is not obtained prior to the Closing, such Seller
will, subsequent to the Closing, cooperate with the Purchaser and the Company in
attempting to obtain such consent, approval or authorization as promptly
thereafter as practicable. If such consent, approval or authorization cannot be
obtained, such Seller shall use its best efforts to provide the Company, at the
Company's sole expense, with the rights and benefits of the affected lease,
license, contract, commitment or other agreement or arrangement for the term of
such lease, license, contract or other agreement or arrangement, and, if such
Seller provides such rights and benefits, the Company shall assume the
obligations and burdens thereunder.
SECTION 6.05. No Solicitation or Negotiation. Each of the
Sellers agrees that between the date of this Agreement and the earlier of (i)
the Closing and (ii) the termination of this Agreement, none of the Sellers, the
Company or any of their respective Affiliates, officers, directors,
representatives or agents will (a) solicit, initiate, consider, encourage or
accept any other proposals or offers from any Person (i) relating to any
acquisition or purchase of all or any
42
portion of the capital stock of the Company or assets of the Company, (ii) to
enter into any business combination with the Company or (iii) to enter into any
other extraordinary business transaction involving or otherwise relating to the
Company, or (b) participate in any discussions, conversations, negotiations and
other communications regarding, or furnish to any other Person any information
with respect to, or otherwise cooperate in any way, assist or participate in,
facilitate or encourage any effort or attempt by any other Person to seek to do
any of the foregoing. The Sellers immediately shall cease and cause to be
terminated all existing discussions, conversations, negotiations and other
communications with any Persons conducted heretofore with respect to any of the
foregoing. The Sellers shall notify the Purchaser promptly if any such proposal
or offer, with any Person with respect thereto, is made and shall, in any such
notice to the Purchaser, indicate in reasonable detail the identity of the
Person making such proposal or offer and the terms and conditions of such
proposal or offer. Each of the Sellers agrees not to, and to cause the Company
not to, without the prior written consent of the Purchaser, release any Person
from, or waive any provision of, any confidentiality or standstill agreement to
which the Company is a party.
SECTION 6.06. Notification of Certain Matters. Prior to the
Closing, the Sellers shall promptly notify the Purchaser in writing of (i) all
events, circumstances, facts and occurrences arising subsequent to the date of
this Agreement which would reasonably be expected to result in any breach of a
representation or warranty or covenant of any of the Sellers in this Agreement
or which would be reasonably likely to have the effect of making any
representation or warranty of any Seller in this Agreement untrue or incorrect
in any respect and (ii) all other material developments affecting the assets,
Liabilities, business, financial condition, operations, results of operations,
customer or supplier relations or employee relations of the Company or the
Business; provided, however, that the delivery of any notice pursuant to this
Section 6.06 shall not be deemed to be an amendment of this Agreement or the
Disclosure Schedule and shall not cure any breach of any representation or
warranty requiring disclosure of such matter prior to the date of this
Agreement. No delivery of any notice pursuant to this Section 6.06 shall limit
or affect the remedies available hereunder to the party receiving such notice,
including the rights of the Purchaser under Section 9.02(a), in the event that a
representation or warranty made by the Company or the Purchaser herein shall not
be true and correct as of the date hereof and as of the Closing Date.
SECTION 6.07. Non-Competition. (a) For a period of three (3)
years after the Closing, none of the Sellers shall directly or indirectly engage
in the business of providing telecommunications or electrical services in the
nature of engineering, construction, installation, upgrading, maintenance,
mapping, locating or technical activities for utility companies, cable
television systems or telephone companies (the "Purchaser's Business"), whether
as a proprietor, partner, joint venturer, employer, agent, employee, consultant,
officer or beneficial or record owner of more than four percent of the stock of
any corporation or association of any nature which is competitive to the
Purchaser's Business in the contiguous lower 48 states of the United States of
America. Within that geographical area and during that non-compete period, none
of
43
the Sellers shall solicit or do business competitive to the Purchaser's Business
with any customers, partners or associates of the Purchaser or any of its
subsidiaries. Provided, however, that nothing in this Section or this Agreement
shall prevent any Seller from participation in the management of or ownership of
an equity interest in any company, corporation or association of any nature,
that owns or has constructed for its own account, alone or with co-owners or
joint venturers, fiber optic or other telecommunications or electrical systems
or facilities.
(b) Each of the Sellers agrees that the breach by such Seller
of the covenant contained in Section 6.07(a) is likely to result in immediate
and irreparable harm, directly or indirectly, to the Purchaser. Each of the
Sellers, therefore, consents and agrees that if such Seller violates any of such
covenants, the Purchaser shall be entitled, among and in addition to any other
rights or remedies available under this Agreement or at law or in equity, to
temporary and permanent injunctive relief to prevent such Seller from committing
or continuing a breach of such covenants.
(c) It is the desire, intent and agreement of each of the
Sellers and the Purchaser that the restrictions placed on each of the Sellers by
Section 6.07(a) be enforced to the fullest extent permissible under the law and
public policy applied by any jurisdiction in which enforcement is sought.
Accordingly, if and to the extent that any portion of this Section 6.07 shall be
adjudicated to be unenforceable, such portion shall be deemed amended to delete
therefrom, or to reform the portion thus adjudicated to be invalid or
unenforceable, such deletion or reformation to apply only with respect to the
operation of such portion in the particular jurisdiction in which such
adjudication is made.
SECTION 6.08. Public Announcements. Prior to the Closing, the
Purchaser, the Sellers and the Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or the transactions contemplated thereby, including by
providing a draft of any proposed press release or public statement with respect
to the initial announcement of this Agreement and the transactions contemplated
thereby to the other party prior to such issuance, and shall not issue any such
press release or make any such public statement prior to such consultation.
SECTION 6.09. Resale Restrictions. (a) Each of the Sellers
acknowledges and agrees that the shares of Purchaser Common Stock issued
pursuant to this Agreement have not been registered under the Securities Act or
any state securities Law, and that such shares to be received by them are being
acquired solely for their own account, for investment and not with a view to the
sale or distribution thereof. Each of the Sellers hereby agrees not to offer,
sell, hypothecate, pledge or otherwise transfer, pledge or hypothecate such
shares unless and until registered under the Securities Act and any applicable
state securities Law or unless such offer, sale, transfer, pledge or
hypothecation is exempt from registration or is otherwise in compliance with the
Securities Act and such Laws. Each of the Sellers acknowledges that, except as
provided in the Registration Rights Agreement, such Seller has no right to
require the Purchaser
44
to register shares of Purchaser Common Stock. Each of the Sellers understands
and agrees that each certificate representing shares of Purchaser Common Stock
received hereunder shall bear the following legends:
THE TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED BY AN AGREEMENT
ON FILE AT THE OFFICES OF THE CORPORATION.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO
THE REGISTRATION REQUIREMENTS OF SUCH ACT OR
SUCH LAWS.
and such Seller agrees to transfer shares of Purchaser Common Stock only in
accordance with the provisions of such legends. In addition, each of the Sellers
agrees that the Purchaser shall instruct the transfer agent to only transfer the
Purchaser Common Stock pursuant to these provisions.
(b) In the event the shares of Purchaser Common Stock received
by any Seller hereunder cease to be restricted for purposes of the Securities
Act, upon request of such Seller and surrender of the certificate bearing such
legends, the Purchaser or its designated agent will promptly reissue such
certificates to such Seller without such legends.
SECTION 6.10. Release of Indemnity Obligations. Each of the
Sellers covenants and agrees, on or prior to the Closing, to execute and deliver
to the Company, for the benefit of the Company, a general release and discharge,
in form and substance satisfactory to the Purchasers releasing and discharging
the Company from any and all obligations to indemnify such Seller or otherwise
hold it harmless pursuant to any agreement or other arrangement entered into
prior to the Closing except for the obligation to indemnify such Seller as an
officer or director of the Company pursuant to the bylaws of the Company in
effect on the date hereof or as otherwise provided under the GBCL.
SECTION 6.11. Further Action. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers as may
be required to carry out the provisions of this Agreement and consummate and
make effective the transactions contemplated by this Agreement.
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SECTION 6.12. Stock Splits. Prior to the Closing, the
Purchaser shall not subdivide into a smaller number, reclassify or otherwise
materially change its issued and outstanding common stock.
SECTION 6.13. Disclosure Schedule. Prior to the Closing and
within 21 days of the date of this Agreement, the Sellers shall provide the
Purchaser with a copy of the Disclosure Schedule.
ARTICLE VII
TAX MATTERS
SECTION 7.01. Indemnity. (a) The Sellers agree, jointly and
severally, to indemnify and hold harmless the Purchaser and the Company against
the following Taxes and, except as otherwise provided in Section 7.04, against
any loss, damage, liability or expense, including reasonable fees for attorneys
and other outside consultants, incurred in contesting or otherwise in connection
with any such Taxes: (i) Taxes imposed on the Company with respect to taxable
periods or the portion of any taxable period ending on or before the Closing
Date resulting from a determination by a tax authority that such Taxes are due
because of (x) a finding of fraud and/or (y) the disallowance of any deduction
taken by the Company and determined to be a personal expense of a Seller and
(ii) Taxes resulting from an election described in Section 338(h)(10) of the
Code. The Purchaser shall be responsible for Taxes and associated expenses not
allocated to the Seller pursuant to the first sentence hereof.
(b) In the case of Taxes that are payable with respect to a
taxable period that begins before the Closing Date and ends after the Closing
Date, the portion of any such Tax that is allocable to the portion of the period
ending on the Closing Date shall be:
(i) in the case of Taxes that are either (x) based upon or
related to income or receipts, or (y) imposed in connection with any
sale or other transfer or assignment of property (real or personal,
tangible or intangible) (other than conveyances pursuant to this
Agreement, as provided under Section 7.07), deemed equal to the amount
which would be payable if the taxable year ended with the Closing Date;
and
(ii) in the case of Taxes imposed on a periodic basis with
respect to the assets of the Company or otherwise measured by the level
of any item, deemed to be the amount of such Taxes for the entire
period (or, in the case of such Taxes determined on an arrears basis,
the amount of such Taxes for the immediately preceding period),
multiplied by a fraction the numerator of which is the number of
calendar days in the period ending on the Closing Date and the
denominator of which is the number of calendar days in the entire
period.
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SECTION 7.02. Returns and Payments. (a) From the date of this
Agreement through and after the Closing Date, the Sellers shall prepare and file
or otherwise furnish in proper form to the appropriate Governmental Authority
(or cause to be prepared and filed or so furnished) in a timely manner all Tax
returns, reports and forms ("Returns") relating to the Company that are due on
or before or relate to any taxable period ending on or before the Closing Date
(and the Purchaser shall do the same with respect to any taxable period ending
after the Closing Date). Returns of the Company not yet filed for any taxable
period that begins before the Closing Date shall be prepared in a manner
consistent with past practices employed with respect to the Company (except to
the extent counsel for the Sellers or the Company renders a legal opinion that
there is no reasonable basis in law therefor or determines that a Return cannot
be so prepared and filed without being subject to penalties). With respect to
any Return required to be filed by the Purchaser with respect to the Company and
as to which an amount of Tax is allocable to the Sellers under Section 7.01, the
Purchaser shall provide the Sellers and their authorized representatives with a
copy of such completed Return and a statement certifying the amount of Tax shown
on such Return that is allocable to the Sellers pursuant to Section 7.01,
together with appropriate supporting information and schedules at least 20
Business Days prior to the due date (including any extension thereof) for the
filing of such Return, and the Sellers and their authorized representatives
shall have the right to review and comment on such Return and statement prior to
the filing of such Return. With respect to any Return required to be filed by
any Seller with respect to the Company, the Sellers shall provide the Purchaser
and its authorized representatives with a copy of such completed Return,
together with appropriate supporting information and schedules at least 20
Business Days prior to the due date (including any extension thereof) for the
filing of such Return, and the Purchaser and its authorized representatives
shall have the right to review and comment on such Return and statement prior to
the filing of such Return.
(b) The Sellers shall pay or cause to be paid when due and
payable all Taxes with respect to the Company for any taxable period ending on
or before the Closing Date to the extent such Taxes exceed the amount, if any,
accrued for such Taxes as current Taxes payable on the Closing Date, and the
Purchaser shall so pay or cause to be paid Taxes for any taxable period after
the Closing Date (subject to its right of indemnification from the Sellers by
the date set forth in Section 7.05 for Taxes attributable to the portion of any
Tax period that includes the Closing Date pursuant to Section 7.01).
SECTION 7.03. Refunds. Any Tax refund (including any interest
with respect thereto) relating to the Company for any taxable period prior to
the Closing Date shall be the property of the Purchaser, and if received by the
Sellers or the Company shall be paid over promptly to the Purchaser. In
addition, any Tax refund (or equivalent benefit to any Seller through a
reduction in Tax liability) for a period before the Closing Date arising out of
the carryback of a loss or credit incurred by the Company in a taxable year
ending after the Closing Date shall be the property of the Purchaser and, if
received by such Seller, shall be paid over promptly to the Purchaser.
47
SECTION 7.04. Contests. (a) After the Closing, the Purchaser
shall promptly notify the Sellers in writing of any written notice of a proposed
assessment or claim in an audit or administrative or judicial proceeding of the
Purchaser or of the Company which, if determined adversely to the taxpayer,
would be grounds for indemnification under this Article VII; provided, however,
that a failure to give such notice will not affect the Purchaser's right to
indemnification under this Article VII except to the extent, if any, that, but
for such failure, the Sellers could have avoided all or a portion of the Tax
liability in question.
(b) In the case of an audit or administrative or judicial
proceeding that relates to periods ending on or before the Closing Date and
provided that the Sellers acknowledge in writing their liability under this
Agreement to hold the Purchaser and the Company harmless against the full amount
of any adjustment which may be made as a result of such audit or proceeding that
relates to periods ending on or before the Closing Date (or, in the case of any
taxable year that includes the Closing Date, against an adjustment allocable
under Section 7.01(b) to the portion of such year ending on or before the
Closing Date) and is subject to indemnification under Section 7.01(a), the
Sellers shall have the right at their expense to participate in and control the
conduct of such audit or proceeding but only to the extent that such audit or
proceeding relates solely to a potential adjustment for which the Sellers have
acknowledged their liability; the Purchaser also may participate in any such
audit or proceeding and, if the Sellers do not assume the defense of any such
audit or proceeding, the Purchaser may defend the same in such manner as it may
deem appropriate, including, but not limited to, settling such audit or
proceeding after giving five days' prior written notice to the Sellers setting
forth the terms and conditions of settlement. In the event that issues relating
to a potential adjustment for which the Sellers have acknowledged their
liability are required to be dealt with in the same proceeding as separate
issues relating to a potential adjustment for which the Purchaser would be
liable, the Purchaser shall have the right, at its expense, to control the audit
or proceeding with respect to the latter issues.
(c) With respect to issues relating to a potential adjustment
for which both the Sellers (as evidenced by its acknowledgment under this
Section 7.04) and the Purchaser or the Company could be liable, (i) each party
may participate in the audit or proceeding, and (ii) the audit or proceeding
shall be controlled by that party which would bear the burden of the greater
portion of the sum of the adjustment and any corresponding adjustments that may
reasonably be anticipated for future Tax periods. The principle set forth in the
immediately preceding sentence shall govern also for purposes of deciding any
issue that must be decided jointly (including, without limitation, choice of
judicial forum) in situations in which separate issues are otherwise controlled
under this Article VII by the Purchaser and the Sellers.
(d) Neither the Purchaser nor any Seller shall enter into any
compromise or agree to settle any claim pursuant to any Tax audit or proceeding
which would adversely affect the other party for such year or a subsequent year
without the written consent of the other party, which consent may not be
unreasonably withheld. The Purchaser and the Sellers agree to
48
cooperate, and the Purchaser agrees to cause the Company to cooperate, in the
defense against or compromise of any claim in any audit or proceeding.
SECTION 7.05. Time of Payment. Payment by the Sellers of any
amounts due under this Article VII in respect of Taxes shall be made (i) at
least three Business Days before the due date of the applicable estimated or
final Return required to be filed by the Purchaser on which is required to be
reported income for a period ending after the Closing Date for which any Seller
is responsible under Sections 7.01(a) and 7.01(b) without regard to whether the
Return shows overall net income or loss for such period, and (ii) within three
Business Days following an agreement between the Sellers and the Purchaser that
an indemnity amount is payable, an assessment of a Tax by a taxing authority, or
a "determination" as defined in Section 1313(a) of the Code. If liability under
this Article VII is in respect of costs or expenses other than Taxes, payment by
any Seller of any amounts due under this Article VII shall be made within five
Business Days after the date on which the Sellers have been notified by the
Purchaser that the Sellers have a liability for a determinable amount under this
Article VII and is provided with calculations or other materials supporting such
liability.
SECTION 7.06. Cooperation and Exchange of Information. Upon
the terms set forth in Section 6.02 of this Agreement, the Sellers and the
Purchaser will provide each other with such cooperation and information as
either of them reasonably may request of the other in filing any Return, amended
Return or claim for refund, determining a liability for Taxes or a right to a
refund of Taxes, participating in or conducting any audit or other proceeding in
respect of Taxes or making representations to or furnishing information to
parties subsequently desiring to purchase any of the Company or any part of the
Business from the Purchaser. Such cooperation and information shall include
providing copies of relevant Returns or portions thereof, together with
accompanying schedules, related work papers and documents relating to rulings or
other determinations by Tax authorities. The Sellers shall make their employees
available on a basis mutually convenient to both parties to provide explanations
of any documents or information provided hereunder. Each of the Sellers and the
Purchaser shall retain all Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Company for each
taxable period first ending after the Closing Date and for all prior taxable
periods until the later of (i) the expiration of the statute of limitations of
the taxable periods to which such Returns and other documents relate, without
regard to extensions except to the extent notified by the other party in writing
of such extensions for the respective Tax periods, or (ii) six years following
the due date (without extension) for such Returns. Any information obtained
under this Section 7.06 shall be kept confidential in accordance with Section
6.03 except as may be otherwise necessary in connection with the filing of
Returns or claims for refund or in conducting an audit or other proceeding.
SECTION 7.07. Section 338(h)(10) Election. (a) At the
Purchaser's request, the Sellers agree to make an election under Section
338(h)(10) of the Code (the "Election") with respect to the purchase of the
Shares, and to cooperate with the Purchaser in the preparation of
49
the Election, jointly file such Election with the Purchaser on a timely basis
and comply with the rules and regulations applicable to such Election. These
principles also shall apply to any similar election as may be available under
applicable state or local laws and specified by the Purchaser.
(b) For purposes of making such Election, the Purchaser shall
propose a valuation of the tangible and intangible assets of the Company and
shall provide the Sellers on or prior to the Closing Date with a proposed
allocation of the Purchaser's "adjusted grossed-up basis" in the Shares (within
the meaning of the Regulations under Section 338 of the Code) to such assets
(the "Allocation") substantially in the form of Exhibit 7.07(b). Upon agreement
among the parties, the Allocation shall be binding upon the Purchaser and the
Sellers for purposes of allocating the "deemed selling price" (within the
meaning of the Regulations) among the assets of the Company. The Sellers and the
Purchaser agree to file all federal, state, local and foreign tax returns in a
manner consistent with the Allocation. The Sellers agree that they will be
solely responsible for, and shall timely pay, any and all Taxes which arise as a
result of the filing of the Election and any similar state or local election
(except sales taxes).
SECTION 7.08. Miscellaneous. (a) The Sellers and the Purchaser
agree to treat all payments made by either of them to or for the benefit of the
other (including any payments to the Company) under this Article VII, under
other indemnity provisions of this Agreement and for any misrepresentations or
breaches of warranties or covenants as adjustments to the Purchase Price or as
capital contributions for Tax purposes and that such treatment shall govern for
purposes hereof except to the extent that the Laws of a particular jurisdiction
provide otherwise, in which case such payments shall be made in an amount
sufficient to indemnify the relevant party on an after-Tax basis.
(b) Notwithstanding any provision in this Agreement to the
contrary, the obligations of the Sellers to indemnify and hold harmless the
Purchaser and the Company pursuant to this Article VII shall terminate at the
close of business on the 120th day following the expiration of the applicable
statute of limitations with respect to the Tax liabilities in question (giving
effect to any waiver, mitigation or extension thereof).
(c) From and after the date of this Agreement, no Seller shall
without the prior written consent of the Purchaser (which may, in its sole and
absolute discretion, withhold such consent) make, or cause or permit to be made,
any material Tax election that would affect the Company.
(d) For purposes of this Article VII, "the Purchaser" and
"each Seller", respectively, shall include each member of the affiliated group
of corporations of which it is or becomes a member (other than the Company,
except to the extent expressly referenced).
(e) The Purchaser or the Sellers shall be entitled to recover
professional fees and related costs that they may reasonably incur to enforce
the provisions of this Article VII.
50
(f) This Article VII (and not Article IX) shall be the sole
provision for indemnification against breach of representations, warranties,
covenants and agreements regarding Taxes.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to the Obligations of Each Party. The
obligations of each party to consummate the transactions contemplated by this
Agreement are subject to the satisfaction, at or prior to the Closing, of each
of the following conditions:
(a) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the Shares contemplated
hereby shall have expired or been terminated;
(b) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law or Governmental Order
which is then in effect and has the effect of making the transactions
contemplated by this Agreement illegal or otherwise prohibiting its
consummation; and
(c) Apex Merger. The Apex Merger Agreement shall be in full
force and effect and all conditions precedent to the consummation of
the transactions contemplated thereunder shall have been satisfied or
waived by the parties thereto, and the merger contemplated thereby
shall be consummated simultaneously with the Closing.
SECTION 8.02. Conditions to Obligations of the Sellers. The
obligations of the Sellers to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Purchaser contained in this
Agreement shall have been true and correct when made and shall be true
and correct in all material respects as of the Closing, with the same
force and effect as if made as of the Closing Date, other than such
representations and warranties as are made as of another date, which
shall be true and correct as of such date (provided, however, that if
any portion of any representation or warranty is already qualified by
materiality, for purposes of determining whether this Section 8.02(a)
has been satisfied with respect to such portion of such representation
or warranty, such portion of such representation or warranty as so
qualified must be true and correct in all respects), and the covenants
and agreements contained in this Agreement to be complied with by the
Purchaser on or before the Closing shall have been complied
51
with in all material respects, and the Sellers shall have received a
certificate from the Purchaser to such effect signed by a duly
authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been
commenced by or before any Governmental Authority against any of the
Sellers or the Purchaser, seeking to restrain or materially and
adversely alter the transactions contemplated by this Agreement which,
in the reasonable, good faith determination of the Sellers, is likely
to render it impossible or unlawful to consummate such transactions;
provided, however, that the provisions of this Section 8.02(b) shall
not apply if any of the Sellers has directly or indirectly solicited
or encouraged any such Action;
(c) Resolutions. The Sellers shall have received a true and
complete copy, certified by the Secretary or an Assistant Secretary of
the Purchaser, of the resolutions duly and validly adopted by the Board
of Directors of the Purchaser evidencing its authorization of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(d) Incumbency Certificate. The Sellers shall have received a
certificate of the Secretary or an Assistant Secretary of the Purchaser
certifying the names and signatures of the officers of the Purchaser
authorized to sign this Agreement and the other documents to be
delivered hereunder;
(e) Registration Rights Agreement. The Registration Rights
Agreement, in substantially the form attached hereto as Exhibit
8.02(e), shall have been executed and delivered by the Purchaser; and
(f) Legal Opinion. The Sellers shall have received a legal
opinion, addressed to the Sellers and dated the Closing Date
substantially in the form of Exhibit 8.02(f).
SECTION 8.03. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Sellers contained in this
Agreement shall have been true and correct when made and shall be true
and correct in all material respects as of the Closing with the same
force and effect as if made as of the Closing, other than such
representations and warranties as are made as of another date, which
shall be true and correct as of such date (provided, however, that if
any portion of any representation or warranty is already qualified by
materiality, for purposes of determining whether this Section 8.03(a)
has been satisfied with respect to such portion of such representation
or warranty, such portion of such representation or warranty as so
qualified must be true and correct in all
52
respects), and the covenants and agreements contained in this
Agreement to be complied with in all material respects by the Sellers
on or before the Closing shall have been complied with, and the
Purchaser shall have received a certificate of each of the Sellers to
such effect;
(b) No Proceeding or Litigation. No Action shall have been
commenced or threatened by or before any Governmental Authority against
any Seller or the Purchaser, seeking to restrain or materially and
adversely alter the transactions contemplated by this Agreement which
the Purchaser believes, in its reasonable, good faith determination, is
likely to render it impossible or unlawful to consummate the
transactions contemplated by this Agreement or which could have a
Material Adverse Effect or otherwise render inadvisable, in the sole
and absolute discretion of the Purchaser, the consummation of the
transactions contemplated by this Agreement; provided, however, that
the provisions of this Section 8.03(b) shall not apply if the Purchaser
has solicited or encouraged any such Action;
(c) Legal Opinion. The Purchaser shall have received legal
opinions each addressed to the Purchaser and dated the Closing Date,
substantially in the form of Exhibits 8.03(c)(i) and 8.03(c)(ii);
(d) Consents and Approvals. The Purchaser and the Sellers
shall have received, each in form and substance satisfactory to the
Purchaser in its sole and absolute discretion, all authorizations,
consents, orders and approvals of all Governmental Authorities and
officials and all third party consents and estoppel certificates which
the Purchaser in its sole and absolute discretion deems necessary or
desirable for the consummation of the transactions contemplated by this
Agreement;
(e) Resignations of the Company's Directors and Officers. The
Purchaser shall have received the resignations, effective as of the
Closing, of all the directors and officers of the Company, except for
such persons as shall have been designated in writing prior to the
Closing by the Purchaser to the Sellers;
(f) Organizational Documents. The Purchaser shall have
received a copy of (i) the Certificates of Incorporation, as amended,
of the Company, certified by the secretary of state of Kentucky, as of
a date not earlier than five Business Days prior to the Closing Date
and accompanied by a certificate of the Secretary or Assistant
Secretary of the Company, dated as of the Closing Date, stating that no
amendments have been made to such Certificate of Incorporation (or
similar organizational documents) since such date, and (ii) the By-laws
(or similar organizational documents) of the Company, certified by the
Secretary or Assistant Secretary of the Company;
53
(g) Minute Books. The Purchaser shall have received a copy of
the minute books and stock register of the Company, certified by the
Secretary or Assistant Secretary as of the Closing Date;
(h) Good Standing; Qualification to Do Business. The Purchaser
shall have received good standing certificates for the Company from the
secretary of state of the jurisdiction in which each such entity is
incorporated or organized and from the secretary of state in each other
jurisdiction in which the properties owned or leased by any of the
Company, or the operation of its business in such jurisdiction,
requires the Company to qualify to do business as a foreign
corporation, in each case dated as of a date not earlier than five
Business Days prior to the Closing Date and accompanied by bring-down
telegrams dated the Closing Date;
(i) Release of Indemnity Obligations. The Purchaser shall have
received the general release and discharge from each of the Sellers
referred to in Section 6.10 in form and substance satisfactory to the
Purchaser in its sole and absolute discretion;
(j) Due Diligence. The Purchaser shall have completed all its
business, legal, accounting and environmental due diligence with
respect to the Company and shall, in its reasonable discretion, be
satisfied with the results thereof;
(k) No Material Adverse Effect. No event or events shall have
occurred, or be reasonably likely to occur, which, individually or in
the aggregate, have, or could have, a Material Adverse Effect;
(l) Escrow Agreement. Each of the Sellers shall have executed
the Escrow Agreement in substantially the form attached hereto as
Exhibit 2.06.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties. The
representations and warranties of the Sellers contained in this Agreement, and
all statements contained in this Agreement, the Exhibits to this Agreement, the
Disclosure Schedule and any certificate, Financial Statement or report or other
document delivered pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement (collectively, the "Acquisition
Documents"), shall survive the Closing until October 1, 2000; provided, however,
that (a) the representations and warranties dealing with Tax matters shall
survive as provided in Section 7.08(b), (b) insofar as any claim is made by the
Purchaser for the breach of any representation or warranty of any of the Sellers
contained herein, which claim arises out of
54
allegations of personal injury or property damage suffered by any third party on
or prior to the Closing Date, or activities or omissions that occur, on or prior
to the Closing Date, such representations and warranties shall, for purposes of
such claim by the Purchaser, survive until thirty calendar days after the
expiration of the applicable statute of limitations governing such claims and
(c) insofar as any claim is made by the Purchaser for the breach of any
representation or warranty of any of the Sellers contained herein relating to
environmental matters, such representation and warranty shall, for purposes of
such claims by the Purchaser, survive the Closing Date until the fifth
anniversary of the Closing Date. Neither the period of survival nor the
liability of the Sellers with respect to the Sellers' representations and
warranties shall be reduced by any investigation made at any time by or on
behalf of the Purchaser. If written notice of a claim has been given prior to
the expiration of the applicable representations and warranties by a party to
another party, then the relevant representations and warranties shall survive as
to such claim, until such claim has been finally resolved.
SECTION 9.02. Indemnification. (a) The Purchaser, its
Affiliates and their successors and assigns, and the officers, directors,
employees and agents of the Purchaser, its Affiliates (including without
limitation, the Company) and their successors and assigns shall be indemnified
and held harmless by the Sellers, jointly and severally, for any and all
Liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, reasonable attorneys'
and consultants' fees and expenses) actually suffered or incurred by them
(including, without limitation, any Action brought or otherwise initiated by any
of them) (hereinafter a "Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made by any
Seller contained in the Acquisition Documents; or
(ii) the breach of any covenant or agreement by any Seller
contained in the Acquisition Documents; or
(iii) Liabilities of the Company not reflected on the
Reference Balance Sheet, whether arising before or after the Closing
Date, arising from or relating to the ownership or actions or inactions
of the Company or the conduct of their respective businesses prior to
the Closing; or
(iv) any and all Losses suffered or incurred by the Purchaser,
any of its Affiliates or the Company by reason of or in connection with
any claim or cause of action of any third party to the extent arising
out of any action, inaction, event, condition, liability or obligation
of any of the Sellers occurring or existing prior to the Closing; or
(v) (A) any and all Remedial Actions performed at any time
relating to any Release of Hazardous Materials into the Environment or
on or about the Real Property prior to the Closing to the extent any
such Remedial Action is required under any Environmental Law or by any
Governmental Authority or is necessary to prevent or abate
55
a significant risk to human health or the environment; (B) any and all
Environmental Claims arising before the fifth anniversary of the
Closing Date that relate to the business or the operation of the
Company prior to the Closing; or (C) any and all noncompliances with or
violations of any applicable Environmental Law or Environmental Permit
by the Company prior to the Closing;
provided, however, with respect to each Seller, such Seller shall have no
obligation under this Section 9.02 for breaches of another Seller's
representations and warranty contained in Article IV.
(b) Each of the Sellers, their successors and assigns and
agents of the Sellers and their successors and assigns shall be indemnified and
held harmless by the Purchaser for any and all Losses arising from any claim or
cause of action of any third party to the extent arising out of the Purchaser's
use of the Assets or conduct of the Business following the Closing.
(c) An indemnified party shall give the indemnifying party
notice of any matter which an indemnified party has determined has given or
could give rise to a right of indemnification under this Agreement, within 60
days of such determination, stating the amount of the Loss, if known, and method
of computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and Liabilities of the indemnifying party under this
Article IX with respect to Losses arising from claims of any third party which
are subject to the indemnification provided for in this Article IX ("Third Party
Claims") shall be governed by and contingent upon the following additional terms
and conditions: if an indemnified party shall receive notice of any Third Party
Claim, the indemnified party shall give the indemnifying party notice of such
Third Party Claim within 30 days of the receipt by the indemnified party of such
notice; provided, however, that the failure to provide such notice shall not
release the indemnifying party from any of its obligations under this Article IX
except to the extent the indemnifying party is materially prejudiced by such
failure. If the indemnifying party acknowledges in writing its obligation to
indemnify the indemnified party hereunder against any Losses that may result
from such Third Party Claim, then the indemnifying party shall be entitled to
assume and control the defense of such Third Party Claim at its expense and
through counsel of its choice if it gives notice of its intention to do so to
the indemnified party within ten days of the receipt of such notice from the
indemnified party; provided, however, that if there exists or is reasonably
likely to exist a conflict of interest that would make it inappropriate in the
judgment of the indemnified party, in its sole and absolute discretion, for the
same counsel to represent both the indemnified party and the indemnifying party,
then the indemnified party shall be entitled to retain its own counsel, in each
jurisdiction for which the indemnified party determines counsel is required, at
the expense of the indemnifying party. In the event the indemnifying party
exercises the right to undertake any such defense against any such Third Party
Claim as provided above, the indemnified party shall cooperate with the
indemnifying party in such defense and make available to the indemnifying party,
at the indemnifying party's expense, all witnesses, pertinent records, materials
and information in the indemnified party's possession or under the indemnified
party's control
56
relating thereto as is reasonably required by the indemnifying party. Similarly,
in the event the indemnified party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the indemnifying party shall
cooperate with the indemnified party in such defense and make available to the
indemnified party, at the indemnifying party's expense, all such witnesses,
records, materials and information in the indemnifying party's possession or
under the indemnifying party's control relating thereto as is reasonably
required by the indemnified party. No such Third Party Claim may be settled by
any indemnifying party without the prior written consent of the indemnified
party.
SECTION 9.03. Tax Matters. Article VII (and not this Article
IX) shall be the sole provision for indemnification against breach of
representations, warranties, covenants and agreements regarding Tax matters,
including the survival of representations and warranties contained in Section
3.25 of this Agreement and any other representations and warranties relating to
Taxes contained in any of the Acquisition Documents.
SECTION 9.04. Limits on Indemnification. The indemnification
obligations of the Sellers pursuant to Section 9.02(a) shall not be effective
until the aggregate dollar amount of all Losses which would otherwise be
indemnifiable pursuant to Section 9.02(a) exceeds $317,500 (the "Threshold
Amount"), provided, however, that if the Threshold Amount is exceeded, the
Sellers shall be liable for all Losses, including the Threshold Amount.
Notwithstanding anything to the contrary contained in this Agreement, the
maximum amount of indemnifiable Losses which may be recovered from the Sellers
arising out of or resulting from the causes enumerated in Section 9.02(a) of
this Agreement shall be an amount equal to $3,175,000 in the aggregate. In
addition, the indemnification obligations of the Sellers shall be satisfied
first from the Escrow Shares, in accordance with the Escrow Agreement.
SECTION 9.05. Exclusive Remedy. Except for claims related to a
wilful or intentional breach of any provision of this Agreement or fraud by any
of the parties hereto, the rights of indemnified parties to indemnification
under this Article IX shall constitute the sole and exclusive remedies of the
indemnified parties from and after the Closing Date with respect to the matters
in respect of which indemnification may be provided for hereunder; provided,
however, nothing in this Article IX shall be deemed to preclude an indemnified
party from seeking equitable relief for any failure of any party hereto to
perform any covenant or agreement required to be performed by any party hereto.
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated
at any time prior to the Closing:
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(a) by the Purchaser if, between the date hereof and the time
scheduled for the Closing: (i) an event or condition occurs that has
resulted in or that may be reasonably expected to result in a Material
Adverse Effect, (ii) any representation or warranty of any of the
Sellers contained in this Agreement shall not have been true and
correct in all material respects when made, (iii) any of the Sellers
shall not have complied with any covenant or agreement to be complied
with by it and contained in this Agreement in all material respects;
or (iv) any of the Sellers or the Company makes a general assignment
for the benefit of creditors, or any proceeding shall be instituted by
or against any such Seller or the Company seeking to adjudicate any of
them a bankrupt or insolvent, or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or
composition of its debts under any Law relating to bankruptcy,
insolvency or reorganization; or
(b) by the Sellers or the Purchaser if the Closing shall not
have occurred by April 30, 1999; provided, however, that the right to
terminate this Agreement under this Section 10.01(b) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement shall have been the cause of, or shall have resulted in,
the failure of the Closing to occur on or prior to such date; or
(c) by either the Purchaser or the Sellers in the event that
any Governmental Authority shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
nonappealable; or
(d) by the Sellers upon written notice to the Purchaser, if
the closing price of Purchaser Common Stock on the trading day prior to
the Initial Closing Date is less than the Minimum Share Value provided
that such termination right shall only be effective if the closing
price of Purchaser Common Stock is less than the Minimum Share Value on
each of the five Business Days beginning with and including the Initial
Closing Date (such five-day period, the "Waiting Period"), provided
further that such notice of termination shall be deemed revoked by the
Sellers on the first day (the "Seller Termination Revocation Date")
during the Waiting Period that the closing price of Purchaser Common
Stock is equal to or greater than the Minimum Share Value; or
(e) by the Purchaser upon written notice to the Sellers, if
the closing price of Purchaser Common Stock on the trading day prior to
the Initial Closing Date is greater than the Maximum Share Value
provided that such termination right shall only be effective if the
closing price of Purchaser Common Stock is greater than the Maximum
Share Value on each of the five Business Days during the Waiting
Period, provided further that such notice of termination shall be
deemed revoked by the Purchaser on the first day (the "Purchaser
Termination Revocation Date") during the Waiting Period that
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the closing price of Purchaser Common Stock is less than or equal to
the Maximum Share Value; or
(f) by the mutual written consent of the Sellers and the
Purchaser.
SECTION 10.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 10.01, this Agreement shall
forthwith become void and there shall be no liability on the part of either
party hereto except (i) as set forth in Section 11.01 and (ii) that nothing
herein shall relieve any party from liability for any breach of this Agreement.
SECTION 10.03. Waiver. Either of the Purchaser, on one hand,
and the Sellers, on the other hand, may (a) extend the time for the performance
of any of the obligations or other acts of the other party, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered by the other party pursuant hereto or (c)
waive compliance with any of the agreements or conditions of the other party
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party to be bound thereby. Any waiver
of any term or condition shall not be construed as a waiver of any subsequent
breach or a subsequent waiver of the same term or condition, or a waiver of any
other term or condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any of such rights.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses. All costs and expenses, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred.
SECTION 11.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 11.02):
if to the Sellers, to the Sellers' Representative:
Ervin Cable Construction, Inc.
P.O. Box 10
450 Pryor Boulevard
59
Sturgis, Kentucky 42459
Telecopy: (502) 333-3300
Attention: Mr. Gary Ervin
with a copy to:
White and Williams LLP
1800 One Liberty Place
Philadelphia, Pennsylvania 19103
Telecopy: (215) 864-7123
Attention: M. Melvin Shralow, Esquire
if to the Purchaser:
Dycom Industries, Inc.
First Union Center,
Suite 600
4440 PGA Boulevard
Palm Beach Gardens, Florida 33410-6542
Telecopier: (561) 627-7709
Attention: Mr. Steven Nielsen
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier: (212) 848-7179
Attention: Richard B. Vilsoet, Esq.
SECTION 11.03. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 11.04. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. 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 in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
60
SECTION 11.05. Entire Agreement. This Agreement, the Escrow
Agreement, the Registration Rights Agreement and the Confidentiality Agreement,
the Sellers and the Purchaser, constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, between the Sellers and the
Purchaser with respect to the subject matter hereof and thereof.
SECTION 11.06. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Sellers and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Sellers or the Purchaser).
SECTION 11.07. No Third Party Beneficiaries. Except for the
provisions of Article IX relating to indemnified parties, this Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 11.08. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Sellers and the Purchaser or (b) by a waiver in accordance with Section 10.03.
SECTION 11.09. Miscellaneous. (a) Each of the Sellers hereby
(i) appoints and authorizes Gary E. Ervin to act as, and Gary E. Ervin by his
signature on the designated signature page of this Agreement agrees to act as,
the agent for purposes of Article II and Article VIII of this Agreement and (ii)
appoints and authorizes Gary E. Ervin to act as, and Gary E. Ervin by his
signature on the designated signature page of this Agreement agrees to act as,
the agent for all other matters hereunder and under the other Acquisition
Documents for the benefit of all the Sellers for the receipt and for the giving
of any notice specified in this Agreement or any other Acquisition Document to
be given or received, as the case may be, by the Sellers' Representative (in
such capacity, the "Sellers' Representative"). The Purchaser and the Escrow
Agent may each conclusively rely on the authority of the Sellers' Representative
to act as agent for each of the Sellers for the receipt or giving of any notice
specified in this Agreement or any other Acquisition Document to be given or
received, as the case may be, by the Sellers' Representative, until such time as
the Purchaser or the Escrow Agent, as the case may be, shall have received
written notice from the Sellers' Representative of his, her or its resignation
and the appointment of a substitute agent. Each Seller agrees that, should the
Sellers' Representative resign or be unable to serve, it shall immediately
select jointly with the other Sellers a single substitute agent for the giving
and receiving of notices, whose appointment shall be effective on the date of
the prior agent's resignation.
(b) The Sellers' Representative accepts his or her appointment
and, notwithstanding any provision to the contrary contained in any Acquisition
Document, it is agreed that the Sellers' Representative shall not have any
duties or responsibilities to the Purchaser, except those expressly set forth
herein and therein, nor shall the Sellers'
61
Representative have or be deemed to have any fiduciary relationship with any
Seller as a result of his or her appointment as Sellers' Representative, and no
implied covenants, functions, responsibilities, duties, obligation or
liabilities shall be read into any Acquisition Document or otherwise exist
against the Sellers' Representative.
SECTION 11.10. Governing Law. This Agreement shall be governed
by the laws of the State of New York.
SECTION 11.11. Jurisdiction and Service of Process. Any legal
action or proceeding with respect to this Agreement shall be brought in the
courts of the State of Delaware located in Wilmington, or in the United States
District Court for the District of Delaware. By execution and delivery of this
Agreement, each of the parties hereto accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each of the parties hereto irrevocably consents to the service of
process of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by certified mail, postage prepaid, to the party
at its address set forth in Section 11.02 hereof.
SECTION 11.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 11.13. 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 at law or equity.
SECTION 11.14. Waiver of Jury Trial. THE PURCHASER AND EACH OF
THE SELLERS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PURCHASER AND
THE SELLERS IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
THEREOF.
IN WITNESS WHEREOF, each of the Sellers and the Purchaser (by
its officers thereunto duly authorized) have caused this Agreement to be
executed as of the date first written above.
/s/ GARY E. ERVIN
-----------------------------
GARY E. ERVIN,
in his individual capacity
/s/ TIMOTHY W. ERVIN
-----------------------------
TIMOTHY W. ERVIN,
in his individual capacity
/s/ ROBERT W. ERVIN
-----------------------------
ROBERT W. ERVIN,
in his individual capacity
DYCOM INDUSTRIES, INC.
By: /s/ Thomas R. Pledger
---------------------------------
Name: Thomas R. Pledger
Title: Executive Chairman