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AGREEMENT AND PLAN OF MERGER
among
DYCOM INDUSTRIES, INC.,
DYCOM ACQUISITION CORPORATION I,
INSTALLATION TECHNICIANS, INC.
and
THE STOCKHOLDERS LISTED
ON THE SIGNATURE PAGES
HERETO
Dated as of February 23, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.01. Certain Definitions....................................................1
ARTICLE II
THE MERGER
2.01. The Merger.............................................................9
2.02. Effective Time; Closing................................................9
2.03. Effect of the Merger...................................................9
2.04. Certificate of Incorporation; By-Laws..................................9
2.05. Directors and Officers................................................10
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
3.01. Conversion of Securities..............................................10
3.02. Exchange of Certificates .............................................10
3.03. Stock Transfer Books..................................................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
4.01. Organization and Qualification; Absence of Subsidiaries...............11
4.02. Certificate of Incorporation and By-Laws..............................12
4.03. Capitalization........................................................12
4.04. Authority Relative to This Agreement..................................12
4.05. No Conflict; Required Filings and Consents............................13
4.06. Permits; Compliance...................................................13
4.07. Financial Statements..................................................14
4.08. Conduct in the Ordinary Course; Absence of Certain Changes or Events..14
4.09. Absence of Litigation.................................................16
4.10. Employee Benefit Matters..............................................16
4.11. Labor Matters.........................................................19
4.12. Key Employees.........................................................20
4.13. Intellectual Property.................................................20
4.14. Taxes.................................................................21
4.15. Environmental Matters.................................................22
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4.16. Material Contracts...................................................23
4.17. Real Property........................................................23
4.18. Personal Property....................................................25
4.19. Assets...............................................................26
4.20. Insurance............................................................26
4.21. No Undisclosed Liabilities...........................................27
4.22. Private Placement....................................................27
4.23. Customers............................................................27
4.24. Guaranties...........................................................27
4.25. Brokers..............................................................27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
5.01. Organization and Qualification; Subsidiaries.........................28
5.02. Certificate of Incorporation and By-Laws.............................28
5.03. Capitalization.......................................................28
5.04. Authority Relative to This Agreement.................................29
5.05. No Conflict; Required Filings and Consents...........................29
5.06. SEC Filings; Financial Statements....................................30
5.07. Brokers..............................................................30
5.08. Taxes................................................................30
5.09. Absence of Litigation................................................31
5.10. No Material Adverse Effect...........................................31
5.11. Continuity...........................................................31
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
6.01. Conduct of Business by the Company Pending the Merger................31
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01. Access to Information; Confidentiality...............................33
7.02. No Solicitation of Competing Transactions............................34
7.03. Notification of Certain Matters......................................34
7.04. Pooling..............................................................35
7.05. Further Action; Consents; Filings....................................35
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7.06. Plan of Reorganization................................................36
7.07. Public Announcements..................................................36
7.08. Resale Restrictions...................................................36
7.09. Merger Information....................................................37
7.10. Stockholder Vote......................................................37
7.11. Fiscal Year 1997 Financial Statement..................................37
7.12. SEC Filings...........................................................38
7.13. Guaranties............................................................38
7.14. Company Disclosure Schedule...........................................38
7.15. Stock Transfer Taxes..................................................38
ARTICLE VIII
EMPLOYEE MATTERS
8.01. Employee Matters......................................................38
ARTICLE IX
CONDITIONS TO THE MERGER
9.01. Conditions to the Obligations of Each Party...........................39
9.02. Conditions to the Obligations of Parent and Merger Sub................40
9.03. Conditions to the Obligations of the Company..........................40
ARTICLE X
INDEMNIFICATION
10.01. Survival of Representations and Warranties...........................41
10.02. Indemnification by the Stockholders..................................41
10.03. Limits on Indemnification............................................43
ARTICLE XI
TERMINATION, AMENDMENTS AND WAIVER
11.01. Termination..........................................................43
11.02. Effect of Termination................................................44
11.03. Amendments and Waivers...............................................44
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ARTICLE XII
GENERAL PROVISIONS
12.01. Expenses.............................................................45
12.02. Notices..............................................................45
12.03. Severability.........................................................46
12.04. Assignment; Binding Effect; Benefit..................................46
12.05. Incorporation of Exhibits............................................46
12.06. Attorneys' Fees......................................................47
12.07. Governing Law........................................................47
12.08. Jurisdiction and Service of Process..................................47
12.09. Headings.............................................................47
12.10. Counterparts.........................................................47
12.11. Entire Agreement.....................................................47
12.12. Waiver of Jury Trial.................................................48
SCHEDULES
Company Disclosure Schedule
Parent Disclosure Schedule
EXHIBITS
Exhibit 9.01(d) Form of Employment Agreement with Xxxxxx X. Xxxxxxx
Exhibit 9.03(c) Form of Registration Rights Agreement
AGREEMENT AND PLAN OF MERGER dated as of February 23, 1998
(this "Agreement") among DYCOM INDUSTRIES, INC., a Florida corporation
("Parent"), DYCOM ACQUISITION CORPORATION I, a Missouri corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), INSTALLATION TECHNICIANS, INC., a
Missouri corporation (the "Company"), and the stockholders of the Company listed
on the signature pages hereto (collectively, the "Stockholders").
WHEREAS, Merger Sub, upon the terms and subject to the
conditions of this Agreement and in accordance with the GBCL, 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; and
WHEREAS, for accounting purposes, it is intended that the
Merger shall be accounted for as a "pooling of interests";
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 Definitions. For purposes of this
Agreement, the term:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" of any specified Person means any other Person
that directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified Person.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
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"Assets" has the meaning set forth in Section 4.19(a).
"Beneficial Owner" with respect to any Shares means a Person
who shall be deemed to be the beneficial owner of such Shares (a) that such
Person or any of its Affiliates or associates (as such term is defined in Rule
12b-2 promulgated under the Exchange Act) beneficially owns, directly or
indirectly, (b) that such Person or any of its Affiliates or associates has,
directly or indirectly, (i) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options or otherwise, or (ii) the right to
vote pursuant to any agreement, arrangement or understanding or (c) that are
beneficially owned, directly or indirectly, by any other Persons with whom such
Person or any of its Affiliates or associates or Person with whom such Person or
any of its Affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
Shares.
"Business Day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date on which any payment is due, any day on which banks are not
required or authorized to close in the City of New York.
"Certificate of Merger" has the meaning set forth in Section
2.02.
"Certificates" has the meaning set forth in Section 3.02(a).
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Audited Financial Statements" has the meaning set
forth in Section 4.07(a).
"Company Benefit Plans" means each employee benefit plan,
program, arrangement and contract (including, without limitation, any "employee
benefit plan", as defined in Section 3(3) of ERISA) maintained or contributed to
by the Company or with respect to which the Company could incur liability under
Section 4069, 4212(c) or 4204 of ERISA.
"Company Common Stock" means, collectively, the Voting Common
Stock and the Nonvoting Common Stock.
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"Company Disclosure Schedule" means the disclosure schedule
delivered by the Company pursuant to Section 7.14.
"Company Financial Statements" has the meaning set forth in
Section 4.07(a).
"Company Intellectual Property" has the meaning set forth in
Section 4.13(a).
"Company Interim Financial Statements" has the meaning set
forth in Section 4.07(b).
"Company Material Adverse Effect" means any circumstance,
change in, or effect on the business of the Company that, individually or in the
aggregate with any other circumstances, changes in, or effects on the business
of the Company (a) is, or could be, materially adverse to the business,
operations, assets or liabilities, employee relationships, customer or supplier
relationships, results of operations or financial condition of the Company or
(b) could adversely affect the ability of the Company to operate or conduct its
business in the manner in which it is currently operated or conducted.
"Company Permits" means all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Authority necessary for
the Company to own, lease and operate its properties or to carry on its business
as it is currently being conducted.
"Company's Accountants" means Xxxxx, Xxxxx and Xxxxxx,
independent accountants for the Company.
"Competing Transaction" means any of the following involving
the Company (other than the Merger): (a) a merger, consolidation, share
exchange, business combination or other similar transaction; (b) a sale, lease,
exchange, transfer or other disposition of any significant assets of the
Company, other than in the ordinary course of business or sales of obsolete
materials; or (c) an acquisition of any Company Common Stock.
"Confidentiality Agreement" has the meaning set forth in
Section 7.01(b).
"control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise.
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"Effective Time" means the date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of Missouri (or
such later time as may be agreed in writing by each of the parties hereto and
specified in the Certificate 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.
"Environmental Claims" means any and all actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
notices of liability or potential liability, investigations, proceedings,
consent orders or consent agreements relating in any way to any Environmental
Law, Environmental Permit or Hazardous Materials.
"Environmental Laws" means any federal, state or local Law
relating to (A) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment.
"Environmental Permits" has the meaning set forth in Section
4.15.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fiscal Year 1997 Audited Financial Statements" has the
meaning set forth in Section 7.11.
"GBCL" means the General Business and Corporation Law of the
State of Missouri.
"Governmental Authority" means any United States federal,
state or local or foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal or judicial or arbitral
body.
"Guaranty" means a guaranty given by a Stockholder of an
obligation incurred by the Company in the ordinary course of its business.
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"Hazardous Substances" 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 Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section
10.02(a).
"Indemnifying Party" has the meaning set forth in Section
10.02(a).
"Intellectual Property" means (a) trademarks, service marks,
trade dress, logos, trade names and corporate names, including all common law
rights, registrations and applications for registration thereof, and all rights
therein provided by multinational treaties or conventions, (b) copyrights
(registered or otherwise) and registrations and applications for registration
thereof, and all rights therein provided by multinational 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, data and documentation, (d) trade secrets and
confidential, technical or business information (including manufacturing
processes, and all 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 and
show-how), manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information, (f) copies and tangible embodiments of all the
foregoing, in whatever form or medium, (g) issued patents and patent
applications, (h) all rights to obtain and rights to apply for patents, and to
register trademarks and copyrights, (i) licenses or sublicenses in connection
with any of the foregoing, and (j) all rights to xxx and recover and retain
damages and costs and attorneys' fees for past, present and future infringement
or breach of any of the Intellectual Property rights hereinabove set forth.
"IRS" means the Internal Revenue Service.
"Law" means any United States federal, state or local or
foreign law, statute, ordinance, rule, regulation, code, order, judgment or
decree or other requirement or rule of law.
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"Liabilities" means any and all debts, 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 Order of any Governmental Authority and those arising under any
contract, agreement, arrangement, commitment or undertaking.
"Loss" has the meaning set forth in Section 10.02(a).
"Material Contracts" has the meaning set forth in Section
4.16(a).
"Merger" has the meaning set forth in the recitals to this
Agreement.
"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.
"Multiemployer Plan" has the meaning set forth in Section
4.10(b).
"Multiple Employer Plan" has the meaning set forth in Section
4.10(b).
"Nonvoting Common Stock" means the nonvoting common stock, par
value $.01 per share, of the Company.
"NYSE" means the New York Stock Exchange.
"Order" means any decree, judgment, injunction, ruling or
other order (whether temporary, preliminary or permanent) issued in any judicial
or administrative proceeding brought under any Law by any Governmental Authority
or any other party.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Common Stock" means the common stock, par value $0.33
1/3 per share, of Parent.
"Parent Disclosure Schedule" means the disclosure schedule
dated as of the date hereof of Parent and Merger Sub attached hereto and forming
a part of this Agreement.
"Parent Material Adverse Effect" means any circumstance,
change in, or effect on the business of Parent or any Parent Subsidiary that,
individually or in the aggregate with any other circumstances, changes in, or
effects on, the business of Parent or any Parent
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Subsidiary (a) is, or could be, materially adverse to the business, operations,
assets or liabilities, employee relationships, customer or supplier
relationships, results of operations or financial condition of Parent and the
Parent Subsidiaries, taken as a whole, or (b) could adversely affect the ability
of Parent and the Parent Subsidiaries to operate or conduct their business in
the manner in which it is currently operated or conducted.
"Parent Preferred Stock" has the meaning set forth in Section
5.03.
"Parent SEC Reports" has the meaning set forth in Section
5.06(a).
"Parent Subsidiary" means a Subsidiary of Parent.
"Parent's Accountants" means Deloitte & Touche L.L.P.,
independent accountants of Parent.
"Pension Plan" has the meaning set forth in Section 8.01.
"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; (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) minor 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 an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation, a
"person" as defined in Section 13(d)(3) of the Exchange Act), trust, association
or entity or government, political subdivision, agency or instrumentality of a
government.
"Personal Property" has the meaning set forth in Section
4.18(a).
"Plans" has the meaning set forth in Section 4.10(a).
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"Real Property" has the meaning set forth in Section 4.17(a).
"Registration Rights Agreement" has the meaning set forth in
Section 9.03(c).
"Representatives" of an entity means the officers, directors,
employees, accountants, consultants, legal counsel, agents and other advisors
and representatives of such entity.
"S Election" has the meaning set forth in Section 4.14.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means, collectively, all issued and outstanding
shares of Company Common Stock.
"Sophisticated Person" means a person who has sufficient
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of its investment in the shares of Parent
Common Stock and is capable of bearing the economic risks of such investment.
"Stockholders" has the meaning set forth in the preamble to
this Agreement.
"Subsidiary" or "Subsidiaries" of any Person means any
corporation, partnership, joint venture or other legal entity of which such
Person (either alone or through or together with any other Subsidiary), owns,
directly or indirectly, more than 50% of the stock or other equity interests,
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other legal
entity.
"Surviving Corporation" has the meaning set forth in Section
2.01.
"Tax" or "Taxes" has the meaning set forth in Section 4.14.
"Third Party Claims" has the meaning set forth in Section
10.02(b).
"Threshold Amount" has the meaning set forth in Section 10.03.
"U.S. GAAP" means United States generally accepted accounting
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.
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"Voting Common Stock" means the voting common stock, par value
$.01 per share, of the Company.
"WARN" means the Workers Adjustment and Retraining
Notification Act.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in Article X, 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 third Business Day following the
satisfaction or, if permissible, waiver of the conditions set forth in Article X
(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 a
Certificate of Merger (the "Certificate of Merger") with the Secretary of State
of the State of Missouri 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 Certificate of Merger, a closing will be held at the offices of
Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such
other place as the parties may agree).
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.
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
10
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.
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
cancelled pursuant to Section 3.01(b)) shall be converted into 20
shares of Parent Common Stock.
(b) each Share held in the treasury of the Company immediately
prior to the Effective Time shall be cancelled 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 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 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.
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(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.
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 each hereby represents and
warrants, severally and not jointly, to Parent and Merger Sub that:
SECTION 4.01. Organization and Qualification; Absence of
Subsidiaries. The Company is a corporation duly organized and validly existing
and in good standing under the laws of the State of Missouri and has the
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is currently being conducted. The Company is in good
standing in the State of Missouri. 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 nature of its business makes such qualification or licensing
necessary, except for such failures to be so
12
qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Company Material Adverse Effect. The Company does not have
any Subsidiaries nor an equity interest in any partnerships or joint venture
arrangements or other business entity.
SECTION 4.02. Certificate of Incorporation and By-Laws. The
Company has heretofore made available to Parent a complete and correct copy of
the Certificate of Incorporation and the By-Laws of the Company. Such
Certificate of Incorporation and By-Laws are in full force and effect.
SECTION 4.03. Capitalization. (a) The authorized capital stock
of the Company consists of 3,000 Shares of Voting Common Stock and 27,000 Shares
of Nonvoting Common Stock. As of the date of this Agreement, (i) 3,000 Shares of
Voting Common Stock and 27,000 Shares of Nonvoting Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
(ii) no Shares of Voting Common Stock or Nonvoting Common Stock are held in the
treasury of the Company. There are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or obligating the Company to issue or
sell any shares of capital stock of, or other equity interests, in the Company.
There are no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any Shares. 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. There are no material 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 Stockholders are all of the record and Beneficial
Owners of the Shares, and each Stockholder holds his or its Shares free and
clear of Encumbrance, and has full and absolute right and power to assign,
transfer and sell his or its Shares.
SECTION 4.04. Authority Relative to This Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Merger. Each Stockholder has full right and capacity to enter into this
Agreement and to carry out its obligations hereunder. 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 Voting 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). This Agreement has been duly and validly executed and
13
delivered by the Company and each Stockholder and, assuming due authorization,
execution and delivery by Parent and Merger Sub, constitute legal, valid and
binding obligations of the Company and each Stockholder, enforceable against the
Company and each Stockholder in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws of general application affecting the enforcement of
creditors' rights generally.
SECTION 4.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company and the Stockholders
does not, and the performance of this Agreement by the Company and the
Stockholders will not, (i) conflict with or violate the Certificate of
Incorporation or By-Laws of the Company, (ii) assuming that all consents,
approvals, authorizations and other actions described in subsection (b) have
been obtained and all filings and obligations described in subsection (b) have
been made, conflict with or violate any Law applicable to the Stockholders or
the Company or by which any property or asset of the Company is bound, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of an Encumbrance on any property or asset of the Company pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation, except, with respect to
clauses (ii) and (iii) only, (X) as disclosed in Section 4.05 of the Company
Disclosure Schedule and (Y) where any such conflicts, violations, breaches,
defaults or other occurrences would not prevent or delay consummation of the
Merger, or otherwise prevent the Company or the Stockholders from performing
their respective obligations under this Agreement, and would not, individually
or in the aggregate, have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company and the Stockholders do not, and the performance of this Agreement by
each of them will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority, except (i)
for the pre-merger notification requirements of the HSR Act and the rules and
regulations thereunder, and filing and recordation of appropriate merger
documents as required by the GBCL or (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications
would not prevent or delay consummation of the Merger, or otherwise prevent the
Company or the Stockholders from performing their respective obligations under
this Agreement, and would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 4.06. Permits; Compliance. The Company is in
possession of all Company Permits and, as of the date hereof, no suspension or
cancellation of any of the Company Permits is pending or, to the knowledge of
the Company and the Stockholders after reasonable investigation, threatened,
except where the failure to possess, or the suspension or
14
cancellation of, any of the Company Permits would not, individually or in the
aggregate, have a Company Material Adverse Effect. The Company is not in
conflict with, or in default or violation of, (a) any Law applicable to the
Company or by which any property or asset of the Company is bound or (b) any
Company Permits, other than conflicts or violations which, individually or in
the aggregate, would not have a Company Material Adverse Effect.
SECTION 4.07. Financial Statements. True and complete copies
of (a) the audited balance sheet of the Company for each of the fiscal years
ended as of (i) January 1, 1994 and December 31, 1994 and the related audited
statements of income, retained earnings and cash flow for the periods then ended
and (ii) December 30, 1995 and December 28, 1996, and the related statements of
income, stockholders' equity and cash flows for the periods then ended,
together, in each case, with all related notes and schedules thereto,
accompanied by the reports thereon of the Company's Accountants (collectively
referred to herein as the "Company Audited Financial Statements") and (b) the
unaudited balance sheets of the Company for each of the 12 months of calendar
year 1997, and the related statements of income of the Company (collectively
referred to herein as the "Company Interim Financial Statements" and, together
with the Company Audited Financial Statements, the "Company Financial
Statements") have been delivered by the Company to Parent. The Company Financial
Statements (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 U.S. GAAP
(except as may be indicated in the notes thereto) 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 (subject, in the case of the Company Interim Financial Statement, to
normal recurring year end adjustments).
SECTION 4.08. Conduct in the Ordinary Course; Absence of
Certain Changes or Events. Since December 28, 1996, except as disclosed in
Section 4.08 of the Company Disclosure Schedule, the Company has conducted its
business only in the ordinary course and in a manner consistent with past
practice and, since such date, has not
(a) amended or otherwise changed its Certificate of
Incorporation or By- Laws;
(b) issued, sold or pledged, or authorized the issuance,
sale or pledge of, any shares of its capital stock;
(c) declared, set aside, made or paid any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
15
(d) reclassified, combined, split, subdivided or redeemed,
purchased or otherwise acquired, directly or indirectly, any of
its capital stock;
(e) acquired (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in
any corporation, partnership, other business organization or any
assets, other than the acquisition of assets in the ordinary
course of business consistent with past practice;
(f) incurred any indebtedness for borrowed money, except for
indebtedness incurred in the ordinary course of business and
consistent with past practice;
(g) 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;
(h) increased the compensation payable or to become payable
to its officers, consultants or employees, except for increases
in accordance with past practices in salaries or wages of
employees or consultants of the Company who are not officers of
the Company, or granted any severance or termination pay to, or
entered into any employment or severance agreement with any
director, officer, consultant or other employee of the Company,
or established, adopted, entered into or amended any collective
bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any director, officer, consultant or employee;
(i) 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);
(j) made any tax election or settled or compromised any
material federal, state, local or foreign income tax liability;
(k) paid, discharged or satisfied any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction,
in the ordinary course of business and consistent with past
practice, of liabilities reflected or reserved against in the
Company Financial Statements or subsequently incurred in the
ordinary course of business and consistent with past practice;
16
(l) suffered any casualty, loss or damage with respect to
any of the Assets which in the aggregate have a replacement cost
of more than $100,000, whether or not such casualty, loss or
damage shall have been covered by insurance;
(m) disclosed any confidential or proprietary Company
Intellectual Property;
(n) made any material changes in the customary methods of
operations of the Company, including, without limitation,
practices and policies relating to manufacturing, purchasing,
marketing, selling and pricing;
(o) 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);
(p) suffered any Company Material Adverse Effect; or
(q) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 4.08 or granted 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 4.08, except as expressly
contemplated by this Agreement.
SECTION 4.09. Absence of Litigation. Except as disclosed in
Section 4.09 of the Company Disclosure Schedule, there is no Action pending or,
to the knowledge of the Company or the Stockholders after reasonable
investigation, threatened against the Company or any property or asset of the
Company before any Governmental Authority.
SECTION 4.10. Employee Benefit Matters. (a) Plans and Material
Documents. Section 4.10(a) of the Company Disclosure Schedule lists (i) all
employee benefit plans (as defined in Section 3(3) of 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, (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 between the Company or any of its Affiliates and
any employee of the Company including, without limitation, any contracts,
arrangements or
17
understandings relating to the sale of the Company (collectively, the "Plans").
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 funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the most
recently filed IRS Form 5500, (iv) the most recently received IRS determination
letter for each such Plan, and (v) the most recently prepared actuarial report
and financial statement in connection with each such Plan. Except as disclosed
on Section 4.10(a) of the Company 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, except
where such noncompliance would not have a Company Material Adverse Effect, and
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. 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, except where such non-
18
compliance or default would not have a Company Material Adverse Effect. No legal
action, suit or claim is pending or, to the knowledge of the Company and the
Stockholders after reasonable investigation, threatened with respect to any Plan
(other than claims for benefits in the ordinary course) and, to the knowledge of
the Company and the Stockholders after reasonable investigation, no fact or
event exists that could give rise to any such action, suit or claim.
(d) Qualification of Certain Plans. 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
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. 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 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
material liability for any penalty or tax arising under Section 4971, 4972,
4980, 4980B or 6652 of the Code or any material liability under Section 502 of
ERISA, and, to the knowledge of the Company and the Stockholders after
reasonable investigation, no fact or event exists which could give rise to any
such material liability. The Company has not incurred any material 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 material 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 material 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 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
18
Code; and, to the knowledge of the Company and the Stockholders after reasonable
investigation, no fact or event exists which could give rise to any such lien or
requirement to post any such security.
(f) Plan Contributions and Funding. All contributions,
premiums or payments required to be made with respect to any Plan have been made
on or before their due dates. All such contributions have been fully deducted
for income tax purposes and no such deduction has been challenged or disallowed
by any government entity and no fact or event exists which could give rise to
any such challenge or disallowance. As of the 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. Each of the guaranteed
investment contracts and other funding contracts with any insurance company that
are 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
was issued by an insurance company which carried the highest rating from each of
Duff & Xxxxxx Credit Rating Co., Standard & Poor's Insurance Rating Services,
A.M. Best Company and Xxxxx'x Investors Service, as of the date such contract
was issued, the date hereof and the Effective Time.
(h) Americans With Disability Act. Except as set forth in
Section 4.10(h) of the Company Disclosure Schedule, the Company is in compliance
with the requirements of the Americans With Disabilities Act, except where such
noncompliance would not have a Company Material Adverse Effect.
(i) WARN Act. The Company is in compliance with the
requirements of WARN and has no liabilities pursuant to WARN.
SECTION 4.11. Labor Matters. Except as set forth in Section
4.11 of the Company 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 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 knowledge
of the Company and the Stockholders after reasonable investigation, 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 there are
no grievances outstanding against the Company under any such agreement or
contract which constitutes a Company Material Adverse Effect; (d) there are no
19
unfair labor practice complaints pending against the Company before the National
Labor Relations Board or any other Governmental Authority or any current union
representation questions involving employees of the Company which constitutes a
Company 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
where such noncompliance would not have a Company 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, except where such failure or noncompliance would not have a Company
Material Adverse Effect; (f) the Company has paid in full to all its employees
or adequately accrued for in accordance with U.S. 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 knowledge of
the Company and the Stockholders after reasonable investigation, threatened
before any Governmental Authority with respect to any Persons currently or
formerly employed by the Company; (h) the Company is not a party to, or
otherwise bound by, any consent decree with, or citation by, any Governmental
Authority relating to employees or employment practices; (i) there is no charge
or proceeding with respect to a violation of any occupational safety or health
standards that has been asserted or is now pending or, to the knowledge of the
Company and the Stockholders after reasonable investigation, 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 knowledge of the Company
and the Stockholders after reasonable investigation, 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 4.12. Key Employees. Section 4.12 of the Company
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 1997, 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 whose annual compensation exceeded (or, in 1998, is
expected to exceed) $60,000.
SECTION 4.13. Intellectual Property. (a) Section 4.13(a) of
the Company Disclosure Schedule sets forth a true and complete list of all
Intellectual Property owned by the Company (the "Company Intellectual
Property"). The Company Intellectual Property
20
constitutes all the Intellectual Property used by the Company in the conduct of
its business, and there are no other items of Intellectual Property that are
material to the Company or the business of the Company.
(b) The rights of the Company in or to the Company
Intellectual Property, and the conduct of the business of the Company, do not
conflict with or infringe upon the Intellectual Property or other rights of any
third party, and no claim has been asserted that the use of the Company
Intellectual Property or the conduct of the business of the Company does or may
infringe upon such rights of any third party.
(c) The Company is the exclusive owner of the entire right,
title and interest in and to, free and clear of all Encumbrances, and has the
right to use, all Company Intellectual Property in the continued operation of
the Company in a manner consistent with past practice.
(d) The Company Intellectual Property is valid and has not
been adjudged invalid or unenforceable in whole or part by any Governmental
Authority.
(e) To the knowledge of the Company and the Stockholders after
reasonable investigation, no Person is engaging in any activity that infringes
upon the Company Intellectual Property or upon the rights of the Company
therein. The consummation of the Merger will not result in the termination or
impairment of any of the Company Intellectual Property.
(f) The Company is not aware of any reason why any pending
application with respect to any of the Company Intellectual Property would not
be granted.
(g) The Company has not granted to, nor received from, any
third party any license or sublicense of Intellectual Property.
SECTION 4.14. Taxes. The Company has (a) filed all federal,
state, local and foreign Tax returns required to be filed by it prior to the
date of this Agreement (taking into account extensions), (b) paid or accrued all
Taxes shown to be due on such returns and paid all applicable ad valorem and
value added Taxes as are due, and (c) paid or accrued all Taxes for which a
notice of assessment or collection has been received (other than amounts being
contested in good faith by appropriate proceedings), except in the case of
clause (a), (b) or (c) for any such filings, payments or accruals which would
not, individually or in the aggregate, have a Company Material Adverse Effect.
The Company has open years for federal, state and local income Tax returns only
as set forth in Section 4.14 of the Company Disclosure Schedule. The Company has
not received from any governmental authority any written notice of proposed
material adjustment, deficiency or underpayment of any Taxes, which notice has
21
not been satisfied by payment or been withdrawn, and there are no material
claims that have been asserted or, to the knowledge of the Company and the
Stockholders after reasonable investigation, threatened relating to such Taxes
against the Company. There are no agreements for the extension of time for the
assessment of any Taxes of the Company other than routine extensions granted in
the ordinary course of business. The Company has withheld or collected and paid
over to the appropriate governmental authorities (or is properly holding for
such payment) all Taxes required by Law to be withheld or collected, except for
amounts which would not, individually or in the aggregate, have a Company
Material Adverse Effect. The Company has not made an election under Section
341(f) of the Code. At all times since January 2, 1994, the Company has had in
effect (i) an election under Section 1362(a) of the Code (or a comparable
election under any successor provision) to be taxed as an S Corporation for
federal income tax purposes (an "S Election") (or comparable election under
state or local law), (ii) a comparable state law election in each state in which
it conducts business, and (iii) a comparable local law election in each locality
in which it both conducts business and is subject to a local income tax. 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. 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 amounts imposed with respect thereto) imposed by
any government or taxing authority, 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 4.15. Environmental Matters. The Company: (a) is in
compliance with, and for the past three years has been in compliance with, all
applicable Environmental Laws, except where such noncompliance would not have a
Company Material Adverse Effect; (b) does not currently own or lease, and has
not formerly owned or leased, any property that is contaminated with any
Hazardous Substance; (c) has not disposed of, has not arranged for the disposal
of, nor has any knowledge of the disposal of, any hazardous substance on Real
Property; (d) has all permits, licenses and other authorizations required under
any Environmental Law ("Environmental Permits"), except where the failure to
have such Environmental Permits would not have a Company Material Adverse
Effect; and (e) is in compliance with its Environmental Permits except where
such noncompliance would not have a Company Material Adverse Effect. All past
non-compliance with any applicable Environmental Law or Environmental Permit has
been resolved without any pending, ongoing or future obligation, cost or
liability, and there is no requirement proposed for adoption or
22
implementation under any Environmental Law or Environmental Permit that would
have a Company Material Adverse Effect.
SECTION 4.16. Material Contracts. (a) Section 4.16(a) of the
Company Disclosure Schedule lists each of the following contracts and agreements
of the Company (collectively, the "Material Contracts"):
(i) each instrument or arrangement creating an Encumbrance
on any real or personal property;
(ii) each indenture, trust agreement, credit agreement or
other instrument relating to any issue of bonds, debentures,
notes or other evidences of indebtedness;
(iii) each lease or other agreement relating to real or
personal property or any interest therein that either does not
terminate or is not terminable within six months from the date
hereof;
(iv) each policy of fire, liability and other forms of
insurance (including title insurance) held by and/or covering
assets of the Company;
(v) each letter of credit, bank account or safe deposit box
arrangement;
(vi) each contract or agreement between the Company and any
Affiliate; and
(vii) each contract or agreement that obligates the Company
to perform, provide or purchase goods, supplies or services which
have an individual value of more than $100,000.
(b) Except as disclosed in Section 4.16(b) of the Company
Disclosure Schedule, each Material Contract (i) is valid and binding on the
Company and (ii) is in full force and effect.
(c) The Company is not in breach of, or default under, any
Material Contract. To the knowledge of the Company, no other party to any
Material Contract is in breach thereof or default thereunder.
SECTION 4.17. Real Property. (a) Section 4.17(a) of the
Company Disclosure Schedule lists the street address of each parcel of real
property owned or leased by the Company (collectively, the "Real Property"),
together with a designation as to whether such real property is owned or leased.
23
(b) Except as described in Section 4.17(b) of the Company
Disclosure Schedule, there is no material violation of any Law (including,
without limitation, any building, planning or zoning law) relating to any of the
Real Property. The Company has made available to Parent true and complete
copies, for each parcel of the Real Property owned by it and, to the extent
available, for each parcel of Real Property leased or subleased by it, all
deeds, title insurance policies, title reports, surveys, certificates of
occupancy, environmental reports and audits, appraisals, permits, other title
documents and other documents relating to 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. There are
no condemnation proceedings or eminent domain proceedings of any kind pending
or, to the knowledge of the Company, threatened against the Real Property. All
existing water, sewer, steam, gas, electricity, telephone and other utilities
required for the construction, use, occupancy, operation and maintenance of the
Real Property are adequate for the conduct of the business of the Company as it
has been and currently is conducted. There are no material adverse physical
conditions affecting the Real Property or any of the facilities, buildings,
structures, erections, improvements, fixtures, fixed assets and personalty of a
permanent nature annexed, affixed or attached to, located on or forming part of
the Real Property. Except as set forth in Section 4.17(b) of the Company
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 4.17(b) of
the Company Disclosure Schedule to any third party.
(c) The Company has delivered to Parent true and complete
copies of all leases and subleases with respect to the Real Property that is
leased or subleased by the Company 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 pertaining thereto, is valid and binding and in full force
and effect and represents the entire agreement between the respective
landlord and tenant with respect to such property;
(ii) except as otherwise set forth in Section 4.17(c) of the
Company Disclosure Schedule, such lease or sublease will not cease to
be valid and binding 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;
24
(iii) except as otherwise disclosed in Section 4.17(c) of the
Company Disclosure Schedule, with respect to each such lease or
sublease: (A) the Company has not 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) the Company has not
received any notice of a breach or default under such lease or
sublease, which breach or default has not been cured, and (C) the
Company has not granted to any other Person any rights, adverse or
otherwise, under such lease or sublease; and
(iv) neither the Company nor, to the knowledge of the Company
and the Stockholders after reasonable investigation, any other party to
such lease or sublease, is in breach or default in any material
respect, and, to the knowledge of the Company and the Stockholders
after reasonable investigation, 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.
SECTION 4.18. Personal Property. (a) Section 4.18(a) of the
Company Disclosure Schedule lists each item or distinct group of machinery,
equipment, tools, supplies, furniture, fixtures, personalty, vehicles, rolling
stock and other tangible personal property (collectively, the "Personal
Property") used in the business of the Company or owned or leased by the
Company.
(b) The Company has delivered to Parent true and complete
copies of all leases and subleases for 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
pertaining thereto, is valid and binding 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 4.18(b) of the Company
Disclosure Schedule, such lease or sublease will not cease to be valid
and binding and in full force and effect on terms identical to those
currently in effect as a result of the consummation of the
transactions contemplated by this Agreement, nor will the consummation
of the transactions contemplated by this Agreement constitute a breach
or default under such lease or sublease or otherwise give the lessor a
right to terminate such lease or sublease;
(iii) except as otherwise disclosed in Section 4.18(b) of the
Company Disclosure Schedule, with respect to each such lease or
sublease: (A) the Company has
25
not 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) the Company has not received any notice of a
breach or default under such lease or sublease, which breach or default
has not been cured, and (C) the Company has not granted to any other
Person any rights, adverse or otherwise, under such lease or sublease;
and
(iv) neither the Company nor, to the knowledge of the Company
and the Stockholders after reasonable investigation, any other party to
such lease or sublease, is in breach or default in any material
respect, and, to the knowledge of the Company, 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 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 Personal Property for
the full term of such renewal options.
SECTION 4.19. Assets. (a) Except as disclosed in Section
4.19(a) of the Company Disclosure Schedule, the Company owns, leases or has the
legal right to use all the properties and assets, including, without limitation,
the Real Property and the Personal Property, used or intended to be used in the
conduct of its 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 its 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 4.17(b), 4.17(c), 4.18(b)
or 4.19(a) of the Company 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
of the Company as it is currently conducted. The Company has caused the Assets
to be maintained in accordance with good business practice, and all the Assets
are in good operating condition and repair, normal wear and tear excepted.
SECTION 4.20. Insurance. The Company maintains policies of
insurance on terms, and in amounts, that are adequate for the conduct of its
business as it is currently conducted and consistent with customary practices
and standards of companies engaged in a business similar to that of the Company,
and with insurers reasonably believed by the Company to be responsible.
26
SECTION 4.21. No Undisclosed Liabilities. There are no
material Liabilities of the Company, other than Liabilities (a) reflected or
reserved against on the Company Financial Statements, or (b) disclosed in
Section 4.21 of the Company Disclosure Schedule. Adequate reserves are reflected
on the Company Financial Statements against all material 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 U.S. GAAP.
SECTION 4.22. Private Placement. (a) Each Stockholder
understands that (i) the offering and sale of the shares of Parent Common Stock
is intended to be exempt from registration under the Securities Act pursuant to
Section 4(2) of the Securities Act and (ii) there is no existing public or other
market for such shares and there can be no assurance that such Stockholder will
be able to sell or dispose of such shares purchased by it pursuant to this
Agreement.
(b) Each Stockholder is (i) a natural person whose individual
net worth, or joint net worth with that Stockholder's spouse, at the Effective
Time is at least $1,000,000 or (ii) a natural person who had an individual
income in excess of $200,000 in each of the two most recent years or joint
income with such Stockholder's spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income level in the
current year.
(c) Each Stockholder is a Sophisticated Person.
SECTION 4.23. Customers. Except as disclosed in Section 4.23
of the Company Disclosure Schedule, the Company has not received any notice or
has any reason to believe that any 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 4.24. Guaranties. Section 4.24 of the Company
Disclosure Schedule sets forth a list of all Guaranties other than Guaranties
for trade payables.
SECTION 4.25. Brokers. No arrangements with any broker, finder
or investment banker with respect to any brokerage, finder's or other fee or
commission in connection with the Merger have been made by or on behalf of the
Company for which Parent or Merger Sub would be liable.
27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Parent SEC Reports, Parent and
Merger Sub hereby jointly and severally represent and warrant to the Company and
the Stockholders that:
SECTION 5.01. Organization and Qualification; Subsidiaries.
Each of Parent and each Parent Subsidiary is a corporation duly organized and
validly existing under the laws of the jurisdiction of its incorporation and has
the requisite power and authority to own, lease and operate its properties and
to carry on its business as it is currently being conducted. Each of Parent and
each Parent Subsidiary is in good standing under the laws of the jurisdiction of
its incorporation. Each of Parent and each Parent Subsidiary 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 nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have a Parent
Material Adverse Effect.
SECTION 5.02. Certificate of Incorporation and By-Laws. Parent
heretofore has made available to the Company a complete and correct copy of the
Articles or Certificate of Incorporation and the By-Laws of Parent and Merger
Sub. The Articles or Certificate of Incorporation and By-Laws of each of Parent
and Merger Sub are in full force and effect.
SECTION 5.03. 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 February 4, 1998, (i) 12,884,071 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. The authorized capital stock of
Merger Sub consists of 1,000 shares of Merger Sub Common Stock of which, as of
the date of this Agreement, 100 shares are issued and outstanding. On the date
of this Agreement, all issued and outstanding shares of Merger Sub Common Stock
are, and at the Effective Time all issued and outstanding shares of Merger Sub
Common Stock will be, duly authorized, validly issued, fully paid and
non-assessable and will be held by Parent. Except for 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, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of Parent or any
Parent Subsidiary or obligating Parent or any Parent Subsidiary to issue or sell
any shares of
28
capital stock of, or other equity interests in, Parent or any Parent Subsidiary.
The shares of Parent Common Stock to be issued pursuant to the Merger will be
duly authorized, validly issued, fully paid and nonassessable.
SECTION 5.04. Authority Relative to This Agreement. Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver this Agreement, to perform their respective obligations hereunder
and to consummate the Merger. The execution and delivery of this Agreement by
each of Parent and Merger Sub and the consummation by each of Parent and Merger
Sub of the Merger have been duly authorized by all necessary corporate action
and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the Merger (other than
the filing and recordation of appropriate merger documents as required by the
GBCL). This Agreement has been duly and validly executed and delivered by each
of Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitute legal, valid and binding obligations of each
of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization or other similar laws of general
application affecting the enforcement of creditors' rights generally.
SECTION 5.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by each of Parent and Merger Sub do
not, and the performance of this Agreement by each of Parent and Merger Sub will
not (i) conflict with or violate the Articles of Incorporation or By-Laws or
equivalent organizational documents of Parent, or Merger Sub, (ii) assuming that
all consents, approvals, authorizations and other actions described in
subsection (b) have been obtained and all filings and obligations described in
subsection (b) have been made, conflict with or violate any Law applicable to
Parent or any Parent Subsidiary or by which any property or asset of Parent or
any Parent Subsidiary is bound, or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of an Encumbrance on
any property or asset of Parent or any Parent Subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, except, with respect to clauses
(ii) and (iii) only, (X) as disclosed in Section 5.05 of the Parent Disclosure
Schedule and (Y) where any such conflicts, violations, breaches, defaults or
other occurrences would not prevent or delay consummation of the Merger, or
otherwise prevent Parent or Merger Sub from performing their respective
obligations under this Agreement, and would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by each of
Parent and Merger Sub do not, and the performance of this Agreement by each of
Parent and Merger Sub
29
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Government Authority, except (i) for applicable
requirements, if any, of the Exchange Act, state securities or "blue sky" Laws
and the NYSE and the pre-merger notification requirements of the HSR Act and
filing and recordation of appropriate merger documents as required by the GBCL
and (ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications would not prevent or delay
consummation of the Merger, or otherwise prevent either Parent or Merger Sub
from performing their respective obligations under this Agreement, and would
not, individually or in the aggregate, have a Parent Material Adverse Effect.
SECTION 5.06. SEC Filings; Financial Statements. (a) Parent
has filed all forms, reports and documents required to be filed by it with the
SEC since August 1, 1994 through the date of this Agreement (collectively, the
"Parent SEC Reports"). The Parent SEC Reports (i) were prepared in accordance
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 Parent Subsidiary
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 Parent SEC Reports was
prepared in accordance with U.S. 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 the consolidated Parent Subsidiaries as at the
respective dates thereof and for the respective periods indicated therein except
as otherwise noted therein (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments which were not and are not expected,
individually or in the aggregate, to have a Parent Material Adverse Effect).
SECTION 5.07. Brokers. No arrangements with any broker, finder
or investment banker with respect to any brokerage, finder's or other fee or
commission in connection with the Merger have been made by or on behalf of
Parent for which the Company or the Stockholders would be liable.
SECTION 5.08. Taxes. Parent has filed all federal, state and
local Tax returns required to be filed by it prior to the date of this Agreement
(taking into account extensions), paid or provided for in Parent's financial
statements the payment in full of all Taxes due any Governmental Authority and
no deficiency for any material amount of Tax has been asserted or assessed by a
taxing authority against Parent. Parent has not executed, or agreed to execute,
any waivers of any statutes of limitations on the right of any Governmental
Authority to assess additional Taxes or to contest the income or loss reported
with respect to any Tax period. No
30
issues have been raised (and are currently pending) as of the date of this
Agreement by the IRS or any other Governmental Authority in connection with any
of the Parent's Tax returns. The consummation of the Merger shall not result in
any material Taxes being due and payable by Parent to any Governmental
Authority.
SECTION 5.09. Absence of Litigation. Except as disclosed in
Section 5.09 of Parent Disclosure Schedule, there is no Action pending or, to
the knowledge of Parent after reasonable investigation, threatened against
Parent or any property or asset of Parent before any Governmental Authority.
SECTION 5.10. No Material Adverse Effect. Since July 31, 1997,
Parent has not suffered any Parent Material Adverse Effect.
SECTION 5.11. Continuity. Parent's intention, upon the
consummation of the Merger, is to continue the current lines of business of the
Company in the same general geographic area as it is currently conducted and to
preserve the existing relationships of the Company with its customers.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company Pending the
Merger. The Company and the Stockholders covenant and agree that, between the
date of this Agreement and the Effective Time, except as set forth in Section
6.01 of the Company Disclosure Schedule, unless Parent shall otherwise agree in
writing, (a) the business of the Company shall be conducted only in, and the
Company shall not take any action except in, the ordinary course of business and
in a manner consistent with past practice and (b) the Company shall use its
reasonable efforts to preserve substantially intact its business organization,
to keep available the services of the current officers, employees and
consultants of the Company and to preserve the current relationships of the
Company with customers, suppliers and other Persons with which the Company has
significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, the Company shall 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 following:
(a) amend or otherwise change its Certificate of
Incorporation or By-Laws;
(b) issue, sell or pledge, or authorize the issuance, sale
or pledge of, any shares of its capital stock;
31
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except for any such
distribution to pay the income Tax liability of the Stockholders
for 1997 and that portion of 1998 up to and including the
Effective Time with respect to the income of the Company;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in
any corporation, partnership, other business organization or any
assets, other than the acquisition of assets in the ordinary
course of business consistent with past practice;
(f) incur any indebtedness for borrowed money, except for
indebtedness incurred in the ordinary course of business and
consistent with past practice;
(g) enter 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;
(h) authorize any capital expenditure which, when taken
together with all other capital expenditures made by the Company
between the date of this Agreement and the Effective Time, is in
excess of $25,000;
(i) increase the compensation payable or to become payable
to its officers, consultants or employees, except for increases
in accordance with past practices in salaries or wages of
employees or consultants of the Company who are not officers of
the Company, or grant any severance or termination pay to, or
enter into any employment or severance agreement with any
director, officer, consultant or other employee of the Company,
or establish, adopt, enter into or amended any collective
bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any director, officer, consultant or employee;
(j) take 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);
32
(k) make any tax election or settle or compromise any
material federal, state, local or foreign income tax liability;
(l) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction,
in the ordinary course of business and consistent with past
practice, of liabilities reflected or reserved against in the
Company Financial Statements or subsequently incurred in the
ordinary course of business and consistent with past practice;
(m) disclose any confidential or proprietary Company
Intellectual Property;
(n) make any material changes in the customary methods of
operations of the Company, including, without limitation,
practices and policies relating to manufacturing, purchasing,
marketing, selling and pricing;
(o) enter 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);
(p) suffer any Company Material Adverse Effect; or
(q) agree, whether in writing or otherwise, to take any of
the actions specified in this Section 6.01 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 6.01, except as expressly
contemplated by this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Access to Information; Confidentiality. (a) From
the date hereof to the Effective Time, Parent, on the one hand, and the
Stockholders and the Company, on the other hand, shall (i) provide to the other
party and its Representatives access at reasonable times upon prior notice to
the officers, employees, agents, properties, offices and other facilities of the
other and, in the case of Parent, the Parent Subsidiaries and the Company and to
the books and records thereof and (ii) furnish promptly such information
concerning the business, properties, contracts, assets, liabilities, personnel
and other aspects of the other party and, in the case of Parent, the Parent
Subsidiaries and the Company.
33
(b) Parent, the Company and the Stockholders shall comply
with, and shall cause their respective Representatives to comply with, their
respective obligations under the Amended and Restated Confidentiality Agreement
dated February 20, 1998 (the "Confidentiality Agreement") among the Company, the
Stockholders and Parent.
SECTION 7.02. No Solicitation of Competing Transactions. From
the date hereof to the earlier to occur of the termination of this Agreement or
the Effective Time, the Company and the Stockholders will not, directly or
indirectly, and will instruct their respective Representatives not to, directly
or indirectly, solicit or initiate (including by way of furnishing nonpublic
information), or take any other action knowingly to facilitate, any inquiries or
the making of any proposal or offer that constitutes, any Competing Transaction,
or enter into or maintain or continue discussions or negotiate with any Person
or entity in furtherance of such inquiries or to obtain a Competing Transaction,
or agree to or endorse any Competing Transaction, or authorize or permit any of
their Representatives to take any such action. The Company shall notify Parent
promptly if any proposal or offer, or any inquiry or contact with any Person
with respect thereto, regarding a Competing Transaction is made. The Company
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to a Competing
Transaction.
SECTION 7.03. Notification of Certain Matters. From and after
the date of this Agreement until the earlier to occur of the termination of this
Agreement or the Effective Time, each party hereto shall promptly notify the
other parties hereto in writing of (a) the occurrence, or nonoccurrence, of any
event the occurrence or nonoccurrence of which would be likely to cause (i) any
representations or warranties made in this Agreement, or any information
furnished on any Schedule in the Parent Disclosure Schedule or the Company
Disclosure Schedule, not to be accurate, to a degree which would cause any
condition to the obligations of any party to effect the Merger not to be
satisfied, either at the time such representation or warranty is made, or such
information is furnished, or at the time of the occurrence or nonoccurrence of
such event, or (ii) any condition to the obligations of any party to effect the
Merger not to be satisfied, including, without limitation, the failure of the
Company to satisfy the condition specified in Section 9.02(c), or (b) the
failure of the Company or Parent, as the case be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it pursuant
to this Agreement which would be likely to result in any condition to the
obligations of any party to effect the Merger not be satisfied; provided,
however, that the delivery of any notice pursuant to this Section 7.03 shall not
be deemed to be an amendment of this Agreement or any Schedule in the Parent
Disclosure Schedule or the Company 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 7.03 shall limit or affect the remedies available hereunder to the party
receiving such notice, including the rights of Parent under Section 9.02(a) and
the rights of the Company under Section 9.03(a), in the event that a
34
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 7.04. Pooling. (a) From and after the date hereof and
until the Effective Time, neither Parent, the Stockholders nor the Company nor
any of their respective Affiliates shall knowingly take any action, or knowingly
fail to take any action, that is reasonably likely to jeopardize the treatment
of the Merger as a "pooling of interests" for accounting purposes. Between the
date of this Agreement and the Effective Time, Parent, the Stockholders and the
Company each shall take all reasonable actions necessary to cause the
characterization of the Merger as a pooling of interests for accounting purposes
if such a characterization were jeopardized by action taken by Parent, the
Stockholders or the Company, respectively, prior to the Effective Time (it being
agreed that such actions will include, if necessary, in the case of Parent, the
sale or transfer for fair value of all shares of Parent Common Stock that
currently are treasury shares). Following the Effective Time, Parent, the
Surviving Corporation and the Stockholders shall not knowingly take any action,
or fail to take any action, that would jeopardize the characterization of the
Merger as a "pooling of interests" for accounting purposes.
(b) Without limiting the generality of Section 7.04(a), each
Stockholder agrees that, between the date of this Agreement and the Effective
Time, it will not sell, transfer or otherwise dispose of any Shares or shares of
Parent Common Stock that it may hold. Furthermore, each Stockholder agrees not
to sell, transfer or otherwise dispose of shares of Parent Common Stock received
by it in the Merger or any other shares of Parent Common Stock that it may hold
until after such time as results covering at least 30 days of combined
operations of the Company and Parent have been published by Parent, in the form
of a quarterly earnings report, an effective registration statement filed with
the SEC, a report to the SEC on Form 10-K, 10-Q, or 8-K, or any other public
filing or announcement that includes the combined results of operations.
SECTION 7.05. Further Action; Consents; Filings. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
their best efforts to (a) take, or cause to be taken, all appropriate action,
and do, or cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate and make effective the Merger, (b)
obtain from Governmental Authorities any consents, licenses, permits, waivers,
approvals, authorizations or Orders required to be obtained or made by Parent,
the Parent Subsidiaries and the Company in connection with the authorization,
execution and delivery of this Agreement and the consummation of the Merger, and
(iii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under the
HSR Act. The parties hereto shall cooperate with each other in connection with
the making of all such filings, including by providing copies of all such
documents, except such documents as do not relate directly to Parent, the Parent
35
Subsidiaries, the Company, the Stockholders or the Merger, to the nonfiling
party and its advisors prior to filing and, if requested, by accepting all
reasonable additions, deletions or changes suggested in connection therewith.
Notwithstanding anything to the contrary in this Section 7.05, the parties agree
that, in respect to any action taken or threatened to be taken by any
Governmental Authority, Parent shall not be required to sell, license or
otherwise dispose of, hold separate or otherwise divest itself of any portion of
the business or assets of the Company, Merger Sub or Parent or any of its
Subsidiaries in order to consummate the Merger.
SECTION 7.06. 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 7.07. Public Announcements. Unless otherwise required
by applicable law or the requirements of the NYSE, 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
Merger and shall not issue any such press release or make any such public
statement prior to such consultation.
SECTION 7.08. Resale Restrictions. (a) The Stockholders
acknowledge and agree 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. The Stockholders hereby agree 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. The Stockholders acknowledge that, except as provided in the
Registration Rights Agreement, the Stockholders have no right to require Parent
to register shares of Parent Common Stock. The Stockholders understand and agree
that each certificate representing shares of Parent Common Stock received
hereunder, shall bear the following legends:
36
"THE TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED BY AN AGREEMENT
ON FILE AT THE OFFICES OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH
LAWS."
and the Stockholders agree to transfer shares of Parent Common Stock only in
accordance with the provisions of such legends. In addition, such Stockholders
agree that Parent shall instruct the transfer agent to only transfer the Parent
Common Stock pursuant to these provisions.
(b) In the event the shares of Parent Common Stock received by
the Stockholders hereunder cease to be restricted for purposes of the Securities
Act, upon request of a Stockholder and surrender of the certificate bearing such
legends, Parent or its designated agent will reissue such certificates to such
Stockholder without such legends.
SECTION 7.09. Merger Information. Parent shall make available
to each Stockholder at a reasonable time prior to the Effective Time the
opportunity to ask questions and receive answers concerning the terms and
conditions of the Merger and to obtain any additional information which Parent
possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of the information furnished by Parent.
SECTION 7.10. Stockholder Vote. The Company shall call and
hold a meeting of the Stockholders, if required to do so, or otherwise solicit
the adoption of this Agreement by the Stockholders. Each Stockholder holding
shares of Common Stock shall vote all of the Shares held by such Stockholder in
favor of adoption of this Agreement.
SECTION 7.11. Fiscal Year 1997 Financial Statements. The
Company shall deliver to Parent a true and complete copy of the audited balance
sheet of the Company for the 1997 fiscal year and the related statements of
income, stockholders' equity and cash flows for the period then ended together
with all related notes and schedules thereto, accompanied by the reports thereon
of the Company's Accountants (the "Fiscal Year 1997 Audited Financial
Statements"). Upon delivery thereof, the Fiscal Year 1997 Audited Financial
Statements shall (i) be prepared in accordance with the books of account and
other financial records of the
37
Company, (ii) present fairly the financial condition and results of operations
of the Company as of the date thereof or for the period covered thereby, (iii)
be prepared in accordance with U.S. 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 date thereof or for the period covered thereby.
SECTION 7.12. SEC Filings. From the date hereof until the
Effective Time, Parent shall furnish to the Company and the Stockholders copies
of any reports, statements or other filings filed by it during that period with
the SEC promptly after such filings are made.
SECTION 7.13. Guaranties. Parent will use its reasonable
efforts to remove and replace the Stockholders as guarantors under the
Guaranties. Parent will indemnify the Stockholders, as of the Effective Time,
for any claims made against any Stockholder under any Guaranty listed in
Schedule 4.24 of the Company Disclosure Schedule and additional Guaranties for
trade payables in an aggregate amount not to exceed $25,000.
SECTION 7.14. Company Disclosure Schedule. Within 21 days of
the date of this Agreement, the Company shall provide Parent with a copy of the
Company Disclosure Schedule. The Company shall thereafter have the right to
amend, modify or supplement the Company Disclosure Schedule; provided that,
subject to Section 7.03, any such amendment, modification or supplement is
delivered to Parent no later than five Business Days prior to the Effective
Time.
SECTION 7.15. Stock Transfer Taxes. Parent shall pay any and
all documentary stamp Taxes which may be incurred in connection with the
issuance of the shares of Parent Common Stock.
ARTICLE VIII
EMPLOYEE MATTERS
SECTION 8.01. Employee Matters. Persons employed by the
Company just prior to the Effective Time, and who become employees of the
Surviving Corporation or Parent immediately after the Effective Time, will be
permitted to enroll in the employee benefit plans, as this term is defined in
Section 3(3) of ERISA, that are generally available to the employees of Parent
immediately upon becoming employees of the Surviving Corporation without being
required to fulfill any period of service qualification requirements otherwise
applicable to such plans. Parent also shall grant credit to employees of the
Company, for purposes of vesting under its employee benefit plans, for all such
employees' service with the Company prior to the Effective Time that was
recognized for vesting purposes under analogous
38
employee benefit plans of the Company. The Company will freeze, as of the
Effective Time, the additional accrual of benefits under any pension plan, as
this term is defined in Section 3(2) of ERISA (the "Pension Plan"), of the
Company, including without limitation any plans that qualify under Section
401(k) of the Code. After the Effective Time, Parent will take whatever action
it deems necessary to (a) terminate such Pension Plans and distribute the assets
of such Plans to the participants therein or (b) merge such Pension Plans into
Parent's comparable plans and transfer to such comparable plans the assets of
such Pension Plans. Except for any Pension Plans, the Company will terminate, as
of the Effective Time, all of the plans, programs, insurance, options and other
agreements listed in Section 4.10(a) of the Company Disclosure Schedule. Parent
will provide continuation coverage, as this term is defined in Section 602 of
ERISA, to the former employees of the Company who either are receiving or are
entitled to commence receiving such coverage as of the Effective Time.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to the Obligations of Each Party. The
obligations of the Company, the Stockholders, Parent and Merger Sub to
consummate the Merger are subject to the satisfaction of the following
conditions:
(a) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated;
(b) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law or Order which is
then in effect and has the effect of making the Merger illegal or
otherwise prohibiting its consummation; and
(c) Letters of Accountants. Parent and the Company shall have
received from the Parent's Accountants an opinion that the Merger will
be treated as a pooling of interests under applicable accounting
standards.
(d) Employment Agreement. The Company shall have entered into an
employment agreement with Xxxxxx X. Xxxxxxx in substantially the form
attached hereto as Exhibit 9.01(d).
SECTION 9.02. Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger
are subject to the satisfaction of the following further conditions:
39
(a) Representations and Warranties. The representations and
warranties of the Company and the Stockholders contained in this
Agreement shall have been true and correct when made and shall be true
and correct 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, and Parent shall have
received a certificate of the Company and each Stockholder to such
effect;
(b) Covenants. The covenants and agreements contained in this
Agreement to be performed or complied with by the Company and the
Stockholders on or before the Effective Time shall have been complied
with in all material respects, and Parent shall have received a
certificate to such effect of the Company, with respect to the
covenants to be performed or complied with by the Company, and of each
Stockholder, with respect to the covenants to be performed or complied
with by such Stockholder;
(c) No Uninsured Casualty. The Company shall not have suffered
any uninsured casualty, loss or damage with respect to any of the
Assets that in the aggregate would have a replacement cost of more
than $1,000,000;
(d) Due Diligence. Parent shall have completed all of its
business, financial, legal, accounting and environmental due diligence
with respect to the Company and the Stockholders and Parent shall, in
its judgment, be satisfied with the results thereof;
(e) Fiscal Year 1997 Financial Statements. Parent and Merger Sub
shall have received the Fiscal Year 1997 Financial Statements; and
(f) Incumbency Certificate. Parent and Merger Sub shall have
received a certificate of the Secretary of the Company certifying the
names and signatures of the officers of the Company who are authorized
to sign this Agreement and the other documents to be delivered
hereunder.
SECTION 9.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall
have been true and correct when made and shall be true and correct 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, and the Company shall have received a
certificate of Parent to such effect;
40
(b) Covenants. The covenants and agreements contained in this
Agreement to be performed or complied with by Parent and Merger Sub on
or before the Effective Time shall have been performed or complied
with in all material respects, and the Company shall have received a
certificate of an executive officer of Parent and Merger Sub to such
effect;
(c) Registration Rights Agreement. The Registration Rights
Agreement, in substantially the form attached hereto as Exhibit
9.03(c), shall have been executed and delivered by Parent (the
"Registration Rights Agreement");
(d) Incumbency Certificate. The Company and the Stockholders
shall have received a certificate of the Secretary of each of Parent
and Merger Sub certifying the names and signatures of the officers of
such party who are authorized to sign this Agreement and the other
documents to be delivered hereunder; and
(e) The Company and the Stockholders shall have obtained an
opinion from their tax advisor that the Merger qualifies as a tax free
reorganization under the provisions of Section 368(a) of the Code.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Survival of Representations and Warranties. The
representations and warranties of the Company and the Stockholders contained in
Section 4.14 or 4.15, shall survive until November 30, 1998. Neither the period
of survival nor the liability of any Indemnifying Party with respect to
representations and warranties shall be reduced by any investigation made at any
time by or on behalf of any Indemnified Party. If written notice of a claim
setting forth in reasonable detail the basis of such claim has been given prior
to the expiration of the applicable representations and warranties by the
Indemnified Party to the applicable Indemnifying Party, then the relevant
representations and warranties shall survive as to such claim until such claim
has been finally resolved.
SECTION 10.02. Indemnification by the Stockholders. (a) Parent
and its Affiliates, officers, directors, employees, agents, successors and
assigns (for purposes of this Article X, each an "Indemnified Party") shall be
indemnified and held harmless by the Stockholders, jointly but not severally
(for purposes of this Article X, each a "Indemnifying Party") 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
41
limitation, any Action brought or otherwise initiated by any of them) (each a
"Loss"), arising out of or resulting from the breach of any representation or
warranty contained in Section 4.14 or 4.15 by the Company or any Stockholder;
provided, however, that, in the event a review or audit of the Company's Tax
returns for any Tax period ending prior to the Effective Time results in an
assessment for additional Taxes due from the Company, the Stockholder's
indemnification obligation with respect to Taxes pursuant to this Section 10.02
shall apply only if the assessment for such additional Taxes is based upon a
determination by the assessing Tax authority that such additional Taxes are due
because of (i) a finding of fraud and/or (ii) the disallowance of any deduction
taken by the Company and determined to be a personal expense of a Stockholder.
(b) An Indemnified Party shall give the applicable
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
Article X, within 30 calendar 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; provided, however, that the failure to
provide such notice shall release the applicable Indemnifying Party from any of
its obligations under this Article X if, and only to the extent that, such
Indemnifying Party is materially prejudiced by such failure. The obligations and
liabilities of an 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 ten calendar
days of the receipt by the Indemnified Party of such notice; provided, however,
that the failure to provide such notice shall only release the applicable
Indemnifying Party from any of its obligations under this Article X if, and only
to the extent that, such 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 30 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
reasonable judgment of the Indemnified Party for the same counsel to represent
both the Indemnified Party and the Indemnifying Party, then the Indemnified
Party shall be entitled to retain its own counsel, in each jurisdiction for
which the Indemnified Party reasonably determines counsel is required, at the
expense of the Indemnifying Party; provided, however, that in no event shall the
Indemnifying Party be liable for the expenses of more than one counsel in any
jurisdiction in addition to local counsel. In the event the Indemnifying Party
exercises the right to undertake any such defense against any such Third Party
Claim as
42
provided above, the Indemnified Party shall cooperate, and shall use reasonable
efforts to cause its Affiliates, officers, directors, employees and agents to
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, and shall use reasonable
efforts to cause its Affiliates, officers, directors, employees and agents to
make available to the Indemnifying Party, at the Indemnifying Party's expense,
all witnesses, pertinent records, materials and information in the possession or
under the control of any of them relating thereto as is reasonably required by
the Indemnifying Party. Similarly, in the event the Indemnified Party is
conducting the defense against any such Third Party Claim, the Indemnifying
Party shall cooperate, and shall use reasonable efforts to cause its Affiliates,
officers, directors, employees and agents to 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 in connection with such claim, and shall use reasonable efforts
to cause its Affiliates, officers, directors, employees and agents to make
available to the Indemnified Party, at the Indemnifying Party's expense, all
witnesses, records, materials and information in the possession or under the
control of any of them, relating thereto as is reasonably required by the
Indemnified Party. No such Third Party Claim may be settled by the Indemnifying
Party without the prior written consent of the Indemnified Party which consent
shall not be unreasonably withheld. No Third Party Claim may be settled by the
Indemnified Party without the prior written consent of the Indemnifying Party.
SECTION 10.03. Limits on Indemnification. The indemnification
obligations of the Stockholders pursuant to Section 10.02 shall not be effective
until the aggregate dollar amount of all Losses which would otherwise be
indemnifiable pursuant to Section 10.02 exceeds $150,000 (the "Threshold
Amount"), and the Stockholders shall not be liable to pay for the first $150,000
in aggregate amount of such Losses. 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 of this Agreement shall be $1,500,000.
ARTICLE XI
TERMINATION, AMENDMENTS AND WAIVER
SECTION 11.01. Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time as
follows:
(a) by mutual written consent of each of Parent, the
Stockholders and the Company;
43
(b) by Parent if the Company makes a general assignment for
the benefit of creditors, or any proceeding shall be instituted
by or against the Company seeking to adjudicate any of them as
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;
(c) by either Parent, on the one hand, or the Company and
Stockholders, on the other hand, if there shall be any Law that
makes consummation of the Merger illegal or otherwise prohibited
or if consummation of the Merger would violate any nonappealable
final Order of any Governmental Authority having competent
jurisdiction; provided, however, that the right to terminate this
Agreement under this Section 11.01(c) shall not be available to
any party who has not used its reasonable best efforts to have
such Order rescinded; or
(d) by either Parent, on the one hand, or the Company and
Stockholders, on the other hand, if the Effective Time shall not
have occurred on or before May 1, 1998; provided, however, that
the right to terminate this Agreement under this Section 11.01(d)
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.
The party desiring to terminate this Agreement shall give
written notice of such termination to the other parties.
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 Parent,
Merger Sub, the Company or any of their respective officers and directors or any
Stockholders except (a) as set forth in Section 12.01, (b) that nothing herein
shall relieve either party from liability for any willful breach of this
Agreement and (c) as set forth in the Confidentiality Agreement.
SECTION 11.03. Amendments and Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operated as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Except as
otherwise provided herein, the rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by Law.
44
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 Merger 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 (and
shall be deemed to have been duly given upon receipt) by delivery in Person, by
cable, telecopy (upon confirmation of receipt of delivery by the recipient),
telegram or 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 Parent:
Dycom Industries, Inc.
First Union Center,
Suite 600
0000 XXX Xxxxxxxxx
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Telecopier: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxxx
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
45
if to the Company:
Installation Technicians, Inc.
X.X. Xxx 000
Xxxxxxxxxx Xxxx, XX 00000
Telecopier: (000)000-0000
Attention: Xxxxxx X. Xxxxxxx
with copies to:
Xxxxxxxxxxx & Xxxxxxxx
Suite 200
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
In the case of a notice given to any of the Stockholders, such notice shall be
delivered or sent to the address set forth below such Stockholder's name on the
signature pages hereto.
SECTION 12.03. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Merger 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 a mutually acceptable manner in
order that the Merger be consummated as originally contemplated to the fullest
extent possible.
SECTION 12.04. Assignment; Binding Effect; Benefit. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 12.05. Incorporation of Exhibits. The Company
Disclosure Schedule, the Parent Disclosure Schedule and all Exhibits attached
hereto and referred to
46
herein are hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein.
SECTION 12.06. Attorneys' Fees. In the event that any party
hereto shall file suit to enforce any of the terms of this Agreement or to
recover damages for a breach of this Agreement, the prevailing party shall be
entitled to recover attorney's fees and costs incurred in such proceeding.
SECTION 12.07. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed in that State.
SECTION 12.08. 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 12.09. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 12.10. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 12.11. Entire Agreement. This Agreement (including the
Annexes, the Exhibits, the Company Disclosure Schedule and the Parent Disclosure
Schedule) and the Confidentiality Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
47
SECTION 12.12. Waiver of Jury Trial. EACH OF PARENT, THE
COMPANY, THE STOCKHOLDERS AND MERGER SUB 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
ACTIONS OF PARENT, THE COMPANY, THE STOCKHOLDERS OR MERGER SUB IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first written above, in the case of Parent, Merger
Sub and the Company, by their respective officers thereunto duly authorized.
DYCOM INDUSTRIES INC.
By /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and CEO
DYCOM ACQUISITION CORPORATION I
By /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board
INSTALLATION TECHNICIANS, INC.
By /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
48
STOCKHOLDERS:
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Address: 0000 Xxxx Xxxxxxxx
Xxxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Address: 000 Xxxxxxxx Xxx Xxxxxxx
Xxxxxxxxxx Xxxx, XX 00000
/s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
Address: 0000 X.X. 000 Xxxxx
Xxxxx Xxxxxx, XX 00000
Exhibit 9.01(d)
FORM OF
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Employment Agreement") is made
this ___ day of ____, 1998, by and between Xxxxxx X. Xxxxxxx (the "Employee")
and Installation Technicians, Inc., a Missouri corporation (the "Employer"), and
Dycom Industries, Inc, a Florida corporation (the "Company").
1. Employment and Service on the Board of Directors. Subject
to the terms and conditions hereof, as of the "Effective Time", as this term is
defined in that certain Agreement and Plan of Merger (the "Merger Agreement")
dated February 23, 1998 and executed, by the Employer, the Company and the
Stockholders (as defined in the Merger Agreement), the Employer hereby agrees to
employ the Employee as the Employer's President and Chief Executive Officer to
perform such specific duties and have such responsibilities as the board of
directors of the Employer (the "Board of Directors") may from time to time
establish; provided, however, that such duties shall be consistent with the
duties and responsibilities typically accorded to a president and chief
executive officer. The Employee hereby accepts employment by the Employer as
President and Chief Executive Officer, subject to the terms and conditions
hereof, and agrees to devote his full business time and attention to his duties
hereunder, to the best of his abilities. While an employee of the Employer, the
Employee shall also serve as a member of the Board of Directors during the term
of this Employment Agreement.
2. Term of Employment; Certain Definitions.
(a) The term of the Employee's employment pursuant to this
Employment Agreement shall commence as of the Effective Time and shall terminate
upon the earlier of (i) termination pursuant to paragraph 5 hereof or (ii) the
fifth anniversary of the Effective Time. The foregoing notwithstanding, in the
event that the Merger Agreement is terminated, or the transactions contemplated
pursuant to the Merger Agreement are abandoned, then this Employment Agreement
shall be terminated and it shall have no further force or effect.
(b) "Post-Employment Period" means the period commencing on
the date of the Employee's termination of employment (or the date the Employee
is determined to be Disabled, as such term is hereinafter defined) and ending on
the earlier of the third anniversary of such termination of employment or the
expiration of the term of this Employment Agreement; provided however, the
Post-Employment Period will not end prior to the first anniversary of the
Employee's termination of employment.
(c) "Prior Year Bonus" means the amount of any bonus earned by
the Employee with respect to services rendered during the prior fiscal year of
the Employer, regardless of when such bonus is paid.
2
3. Compensation, Benefits and Expenses.
(a) During the term of the Employee's employment pursuant to
this Employment Agreement, the Employee shall be paid a base annual salary of
$260,000 (the "Base Pay"). Payment will be made on the regularly scheduled pay
dates of the Employer, subject to all appropriate withholdings or other
deductions required by law or by the Employer's established policies applicable
to all the Employees of the Employer. The Employer may increase the Employee's
Base Pay at the Employer's sole discretion, but shall not reduce the Base Pay
below the rate established by this Employment Agreement without the Employee's
written consent.
(b) In addition to any other compensation payable to the
Employee pursuant to this Employment Agreement, during the term of the
Employee's employment pursuant to this Employment Agreement the Employee may be
paid an annual bonus as determined by and within the sole discretion of board of
directors of the Company.
(c) The Employee's services hereunder shall be performed at
the principal offices of the Employer in the southwestern Missouri area, subject
to travel that is consistent with prior practice of the Employee.
(d) In addition to compensation payable to the Employee as
described above, the Employee shall be entitled to participate in all the
employee benefit plans or programs of the Company as are available to management
employees of the Employer generally and such other benefit plans or programs as
may be specified by the Board of Directors, including any stock options that may
be granted by the board of directors of the Company ("Employee Benefits").
Employee Benefits provided the Employee will be no less favorable in the
aggregate than those benefits of the Employer in which the Employee was enrolled
immediately prior to the Effective Date. With respect to the Employee, the
Employer and the Company hereby waive any applicable waiting period for the
Employee Benefits.
(e) On a timely basis, the Employer shall reimburse the
Employee for such reasonable out-of-pocket expenses as the Employee may incur
for and on behalf of the furtherance of the Employer's business, provided that
the Employee submits to the Employer satisfactory documentation or other support
for such expenses in accordance with the Employer's expense reimbursement
policy.
4. Covenants of the Employee.
(a) While employed by the Employer, the Employee shall not
directly or indirectly engage in any business, whether as a proprietor, partner,
joint venturer, employer, agent, employee, consultant, officer or beneficial or
record owner of more than one percent of the stock of any corporation or
association of any nature which is competitive to the business conducted by the
Employer, the Company, or any of the Company's other wholly owned subsidiaries.
3
(b) At no time will the Employee divulge or appropriate to the
Employee's own use or to the use of others any trade secrets or confidential
information or confidential knowledge pertaining in any to the business of the
Employer, the Company or any of the Company's other wholly owned subsidiaries.
(c) In the event the Employee breaches this Employment
Agreement (including, without limitation, by terminating his employment without
Good Reason (as hereinafter defined)) or if the Employee's employment is
terminated for Cause (as hereinafter defined), the Employee separately agrees,
being fully aware that the performance of this Employment Agreement is important
to preserve the present value of the property and business of the Employer and
the Company, that during the Post-Employment Period, the Employee shall not
directly or indirectly engage in any business, whether as proprietor, partner,
joint venturer, employer, agent, employee, consultant, officer or beneficial or
record owner of more than one percent of the stock of any corporation or
association of any nature which is competitive to the business conducted by the
Employer or any of the Company's other wholly owned subsidiaries in the
geographical service area of the Employer or any of the Company's other wholly
owned subsidiaries, determined as of the date of the Employee's termination of
employment. Within such geographical service areas and during such non-compete
period, the Employee shall not solicit or do business competitive to the
business conducted by the Employer or any of the Company's other wholly owned
subsidiaries, with any customers, partners or associates of the Employer or any
of the Company's other wholly owned subsidiaries. The foregoing notwithstanding,
the Employee may continue to hold his existing ownership interest, determined as
of the Effective Time, of Holland Telecommunications Group , Inc., but may not
directly or indirectly increase such ownership interest or engage actively in
the management or business activities of such corporation.
(d) The Employee agrees that the breach by the Employee of any
of the foregoing covenants is likely to result in irreparable harm, directly or
indirectly, to the Employer and the Company. The Employee, therefore, consents
and agrees that if the Employee violates any of such covenants, the Employer and
the Company shall be entitled, among and in addition to any other rights or
remedies available under this Employment Agreement or at law or in equity, to
temporary and permanent injunctive relief to prevent the Employee from
committing or continuing a breach of such covenants.
(e) It is the desire, intent and agreement of the Employee and
the Employer that the restrictions placed on the Employee by this paragraph 4 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 paragraph 4 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.
(f) Except with respect to the equitable relief contemplated
under paragraph 4(d), any controversy or claim arising out of or relating to
this Employment
4
Agreement shall be settled by arbitration in Palm Beach County, Florida in
accordance with the rules then in effect of the American Arbitration
Association, and judgment upon the award rendered may be entered in any court
having jurisdiction thereon. The prevailing party in any such arbitration will
be entitled to an award of its attorney fees and may recover fees and costs
incurred enforcing an arbitration award.
5. Termination.
(a) The Employer shall have the right to terminate the
Employee's employment at any time and for any reason. If the Employee is
terminated for Cause, the Employer shall have no obligation to pay the Employee
any Base Pay or other compensation or to provide any Employee Benefits
subsequent to the date of the Employee's termination of employment. Termination
for "Cause" shall mean termination of employment for any of the following
reasons:
(i) the Employee entering a plea of no-contest with respect
to or being convicted by a court of competent and final
jurisdiction of any crime, whether or not involving the
Employer, that constitutes a felony in the jurisdiction
involved;
(ii) the Employee committing any act of fraud,
misappropriation, embezzlement, unethical business
conduct or other act of dishonesty against the Employer
or the Company, or materially breaching a fiduciary
obligation thereto; or
(iii) the Employee materially breaching this Employment
Agreement or failing or refusing to perform any of his
duties as required by this Employment Agreement in any
material respect.
(b) Unless otherwise terminated earlier pursuant to the terms
of this Employment Agreement, the Employee's employment under this Employment
Agreement will terminate upon the Employee's death and may be terminated by the
Employer or the Employee upon giving not less than thirty days written notice to
the other in the event that the Employee, because of physical or mental
disability or incapacity, is unable to perform the Employee's duties hereunder
for an aggregate of one hundred eighty working days during any twelve-month
period ("Disabled"). All questions arising with respect to whether the Employee
is Disabled shall be determined by a reputable physician mutually selected by
the Employer and the Employee at the time such question arises. If the Employer
and the Employee cannot agree upon the selection of a physician within a period
of seven days after such question arises, then the Chief of Staff of Good
Samaritan Hospital in West Palm Beach, Florida shall be asked to select a
physician to make such determination. The determination of the physician
selected pursuant to the above provisions of this paragraph 5(b) as to such
matters shall be conclusively binding upon the parties hereto. If the Employee
is determined to be Disabled, the Employer shall provide the Employee with the
Severance Benefits. The "Severance Benefits" means (i) prompt payment of any
unpaid Base Pay earned through the date of the Employee's termination and a pro
rata bonus with respect to the fiscal year of the Employer in which the
Employee's employment terminates determined by multiplying the Prior Year Bonus
by a fraction, the denominator of which is 365 and the numerator of which is the
number of days of the Employer's fiscal year preceding the
5
date of such termination, (ii) payment each month during the Post-Employment
Period of an amount equal to one-twelfth of the sum of the Employee's Base Pay
and Prior Year Bonus, and (iii) providing the Employee and his eligible
dependents with medical and dental benefits during the Post-Employment Period
upon the same terms and conditions as if the Employee were still employed by the
Employer.
(c) The Employee may terminate his employment for Good Reason.
For purposes of this paragraph 5, "Good Reason" shall mean the following:
(i) the Employer failing to pay any portion of the
Employee's Base Pay or failing to provide the Employee
any Employee Benefits due the Employee hereunder;
(ii) the Employer discharging the Employee without Cause;
(iii) the Employer materially breaching any other agreement
with the Employee;
(iv) the Employer materially and inappropriately changing
the duties and responsibilities of the Employee;
(v) the Employer transferring the Employee from the
southwestern Missouri area without the Employee's
consent; or
(vi) the merger of the Employer with, or the sale of a
majority of the stock of the Employer to, or the sale
of substantially all of the assets of the Employer to
any person, corporation or other business entity that
is not affiliated with or controlled by the Company.
If the Employee shall terminate his Employment for Good Reason, provided that
the Employer does not also have grounds to terminate his Employment for Cause,
the Employee shall not be liable to the Employer for any damages as a result
thereof and shall not be bound by the provisions of paragraph 4(c) hereof.
Furthermore, the Employer shall provide the Employee with the Severance
Benefits.
(d) In the event the Employer terminates the Employee's
employment without Cause, the Employer shall provide the Employee with the
Severance Benefits.
(e) In the event that it is determined by an independent
accounting firm designated by the Company that any amount payable to the
Employee under this Employment Agreement, alone or when aggregated with any
amount payable to the Employee pursuant to any other plan or arrangement of the
Employer or the Company (collectively, the "Parachute Payments"), would
constitute an "excess parachute payment" within the meaning of Section 280G of
Internal Revenue Code of 1986, as amended (the "Code"), then the aggregate
present value of the Parachute Payments shall be reduced to the amount,
expressed as a present value,
6
which maximizes the aggregate present value of the Parachute Payments without
causing any such payment to be nondeductible by the Employer or the Company
under Section 280G of the Code; provided, however, that the Parachute Payments
will not be reduced if the Employee's net after-tax income with respect to the
Parachute Payments absent such reduction would exceed the Employee's net
after-tax income with respect to the Parachute Payments after giving effect to
such reduction.
6. Assignment and Succession.
(a) The services to be rendered and obligations to be
performed by the Employee under this Employment Agreement are special and
unique, and all such services and obligations and all of the Employee's rights
under this Employment Agreement are personal to the Employee and shall not be
assignable or transferrable. In the event of the Employee's death, however, the
Employee's personal representative shall be entitled to receive any and all
payments then due under this Employment Agreement. The Employer may assign this
Employment Agreement to any subsidiary of the Employer or in connection with any
merger or consolidation involving the Employer or a sale of substantially all of
the assets of the Employer, as the case may be, provided that such successor
shall assume (by contract or operation of law) all of the Employer's obligations
hereunder.
(b) This Employment Agreement shall inure to the benefit of
and be binding upon and enforceable by the Employer and the Employee and their
respective successors, permitted assigns, heirs, legal representatives,
executors, and administrators. If the Employer shall be merged into or
consolidated with another entity, the provisions of the Employment Agreement
shall be binding upon and inure to the benefit of the entity surviving such
merger or resulting from such consolidation. The Employer will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the
Employer, by agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Employment Agreement in the same
manner that the Employer would be required to perform it if no such succession
had taken place. The provisions of this paragraph 6(b) shall continue to apply
to each subsequent employer of the Employee hereunder in the event of any
subsequent merger, consolidation, or transfer of assets of such subsequent
employer.
7. Notices.
All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram or 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 paragraph 7):
7
if to the Employer or the Company:
Dycom Industries, Inc.
First Union Center, Suite 600
0000 XXX Xxxxxxxxx
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
if to the Employee:
Xxxxxx X. Xxxxxxx
000 Xxxxxxxx Xxx Xxxxxxx
Xxxxxxxxxx Xxxx, Xxxxxxxx 00000
8. Waiver of Breach.
The waiver by the Employer or the Employee of a breach of any
provision of this Employment Agreement by another party shall not operate or be
construed as a waiver by any other party of any subsequent breach.
9. Amendment.
This Employment Agreement may be amended only by a written
instrument signed by all parties hereto.
10. Governing Law; Jurisdiction and Service of Process.
This Employment Agreement shall be governed by the laws of the
State of Delaware applicable to contracts executed in and to be performed in
that State.
11. Partial Invalidity.
The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
12. Entire Agreement.
All prior negotiations and agreements between the parties
hereto with respect to
8
the matters contained herein are superseded by this Employment Agreement, and
there are no representations, warranties, understandings or agreements other
than those expressly set forth herein.
IN WITNESS WHEREOF, the Employee and the Employer have entered
into this Employment Agreement as of the date set forth above.
EMPLOYEE
------------------------------
Xxxxxx X. Xxxxxxx
INSTALLATION TECHNICIANS, INC.
By:
--------------------------
Name:
Title:
Solely in the capacity of guarantor of the Employer's
obligations under this Employment Agreement, the Company hereby executes this
Employment Agreement effective as of the date set forth above.
DYCOM INDUSTRIES, INC.
------------------------------
Xxxxxx X Xxxxxxx
Chairman and Chief Executive Officer
Exhibit 9.03
FORM OF
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of _____ __, 1998 (this
"Agreement") among DYCOM INDUSTRIES, INC., a Florida corporation (the
"Company"), and the parties listed on the signature pages hereto (each a
"Purchaser" and, collectively, the "Purchasers") who will, as of the effective
time of the Merger (as defined below) be holders of the amount of common stock,
par value $0.33 1/3 per share, of the Company (the "Common Stock") set forth on
Schedule I to this Agreement.
WHEREAS, Dycom Acquisition Corporation I, a Missouri
corporation and wholly owned subsidiary of the Company ("Merger Sub") will be
merged (the "Merger") with and into Installation Technicians, Inc., a Missouri
corporation ("ITI"), pursuant to an Agreement and Plan of Merger dated as of
February 23, 1998 among the Company, Merger Sub, ITI and the Purchasers (the
"Merger Agreement");
WHEREAS, the Purchasers will receive the Common Stock pursuant
to the Merger Agreement; and
WHEREAS, it is a condition to the obligations of the parties
to the Merger Agreement that this Agreement be entered into by the parties
hereto concurrently with the closing under the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual convents and agreements herein contained, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
1. Certain Definitions. The following terms, as used herein,
have the following meanings:
"Affiliate" of a Holder means a Person who controls, is
controlled by or is under common control with such Holder or the spouse
or children (or a trust exclusively for the benefit of a spouse and/or
children) of such Holder or, in the case of a Holder that is a
partnership, its partners.
"Agreement" has the meaning set forth in the preamble to this
agreement.
"ITI" has the meaning set forth in the recitals to this
Agreement.
"Common Stock" has the meaning set forth in the preamble to
this
2
Agreement.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, as the same shall be in effect at the
time.
"Holder" means the Purchaser or any assignee thereof to whom
the rights under this Agreement are assigned in accordance with the
provisions of Section 13.
"Initiating Holders" has the meaning set forth in Section
3(a).
"Maximum Demand Amount" has the meaning set forth in Section
3(a).
"Merger" has the meaning set forth in the recitals to this
Agreement.
"Merger Agreement" has the meaning set forth in the recitals
to this Agreement.
"Merger Sub" has the meaning set forth in the preamble to this
Agreement.
"Minimum Demand Amount" has the meaning set forth in Section
3(a).
"Person" means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation, a
"person" as defined in Section 13(d)(3) of the Exchange Act), trust, association
or entity or government, political subdivision, agency or instrumentality of a
government.
"PORTAL" has the meaning set forth in Section 9(b).
"Purchaser" has the meaning set forth in the preamble to this
Agreement.
"register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement
or similar document in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement
or document.
"Registrable Stock" means (a) the Common Stock issued to the
Purchaser pursuant to the Merger Agreement, (b) any Common Stock issued
as (or issuable upon the conversion or exercise of any warrant, right,
option or
3
other convertible security which is issued) a dividend or other
distribution with respect to, or in exchange for, or in replacement of,
the Common Stock issued to the Purchaser pursuant to the Merger
Agreement, and (c) any Common Stock issued by way of a stock split of
the Common Stock referred to in clause (a) or (b) above. For purposes
of this Agreement, any Registrable Stock shall cease to be Registrable
Stock when (1) a registration statement covering such Registrable Stock
has been declared effective and such Registrable Stock has been
disposed of pursuant to such effective registration statement, (2) such
Registrable Stock is sold by a Person in a transaction in which the
rights under the provisions of this Agreement are not assigned or (3)
such Registrable Stock is sold pursuant to Rule 144(k) (or any similar
provision then in force under the Securities Act) without registration
under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, as the same shall be in effect at the
time.
2. Notice of Proposed Transfer. Prior to any proposed transfer
of any Registrable Stock (other than under the circumstances described in
Section 3 or 4), the holder thereof shall have given written notice to the
Company of its intention to effect such transfer. Each such notice shall
describe the manner of the proposed transfer and, if requested by the Company,
shall be accompanied by an opinion of counsel satisfactory to the Company to the
effect that the proposed transfer may be effected without registration under the
Securities Act, whereupon the holder of such stock shall be entitled to transfer
such stock in accordance with the terms of its notice. Each certificate for
Registrable Stock transferred as provided above shall bear the legend required
pursuant to Section 7.08(a) of the Merger Agreement, except that such
certificate shall not bear such legend if (i) such transfer is in accordance
with the provisions of Rule 144 (or any other rule permitting public sale
without registration under the Securities Act) or (ii) the opinion of counsel
referred to above is to the further effect that the transferee and any
subsequent transferee (other than an Affiliate of the Company) would be entitled
to transfer such securities in a public sale without registration under the
Securities Act.
3. Demand for Registration.
(a) On and after the date that is six (6) months from the date
of this Agreement, the Holders of at least 33 1/3% of the Registrable
Stock (the "Initiating Holders") may demand in a written notice that
the Company file a registration statement under the Securities Act (or
a similar document pursuant to any other statute then in effect
corresponding to the Securities Act) covering the registration of any
or all Registrable Stock held by such Initiating Holders in the manner
specified in such notice, provided that the amount of Registrable
4
Stock included in such registration shall be equal to at least 33 1/3%
(the "Minimum Demand Amount"), but not more than 50% (the "Maximum
Demand Amount"), of the total Registrable Stock held by each Holder.
Following receipt of any notice under this Section 3 the Company shall
(x) within twenty (20) days notify all other Holders of such request in
writing and (y) use its reasonable efforts to cause to be registered
under the Securities Act, subject to the proviso of the immediately
preceding sentence, all Registrable Stock that the Initiating Holders
and such other Holders have demanded, within ten (10) days after the
Company has given such notice, be registered in accordance with the
manner of disposition specified in such notice by the Initiating
Holders.
(b) If the Initiating Holders intend to have the Registrable
Stock distributed by means of an underwritten offering, the Company
shall include such information in the written notice referred to in
clause (x) of Section 3(a). In such event, the right of any Holder to
include its Registrable Stock in such registration shall be conditioned
upon such Holder's participation in such underwritten offering and the
inclusion of such Holder's Registrable Stock in the underwritten
offering (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Holder) on the terms provided below.
All Holders proposing to distribute Registrable Stock through such
underwritten offering shall enter into an underwriting agreement in
customary form with the underwriter or underwriters. Such underwriter
or underwriters shall be selected by a majority in interest of the
Initiating Holders and shall be approved by the Company, which approval
shall not be unreasonably withheld, provided, that (i) all of the
representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such Holders of Registrable Stock,
(ii) any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement shall be conditions
precedent to the obligations of such Holders of Registrable Stock, and
(iii) no Holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters other
than representations, warranties or agreements regarding such Holder,
the Registrable Stock of such Holder and such Holder's intended method
of distribution and any other representations required by law or
reasonably required by the underwriter. If any Holder of Registrable
Stock disapproves of the terms of the underwriting, such Holder may
elect to withdraw all its Registrable Stock by written notice to the
Company, the managing underwriter and the Initiating Holders. The
Registrable Stock so withdrawn shall also be withdrawn from
registration. If, as a result of such withdrawal, the amount of
Registrable Stock to be included in the offering is less than the
Minimum Demand Amount, the Company shall not be required to proceed
with such offering.
(c) Notwithstanding any provision of this Agreement to the
contrary:
5
(i) the Company shall not be required to effect a
registration pursuant to this Section 3 during the
period starting with the date of filing by the Company
of, and ending on a date one hundred twenty (120) days
following the effective date of, a registration
statement pertaining to a public offering of securities
for the account of the Company or on behalf of the
selling stockholders under any other registration
rights agreement which the Holders have been entitled
to join pursuant to Section 4; provided that the
Company shall actively employ in good faith
all reasonable efforts to cause such registration
statement to become effective as soon as possible; and
(ii) if the Company shall determine in good faith that such
registration would interfere with any material
transaction then being pursued by the Company, the
Company's obligation to use its reasonable efforts to
file a registration statement shall be deferred for a
period not to exceed ninety (90) days.
(d) The Company shall not be obligated to effect and pay for
more than one (1) registration pursuant to this Section 3; provided,
that a registration demanded pursuant to this Section 3 shall not be
deemed to have been effected for purposes of this Section 3(d) unless
(i) it has been declared effective by the SEC, (ii) it has remained
effective for the period set forth in Section 9(a) and (iii) the
offering of Registrable Stock pursuant to such registration is not
subject to any stop order, injunction or other order or requirement of
the SEC (other than any such stop order, injunction, or other
requirement of the SEC prompted by any act or omission of Holders of
Registrable Stock).
4. Participatory Registration. Subject to Section 8, if at any
time the Company determines that it shall file a registration statement under
the Securities Act (other than a registration statement on a Form S-4 or S-8 or
filed in connection with an exchange offer or an offering of securities solely
to the Company's existing stockholders) on any form that would also permit the
registration of the Registrable Stock and such filing is to be on its behalf
and/or on behalf of selling holders of its securities for the general
registration of its Common Stock to be sold for cash, the Company shall each
such time promptly give each Holder written notice of such determination setting
forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than thirty (30) days from the date of
such notice, and advising each Holder of its right to have Registrable Stock
included in such registration. Upon the written request of any Holder received
by the Company no later than ten (10) days after the date of receipt of the
Company's notice,
6
the Company shall use its reasonable efforts to cause to be registered under the
Securities Act all of the Registrable Stock that each such Holder has so
requested to be registered; provided that the amount of Registrable Stock
included in such registration shall be equal to at least the Minimum Demand
Amount but not more than the Maximum Demand Amount. If, in the opinion of the
managing underwriter (or, in the case of a non-underwritten offering, in the
opinion of the Company), the total amount of such securities to be so
registered, including such Registrable Stock, will exceed the maximum amount of
the Company's securities which can be marketed (a) at a price reasonably related
to the then current market value of such securities, or (b) without otherwise
materially and adversely affecting the entire offering, then the Company shall
be entitled either (i) to reduce the number of shares of Registrable Stock to be
registered or (ii) to elect not to register any shares of Registrable Stock in
such offering. Any reduction made pursuant to the immediately preceding sentence
shall be allocated among all such Holders in proportion (as nearly as
practicable) to the amount of Registrable Stock owned by each Holder at the time
of filing the registration statement.
5. Obligations of the Company. Whenever required under Section
3 to use its reasonable efforts to effect the registration of any Registrable
Stock, the Company shall, as expeditiously as possible:
(a) prepare and file with the SEC a registration statement
signed, pursuant to Section 6(a) of the Securities Act, by the officers
and directors of the Company with respect to such Registrable Stock and
use its reasonable efforts to cause such registration statement to
become and remain effective for the period of the distribution
contemplated thereby determined as hereinafter provided;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement signed, pursuant to Section
6(a) of the Securities Act, by the officers and directors of the
Company and the prospectus used in connection therewith as may be
necessary to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Stock covered by such
registration statement;
(c) furnish to the Holders such numbers of copies of the
registration statement and the prospectus included therein (including
each preliminary prospectus and any amendments or supplements thereto
in conformity with the requirements of the Securities Act) and such
other documents and information as they may reasonably request;
(d) use its reasonable efforts to register or qualify the
Registrable Stock covered by such registration statement under such
other securities or blue sky laws of such jurisdiction within the
United States and Puerto Rico as shall be reasonably appropriate for
the distribution of the Registrable Stock
7
covered by the registration statement; provided, however, that the
Company shall not be required in connection therewith or as a condition
thereto to qualify to do business in or to file a general consent to
service of process in any jurisdiction wherein it would not but for the
requirements of this paragraph (d) be obligated to do so; and provided,
further, that the Company shall not be required to qualify such
Registrable Stock in any jurisdiction in which the securities
regulatory authority requires that any Holder submit any shares of its
Registrable Stock to the terms, provisions and restrictions of any
escrow, lockup or similar agreement(s) for consent to sell Registrable
Stock in such jurisdiction unless such Holder agrees to do so;
(e) promptly notify each Holder for whom such Registrable
Stock is covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under
which they were made, and at the request of any such Holder promptly
prepare and furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made;
(f) furnish, at the request of any Holder demanding
registration of Registrable Stock pursuant to Section 3, if the method
of distribution is by means of an underwriting, on the date that the
shares of Registrable Stock are delivered to the underwriters for sale
pursuant to such registration, or if such Registrable Stock is not
being sold through underwriters, on the date that the registration
statement with respect to such shares of Registrable Stock becomes
effective, (i) a signed opinion, dated such date, of the independent
legal counsel representing the Company for the purpose of such
registration, addressed to the underwriters, if any, and if such
Registrable Stock is not being sold through underwriters, then to the
Holders making such request, as to such matters as such underwriters or
the Holders holding a majority of the Registrable Stock included in
such registration, as the case may be, may reasonably request and as
would be customary in such a transaction; and (ii) letters dated such
date and the date the offering is priced from the independent certified
public accountants of the Company, addressed to the underwriters, if
any, and if such Registrable Stock is not being sold through
underwriters, then to the Holders making such request and, if such
accountants refuse to deliver such letters to such Holders, then to the
8
Company (A) stating that they are independent certified public
accountants within the meaning of the Securities Act and that, in the
opinion of such accountants, the financial statements and other
financial data of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereto, comply as to
form in all material respects with the applicable accounting
requirements of the Securities Act and (B) covering such other
financial matters (including information as to the period ending not
more than five (5) business days prior to the date of such letters)
with respect to the registration in respect of which such letter is
being given as such underwriters or the Holders holding a majority of
the Registrable Stock included in such registration, as the case may
be, may reasonably request and as would be customary in such a
transaction;
(g) enter into customary agreements (including if the method
of distribution is by means of an underwriting, an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Stock to be so included in the registration
statement;
(h) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, but not later than
eighteen (18) months after the effective date of the registration
statement, an earnings statement covering the period of at least twelve
(12) months beginning with the first full month after the effective
date of such registration statement, which earnings statements shall
satisfy the provisions of Section 11(a) of the Securities Act;
(i) use its reasonable efforts to list the Registrable Stock
covered by such registration statement with any securities exchange on
which the Common Stock is then listed; and
(j) shall use its reasonable efforts to cause such
Registration Statement (i) to become effective as soon as possible
after the filing thereof and (ii) to remain effective, with a
prospectus at all times meeting the requirements of the Securities Act
for so long as a prospectus may be required to be delivered pursuant to
the Securities Act.
For purposes of Sections 5(a) and 5(b), the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and six (6) months after the
effective date thereof.
6. Furnish Information. It shall be a condition precedent to
the
9
obligations of the Company to take any action pursuant to this Agreement that
the Holders shall furnish to the Company such information regarding themselves,
the Registrable Stock held by them, and the intended method of disposition of
such securities as the Company shall reasonably request and as shall be required
in connection with the action to be taken by the Company.
7. Expenses of Registration. All expenses incurred in
connection with each registration pursuant to Section 3 and Section 4 of this
Agreement, excluding underwriters' discounts and commissions, but including
without limitation all registration, filing and qualification fees, word
processing, duplicating, printers' and accounting fees (including the expenses
of any special audits or "cold comfort" letters required by or incident to such
performance and compliance), fees of the New York Stock Exchange or listing
fees, messenger and delivery expenses, all fees and expenses of complying with
state securities or blue sky laws, fees and disbursements of counsel for the
Company, and, to the extent permitted without jeopardizing the treatment of the
Merger as a pooling of interests for accounting purposes, the fees and
disbursements of one counsel for the selling Holders (which counsel shall be
selected by the Holders holding a majority in interest of the Registrable Stock
being registered), shall be paid by the Company; provided, however, that if a
registration request pursuant to Section 3 of this Agreement is subsequently
withdrawn at the request of the Holders of a number of shares of Registrable
Stock such that the remaining Holders requesting registration would not have
been able to request registration under the provisions of Section 3 of this
Agreement, such withdrawing Holders shall bear such expenses. The Holders shall
bear and pay the underwriting commissions and discounts applicable to securities
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Agreement.
8. Underwriting Requirements. In connection with any
underwritten offering, the Company shall not be required under Section 4 to
include shares of Registrable Stock in such underwritten offering unless the
Holders of such shares of Registrable Stock accept the terms of the underwriting
of such offering that have been reasonably agreed upon between the Company and
the underwriters selected by the Company; provided, however, that in no event
shall any Holder be required to make the representations and warranties to, or
agreements with, the Company and its representatives other than as contemplated
by Section 3(b)(iii).
9. Rule 144 Information. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Registrable Stock to the public without registration, (a)
at all times after ninety (90) days after any registration statement covering a
public offering of securities of the Company under the Securities Act shall have
become effective, the Company agrees to:
(i) make and keep public information available, as those
terms are
10
understood and defined in Rule 144 under the Securities Act;
(ii) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and
(iii) furnish to each Holder of Registrable Stock forthwith
upon request a written statement by the Company as to its compliance
with the reporting requirements of such Rule 144 and of the Securities
Act and the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by
the Company as such Holder may reasonably request in availing itself of
any rule or regulation of the SEC allowing such Holder to sell any
Registrable Stock without registration; and
(b) at all times during which the Company is neither subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act, it
will provide, upon the written request of any Holder of Registrable Stock in
written form (as promptly as practicable and in any event within 15 business
days), to any prospective buyer of such stock designated by such Holder, all
information required by Rule 144A(d)(4)(i) of the General Regulations
promulgated by the Commission under the Securities Act. Upon written request of
the Holder, the Company will cooperate with and assist any Holder of Registrable
Stock or any member of the National Association of Securities Dealers, Inc.
system for Private Offerings Resales and Trading through Automated Linkage
("PORTAL") in applying to designate and thereafter maintain the eligibility of
the Registrable Stock for trading through PORTAL.
10. Indemnification. In the event any Registrable Stock is
included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder,
such Holder's directors and officers, each Person who participates in
the offering of such Registrable Stock, including underwriters (as
defined in the Securities Act), and each Person, if any, who controls
such Holder or participating Person within the meaning of the
Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which they may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are
based on any untrue or alleged untrue statement of any material fact
contained in such registration statement on the effective date thereof
(including any prospectus filed under Rule 424 under the Securities Act
or any amendments or supplements thereto) or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse each such Holder, such
Holder's directors and officers, such participating person or
controlling person for any legal or other expenses
11
reasonably incurred by them (but not in excess of expenses incurred in
respect of one counsel for all of them unless, in the reasonable
judgement of an indemnified party there is a conflict of interest with
another indemnified party, in which case the indemnified parties may be
represented by separate counsel) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 10(a)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably
withheld); provided, further, that the Company shall not be liable to
any Holder, such Holder's directors and officers, participating Person
or controlling Person in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is
based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in connection with such registration
statement, preliminary prospectus, final prospectus or amendments or
supplements thereto, in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by any such Holder, such Holder's directors and officers,
participating Person or controlling Person. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of any such Holder, such Holder's directors and officers,
participating Person or controlling Person, and shall survive the
transfer of such securities by such Holder. The indemnification as
provided in this Section 10(a) shall be separate from, and in addition
to, the indemnification provided in the Merger Agreement.
(b) The Holders demanding or joining in a registration
severally and not jointly shall indemnify and hold harmless the
Company, each of its directors and officers, each Person, if any, who
controls the Company within the meaning of the Securities Act, and each
agent and any underwriter for the Company (within the meaning of the
Securities Act) against any losses, claims, damages or liabilities,
joint or several, to which the Company or any such director, officer,
controlling Person, agent or underwriter may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in such registration statement on the effective
date thereof (including any prospectus filed under Rule 424 under the
Securities Act or any amendments or supplements thereto) or arise out
of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in such registration
statement, preliminary or final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written
12
information furnished by or on behalf of such Holder expressly for use
in connection with such registration; and each such Holder shall
reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, controlling Person, agent or
underwriter (but not in excess of expenses incurred in respect of one
counsel for all of them unless, in the reasonable judgement of an
indemnified party, there is a conflict of interest with another
indemnified party, in which case the indemnified parties may be
represented by separate counsel) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 10(b)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of such Holder (which consent shall not be unreasonably
withheld), and provided, further, that the liability of each Holder
hereunder shall be limited to the proportion of any such loss, claim,
damage, liability or expense which is equal to the proportion that the
net proceeds from the sale of the shares sold by such Holder under such
registration statement bears to the total net proceeds from the sale of
all securities sold thereunder, but not in any event to exceed the net
proceeds received by such Holder from the sale of Registrable Stock
covered by such registration statement.
(c) Promptly after receipt by an indemnified party under this
Section 10(c) of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section, notify the
indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to participate in and assume
the defense thereof with counsel selected by the indemnifying party and
reasonably satisfactory to the indemnified party; provided, however,
that an indemnified party shall have the right to retain its own
counsel, with all fees and expenses thereof to be paid by such
indemnified party (except as provided in paragraph (a) and (b) above),
and to be apprised of all progress in any proceeding the defense of
which has been assumed by the indemnifying party. The failure to notify
an indemnifying party promptly of the commencement of any such action
shall only release the indemnifying party from any of its obligations
under this Section 10 if, and only to the extent that, such
indemnifying party is materially prejudiced by such failure, but the
omission to so notify the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than
under this Section.
(d) To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to
reflect the relative fault of the
13
indemnifying party and indemnified party in connection with the actions
which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of material fact or
omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims,
damages or liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 10(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
11. Limitation on Registration Rights. Notwithstanding any
other provisions of this Agreement to the contrary, the Company shall not be
required to register any Registrable Stock under this Agreement with respect to
any demand or demands made by any Holder after forty-two months after the date
of this Agreement.
12. Lockup. Each Holder shall, in connection with any
registration of the Company's securities, upon the request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
agree in writing not to effect any sale, disposition or distribution of any
Registrable Stock (other than that included in the registration) without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time not to exceed one hundred eighty (180) days from the
effective date of such registration as the Company or the underwriters may
specify; provided, however, that all executive officers and directors of the
Company shall also have agreed not to effect any sale, disposition or
distribution of any Registrable Stock under the circumstances and pursuant to
the terms set forth in this Section 12.
13. Assignment of Registration Rights. The registration rights
of any Holder under this Agreement with respect to any Registrable Stock may be
assigned to an Affiliate of such Holder; provided, however, that (a) the
assigning Holder shall give the Company written notice at or prior to the time
of such assignment stating the name and address of the assignee and identifying
the securities with respect to which the rights under this Agreement are being
assigned; (b) such assignee shall agree in
14
writing, in form and substance reasonably satisfactory to the Company, to be
bound as a Holder by the provisions of this Agreement; and (c) immediately
following such assignment the further disposition of such securities by such
assignee is restricted under the Securities Act. No assignment of the
registration rights of any Holder with respect to any Registrable Stock in
accordance with this Section 13 shall cause such Registrable Stock to lose such
status.
14. Binding Effect; Benefit. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
15. Governing Law; Jurisdiction and Service of Process. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware applicable to contracts executed in and to be performed in
that State. 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 18.
16. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
17. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
18. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy upon written confirmation of receipt by the recipient, telegram or
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 18):
15
if to the Company:
Dycom Industries, Inc.
First Union Center,
Suite 600
0000 XXX Xxxxxxxxx
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Telecopier: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxxx
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
In the case of a notice given to any of the Purchasers, such notice shall be
delivered or sent to the address set forth below such Purchaser's name on the
signature pages hereto and, in each case, with a copy of such notice to
Xxxxxxxxxxx & Xxxxxxxx, Suite 200, 000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxx
00000, Telecopier: (000) 000-0000, Attention: Xxxxxxx Xxxxxx, Esq.
19. Amendments and Waivers. Any provision of this Agreement
may be amended or waived if such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
20. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, or is reasonably likely to jeopardize the treatment of the
Merger as a pooling of interests for accounting purposes, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions set forth
in this Agreement is not affected in any manner materially adverse to any party
hereto. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, or that the treatment of the Merger as a
pooling of interests for accounting purposes is reasonably likely to be
jeopardized, 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 a mutually acceptable manner in order that the transactions set
forth in this Agreement be consummated as originally contemplated to the fullest
extent possible.
16
21. Entire Agreement. This Agreement (including the schedule
hereto) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings
among the parties with respect thereto.
22. Attorneys' Fees. In the event that any party hereto shall
file suit to enforce any of the terms of this Agreement or to recover damages
for a breach of this Agreement, the prevailing party shall be entitled to
recover attorney's fees and costs incurred in such proceeding.
17
23. Waiver of Jury Trial. EACH OF THE COMPANY AND THE
PURCHASERS 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 ACTIONS OF THE COMPANY AND
THE PURCHASERS IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
THEREOF.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
DYCOM INDUSTRIES, INC.
By
-----------------------------
Name:
Title:
PURCHASERS:
-------------------------------
Name: Xxxxxx X. Xxxxxx
Address: 0000 Xxxx Xxxxxxxx
Xxxxxxxx, XX 00000
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Address: 000 Xxxxxxxx Xxx Xxxxxxx
Xxxxxxxxxx Xxxx, XX 00000
-------------------------------
Name: Xxxx X. Xxxxxxx
Address: 0000 X.X. 000 Xxxxx
Xxxxx Xxxxxx, XX 00000
18
Schedule I
Ownership of Shares by the Purchasers
Immediately After the Effective Time
Xxxxxx X. Xxxxxx 200,000
Xxxxxx X. Xxxxxxx 200,000
Xxxx X. Xxxxxxx and Xxxxxx Xxxxxxx
as Tenants by the Entireties 200,000
