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AGREEMENT AND PLAN OF MERGER
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Among
APEX DIGITAL TV, INC.,
THE STOCKHOLDERS OF APEX DIGITAL TV, INC.,
DYCOM ACQUISITION CORPORATION III
and
DYCOM INDUSTRIES, INC.
Dated as of March 12, 1999
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DISCLOSURE SCHEDULE
The Disclosure Schedule shall include the following Sections:
4.02 Organization and Qualification of the Company
4.04 Ownership of Shares
4.06 No Conflict
4.07 Governmental Consents and Approvals
4.08 Reference Balance Sheet
4.09 No Undisclosed Liabilities
4.10 Receivables
4.11 Inventories
4.12 Conduct in the Ordinary Course; Absence of Certain Changes, Events and
Conditions
4.13 Litigation
4.14 Certain Interests
4.15 Compliance with Laws
4.16 Environmental Matters
4.17 Material Contracts
4.18 Intellectual Property
4.19 Real Property
4.19(a) for Owned Real Property
4.19(b) for Leased Real Property
4.20 Tangible Personal Property
4.21 Assets
4.22 Customers
4.23 Employee Benefit Matters
4.24 Labor Matters
4.25 Key Employees
4.26 Taxes
4.27 Insurance
5.02 Ownership
7.01 Conduct of Business by the Company Pending the Merger
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms...................................................1
ARTICLE II
THE MERGER
2.01. The Merger.............................................................10
2.02. Effective Time; Closing................................................10
2.03. Effect of the Merger...................................................10
2.04. Certificate of Incorporation; By-Laws..................................11
2.05. Directors and Officers.................................................11
2.06. Delivery of Escrow Shares by the Stockholders..........................11
2.07. Escrow Agreement.......................................................11
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
3.01. Conversion of Securities...............................................11
3.02. Exchange of Certificates...............................................12
3.03. Stock Transfer Books...................................................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
4.01. Authority Relative to this Agreement...................................13
4.02. Organization and Qualification; Absence of Subsidiaries................13
4.03. Certificate of Incorporation and By-Laws...............................13
4.04. Capitalization; Ownership of Shares....................................14
4.05. Corporate Books and Records............................................14
4.06. No Conflict............................................................14
4.07. Governmental Consents and Approvals....................................15
4.08. Financial Information, Books and Records...............................15
4.09. No Undisclosed Liabilities.............................................16
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4.10. Receivables............................................................16
4.11. Inventories............................................................16
4.12. Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions...............................................16
4.13. Litigation.............................................................19
4.14. Certain Interests......................................................20
4.15. Compliance with Laws...................................................20
4.16. Environmental Matters..................................................21
4.17. Material Contracts.....................................................22
4.18. Intellectual Property..................................................23
4.19. Real Property..........................................................23
4.20. Tangible Personal Property.............................................26
4.21. Assets.................................................................27
4.22. Customers..............................................................28
4.23. Employee Benefit Matters...............................................28
4.24. Labor Matters..........................................................31
4.25. Key Employees..........................................................32
4.26. Taxes..................................................................32
4.27. Insurance..............................................................33
4.28. Full Disclosure........................................................34
4.29. Brokers................................................................34
4.30. Vote Required..........................................................34
ARTICLE V
ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
5.01. Authority of the Stockholders..........................................35
5.02. Ownership..............................................................35
5.03. Private Placement......................................................36
5.04. Full Disclosure........................................................36
5.05. Brokers................................................................36
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
6.01. Organization and Authority.............................................37
6.02. No Conflict............................................................37
6.03. Governmental Consents and Approvals....................................37
6.04. Litigation.............................................................38
6.05. Capitalization.........................................................38
6.06. SEC Filings; Financial Statements......................................38
6.07. Brokers................................................................39
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ARTICLE VII
ADDITIONAL AGREEMENTS
7.01. Conduct of Business by the Company Pending the Merger..................39
7.02. Access to Information..................................................40
7.03. Confidentiality........................................................40
7.04. Regulatory and Other Authorizations; Notices and Consents..............42
7.05. No Solicitation or Negotiation.........................................43
7.06. Notification of Certain Matters........................................44
7.07. Non-Competition........................................................44
7.08. Public Announcements...................................................45
7.09. Resale Restrictions....................................................45
7.10. Release of Indemnity Obligations.......................................46
7.11. Plan of Reorganization.................................................46
7.12. Stockholder Vote.......................................................46
7.13. Further Action.........................................................46
7.14. Stock Splits...........................................................47
7.15. Disclosure Schedule....................................................47
ARTICLE VIII
TAX MATTERS
8.01. Indemnity..............................................................47
8.02. Returns and Payments...................................................48
8.03. Refunds................................................................48
8.04. Contests...............................................................49
8.05. Time of Payment........................................................50
8.06. Cooperation and Exchange of Information................................50
8.07. Miscellaneous..........................................................51
ARTICLE IX
CONDITIONS TO THE MERGER
9.01. Conditions to the Obligations of Each Party............................51
9.02. Conditions to Obligations of the Company...............................52
9.03. Conditions to Obligations of Parent and Merger Sub.....................53
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ARTICLE X
INDEMNIFICATION
10.01. Survival of Representations and Warranties............................55
10.02. Indemnification.......................................................56
10.03. Tax Matters...........................................................58
10.04. Limits on Indemnification.............................................58
10.05. Exclusive Remedy......................................................58
ARTICLE XI
TERMINATION AND WAIVER
11.01. Termination...........................................................58
11.02. Effect of Termination.................................................60
11.03. Waiver................................................................60
ARTICLE XII
GENERAL PROVISIONS
12.01. Expenses..............................................................60
12.02. Notices...............................................................60
12.03. Headings..............................................................61
12.04. Severability..........................................................61
12.05. Entire Agreement......................................................62
12.06. Assignment............................................................62
12.07. No Third Party Beneficiaries..........................................62
12.08. Amendment.............................................................62
12.09. Miscellaneous.........................................................62
12.10. Governing Law.........................................................63
12.11. Jurisdiction and Service of Process...................................63
12.12. Counterparts..........................................................63
12.13. Specific Performance..................................................63
12.14. Waiver of Jury Trial..................................................63
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SCHEDULES
Disclosure Schedule
EXHIBITS
Exhibit 2.07 Form of Escrow Agreement
Exhibit 9.02(e) Form of Registration Rights Agreement
Exhibit 9.02(f) Form of Opinion of Parent's Counsel
Exhibit 9.03(c)(i) Form of Opinion of White and Williams LLP
Exhibit 9.03(c)(ii) Form of Opinion of Kentucky Counsel of the Company and
the Stockholders
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AGREEMENT AND PLAN OF MERGER dated as of March 12, 1999 (this
"Agreement") among DYCOM INDUSTRIES, INC., a Florida corporation ("Parent"),
DYCOM ACQUISITION CORPORATION III, a Kentucky corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), APEX DIGITAL TV, INC., a Kentucky
corporation (the "Company"), and Gary E. Ervin, Timothy W. Ervin, Robert W.
Ervin, Keith E. Walker, Robert J. Chastain, Charles T. McElroy and Penny J. Ward
(collectively, the "Stockholders").
WITNESSETH:
WHEREAS, Merger Sub, upon the terms and subject to the
conditions of this Agreement and in accordance with the GBCL (as defined
herein), will merge with and into the Company (the "Merger");
WHEREAS, the Board of Directors of the Company (i) has
determined that the Merger is in the best interests of the Company and the
Stockholders and approved and adopted this Agreement and the Merger and (ii) has
recommended approval and adoption of this Agreement and approval of the Merger
by the Stockholders;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a tax free reorganization under the provisions of
Section 368(a) of the Code (as defined below); and
WHEREAS, certain of the Stockholders are concurrently entering
into a stock purchase agreement dated as of the date hereof (the "Ervin Stock
Purchase Agreement") providing for the purchase of the outstanding shares of
Ervin Cable Construction, Inc. ("ECC") by Parent.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the parties hereto 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:
"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
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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 Person having a relationship with
such Person by blood, marriage or adoption not more remote than first cousin.
"Agreement" or "this Agreement" means this Agreement and Plan
of Merger, dated as of March 12, 1999, among Parent, Merger Sub, the Company and
the Stockholders (including the Exhibits and the Disclosure Schedule) and all
amendments hereto made in accordance with the provisions of Section 12.08
hereto.
"Articles of Merger" has the meaning set forth in Section
2.02.
"Assets" has the meaning specified in Section 4.21.
"Business" means direct broadcast satellite installations
consisting of placement of satellite dish, premise wiring of coaxial and
telephone cables and activation of satellite receiver, service and trouble
repair, direct and telemarketing sales and CATV installation of primary cable
service, set top converters, programming filters and residential service lines.
"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.
"Certificates" has the meaning set forth in Section 3.02(a).
"Closing" has the meaning set forth in Section 2.02.
"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.
"Company" has the meaning specified in the preamble to this
Agreement.
"Company Common Stock" means the common stock, no par value
per share of the Company.
"Company Intellectual Property" has the meaning set forth in
Section 4.18.
"Confidentiality Agreement" means the Confidentiality
Agreement, dated as of March 1, 1999, among the Company, the Stockholders, ECC
and Parent.
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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.
"Conversion Ratio" has the meaning set forth in Section
3.01(a).
"Disclosure Schedule" means the Disclosure Schedule delivered
to Parent by the Company and the Stockholders pursuant to Section 7.15.
"due inquiry" means due inquiry among the officers, executives
and state and regional managers of the Company.
"ECC" has the meaning set forth in the recitals to this
Agreement.
"Effective Time" means the date and time of the filing of the
Articles of Merger with the Secretary of the State of Kentucky (or such later
time as may be agreed in writing by each of the parties hereto and specified in
the Articles of Merger).
"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.
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"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 4.23(a).
"Ervin Stock Purchase Agreement " has the meaning specified in
the recitals to this Agreement.
"Escrow Agent" means Wilmington Trust Company.
"Escrow Agreement" has the meaning specified in Section 2.07.
"Escrow Shares" has the meaning specified in Section 2.06.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Final Closing Date" has the meaning specified in Section
2.02.
"Financial Statements" has the meaning specified in Section
4.08(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.
5
"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,
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 specified in Section
2.02.
"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,
6
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.
"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 Effective
Time 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.
"Licensed Intellectual Property" means all Intellectual
Property licensed or sublicensed to the Company from a third party.
"Loss" has the meaning specified in Section 10.02(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 Parent or the Company to operate or conduct the Business in the
manner in which it is currently operated or conducted by the Company.
NYDOCS01/581714 12
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"Material Contracts" has the meaning specified in Section
4.17(a).
"Maximum Amount" means $58,666.67.
"Maximum Share Value" means $42.625.
"Merger" has the meaning set forth in the recitals to this
Agreement.
"Merger Documents" has the meaning specified in Section 10.01.
"Merger Sub" has the meaning set forth in the preamble to this
Agreement.
"Merger Sub Common Stock" means the common stock, par value
$.01 per share, of Merger Sub.
"Minimum Amount" means $48,000.00.
"Minimum Share Value" means $34.875.
"Multiemployer Plan" has the meaning specified in Section
4.23(b).
"Multiple Employer Plan" has the meaning specified in Section
4.23(b).
"NYSE" means the New York Stock Exchange.
"Owned Intellectual Property" means all Intellectual Property
in and to which the Company holds, or has the right to hold, right, title and
interest.
"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.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Business" has the meaning specified in Section 7.07.
"Parent Common Stock" means the voting common stock, $.331/3
par value per share, of Parent.
"Parent Preferred Stock" has the meaning specified in Section
6.05.
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"Parent Termination Revocation Date" has the meaning specified
in Section 11.01(e).
"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 4.23(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 Effective Time, 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 4.08(a) of the
Disclosure Schedule.
"Reference Balance Sheet Date" means December 31, 1998.
"Registration Rights Agreement" has the meaning set forth in
Section 9.02(e).
9
"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 8.02(a).
"S Election" has the meaning specified in Section 4.26(l).
"SEC" means the United States Securities and Exchange
Commission.
"SEC Reports" has the meaning specified in Section 6.06(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Share Value Amount" means the closing price of Parent Common
Stock on the trading day which occurs two days before the Closing Date.
"Shares" means, collectively, all issued and outstanding
shares of Company Common Stock.
"Stockholders" has the meaning set forth in the preamble to
this Agreement.
"Stockholders' Representative" has the meaning specified in
Section 12.09(a).
"Stockholders' Termination Revocation Date" has the meaning
specified in Section 11.01(d).
"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.
"Surviving Corporation" has the meaning specified in Section
2.01.
"Tangible Personal Property" has the meaning specified in
Section 4.20(a).
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"Tax" or "Taxes" has the meaning set forth in Section 4.26.
"Termination Revocation Date" has the meaning specified in
Section 11.01(d).
"Third Party Claims" has the meaning specified in Section
10.02(c).
"Threshold Amount" has the meaning specified in Section 10.04.
"Waiting Period" has the meaning specified in Section
11.01(d).
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in Article IX, and in accordance with the GBCL, at the
Effective Time, Merger Sub shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Merger Sub shall cease
and the Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
SECTION 2.02. Effective Time; Closing. As promptly as
practicable and in no event later than the fifth Business Day (the "Initial
Closing Date") following the satisfaction or waiver of the conditions set forth
in Article IX (or such other date as may be agreed in writing by each of the
parties hereto), the parties hereto shall cause the Merger to be consummated by
filing Articles of Merger (the "Articles of Merger") with the Secretary of State
of the State of Kentucky in such form as is required by, and executed in
accordance with, the relevant provisions of the GBCL. Immediately prior to the
filing of the Articles of Merger, a closing (the "Closing") will be held at the
offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022
(or such other place as the parties may agree); provided that if either the
Stockholders' Representative or Parent delivers a written notice of termination
pursuant to Section 11.01(d) or Section 11.01(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 Stockholders' Termination Revocation Date or the Parent
Termination Revocation Date, if applicable.
SECTION 2.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
GBCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of each
of the Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
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SECTION 2.04. Certificate of Incorporation; By-Laws. (a) At
the Effective Time, the Certificate of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by Law and such Certificate of Incorporation.
(b) At the Effective Time the By-Laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by Law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
SECTION 2.05. Directors and Officers. The directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
SECTION 2.06. Delivery of Escrow Shares by the Stockholders.
At the Closing, the Stockholders shall deliver to the Escrow Agent, in
accordance with the Escrow Agreement, stock certificates evidencing the number
of shares of Parent Common Stock equal to $5,175,000, divided by the Share Value
Amount (the "Escrow Shares").
SECTION 2.07. Escrow Agreement. Prior to the Effective Time,
the Stockholders and Parent shall enter into an Escrow Agreement with the Escrow
Agent substantially in the form of Exhibit 2.07 (the "Escrow Agreement").
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01. Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Merger Sub, the
Company or the Stockholders:
(a) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any Shares to be
canceled pursuant to Section 3.01(b)) shall be converted into the right
to receive the number of shares (the "Conversion Ratio") of Parent
Common Stock determined as follows;
(i) if the Share Value Amount is less than or equal
to the Maximum Share Value but not less than the Minimum Share
Value, then the Conversion Ratio shall be equal to 1,376.3441;
12
(ii) if the Share Value Amount exceeds the Maximum
Share Value, then the Conversion Ratio shall be equal to the
Maximum Amount divided by the Share Value Amount; and
(iii) if the Share Value Amount is less than the
Minimum Share Value, then the Conversion Ratio shall be equal
to the Minimum Amount divided by the Share Value Amount.
(b) each Share held in the treasury of the Company immediately
prior to the Effective Time shall be canceled and extinguished without
any conversion thereof and no payment shall be made with respect
thereto; and
(c) each share of Merger Sub Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted
into one validly issued fully paid and nonassessable share of common
stock of the Surviving Corporation.
SECTION 3.02. Exchange of Certificates. (a) Upon the Effective
Time, each Stockholder shall cause all certificates held by such Stockholder
that immediately prior to the Effective Time represented outstanding Shares (the
"Certificates") to be surrendered to the Parent or an agent designated by it.
Upon such surrender of a Certificate, the Stockholder shall receive in exchange
therefor a certificate representing that number of whole shares of Parent Common
Stock that such Stockholder has the right to receive pursuant to Section 3.01
(less such Stockholder's pro rata portion of the shares of Parent Common Stock
held by the Parent pursuant to the Escrow Agreement) in respect of the Shares
formerly represented by such Certificate (after taking into account all Shares
then held by such Stockholder) and the Certificate so surrendered shall
forthwith be cancelled.
(b) No certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
Certificates and no cash shall be paid in lieu of such fractional shares.
(c) All shares of Parent Common Stock issued upon conversion
of the Shares in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Shares other than
the registration rights under the Registration Rights Agreement.
(d) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, Parent or its
agent shall issue in exchange for such lost, stolen or destroyed Certificate the
shares of Parent Common Stock.
13
SECTION 3.03. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of Shares thereafter on the records of the
Company. From and after the Effective Time, the holders of certificates
representing Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares except as otherwise
provided herein or by Law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
The Company and the Stockholders hereby, jointly and
severally, represent and warrant to Parent and Merger Sub as follows:
SECTION 4.01. Authority Relative to this Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and the Escrow Agreement and its obligations hereunder and
thereunder, and the execution and delivery of this Agreement by the Company and
the consummation by the Company of the Merger have been duly authorized by all
necessary action on the part of the Company and no other proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
Merger (other than the approval and adoption of this Agreement by the holders of
a majority of the then outstanding shares of Company Common Stock if and to the
extent required by applicable Law, and the filing and recordation of appropriate
merger documents as required by the GBCL).
SECTION 4.02. 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 4.02 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 Stockholders shall not be deemed to be "indirect ownership" by the Company.
SECTION 4.03. Certificate of Incorporation and By-Laws. The
Stockholders have heretofore delivered to Parent a true and correct copy of the
Certificate of Incorporation and
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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.
SECTION 4.04. Capitalization; Ownership of Shares. (a) The
authorized capital stock of the Company consists of 1,000 shares of Company
Common Stock. As of the date of this Agreement, (i) 375 shares of Company Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable, and (ii) no shares of Company Common Stock are held in the
treasury of the Company. None of the issued and outstanding shares of Company
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
Stockholders 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 Company 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 4.04(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 4.05. 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 Company to Parent.
SECTION 4.06. No Conflict. The execution, delivery and
performance of this Agreement and the Escrow Agreement by each of the Company
and the Stockholders 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
NYDOCS01/581714 12
15
could have a Material Adverse Effect as a result of) any Law or Governmental
Order applicable to any Stockholder, 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 4.06(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, 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 Stockholder 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 Stockholder 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 4.07. Governmental Consents and Approvals. Except as
set forth in Section 4.07 of the Disclosure Schedule, the execution, delivery
and performance of this Agreement by the Company and each of the Stockholders 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 4.07 of the Disclosure Schedule, (b) the notification
requirements of the HSR Act and (c) the filing and recordation of appropriate
merger documents as required by the GBCL.
SECTION 4.08. 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 4.08(a) of the Disclosure Schedule), and the
related statements of income, stockholders' equity and cash flow of the Company,
together with all related notes thereto, have been delivered by the Company to
Parent. 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
16
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 4.09. No Undisclosed Liabilities. There are no
Liabilities of the Company, other than Liabilities (i) reflected or reserved
against on the Reference Balance Sheet, (ii) disclosed in Section 4.09 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 4.10. Receivables. Section 4.10 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 4.10 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
Effective Time will have arisen from, the sale of services to Persons not
affiliated with any Stockholder 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 4.11. Inventories. Subject to amounts reserved
therefor on the Reference Balance Sheet, the values at which all Inventories are
carried on the Reference Balance Sheet reflect the historical inventory
valuation policy of the Company of stating such Inventories at the lower of cost
or market value. Except as set forth in Section 4.11 of the Disclosure Schedule,
the Company has good and marketable title to the Inventories free and clear of
all Encumbrances. The Inventories do not consist of, in any material amount,
items that are obsolete, damaged or slow-moving and do not consist of any items
held on consignment. The Company is not under any obligation or liability with
respect to accepting returns of items of Inventory or merchandise in the
possession of their customers other than in the ordinary course of business
consistent with past practice. No clearance or extraordinary sale of the
Inventories has been conducted since the Reference Balance Sheet Date.
SECTION 4.12. Conduct in the Ordinary Course; Absence of
Certain Changes, Events and Conditions. Since the Reference Balance Sheet Date,
except as disclosed in
17
Section 4.12 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 4.12 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;
(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;
18
(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 Effective Time;
(xv) incurred any Indebtedness that will not be repaid prior
to the Closing, in excess of $50,000 individually or $100,000 in the
aggregate;
(xvi) (A) granted any increase, promised 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 and 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;
19
(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;
(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 4.12 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 4.12, except as expressly contemplated by
this Agreement.
20
SECTION 4.13. Litigation. Except as set forth in Section 4.13
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 Stockholders 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 Company and the Stockholders after
due inquiry, threatened to be brought by or before any Governmental Authority).
None of the matters disclosed in Section 4.13 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 4.13 of the Disclosure Schedule, none of the Company,
the Assets nor the Stockholders is subject to any Governmental Order (nor, to
the best knowledge of the Company and the Stockholders 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.
SECTION 4.14. Certain Interests. (a) Except as disclosed in
Section 4.14(a) of the Disclosure Schedule, no Stockholder 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 Stockholder 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 4.14(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 4.15. Compliance with Laws. (a) Except as set forth in
Section 4.15(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.
21
(b) Section 4.15(b) of the Disclosure Schedule sets forth a
brief description of each Governmental Order directed to, or to the best
knowledge of the Company and the Stockholders 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 4.16. Environmental Matters. (a) Except as disclosed
in Section 4.16(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
Company and the Stockholders 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.
(ii) The Company has not and, to the best knowledge of the
Company and the Stockholders 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 Company and the
Stockholders after due inquiry, there is no asbestos or
asbestos-containing material on any of the Real Property.
(iv) To the best knowledge of the Company and the Stockholders
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 Parent 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 Company and the Stockholders
after due inquiry, except as disclosed in Section 4.16(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.
22
SECTION 4.17. Material Contracts. (a) Section 4.17(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 4.17(a) or 4.17(b) of the Disclosure Schedule to which the
Company is a party and all agreements relating to Intellectual Property set
forth in Section 4.18 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 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 Stockholder or any Affiliate of any Stockholder
currently in effect and in effect within the
23
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 4.17 and Sections 4.19, 4.20 and
4.21, the term "lease" shall include any and all leases, subleases,
sale/leaseback agreements or similar arrangements.
(b) Except as disclosed in Section 4.17(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 4.07 of the Disclosure
Schedule are not obtained, shall continue in full force and effect without
penalty or other adverse consequence. The Company is not in breach of, or
default under, any Material Contract.
(c) Except as disclosed in Section 4.17(c) of the Disclosure
Schedule, to the best knowledge of the Company and the Stockholders after due
inquiry, no other party to any Material Contract is in breach thereof or default
thereunder.
(d) Except as disclosed in Section 4.17(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 4.18. Intellectual Property. Except as set forth in
Section 4.18 of the Disclosure Schedule, there are no items of Intellectual
Property that are material to the Company or the Business except the Company's
trade name, Apex Digital TV, Inc. (the "Company Intellectual Property"). To the
best knowledge of the Company and the Stockholders 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 Stockholders or
the Company has received any claim or written notice from any Person, to such
effect.
SECTION 4.19. Real Property. (a) Section 4.19(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
24
each such parcel of Owned Real Property was acquired and (v) the current use of
each such parcel of Owned Real Property.
(b) Section 4.19(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 4.19(c) or 4.15(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 Company and the Stockholders have made available to Parent true and complete
copies of each deed for each parcel of Owned Real Property and, to the extent
the Company or the Stockholders 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 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 4.19(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 4.19(b) of the Disclosure Schedule
to any third party.
(d) The Company has delivered to Parent true and complete
copies of all leases and subleases listed in Section 4.19(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
4.19(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;
25
(ii) except as otherwise set forth in Section 4.19(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 4.19(d) of the
Disclosure Schedule, with respect to each such lease or sublease: (A)
none of the Stockholders 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 Stockholders 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 Stockholders 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
Company and the Stockholders 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 Company and the Stockholders 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.
(e) There are no condemnation proceedings or eminent domain
proceedings of any kind pending or, to the best knowledge of the Company and the
Stockholders 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 Company and
the Stockholders 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 Effective Time in the same manner as occupied by the Company
immediately prior to the Effective Time.
(g) All improvements on the Real Property constructed by or on
behalf of the Company or, to the best knowledge of the Company and the
Stockholders 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.
26
(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.
SECTION 4.20. Tangible Personal Property. (a) Section 4.20(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 Company has delivered to Parent 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
4.20(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 4.20(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
27
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 4.19(b) of the
Disclosure Schedule, with respect to each such lease or sublease: (A)
none of the Stockholders 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 Stockholders 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 Stockholders 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
Company and the Stockholders 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 Company and the Stockholders 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 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 4.21. Assets. (a) Except as disclosed in Section
4.21(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, Owned Intellectual Property, the Licensed
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
4.18, 4.19(a), 4.19(b), 4.19(c), 4.19(d), 4.20(a), 4.20(b) or 4.21(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
28
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 Effective Time, 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 4.22. Customers. Listed in Section 4.22 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 4.22 of the
Disclosure Schedule, none of the Stockholders 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.
SECTION 4.23. Employee Benefit Matters. (a) Plans and Material
Documents. Section 4.23(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 Stockholder 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 4.23(a) of the Disclosure Schedule, each Plan is
in writing and the Company has furnished Parent 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
29
funding arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed Internal Revenue Service ("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
4.23(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 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 Law, including, without limitation, ERISA and the Code, and to
the best knowledge of the Company and the Stockholders 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 Company and the Stockholders
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 Company and
the Stockholders after due inquiry, no fact or event exists that could give rise
to any such action, suit or claim.
30
(d) Qualification of Certain Plans. Except as set forth in
Section 4.23(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 Company and the Stockholders 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 4.23(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 Company
and the Stockholders 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 Company and the Stockholders 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 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 Company and the Stockholders 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
31
give rise to any such challenge or disallowance. As of the Effective Time, 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 and 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 4.24. Labor Matters. Except as set forth in Section
4.24 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
Company and the Stockholders 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 Company and the Stockholders 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 Company and the Stockholders after due inquiry, there are
no grievances outstanding against the Company under any such agreement or
contract which could have a Material Adverse 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 Company and the Stockholders 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
32
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 Company and the
Stockholders 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 Company and the Stockholders 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 4.25. Key Employees. Section 4.25 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 4.26. Taxes. Except as disclosed in Section 4.26 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 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 Company and the Stockholders after due inquiry, no
basis exists for any such material adjustment; (e) there are no pending or, to
the best knowledge of the Company and the Stockholders 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 September 26, 1997, 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
33
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 4.27. Insurance. (a) Section 4.27(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;
(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 Company and the
Stockholders 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.
34
(c) Section 4.27(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 4.27(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
4.27(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 Company and the Stockholders 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 Effective Time, all insurance policies currently in
effect will be outstanding and duly in force.
(f) No insurance policy listed in Section 4.27(a) of the
Disclosure Schedule will cease to be legal, valid, binding, enforceable in
accordance with its terms and in full force and effect on terms identical to
those in effect as of the date hereof as a result of the consummation of the
Merger.
SECTION 4.28. Full Disclosure. No representation or warranty
of any of the Stockholders in this Agreement, nor any statement or certificate
furnished or to be furnished to Parent by the Company or any Stockholder 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 4.29. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of any Stockholder.
SECTION 4.30. Vote Required. The affirmative vote of the
holders of a majority of the outstanding shares of the Company Common Stock is
the only vote of the holders of any
35
class or series of the Company's capital stock necessary to approve the Merger.
The Board of Directors of the Company has unanimously approved this Agreement.
ARTICLE V
ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
As an inducement to Parent and Merger Sub to enter into this
Agreement, each of the Stockholders, as to themselves and not to the other
Stockholders, hereby represents and warrants to Parent as follows:
SECTION 5.01. Authority of the Stockholders. Each Stockholder
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 9.03, 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
Stockholder, and this Agreement constitutes, and upon its execution the Escrow
Agreement will constitute, a legal, valid and binding obligation of each such
Stockholder enforceable against each Stockholder in accordance with its terms.
The failure of the spouse of any Stockholder to be a party or signatory to this
Agreement or the Escrow Agreement shall not (i) prevent any such Stockholder
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 Stockholder
enforceable against any such Stockholder in accordance with its terms. No spouse
of any Stockholder has any rights whatsoever in respect of the Shares.
SECTION 5.02. Ownership. Each of the Stockholders owns the
number of Shares set forth next to such Stockholder's name in Section 5.02 of
the Disclosure Schedule, and, except as set forth in Section 5.02 of the
Disclosure Schedule, (i) such Stockholder 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 Stockholder's name in Schedule 5.02 of the
Disclosure Schedule, each such Stockholder does not own any other shares of
capital stock of the Company. All the Shares set forth next to each
Stockholder's name in Schedule 5.02 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 Parent in the
stock records of the Company, Parent, 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.
36
Except as disclosed in Section 5.02 of the Disclosure Schedule, 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 5.03. Private Placement. (a) Each of the Stockholders
understands that (i) the offering and sale of the shares of Parent 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
Stockholders will be able to sell or dispose of such shares purchased by them
pursuant to this Agreement. Each of the Stockholders represents that any Parent
Common Stock acquired by such Stockholder pursuant to this Agreement shall be
acquired by such Stockholder for such Stockholder'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 of 1933, as amended, that would violate the securities laws of
the United States of America or any state thereof.
(b) Each Stockholder 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 Parent
Common Stock to be issued in connection with the transaction contemplated by
this Agreement.
(c) Each Stockholder has sufficient knowledge and experience
in financial and business matters so as to be capable of evaluating the merits
and risks of its investment in the shares of Parent Common Stock, or has been
advised by a representative with such knowledge and experience, and each
Stockholder is capable of bearing the economic risks of such investment.
(d) Each Stockholder, or its representative, has been
furnished with and has carefully read a copy of this Agreement and the exhibits
and schedules to this Agreement and has been given the opportunity to ask
questions of, and receive answers from, Parent concerning Parent and its
subsidiaries, the terms and conditions of the shares of Parent Common Stock and
other related matters.
SECTION 5.04. Full Disclosure. No representation or warranty
of any of the Stockholders in this Agreement, nor any statement or certificate
furnished or to be furnished to Parent by the Company or any Stockholder 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.
37
SECTION 5.05. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of any Stockholder.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent
and warrant to the Company and the Stockholders as follows:
SECTION 6.01. Organization and Authority. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation 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 Parent and Merger Sub,
the performance by Parent and Merger Sub of its obligations hereunder and
thereunder and the consummation by Parent and Merger Sub of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of Parent. This Agreement has been, and upon its execution,
the Escrow Agreement will be, duly executed and delivered by Parent, and
(assuming due authorization, execution and delivery by the Stockholders) this
Agreement constitutes, and upon its execution the Escrow Agreement will
constitute, a valid and binding obligation of Parent enforceable against Parent
in accordance with its terms.
SECTION 6.02. 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 6.03, except as may result from any facts or
circumstances relating solely to any of the Stockholders, the execution,
delivery and performance of this Agreement and the Escrow Agreement by Parent
and Merger Sub 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 Parent
or Merger Sub, (b) conflict with or violate any Law or Governmental Order
applicable to Parent or Merger Sub, 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
Encumbrance on any of the assets or properties of Parent or Merger Sub pursuant
to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to which Parent or
Merger Sub is a party or by which any of such assets or properties are bound or
affected which would have a material adverse
38
effect on the ability of Parent or Merger Sub to consummate the transactions
contemplated by this Agreement and by the Escrow Agreement.
SECTION 6.03. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement and the Escrow Agreement
by Parent and Merger Sub 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 Parent or Merger Sub from performing their respective obligations under
this Agreement, except for the notification requirements of the HSR Act and
filing and recordation of appropriate merger documents as required by the GBCL.
SECTION 6.04. Litigation. Except as disclosed in a writing
given to the Company and the Stockholders by Parent on the date of this
Agreement, no claim, action, proceeding or investigation is pending or, to the
best knowledge of Parent and Merger Sub after due inquiry, threatened, which
seeks to delay or prevent the consummation of, or which would be reasonably
likely to materially adversely affect (i) Parent's or Merger Sub's ability to
consummate, the transactions contemplated by this Agreement or (ii) the business
of Parent and its subsidiaries, taken as a whole.
SECTION 6.05. Capitalization. The authorized capital stock of
Parent consists of (a) 50,000,000 shares of Parent Common Stock and (b)
1,000,000 shares of preferred stock, par value $1.00 per share ("Parent
Preferred Stock"). As of March 1, 1999, (i) 22,250,472 shares of Parent Common
Stock were issued and outstanding, all of which were validly issued, fully paid
and nonassessable and (ii) no shares of Parent Common Stock are held in the
treasury of Parent. As of the date of this Agreement, no shares of Parent
Preferred Stock were issued and outstanding. Except for (i) stock purchase
rights issued pursuant to the Stockholder Rights Plan dated June 1, 1992 between
Parent and First Union National Bank of North Carolina, as agent, and (ii) the
stock option plans of Parent 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 Parent or any of its subsidiaries or
obligating Parent or any of its subsidiaries to issue or sell any shares of
capital stock of, or other equity interests in, Parent or any of its
subsidiaries. The Parent 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 Parent, Dycom 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 6.06. SEC Filings; Financial Statements. (a) Parent
has filed all forms, reports and documents required to be filed by it with the
SEC since December 31, 1997
39
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 Parent 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 Parent 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 Parent, 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 6.07. 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 Parent.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Conduct of Business by the Company Pending the
Merger. (a) The Company and the Stockholders covenant and agree that, except as
described in Section 7.01(a) of the Disclosure Schedule, between the date hereof
and the Effective Time, the business of the Company shall be conducted only in
the ordinary course and consistent with the Company's prior practice. Without
limiting the generality of the foregoing, except as described in Section 7.01(a)
of the Disclosure Schedule, the Company shall (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 Parent 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 Parent and receipt of
Parent's prior written approval, any rights of renewal pursuant to the terms of
any of the leases
40
or subleases set forth in Section 4.19(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 the Company or any of the Stockholders to be
untrue or result in a breach of any covenant made by the Company or any
Stockholders in this Agreement.
(b) By way of amplification and not limitation, the Company
will not, between the date of this Agreement and the Effective Time, directly or
indirectly do, or propose to do, without the prior written consent, which
consent shall not be unreasonably withheld, of Parent, any of the things
enumerated in the second sentence of Section 4.12 (including, without
limitation, clauses (i) through (xxx) thereof).
SECTION 7.02. Access to Information. (a) From the date hereof
until the Effective Time, upon reasonable notice and during normal business
hours, the Company and each of the Company's officers, directors, employees,
agents, representatives, accountants and counsel shall afford Parent 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 Parent 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 Parent 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 Stockholders prior to the Effective Time, for a
period of seven years after the Effective Time, Parent shall (i) retain the
books and records of the Company relating to periods prior to the Effective Time
and (ii) during such seven-year period, upon reasonable notice, afford the
officers, employees and authorized agents and representatives of the
Stockholders reasonable access (including the right to make, at the
Stockholders' 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 Parent or the Company after the Effective Time or
for any other reasonable purpose, for a period of seven years following the
Effective Time, each of the Stockholders shall (i) retain the books and records
which relate to the Company and its operations for periods prior to the
Effective Time and which shall not otherwise have been delivered to Parent or
the Company and (ii) during such seven-year period, upon reasonable notice,
afford the officers, employees and authorized agents and representatives of
Parent or the Company reasonable access (including the right to make
photocopies, at the expense of Parent or the Company), during normal business
hours, to such books and records.
41
SECTION 7.03. Confidentiality. (a) The Company and each of the
Stockholders 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 Stockholder or any such agent, representative, Affiliate, employee, officer
or director becomes legally compelled to disclose any such information, provide
Parent with prompt written notice of such requirement so that Parent or the
Company may seek a protective order or other remedy or waive compliance with
this Section 7.03, (iii) in the event that such protective order or other remedy
is not obtained, or Parent waives compliance with this Section 7.03, furnish
only that portion of such confidential information which is legally required to
be provided and exercise its best efforts, at Parent'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
Effective Time) to the Company or Parent any and all copies (in whatever form or
medium) of all such confidential information then in the possession of such
Stockholder or any of his agent, representative, Affiliate, employee, officer
and director and, except as otherwise required by Section 7.02(c), destroy any
and all additional copies then in the possession of such Stockholder 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 Stockholders or their representatives not permitted by this Agreement,
(y) was available to the Stockholders on a nonconfidential basis prior to its
disclosure by Parent or its representatives or (z) becomes available to the
Stockholders on a nonconfidential basis from a person other than Parent or its
representatives who is not otherwise bound by a confidentiality agreement with
Parent or any of its representatives, or is not otherwise under an obligation to
Parent or any of its representatives not to transmit the information to the
Stockholders. The Company and each of the Stockholders agree and acknowledge
that remedies at law for any breach of its obligations under this Section
7.03(a) are inadequate and that in addition thereto Parent shall be entitled to
seek equitable relief, including injunction and specific performance, in the
event of any such breach.
(b) Parent 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 Stockholders, (ii) in the event
that Parent or any such agent, representative, Affiliate, employee,
42
officer or director becomes legally compelled to disclose any such information,
provide the Stockholders with prompt written notice of such requirement so that
the Stockholders may seek a protective order or other remedy or waive compliance
with this Section 7.03, (iii) in the event that such protective order or other
remedy is not obtained, or the Stockholders waive compliance with this Section
7.03, furnish only that portion of such confidential information which is
legally required to be provided and exercise its best efforts, at the
Stockholders' 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 Stockholders any and all copies (in
whatever form or medium) of all such confidential information then in the
possession of Parent or any such agent, representative, Affiliate, employee,
officer and director and, except as otherwise required by Section 7.02(c),
destroy any and all additional copies then in the possession of Parent 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
Parent or its representatives not permitted by this Agreement, (y) was available
to Parent on a nonconfidential basis prior to its disclosure by Parent or its
representatives or (z) becomes available to Parent on a nonconfidential basis
from a person other than the Stockholders or their representatives who is not
otherwise bound by a confidentiality agreement with the Stockholders or any of
their representatives, or is not otherwise under an obligation to the
Stockholders or any of their representatives not to transmit the information to
Parent. Parent agrees and acknowledges that remedies at law for any breach of
its obligations under this Section 7.03(b) are inadequate and that in addition
thereto the Stockholders 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
11.01, the obligations of the parties with respect to confidential information
shall be governed by the Confidentiality Agreement.
SECTION 7.04. Regulatory and Other Authorizations; Notices and
Consents. (a) The Company and the Stockholders shall use their best efforts 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 Parent 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.
43
(b) The Company shall give promptly such notices to third
parties and use its or their best efforts to obtain such third party consents
and estoppel certificates as Parent may in its sole and absolute discretion deem
necessary or desirable in connection with the transactions contemplated by this
Agreement.
(c) Parent shall cooperate and use all reasonable efforts to
assist the Company in giving such notices and obtaining such consents and
estoppel certificates; provided, however, that Parent 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 Parent in its sole and absolute
discretion may deem adverse to the interests of Parent, the Company or the
Business.
(d) None of the Stockholders nor the Company know 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 Stockholders 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 Stockholder or
the Company is a party is not obtained prior to the Effective Time, such
Stockholder will, subsequent to the Effective Time, cooperate with Parent and
the Surviving Corporation in attempting to obtain such consent, approval or
authorization as promptly thereafter as practicable. If such consent, approval
or authorization cannot be obtained, such Stockholder shall use its best efforts
to provide the Surviving Corporation, at the Surviving Corporation'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 Stockholder
provides such rights and benefits, the Company shall assume the obligations and
burdens thereunder.
SECTION 7.05. No Solicitation or Negotiation. The Company and
each of the Stockholders agree that between the date of this Agreement and the
earlier of (i) the Closing and (ii) the termination of this Agreement, none of
the Stockholders, 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 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 Company and the Stockholders immediately shall cease and cause to
be terminated all existing discussions, conversations, negotiations and other
44
communications with any Persons conducted heretofore with respect to any of the
foregoing. The Company and the Stockholders shall notify Parent promptly if any
such proposal or offer, with any Person with respect thereto, is made and shall,
in any such notice to Parent, 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 Company and the Stockholders agree not to and
without the prior written consent of Parent, release any Person from, or waive
any provision of, any confidentiality or standstill agreement to which the
Company is a party.
SECTION 7.06. Notification of Certain Matters. Prior to the
Effective Time, the Company and each of the Stockholders shall promptly notify
Parent 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
the Company or any of the Stockholders in this Agreement or which would be
reasonably likely to have the effect of making any representation or warranty of
the Company or any Stockholder 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 7.06 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 7.06 shall limit
or affect the remedies available hereunder to the party receiving such notice,
including the rights of Parent under Section 10.02(a), in the event that a
representation or warranty made by the Company or Parent herein shall not be
true and correct as of the date hereof and as of the Effective Time.
SECTION 7.07. Non-Competition. (a) For a period of three (3)
years after the Closing, none of the Stockholders 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 "Parent'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
Parent'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 the Stockholders shall solicit or do business competitive to the Parent's
Business with any customers, partners or associates of the Parent or any of its
subsidiaries. Provided, however, that nothing in this Section or this Agreement
shall prevent any Stockholder 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.
45
(b) Each of the Stockholders agrees that the breach by such
Stockholder of the covenant contained in Section 7.07(a) is likely to result in
immediate and irreparable harm, directly or indirectly, to Parent. Each of the
Stockholders, therefore, consents and agrees that if such Stockholder violates
any of such covenants, Parent 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 Stockholder from
committing or continuing a breach of such covenants.
(c) It is the desire, intent and agreement of each of the
Stockholders and Parent that the restrictions placed on each of the Stockholders
by Section 7.07(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 7.07 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 7.08. Public Announcements. Prior to the Closing,
Parent, the Stockholders 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
hereby 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 7.09. Resale Restrictions. (a) Each of the
Stockholders acknowledges and agrees that the shares of Parent 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 Stockholders 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 Stockholders acknowledges that, except
as provided in the Registration Rights Agreement, such Stockholder has no right
to require Parent to register shares of Parent Common Stock. Each of the
Stockholders understands and agrees that each certificate representing shares of
Parent 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.
46
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 Stockholder agrees to transfer shares of Parent Common Stock only in
accordance with the provisions of such legends. In addition, each of the
Stockholders agrees that Parent shall instruct the transfer agent to only
transfer Parent Common Stock pursuant to these provisions.
(b) In the event the shares of Parent Common Stock received by
any Stockholder hereunder cease to be restricted for purposes of the Securities
Act, upon request of such Stockholder and surrender of the certificate bearing
such legends, Parent or its designated agent will promptly reissue such
certificates to such Stockholder without such legends.
SECTION 7.10. Release of Indemnity Obligations. Each of the
Stockholders 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 Parent releasing and
discharging the Company from any and all obligations to indemnify such
Stockholder 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 Stockholder 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 7.11. Plan of Reorganization. The Agreement is
intended to constitute a tax free "plan of reorganization" within the meaning of
Section 1.368-2(g) of the income tax regulations promulgated under the Code.
From and after the date hereof and until the Effective Time, each party hereto
shall use its reasonable best efforts to cause the Merger to qualify, and will
not knowingly take any actions or cause any actions to be taken which could
prevent the Merger from qualifying, as a reorganization under the provisions of
Section 368(a) of the Code. Following the Effective Time, neither the Surviving
Corporation, Parent nor any of their Affiliates shall knowingly take any action
or knowingly cause any action to be taken which would cause the Merger to fail
to qualify as a reorganization under Section 368(a) of the Code.
SECTION 7.12. Stockholder Vote. Prior to the Effective Time,
the Company shall call and hold a meeting of the Board of Directors of the
Company and of the Stockholders, if required to do so, or otherwise solicit the
adoption of this Agreement by both the Board of Directors of the Company and the
Stockholders. Each Stockholder holding shares of Company
47
Common Stock shall vote all of the Shares held by such Stockholder in favor of
adoption of this Agreement.
SECTION 7.13. 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.
SECTION 7.14. Stock Splits. Prior to the Closing, Parent shall
not subdivide into a smaller number, reclassify or otherwise materially change
its issued and outstanding common stock.
SECTION 7.15. Disclosure Schedule. Prior to the Closing and
within 21 days of the date of this Agreement, the Company and the Stockholders
shall provide Parent with a copy of the Disclosure Schedule.
ARTICLE VIII
TAX MATTERS
SECTION 8.01. Indemnity. (a) The Stockholders agree, jointly
and severally, to indemnify and hold harmless Parent and the Company against the
following Taxes and, except as otherwise provided in Section 8.04, 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: Taxes imposed on the Company with respect to taxable
periods or the portion of any taxable period of such Person ending on or before
the Effective Time 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 a
deduction taken by the Company and determined to be a personal expense of a
Stockholder. Parent shall be responsible for Taxes and associated expenses not
allocated to the Stockholder 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 Final Closing Date and ends after the
Final Closing Date, the portion of any such Tax that is allocable to the portion
of the period ending on the Final 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 person,
tangible or intangible) (other than conveyances pursuant to this
Agreement, as provided under Section 8.07), deemed equal to the amount
which would be payable if the taxable year ended with the Final Closing
Date; and
48
(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 Final Closing Date and the
denominator of which is the number of calendar days in the entire
period.
SECTION 8.02. Returns and Payments. (a) From the date of this
Agreement through and after the Closing, the Stockholders 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 (and
Parent shall do the same with respect to any taxable period ending after the
Closing). Returns of the Company not yet filed for any taxable period that
begins before the Closing shall be prepared in a manner consistent with past
practices employed with respect to the Company (except to the extent counsel for
the Stockholders 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 Parent with respect to the Company and as to
which an amount of Tax is allocable to the Stockholders under Section 8.01,
Parent shall provide the Stockholders 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 Stockholders pursuant to Section
8.01, 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 Stockholders 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 Stockholder with respect to the Company, the Stockholders shall provide
Parent 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 Parent 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 Stockholders 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 to the extent such Taxes exceed the amount, if any,
accrued for such Taxes as current Taxes payable on the Closing, and Parent shall
so pay or cause to be paid Taxes for any taxable period after the Closing
(subject to its right of indemnification from the Stockholders by the date set
forth in Section 8.05 for Taxes attributable to the portion of any Tax period
that includes the Closing pursuant to Section 8.01).
49
SECTION 8.03. Refunds. Any Tax refund (including any interest
with respect thereto) relating to the Company for any taxable period prior to
the Closing shall be the property of Parent, and if received by the Stockholders
shall be paid over promptly to Parent. In addition, any Tax refund (or
equivalent benefit to any Stockholder through a reduction in Tax liability) for
a period before the Closing arising out of the carryback of a loss or credit
incurred by the Company in a taxable year ending after the Closing shall be the
property of Parent and, if received by such Stockholder, shall be paid over
promptly to Parent.
SECTION 8.04. Contests. (a) After the Closing, Parent shall
promptly notify the Stockholders in writing of any written notice of a proposed
assessment or claim in an audit or administrative or judicial proceeding of
Parent or of the Company which, if determined adversely to the taxpayer, would
be grounds for indemnification under this Article VIII; provided, however, that
a failure to give such notice will not affect Parent's right to indemnification
under this Article VIII except to the extent, if any, that, but for such
failure, the Stockholders 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 and provided
that the Stockholders acknowledge in writing their liability under this
Agreement to hold Parent 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 (or, in the case of any
taxable year that includes the Closing, against an adjustment allocable under
Section 8.01 to the portion of such year ending on or before the Closing Date)
and is subject to indemnification under Section 7.01, the Stockholders 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 Stockholders have
acknowledged their liability; Parent also may participate in any such audit or
proceeding and, if the Stockholders do not assume the defense of any such audit
or proceeding, Parent 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 Stockholders setting forth
the terms and conditions of settlement. In the event that issues relating to a
potential adjustment for which the Stockholders have acknowledged their
liability are required to be dealt with in the same proceeding as separate
issues relating to a potential adjustment for which Parent would be liable,
Parent 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 Stockholders (as evidenced by its acknowledgment under this
Section 8.04) and Parent 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,
50
without limitation, choice of judicial forum) in situations in which separate
issues are otherwise controlled under this Article VIII by Parent and the
Stockholders.
(d) Neither Parent nor any Stockholder shall enter into any
compromise or agree to settle any claim pursuant to any Tax audit or proceeding
which would adversely affectthe other party for such year or a subsequent year
without the written consent of the other party, which consent may not be
unreasonably withheld. Parent and the Stockholders agree to cooperate, and
Parent agrees to cause the Company to cooperate, in the defense against or
compromise of any claim in any audit or proceeding.
SECTION 8.05. Time of Payment. Payment by the Stockholders of
any amounts due under this Article VIII 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 Parent on which is required to be reported
income for a period ending after the Closing for which any Stockholder is
responsible under Section 8.01 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 Stockholders and Parent 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 VIII is in respect of costs or expenses other than Taxes, payment
by any Stockholder of any amounts due under this Article VIII shall be made
within five Business Days after the date on which the Stockholders have been
notified by Parent that the Stockholders have a liability for a determinable
amount under this Article VIII and is provided with calculations or other
materials supporting such liability.
SECTION 8.06. Cooperation and Exchange of Information. Upon
the terms set forth in Section 7.02 of this Agreement, the Stockholders and
Parent 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 Parent. 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 Stockholders 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 Stockholders and Parent
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
51
obtained under this Section 8.06 shall be kept confidential in accordance with
Section 7.03 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 8.07. Miscellaneous. (a) The Stockholders and Parent
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 VIII, under
other indemnity provisions of this Agreement and for any misrepresentations or
breaches of warranties or covenants as adjustments to the merger consideration
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 Stockholders to indemnify and hold harmless
Parent and the Company pursuant to this Article VIII 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 Stockholder
shall without the prior written consent of Parent (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 VIII, "Parent" and "each
Stockholder", 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) Parent or the Stockholders shall be entitled to recover
professional fees and related costs that they may reasonably incur to enforce
the provisions of this Article VIII.
(f) This Article VIII (and not Article X) shall be the sole
provision for indemnification against breach of representations, warranties,
covenants and agreements regarding Taxes.
52
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01. 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; and
(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) Ervin Stock Purchase Agreement. The Ervin Stock Purchase
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 9.02. Conditions to Obligations of the Company. The
obligations of the Company to consummate the transactions the Merger shall be
subject to the fulfillment of the following further conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Parent and Merger Sub 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 Effective Time,
with the same force and effect as if made as of the Effective Time,
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 9.02(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 Parent and
Merger Sub on or before the Effective Time shall have been complied
with in all material respects, and the Company shall have received a
certificate from the Parent and Merger Sub to such effect signed by a
duly authorized officer thereof;
53
(b) No Proceeding or Litigation. No Action shall have been
commenced by or before any Governmental Authority against any of the
parties hereto, seeking to restrain or materially and adversely alter
the Merger which, in the reasonable, good faith determination of the
Company, is likely to render it impossible or unlawful to consummate
such transactions; provided, however, that the provisions of this
Section 9.02(b) shall not apply if the Company or any of the
Stockholders has directly or indirectly solicited or encouraged any
such Action;
(c) Resolutions. The Company shall have received a true and
complete copy, certified by the Secretary or an Assistant Secretary of
Parent, of the resolutions duly and validly adopted by the Board of
Directors of Parent evidencing its authorization of the execution and
delivery of this Agreement and the consummation of the Merger;
(d) Incumbency Certificate. The Company shall have received a
certificate of the Secretary or an Assistant Secretary of each of the
Parent and Merger Sub certifying the names and signatures of the
officers of the Parent and Merger Sub authorized to sign this Agreement
and the other documents to be delivered hereunder; and
(e) Registration Rights Agreement. The Registration Rights
Agreement, in substantially the form attached hereto as Exhibit
9.02(e), shall have been executed and delivered by Parent.
(f) Legal Opinion. The Company and the Stockholders shall have
received a legal opinion, addressed to the Stockholders and dated the
Effective Time, substantially in the form of Exhibit 9.02(f).
SECTION 9.03. Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent 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 Company and the Stockholders
contained in this Agreement and the Escrow 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 9.03(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 respects), and the covenants and agreements
contained in this Agreement to be complied with in all material
respects by the Company and the Stockholders on or before the Closing
shall have been complied
54
with, and Parent shall have received a certificate of the Company and
each of the Stockholders to such effect;
(b) No Proceeding or Litigation. No Action shall have been
commenced or threatened by or before any Governmental Authority against
any of the parties hereto, seeking to restrain or materially and
adversely alter the transactions contemplated by this Agreement and the
Escrow Agreement which Parent 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 Parent, the consummation of the
transactions contemplated by this Agreement; provided, however, that
the provisions of this Section 9.03(b) shall not apply if Parent has
solicited or encouraged any such Action;
(c) Legal Opinion. Parent shall have received legal opinions
from the counsel to each of the Company and the Stockholders, each
addressed to Parent and dated the Effective Time, substantially in the
form of Exhibits 9.03(c)(i) and 9.03(c)(ii), respectively;
(d) Consents and Approvals. Parent, the Stockholders and the
Company shall have received, each in form and substance satisfactory to
Parent 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
Parent 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.
Parent 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 Parent to the Stockholders;
(f) Organizational Documents. Parent 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 Effective Time and
accompanied by a certificate of the Secretary or Assistant Secretary of
the Company, dated as of the Effective Time, 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;
55
(g) Minute Books. Parent 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 Effective Time;
(h) Good Standing; Qualification to Do Business. Parent 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 Effective Time and accompanied by bring-down
telegrams dated the Effective Time;
(i) Release of Indemnity Obligations. Parent shall have
received the general release and discharge from each of the
Stockholders referred to in Section 7.10 in form and substance
satisfactory to Parent in its sole and absolute discretion;
(j) Due Diligence. Parent 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; and
(l) Escrow Agreement. Each of the Stockholders shall have
executed the Escrow Agreement in substantially the form attached hereto
as Exhibit 2.07.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Survival of Representations and Warranties. The
representations and warranties of the Company and the Stockholders contained in
this Agreement, and all statements contained in this Agreement, the Exhibits to
this Agreement, the Disclosure Schedule, the Escrow Agreement 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 "Merger Documents"), shall survive the Effective
Time until October 1, 2000; provided, however, that (a) the representations and
warranties dealing with Tax matters shall survive as provided in Section
8.07(b), (b) insofar as any claim is made by Parent for the breach of any
representation or warranty of any of the
56
Stockholders contained herein, which claim arises out of allegations of personal
injury or property damage suffered by any third party on or prior to the
Effective Time, or activities or omissions that occur, on or prior to the
Effective Time, such representations and warranties shall, for purposes of such
claim by Parent, 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 Parent for the breach of any representation or warranty of any
of the Stockholders contained herein relating to environmental matters, such
representation and warranty shall, for purposes of such claims by Parent,
survive the Effective Time until the fifth anniversary of the Effective Time.
Neither the period of survival nor the liability of the Stockholders with
respect to the Stockholders' representations and warranties shall be reduced by
any investigation made at any time by or on behalf of Parent. 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 10.02. Indemnification. (a) Parent, its Affiliates and
their successors and assigns, and the officers, directors, employees and agents
of Parent, its Affiliates (including without limitation, the Company) and their
successors and assigns shall be indemnified and held harmless by the
Stockholders, 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 the
Company or any Stockholder contained in the Merger Documents; or
(ii) the breach of any covenant or agreement by the Company or
any Stockholder contained in the Merger Documents; or
(iii) Liabilities of the Company not reflected on the
Reference Balance Sheet, whether arising before or after the Effective
Time, arising from or relating to the ownership or actions or inactions
of the Company or the conduct of their respective businesses prior to
the Effective Time; or
(iv) any and all Losses suffered or incurred by Parent, 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 Stockholders or the Company occurring or existing prior to
the Effective Time; or
57
(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 Effective Time 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 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 Effective Time; or (C) any and all noncompliances
with or violations of any applicable Environmental Law or Environmental
Permit by the Company prior to the Effective Time;
provided, however, with respect to each Stockholder, such Stockholder shall have
no obligation under this Section 10.02 for breaches of another Stockholder's
representations and warranty contained in Article V.
(b) Each of the Stockholders, their successors and assigns and
agents of the Stockholders and their successors and assigns shall be indemnified
and held harmless by the Parent for any and all Losses arising from any claim or
cause of action of any third party to the extent arising out of the Parent'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 X with respect to Losses arising from claims of any third party which
are subject to the indemnification provided for in this Article X ("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 X
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
58
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 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 10.03. Tax Matters. Article VIII (and not this Article
X) 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
4.26 of this Agreement and any other representations and warranties relating to
Taxes contained in any of the Merger Documents.
SECTION 10.04. Limits on Indemnification. The indemnification
obligations of the Stockholders pursuant to Section 10.02(a) shall not be
effective until the aggregate dollar amount of all Losses which would otherwise
be indemnifiable pursuant to Section 10.02(a) exceeds $200,000 (the "Threshold
Amount"), provided, however, that if the Threshold Amount is exceeded, the
Stockholders 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
Stockholders arising out of or resulting from the causes enumerated in Section
10.02(a) of this Agreement shall be an amount equal to $2,000,000 in the
aggregate. In addition, the indemnification obligations of the Stockholders
shall be satisfied first from the Escrow Shares, in accordance with the Escrow
Agreement.
SECTION 10.05. 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 X shall constitute the sole and exclusive remedies of the
indemnified parties from and after the Effective Time with respect to the
matters in respect of which indemnification may be provided for hereunder;
provided, however, nothing in this Article X 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.
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ARTICLE XI
TERMINATION AND WAIVER
SECTION 11.01. Termination. This Agreement may be terminated
at any time prior to the Effective Time:
(a) by Parent if (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 the Company or
any of the Stockholders contained in this Agreement shall not have
been true and correct in all material respects when made, (iii) the
Company or any of the Stockholders 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 Stockholders or
the Company makes a general assignment for the benefit of creditors,
or any proceeding shall be instituted by or against any such
Stockholder 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 Company and the Stockholders, on the one hand, or
Parent and Merger Sub, on the other hand, if the Effective Time shall
not have occurred by April 30, 1999; provided, however, that the right
to terminate this Agreement under this Section 11.01(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 Effective Time to occur on or prior to such date; or
(c) by either the Company and the Stockholders, on the one
hand, or Parent and Merger Sub, on the other hand, 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;
(d) by the Stockholders upon written notice to Parent, if the
closing price of Parent 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
Parent 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
Stockholders on the first day (the "Stockholders' Termination
Revocation Date") during the Waiting Period that the closing price of
Parent Common Stock is equal to or greater than the Minimum Share
Value; or
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(e) by Parent upon written notice to the Stockholders, if the
closing price of Parent 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 Parent 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
Parent on the first day (the "Parent Termination Revocation Date")
during the Waiting Period that the closing price of Parent Common Stock
is less than or equal to the Maximum Share Value; or
(f) by the mutual written consent of the Company and the
Stockholders, on the one hand, or Parent and Merger Sub, on the other
hand.
SECTION 11.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 11.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except (i) as set forth in Section 12.01 and (ii) that nothing herein
shall relieve any party from liability for any breach of this Agreement.
SECTION 11.03. Waiver. Either Parent and Merger Sub, on one
hand, and the Company and the Stockholders, 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 XII
GENERAL PROVISIONS
SECTION 12.01. 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 Effective Time shall have occurred.
SECTION 12.02. 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,
61
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 12.02):
if to the Stockholders or to the Company:
Apex Digital TV, Inc.
P.O. Box 10
450 Pryor Boulevard
Sturgis, Kentucky 42459
Telecopier: (502) 333-3300
Attention: Mr. Gary Ervin
with a copy to:
White and Williams LLP
1800 One Liberty Place
Philadelphia, Pennsylvania 19103
Telecopier: (215) 864-7123
Attention: Mr. Melvin Shralow, Esquire
if to Parent or Merger Sub:
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 12.03. 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.
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SECTION 12.04. 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.
SECTION 12.05. Entire Agreement. This Agreement, the Escrow
Agreement, the Registration Rights Agreement and the Confidentiality Agreement
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 parties hereto with respect to the subject matter
hereof and thereof.
SECTION 12.06. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Stockholders and Parent (which consent may be granted or withheld in the sole
discretion of the Stockholders or Parent).
SECTION 12.07. No Third Party Beneficiaries. Except for the
provisions of Article X 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 12.08. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
parties hereto or (b) by a waiver in accordance with Section 11.03.
SECTION 12.09. Miscellaneous. (a) Each of the Stockholders
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, Article VIII and Article X 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 Merger
Documents for the benefit of all the Stockholders for the receipt and for the
giving of any notice specified in this Agreement or any other Merger Document to
be given or received, as the case may be, by the Stockholders' Representative
(in such capacity, the "Stockholders' Representative"). Parent and the Escrow
Agent may each conclusively rely on the authority of the Stockholders'
Representative to act as agent for each of the Stockholders for the receipt or
giving of any notice specified in this Agreement or any other Merger Document to
be given or received, as the case
63
may be, by the Stockholders' Representative, until such time as Parent or the
Escrow Agent, as the case may be, shall have received written notice from the
Stockholders' Representative of his, her or its resignation and the appointment
of a substitute agent. Each Stockholder agrees that, should the Stockholders'
Representative resign or be unable to serve, it shall immediately select jointly
with the other Stockholders 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 Stockholders' Representative accepts his or her
appointment and, notwithstanding any provision to the contrary contained in any
Merger Document, it is agreed that the Stockholders' Representative shall not
have any duties or responsibilities to Parent, except those expressly set forth
herein and therein, nor shall the Stockholders' Representative have or be deemed
to have any fiduciary relationship with any Stockholder as a result of his or
her appointment as Stockholders' Representative, and no implied covenants,
functions, responsibilities, duties, obligation or liabilities shall be read
into any Merger Document or otherwise exist against the Stockholders'
Representative.
SECTION 12.10. Governing Law. This Agreement shall be governed
by the laws of the State of New York.
SECTION 12.11. 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 12.02 hereof.
SECTION 12.12. 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 12.13. 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 12.14. Waiver of Jury Trial. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES 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
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ACTIONS OF ANY OF THE PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, each of the Company, the Stockholders,
Merger Sub and Parent (by its officers thereunto duly authorized) have caused
this Agreement to be executed as of the date first written above.
APEX DIGITAL TV, INC.
By: /s/ GARY ERVIN
------------------------------
Name: GARY ERVIN
Title: President
/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
/s/ KEITH E. WALKER
------------------------
KEITH E. WALKER,
in his individual capacity
/s/ ROBERT J. CHASTAIN
------------------------
ROBERT J. CHASTAIN,
in his individual capacity
/s/ CHARLES T. MCELROY
------------------------
CHARLES T. MCELROY,
in his individual capacity
/s/ PENNY J. WARD
------------------------
PENNY J. WARD,
in her individual capacity
DYCOM INDUSTRIES, INC.
By: /s/ Thomas R. Pledger
------------------------------
Name: Thomas R. Pledger
Title: Executive Chairman
DYCOM ACQUISITION CORPORATION III
By: /s/ Steven Nielsen
------------------------------
Name: Steven Nielsen
Title: President