FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: March 17, 2000 Date of earliest event reported:
March 8, 2000
Dycom Industries, Inc.
(Exact name of Registrant as specified in its charter)
Florida 0-5423 59-1277135
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
4440 PGA Boulevard, Suite 500, Palm Beach Gardens, Florida 33410
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 627-7171
Exhibit Index on Page 3
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Item 2. Acquisition and Disposition of Assets.
On March 8, 2000, Dycom Industries, Inc., a Florida corporation (the
"Company"), acquired Niels Fugal Sons Company, a Utah corporation ("Niels
Fugal"). The acquisition of Niels Fugal was consummated pursuant to an Agreement
and Plan of Merger, dated February 14, 2000 (the "Merger Agreement"), among the
Company, Niels Fugal, Dycom Acquisition Corporation IV, a Utah corporation, and
Daniel B. Fugal and Guy L. Fugal, the stockholders of Niels Fugal (the
"Stockholders"). The transaction will be accounted for as a pooling of
interests. A copy of the Merger Agreement is included herewith as Exhibit 2(i).
Pursuant to the Merger Agreement and the Articles of Merger (as
defined below), dated March 8, 2000, at the Effective Time (as defined in the
Merger Agreement) Dycom Acquisition Corporation IV, a wholly-owned subsidiary of
the Company ("Merger Sub"), was merged with and into Niels Fugal with Niels
Fugal as the surviving corporation (the "Merger"). As a result of the Merger,
the separate corporate existence of Merger Sub ceased and the Stockholders
became stockholders of the Company. The Articles of Merger for Niels Fugal (the
"Articles of Merger") are included herewith as Exhibit 99(i). Pursuant to the
Merger Agreement, the Company issued an aggregate of 2,726,210 shares of its
common stock, par value $0.33 1/3 per share, to the Stockholders. The
Stockholders received approximately 105.827 shares of the Company's common stock
for each share of Niels Fugal common stock, $1.00 par value per share, issued
and outstanding immediately prior to the Effective Time.
In connection with the Merger, the Company entered into a Registration
Rights Agreement, dated March 8, 2000 (the "Registration Rights Agreement"),
with the Stockholders. The Registration Rights Agreement grants the Stockholders
certain rights to have their shares of the Company's common stock issued in
connection with the Merger registered under the Securities Act of 1933, as
amended. A copy of the Registration Rights Agreement is included herewith as
Exhibit 4(i).
The foregoing description of the Merger Agreement, the Registration
Rights Agreement and the Articles of Merger does not purport to be complete and
is qualified in its entirety by reference to such documents, attached hereto as
Exhibits 2(i), 4(i) and 99(i) respectively, and incorporated by reference
herein. The terms of the Merger are set forth in the Merger Agreement and were
established through arm's length negotiations between the parties to such
agreement.
Niels Fugal provides telecommunications maintenance and construction
services throughout the western United States. Niels Fugal will conduct business
as a wholly-owned subsidiary of the Company. The Company intends to use the
assets acquired pursuant to the Merger in the business in which the assets were
used prior to the Merger, subject to such changes as the Company may deem
appropriate in the future.
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Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not required.
(b) Pro forma financial information.
Not required.
(c) Exhibits.
2(i) Agreement and Plan of Merger, dated as of February 14, 2000,
among Dycom Industries, Inc., Dycom Acquisition Corporation
IV, Niels Fugal Sons Company, Daniel B. Fugal and Guy L.
Fugal.
4(i) Registration Rights Agreement, dated as of March 8, 2000,
among Dycom Industries, Inc., Daniel B. Fugal and Guy L.
Fugal.
99(i) Articles of Merger, dated March 8, 2000, for Niels Fugal Sons
Company.
99(ii) Press release issued March 8, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DYCOM INDUSTRIES, INC.
Date: March 17, 2000 By: /s/ STEVEN NIELSEN
---------------------------------------------
Name: Steven Nielsen
Title: President and Chief Executive Officer
By: /s/ RICHARD DUNN
---------------------------------------------
Name: Richard Dunn
Title: Senior Vice President and
Chief Financial Officer
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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Among
DYCOM INDUSTRIES, INC.,
DYCOM ACQUISITION CORPORATION IV,
NIELS FUGAL SONS COMPANY
and
THE STOCKHOLDERS LISTED
ON THE SIGNATURE PAGES
HERETO
Dated as of February 14, 2000
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TABLE OF CONTENTS
Page
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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 Guy L. Fugal
Exhibit 8.01(d)(ii) Form of Employment Agreement with Daniel B. Fugal
Exhibit 8.03(c) Form of Registration Rights Agreement
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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)
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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)
<PAGE>
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"), NIELS FUGAL 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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2
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, 599 Lexington Avenue, New York, New
York 10022 (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 Niels Fugal 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
<PAGE>
4
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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5
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 Boyd L. Fugal and the related promissory note, and (ii) the Stock Repurchase
Agreement, dated February 1, 1997, by and between the Company and Grant K. Fugal
and the related promissory note.
<PAGE>
7
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.
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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 Hart-Scott-Rodino 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
<PAGE>
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,
<PAGE>
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;
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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 & Phelps Credit Rating Co., Standard & Poor's Insurance Rating Services,
A.M. Best Company and Moody's 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
<PAGE>
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
<PAGE>
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;
<PAGE>
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
<PAGE>
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
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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
<PAGE>
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.
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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
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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.
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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.
<PAGE>
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 sue 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
<PAGE>
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
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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.
<PAGE>
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
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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
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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.
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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
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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
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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.
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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
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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.
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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.
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(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 Guy L. Fugal and Daniel B. Fugal 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.
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(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.
<PAGE>
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
<PAGE>
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,
<PAGE>
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,
<PAGE>
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
<PAGE>
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.
<PAGE>
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
4440 PGA Boulevard
Palm Beach Gardens, Florida 33410-6542
Facsimile: (561) 627-7709
Attention: Marc R. Tiller
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile: (212) 848-7179
Attention: Richard B. Vilsoet
<PAGE>
46
if to the Company:
Niels Fugal Sons Company
P.O. Box 650
Pleasant Grove, Utah 84062
Facsimile: (801) 785-5844
Attention: Chief Executive Officer
with a copy to:
Jones, Waldo, Holbrook & McDonough, P.C.
1500 First Interstate Plaza
170 South Main Street
Salt Lake City, Utah 84101
Facsimile: (801) 382-0537
Attention: Glen Watkins
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
<PAGE>
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 Daniel B. Fugal, Guy L. Fugal, Krist
McFarland or Boyd J. Holdaway 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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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/ Steven Nielsen
-----------------------------------
Name: Steven Nielsen
Title: President and Chief
Executive Officer
DYCOM ACQUISITION
CORPORATION IV
By /s/ Steven Nielsen
-----------------------------------
Name: Steven Nielsen
Title: President
NIELS FUGAL SONS COMPANY
By /s/ Daniel B. Fugal
-----------------------------------
Name: Daniel B. Fugal
Title: Chief Executive Officer
By /s/ Guy L. Fugal
-----------------------------------
Name: Guy L. Fugal
Title: President
STOCKHOLDERS:
/s/ Daniel B. Fugal
---------------------------------------
Name: Daniel B. Fugal
Address: P.O. Box 650
Pleasant Grove, UT 84062
/s/ Guy L. Fugal
---------------------------------------
Name: Guy L. Fugal
Address: P.O. Box 650
Pleasant Grove, UT 84062
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of March 8, 2000 (this
"Agreement") among DYCOM INDUSTRIES, INC., a Florida corporation (the
"Company"), and the parties listed on the signature pages hereto (each a
"Purchaser" and, collectively, the "Purchasers") who will, as of the effective
time of the Merger (as defined below) be holders of the amount of common stock,
par value $0.33 1/3 per share, of the Company (the "Common Stock") set forth on
Schedule I to this Agreement.
WHEREAS, Dycom Acquisition Corporation IV, a Utah corporation
and wholly owned subsidiary of the Company ("Merger Sub") will be merged (the
"Merger") with and into Niels Fugal Sons Company, a Utah corporation ("NFSC"),
pursuant to an Agreement and Plan of Merger dated as of February 14, 2000 among
the Company, Merger Sub, NFSC and the Purchasers (the "Merger Agreement");
WHEREAS, the Purchasers will receive the Common Stock pursuant
to the Merger Agreement; and
WHEREAS, it is a condition to the obligations of the parties
to the Merger Agreement that this Agreement be entered into by the parties
hereto concurrently with the closing under the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual convents and agreements herein contained, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
1. Certain Definitions. The following terms, as used herein,
have the following meanings:
"Affiliate" of a Holder means (a) a Person who controls, is
controlled by or is under common control with such Holder or the spouse
or children (or a trust exclusively for the benefit of a spouse and/or
children) of such Holder or, in the case of a Holder that is a
partnership, its partners, (b) trusts for the benefit of any of the
Persons included in the foregoing clause (a), and (c) any charitable
foundation a majority of whose members, trustees or directors, as the
case may be, are Persons included in the foregoing clause (a).
<PAGE>
2
"Aggregate Maximum Demand Amount" has the meaning set forth in
Section 3(a).
"Aggregate Maximum Participatory Amount" has the meaning set
forth in Section 4(a).
"Aggregate Minimum Demand Amount" has the meaning set forth in
Section 3(a).
"Agreement" has the meaning set forth in the preamble to this
agreement.
"Common Stock" has the meaning set forth in the preamble to
this Agreement.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, as the same shall be in effect
at the time.
"Holder" means a Purchaser or any assignee thereof to whom the
rights under this Agreement are assigned in accordance with the
provisions of Section 14.
"Individual Maximum Demand Amount" has the meaning set forth
in Section 3(a).
"Initiating Holders" has the meaning set forth in Section
3(a).
"Merger" has the meaning set forth in the recitals to this
Agreement.
"Merger Agreement" has the meaning set forth in the recitals
to this Agreement.
"Merger Sub" has the meaning set forth in the preamble to this
Agreement.
"NFSC" has the meaning set forth in the recitals to this
Agreement.
"Person" means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation,
a "person" as defined in Section 13(d)(3) of the Exchange Act), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government.
"PORTAL" has the meaning set forth in Section 10(b).
<PAGE>
3
"Purchaser" has the meaning set forth in the preamble to this
Agreement.
"register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement
or similar document in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement
or document.
"Registrable Stock" means (a) the Common Stock issued to the
Purchasers pursuant to the Merger Agreement, (b) any Common Stock
issued as (or issuable upon the conversion or exercise of any warrant,
right, option or other convertible security which is issued) a dividend
or other distribution with respect to, or in exchange for, or in
replacement of, the Common Stock issued to the Purchasers pursuant to
the Merger Agreement or this clause (b), and (c) any Common Stock
issued by way of a stock split of the Common Stock referred to in
clause (a) or (b) above. For purposes of this Agreement, any
Registrable Stock shall cease to be Registrable Stock when (1) a
registration statement covering such Registrable Stock has been
declared effective and such Registrable Stock has been disposed of
pursuant to such effective registration statement, (2) such Registrable
Stock is sold by a Person in a transaction in which the rights under
the provisions of this Agreement are not assigned or (3) such
Registrable Stock may be sold pursuant to Rule 144(k) (or any similar
provision then in force under the Securities Act) without registration
under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, as the same shall be in effect at the
time.
2. Notice of Proposed Transfer. Prior to any proposed sale,
transfer, disposition or distribution of any Registrable Stock (other than under
the circumstances described in Section 3 or 4), the holder thereof shall have
given written notice to the Company of its intention to effect such sale,
transfer, disposition or distribution. Each such notice shall describe the
manner of the proposed sale, transfer, disposition or distribution, and, if
requested by the Company, shall be accompanied by an opinion of counsel
satisfactory to the Company to the effect that the proposed sale, transfer,
disposition or distribution may be effected without registration under the
Securities Act, whereupon the holder of such stock shall be entitled to sell,
transfer, dispose of or distribute such stock in accordance with the terms of
its notice. Each certificate for Registrable Stock sold, transferred, disposed
of or distributed as provided above shall bear the legend required pursuant to
Section 6.07 of the Merger Agreement, except that such certificate shall not
bear such legend if (i) such sale, transfer, disposition or distribution is in
accordance with the provisions of Rule 144 (or any other rule permitting public
sale without registration under the Securities Act) or (ii) the opinion of
counsel referred
<PAGE>
4
to above is to the further effect that the transferee or holder and any
subsequent transferee or holder (other than an Affiliate of the Company) would
be entitled to transfer such securities in a public sale without registration
under the Securities Act.
3. Demand for Registration.
(a) On and after the date that is ninety (90) days from the
Effective Time (as such term is defined in the Merger Agreement), the
Holders of at least 331/3% of the Registrable Stock (the "Initiating
Holders") may demand in a written notice that the Company file a
registration statement under the Securities Act (or a similar document
pursuant to any other statute then in effect corresponding to the
Securities Act) covering the registration of any or all Registrable
Stock held by such Initiating Holders in the manner specified in such
notice, provided that the amount of Registrable Stock included in such
registration shall be equal to at least 331/3% ("Aggregate Minimum
Demand Amount"), but not more than 50% (the "Aggregate Maximum Demand
Amount") of the total Registrable Stock existing on the date of such
notice, and provided further that, with respect to any Holder who is a
Purchaser or an Affiliate of a Purchaser, the amount of Registrable
Stock included in such registration by such Holder shall not exceed 50%
(the "Individual Maximum Demand Amount") of the total Registrable Stock
held by such Holder. Following receipt of any notice under this Section
3 the Company shall (x) within twenty (20) days notify all other
Holders of such request in writing and (y) use its reasonable efforts
to cause to be registered under the Securities Act, subject to the
provisos of the immediately preceding sentence, all Registrable Stock
that the Initiating Holders and such other Holders have demanded,
within ten (10) days after the Company has given such notice, be
registered in accordance with the manner of disposition specified in
such notice by the Initiating Holders, provided, however, that (1) if
the amount of Registrable Stock requested to be included in a
registration pursuant to this Section 3(a) exceeds the Aggregate
Maximum Demand Amount, then the amount of Registrable Stock registered
in such registration shall be reduced pro rata based upon the amount of
securities then held by each Holder so that the Aggregate Maximum
Demand Amount is not exceeded, and (2) if (i) any Person (an "ECC
Holder") holding securities of the Company is entitled to register any
of such securities pursuant to the Registration Rights Agreement (the
"ECC Agreement"), dated as of March 31, 1999, among the Company, Gary
E. Ervin, Timothy W. Ervin, Robert W. Ervin, Keith E. Walker, Robert J.
Chastain, Charles T. McElroy and Penny J. Ward and such Person has
requested pursuant to paragraph 4 of the ECC Agreement to include a
certain amount of securities in a registration initiated by the Holders
pursuant to this paragraph 3(a) and (ii) the Company determines that it
is, pursuant to paragraph 4 of the ECC Agreement, entitled to reduce
the amount of securities included in such registration by an ECC
Holder, then the amount of securities registered in such
<PAGE>
5
registration by the Holders and the ECC Holders shall be reduced pro
rata based upon the amount of securities then held by each such holder.
(b) If the Initiating Holders intend to have the Registrable
Stock distributed by means of an underwritten offering, the Company
shall include such information in the written notice referred to in
clause (x) of Section 3(a). In such event, the right of any Holder to
include its Registrable Stock in such registration shall be conditioned
upon such Holder's participation in such underwritten offering and the
inclusion of such Holder's Registrable Stock in the underwritten
offering (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Holder) on the terms provided below.
All Holders proposing to distribute Registrable Stock through such
underwritten offering shall enter into an underwriting agreement in
customary form with the underwriter or underwriters. Such underwriter
or underwriters shall be selected by a majority in interest of the
Initiating Holders and shall be approved by the Company, which approval
shall not be unreasonably withheld, provided that (i) all of the
representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such Holders of Registrable Stock,
(ii) any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement shall be conditions
precedent to the obligations of such Holders of Registrable Stock, and
(iii) no Holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters other
than representations, warranties or agreements regarding such Holder,
the Registrable Stock of such Holder and such Holder's intended method
of distribution and any other representations required by law or
reasonably required by the underwriter or the Company. If any Holder of
Registrable Stock disapproves of the terms of the underwriting, such
Holder may elect to withdraw all its Registrable Stock by written
notice to the Company, the managing underwriter and the Initiating
Holders. The Registrable Stock so withdrawn shall also be withdrawn
from registration. If, as a result of such withdrawal, the amount of
Registrable Stock to be included in the offering is less than the
Aggregate Minimum Demand Amount, the Company shall not be required to
proceed with such offering.
(c) Notwithstanding any provision of this Agreement to the
contrary:
(i) the Company shall not be required to effect
a registration pursuant to this Section 3
during the period starting with the date of
filing by the Company of, and ending on a
date one hundred twenty (120) days following
the effective date of, a registration
statement pertaining to a public offering of
securities for the account of the Company or
on behalf of the selling stockholders
<PAGE>
6
under any other registration rights
agreement which the Holders have been
entitled to join pursuant to Section 4 of
this Agreement; provided that the Company
shall actively employ in good faith all
reasonable efforts to cause such
registration statement to become effective
as soon as possible; and
(ii) if the Company shall determine in good faith
that such registration would interfere with
any material transaction then being pursued
by the Company, the Company's obligation to
use its reasonable efforts to file a
registration statement shall be deferred for
a period not to exceed ninety (90) days.
(d) The Company shall not be obligated to effect and pay for
more than one (1) registration pursuant to this Section 3; provided,
that a registration demanded pursuant to this Section 3 shall not be
deemed to have been effected for purposes of this Section 3(d), (1) if
by reason of any reduction in the amount of securities registered by
the Holders pursuant to Section 3(a)(2) of this Agreement the amount of
Registrable Stock registered in such registration is not equal to or
greater than the Aggregate Minimum Demand Amount and (2) unless (i) it
has been declared effective by the SEC, (ii) it has remained effective
for the period set forth in Section 5(a) and (iii) the offering of
Registrable Stock pursuant to such registration is not subject to any
stop order, injunction or other order or requirement of the SEC (other
than any such stop order, injunction, or other requirement of the SEC
prompted by any act or omission of Holders of Registrable Stock).
4. Participatory Registration.
(a) If at any time on or after the date that is ninety (90)
days from the Effective Time, the Company determines that it shall file
a registration statement under the Securities Act (other than a
registration statement on a Form S-4 or S-8 or filed in connection with
an exchange offer or an offering of securities solely to the Company's
existing stockholders) on any form that would also permit the
registration of the Registrable Stock and such filing is to be on its
behalf and/or on behalf of selling holders of its securities for the
general registration of its Common Stock to be sold for cash (other
than where such selling holders are limited to selling securities
pursuant to an over-allotment option), the Company shall each such time
promptly give each Holder written notice of such determination setting
forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than fifteen (15) days from
the date of such notice, and advising each Holder of its right to have
Registrable Stock included in such registration. Subject to Sections 7
and 9, upon the written request of any Holder received by the Company
no later than ten (10)
<PAGE>
7
days after the date of receipt of the Company's notice, the Company
shall use its reasonable efforts to cause to be registered under the
Securities Act all of the Registrable Stock that each such Holder has
so requested to be registered; provided that the amount of Registrable
Stock included in such registration shall not exceed 50% (the
"Aggregate Maximum Participatory Amount") of the total Registrable
Stock existing on the date of such notice given by the Company, and
provided further that, with respect to any Holder who is a Purchaser or
an Affiliate of a Purchaser, the amount of Registrable Stock included
in such registration by such Holder shall not exceed 50% of the total
Registrable Stock held by such Holder. If the amount of Registrable
Stock requested to be included in a registration pursuant to this
Section 4(a) exceeds the Aggregate Maximum Participatory Amount, then
the amount of Registrable Stock registered in such registration shall
be reduced pro rata based upon the amount of securities then held by
each Holder so that the Aggregate Maximum Participatory Amount is not
exceeded.
(b) In a registration pursuant to Section 4(a) hereof, if the
managing underwriter (or, in the case of a non-underwritten offering,
the Company) has informed the Holders of Registrable Stock requesting
inclusion in such offering (and the Company in the case of an
underwritten offering) that in such underwriter's opinion (or, in the
case of a non-underwritten offering, the opinion of the Company) the
total number of securities which the Company, the Holders of
Registrable Stock and any other Persons desiring to participate in such
registration intend to include in such offering is such as could
materially and adversely affect the success of such offering, including
the price at which such securities can be sold, then the Company will
be required to include in such registration only the amount of
securities which it is so advised (or, in the case of a
non-underwritten offering, that it reasonably determines) should be
included in such registration. In such event: (1) in cases only
involving the registration for sale of securities for the Company's own
account (other than pursuant to the exercise of participatory rights
herein and in other contractual commitments of the Company), securities
shall be registered in such offering in the following order of
priority: (i) first, the securities which the Company proposes to
register, (ii) second, provided that no securities sought to be
included by the Company have been excluded from such registration, the
securities which have been requested to be included in such
registration by Persons entitled to exercise participatory registration
rights pursuant to contractual commitments of the Company existing as
of the date hereof, pro rata based upon the aggregate amount of
securities then held, and (iii) third, provided that no securities
sought to be included by the Company or the other Persons described in
the immediately preceding clause (ii) have been excluded from such
registration, the securities which have been requested to be included
in such registration by the Holders of Registrable Stock pursuant to
this Agreement together with the securities of other Persons entitled
to exercise participatory registration rights pursuant to contractual
commitments of the Company (pro rata based upon the aggregate amount of
securities then held) and are not
<PAGE>
8
included in the immediately preceding clause (ii); and (2) in cases not
involving the registration for sale of securities for the Company's own
account only, securities shall be registered in such offering in the
following order of priority: (i) first, the securities of any Person
whose exercise of a "demand" registration right pursuant to a
contractual commitment of the Company is the basis for the registration
and, pursuant to the terms of the ECC Agreement, the securities
requested to be included in such registration by any ECC Holder
pursuant to paragraph 4 of the ECC Agreement, pro rata based upon the
aggregate amount of securities then held, (ii) second, provided that no
securities of such Person referred to in the immediately preceding
clause (i) have been excluded from such registration, the securities
which have been requested to be included in such registration by
Persons entitled to exercise participatory registration rights pursuant
to contractual commitments of the Company existing as of the date
hereof, pro rata based upon the aggregate amount of securities then
held, (iii) third, provided that no securities of such Persons referred
to in the immediately preceding clause (i) or (ii) have been excluded
from such registration, the securities which have been requested to be
included in such registration by the Holders of Registrable Stock
pursuant to this Agreement together with the securities of other
Persons entitled to exercise participatory registration rights pursuant
to contractual commitments of the Company (pro rata based upon the
aggregate amount of securities then held) and are not included in the
immediately preceding clause (ii) and (iv) fourth, provided that no
securities of any other Person have been excluded from such
registration, the securities which the Company proposes to register.
5. Obligations of the Company. Whenever required under this
Agreement to use its reasonable efforts to effect the registration of any
Registrable Stock, the Company shall, as expeditiously as possible:
(a) prepare and file with the SEC a registration statement
signed, pursuant to Section 6(a) of the Securities Act, by the officers
and directors of the Company with respect to such Registrable Stock and
use its reasonable efforts to cause such registration statement to
become and remain effective for the period of the distribution
contemplated thereby determined as hereinafter provided;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement signed, pursuant to Section
6(a) of the Securities Act, by the officers and directors of the
Company and the prospectus used in connection therewith as may be
necessary to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Stock covered by such
registration statement;
(c) furnish to the Holders such numbers of copies of the
registration statement and the prospectus included therein (including
each preliminary prospectus and any amendments or supplements thereto
in conformity with the requirements of the
<PAGE>
9
Securities Act) and such other documents and information as they may
reasonably request;
(d) use its reasonable efforts to register or qualify the
Registrable Stock covered by such registration statement under such
other securities or blue sky laws of such jurisdiction within the
United States and Puerto Rico as shall be reasonably appropriate for
the distribution of the Registrable Stock covered by the registration
statement; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business in, subject itself to general taxation by or to file a general
consent to service of process in any jurisdiction wherein it would not
but for the requirements of this paragraph (d) be obligated to do so;
and provided further that the Company shall not be required to qualify
such Registrable Stock in any jurisdiction in which the securities
regulatory authority requires that any Holder submit any shares of its
Registrable Stock to the terms, provisions and restrictions of any
escrow, lockup or similar agreement(s) for consent to sell Registrable
Stock in such jurisdiction unless such Holder agrees to do so;
(e) promptly notify each Holder for whom such Registrable
Stock is covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under
which they were made, and at the request of any such Holder promptly
prepare and furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made;
(f) use reasonable efforts to furnish, at the request of any
Holder demanding registration of Registrable Stock pursuant to this
Agreement, if the method of distribution is by means of an
underwriting, on the date that the shares of Registrable Stock are
delivered to the underwriters for sale pursuant to such registration,
or if such Registrable Stock is not being sold through underwriters, on
the date that the registration statement with respect to such shares of
Registrable Stock becomes effective, (i) a signed opinion, dated such
date, of the independent legal counsel representing the Company for the
purpose of such registration, addressed to the underwriters, if any,
and if such Registrable Stock is not being sold through underwriters,
then to the Holders making such request, as to such matters as such
<PAGE>
10
underwriters or the Holders holding a majority of the Registrable Stock
included in such registration, as the case may be, may reasonably
request and as would be customary in such a transaction; and (ii)
letters dated such date and the date the offering is priced from the
independent certified public accountants of the Company, addressed to
the underwriters, if any, and if such Registrable Stock is not being
sold through underwriters, then to the Holders making such request and,
if such accountants refuse to deliver such letters to such Holders,
then to the Company (A) stating that they are independent certified
public accountants within the meaning of the Securities Act and that,
in the opinion of such accountants, the financial statements and other
financial data of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereto, comply as to
form in all material respects with the applicable accounting
requirements of the Securities Act and (B) covering such other
financial matters (including information as to the period ending not
more than five (5) business days prior to the date of such letters)
with respect to the registration in respect of which such letter is
being given as such underwriters or the Holders holding a majority of
the Registrable Stock included in such registration, as the case may
be, may reasonably request and as would be customary in such a
transaction;
(g) enter into customary agreements (including if the method
of distribution is by means of an underwriting, an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Stock to be so included in the registration
statement;
(h) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, but not later than
eighteen (18) months after the effective date of the registration
statement, an earnings statement covering the period of at least twelve
(12) months beginning with the first full month after the effective
date of such registration statement, which earnings statements shall
satisfy the provisions of Section 11(a) of the Securities Act; and
(i) use its reasonable efforts to list the Registrable Stock
covered by such registration statement with any securities exchange on
which the Common Stock is then listed.
For purposes of Sections 5(a) and 5(b), the period of distribution of
Registrable Stock shall be deemed to extend until the earlier of (i) the sale of
all Registrable Stock covered thereby or, in the case of a firm commitment
underwritten public offering, the distribution of all securities purchased by
the underwriters and (ii) six (6) months after the effective date thereof.
<PAGE>
11
6. Suspension of Registration Statement. The Company may
suspend the availability of any registration statement filed by the Company
referred to in Section 3 or 4 and the use of the prospectus included therein if
such suspension is effected in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, the filing of public reports with the SEC
and during the pendency of material corporate developments. Upon such suspension
of a registration statement by the Company, the Holders shall suspend offers and
sales of Registrable Stock until the Company notifies the Holders that (i)
offers and sales may recommence or (ii) the Company has filed a supplement to
the prospectus or an amendment to such registration statement to update the
disclosure contained therein.
7. Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
that the Holders shall furnish to the Company such information regarding
themselves, the Registrable Stock held by them, and the intended method of
disposition of such securities as the Company shall reasonably request and as
shall be required in connection with the action to be taken by the Company.
8. Expenses of Registration. All expenses incurred in
connection with each registration pursuant to Section 3 and Section 4 of this
Agreement, excluding underwriters' discounts and commissions and the fees, but
including without limitation all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance), fees of the New York Stock Exchange or
listing fees, messenger and delivery expenses, all fees and expenses of
complying with state securities or blue sky laws, fees and disbursements of
counsel for the Company, and, to the extent permitted without jeopardizing the
treatment of the Merger as a pooling of interests for accounting purposes, the
fees and disbursements of one counsel for the selling Holders (which counsel
shall be selected by the holders of a majority in interest of the Common Stock
being registered (excluding the Company and the Common Stock being registered
thereby)), shall be paid by the Company; provided, however, that if a
registration request pursuant to Section 3 of this Agreement is subsequently
withdrawn at the request of the Holders of a number of shares of Registrable
Stock such that the remaining Holders requesting registration would not have
been able to request registration under the provisions of Section 3 of this
Agreement, such withdrawing Holders shall bear all expenses incurred in
connection with such requested registration. The Holders shall bear and pay the
underwriting commissions and discounts applicable to securities offered for
their account in connection with any registrations, filings and qualifications
made pursuant to this Agreement.
9. Underwriting Requirements. In connection with any
underwritten offering, the Company shall not be required under this Agreement to
include shares of Registrable Stock in such underwritten offering unless the
Holders of such shares of
<PAGE>
12
Registrable Stock accept the terms of the underwriting of such offering that
have been reasonably agreed upon between the Company and the underwriters
selected by the Company; provided, however, that in no event shall any Holder be
required to make the representations and warranties to, or agreements with, the
Company and its representatives other than as contemplated by Section 3(b)(iii).
10. Rule 144 Information. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Registrable Stock to the public without registration, (a)
at all times after ninety (90) days after any registration statement covering a
public offering of securities of the Company under the Securities Act shall have
become effective, the Company agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(ii) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and
(iii) furnish to each Holder of Registrable Stock forthwith
upon request a written statement by the Company as to its compliance
with the reporting requirements of such Rule 144 and of the Securities
Act and the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by
the Company as such Holder may reasonably request in availing itself of
any rule or regulation of the SEC allowing such Holder to sell any
Registrable Stock without registration; and
(b) at all times during which the Company is neither subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act, it
will provide, upon the written request of any Holder of Registrable Stock in
written form (as promptly as practicable and in any event within 15 business
days), to any prospective buyer of such stock designated by such Holder, all
information required by Rule 144A(d)(4)(i) of the General Regulations
promulgated by the SEC under the Securities Act. Upon written request of the
Holder, the Company will cooperate with and assist any Holder of Registrable
Stock or any member of the National Association of Securities Dealers, Inc.
system for Private Offerings Resales and Trading through Automated Linkage
("PORTAL") in applying to designate and thereafter maintain the eligibility of
the Registrable Stock for trading through PORTAL.
<PAGE>
13
11. Indemnification. In the event any Registrable Stock is
included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder,
such Holder's directors and officers, each Person who participates in
the offering of such Registrable Stock, including underwriters (as
defined in the Securities Act), and each Person, if any, who controls
such Holder or participating Person within the meaning of the
Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which they may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are
based on any untrue or alleged untrue statement of any material fact
contained in such registration statement on the effective date thereof
(including any prospectus filed under Rule 424 under the Securities Act
or any amendments or supplements thereto) or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse each such Holder, such
Holder's directors and officers, such participating person or
controlling person for any legal or other expenses reasonably incurred
by them (but not in excess of expenses incurred in respect of one
counsel for all of them unless, in the reasonable judgement of an
indemnified party there is a conflict of interest with another
indemnified party, in which case the indemnified parties may be
represented by separate counsel) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 11(a)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably
withheld); provided further that the Company shall not be liable to any
Holder, such Holder's directors and officers, participating Person or
controlling Person in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements
thereto, in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any
such Holder, such Holder's directors and officers, participating Person
or controlling Person. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any such
Holder, such Holder's directors and officers, participating Person or
controlling Person, and shall survive the transfer of such securities
by such Holder. The indemnification as provided in this Section 11(a)
shall be separate from, and in addition to, the indemnification
provided in the Merger Agreement.
<PAGE>
14
(b) The Holders demanding or joining in a registration
severally and not jointly shall indemnify and hold harmless the
Company, each of its directors and officers, each agent and any
underwriter for the Company (within the meaning of the Securities Act)
and each Person who controls any of the foregoing Persons (within the
meaning of the Securities Act) against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such
director, officer, controlling Person, agent or underwriter may become
subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or proceedings in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement
on the effective date thereof (including any prospectus filed under
Rule 424 under the Securities Act or any amendments or supplements
thereto) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
such registration statement, preliminary or final prospectus, or
amendments or supplements thereto, in reliance upon and in conformity
with written information furnished by or on behalf of such Holder
expressly for use in connection with such registration; and each such
Holder shall reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, agent, underwriter or
controlling Person (but not in excess of expenses incurred in respect
of one counsel for all of them unless, in the reasonable judgement of
an indemnified party, there is a conflict of interest with another
indemnified party, in which case the indemnified parties may be
represented by separate counsel) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 11(b)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of such Holder (which consent shall not be unreasonably
withheld), and provided further that the liability of each Holder
hereunder shall be limited to the proportion of any such loss, claim,
damage, liability or expense which is equal to the proportion that the
net proceeds from the sale of the shares sold by such Holder under such
registration statement bears to the total net proceeds from the sale of
all securities sold thereunder, but not in any event to exceed the net
proceeds received by such Holder from the sale of Registrable Stock
covered by such registration statement.
(c) Promptly after receipt by an indemnified party under this
Section 11 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section, notify the
indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to participate in and assume
the defense thereof with counsel
<PAGE>
15
selected by the indemnifying party and reasonably satisfactory to the
indemnified party; provided, however, that an indemnified party shall
have the right to retain its own counsel, with all fees and expenses
thereof to be paid by such indemnified party (except as provided in
paragraph (a) and (b) above), and to be apprised of all progress in any
proceeding the defense of which has been assumed by the indemnifying
party. The failure to notify an indemnifying party promptly of the
commencement of any such action shall only release the indemnifying
party from any of its obligations under this Section 11 if, and only to
the extent that, such indemnifying party is materially prejudiced by
such failure, but the omission to so notify the indemnifying party will
not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section.
(d) To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified
party in connection with the actions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages or
liabilities referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 11(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
12. Limitation on Registration Rights. Notwithstanding any
other provisions of this Agreement to the contrary, the Company shall not be
required to register any Registrable Stock under this Agreement with respect to
any demand or demands made by any Holder after 36 months after the date of this
Agreement.
<PAGE>
16
13. Lockup. Each Holder shall, in connection with any
registration of the Company's securities, upon the request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
agree in writing not to effect any sale, transfer, disposition or distribution
of any Registrable Stock (other than that included in the registration) without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time not to exceed one hundred eighty (180) days from the
effective date of such registration as the Company or the underwriters may
specify; provided, however, that all executive officers and directors of the
Company shall also have agreed not to effect any sale, transfer, disposition or
distribution of any Registrable Stock under the circumstances and pursuant to
the terms set forth in this Section 13.
14. Assignment of Registration Rights. The registration rights
of any Holder under this Agreement with respect to any Registrable Stock may be
assigned to an Affiliate of such Holder, to any charitable organization as such
term is defined by Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended through the date hereof, or to a charitable remainder trust as such term
is defined by Section 664(d) of the Internal Revenue Code of 1986, as amended
through the date hereof; provided, however, that (a) the assigning Holder shall
give the Company written notice at or prior to the time of such assignment
stating the name and address of the assignee and identifying the securities with
respect to which the rights under this Agreement are being assigned; (b) such
assignee shall agree in writing, in form and substance reasonably satisfactory
to the Company, to be bound as a Holder by the provisions of this Agreement; and
(c) immediately following such assignment the further disposition of such
securities by such assignee is restricted under the Securities Act. No
assignment of the registration rights of any Holder with respect to any
Registrable Stock in accordance with this Section 14 shall cause such
Registrable Stock to lose such status as Registrable Stock.
15. Binding Effect; Benefit. Subject to Section 14, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns and 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.
16. Governing Law; Jurisdiction and Service of Process. 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. Any legal action or proceeding with respect to this Agreement which
is initiated by any Holder shall be brought in the courts of the State of
Florida located in Palm Beach County, Florida or the United States District
Court for the Southern District of Florida. Any legal action or proceeding with
respect to this Agreement which is initiated by the Company shall be brought in
the courts of the State of Utah located in Salt Lake City, Utah or the United
States District Court for the District of Utah. By execution and delivery of
this Agreement, each of the parties hereto
<PAGE>
17
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the parties
hereto irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the party at its address set
forth in Section 19.
17. 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.
18. 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.
19. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy upon written confirmation of receipt by the recipient, telegram or
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 19):
if to the Company:
Dycom Industries, Inc.
First Union Center,
Suite 500
4440 PGA Boulevard
Palm Beach Gardens, Florida 33410
Facsimile: (561) 627-7709
Attention: Mr. Marc R. Tiller
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile: (212) 848-7179
Attention: Richard B. Vilsoet
<PAGE>
18
In the case of a notice given to any of the Purchasers, such notice shall be
delivered or sent to the address set forth below such Purchaser's name on the
signature pages hereto and, in each case, with a copy of such notice to Jones,
Waldo, Holbrook & McDonough, P.C., 1500 First Interstate Plaza, 170 South Main
Street, Salt Lake City, Utah 84101, Attention: Glen D.
Watkins.
20. Amendments and Waivers. Any provision of this Agreement
may be amended or waived if such amendment or waiver is in writing and is
signed, in the case of an amendment, by the Holders of a majority of the
Registrable Stock and the Company, or in the case of a waiver, by the party
against whom the waiver is to be effective. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
21. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, or is reasonably likely to jeopardize the treatment of the
Merger as a pooling of interests for accounting purposes, such term or
provision, as to such jurisdiction, shall be ineffective, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions set forth
in this Agreement is not affected in any manner materially adverse to any party
hereto. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, or that the treatment of the Merger as a
pooling of interests for accounting purposes is reasonably likely to be
jeopardized, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions set
forth in this Agreement be consummated as originally contemplated to the fullest
extent possible.
22. Entire Agreement. This Agreement (including the schedule
hereto) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings
among the parties with respect thereto.
23. Attorneys' Fees. In the event that any party hereto shall
file suit to enforce any of the terms of this Agreement or to recover damages
for a breach of this Agreement, the prevailing party shall be entitled to
recover attorney's fees and costs incurred in such proceeding.
<PAGE>
19
24. Waiver of Jury Trial. EACH OF THE COMPANY AND THE HOLDERS
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE COMPANY AND THE HOLDERS IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
<PAGE>
20
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
DYCOM INDUSTRIES, INC.
By /s/ Steven Nielsen
--------------------------------
Name: Steven Nielsen
Title: President and
Chief Executive Officer
PURCHASERS:
/s/ Guy L. Fugal
---------------------------------
Name: Guy L. Fugal
Address: P.O. Box 650
Pleasant Grove, UT 84062
/s/ Daniel B. Fugal
---------------------------------
Name: Daniel B. Fugal
Address: P.O. Box 650
Pleasant Grove, UT 84062
<PAGE>
21
Schedule I
Ownership of Shares by the Purchasers
Immediately After the Effective Time
Guy L. Fugal 1,363,105 shares
Daniel B. Fugal 1,363,105 shares
ARTICLES OF MERGER
OF
DYCOM ACQUISITION CORPORATION IV,
a Utah corporation
INTO
NIELS FUGAL SONS COMPANY,
a Utah corporation
March 8, 2000
In accordance with Sections 16-10a-1105 and 16-10a-1107 of the Utah
Revised Business Corporation Act (the "URBCA"), NIELS FUGAL SONS COMPANY, a Utah
corporation ("FUGAL"), as surviving corporation of a merger with DYCOM
ACQUISITION CORPORATION IV, a Utah corporation, hereby declares and certifies as
follows:
ARTICLE ONE
Plan of Merger
The Summary Agreement and Plan of Merger, dated as of February 14, 2000
(the "Plan of Merger"), by and among Dycom Industries, Inc., a Florida
corporation ("Acquiror"), Dycom Acquisition Corporation IV, a Utah corporation
("Merger Sub"), FUGAL, and the shareholders of FUGAL, is attached hereto as
Exhibit "A" and is incorporated herein by reference.
ARTICLE TWO
Shareholder Approval
The shareholders of each of FUGAL and Merger Sub were required to
approve the Plan of Merger. No shareholders were entitled to vote separately in
voting groups. The designation, number of outstanding shares, number of votes
entitled to be cast, and the total number of votes cast for and against the Plan
of Merger were as follows:
<PAGE>
<TABLE>
<CAPTION>
Corporation Outstanding Votes For Against
and Shares Entitled To
Designation Be Cast
- ---------------------- ------------------- -------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
FUGAL 25,761 25,761 25,761 0
Common Stock
Merger Sub
Common Stock 100 100 100 0
</TABLE>
The number of votes cast for the Plan of Merger was sufficient for approval.
ARTICLE THREE
Effective Time
Pursuant to Section 16-10a-1105(2), these Articles of Merger shall be
effective on the date they are filed with the Division of Corporations and
Commercial Code of the State of Utah.
[Remainder of page intentionally left blank.]
2
<PAGE>
IN WITNESS WHEREOF, NIELS FUGAL SONS COMPANY hereby certifies to the
truth of the facts stated herein and executes and delivers these Articles of
Merger this 8th day of March, 2000.
NIELS FUGAL SONS COMPANY
By: /s/ Guy Fugal
--------------------------
Guy Fugal, President
MAILING ADDRESS
If, upon completion of filing of the above Articles of Merger, the
Division elects to send a copy of the Articles of Merger to FUGAL by mail, the
address to which the copy should be mailed is:
NIELS FUGAL SONS COMPANY
P.O. Box 650
Pleasant Grove, Utah 84062
Attention: Guy Fugal, President
S-1
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
(Abbreviated)
A. Merger of Acquiror Merger Sub into FUGAL.
1. Agreement and Plan of Merger. Subject to the terms of an
Agreement and Plan of Merger dated as of February 14, 2000, (the "Merger
Agreement"), among Dycom Industries, Inc., a Florida corporation ("Acquiror"),
Dycom Acquisition Corporation IV, a Utah corporation ("Merger Sub"), NIELS FUGAL
SONS COMPANY, a Utah corporation ("FUGAL"), and the shareholders of FUGAL
("Shareholders"), Merger Sub shall be merged with and into FUGAL (the "Merger").
2. Effective Time of the Merger. The Merger shall become
effective on the date that the Articles of Merger are duly filed with the
Division of Corporations and Commercial Code of the State of Utah (the
"Effective Time").
3. Surviving Corporation. At the Effective Time, Merger Sub
shall be merged with and into FUGAL and the separate corporate existence of
Merger Sub shall thereupon cease. FUGAL shall be the surviving corporation (the
"Surviving Corporation") in the Merger and shall continue its existence under
the provisions of the Utah Revised Business Corporation Act (the "Act").
B. Effect of the Merger; Additional Actions.
1. Effects. The Merger shall have the effects set forth in the
Act.
2. Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any such further action is necessary or desirable to
carry out the purposes of the Merger Agreement and to vest FUGAL as the
Surviving Corporation, with full right, title and possession to all assets,
property, rights, privileges and powers of Merger Sub, the officers and
directors of Merger Sub and FUGAL are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary actions.
3. Articles of Incorporation of Surviving Corporation. The
Articles of Incorporation of FUGAL shall be the Articles of Incorporation of the
Surviving Corporation, as amended and restated in Exhibit 1, attached hereto and
made a part hereof.
1
<PAGE>
4. Bylaws of Surviving Corporation. The Bylaws of Merger Sub
as in effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation on and after the Effective Time and thereafter may be
amended in accordance with the terms thereof, the Articles of Incorporation of
the surviving corporation, and applicable law.
C. Conversion of Shares. At the Effective Time, all shares of common
stock, no par value, of FUGAL by reason of the Merger provided for hereunder and
without any action on the part of the holder thereof, shall be converted into
the right to receive 2,726,210 shares of common stock, $.33 1/3 par value per
share, of Acquiror (the "Acquiror Stock"). All such shares of FUGAL common stock
by virtue of the Merger and without any action on the part of the holder
thereof, shall no longer be outstanding and shall be canceled and retired and
shall cease to exist, and each shareholder of FUGAL shall thereafter cease to
have any rights with respect to such shares of FUGAL common stock, except the
right to receive the Acquiror Stock.
No fractional shares of Acquiror Stock shall be issued as a result of
the Merger. The number of shares each shareholder is entitled to receive shall
be rounded to the nearest whole number.
As of the Effective Time, each share of common stock of Merger Sub, by
reason of the Merger provided for hereunder, and without any action on the part
of Acquiror, the holder thereof, shall be converted into the right to receive
one share of common stock of Acquiror. All such shares of Merger Sub common
stock, by virtue of the Merger, and without any action on the part of the holder
thereof, shall no longer be outstanding and shall be canceled and retired and
shall cease to exist, and Acquiror shall cease to have any rights with respect
to such shares of Merger Sub common stock.
2
<PAGE>
EXHIBIT 1
AMENDED AND RESTATED ARTICLES OF INCOPORATION
OF NIELS FUGAL SONS COMPANY
3
<PAGE>
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION
OF
NIELS FUGAL SONS COMPANY
The undersigned, Guy Fugal, being a duly appointed officer and director
of Niels Fugal Sons Company, a Utah corporation (the "Corporation"), hereby
certifies the following:
1. The Articles of Incorporation of the Corporation have been amended
and restated in their entirety to read as follows:
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
NIELS FUGAL SONS COMPANY
ARTICLE I
Name
The name of the corporation is Niels Fugal Sons Company (the
"Corporation").
ARTICLE II
Registered Office and Registered Agent
The address of the registered office of the Corporation in the
State of Utah is One Utah Center, 201 South Main Street, Salt Lake City, Utah
84111. The name of the registered agent of the Corporation at such address is
Corporation Service Company.
4
<PAGE>
ARTICLE III
Corporate Purpose
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Utah Revised
Business Corporation Act of the State of Utah (the "URBCA").
ARTICLE IV
Capital Stock
(1) The total number of shares of all classes of stock that
the Corporation shall have authority to issue is 1,000, all of which shall be
shares of Common Stock and of the same class, and without par value.
(2) No holder of any of the shares of any class of the
Corporation shall be entitled as of right to subscribe for, purchase or
otherwise acquire any shares of any class of the Corporation which the
Corporation proposes to issue or any rights or options which the Corporation
proposes to grant for the purchase of shares of any class of the Corporation or
for the purchase of any shares, bonds, securities or obligations of the
Corporation which are convertible into or exchangeable for, or which carry any
rights to subscribe for, purchase or otherwise acquire shares of any class of
the Corporation; and any and all of such shares, bonds, securities or
obligations of the Corporation, whether now or hereafter authorized or created,
may be issued, or may be reissued if the same have been reacquired and if their
reissue is not prohibited, and any and all of such rights and options may be
granted by the Board of Directors to such individuals and entities, and for such
lawful consideration, and on such terms, as the Board of Directors in its
discretion may determine, without first offering the same, or any thereof, to
any said holder.
ARTICLE V
Directors
(1) Elections of directors of the Corporation need not be by
written ballot, except and to the extent provided in the By-laws of the
Corporation.
(2) To the fullest extent permitted by the URBCA as it now
exists and as it may hereafter be amended, no director of the Corporation shall
be personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director.
5
<PAGE>
ARTICLE VI
Indemnification of Directors, Officers and Others
(1) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in, or not opposed to, the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
(2) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the Corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
(3) To the extent that a present or former director or officer
of the Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections (1) and (2) of this
Article VI, or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
6
<PAGE>
(4) Any indemnification under Sections (1) and (2) of this
Article VI (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
present or former director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard of conduct set
forth in such Sections (1) and (2). Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination, (a) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (b) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (c) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (d)
by the stockholders of the Corporation.
(5) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation authorized in this Article VI. Such expenses
(including attorneys' fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions, if any, as
the Corporation deems appropriate.
(6) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other sections of this Article VI shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any law, by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
such person's official capacity and as to action in another capacity while
holding such office.
(7) The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of Section 16-10a-902 of the URBCA.
(8) For purposes of this Article VI, references to "the
Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article VI with
7
<PAGE>
respect to the resulting or surviving corporation as such person would have with
respect to such constituent corporation if its separate existence had continued.
(9) For purposes of this Article VI, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves service by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article VI.
(10) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article VI shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE VII
Duration
The duration of the Corporation shall be perpetual.
ARTICLE VIII
By-Laws
The directors of the Corporation shall have the power to
adopt, amend or repeal by-laws.
ARTICLE IX
Amendment
The Corporation reserves the right to amend, alter, change or
repeal any provision of these Articles of Incorporation, in the manner now or
hereafter prescribed by law, and all rights conferred on stockholders in these
Articles of Incorporation are subject to this reservation.
[End of Amended and Restated Articles]
8
<PAGE>
2. This Amended and Restated Articles of Incorporation (this
"Amendment") was approved by the Board of Directors of the Corporation by
unanimous written consent dated February 14, 2000 and submitted to the
shareholders of the Corporation for their approval. The Corporation has 25,761
shares of outstanding Common Stock entitled to vote on this Amendment. No
shareholders were entitled to vote separately in voting groups. The total number
of votes cast for the Amendment was 25,761, and no shares were voted against the
Amendment.
IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation as of the 8th day of March, 2000.
NIELS FUGAL SONS COMPANY
By /s/ Guy Fugal
-------------------------------
Guy Fugal, President
The appointment of the undersigned as registered agent of the
Corporation is hereby accepted:
CORPORATION SERVICE COMPANY
By /s/ Vickie Schreiber
-------------------------------
Vickie Schreiber, Asst. V.P.
Dated March 8, 2000
9
DYCOM INDUSTRIES, INC.
4440 PGA Boulevard / Palm Beach Gardens, Florida 33410-6542
First Union Center / Suite 500 / Telephone (561) 627-7171
NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: Thomas R. Pledger, Executive Chairman
Steven Nielsen, President and CEO
(561) 627-7171
Palm Beach Gardens, Florida March 8, 2000
DYCOM INDUSTRIES, INC. COMPLETES THE ACQUISITION OF
NIELS FUGAL SONS COMPANY
PALM BEACH GARDENS, Florida, March 8 -- Dycom Industries, Inc. (NYSE Symbol: DY)
announced today that pursuant to a merger agreement previously announced on
February 15, 2000, Niels Fugal Sons Company has become a wholly owned subsidiary
of Dycom. Niels Fugal Sons Company, based in Pleasant Grove, Utah, provides
telecommunications maintenance and construction services throughout the western
United States. Upon consummation of the transaction, the stockholders of Niels
Fugal Sons Company received an aggregate of 2,726,210 shares of common stock of
Dycom. The transaction will be accounted for as a pooling of interests.
Dycom is a leading provider of engineering, construction, and maintenance
services to telecommunications providers throughout the United States.
Additionally, the Company provides similar services related to the installation
of integrated voice, data, and video local and wide area networks within office
buildings and similar structures. Dycom also provides underground utility
locating and mapping and electric utility construction services.
Dycom has scheduled a conference call for Friday, March 10, 2000, at 9:00 a.m.
(EST). To participate in the conference call, dial 1-800-450-0788 ten minutes
before the conference call begins and ask for the "Dycom Acquisition" conference
call.
