SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: MAY 11, 1998
(Amending form 8K filed on March 12, 1998 to report event on February 25, 1998)
ABLE TELCOM HOLDING CORP.
--------------------------------------------------
(Exact name of registrant as specified in charter)
FLORIDA 0-21986 65-0013218
- ---------------------------- ------------ -------------------
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
1601 FORUM PLACE, SUITE 1110, WEST PALM BEACH, FLORIDA 33401
- ------------------------------------------------------ ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (561) 688-0400
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following financial statements, pro forma financial information and
exhibits are filed as part of this Form 8-K/A-1:
(a) FINANCIAL STATEMENTS.
Financial Statements of CRSI Acquisition, Inc.:
Report of Independent Auditors
Balance Sheets as of December 31, 1997 and February 24, 1998
Statements of Operations for the Year Ended December 31, 1997
and for the periods from January 1 to February 24, 1997 and
1998
Statements of Changes in Shareholder's Deficit for the year ended
December 31, 1997 and the period from January 1 to February 24,
1998
Statement of Cash Flows for the years ended December 31, 1997 and
for the periods from January 1 to February 24, 1997 and 1998
Notes to Financial Statements
2
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
(b) PRO FORMA FINANCIAL INFORMATION.
On February 25, 1998, Able Telcom Holding Corp. ("Able"), through its
wholly owned subsidiary Georgia Electric Company ("GEC") acquired
substantially all of the assets, and assumed certain liabilities, of
CRSI Acquisition, Inc. (d/b/a COMSAT RSI JEFA Wireless Systems), a
subsidiary of COMSAT Corporation. As part of the transaction, GEC
assumed certain construction contracts with the Texas Department of
Transportation and various other telecommunication customers. GEC
acquired the accounts receivable and fixed assets of the seller and
assumed its trade payables, and received a cash payment from the
seller at closing of $4,662,854.
The following Pro Forma Combined Balance Sheet of the Registrant has
been prepared by management of the Registrant based upon the balance
sheets of the Registrant as of October 31, 1997 and January 31, 1998
and of COMSAT RSI JEFA as of December 31, 1997 and February 24, 1998.
The Pro Forma Combined Statement of Income was prepared based upon the
statement of income for the Registrant for the twelve months ended
October 31, 1997 and the three months ended January 31, 1998. The pro
forma statements give effect to the transaction under the purchase
method of accounting and the assumptions and adjustments in the
accompanying notes to pro forma combined financial statements. The pro
forma combined balance sheet gives effect to the acquisition as if it
had occurred as of January 31, 1998. The pro forma combined statement
of income for the year ended October 31, 1997 gives effect to the
acquisition as if it had occurred as of November 1, 1996. The pro
forma combined statement of income for the three months ended January
31, 1998 gives effect to the acquisition as if it had occurred as of
November 1, 1997.
The pro forma adjustments are based upon available information and
certain assumptions that management believes are reasonable. The pro
forma combined financial statements do not purport to represent what
the combined companies' financial position or results of operations
would actually have been had the acquisition occurred on such date or
as of the beginning of the period indicated, or to project the
combined companies' financial position or results of operations for
any future period.
3
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
(C) EXHIBITS.
EXHIBIT
NO. DESCRIPTION
- ------- -----------
2.2 Indemnification Agreement, dated February 25, 1998, among Able
Telcom Holding Corp., Georgia Electric Company, Transportation
Safety Contractors, Inc., COMSAT RSI Acquisition, Inc., and COMSAT
Corporation.
4
<PAGE>
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 thereunto duly authorized.
ABLE TELCOM HOLDING CORP.
By: /s/ MARK A. SHAIN
--------------------------------
Mark A. Shain
Chief Financial Officer
Dated: May 11, 1998
5
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Able Telcom Holding Corp. and Subsidiaries
West Palm Beach, Florida
We have audited the accompanying balance sheet of CRSI Acquisition, Inc. (a
Delaware corporation and indirect wholly-owned subsidiary of COMSAT Corporation)
as of December 31, 1997, and the related statements of operations, changes in
shareholder's deficit, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amount and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CRSI Acquisition, Inc. as of
December 31, 1997, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ AGEE FISHER, LLC.
-----------------
AGEE FISHER, LLC.
Atlanta, Georgia
May 1, 1998
<PAGE>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
BALANCE SHEETS
DECEMBER 31, FEBRUARY 24,
1997 1998
------------ -----------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 77,687 $ 115,837
Accounts receivable (Note 5) 3,704,407 3,723,495
Costs and estimated earnings in excess
of billings on uncompleted contracts
(Note 6) 11,355,705 13,849,085
Inventory 83,259 71,365
Other receivables 15,294 6,244
Prepaid expenses 32,921 32,921
Deferred tax asset (Note 10) 723,294 674,224
----------- -----------
15,992,567 18,473,171
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization (Note 7) 3,213,953 3,100,205
GOODWILL, net of accumulated amortization of
$548,613 and $589,251 670,527 629,889
DEFERRED TAX ASSET, non-current portion (Note 10) 124,353 133,564
OTHER ASSETS 44,416 44,416
----------- -----------
$20,045,816 $22,381,245
=========== ===========
(Continued)
2
<PAGE>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
BALANCE SHEETS (CONTINUED)
DECEMBER 31, FEBRUARY 24,
1997 1998
------------ -----------
(UNAUDITED)
LIABILITIES AND SHAREHOLDER'S DEFICIT
CURRENT LIABILITIES:
Inter-company advances (Note 8) $25,795,658 $28,403,251
Accounts payable 2,077,854 3,552,962
Accrued expenses 358,409 237,312
Accrued losses on uncompleted contracts
(Note 6) 2,880,155 2,932,508
Billings in excess of costs and estimated
earnings on uncompleted contracts (Note 6) 26,293
----------- -----------
31,112,076 35,152,326
COMMITMENTS AND CONTINGENCIES (Note 12)
SHAREHOLDER'S DEFICIT:
Common stock, $1 par value, 1,000 shares
authorized, 100 shares issued and
outstanding 100 100
Additional paid-in capital 2,100,000 2,100,000
Accumulated deficit (13,166,360) (14,871,181)
----------- -----------
(11,066,260) (12,771,081)
$20,045,816 $22,381,245
=========== ===========
See notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
STATEMENTS OF OPERATIONS
PERIOD FROM
YEAR ENDED JANUARY 1 - FEBRUARY 24,
DECEMBER 31, ----------------------------
1997 1997 1998
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
REVENUES:
Contract revenues earned $28,740,122 $ 3,984,029 $ 5,564,983
Net sales 2,922,107 312,687
----------- ----------- -----------
31,662,229 4,296,716 5,564,983
----------- ----------- -----------
COSTS:
Cost of contract revenues earned 32,192,478 5,184,716 7,164,308
Provision for contract losses on
uncompleted contracts 188,600
Cost of sales 3,388,197 222,234
----------- ----------- -----------
35,769,275 5,406,950 7,164,308
----------- ----------- -----------
GROSS MARGIN (4,107,046) (1,110,234) (1,599,325)
----------- ----------- -----------
OPERATING EXPENSES:
General and administrative 5,054,738 367,665 983,738
Selling expenses 520,013 87,693
----------- ----------- -----------
5,574,751 455,358 983,738
----------- ----------- -----------
LOSS FROM OPERATIONS (9,681,797) (1,565,592) (2,583,063)
OTHER INCOME (EXPENSE) 66,953 (2,965)
----------- ----------- -----------
NET LOSS BEFORE INCOME
TAX BENEFIT (9,614,844) (1,568,557) (2,583,063)
INCOME TAX (BENEFIT) EXPENSE:
Current (3,651,262) (598,527) (918,101)
Deferred 438,445 73,000 39,859
----------- ----------- -----------
(3,212,817) (525,527) (878,242)
----------- ----------- -----------
NET LOSS $(6,402,027) $(1,043,030) $(1,704,821)
=========== =========== ===========
</TABLE>
See notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
STATEMENTS OF CHANGES IN SHAREHOLDER'S DEFICIT
ADDITIONAL TOTAL
COMMON PAID-IN ACCUMULATED SHAREHOLDER'S
STOCK CAPITAL DEFICIT DEFICIT
------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1997 $ 100 $ (6,764,333) $ (6,764,233)
CAPITAL INVESTMENT
FROM PARENT $ 2,100,000 2,100,000
NET LOSS (6,402,027) (6,402,027)
------- ----------- ------------ ------------
BALANCE,
DECEMBER 31, 1997 $ 100 $ 2,100,000 $(13,166,360) $(11,066,260)
NET LOSS (Unaudited) (1,704,821) (1,704,821)
------- ----------- ------------ ------------
BALANCE, FEBRUARY 24, 1998
(UNAUDITED) $ 100 $ 2,100,000 $(14,871,181) $(12,771,081)
======= =========== ============ ============
</TABLE>
See notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
STATEMENTS OF CASH FLOW
PERIOD FROM
YEAR ENDED JANUARY 1 - FEBRUARY 24,
DECEMBER 31, -----------------------------
1997 1997 1998
----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(6,402,027) $(1,043,030) $(1,704,821)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 884,777 124,033 159,142
Deferred tax expense 438,445 73,000 39,859
Gain on sale of property
and equipment (6,135) (3,224)
Changes in assets and liabilities:
Accounts receivable, net 1,670,342 (852,479) (19,088)
Costs and estimated earnings
in excess of billings on
uncompleted contracts (2,012,894) 570,701 (2,493,380)
Inventory 654,657 (43,821) 11,894
Other receivables 37,293 30,150 9,050
Prepaid expenses 111,254 13,579
Other assets 1,043
Accounts payable 747,920 (521,873) 1,475,108
Accrued expenses (93,771) 70,871 (121,096)
Accrued losses on uncompleted
contracts (1,380,985) 52,353
Billings in excess of costs and
estimated earnings on
uncompleted contracts (181,825) (181,825) 26,293
----------- ----------- -----------
NET CASH USED IN
OPERATING ACTIVITIES (5,532,949) (1,759,651) (2,567,910)
----------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from sale of property
and equipment 37,834 3,000
Purchase of property and equipment (1,339,634) (274,855) (4,533)
----------- ----------- -----------
NET CASH USED IN
INVESTING ACTIVITIES (1,301,800) (274,855) (1,533)
----------- ----------- -----------
</TABLE>
Continued
6
<PAGE>
<TABLE>
<CAPTION>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
STATEMENTS OF CASH FLOW (CONTINUED)
PERIOD FROM
YEAR ENDED JANUARY 1 - FEBRUARY 24,
DECEMBER 31, -----------------------------
1997 1997 1998
----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net proceeds (payments) from
inter-company advances $ 4,556,529 $ (215,128) $2,607,593
Capital investment by parent 2,100,000 2,100,000
----------- ----------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 6,656,529 1,884,872 2,607,593
----------- ----------- ----------
NET (DECREASE) INCREASE IN CASH (178,220) (149,634) 38,150
CASH, Beginning of period 255,907 255,907 77,687
----------- ----------- ----------
CASH, END OF PERIOD $77,687 $106,273 $115,837
=========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest $ 0 $ 0 $ 0
Income taxes 0 0 0
</TABLE>
See notes to financial statements.
7
<PAGE>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
NOTES TO FINANCIAL STATEMENTS.
NOTE 1 INTERIM FINANCIAL STATEMENTS (UNAUDITED):
In the opinion of CRSI Acquisition, Inc. (the Company), the
accompanying unaudited financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the financial position of the Company at February 24, 1998 and
the results of its operations and its cash flows for the period from
January 1 through February 24, 1997 and 1998.
NOTE 2 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
DESCRIPTION OF BUSINESS
CRSI Acquisition, Inc. (d/b/a COMSAT RSI JEFA Wireless Systems) was
incorporated in Delaware in August 1995. The Company is an indirect
wholly-owned subsidiary of COMSAT Corporation. The Company engages in
the installation of intelligent traffic management systems, and the
design and construction of wireless communication networks. The Company
operates in twenty-one states, primarily in Texas and Alabama.
REVENUE AND COST RECOGNITION
The Company's construction contracts are performed on a fixed-price
basis. Contract revenues are recognized on the percentage-of-completion
method, measured by the percentage of costs incurred to date to total
estimated costs at completion. This method is used because management
considers costs incurred to be the best available measure of progress
on these contracts. Changes in job performance, job conditions, and
estimated profitability may result in revisions to costs and revenues,
and are recognized in the period in which the revisions are determined.
Provisions for estimated losses on uncompleted contracts are made in
the period in which such losses are determined.
Contract costs include all direct material and labor costs, cost of
work subcontracted to others but under the supervision of the Company
and those indirect costs related to contract performance, such as
indirect labor, depreciation, supplies, tools, and repairs. Selling,
general and administrative costs are charged to expense as incurred.
The current asset "Costs and estimated earnings in excess of billings
on uncompleted contracts", represents revenues recognized in excess of
amounts billed. The current liability, "Billings in excess of costs and
estimated earnings on uncompleted contracts", represents amounts billed
in excess of revenues recognized.
INVENTORY
Inventory consists of finished equipment and materials held for resale,
and is stated at the lower of cost or market value. Costs are
determined by the first-in, first-out method.
8
<PAGE>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED):
GOODWILL
Goodwill, which represents the excess of the cost of an acquired
company over the fair value of its net assets at the date of
acquisition, is being amortized on the straight-line method over five
years.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided by
the straight-line method over the estimated useful lives of the related
assets. The cost of leasehold improvements is amortized over the lesser
of the length of the related leases or the estimated useful lives of
the assets.
ESTIMATES AND ASSUMPTIONS
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amounts of assets
and liabilities, and the reported revenues and expenses. Actual results
could vary from the estimates that were used.
NOTE 3 CONCENTRATION OF CREDIT RISK:
The Company maintains cash balances with one financial institution. At
various times during the year ended December 31, 1997 and the period
from January 1, 1998 through February 24, 1998, cash balances exceeded
the FDIC-insured limit.
NOTE 4 FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amounts of the Company's financial instruments, consisting
of cash, accounts receivable, accounts payable, and inter-company
advances held for non-trading purposes, approximates fair value due to
the short maturity of the instruments and the provision for reserves
for potential non-performance.
NOTE 5 CONTRACT RECEIVABLES:
DECEMBER 31, FEBRUARY 24,
1997 1998
------------ ------------
(UNAUDITED)
Contract receivables:
Completed contracts $ 4,143,585 $ 3,833,081
Uncompleted contracts 1,193,438 1,523,030
------------ ------------
5,337,023 5,356,111
Less allowance for doubtful accounts 1,632,616 1,632,616
------------ ------------
$ 3,704,407 $ 3,723,495
============ ============
9
<PAGE>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 5 CONTRACT RECEIVABLES (CONTINUED):
DECEMBER 31, FEBRUARY 24,
1997 1998
------------ ------------
(UNAUDITED)
Significant customer receivables are
as follows:
Due from U.S. Government agency $ 1,654,959 $ 1,656,959
Due from State agency 812,657 894,336
------------ ------------
2,467,616 2,551,295
Less allowance for doubtful accounts 1,167,616 1,167,616
------------ ------------
$ 1,300,000 $ 1,383,679
============ ============
For the year ended December 31, 1997, one customer accounted for nearly
65% of revenues earned.
NOTE 6 UNCOMPLETED CONTRACTS:
DECEMBER 31, FEBRUARY 24,
1997 1998
------------ ------------
(UNAUDITED)
Costs incurred on uncompleted contracts $ 25,092,456 $ 28,715,207
Estimated earnings 1,944,091 2,331,266
------------ ------------
Contract revenues recognized to date on
uncompleted contracts 27,036,547 31,046,473
Less billings to date (15,680,842) (17,223,681)
------------ ------------
Revenues recognized over billings, net $ 11,355,705 $ 13,822,792
============ ============
Included in the accompanying balance
sheet under the following captions:
Costs and estimated earnings in
excess of billings on uncompleted
contracts $ 11,355,705 $ 13,849,085
Billings in excess of costs and
estimated earnings on
uncompleted contracts (26,293)
------------ ------------
$ 11,355,705 $ 13,822,792
============ ============
At December 31, 1997 and February 24, 1998, one customer accounted for
87% and 91% (unaudited) of costs and estimated earnings in excess of
billings on uncompleted contracts.
10
<PAGE>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 7 PROPERTY AND EQUIPMENT:
DECEMBER 31, FEBRUARY 24,
1997 1998
------------ ------------
(UNAUDITED)
Machinery and equipment $ 2,127,944 $ 2,130,940
Vehicles 1,793,031 1,793,031
Leasehold improvements 79,487 81,020
Computer software 71,084 71,084
Furniture and fixtures 61,023 61,023
Communications equipment 55,420 55,420
------------ ------------
$ 4,187,989 $ 4,192,518
Less accumulated depreciation (974,036) (1,092,313)
------------ ------------
$ 3,213,953 $ 3,100,205
============ ============
Depreciation expense is $640,356 for the year ended December 31, 1997
and $82,151 (unaudited) and $118,504 (unaudited) for the periods from
January 1 through February 24, 1997 and 1998.
NOTE 8 INTER-COMPANY ADVANCES:
The Company's parent makes non-interest bearing cash advances to the
Company, as required, for working capital needs. These advances are
reduced by the Company's trade receivables collected by the parent.
NOTE 9 OTHER RELATED PARTY TRANSACTIONS:
The Company purchases inventory for resale from its parent and a
company related by common ownership. The total inventory purchases from
these companies is $691,927 for the year ended December 31, 1997 and
$222,234 (unaudited) and $0 (unaudited) for the periods from January 1
through February 24, 1997 and 1998. The Company pays its parent a
monthly charge for management services. These charges total $980,136
for the year ended December 31, 1997 and $146,300 (unaudited) and
$161,200 (unaudited) for the periods from January 1 through February
24, 1997 and 1998.
11
<PAGE>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 10 INCOME TAXES:
The income tax effects of Company operating results are determined and
included in the consolidated income tax returns of the parent. For
presentation of these financial statements, the Company provides for an
estimated income tax benefit from operating losses on a separate-basis
return, and recognizes a credit which would be received from the parent
as a result of filing consolidated returns. The parent would use any
such income tax benefit to off-set amounts previously advanced to the
Company, therefore the estimated income tax receivable is included in
inter-company advances.
A reconciliation of the income tax provision at the federal statutory
rate to the income tax provision at the effective tax rate is as
follows:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1 - FEBRUARY 24,
DECEMBER 31, ---------------------------
1997 1997 1998
------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Income tax computed at the
Federal statutory rate $ (3,269,049) $ (533,309) $ (878,242)
Nondeductible expenses 56,232 7,782
------------ ------------ ------------
$ (3,212,817) $ (525,527) $ (878,242)
============ ============ ============
</TABLE>
The components of deferred taxes consist of the following:
DECEMBER 31, FEBRUARY 24,
1997 1998
------------ -----------
(UNAUDITED)
DEFERRED TAX ASSETS:
Accounts receivable allowance $ 555,090 $ 555,090
Goodwill 124,352 133,564
Accrued losses on uncompleted contracts 979,253 997,053
------------ -----------
1,658,695 1,685,707
DEFERRED TAX LIABILITIES:
Uncompleted contracts (811,048) (877,919)
------------ -----------
$ 847,647 $ 807,788
============ ============
12
<PAGE>
CRSI ACQUISITION, INC.
(A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
NOTE 11 EMPLOYEE BENEFIT PLAN:
The Company's parent sponsors a contributory defined contribution
benefit plan for all employees working at least 20 hours per week or
having one year of service. The sponsor matches employee contributions
in stock of the parent, based on a formula defined in the plan. Plan
expense recorded by the Company is $82,482 for the year ended December
31, 1997 and $10,335 (unaudited) and $27,650 (unaudited) for the
periods from January 1 through February 24, 1997 and 1998.
NOTE 12 COMMITMENTS AND CONTINGENCIES:
The Company leases office and warehouse space, vehicles and other
equipment under non-cancelable operating lease agreements. Rental
expense under these operating leases is $238,216 for the year ended
December 31, 1997 and $32,845 (unaudited) and $29,389 (unaudited) for
the periods from January 1 through February 24, 1997 and 1998.
Minimum future lease payments under these operating leases at December
31, 1997 are as follows:
YEAR ENDING
DECEMBER 31,
------------
1998 $ 123,636
1999 38,025
---------
$ 161,661
=========
NOTE 13 SUBSEQUENT EVENT (UNAUDITED):
On February 25, 1998, Able Telcom Holding Corp. (Able), a publicly-held
corporation, purchased substantially all assets and certain liabilities
of the Company in exchange for cash from the Company's parent. The
purchase was effected through Able's wholly-owned subsidiary, Georgia
Electric Company, Inc. As a part of this transaction, Able assumed
uncompleted installation contracts with governmental agencies and
telecommunications customers. As of the date of the sale, the Company
ceased operations.
13
<PAGE>
<TABLE>
<CAPTION>
Able Telcom Holding Corp.
And Subsidiaries
Pro Forma Combined Balance Sheets (Unaudited)
ABLE TELCOM
HOLDING CORP. COMSAT RSI
AND JEFA WIRELESS
SUBSIDIARIES SYSTEMS
------------- ------------- PRO FORMA
OCTOBER 31, DECEMBER 31, ----------------------------
1997 1997 ADJUSTMENTS COMBINED
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,229,602 $ 77,687 $ 4,585,167 A $ 10,892,456
Accounts receivable, net 13,399,327 3,719,701 17,119,028
Inventories 1,257,218 83,259 2,500,000 A 3,840,477
Costs and profits in excess of -
billings on uncompleted contracts 5,614,813 11,355,705 (11,355,705)A 5,614,813
Prepaid expenses and other 508,591 32,921 541,512
Deferred income taxes 723,294 (723,294)A -
----------- ----------- ------------ ------------
Total current assets 27,009,551 15,992,567 (4,993,832) 38,008,286
Property, and equipment, net 13,113,638 3,213,953 16,327,591
Other assets:
Deferred income taxes 981,976 124,353 (124,353)A 981,976
Goodwill, net 8,341,064 670,527 (670,527)A 8,341,064
Other 899,765 44,416 944,181
----------- ----------- ------------ ------------
Total other assets 10,222,805 839,296 (794,880) 10,267,221
----------- ----------- ------------ ------------
Total assets $50,345,994 $20,045,816 $ (5,788,712) $ 64,603,098
=========== =========== ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Able Telcom Holding Corp.
And Subsidiaries
Pro Forma Combined Balance Sheets (Unaudited)
ABLE TELCOM
HOLDING CORP. COMSAT RSI
AND JEFA WIRELESS
SUBSIDIARIES SYSTEMS
------------- ------------- PRO FORMA
OCTOBER 31, DECEMBER 31, ----------------------------
1997 1997 ADJUSTMENTS COMBINED
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 3,154,428 $ - $ - $ 3,154,428
Inter-company Advances, net 25,795,658 (25,795,658)A -
Notes payable shareholders/directors 875,000 875,000
Accounts payable and accrued
liabilities 8,418,323 2,436,263 8,940,686 A 19,795,272
Billings in excess of costs and
profits on uncompleted contracts 291,165 291,165
Accrued losses on uncompleted
contracts 2,880,155 2,880,155
Customer deposits 229,721 229,721
----------- ----------- ------------ ------------
Total current liabilities 12,968,637 31,112,076 (16,854,972) 27,225,741
Long-term debt, excluding current
portion 14,139,567 14,139,567
Other liabilities 1,277,866 1,277,866
Deferred profit 2,040,000 A
----------- ----------- ------------ ------------
Total liabilities 28,386,070 31,112,076 (16,854,972) 42,643,174
Convertible redeemable preferred
stock $.10 par value, authorized
1,000,000 shares: 995 shares
issued and outstanding in 1997 6,713,314 6,713,314
Shareholders' equity:
Common stock, $.001 par value,
authorized 25,000,000 shares;
8,580,422 shares issued and
outstanding in 1997 8,579 8,579
Common stock, $1.00 par value,
authorized 1,000 shares;
100 shares issued and
outstanding in 1997 100 (100)A -
Additional paid in capital 15,095,863 2,100,000 (2,100,000)A 15,095,863
Retained earnings (deficit) 142,168 (13,166,360) 13,166,360 A 142,168
Total shareholders' equity 15,246,610 (11,066,260) 11,066,260 A 15,246,610
----------- ----------- ------------ ------------
Total liabilities and
shareholders' equity $50,345,994 $20,045,816 $ (5,788,712) $ 64,603,098
=========== =========== ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Able Telcom Holding Corp.
And Subsidiaries
Supplemental
Pro Forma Combined Statements of Income (Unaudited)
For the twelve months ended
ABLE TELCOM
HOLDING CORP. COMSAT RSI
AND JEFA WIRELESS
SUBSIDIARIES SYSTEMS
------------- ------------- PRO FORMA
OCTOBER 31, DECEMBER 31, ----------------------------
1997 1997 ADJUSTMENTS COMBINED
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues $86,334,449 $ 31,662,229 $ - $117,996,678
Cost and expenses:
Cost of revenues 68,164,404 34,884,498 0 103,048,902
General and administrative 8,780,430 5,574,751 0 14,355,181
Depreciation and amortization 4,532,248 884,777 5,417,025
Transaction / transaction
losses, net 16,987 16,987
----------- ------------ ------------ ------------
Total costs and expenses 81,494,069 41,344,026 0 122,838,095
----------- ------------ ------------ ------------
Income ( loss ) from operations 4,840,380 (9,681,797) 0 (4,841,417)
----------- ------------ ------------ ------------
Other expense ( income )
Interest expense 1,565,265 1,565,265
Interest and dividend income (449,479) (449,479)
Other ( income ) expense (152,694) (66,953) (219,647)
----------- ------------ ------------ ------------
Total other expense, net 963,092 (66,953) - 896,139
----------- ------------ ------------ ------------
Income ( loss ) before income taxes
and minority interest 3,877,288 (9,614,844) 0 (5,737,556)
Income tax expense 727,223 (3,212,817) 0 2,485,594
----------- ------------ ------------ ------------
Income ( loss ) before minority
interest 3,150,065 (6,402,027) 0 (3,251,962)
Minority interest 292,532
----------- ------------ ------------ ------------
Net income ( loss ) 2,857,533 (6,402,027) 0 (3,544,494)
Preferred stock dividend 260,000 260,000
Discount attributable to beneficial
conversion of preferred stock 1,266,364 1,266,364
----------- ------------ ------------ ------------
Net income ( loss ) applicable to
common stock $ 1,331,169 $ (6,402,027) $ 0 $ (5,070,858
=========== ============ ============ ============
Income ( loss ) per common share:
Basic $ 0.16 $(0.60)
=========== ============
Diluted $ 0.16 $(0.60)
=========== ============ ============ ============
Weighted average common shares and
common stock equivalents
outstanding 8,504,972 8,504,972
=========== ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Able Telcom Holding Corp.
And Subsidiaries
Supplemental
Pro Forma Combined Balance Sheets (Unaudited)
ABLE TELCOM
HOLDING CORP. COMSAT RSI
AND JEFA WIRELESS
SUBSIDIARIES SYSTEMS
------------- ------------- PRO FORMA
JANUARY 31, FEBRUARY 24, ----------------------------
1998 1998 ADJUSTMENTS COMBINED
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,971,821 $ 115,837 $ 4,547,017 A $ 8,634,675
Accounts receivable, net 15,314,102 3,729,739 19,043,841
Inventories 1,156,152 71,365 2,500,000 A 3,727,517
Costs and profits in excess of
billings on uncompleted
contracts 4,774,002 13,849,085 (13,849,085)A 4,774,002
Prepaid expenses and other 858,162 32,921 891,083
Deferred income taxes 674,224 (674,224)A
----------- ------------ ------------ -----------
Total current assets 26,074,239 18,473,171 (7,476,292) 37,071,118
Property, and equipment, net 15,133,388 3,100,205 18,233,593
Other assets:
Deferred income taxes 1,323,960 133,564 (133,564)A 1,323,960
Goodwill, net 8,200,422 629,889 (629,889)A 8,200,422
Other 1,378,451 44,416 1,422,867
----------- ------------ ------------ -----------
Total other assets 10,902,833 807,869 (763,453) 10,947,249
----------- ------------ ------------ -----------
Total assets $52,110,460 $ 22,381,245 $ (8,239,745) $66,251,960
=========== ============ ============ ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Able Telcom Holding Corp.
And Subsidiaries
Pro Forma Combined Balance Sheets (Unaudited)
ABLE TELCOM
HOLDING CORP. COMSAT RSI
AND JEFA WIRELESS
SUBSIDIARIES SYSTEMS
------------- ------------- PRO FORMA
JANUARY 31, FEBRUARY 24, ----------------------------
1998 1998 ADJUSTMENTS COMBINED
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 4,025,479 $ - $ - $ 4,025,479
Inter-company Advances, net 28,403,251 (28,403,251)A -
Accounts payable and accrued
liabilities 8,822,978 3,790,274 7,392,425 A 20,005,677
Billings in excess of costs
and profits on uncompleted
contracts 667,212 26,293 693,505
Accrued losses on uncompleted
contracts 2,932,508 2,932,508
Customer deposits 102,709 102,709
----------- ------------ ------------ -----------
Total current liabilities 13,618,378 35,152,326 (21,010,826) 27,759,878
Long-term debt, excluding current
portion 15,622,982 15,622,982
Other liabilities 1,277,866 1,277,866
Deferred profit 2,040,000 A
----------- ------------ ------------ -----------
Total liabilities 30,519,226 35,152,326 (21,010,826) 44,660,726
Minority interest 111,081 111,081
Convertible redeemable preferred stock
$.10 par value, authorized
1,000,000 shares: 995 shares
issued and outstanding in 1997 3,343,500 3,343,500
Shareholders' equity:
Common stock, $.001 par value,
authorized 25,000,000 shares;
8,580,422 shares issued and
outstanding in 1997 9,090 9,090
Common stock, $1.00 par value,
authorized 1,000 shares; 100
shares issued and outstanding
in 1997 100 (100)A -
Additional paid in capital 18,809,605 2,100,000 (2,100,000)A 18,809,605
Retained earnings ( deficit ) (682,042) (14,871,181) 14,871,181 A (682,042)
Total shareholders' equity 18,136,653 (12,771,081) 12,771,081 A 18,136,653
----------- ------------ ------------ -----------
Total liabilities and
shareholders' equity $52,110,460 $ 22,381,245 $ (8,239,745) $66,251,960
=========== ============ ============ ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Able Telcom Holding Corp.
And Subsidiaries
Pro Forma Combined Statements of Income (Unaudited)
For the periods ended
ABLE TELCOM
HOLDING CORP. COMSAT RSI
AND JEFA WIRELESS
SUBSIDIARIES SYSTEMS
------------- ------------- PRO FORMA
JANUARY 31, FEBRUARY 24, ----------------------------
1998 1998 ADJUSTMENTS COMBINED
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues $ 22,267,800 $ 5,564,983 $ - $ 27,832,783
Cost and expenses:
Cost of revenues 19,010,379 7,005,166 0 26,015,545
General and administrative 2,896,294 983,738 0 3,880,032
Depreciation and amortization 1,152,489 159,142 1,311,631
Transaction / translation
Losses, net (15,429) (15,429)
------------ ----------- ------------ ------------
Total costs and expenses 23,043,733 8,148,046 0 31,191,779
------------ ----------- ------------ ------------
Income ( loss ) from operations (775,933) (2,583,063) 0 (3,358,996)
------------ ----------- ------------ ------------
Other expense ( income )
Interest expense 275,611 275,611
Interest and dividend income (73,602) (73,602)
Other ( income ) expense (125,679) (125,679)
------------ ----------- ------------ ------------
Total other expense, net 76,330 - - 76,330
------------ ----------- ------------ ------------
Income ( loss ) before income taxes
and minority interest (852,263) (2,583,063) 0 (3,435,326)
Income tax expense (341,984) (878,242) 0 (1,220,226)
------------ ----------- ------------ ------------
Income ( loss ) before minority
interest (510,279) (1,704,821) 0 (2,215,100)
Minority interest 159,971 159,971
------------ ----------- ------------ ------------
Net income ( loss ) (670,250) (1,704,821) 0 (2,375,071)
Preferred stock dividend 49,187 49,187
Discount attributable to beneficial
conversion of preferred stock 104,773 104,773
------------ ----------- ------------ ------------
Net income ( loss ) applicable to
common stock $ (824,210) $(1,704,821) $ 0 $ (2,529,031)
============ =========== ============ ============
Income ( loss ) per common share:
Basic $ (0.09) $ (0.29)
============ ============
Diluted $ (0.09) $ (0.29)
============ =========== ============ ============
Weighted average common shares
and common stock equivalents
outstanding 8,825,362 8,825,362
============ =========== ============ ============
</TABLE>
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(A) The Company acquired certain assets and liabilities from Comsat RSI. These
assets consisted of cash, accounts receivable, stored materials and various
other assets and prepaid expenses. The Company assumed various liabilities,
including trade accounts payable, accrued warranty expenses, liquidated
damages and other contract related expenses.
The acquisition is accounted for under the purchase method of accounting.
The Company expects to reduce the operating costs of the business acquired from
Comsat RSI, by 22%, as a result of renegotiating subcontractor agreements and
reducing salary expenses and contract costs, in line with the existing operating
units of the Company. The closing of the Comsat RSI administrative offices will
result in a decrease in general and administrative expenses of approximately
60%.
Had these adjustments been reflected on the proformas, they would have resulted
in increases in the combined net income of approximately $6,751,000 and
$1,843,000 for the year ended December 31, 1997 and the period ended February
24, 1998, respectively.
6
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
2.2 Indemnification Agreement, dated February 25, 1998, among Able
Telcom Holding Corp., Georgia Electric Company, Transportation
Safety Contractors, Inc., COMSAT RSI Acquisition, Inc., and
COMSAT Corporation.
EXHIBIT 2.2
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("AGREEMENT") is entered into as of
February 25, 1998, among Able Telcom Holding Corp., a Florida corporation
("ABLE"), Transportation Safety Contractors, Inc., a Florida corporation, and
Georgia Electric Company, Inc., a Georgia corporation (collectively, the
"BUYER"), COMSAT Corporation, a District of Columbia corporation ("COMSAT"), and
COMSAT RSI Acquisition, Inc., a Delaware corporation, doing business as COMSAT
RSI JEFA Wireless Systems, and an indirect wholly-owned subsidiary of COMSAT
(the "SELLER"). The Buyer, Able, COMSAT and Seller are referred to collectively
herein as the "Parties." All capitalized terms used herein but not otherwise
defined shall have the meaning ascribed to them as set forth in the Purchase
Agreement (defined below).
RECITALS
WHEREAS, the Parties have entered into that certain Asset Purchase
Agreement dated November 26, 1997 ("PURCHASE AGREEMENT") whereby Buyer agreed to
purchase substantially all of the assets (and assume certain of the liabilities)
of Seller;
WHEREAS, as a condition precedent to the Closing of the asset purchase,
the Buyer, Seller, COMSAT and Able agreed to give notices to third parties, and
use commercially reasonable efforts to obtain any third party consents,
authorizations, approvals of governments and governmental agencies that the
other reasonably may request; and
WHEREAS, the Parties have yet to obtain all the necessary consents but
the Buyer and Able do not wish to delay the Closing;
THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, the Parties agree as follows.
AGREEMENT
1.01 INDEMNIFICATION. Buyer and Able, jointly and severally, shall indemnify
Seller and COMSAT from and against the entirety of any Adverse Consequences (as
defined in the Purchase Agreement) that Seller or COMSAT, as the case may be,
may suffer resulting from, arising out of, relating to in the nature of, or
caused by the failure to obtain all necessary consents pursuant to SECTION 5(B)
of the Purchase Agreement.
1.02 DETERMINATION OF DAMAGES AND OTHER MATTERS.
(a) The Indemnity Cap, defined in and pursuant to the Purchase Agreement,
shall not apply to any claim of indemnity made by Seller or COMSAT under this
Agreement.
1
<PAGE>
(b) Each Party hereby waives any claim for indirect, special or
consequential damages resulting from, arising out of, relating to, in the nature
of, or caused by a breach of this Agreement by any other Party.
(c) The amount which any party (an "INDEMNIFYING PARTY") is or may be
required to pay to any other party (an "INDEMNITEE") pursuant to this Agreement
shall be reduced (including, without limitation, retroactively) by any Insurance
Proceeds or other amounts actually recovered by or on behalf of such Indemnitee,
in reduction of the related Adverse Consequence. If an Indemnitee shall have
received payment (an "INDEMNITY PAYMENT") required by this Agreement from an
Indemnifying Party in respect of any Adverse Consequence and shall subsequently
actually receive Insurance Proceeds or other amounts in respect of such Adverse
Consequence, then such Indemnitee shall pay to such Indemnifying Party a sum
equal to the amount of such Insurance Proceeds or other amounts actually
received (up to but not in excess of the amount of the related Indemnity
Payment). An insurer who would otherwise be obligated to pay any claim shall not
be relieved of the responsibility with respect thereto, or, solely by virtue of
the indemnification provisions hereof, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
third party shall be entitled to a "windfall" (i.e., a benefit they would not be
entitled to receive in the absence of the indemnification provisions of this
Agreement) by virtue of the indemnification provisions hereof.
1.03 MATTERS INVOLVING THIRD PARTIES.
(a) If an Indemnitee shall receive notice or otherwise learn of the
assertion by a person (including, without limitation, any governmental entity)
who is not a party to this Agreement (or an Affiliate of either party) of a
claim or of the commencement by any such person of any Action with respect to
which an Indemnifying Party may be obligated to provide indemnification pursuant
to this Section (a "THIRD PARTY CLAIM"), such Indemnitee shall give such
Indemnifying Party written notice thereof promptly after becoming aware of such
Third Party Claim; provided that the failure of any Indemnitee to give notice as
provided in this SECTION 1.03 shall not relieve the Indemnifying Party of its
obligations hereunder, except to the extent that such Indemnifying Party is
actually prejudiced by such failure to give notice. Such notice shall describe
the Third Party Claim in reasonable detail.
(b) An Indemnifying Party may elect to defend or to seek to settle or
compromise, at such Indemnifying Party's own expense and with such Indemnifying
Party's own counsel, any Third Party Claim, as provided hereafter, so long as
the Indemnifying Party notifies the Indemnitee in writing within 30 days after
the Indemnitee has given notice of the Third Party Claim that the Indemnifying
Party will indemnify the Indemnitee from and against the entirety of any Adverse
Consequences the Indemnitee may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim (subject to the
limitations provided in SECTION 1.02). After notice from an Indemnifying Party
to an Indemnitee of its election to assume the defense of a Third Party Claim,
such Indemnifying Party shall not be liable to such Indemnitee under this
Agreement for any legal or other expenses (except expenses approved in advance
by the Indemnifying Party) subsequently incurred by such Indemnitee in
connection with the defense thereof; provided that if the defendants with
respect to any such Third Party Claim
2
<PAGE>
include both the Indemnifying Party and one or more Indemnitees and in any
Indemnitee's reasonable judgment a conflict of interest between one or more of
such Indemnitees and such Indemnifying Party exists in respect of such claim,
such Indemnitees shall have the right to employ separate counsel to represent
such Indemnitees and in that event the reasonable fees and expenses of such
separate counsel (but not more than one separate counsel reasonably satisfactory
to the Indemnifying Party) shall be paid by such Indemnifying Party. If an
Indemnifying Party elects not to assume responsibility for defending a Third
Party Claim, or fails to notify an Indemnitee of its election as provided in
this SECTION 1.03, such Indemnitee may defend or, subject to the remainder of
this SECTION 1.03, seek to compromise or settle such Third Party Claim without
prejudice to such Indemnitee's rights, if any, to continue to seek
indemnification hereunder. Notwithstanding the foregoing, neither an
Indemnifying Party nor an Indemnitee may settle or compromise any claim over the
objection of the other; provided, however, that consent to settlement or
compromise shall not be unreasonably withheld or delayed. Neither an
Indemnifying Party nor an Indemnitee shall consent to entry of any judgment or
enter into any settlement of any Third Party Claim which does not include as an
unconditional term thereof the giving by a claimant or plaintiff to such
Indemnitee, in the case of a consent or settlement by an Indemnifying Party, or
to the Indemnifying Party, in the case of a consent or settlement by an
Indemnitee, of a written release from all liability in respect to such Third
Party Claim.
(c) If an Indemnifying Party chooses to defend or to seek to compromise or
settle any Third Party Claim, the related Indemnitee shall make reasonably
available to such Indemnifying Party any personnel or any books, records or
other documents within its control or which it otherwise has the ability to make
available that are necessary or appropriate for such defense, settlement or
compromise of such Third Party Claims, subject to the establishment of
reasonably appropriate confidentiality arrangements and arrangements to preserve
any applicable privilege (including, the attorney-client privilege) and shall
cooperate in such defense, compromise or settlement. If an Indemnifying Party
chooses to defend or to seek to compromise or settle any Third Party Claim, the
related Indemnitee shall be entitled to attend and participate in any such
proceeding, discussion or negotiation at its own expense.
(d) Notwithstanding anything else in this Agreement to the contrary, if an
Indemnifying Party notifies the related Indemnitee in writing of such
Indemnifying Party's desire to settle or compromise a Third Party Claim on the
basis set forth in such notice (provided- that such settlement or compromise
includes as an unconditional term thereof the giving by the claimant or
plaintiff of a written release of the Indemnitee from all liability in respect
thereof and does not include any non-monetary remedy) and provides the
Indemnitee a copy of a written proposal of the applicable claimant to settle on
such terms, and the Indemnitee shall notify the Indemnifying Party in writing
that such Indemnitee declines to accept any such settlement or compromise, such
Indemnitee may continue to contest such Third Party Claim, free of any
participation by such Indemnifying Party, at such Indemnitee's sole expense. In
such event, the obligation of such Indemnifying Party to such Indemnitee with
respect to such Third Party Claim shall be equal to (i) the costs and expenses
of such Indemnitee prior to the date such Indemnifying Party notifies such
Indemnitee of the offer to settle or compromise (to the extent such costs and
expenses are otherwise indemnifiable hereunder) plus (ii) the lesser of (A) the
3
<PAGE>
amount of any offer of settlement or compromise which such Indemnitee declined
to accept and (B) the actual out-of-pocket amount such Indemnitee is obligated
to pay subsequent to such date as a result of such Indemnitee's continuing to
defend such Third Party Claim (including attorneys fees and expenses).
(e) Any claim on account of an Adverse Consequence which does not result
from a Third Party Claim shall be asserted by written notice given by the
Indemnitee to the related Indemnifying Party. Such Indemnifying Party shall have
a period of 30 days after the receipt of such notice within which to respond
thereto. If such Indemnifying Party does not respond within such 30-day period,
such Indemnifying Party shall be deemed to have refused to accept responsibility
to make payment.
(f) In addition to any adjustments required pursuant to Section 9(d), if
the amount of any Adverse Consequence shall, at any time subsequent to the
payment required by an Indemnifying Party on account thereof, be reduced by
recovery, settlement or otherwise, the amount of such reduction, less any
expenses incurred in connection therewith, shall promptly be repaid by the
Indemnitee to the Indemnifying Party.
(g) In the event of payment by an Indemnifying Party to any Indemnitee in
connection with any Third Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place and the place of such Indemnitee as
to any events or circumstances in respect of which such Indemnitee may have any
right or claim relating to such Third Party Claim against any claimant or
plaintiff asserting such Third Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense of such Indemnifying Party, in prosecuting any
subrogated right or claim.
1.04 OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification provisions
are in addition to, and not in derogation of, any statutory, equitable, or
common law remedy (including without limitation any such remedy arising under
Environmental, Health, and Safety Requirements) any Party may have pursuant to
this Agreement and with respect to the transactions contemplated by the Purchase
Agreement.
2.01 MISCELLANEOUS.
(a) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(b) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(c) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No
4
<PAGE>
Party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other Party;
provided, however, that Buyer may (i) assign any or all of its rights and
interests hereunder to one or more of its Affiliates and (ii) designate one or
more of its Affiliates to perform its obligations hereunder (in any or all of
which cases Buyer nonetheless shall remain responsible for the performance of
all of its obligations hereunder).
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
to Seller:
COMSAT RSI Jefa Wireless Systems
c/o COMSAT Corporation
(at the address and with the copies set forth below with respect
to COMSAT)
to COMSAT:
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20815
Attention: Allen E. Flower
Vice President and Chief Financial Officer
Telecopy No.: (301) 214-5131
With copy (which shall not constitute notice) to:
Warren Y. Zeger
Vice President, General Counsel and Secretary
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20815
Telecopy No.: (301) 214-5128
and copy (which shall not constitute notice) to:
5
<PAGE>
Charles P. Miller
Patton Boggs, L.L.P.
2200 Ross Avenue, Suite 900
Dallas, Texas 75204
Telecopy No.: (214) 871-2688
If to Buyer or Able:
Transportation Safety Contractors, Inc.
c/o Able Telcom Holding Corp.
1601 Forum Place, Suite 1110
West Palm Beach, FL 33401
Attention: President
Telecopy No.: (561) 688-0455
and copy (which shall not constitute notice) to:
David L. Perry, Jr.
Holland & Knight L.L.P.
625 North Flagler Drive, Suite 700
West Palm Beach, FL 33401
Telecopy No.: (561) 650-8399
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Texas without giving effect to
any choice or conflict of law provision or rule (whether of the State of Texas
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Texas.
(h) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
6
<PAGE>
(i) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(j) Construction. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
'including' shall mean including without limitation.
(k) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Dallas County, Texas. in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on the other Party by sending or delivering a copy of the
process to the Party to be served at the address and in the manner provided for
the giving of notices in SECTION 2.01(F) above. Each Party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law or in
equity.
(REMAINDER OF PAGE INTENTIONALLY BLANK)
7
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
TRANSPORTATION SAFETY CONTRACTORS, INC.
By: /s/
-----------------------------------
Gerry W. Hall
Executive Vice President
GEORGIA ELECTRIC COMPANY, INC.
By: /s/
-----------------------------------
Gerry W. Hall
President
ABLE TELCOM HOLDING CORP.
By: /s/
-----------------------------------
Gerry W. Hall
President and Chief
Executive Officer
COMSAT RSI Acquisition, Inc., d.b.a.
COMSAT RSI JEFA Wireless Systems
By: /s/
-----------------------------------
Dennis Fruhwirth
Vice President and
General Manager
COMSAT CORPORATION
By: /s/
-----------------------------------
Allen E. Flower
Vice President and Chief
Financial Officer
8
