EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Among
DYCOM INDUSTRIES, INC.,
DYCOM ACQUISITION CORPORATION IV,
XXXXX XXXXX SONS COMPANY
and
THE STOCKHOLDERS LISTED
ON THE SIGNATURE PAGES
HERETO
Dated as of February 14, 2000
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger.....................................................1
SECTION 1.02. Effective Time; Closing........................................2
SECTION 1.03. Effect of the Merger...........................................2
SECTION 1.04. Certificate of Incorporation; By-Laws..........................2
SECTION 1.05. Directors and Officers.........................................2
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities.......................................3
SECTION 2.02. Exchange of Certificates.......................................3
SECTION 2.03. Stock Transfer Books...........................................4
SECTION 2.04. Parent Rights Plan.............................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
SECTION 3.01. Organization and Qualification; Subsidiaries...................5
SECTION 3.02. Articles of Incorporation and By-Laws..........................6
SECTION 3.03. Capitalization.................................................6
SECTION 3.04. Corporate Books and Records....................................7
SECTION 3.05. Authority Relative to This Agreement...........................7
SECTION 3.06. No Conflict; Required Filings and Consents.....................7
SECTION 3.07. Permits; Compliance............................................8
SECTION 3.08. Financial Statements...........................................8
SECTION 3.09. Conduct in the Ordinary Course; Absence of
Certain Changes or Events......................................9
SECTION 3.10. Absence of Litigation.........................................12
SECTION 3.11. Employee Benefit Matters......................................12
SECTION 3.12. Labor Matters.................................................15
SECTION 3.13. Key Employees.................................................16
SECTION 3.14. Contracts.....................................................16
SECTION 3.15. Real Property.................................................17
SECTION 3.16. Personal Property.............................................19
SECTION 3.17. Assets........................................................20
SECTION 3.18. Environmental Matters.........................................21
SECTION 3.19. Intellectual Property.........................................23
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SECTION 3.20. Taxes.........................................................24
SECTION 3.21. Insurance.....................................................25
SECTION 3.22. No Undisclosed Liabilities....................................25
SECTION 3.23. State Takeover Statutes.......................................25
SECTION 3.24. Private Placement.............................................26
SECTION 3.25. Customers.....................................................26
SECTION 3.26. Guaranties....................................................26
SECTION 3.27. Brokers.......................................................26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.01. Organization and Qualification; Subsidiaries..................27
SECTION 4.02. Certificate of Incorporation and By-Laws......................27
SECTION 4.03. Capitalization................................................27
SECTION 4.04. Authority Relative to This Agreement..........................28
SECTION 4.05. No Conflict; Required Filings and Consents....................28
SECTION 4.06. SEC Filings; Financial Statements.............................29
SECTION 4.07. Absence of Certain Changes or Events..........................29
SECTION 4.08. Absence of Litigation.........................................30
SECTION 4.09. Operations of Merger Sub......................................30
SECTION 4.10. Brokers.......................................................30
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger.........30
SECTION 5.02. Notification of Certain Matters...............................31
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Access to Information; Confidentiality........................32
SECTION 6.02. No Solicitation of Transactions...............................32
SECTION 6.03. Pooling.......................................................33
SECTION 6.04. Further Action; Consents; Filings.............................33
SECTION 6.05. Plan of Reorganization........................................34
SECTION 6.06. Public Announcements..........................................34
SECTION 6.07. Resale Restrictions...........................................35
SECTION 6.08. Merger Information............................................35
SECTION 6.09. Stockholder Vote..............................................35
SECTION 6.10. Stock Transfer Taxes..........................................36
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SECTION 6.11. Release of Indemnity Obligations..............................36
SECTION 6.12. Termination of Shareholder Agreement..........................36
SECTION 6.13. Fiscal Year 2000 Financial Statements.........................36
ARTICLE VII
EMPLOYEE MATTERS
SECTION 7.01. Employee Matters..............................................37
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party...................37
SECTION 8.02. Conditions to the Obligations of Parent and Merger Sub........38
SECTION 8.03. Conditions to the Obligations of the Company..................40
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties....................41
SECTION 9.02. Indemnification by the Stockholders...........................41
SECTION 9.03. Limits on Indemnification.....................................43
SECTION 9.04. Indemnification of the Stockholders...........................43
ARTICLE X
TERMINATION, AMENDMENTS AND WAIVER
SECTION 10.01. Termination..................................................43
SECTION 10.02. Effect of Termination........................................44
SECTION 10.03. Amendments and Waivers.......................................44
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses.....................................................45
SECTION 11.02. Notices......................................................45
SECTION 11.03. Certain Definitions..........................................46
SECTION 11.04. Severability.................................................47
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SECTION 11.05. Assignment; Binding Effect; Benefit..........................47
SECTION 11.06. Incorporation of Exhibits....................................47
SECTION 11.07. Attorneys' Fees..............................................48
SECTION 11.08. Governing Law; Forum.........................................48
SECTION 11.09. Headings.....................................................48
SECTION 11.10. Counterparts.................................................48
SECTION 11.11. Entire Agreement.............................................48
SECTION 11.12. Waiver of Jury Trial.........................................48
SCHEDULES
Company Disclosure Schedule
EXHIBITS
Exhibit 8.01(d)(i) Form of Employment Agreement with Xxx X. Xxxxx
Exhibit 8.01(d)(ii) Form of Employment Agreement with Xxxxxx X. Xxxxx
Exhibit 8.03(c) Form of Registration Rights Agreement
Glossary of Defined Terms
Location of
Defined Term Definition
------------ -----------
Action........................................................... ss. 3.10
affiliate........................................................ ss. 11.03(a)
Agreement........................................................ Preamble
Articles of Merger............................................... ss. 1.02
Assets........................................................... ss. 3.17(a)
beneficial owner................................................. ss. 11.03(b)
business day..................................................... ss. 11.03(c)
CERCLA........................................................... ss. 3.18
Certificates..................................................... ss. 2.02(a)
Code .......................................................... Recitals
Company.......................................................... Preamble
Company Audited Financial Statements............................. ss. 3.08(a)
Company Common Stock............................................. ss. 2.01(a)
Company Disclosure Schedule...................................... ss. 3.01
Company Intellectual Property.................................... ss. 3.19(a)
Company Material Adverse Effect.................................. ss. 3.01
Company Permits.................................................. ss. 3.07(a)
Competing Transaction............................................ ss. 6.02(b)
Confidentiality Agreement........................................ ss. 6.01(b)
control.......................................................... ss. 11.03(d)
Effective Time................................................... ss. 1.02
Encumbrance...................................................... ss. 3.17(b)
Environmental Claims............................................. ss. 3.18
Environmental Laws............................................... ss. 3.18
Environmental Permits............................................ ss. 3.18
ERISA............................................................ ss. 3.11(a)
Fiscal Year 2000 Audited Financial Statements.................... ss. 6.13
Governmental Entity.............................................. ss. 3.06(b)
Hazardous Materials.............................................. ss. 3.18
HSR Act.......................................................... ss. 3.06(b)
Indemnified Party................................................ ss. 9.02(a)
Indemnifying Party............................................... ss. 9.02(a)
Intellectual Property............................................ ss. 3.19
knowledge........................................................ ss. 11.03(e)
Law .......................................................... ss. 3.06(a)
Liabilities...................................................... ss. 3.22
Loss .......................................................... ss. 9.02(a)
Material Contracts............................................... ss. 3.14(a)
Merger........................................................... Recitals
Merger Sub....................................................... Preamble
Merger Sub Common Stock.......................................... ss. 4.03
Multiemployer Plan............................................... ss. 3.11(b)
Multiple Employer Plan........................................... ss. 3.11(b)
Order............................................................ ss. 8.01(a)
Parent........................................................... Preamble
Parent Common Stock.............................................. 2.01(a)
Parent Material Adverse Effect................................... ss. 4.01
Parent Preferred Stock........................................... ss. 4.03
Parent Rights Plan............................................... ss. 2.04
Parent SEC Reports............................................... ss. 4.06(a)
Parent Subsidiaries.............................................. ss. 4.01
Pension Plan..................................................... ss. 7.01
person........................................................... ss. 11.03(f)
Personal Property................................................ ss. 3.16(a)
Plans............................................................ ss. 3.11(a)
Real Property.................................................... ss. 3.15(a)
Registration Rights Agreement.................................... ss. 8.03(c)
Release.......................................................... ss. 3.18
Representatives.................................................. ss. 6.01(a)
Securities Act................................................... ss. 3.24(a)
Shares........................................................... ss. 2.01(a)
subsidiary or subsidiaries....................................... ss. 11.03(g)
Surviving Corporation............................................ ss. 1.01
Stockholders..................................................... Preamble
Tax or Taxes..................................................... ss. 3.20
Third Party Claims............................................... ss. 9.02(b)
Threshold Amount................................................. ss. 9.03
URBCA............................................................ Recitals
WARN............................................................. ss. 3.11(i)
AGREEMENT AND PLAN OF MERGER dated as of February 14, 2000
(this "Agreement") among DYCOM INDUSTRIES, INC., a Florida corporation
("Parent"), DYCOM ACQUISITION CORPORATION IV, a Utah corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), XXXXX XXXXX SONS COMPANY, a Utah
corporation (the "Company"), and the stockholders of the Company listed on the
signature pages hereto (collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the Utah Revised Business Corporation Act of
the State of Utah (the "URBCA"), Parent and the Company will enter into a
business combination transaction pursuant to which Merger Sub will merge with
and into the Company (the "Merger");
WHEREAS, the Board of Directors of the Company (i) has
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of the Company and fair to, and in the best
interests of, the Company and the Stockholders and has approved and adopted this
Agreement, the Merger and the other transactions contemplated by this Agreement
and (ii) has recommended the approval of this Agreement by the Stockholders;
WHEREAS, the Board of Directors of Parent has determined that
the Merger is consistent with and in furtherance of the long-term business
strategy of Parent and has approved and adopted this Agreement, the Merger and
the other transactions contemplated by this Agreement;
WHEREAS, for federal income tax purposes, the Merger is
intended to qualify as a reorganization under the provisions of section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties intend that the Merger shall be accounted
for as a "pooling of interests" for financial reporting purposes.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, the Stockholders, Merger Sub and the Company hereby agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VIII, and in accordance with the URBCA, at the
Effective Time (as defined below in Section 1.02), 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").
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SECTION 1.02. 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
VIII (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
this Agreement or articles of merger or certificate of ownership and merger (in
any case, the "Articles of Merger") with the Division of Corporations of the
State of Utah in such form as is required by, and executed in accordance with,
the relevant provisions of the URBCA. The term "Effective Time" means the date
and time of the filing of the Articles of Merger with the Division of
Corporations of the State of Utah (or such later time as may be agreed in
writing by each of the parties hereto and specified in the Articles of Merger).
Immediately prior to the filing of the Articles 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 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
URBCA. 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 1.04. Certificate of Incorporation; By-Laws. (a) At
the Effective Time, the Articles of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such Articles of Incorporation; provided, however, that, at the Effective Time,
Article I of the Articles of Incorporation of the Surviving Corporation shall be
amended to read as follows: "The name of the Corporation is Xxxxx Xxxxx Sons
Company."
(b) At the Effective Time, the By-Laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by law, the Articles
of Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. 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 Articles
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.
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ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. 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 common stock, par value $1.00 per share, of
the Company (the "Company Common Stock"; all issued and outstanding shares of
Company Common Stock being hereinafter collectively referred to as the "Shares")
issued and outstanding immediately prior to the Effective Time shall be canceled
and Parent shall issue to each Stockholder 1,363,105 shares of common stock, par
value $0.331/3 per share, of Parent (the "Parent Common Stock"); and
(b) each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation.
SECTION 2.02. Exchange of Certificates. (a) Surrender of
Certificates. 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 2.01 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.
Until surrendered as contemplated by this Section 2.02, each
Certificate shall be deemed at all times after the Effective Time to represent
only the right to receive upon such surrender the certificate representing
shares of Parent Common Stock and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.02(b).
(b) Distributions with Respect to Unexchanged Shares of Parent
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to the Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby until the
holder of such Certificate shall surrender such Certificate. Subject to the
effect of escheat, tax or other applicable Laws (as defined in Section 3.05),
following surrender of any such Certificate, there shall be paid to the holder
of the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) promptly, the amount of dividends or
other distributions with a record date after the Effective Time and theretofore
paid with respect to such whole shares of Parent Common
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Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Parent Common Stock.
(c) No Further Rights in Company Common Stock. All shares of
Parent Common Stock issued upon conversion of the Shares in accordance with the
terms hereof (including any cash paid pursuant to Section 2.02(b) and the rights
under the Parent Rights Plan (as defined in Section 2.04)) 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 (as
defined in Section 8.03(c)).
(d) No Fractional Shares. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any other rights of a shareholder of
Parent.
(e) No Liability. Neither Parent nor the Surviving Corporation
shall be liable to any holder of Shares for any such Shares (or dividends or
distributions with respect thereto), or cash delivered to a public official
pursuant to any abandoned property, escheat or similar Law.
(f) Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
(g) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Parent or its agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of Parent Common Stock and any dividends or
other distributions to which the holders thereof are entitled pursuant to
Section 2.02(b).
SECTION 2.03. 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
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Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided in this Agreement or by Law.
SECTION 2.04. Parent Rights Plan. Each person entitled to
receive shares of Parent Common Stock pursuant to this Article II shall receive
together with such shares of Parent Common Stock the number of Parent Common
Stock purchase rights (pursuant to the Shareholder Protection Rights Agreement,
dated as of June 1, 1992, among Parent and First Union National Bank of North
Carolina, as Rights Agent (the "Parent Rights Plan")) per share of Parent Common
Stock equal to the number of Parent Common Stock purchase rights associated with
one share of Parent Common Stock at the Effective Time.
ARTICLE III
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 3.01. Organization and Qualification; Subsidiaries.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Utah and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted. The Company is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the 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 Company
Material Adverse Effect. The term "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, individually or in the aggregate, 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. Except as disclosed in Section 3.01
of the Company Disclosure Schedule, the Company does not have, nor at any time
has had, any subsidiaries or an equity interest in any partnership, joint
venture arrangement or other business entity. The Company's jurisdiction of
organization and jurisdictions where it is qualified or licensed as a foreign
corporation to do business are disclosed in Section 3.01 of the Disclosure
Schedule delivered by the Company to Parent and Merger Sub concurrently with the
execution of this Agreement (the "Company Disclosure Schedule").
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SECTION 3.02. Articles of Incorporation and By-Laws. The
Company has heretofore made available to Parent a complete and correct copy of
the Amended and Restated Articles of Incorporation and the Amended and Restated
By-Laws of the Company. Such Amended and Restated Articles of Incorporation and
Amended and Restated By-Laws are in full force and effect. The Company is not in
violation of any of the provisions of its Amended and Restated Articles of
Incorporation or Amended and Restated By-Laws.
SECTION 3.03. Capitalization. (a) The authorized capital stock
of the Company consists of 100,000 shares of Company Common Stock. As of the
date of this Agreement, (i) 25,761 shares of Company Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
(ii) no shares of Company Common Stock are held in the treasury of the Company.
Except as disclosed in Section 3.03(a) of the Company Disclosure Schedule, 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. Except as disclosed in
Section 3.03(a) of the Company Disclosure Schedule, there are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of Company Common Stock. Except as disclosed in Section
3.03(a) of the Company Disclosure Schedule, 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
other 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, except as disclosed in Section 3.03(b) of the Company
Disclosure Schedule, has full and absolute right and power to assign, transfer
and sell his or its Shares.
(c) The stock register of the Company accurately records: (i)
the name and address of each person owning shares of capital stock of the
Company and (ii) the certificate number of each certificate evidencing shares of
capital stock issued by the Company, the number of shares evidenced by each such
certificate, the date of issuance thereof and, in the case of cancellation, the
date of cancellation.
(d) The Company has no liability or obligation under (i) the
Stock Repurchase Agreement, dated February 1, 1997, by and between the Company
and Xxxx X. Xxxxx and the related promissory note, and (ii) the Stock Repurchase
Agreement, dated February 1, 1997, by and between the Company and Xxxxx X. Xxxxx
and the related promissory note.
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SECTION 3.04. Corporate Books and Records. The minute books of
the Company for the ten (10) years preceding the date of this Agreement contain,
and as of the Effective Time will contain, accurate records of all meetings and
accurately reflect all other actions taken by the stockholders, Boards of
Directors and all committees of the Boards of Directors of the Company.
SECTION 3.05. 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 and the other transactions contemplated by this Agreement. 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 and
the other transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Merger and the other transactions contemplated by this Agreement
(other than, with respect to the Merger, the approval of this Agreement by the
holders of a majority of then outstanding Shares and the filing of Articles of
Merger with the Division of Corporations of the State of Utah as required by the
URBCA). This Agreement has been duly and validly executed and delivered by the
Company and each Stockholder and, assuming the due authorization, execution and
delivery by Parent and Merger Sub, constitutes a legal, valid and binding
obligation 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 3.06. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company and the Stockholders
do not, and the performance of this Agreement by the Company and the
Stockholders will not, (i) conflict with or violate the Amended and Restated
Articles of Incorporation or Amended and Restated ByLaws of the Company, (ii)
assuming that all consents, approvals, authorizations and other actions
described in Section 3.06(b) have been obtained and all filings and obligations
described in Section 3.06(b) have been made, conflict with or violate any
foreign or domestic law, statute, ordinance, rule, regulation, order, judgment
or decree ("Law") applicable to the Stockholders or to the Company or by which
any property or asset of the Company is bound or affected, 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 a lien or other 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 3.05 and
Section 3.06 of the Company Disclosure Schedule and (y) for any such conflicts,
violations, breaches, defaults or other occurrences that have not had, and would
have, individually or in the aggregate, a Company Material Adverse Effect, and
that would not prevent or delay the consummation of the transactions
contemplated by this Agreement.
8
(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 domestic or foreign governmental or
regulatory authority ("Governmental Entity"), except (i) for the pre-merger
notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"), (ii)
the filing and recordation of appropriate merger documents as required by the
URBCA, and (iii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, has not
had, and would not have, individually or in the aggregate, a Company Material
Adverse Effect, and would not prevent or delay the consummation of the
transactions contemplated by this Agreement.
SECTION 3.07. Permits; Compliance. (a) The Company is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for the Company to own, lease and operate
its properties or to carry on its business as it is now being conducted (the
"Company Permits"), except where the failure to have, or the suspension or
cancellation of, any of the Company Permits has not had, and would not have,
individually or in the aggregate, a Company Material Adverse Effect, and, as of
the date of this Agreement, 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 have, or
the suspension or cancellation of, any of the Company Permits has not had, and
would not have, individually or in the aggregate, a Company Material Adverse
Effect.
(b) The Company is not in conflict with, or in default or
violation of, (i) any Law applicable to the Company or by which any property or
asset of the Company is bound or affected, (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by which the Company
or any property or asset of the Company is bound or affected or (iii) any
Company Permits, except, in the case of each of (i), (ii) and (iii), for any
such conflicts, defaults or violations that have not had, and would not have,
individually or in the aggregate, a Company Material Adverse Effect.
SECTION 3.08. Financial Statements. (a) True and complete
copies of the audited consolidated balance sheet of the Company for each of the
fiscal years ended as of January 31, 1996, 1997, 1998, 1999 and, prior to the
Effective Time, 2000 and the related audited consolidated statements of income,
stockholders' equity and cash flow for each of the fiscal years 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") have been
delivered by the Company to Parent. The Company Audited Financial Statements (i)
were prepared in accordance with the books of account and other financial
records of the Company, (ii) present fairly in all material respects the
financial condition and results of operations of the Company as of the
9
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 consistent basis throughout the periods referred to in this
paragraph (a) of Section 3.08 and (iv) include all adjustments (consisting only
of normal recurring accruals) that are necessary for a fair presentation of the
consolidated financial condition of the Company and the results of the
operations of the Company as of the dates thereof or for the periods covered
thereby.
(b) The books of account and other financial records of the
Company: (i) reflect all items of income and expense and all assets and
Liabilities required to be reflected therein in accordance with U.S. GAAP
applied on a basis consistent with the past practices of the Company; (ii) are
in all material respects complete and correct, and do not contain or reflect any
material inaccuracies or discrepancies; and (iii) have been maintained in
accordance with good business and accounting practices.
SECTION 3.09. Conduct in the Ordinary Course; Absence of
Certain Changes or Events. Since January 31, 2000, except as disclosed in
Section 3.09 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 Amended and Restated
Articles of Incorporation or Amended and Restated By-Laws;
(b) issued, sold, pledged, disposed of, granted, encumbered,
or authorized the issuance, sale or pledge, disposition, grant or
encumbrance of, (i) any shares of its capital stock of any class, or
any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom
interest), of the Company or (ii) any material assets of the Company,
except in the ordinary course of business and in a manner consistent
with past practice;
(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;
(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 division
thereof 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 or issued any
debt securities or assumed, guaranteed or endorsed, or otherwise as an
accommodation became responsible for, the obligations of any person, or
made any loans or advances,
10
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) authorized any capital expenditure, which, when taken
together with all other capital expenditures made by the Company exceed
$50,000;
(i) 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;
(j) amended, terminated, canceled or compromised any material
claim of the Company or waived any other rights of substantial value to
the Company;
(k) failed to maintain the Assets in accordance with good
business practice and in good operating condition and repair;
(l) allowed any Company Permit or Environmental Permit that
was issued or relates to the Company or otherwise relates to any Asset
to lapse or terminate or failed to renew any such Company Permit or
Environmental Permit or any insurance policy that is scheduled to
terminate or expire within 45 calendar days of the Effective Time;
(m) permitted or allowed any of the assets or properties
(whether tangible or intangible) of the Company to be subjected to any
Encumbrance, other than Encumbrances that will be released at or prior
to the Effective Time;
(n) 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);
(o) made any tax election or settled or compromised any
material federal, state, local or foreign income tax liability;
11
(p) 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;
(q) 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;
(r) disclosed any confidential or proprietary Company
Intellectual Property (as defined in Section 3.18 of this Agreement);
(s) incurred any indebtedness, including any guarantee of
indebtedness, in excess of $50,000 individually or $100,000 in the
aggregate, or made any loan to any person, provided, however, that any
indemnity provided by the Company in the ordinary course of business
and consistent with past pracitce shall not be subject to this Section
3.09(s);
(t) 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;
(u) 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);
(v) terminated, discontinued, closed or disposed of any plant,
facility or other business operation, or laid off any employees (other
than layoffs of less than 25 employees in any six-month period in the
ordinary course of business consistent with past practice) or
implemented any early retirement, separation or program providing early
retirement window benefits within the meaning of Section 1.401(a)-4 of
the Regulations or announced or planned any such action or program for
the future;
(w) made any charitable contribution;
(x) suffered any Company Material Adverse Effect; or
(y) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 3.09 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 3.09, except as expressly contemplated by
this Agreement.
12
SECTION 3.10. Absence of Litigation. Except as disclosed in
Section 3.10 of the Company Disclosure Schedule (which, with respect to each
Action disclosed therein, sets forth: the parties, nature of the proceeding,
date and method commenced, amount of damages or other relief sought and if
applicable, paid or granted), there 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 court,
arbitrator or Governmental Entity, domestic or foreign. Except as disclosed in
Section 3.10 of the Company Disclosure Schedule, neither the Company nor any
property or asset of the Company is subject to any continuing order of, consent
decree, settlement agreement or other similar written agreement with, or, to the
knowledge of the Company or the Stockholders, continuing investigation by, any
Governmental Entity, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity or arbitrator. The term
"Action" means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Entity.
SECTION 3.11. Employee Benefit Matters. (a) Plans and Material
Documents. Section 3.11(a) of the Company Disclosure Schedule lists (i) all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical, disability or life insurance, supplemental retirement, severance or
other benefit plans, programs or arrangements, and all employment, termination,
severance or other contracts or agreements, 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 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 3.11(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 (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
13
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
(i) a multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of
ERISA) (a "Multiemployer Plan"), (ii) subject to Title IV of ERISA, or (iii) 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, acceleration of vesting or payment of any
employee benefit, or similar-type benefits to any Person or obligates the
Company to pay separation, severance, termination or similar-type benefits to
accelerate the vesting or payment of any employee benefit 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. Except
as disclosed in Section 3.11(b) of the Company Disclosure Schedule, 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. Except as disclosed in
Section 3.11(c) of the Company Disclosure Schedule, each Plan is now and always
has been operated in all material respects in accordance with the requirements
of all applicable Law, including, without limitation, ERISA and the Code, 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 material respect in default
under or in violation of, any Plan. No legal action, suit or claim is pending
or, to the knowledge of the Company and the Stockholders, 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,
to the knowledge of the Company and the Stockholders after due inquiry, except
as disclosed in Section 3.11(c) of the Company Disclosure Schedule, no fact or
event has occurred since the date of such determination letter from the IRS that
has had or could reasonably have an adverse effect on the qualified status of
any such Plan or the exempt status of any such trust. There is no trust
maintained or contributed to by the Company which is
14
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.
(e) Absence of Certain Liabilities and Events. There has been
no prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Plan. The Company has not incurred any
liability for any penalty or tax arising under Section 4971, 4972, 4980, 4980B
or 6652 of the Code or any liability under Section 502 of ERISA, and, except as
disclosed in Section 3.11(c) of the Company Disclosure Schedule, to the
knowledge of the Company and the Stockholders after due inquiry, no fact or
event exists that has or could reasonably give rise to any such liability. The
Company has not incurred any liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or (ii)
the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no
fact or event exists that has or could reasonably give rise to any such
liability. No complete or partial termination has occurred within the five years
preceding the date hereof with respect to any Plan. No reportable event (within
the meaning of Section 4043 of ERISA) has occurred or is reasonably expected to
occur with respect to any Plan subject to Title IV of ERISA. No Plan had an
accumulated funding deficiency (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived, as of the most recently ended
plan year of such Plan. None of the assets of the Company is the subject of any
lien arising under Section 302(f) of ERISA or Section 412(n) of the Code; the
Company has not been required to post any security under Section 307 of ERISA or
Section 401(a)(29) of the Code; and no fact or event exists that has or could
reasonably give rise to any such lien or requirement to post any such security.
(f) Plan Contributions and Funding. All material
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 that has or
could reasonably give rise to any such challenge or disallowance.
(g) Certain Employee-Benefits Assets. Except as disclosed in
Section 3.11(g) of the Company Disclosure Schedule, 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 Disabilities Act. Except as set forth in
Section 3.11(h) of the Company Disclosure Schedule, and except with respect to
any real property leased by
15
the Company on a month-to-month basis or for a term of less than six months, the
Company is in material compliance with the requirements of the Americans With
Disabilities Act.
(i) WARN Act. The Company is in material compliance with the
requirements of the Workers Adjustment and Retraining Notification Act ("WARN")
and any applicable state or local plant closing notification statute and has no
liabilities pursuant to WARN or any such state or local statute.
SECTION 3.12. Labor Matters. Except as set forth in Section
3.12 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; (d) there are no unfair labor practice complaints pending against the
Company before the National Labor Relations Board or any other Governmental
Entity or any current union representation questions involving employees of the
Company; (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 Entity, and has withheld and paid to
the appropriate Governmental Entity or is holding for payment not yet due to
such Governmental Entity all amounts required to be withheld from employees of
the Company and is not liable for any arrears of wages, taxes, penalties or
other sums for failure to comply with any of the foregoing; (f) the Company has
paid in full to all its employees or adequately accrued for in accordance with
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 Entity 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 Entity 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
16
Governmental Entity in any jurisdiction in which the Company has employed or
currently employs any person.
SECTION 3.13. Key Employees. Section 3.13 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), 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 $60,000.
SECTION 3.14. Contracts. (a) Section 3.14(a) of the Company
Disclosure Schedule lists each of the following contracts and agreements of the
Company that are in effect, that are claimed by the Company, the Stockholders
or, to the knowledge of the Company or the Stockholders after due inquiry, a
third party to be in effect, or, in the ordinary course of business, have been
treated by the Company, the Stockholders or, to the knowledge of the Company or
the Stockholders after due inquiry, a third party as being in effect at the date
of this Agreement (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 that obligates the Company to
perform, provide or purchase goods, supplies or services which have an
individual value of more than $100,000;
(vii) each contract and agreement which cannot be cancelled by
the Company without penalty or further payment and without more than 30
days notice;
(viii) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) to which the
Company is a party and which are not cancelable without penalty or
further payment and without more than 30 days notice;
17
(ix) all broker, franchise, agency dealer and sales promotion
agreements to which the Company is a party;
(x) all contracts and agreements with any Governmental Entity
to which the Company is a party;
(xi) all contracts and agreements that limit or purport to
limit the ability of the Company to compete in any line of business or
with any Person or in any geographic area or during any period of time;
(xii) all contracts and agreements between or among the
Company and any affiliate of the Company;
(xiii) all contracts and agreements providing for benefits
under any Plan; and
(xiv) all other contracts and agreements whether or not made
in the ordinary course of business, which are material to the Company
or the conduct of the business or the absence of which would have a
Company Material Adverse Effect.
(b) Except as disclosed in Section 3.14(b) of the Company
Disclosure Schedule: (i) each Material Contract is valid and binding on the
respective parties thereto and is in full force and effect and (ii) upon
consummation of the transactions contemplated by this Agreement, and except to
the extent that any consents set forth in Section 3.14 of the Disclosure
Schedule are not obtained, each Material Contract shall continue in full force
and effect without penalty or other adverse consequence.
(c) Except as disclosed in Section 3.14(c) of the Company
Disclosure Schedule, the Company is not in breach of, or default under, any
Material Contract. To the knowledge of the Company and the Stockholders, no
other party to any Material Contract is in breach thereof or default thereunder.
SECTION 3.15. Real Property. (a) Section 3.15(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.
(b) Except as described in Section 3.15(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
18
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 or the
Stockholders, 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 that would cause the Real Property or such facilities, buildings,
structures, erections, improvements, fixtures, fixed assets and personalty to be
unsuitable for their respective current or intended uses. Except as set forth in
Section 3.15(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 3.15(b) of the Company Disclosure Schedule to any
third party.
(c) The Company has delivered to Parent, as of the Effective
Time, 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 3.15(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;
(iii) except as otherwise disclosed in Section 3.15(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
19
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, 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, 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 3.16. Personal Property. (a) Section 3.16(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, as of the Effective
Time, 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 3.16(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 3.16(b) 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
20
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 3.17. Assets. (a) Except as disclosed in Section
3.17(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 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 Sections 3.14(a)(i), 3.15(b), 3.15(c), 3.16(b) or
3.17(a) of the Company Disclosure Schedule and (ii) such of the following
Encumbrances 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 (1) are not overdue for a period of
more than 30 days and (2) 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 (1) were not incurred in connection with any indebtedness, (2) do
not render title to the property encumbered thereby unmarketable and (3) do not,
individually or in the aggregate, materially adversely affect the value or use
of such property for its current and anticipated purposes.
(b) Following the consummation of the transactions
contemplated by this Agreement, the Company will continue to own, pursuant to
good and marketable title, or lease, under valid and subsisting leases, or
otherwise retain its respective interest in the Assets without incurring any
penalty or, individually or in the aggregate, any Company Material Adverse
Effect, including, without limitation, any increase in rentals, royalties, or
licenses or other fees imposed as a result of, or arising from, the consummation
of the transactions contemplated by this Agreement. Immediately following the
Closing, the Company shall own and possess all documents, books, records,
agreements and financial data of any sort used by the Company in the conduct of
the Business or otherwise.
21
For purposes of the Agreement, the term "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.
(c) The Assets constitute all the properties, assets and
rights forming a part of, used or held 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 commercially reasonable business practice, and all the Assets
are in good operating condition and repair, normal wear and tear excepted.
SECTION 3.18. Environmental Matters. The Company: (a) except
as disclosed in Section 3.18 of the Company Disclosure Schedule, 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) except as disclosed in Section 3.18 of the
Company Disclosure Schedule and except as would not have a Company Material
Adverse Effect, does not currently own or lease, and, to the knowledge of the
Company and the Stockholders after due inquiry, has not formerly owned or
leased, any property that is contaminated with Hazardous Materials (as defined
below); (c) except as disclosed in Section 3.18 of the Company Disclosure
Schedule, has not disposed of, has not arranged for the disposal of, nor has any
knowledge of the disposal of, any Hazardous Material on any Real Property,
except where such disposal would not have a Company Material Adverse Effect; (d)
has all Environmental Permits (as defined below), except as disclosed in Section
3.18 of the Company Disclosure Schedule and where the failure to have such
Environmental Permits would not have a Company Material Adverse Effect; (e)
except as set forth in Section 3.18 of the Company Disclosure Schedule, is in
compliance with its Environmental Permits except where such noncompliance would
not have a Company Material Adverse Effect; (f) except as disclosed in Section
3.18 of the Company Disclosure Schedule, has not received any written request
for information, or been notified that it is a potentially responsible party,
under CERCLA (defined below) or any similar Law of any state, locality or any
other jurisdiction; (g) except as disclosed in Section 3.18 of the Company
Disclosure Schedule, has not entered into or agreed to any consent decree or
order or is subject to any judgment, decree or judicial order relating to
compliance with Environmental Laws, Environmental Permits or the investigation,
sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous
Materials and, to the knowledge of Company or the Stockholders, no
investigation, litigation or other proceeding is pending or threatened in
writing with respect thereto; and (h) except as disclosed in Section 3.18 of the
Company Disclosure Schedule, has not conducted, and has not undertaken or
completed, any remedial action relating to the Release or threatened Release at
the Real Property or at any other site, location or operation, either
voluntarily or pursuant to the order of any Governmental Entity or the
requirements of any Environmental Law or Environmental Permit; and (i) none of
the real property owned, leased (except no representation is made pursuant to
this clause (i) with respect to any real property leased on a month-to-month
basis or for a term of less than six
22
months, provided that neither the Company nor the Stockholders has actual
knowledge with respect to such property) or secured by the Company, or formerly
owned, leased (except no representation is made pursuant to this clause (i) with
respect to any real property leased on a month-to-month basis or for a term of
less than six months, provided that neither the Company nor the Stockholders has
actual knowledge with respect to such property) or secured by the Company, is
listed or, to the knowledge of Company or the Stockholders, proposed for listing
on the "National Priorities List" under CERCLA, as updated through the date of
this Agreement, or any similar list of sites in the United States or any other
jurisdiction requiring investigation or cleanup. Except as disclosed in Section
3.18 of the Company Disclosure Schedule, 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 implementation under any Environmental Law
or Environmental Permit that would have a Company Material Adverse Effect.
Except as disclosed in Section 3.18 of the Company Disclosure Schedule, there
are no underground or aboveground storage tanks or any surface impoundments,
septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or
have been treated, stored or disposed on any of the Owned Real Property or, to
the knowledge of the Company or the Stockholders after reasonable investigation,
on any of the leased Real Property during the Company's ownership or occupation
of such property or, to the knowledge of the Company or the Stockholders after
reasonable investigation, on any property formerly owned, leased or occupied by
the Company. For the purposes of the immediately preceding sentence of this
Section 3.18, "reasonable investigation" shall not require the Company or the
Stockholders to conduct or cause to be conducted any Phase I or Phase II
environmental investigation with respect to any property unless it is otherwise
deemed to be necessary to conduct a reasonable investigation with respect to
such property. Except as disclosed in Section 3.18 of the Company Disclosure
Schedule, there are no Environmental Claims pending or threatened against the
Company, the business, the Real Property or any other property formerly secured,
leased or occupied by the Company, and there are no circumstances that can
reasonably be expected to form the basis of any such Environmental Claim,
including without limitation with respect to any off-site disposal location
currently or formerly used by the Company or any of their predecessors or with
respect to any previously owned or operated facilities, except where such
Environmental Claim would not have a Company Material Adverse Effect.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date
hereof.
"Environmental Claims" means any and all actions, suits,
demands, demand letters, claims, liens, notices of non-compliance or
violation, notices of liability or potential liability, investigations,
proceedings, consent orders or consent agreements relating in any way
to any Environmental Law, any Environmental Permit or any Hazardous
Material or arising from any alleged injury or threat of injury to
health, safety or the environment.
23
"Environmental Laws" means any federal, state or local
statute, law, ordinance, regulation, rule, code or order of the United
States, or any other jurisdiction and any enforceable judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution
or protection of the environment or natural resources, including,
without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, Release or discharge of
Hazardous Materials, as in effect as of the date of this Agreement.
"Environmental Permits" means any permit, approval,
identification number, license and other authorization required under
any applicable Environmental Law.
"Hazardous Materials" means (a) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (b) any
chemical, material or substance defined or regulated as toxic or
hazardous or as a pollutant or contaminant or waste under any
applicable Environmental Law.
"Release" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing and the like into or upon any land or water or air or otherwise
entering the environment.
SECTION 3.19. Intellectual Property. (a) Section 3.19(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 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 has not been adjudged
invalid or unenforceable in whole or part by any Governmental Entity.
24
(e) To the knowledge of the Company and the Stockholders, 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, except with
respect to purchases of software that is generally available to the public for
purchase or license.
For the purposes of this Agreement, "Intellectual Property"
means (i) 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, (ii) copyrights (registered or otherwise) and
registrations and applications for registration thereof, and all rights therein
provided by multinational treaties or conventions, (iii) computer software,
including, without limitation, source code, operating systems and
specifications, data, data bases, files, documentation and other materials
related thereto, data and documentation, (iv) 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), (v) 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, (vi) copies and tangible embodiments of all the foregoing, in
whatever form or medium, (vii) issued patents and patent applications, (viii)
all rights to obtain and rights to apply for patents, and to register trademarks
and copyrights, (ix) licenses or sublicenses in connection with any of the
foregoing, and (x) 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.
SECTION 3.20. 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, (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) and (d) provided adequate
reserves in its financial statements for any Taxes that have not been paid,
whether or not shown as being due on any returns. All Tax returns filed by the
Company are true, correct and complete in all material respects. The Company has
open years for federal, state and local income Tax returns only as set forth in
Section 3.20 of the Company Disclosure Schedule. The Company has not
25
received from any governmental authority any written notice of proposed material
adjustment, deficiency or underpayment of any Taxes, which notice has 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 Individual
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. The Company
has not made an election under Section 341(f) of the Code. The Company has not
been a member of any affiliated group with any company and has not filed a Tax
return on a consolidated, combined or unitary basis with any company. 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 3.21. 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.
SECTION 3.22. No Undisclosed Liabilities. There are no
material Liabilities of the Company, other than Liabilities (a) reflected or
reserved against on the Company Audited Financial Statements, or (b) disclosed
in Section 3.22 of the Company Disclosure Schedule. Adequate reserves are
reflected on the Company Audited 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. For purposes of this Agreement, "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 Entity and those arising
under any contract, agreement, arrangement, commitment or undertaking.
SECTION 3.23. State Takeover Statutes. The Board of Directors
of the Company has taken all action necessary to ensure that the restrictions on
business combinations contained in Section 61-6-1 of the URBCA will not apply to
the Merger and the other transactions contemplated by this Agreement. To the
knowledge of the Company and the
26
Stockholders, no other state takeover statute is applicable to the Merger or the
other transactions contemplated by this Agreement.
SECTION 3.24. 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 of 1933, as
amended (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 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.
SECTION 3.25. Customers. Except as disclosed in Section 3.25
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 3.26. Guaranties. Section 3.26 of the Company
Disclosure Schedule sets forth a list of each guarantee given by a Stockholder
of an obligation incurred by the Company.
SECTION 3.27. Brokers. No broker, finder or investment banker
(other than Strategic Group LLC) is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger or the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The Company has heretofore made available to Parent a complete and
correct copy of all agreements between the Company and Strategic Group LLC
pursuant to which such firm would be entitled to any payment relating to the
Merger or any other transactions.
27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Parent SEC Reports (as defined in
Section 4.06 of this Agreement), Parent and Merger Sub hereby jointly and
severally represent and warrant to the Company and the Stockholders that:
SECTION 4.01. Organization and Qualification; Subsidiaries.
Each of Parent and each subsidiary of Parent (the "Parent Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. Each of Parent and the Parent Subsidiaries 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 have not had, and could not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect. The
term "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 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
SECTION 4.02. Certificate of Incorporation and By-Laws. Parent
has heretofore made available to the Company a complete and correct copy of the
Amended Certificate of Incorporation and the Amended and Restated By-Laws of
Parent and the Articles of Incorporation and By-Laws of Merger Sub. Such
Certificate of Incorporation, Articles of Incorporation and By-Laws are in full
force and effect. Parent is not in violation of any provision of its Certificate
of Incorporation or By-Laws.
SECTION 4.03. Capitalization. The authorized capital stock of
Parent consists of (a) 150,000,000 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 1, 2000, (i) 25,982,076 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. Since February 1, 2000, no shares of Parent Common
Stock have been issued except such shares issued with respect to (i) stock
options with respect to Parent Common Stock which were exercised subsequent to
February 1, 2000 and (ii) any stock split or stock dividend declared by Parent
with respect to Parent Common Stock. As of the date of this Agreement, no shares
of Parent Preferred Stock were issued and outstanding. The
28
authorized capital stock of Merger Sub consists of 1,000 shares of common stock
(the "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 Parent Rights
Plan, 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 capital stock of, or other equity interests in,
Parent or any Parent Subsidiary. At the Effective Time, the shares of Parent
Common Stock to be issued to the Stockholders pursuant to the Merger will be
duly authorized, validly issued, fully paid and nonassessable.
SECTION 4.04. 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 its obligations hereunder and to
consummate the Merger and the other transactions contemplated by this Agreement.
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 and the
other transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Parent or the Merger Sub are necessary to authorize this
Agreement or to consummate the Merger and the other transactions contemplated by
this Agreement (other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by the URBCA). 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, constitutes a legal, valid and binding obligation 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 4.05. 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 Amended Certificate of Incorporation or
Amended and Restated By-Laws of Parent or any equivalent organizational
documents of Merger Sub or any other Parent Subsidiary, (ii) assuming that all
consents, approvals, authorizations and other actions described in Section
4.05(b) have been obtained and all filings and obligations described in Section
4.05(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 affected, 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 a lien or other
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
29
instrument or obligation, except, with respect to clauses (ii) and (iii) only,
(x) as disclosed in Section 4.05 of the Parent Disclosure Schedule and (y) where
such conflicts, violations, breaches, defaults, or other occurrences that have
not had, and would not have, individually or in the aggregate, a Parent Material
Adverse Effect, and that would not prevent or delay the consummation of the
transactions contemplated by this Agreement.
(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 will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity, except
(i) for applicable requirements, if any, of the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), state securities or "blue sky" Laws, the
Securities Act, the NYSE, state takeover laws, the HSR Act, the filing and
recordation of appropriate merger documents as required by the URBCA and (ii)
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, has not had, and would not have,
individually or in the aggregate, a Parent Material Adverse Effect, and that
would not prevent or delay the consummation of the transactions contemplated by
this Agreement
SECTION 4.06. 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, 1996 through the date of this Agreement (collectively, the
"Parent SEC Reports"). As of the respective dates they were filed, (i) the
Parent SEC Reports were prepared, in all material respects in accordance with
the requirements of the Securities Act, or the Exchange Act, as the case may be,
and (ii) none of the Parent SEC Reports at the time they were filed contained
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 generally accepted accounting principles applied on
a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) 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 4.07. Absence of Certain Changes or Events. Since July
31, 1999, except as contemplated by or as disclosed in this Agreement, or as
disclosed in any Parent SEC Report filed since July 1, 1999, there has not been
any Parent Material Adverse Effect.
30
SECTION 4.08. Absence of Litigation. Except as disclosed in
the Parent SEC Reports, there is no Action pending or, to the knowledge of
Parent, threatened against Parent or any Parent Subsidiary, or any property or
asset of Parent or any Parent Subsidiary, before any court, arbitrator or
Governmental Entity, domestic or foreign, which (i) has had, or could reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect or (ii) seeks to delay or prevent the consummation of the Merger or any
other material transaction contemplated by this Agreement.
SECTION 4.09. Operations of Merger Sub. Merger Sub is a
direct, wholly owned subsidiary of Parent, was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only as contemplated
by this Agreement.
SECTION 4.10. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the other transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Merger. (a) The Company and the Stockholders agree that, between the date of
this Agreement and the Effective Time, except as set forth in Section 5.01 of
the Company Disclosure Schedule or as contemplated by any other provision of
this Agreement, unless Parent shall otherwise consent in writing:
(i) 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
(ii) the Company shall use its reasonable best 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.
Without limiting the generality of the foregoing, except as described in Section
5.01(a) of the Disclosure Schedule, the Company will (i) continue its pricing
and purchasing policies, in accordance with past practice; (ii) not shorten or
lengthen the customary payment cycles for any of its payables or receivables;
(iii) use its best efforts to (A) preserve intact its business organization, (B)
keep available to the Parent the services of the employees of the Company,
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(C) continue in full force and effect without material modification all existing
policies or binders of insurance currently maintained in respect of the Company
and (D) preserve its current relationships with its customers, suppliers and
other persons with which it has significant business relationships; (iv) not
engage in any practice, take any action, fail to take any action or enter into
any transaction which could cause any representation or warranty of the Company
to be untrue or result in a breach of any covenant made by the Company in this
Agreement and (vi) not create or suffer to exist any subsidiary or acquire any
direct or indirect ownership or equity interest in any partnership, joint
venture or other similar interest in any other entity.
(b) Except as described in Section 5.01 of the Company
Disclosure Schedule, the Company and the Stockholders agree that, between the
date of this Agreement and the Effective Time, without the prior written consent
of Parent, the Company will not do any of the things enumerated in Section 3.09
of this Agreement.
SECTION 5.02. 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 8.02(d), or (b) the
failure of the Company, Merger Sub or Parent, as the case may 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 5.02
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 5.02 shall limit or affect the remedies available hereunder to the party
receiving such notice, including the rights of Parent under Section 8.02(a) and
the rights of the Company under Section 8.03(a), in the event that a
representation or warranty made by the Company or Parent herein shall not be
true and correct as of the date hereof and as of the Effective Time.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Access to Information; Confidentiality. (a) From
the date of this Agreement to the Effective Time, Parent, on the one hand, and
the Company and the Stockholders, on the other hand, shall (and shall cause
their respective subsidiaries to): (i) provide to the other party (and its
officers, directors, employees, accountants, consultants, legal counsel, agents
and other representatives, collectively, "Representatives") access at reasonable
times upon prior notice to the officers, employees, agents, properties, offices
and other facilities of the other and its subsidiaries and to the books and
records thereof, including, without limitation, access for the Parent to enter
upon the Company's properties and the Landfill (as defined in Section 3.18 of
the Company Disclosure Schedule) to investigate and collect air, surface water,
groundwater and soil samples or to conduct any other type of environmental site
assessment; provided that, for the avoidance of doubt, the same access is not
being given by Parent to the Company and the Stockholders with respect to the
Parent's properties; and (ii) furnish promptly such information concerning the
business, properties, contracts, assets, liabilities, personnel and other
aspects of the other party and its subsidiaries as the other party or its
Representatives may reasonably request.
(b) Parent, the Company and the Stockholders shall comply
with, and shall cause their respective Representatives to comply with, all of
their respective obligations under the Confidentiality Agreement dated January
21, 2000 (the "Confidentiality Agreement") among the Company, the Stockholders
and Parent. Any Phase II environmental report with respect to the Landfill (as
defined in the Company Disclosure Schedule), which is conducted by Parent
subsequent to the date hereof but prior to the Effective Time, shall be deemed
to be Proprietary Information under the Confidentiality Agreement, provided that
if Parent shall decide not to consummate the Merger pursuant to Section 8.02(o)
of this Agreement, then, notwithstanding the terms of the Confidentiality
Agreement, Parent shall be entitled to disclose that its election not to
consummate the Merger is based upon Section 8.02(o) of this Agreement.
SECTION 6.02. No Solicitation of Transactions. (a) 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
33
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to a Competing
Transaction.
(b) A "Competing Transaction" means any of the following
involving the Company (other than the Merger and the other transactions
contemplated by this Agreement): (i) a merger, consolidation, share exchange,
business combination or other similar transaction; (ii) any sale, lease,
exchange, transfer or other disposition of any significant assets of the Company
other than in the ordinary course of business; or (iii) an acquisition of any
Company Common Stock.
SECTION 6.03. Pooling. (a) From and after the date of this
Agreement and until the Effective Time, neither Parent, the Stockholders nor the
Company, nor any of their respective subsidiaries or other 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 the 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 6.03(a), each
Stockholder agrees that, between the date of this Agreement and Effective Time,
it will not sell, pledge 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 public 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 6.04. Further Action; Consents; Filings. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its best efforts to (i) 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 and the
other transactions contemplated by this Agreement, (ii) obtain from Governmental
Entities any consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by Parent or the Company or any of their
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the
34
consummation of the Merger and the other transactions contemplated by this
Agreement and (iii) make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement, the Merger and the other
transactions contemplated by this Agreement required under (A) the Exchange Act
and the Securities Act and the rules and regulations thereunder and any other
applicable federal or state securities laws, (B) the HSR Act and (C) any other
applicable Law. 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
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 6.04, the parties agree
that, in respect to any action taken or threatened to be taken by any
Governmental Entity, 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.
(b) Parent and the Company shall file as soon as practicable
after the date of this Agreement notifications under the HSR Act and shall
respond as promptly as practicable to all inquiries or requests received from
the Federal Trade Commission or the Antitrust Division of the Department of
Justice for additional information or documentation and shall respond as
promptly as practicable to all inquiries and requests received from any State
Attorney General or other Governmental Entity in connection with antitrust
matters. The parties shall cooperate with each other in connection with the
making of all such filings or responses, including providing copies of all such
documents to the other party and its advisors prior to filing or responding.
SECTION 6.05. Plan of Reorganization. This Agreement is
intended to constitute a "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 of this Agreement 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 action, cause any action to be taken, fail to take any
action or cause any action to fail to be taken which action or failure to act
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 which could cause the Merger to fail to qualify as a
reorganization under section 368(a) of the Code.
SECTION 6.06. Public Announcements. Unless otherwise required
by applicable law or the requirements of the NYSE, Parent, the Stockholders,
Merger Sub and the Company shall consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement, the Merger or any of the other transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation.
35
SECTION 6.07. 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:
"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 6.08. 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 6.09. 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
36
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 6.10. Stock Transfer Taxes. Parent shall pay any and
all documentary stamp Taxes which may be incurred in connection with the
transactions contemplated by this Agreement. The parties acknowledge that this
Section 6.11 is specifically intended to benefit the holders of Shares who are
holders of the Shares immediately prior to the Effective Time.
SECTION 6.11. Release of Indemnity Obligations. The
Stockholders covenant and agree, on or prior to the Effective Time, to execute
and deliver to the Company, for the benefit of the Company and Parent, a general
release and discharge, in form and substance satisfactory to Parent releasing
and discharging the Company from any and all obligations to indemnify the
Stockholders or otherwise hold it harmless pursuant to any agreement or other
arrangement entered into prior to the Effective Time except for the obligation
to indemnify the Stockholders as officers or directors of the Company pursuant
to the URBCA.
SECTION 6.12. Termination of Shareholder Agreement. The
Shareholder Agreement, dated October 1, 1999, among the Company and the
Stockholders shall be terminated on or prior to the Effective Time and Parent
shall receive on or prior to the Effective Time a copy of an instrument
terminating such Shareholder Agreement, signed by the Company and each of the
Stockholders, which such instrument shall be in form and substance satisfactory
to Parent in its sole and absolute discretion.
SECTION 6.13. Fiscal Year 2000 Financial Statements. The
Company shall deliver to Parent a true and complete copy of the audited balance
sheet of the Company for the 2000 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 audit report
thereon of the Company's independent accountants (the "Fiscal Year 2000 Audited
Financial Statements"). Upon delivery thereof, the Fiscal Year 2000 Audited
Financial Statements shall (i) be 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 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.
37
ARTICLE VII
EMPLOYEE MATTERS
SECTION 7.01. Employee Matters. Persons employed by the
Company just prior to the Effective Time may continue employment with the
Surviving Corporation on an "at-will" basis and subject to the Surviving
Corporation's terms, conditions and policies of employment. Such Persons who
continue as 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 similarly situated 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 employee benefit plans of the Company. After the Effective Time,
Parent will, in its discretion, (a) terminate 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 and distribute the assets of such Plans to the participants therein in
accordance with applicable law and the provisions of such Plans 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 3.10(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 VIII
CONDITIONS TO THE MERGER
SECTION 8.01. 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) No Order. No Governmental Entity or court of competent
jurisdiction located or having jurisdiction in the United States shall
have enacted, issued, promulgated, enforced or entered any law, rule,
regulation, judgment, decree, executive order or award (an "Order")
which is then in effect and has the effect of making the Merger illegal
or otherwise prohibiting consummation of the Merger.
38
(b) 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.
(c) Letter of Accountants. Parent and the Company shall have
each received from Deloitte & Touche, independent auditors of Parent,
and Wisan, Smith, Racker & Prescott LLP, independent auditors of the
Company, an opinion addressed to each of Parent and the Company and
dated the Effective Time to the effect that the Merger will be treated
as a "pooling of interests" under applicable accounting standards.
(d) Employment Agreements. The Company shall have entered into
employment agreements with Xxx X. Xxxxx and Xxxxxx X. Xxxxx in
substantially the form attached hereto as Exhibit 8.01(d)(i) and
8.01(d)(ii), respectively.
SECTION 8.02. 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:
(a) Representations and Warranties. Each of 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 as though made
on and as of the Effective Time, and except that those representations
and warranties which address matters only as of a particular date shall
remain true and correct as of such date, and Parent shall have received
a certificate of the Company and each Stockholder to such effect.
(b) Covenants. The Company and the Stockholders shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with
by it or him on or prior to the Effective Time, 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) Government Consents. All consents, approvals and
authorizations legally required to be obtained to consummate the Merger
shall have been obtained from and made with all Governmental Entities.
(d) 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.
(e) Due Diligence. Parent shall have completed all of its
business, financial, legal, and accounting due diligence with respect
to the Company and the Stockholders, including with respect to any
matters set forth in the Company Disclosure Schedule, and Parent shall,
in its sole and absolute judgment, be satisfied with the results
thereof.
39
(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.
(g) Third Party Consents and Approvals. Parent, Merger Sub and
the Stockholders shall have received, each in form and substance
satisfactory to Parent in its sole and absolute discretion, all third
party consents and estoppel certificates which Parent in its sole and
absolute discretion deems necessary or desirable for the consummation
of the transactions contemplated by this Agreement.
(h) Resignations of the Company's Directors. Parent shall have
received the resignations, effective as of the Effective Time, of all
the directors and officers of the Company, except for such persons as
shall have been designated in writing prior to the Effective Time by
Parent to the Stockholders.
(i) Organizational Documents. Parent shall have received a
copy of (i) the Amended and Restated Articles of Incorporation, as
amended (or similar organizational documents), of the Company,
certified by the Division of Corporations of the State of Utah, as of a
date not earlier than five (5) Business Days prior to the Effective
Time and accompanied by a certificate of the Secretary or Assistant
Secretary of the Company, dated as of the Effective Time, stating that
no amendments have been made to such Articles of Incorporation (or
similar organizational documents) since such date, and (ii) the By-Laws
(or similar organizational documents) of the Company, as in effect at
the Effective Time, certified by the Secretary or Assistant Secretary
of the Company.
(j) Minute Books. Parent shall have received the minute books
and stock register of the Company, certified by the Secretary or
Assistant Secretary of the Company as of the Effective Time.
(k) Good Standing; Qualification to Do Business. Parent shall
have received (x) good standing certificates for the Company from the
secretary of state of Utah and from the secretary of state in each
other jurisdiction in which the properties owned or leased by the
Company, or the operation of its business in such jurisdiction,
requires the Company to qualify to do business as a foreign
corporation, in each case dated as of a date not earlier than five
Business Days prior to the Effective Time and accompanied by bring-down
telegrams dated the Effective Time.
(l) Release of Indemnity Obligations. Parent shall have
received the general release and discharge from the Stockholders
referred to in Section 6.11 of this Agreement in form and substance
satisfactory to the Parent in its sole and absolute discretion.
40
(m) Company Audited Financial Statements. Parent shall have
received the Fiscal Year 2000 Audited Financial Statements in form and
substance satisfactory to Parent in its sole and absolute discretion.
(n) Termination of Shareholder Agreement. Parent shall have
received from the Company and the Stockholders the instrument of
termination referred to in Section 6.12 of this Agreement in form and
substance satisfactory to the Parent in its sole and absolute
discretion.
(o) Environmental Due Diligence. Parent shall have completed
all environmental due diligence with respect to the Company and the
Stockholders (including, without limitation, with respect to any actual
or potential liability of the Company related to Hazardous Materials at
or related to the Landfill (as defined in Section 3.18 of the Company
Disclosure Schedule)), and Parent shall, in its sole and absolute
judgment, be satisfied with the results thereof. The Company and the
Stockholders acknowledge that, not withstanding the matters introduced
by the Company and the Stockholders in Section 3.18 of the Company
Disclosure Schedule, Parent shall not be precluded from exercising its
rights under this Section 8.02(o) with respect to such matters.
SECTION 8.03. 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. Each of 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, as though made on and as of
the Effective Time, except that those representations and warranties
which address matters only as of a particular date shall remain true
and correct as of such date, and the Company shall have received a
certificate of Parent to such effect.
(b) Covenants. Parent and Merger Sub shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, and the Company shall have received a
certificate of Parent to that effect.
(c) Registration Rights Agreement. The Registration Rights
Agreement, in substantially the form attached hereto as Exhibit
8.03(c), shall have been executed and delivered by Parent (the
"Registration Rights Agreement").
(d) Closing Price of Parent Common Stock. The average of the
closing prices of Parent Common Stock on the New York Stock Exchange on
the trading days between and including the trading day which occurs two
business days after the day of the public announcement by Parent of its
earnings for the second quarter of its fiscal
41
year 2000 and the trading day which occurs two days before the
Effective Time shall be no less than $28.67 per share.
(e) 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.
(f) Resolutions. The Stockholders and the Company shall have
received true and complete copies, certified by the Secretary or an
Assistant Secretary of Parent and Merger Sub, of the resolutions duly
and validly adopted by the Board of Directors of Parent and Merger Sub
evidencing its authorization of the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(g) Capitalization Bring-Down. The Stockholders shall have
received a certificate stating the number of shares of Parent Common
Stock issued and outstanding, the number of options with respect to
Parent Common Stock outstanding and the number of warrants with respect
to Parent Common Stock outstanding as of a date not more than two
business days prior to the Effective Time.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties. The
representations and warranties of the Company and the Stockholders contained in
this Agreement shall survive until eighteen (18) months after the Effective
Time, provided, however, that for purposes of the indemnification provisions of
Section 9.02, Sections 3.11, 3.12, 3.18 and 3.20 shall survive until November
30, 2000. 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 9.02. Indemnification by the Stockholders. (a) Until
November 30, 2000, Parent and its affiliates, officers, directors, employees,
agents, successors and assigns (for purposes of this Article IX, each, an
"Indemnified Party") shall be indemnified and held harmless by the Stockholders,
jointly but not severally (for purposes of this Article IX, each, an
"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,
42
without 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 3.11, 3.12, 3.18 or 3.20 by the
Company or any 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 IX, 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 IX 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 IX with respect to
Losses arising from claims of any third party which are subject to the
indemnification provided for in this Article IX ("Third Party Claims") shall be
governed by and contingent upon the following additional terms and conditions:
if an Indemnified Party shall receive notice of any Third Party Claim, the
Indemnified Party shall give the Indemnifying Party notice of such Third Party
Claim within 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 IX 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 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,
43
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 9.03. Limits on Indemnification. The indemnification
obligations of the Stockholders pursuant to Section 9.02 shall not be effective
until the aggregate dollar amount of all Losses which would otherwise be
indemnifiable pursuant to Section 9.02 exceeds $840,000 (the "Threshold
Amount"); provided, however, that if the Threshold Amount is exceeded, the
Stockholders shall be liable for all Losses, including the Threshold Amount.
Notwithstanding anything to the contrary contained in this Agreement, the
maximum amount of indemnifiable Losses which may be recovered from the
Stockholders arising out of or resulting from the causes enumerated in Section
9.02(a) of this Agreement shall not exceed $8,400,000 in the aggregate.
SECTION 9.04. Indemnification of the Stockholders. Parent
covenants and agrees to indemnify the Stockholders, as of the Effective Time,
for any claims made against a Stockholder under any guaranty for trade payables
incurred by the Company in the ordinary course of business, provided that the
aggregate amount of all payments made by Parent pursuant to the indemnity
obligation provided by this Section 9.04 shall not exceed $25,000 in the
aggregate.
ARTICLE X
TERMINATION, AMENDMENTS AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated
and the Merger and the other transactions contemplated by this Agreement may be
abandoned at any time prior to the Effective Time, notwithstanding any requisite
approval and adoption of this Agreement and the transactions contemplated by
this Agreement, as follows:
(a) by mutual written consent of each of Parent, the
Stockholders and the Company;
(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
44
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
Entity having competent jurisdiction; provided, however, that the right to
terminate this Agreement under this Section 10.01(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 April 30, 2000; provided, however, that the right to terminate this
Agreement under this Section 10.01(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 10.02. Effect of Termination. In the event of
termination of this Agreement pursuant to Section 10.01, this Agreement shall
forthwith become void, there shall be no liability under this Agreement on the
part of Parent, Merger Sub, the Stockholders or the Company or any of their
respective officers and directors except (a) as set forth in Section 11.01, (b)
that nothing herein shall relieve any party from liability for any willful
breach of this Agreement and (c) as set forth in the Confidentiality Agreement.
SECTION 10.03. 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.
45
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses, whether or not the
Merger or any other transaction is consummated including all out-of-pocket
expenses (including, without limitation, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and all other matters related to the closing of
the Merger and the other transactions contemplated by this Agreement; provided,
however, that Parent shall pay any fee required by any Governmental Entity to be
paid in connection with any filing under the HSR Act in an aggregate amount not
to exceed $135,000.
SECTION 11.02. 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
overnight courier, telecopy, facsimile or telegram or by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 11.02):
if to Parent or Merger Sub:
Dycom Industries, Inc.
First Union Center,
Suite 500
0000 XXX Xxxxxxxxx
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
46
if to the Company:
Xxxxx Xxxxx Sons Company
X.X. Xxx 000
Xxxxxxxx Xxxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Jones, Waldo, Xxxxxxxx & XxXxxxxxx, P.C.
0000 Xxxxx Xxxxxxxxxx Xxxxx
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
SECTION 11.03. Certain Definitions. For the purposes of this
Agreement, the term:
(a) "affiliate" of a specified person means a person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with such specified person;
(b) "beneficial owner" with respect to any shares means a
person who shall be deemed to be the beneficial owner of such shares (i) which
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, (ii) which such person or any of its affiliates or associates has,
directly or indirectly, (A) 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 (B) the right to
vote pursuant to any agreement, arrangement or understanding, or (iii) which 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;
(c) "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 when any payment is due, any day on which banks are
not required or authorized to close in The City of New York;
(d) "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
47
through the ownership of voting securities, as trustee or executor, by contract
or credit arrangement or otherwise;
(e) "knowledge" means, with respect to any matter in question,
(i) with respect to the Company, that Xxxxxx X. Xxxxx, Xxx X. Xxxxx, Xxxxx
XxXxxxxxx or Xxxx X. Xxxxxxxx has actual knowledge of such matter; (ii) with
respect to Parent or Merger Sub, that the executive officers of Parent or Merger
Sub, as the case may be, have actual knowledge of such matter; and (iii) with
respect to each Stockholder, that such Stockholder has actual knowledge of such
matter.
(f) "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; and
(g) "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.
SECTION 11.04. 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 transactions contemplated by this Agreement 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 transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
SECTION 11.05. 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 11.06. Incorporation of Exhibits. The Company
Disclosure Schedule, the Parent Disclosure Schedule and all Exhibits attached
hereto and referred to herein are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
48
SECTION 11.07. Attorneys' Fees. In the event any party hereto
shall file suit to enforce any of the terms of this Agreement, the prevailing
party shall be entitled to recover attorneys' fees and costs incurred in such
proceeding.
SECTION 11.08. Governing Law; Forum. Except to the extent that
the Merger is mandatorily governed by the laws of the State of Utah, this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts executed in and to be performed in
that state and without regard to any applicable conflicts of law. All actions
and proceedings arising out of or relating to this Agreement which are initiated
by the Company or the Stockholders shall be heard and determined in the federal
court of the Southern District of Florida and all actions and proceedings
arising out of or relating to this Agreement which are initiated by Parent or
Merger Sub shall be heard and determined in the federal court of the District of
Utah. Each of the parties to this Agreement (a) consents to submit itself to the
personal jurisdiction of the federal court of the Southern District of Florida
or the District of Utah, as the case may be, in the event any dispute arises out
of this Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, (c) agrees that it will
not bring any action in relation to this Agreement, the Merger or any of the
other transactions contemplated by this Agreement in any court other than the
federal court of the Southern District of Florida or the District of Utah, as
the case may be, and (d) irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by certified mail, postage prepaid, to the party at its address
set forth in Section 11.02 hereof.
SECTION 11.09. 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 11.10. 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 11.11. Entire Agreement. This Agreement (including 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.
SECTION 11.12. 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
49
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 Xxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxx
Title: President and Chief
Executive Officer
DYCOM ACQUISITION
CORPORATION IV
By /s/ Xxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
XXXXX XXXXX SONS COMPANY
By /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
By /s/ Xxx X. Xxxxx
-----------------------------------
Name: Xxx X. Xxxxx
Title: President
STOCKHOLDERS:
/s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Address: X.X. Xxx 000
Xxxxxxxx Xxxxx, XX 00000
/s/ Xxx X. Xxxxx
---------------------------------------
Name: Xxx X. Xxxxx
Address: X.X. Xxx 000
Xxxxxxxx Xxxxx, XX 00000
