Exhibit 10.1
STOCK PURCHASE AGREEMENT
Relating to the
Purchase of the Capital Stock of
Dial Communications, Inc.,
a Florida corporation
TABLE OF CONTENTS
Page
Definitions
1.1 Definitions........................................ 1
1.2 Construction....................................... 3
Purchase and Sale of Shares
2.1 Shares............................................. 3
2.2 Purchase Price..................................... 3
2.3 Post-Closing Adjustment............................ 4
2.4 Disputes with Respect to Post-Closing Adjustment... 4
Closing, Delivery of Shares
3.1 Location........................................... 5
3.2 Deliveries at Closing by Buyer and Able Telcom..... 5
3.3 Deliveries at Closing by Sellers and the Company... 5
3.4 Timing of Deliveries at Closing.................... 6
Representations and Warranties of Sellers
4.1 Corporate Status of the Company.................... 6
4.2 Legal Capacity of Sellers.......................... 6
4.3 Authority Concerning this Agreement................ 6
4.4 Binding Effect..................................... 6
4.5 Shares; Capitalization............................. 7
4.6 Subsidiaries and Investments....................... 7
4.7 No Violation....................................... 7
4.8 Financial Statements............................... 7
4.9 Assets............................................. 8
4.10 Liabilities........................................ 8
4.11 No Adverse Change.................................. 8
4.12 Taxes.............................................. 10
4.13 Real Property...................................... 10
4.14 Intellectual Property.............................. 11
4.15 Contracts, Leases and Commitments.................. 11
4.16 Customers and Suppliers............................ 12
4.17 Accounts Receivable................................ 12
4.18 Permits; Compliance with Law....................... 12
4.19 Employees.......................................... 12
4.20 Insurance.......................................... 13
4.21 Litigation......................................... 13
4.22 Transactions with Affiliates....................... 13
4.23 Books and Records.................................. 13
4.24 Improper Payments.................................. 13
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4.25 Officers and Directors; Bank Accounts, etc......... 14
4.26 No Misstatements................................... 14
4.27 Securities Laws.................................... 14
Representations and Warranties of Buyer and Able Telcom
5.1 Corporate Status of Buyer and Able Telcom.......... 14
5.2 Authority Concerning this Agreement................ 14
5.3 No Violation....................................... 15
5.4 Governing Documents of Buyer and Able Telcom....... 15
5.5 Capitalization..................................... 15
5.6 Periodic Reports................................... 15
5.7 Securities......................................... 15
5.8 Litigation......................................... 15
5.9 No Misstatements................................... 16
Covenants of Seller
6.1 September 30, 1996 Financial Statements............ 15
6.2 Profit Sharing Plan................................ 16
6.3 Transfer of Promissory Note........................ 16
6.4 Payment of Notes Payable........................... 16
6.5 Restrictive Covenants.............................. 17
Covenants of Buyer and Able Telcom
7.1 Piggy Back Registration Rights..................... 17
7.2 Profit Sharing Plan................................ 18
7.3 Indemnification of Personal Guarantees............. 18
7.4 Information Available for Closing Balance Sheet.... 19
Miscellaneous Provisions
8.1 Nature and Survival of Representations and
Warranties......................................... 19
8.2 Further Actions.................................... 19
8.3 Brokers............................................ 19
8.4 Indemnification.................................... 19
8.5 Notices............................................ 21
8.6 Miscellaneous...................................... 22
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List of Schedules and Exhibits
Schedules
Schedule 4.5: Capitalization
Schedule 4.6: Subsidiaries and Investments
Schedule 4.8: Financial Statements
Schedule 4.7: Violations of contracts or laws
Schedule 4.9: Exceptions to title to assets
Schedule 4.11: Adverse changes since the Audited Balance Sheet Date
Schedule 4.10: Liabilities not listed on financial statements
Schedule 4.12: Exceptions to tax representation
Schedule 4.13: Real Property (Leases)
Schedule 4.14: Intellectual Property
Schedule 4.15: Material Contracts
Schedule 4.17: Exceptions to representation regarding accounts receivable
Schedule 4.18: Permits
Schedule 4.19: Employees
Schedule 4.20: Insurance policies
Schedule 4.21: Litigation
Schedule 4.22: Affiliate Transactions
Schedule 4.25: Bank Accounts
Schedule 4.25: Officers, Directors, Bank Accounts
Schedule 5.8: Buyer Litigation
Exhibits
Exhibit 2.2(b): Promissory Note
Exhibit 3.2(d): Lease
Exhibit 3.2(e): Employment and Consulting Agreements
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THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated as of November
30, 1996, by and between Telecommunication Services Group, Inc., a Florida
corporation ("Buyer); Able Telcom Holding Corp., a Florida corporation ("Able
Telcom"), each of Buyer and Able Telcom having its principal place of business
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, each an individual resident of ▇▇▇▇ County, Florida (each a
"Sellers" and collectively, "Sellers"); and Dial Communications, Inc., a Florida
corporation having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (the "Company").
R E C I T A L S
WHEREAS, the Company is engaged in the business of outside plant
telecommunication and electrical utility construction, inside plant premise
wiring and station moves, add and changes, directional boring for general
utilities, and general utility construction (e.g. water, storm drains) (the
"Business");
WHEREAS, the parties have entered into a letter of intent dated October 3,
1996 (the "Letter of Intent") providing for, among other things, the purchase by
Buyer of all of the outstanding capital stock of the Company, consisting of
5,000 shares of common stock, par value $0.10 per share (the "Shares");
WHEREAS, Sellers wish to sell, and Buyer wishes to purchase, the Shares
for the purchase price and upon the terms and subject to the conditions
described in this Agreement, as contemplated by the Letter of Intent;
NOW, THEREFORE, in consideration of the premises and the mutual promises,
terms, and conditions herein made, the parties, intending to be legally bound,
agree as follows:
ARTICLE I
Definitions
1.1 Definitions. As used in this Agreement, the following terms have the
meanings specified in this Section . All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
(a) "Able Telcom Shares" means shares of common stock of Able Telcom, par
value $.01 per share.
(b)"Audited Balance Sheet" has the meaning given that term in Section 6.1.
(c) "Audited Balance Sheet Date" has the meaning given that term in
Section 6.1.
(d) "Buyer's Documents" means this Agreement or any Schedule, Exhibit,
certificate or document delivered by Buyer or Able Telcom in connection
herewith.
(e) "Cash Consideration" has the meaning given that term in Section 2.2.
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(f) "CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as amended.
(g) "CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List pursuant to CERCLA.
(h) "Closing" has the meaning given that term in Section 3.1.
(i) "Closing Date" has the meaning given that term in Section 3.1.
(j)"Closing Balance Sheet" has the meaning given that term in Section 2.3.
(k) "Code" means the Internal Revenue Code of 1986, as amended, or any
predecessor or successor federal income tax law.
(l) "Computed Value," with respect to a share of common stock of Able
Telcom, means the average, over the ten business days immediately preceding the
date on which Computed Value is to be determined, of the average high bid price
and low ask price for such share as reported on the Nasdaq National Market
System.
(m) "ERISA" means Title I, Title II, Title III and Title IV of the
Employee Retirement Income Security Act of 1974, as amended;
(n) "Encumbrance" means any liability, debt, mortgage, security interest,
lien, claim, encumbrance, title defect, pledge, charge, assessment, covenant,
encroachment and burdens of any kind or nature whatsoever.
(o) "Environmental Law" means any applicable federal, state, and local
law, regulation or ordinance relative to air quality, water quality, solid waste
management, hazardous or toxic substances or the protection of health or the
environment, including, but not limited to, CERCLA, the Hazardous Material
Transportation Act (49 U.S.C. ss. 1801 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. ss. 1251 et seq.), the Resource Conservation and Recovery
Act of 1976, as amended (42 U.S.C. ss. 6901 et seq.), the Clean Air Act, as
amended (42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C. ss. 2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. ss. 136 et seq.), and the Clean Water Act
of 1977, as amended (33 U.S.C. ss. 1251 et seq.), as these laws may have been
amended or supplemented through the Closing Date, and any analogous state or
local statutes and the regulations promulgated pursuant thereto.
(p) "GAAP" means United States generally accepted accounting principles.
(q) "Governing Documents" means the certificate or articles of
incorporation, bylaws, deed of trust, formation or governing agreement and other
charter documents or organization or governing documents or instruments.
(r) "Governmental Body" means any court, government (federal, state, local
or foreign), department, commission, board, bureau, agency, arbiter appointed
pursuant to mandatory provisions of law, official or other regulatory,
administrative or governmental authority or instrumentality.
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(s) "Hazardous Substance" means any hazardous substances or chemical as
defined by any Environmental Law and including petroleum, any petroleum-related
material, crude oil or any fraction thereof and any toxic or polluting substance
or other material hazardous to human health or the environment.
(t) "Intellectual Property" has the meaning given that term in Section
4.14.
(u) "Losses" means losses, liabilities, claims, actions, penalties,
assessments, liens, damages, and expenses, including, without limitation,
reasonable attorneys' fees and disbursements.
(v) "Permits" has the meaning given that term in Section 4.18.
(w) "Person" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, any other legal entity, or
a Governmental Body.
(x) "Post-Closing Adjustment" has the meaning given that term in Section
2.3.
(y) "Reviewed Balance Sheet" has the meaning given that term in Section
4.8.
(z) "Reviewed Balance Sheet Date" has the meaning given that term in
Section 4.8.
(aa) "Sellers' Documents" means this Agreement or any Schedule, Exhibit,
certificate or document delivered by the Company or Sellers in connection
herewith.
(ab) "Stock Consideration" has the meaning given that term in Section
2.2(c).
1.2 Construction. As used herein, unless the context otherwise requires: (i)
references to "Article" or "Section" are to an article or section hereof; (ii)
all "Exhibits" and "Schedules" referred to herein are to Exhibits and Schedules
attached hereto and are incorporated herein by reference and made a part hereof;
(iii) "include," "includes" and "including" are deemed to be followed by
"without limitation" whether or not they are in fact followed by such words or
words of like import; and (iv) the table of contents, captions and other
headings of the various articles, sections and other subdivisions hereof are for
convenience of reference only and shall not modify, define or limit, or affect
the interpretation of any of the terms, meaning or provisions hereof.
ARTICLE II
Purchase and Sale of Shares
2.1 Shares. Subject to the terms and conditions of this Agreement, at the
Closing (as hereafter defined), Sellers shall sell, convey, assign, transfer,
and deliver to Buyer, and Buyer shall purchase from Sellers, all of the Shares,
free and clear of any Encumbrance.
2.2 Purchase Price. In full consideration for the Shares and the covenants,
representations and warranties contained in this Agreement, Buyer and Able
Telcom shall pay, at the Closing, to Sellers:
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(a) By wire transfer or otherwise in immediately available funds, cash in
the amount of $3,000,000 (subject to adjustment as provided herein) (the
"Cash Consideration").
(b) A Promissory Note in the amount of $892,000 in the form attached hereto
as Exhibit 2.2(b) (the "Promissory Note"); and
(c) A certificate representing a number of Able Telcom Shares having a
Computed Value as of the date five business days before the Closing Date of
$893,000 (the "Stock Consideration").
2.3 Post-Closing Adjustment.
(a) No later than 60 days after the Closing, Seller shall deliver to Buyer
(prepared at Buyer's expense) an audited balance sheet of the Company as of
November 30, 1996 (the "Closing Balance Sheet"). The Closing Balance Sheet shall
be prepared in accordance with GAAP. Without limiting the generality of the
foregoing:
(i) Liabilities. All liabilities of the Company (whether accrued,
unmatured, contingent, or otherwise and whether due or to become due) will be
adequately reserved against in accordance with GAAP or disclosed and included in
the Closing Balance Sheet.
(ii) Assets. The assets of the Company will be reflected on the
Closing Balance Sheet or, under GAAP, will not be required to be reflected
thereon.
(iii) Taxes. All unpaid federal, foreign, state, local, and other
taxes, fees, assessments, duties, and other similar governmental charges payable
by the Company or which will, with the passage of time, become payable by the
Company (including interest and penalties) as of November 30, 1996 whether or
not disputed with respect to any period prior to the Closing Balance Sheet Date
will be adequately reserved against in accordance with GAAP and included in the
Closing Balance Sheet. The results of all prior audits by the Internal Revenue
Service and the relevant state, local and foreign tax authorities will be
properly reflected in the Audited Balance Sheet.
(iv) Accounts Receivable. All of the Company's accounts receivable
will be reflected in the Closing Balance Sheet in accordance with GAAP.
(b) If the value of the shareholders' equity before restatement as set
forth on the Closing Balance Sheet is less than $1,700,000, then, within ten
days after the receipt of the Closing Balance Sheet by both Buyer and Sellers,
Sellers shall deliver to Buyer in immediately available funds the sum equal to
the amount of such difference. The obligation of Sellers set forth in the
previous sentence shall be joint and several between them. If the value of the
shareholders' equity before restatement as set forth on the Closing Balance
Sheet is greater than $1,700,000, then, within ten days after the receipt of the
Closing Balance Sheet by both Buyer and Sellers, Buyer or Able Telcom shall
deliver to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as bonus compensation the sum equal to the amount
of such difference. (The amount payable by Sellers or Buyer and Able Telcom here
under is referred to herein as the "Post-Closing Adjustment"). The obligation of
Buyer and Able Telcom as set forth in the previous sentence shall be joint and
several between them. If the Post-Closing Adjustment is payable by Buyer or Able
Telcom hereunder, the first $300,000 of the Post-Closing Adjustment shall be
made in immediately available funds, the remainder shall be in the form of a
promissory note in substantially the form attached hereto as the Promissory
Note.
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2.4 Disputes with Respect to Post-Closing Adjustment. If any disagreement
concerning the amount of the Post-Closing Adjustment is not resolved by Buyer
and Sellers within ten business days following the receipt by Sellers of the
Closing Balance Sheet, the undisputed amount shall be distributed or paid, as
the case may be, on such 10th business day as provided in Section 2.3(in the
case of a dispute as to the Post-Closing Adjustment). Within ten business days
thereafter, the party disputing the amount (the "Disputing Party") shall
engage(on standard terms and conditions for a matter of such nature) a firm of
independent accountants to resolve such dispute. The firm of independent
accountants shall be proposed in writing by the Disputing Party to the other
party. In the absence of prompt agreement on the identity of the independent
accountants, the parties shall choose an independent accountant as may be
agreed. The resolution by such independent accounting firm of such dispute shall
be final, binding
and conclusive upon the parties. The engagement agreement with the independent
accountants shall require the independent accountants to make their
determination with respect to the items in dispute within 90 days following
their engagement.
ARTICLE III
Closing, Delivery of Shares
3.1 Location. The closing hereunder (the "Closing") shall take place at 10:00
A.M. on or before the 2nd day of December, 1996 (the "Closing Date") at the
offices of Holland & Knight, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ or
at such other time and place as may be agreed by Buyer and Seller.
3.2 Deliveries at Closing by Buyer and Able Telcom. In addition to this
Agreement, at the Closing, Buyer and Able Telcom shall deliver to Sellers the
following documents:
(a) The Cash Consideration;
(b) The Stock Consideration;
(c) The Promissory Note;
(d) A duly executed copy of the Lease in the form attached hereto as
Exhibit 3.2(d);
(e) A duly executed copy of an Employment and Consulting
Agreement in the form attached hereto as Exhibit 3.2(e);
(f) A certificate of the corporate Secretaries of Buyer and Able Telcom
setting forth true and correct copies of the Governing Documents of
such entities, the encumbancy of officers signing on behalf of such
entities, and the resolutions of the Board of Directors of such
entities authorizing the execution of this Agreement and the
consummation of the transations contemplated thereby;
(g) A certificate of the officers of Buyer and Able Telcom as to the
performance of their obligations hereunder; and
(h) Such other documents as Sellers may reasonably request.
3.3 Deliveries at Closing by Sellers and the Company. In addition to this
Agreement, at the Closing, Sellers and the Company shall deliver to Buyer and
Able Telcom the following documents:
(a) Certificates representing the Shares, duly endorsed to Buyer;
(b) A duly executed copy of the Lease in the form attached hereto as
Exhibit 3.2(d);
(c) A duly executed copy of an Employment and Consulting Agreement in the
form attached hereto as Exhibit 3.2(e);
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(d) A certificate of the corporate Secretary of the Company setting forth
true and correct copies of the Governing Documents of the Company, the
encumbancy of officers signing on behalf of the Company; and the
resolutions of the Board of Directors of the Company authorizing the
execution of this Agreement and the consummation of the transations
contemplated thereby;
(e) in form acceptable to Buyer and Able Telcom, written consents,
waivers, permits and approvals from third parties or governmental or
administrative authorities and evidence of the filing of all notices
and other governmental filings necessary to transfer any of the Shares
or to otherwise consummate the transactions contemplated hereby
including, without limitation, any consents necessary to transfer and
continue in effect all contracts listed on any Schedule to this
Agreement as in effect on the date hereof;
(f) a writing containing the results of the examination of the Internal
Revenue Service of the Tax Audit;
(g) A certificate of the Sellers and the Company as to the performance of
their obligations hereunder; and
(h) Such other documents as Sellers may reasonably request.
3.4 Timing of Deliveries at Closing. All deliveries shall be deemed to be
undertaken simultaneously and no delivery shall be deemed to have occurred
unless and until all other required deliveries have taken place. Upon the
Closing, unless otherwise agreed in writing at the Closing, all documents to be
delivered at the Closing shall be deemed to have been delivered and the party
entitled to receive any document required herein to be delivered shall have
waived rights to such delivery.
ARTICLE IV
Representations and Warranties of Sellers
and the Company
Sellers and the Company represent, warrant and agree, as follows:
4.1 Corporate Status of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. The Company is qualified to do business and in good standing in each
jurisdiction where the Company operates its business. The Company has all
requisite corporate power and authority to own, operate and lease its properties
and assets, to conduct its business as it is now being conducted, to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
4.2 Legal Capacity of Sellers. Sellers each have the legal capacity to own
and hold the Shares and to execute, deliver and perform their obligations under
this Agreement and to consummate the transactions contemplated hereby.
4.3 Authority Concerning this Agreement. The execution, delivery and
performance by the Company of this Agreement and any Sellers' Document executed
by the Company, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized and approved by all necessary
corporate action of the Company.
4.4 Binding Effect. This Agreement is (and, when executed and delivered, each
Sellers' Document will be) valid and binding upon the Company and the Sellers
and enforceable, in accordance with their respective terms, against the Company
and the Sellers except to the extent that enforcement thereof may be limited by
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applicable bankruptcy, reorganization, insolvency or moratorium laws, or other
laws affecting the enforcement of creditors' rights or by the principles
governing the availability of equitable remedies.
4.5 Shares; Capitalization. The authorized capital stock of the Company
consists solely of 25,000 shares of common stock, $0.10 par value per share, of
which 5,000 shares are issued and outstanding. Five thousand shares of capital
stock are held in the Company's treasury. All of the Shares are owned of record,
legally and beneficially by Sellers in amounts set forth on Schedule 4.5 hereof.
The Shares are free and clear of any and all Encumbrances, and upon delivery of
the Shares hereunder, Buyer will acquire title thereto, free and clear of any
and all Encumbrances. Other than voting rights, redemption rights and such other
rights conferred by the Company's charter documents and by applicable Florida
Statutes, there exist no Securities Rights with respect to the Shares. All
rights and powers to vote
the Shares are held exclusively by Sellers. All of the Shares are validly
issued, fully paid and nonassessable, were not issued in violation of the terms
of any agreement or other understanding, and were issued in compliance with all
applicable federal and state securities or "blue sky" laws and regulations. The
certificates representing the Shares to be delivered to Buyer at the Closing
are, and the signatures and endorsements thereof or stock powers relating
thereto, will be valid and genuine.
4.6 Subsidiaries and Investments. Except as set forth on Schedule 4.6 the
Company does not own or control (directly or indirectly), nor has it ever owned
or controlled (directly or indirectly), any shares of capital stock of, or other
equity interest in, any corporation, partnership, joint venture or other entity.
4.7 No Violation. The authorization, execution, delivery, and performance of
this Agreement and any Sellers' Document, and the consummation of the
transactions as contemplated hereby and thereby, do not and will not (1) violate
any of the provisions of the Governing Documents of the Company; (2) except as
set forth in Schedule 4.7 violate, conflict with, result in the breach of or
constitute a default under, require any notice or consent under, give rise to a
right of termination of, or accelerate the performance required by, any terms or
provisions of any material agreement, instrument, or writing of any nature to
which the Company is a party or is bound; (3) violate, or result in the breach
of, conflict with, or require any notice, filing or consent under any statute,
rule, regulation or other provision of law, or any order, judgment or other
direction of a court or other tribunal; (4) any other governmental requirement,
permit, registration, license or authorization applicable to the Company, or any
of its assets or the Business; or (5) result in the creation of any lien, claim,
encumbrance, or restriction on any of the Company's assets. Neither Seller is,
and the Company is not, party to any non-competition or similar agreement which
in any way restricts the operation of the Business.
4.8 Financial Statements. Schedule 4.8 contains true copies of the balance
sheets of the Company as at December 31, 1995, 1994 and 1993 and the related
statements of income, and retained earnings and statements of cash flows for the
fiscal years ended December 31, 1995, 1994 and 1993. The financial statements
included on Schedule 4.8 are collectively referred to as the "Financial
Statements." The Financial Statements have been reviewed by Law ▇▇▇▇ & Crona,
P.A. Certified Public Accountants (the Company's balance sheet as at December
31, 1995 is hereinafter referred to as the "Reviewed Balance Sheet" and December
30, 1995 as the "Reviewed Balance Sheet Date"). Each of the foregoing Financial
Statements is complete and correct, is in accordance with the Company's books
and records, has been prepared in accordance with GAAP and presents fairly the
financial position, and the results of operations and cash flows of the Company
as of the dates and for the fiscal periods indicated.
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4.9 Assets. Except as described in Schedule 4.9 hereto, the Company has good
and marketable title to all its assets (or,with respect to any personal property
leases, a valid leasehold interest therein), free and clear of any and all
Encumbrances. The Company's assets constitute all of the assets that are used in
connection with the operation of the Business. The assets of the Company are
reflected on the Financial Statements and will be reflected on the Audited
Balance Sheet and the Closing Balance Sheet or, under GAAP, are not required to
be reflected thereon.
4.10 Liabilities. The liabilities of the Company (whether accrued, unmatured,
contingent, or otherwise and whether due or to become due) are either set forth
on Schedule 4.10 or adequately reserved against and included in the Financial
Statements. All such liabilities will be reserved against and or disclosed in
the Audited Balance Sheet and the Closing Balance Sheet, in accordance with
GAAP.
4.11 No Adverse Change. Since Audited Balance Sheet Date and the date hereof,
except as set forth on Schedule 4.11, the Company has operated its business
diligently and only in the ordinary course of business as theretofore conducted,
and the Company has not and through the Closing Date shall not have:
(i) experienced any damage, destruction or loss of more than $20,000
in the aggregate (whether or not covered by insurance) or other material adverse
change in its financial condition, or its assets, properties, liabilities, sales
or purchase commitments, earnings, net worth, Business or prospects;
(ii) incurred any obligation or liability of more than $25,000
(whether absolute, accrued, contingent or otherwise and whether due or to become
due) other than obligations or liabilities incurred in the ordinary course of
business and consistent with past practices and which are of similar kinds and
amounts as those set forth in the Audited Balance Sheet;
(iii) failed to maintain its books, accounts and records in the usual,
regular and ordinary manner and in accordance with good business practices and
consistent with past practice;
(iv) except in the ordinary course of business, transferred or applied
any cash or other assets to the direct or indirect payment, discharge,
satisfaction or reduction of any amount payable directly or indirectly to or for
the benefit of the Company or either Seller;
(v) incurred any indebtedness for borrowed money (other than
borrowings in the ordinary course of business consistent with past practices);
(vi) experienced any strike or work stoppage or slowdown or loss of
employees or customers which adversely affects or could adversely affect the
Company or the Business or operations of the Company;
(vii) sold, assigned, mortgaged, transferred, encumbered or granted a
security interest in any asset of the Company to any party except for payments
of third party obligations incurred in the ordinary course of business, in
accordance with the regular payment practices of the Company, and dispositions
of inventory in the ordinary course of business; nor sold, assigned, transferred
or let lapse or otherwise disposed of any Intellectual Property.
(viii) permitted any write-down of the value of any inventory of the
Company, or any write-off as uncollectible of any notes or accounts receivable
or any portion thereof, except for write-downs and write-offs in the ordinary
course of business, consistent with past practice and not involving material
amounts;
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(ix) forgiven or canceled any material debts or claims or terminated
or waived any rights of value to the business of the Company;
(x) suffered any material adverse effects to the Business, assets, or
prospects of the Company as a result of the adoption of any statute, rule,
regulation or order;
(xi) except as otherwise set forth in this agreement or any Schedule
thereto, incurred any general increase in the compensation of, or benefits for,
employees or independent contractors performing services for the Company
(including, without limitation, any material increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment); nor, specifically, granted
any increase in any
compensation or benefits payable to any individual, officer, manager, employee,
consultant, agent or broker of the Company having annual remuneration in excess
of $10,000;
(xii) incurred any capital expenditure or commitment in excess of
$25,000 for additions to or replacements of property, plant or equipment of the
Company;
(xiii) incurred any commitments for the future purchase of goods or
services involving more than $25,000 other than purchase orders placed in the
ordinary course of business for the acquisition of inventory necessary to meet
current requirements;
(xiv) implemented any change in the accounting methods or practices
followed by the Company or any change in depreciation or amortization policies
or rates theretofore adopted;
(xv) prepaid any liability or obligation or payment of any trade debt
other than in accordance with the Company's usual or customary practices;
(xvi) incurred any accepted purchase order or quotation, arrangement
or understanding for the future sale of services or products of the Company that
has not shown a gross profit or which the Company expects will not be
profitable;
(xvii) entered into, made any amendment of or terminated any lease,
license or contract which is listed or should have been listed, on any Schedule
hereto;
(xviii) suffered any loss or become aware of any prospective loss of
any customers that individually account for in excess of 1.0% of gross sales for
fiscal year 1996 or in the aggregate account for in excess of 3.0% of gross
sales for fiscal year 1996;
(xix) suffered any loss or become aware of any prospective loss of any
sales or management personnel;
(xx) entered into any other transaction other than in the ordinary
course of business consistent with past practice;
9
(xxi) suffered any material adverse change in the financial condition
or results of operations of the Company or its assets, liabilities, earnings,
properties, net worth, business, operations or prospects; or
(xxii) agreed to or permitted any of the foregoing.
4.12 Taxes. The Company has properly filed all federal, foreign, state,
local, sales, use and other tax returns and reports which are required to be
filed by it; all of the foregoing are true, correct, and complete; and all
taxes, interest, and penalties due and payable as shown on such returns or
claimed to be due by any taxing authority have been timely paid. All unpaid
federal, foreign, state, local, and other taxes, fees, assessments, duties, and
other similar governmental charges payable by the Company or which will, with
the passage of time, become payable by the Company (including interest and
penalties) whether or not disputed with respect to any period prior to the
Closing Balance Sheet Date, have been adequately reserved against in accordance
with GAAP and will be included in the Closing Balance Sheet. There are no
outstanding waivers or extensions of time with respect to the assessment or
audit of any tax or tax return of the Company, or claims now pending or matters
under discussion with any taxing authority in respect of any tax of the Company.
The Company has furnished to Buyer true copies of the
federal, foreign, state, and local tax returns of the Company for the three
fiscal years ended on Reviewed Balance Sheet Date. Buyer will not incur or be
obligated for, and the assets of the Company will not be subject to, any sales,
use or other tax or excise in connection with the acquisition of the Shares.
Except as set forth on Schedule 4.12, the Company has not received any notice of
any failure to file any such return or report or failure to pay any taxes or
assessments. Except for a currently pending examination and audit by the
Internal Revenue Service of the Company's tax return for fiscal years 1994 and
1995 (the "Tax Audit"), the Company is not the subject of any pending or
threatened tax examination nor is the Company a party to any proceeding or
inquiry by any government for the assessment or the proposed assessment or for
the collection of taxes, or interest or penalties with respect thereto, nor has
any claim for the assessment or proposed assessment or for the collection of
taxes, or interest or penalties with respect thereto, been asserted against the
Company. There are no liens for taxes that are due and unpaid on any of the
properties or assets of the Company. Except in connection with the Tax Audit,
the United States federal income tax returns of, and the state, local and
foreign tax returns filed by, the Company have not been audited by the United
States Internal Revenue Service or the relevant state, local and foreign tax
authorities for any fiscal years of the Company ended on or after December 31,
1991, which are the only fiscal years which are open and subject to audit or for
which the statutes of limitations for claims for tax deficiencies have not yet
expired. The results of all prior audits by the Internal Revenue Service and the
relevant state, local and foreign tax authorities are properly reflected in the
Financial Statements and any deficiencies proposed or assessed have been paid
(and any receivable from the Internal Revenue Service as a result of such audits
has been accrued). Neither the Company nor any predecessor corporation has ever
filed any consent pursuant to Section 341(f) of the Internal Revenue Code of
1986, as amended or any predecessor statute. None of the Company's assets are
subject to a safe harbor leasing transaction under Section 168 of the Internal
Revenue Code.
4.13 Real Property. Schedule 4.13 sets forth a list and summary description
(showing the record title holder) of all real properties currently owned, used
or leased by the Company or in which the Company has an interest (collectively,
the "Real Property"). The Company has good and marketable fee simple title to
all Real Property shown as owned by it on Schedule 4.13, free and clear of all
Encumbrances except those set forth on Schedule 4.13. The Company has the right
to quiet enjoyment of all Real Property in which it holds a leasehold interest
for the full term, and all leases or agreements with respect thereto are in full
force and effect in accordance with their respective terms. Copies of all title
insurance policies written in favor of the Company and all surveys relating to
the Real Property owned by the Company have been delivered to Buyer. All
10
structures and other improvements on all Real Property owned by the Company are
within the lot lines and do not encroach on the properties of any other person,
and the use and operation of all Real Property conform to all applicable
building, zoning, safety and subdivision laws, Environmental Laws and other
laws, and all restrictions and conditions affecting title. The Company has not
received any written or oral notice of assessments for public improvements
against any Real Property. All work required to be done by the Company as
landlord or tenant has been duly performed. No condemnation or other proceeding
is pending or threatened, which would affect the use of any such property by the
Company.
4.14 Intellectual Property. The Company owns or is licensed to use all
patents, trademarks, copyrights, trade names, service marks and other trade
designations, including common law rights, registrations, applications for
registration, technology, know-how or processes necessary to conduct the
Business ("Intellectual Property"), free and clear of and without conflict with
the rights of others. Each item of Intellectual Property owned or used by the
Company immediately prior to the Closing shall be owned or available for use by
Buyer on identical terms and conditions immediately subsequent to the Closing.
To its knowledge, the Company has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
Rights of third parties, and the Company has not received any charge, complaint,
claim, demand or notice alleging any such interference, infringement,
misappropriation or violation. No third party has interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Intellectual
Property rights of the Company. Schedule 4.14 hereto contains a true and
correct description of the following:
(a) All Intellectual Property currently owned, in whole or in part, by the
Company and all licenses, royalties, assignments and other similar agreements
relating to the foregoing to which the Company is a party; and
(b) All agreements relating to Intellectual Property that the Company is
licensed or authorized to use from others or which the Company licenses or
authorizes others to use.
4.15 Contracts, Leases and Commitments. The Company has furnished to Buyer
true copies of all material contracts, leases, agreements and commitments to
which the Company is a party or by which it or its assets are bound or which
otherwise relate to the Business, which contracts, leases and commitments are
listed in Schedule 4.15, including summaries of the terms of any unwritten
commitments. (For purposes of this Section 4.15, a contract, lease, agreement or
commitment is "material" if it obligates or could obligate any party thereto to
pay to another party thereto consideration valued in the aggregate at more than
$5,000 in any one year.) Except as set forth in Schedule : (1) the Company and
the other parties thereto, have complied in all material respects with all of
the Company's contracts, leases, and commitments, all of which are valid and
enforceable; (2) all of the Company's contracts, leases, and commitments are in
full force and effect and there exists no event or condition which with or
without notice or lapse of time would be a default thereunder, give rise to a
right to accelerate or terminate any provision thereof, or give rise to any
lien, claim, encumbrance, or restriction on any of the assets or properties of
the Company; (3) all of the Company's contracts, leases, and commitments have
been entered into on an arm's-length basis; and (4) none of the Company's
purchase commitments is in excess of the normal requirements of its business or
at an excessive price. Except for purchase orders or sales orders or invoices
made, taken, or received by the Company in the ordinary course of its business
consistent with past practice, the Company is not a party, nor are any of its
assets or the Business subject, to any contract, lease, or commitment not listed
in such Schedule (including, without limitation, financing or security
11
agreements or guaranties, repurchase agreements, agency agreements,
manufacturers' representative agreements, commission agreements, employment, or
collective bargaining agreements, pension, bonus, or profit-sharing agreements,
group insurance, medical or other fringe benefit plans, and leases of real or
personal property).
4.16 Customers and Suppliers. The Company is engaged in no material disputes
with any customers or suppliers. To the knowledge of Sellers and the Company, no
customer or supplier is considering termination, non-renewal, or any adverse
modification of its arrangements with the Company, and the transactions
contemplated by this Agreement will not have a material adverse effect on the
Company's relationship with any of its suppliers or customers.
4.17 Accounts Receivable. Except as set forth in Schedule 4.17 hereto, all
of the Company's accounts receivable, other than amounts due from shareholders
or from the Internal Revenue Service, have arisen in the ordinary course of
business and are reflected in the Company's Financial Statements and will be
reflected on the Audited Balance Sheet and the Closing Balance Sheet in
accordance with GAAP. All such accounts receivable to be reflected on the
Closing Balance Sheet will be bona fide, valid and binding receivables
representing obligations for the face dollar amount thereof and will be
collected in full within a reasonable time from their due date and are subject
to no defenses, counterclaims or set-offs of any nature whatsoever, other than
ordinary disputes arising in the ordinary course of business, which disputes
will not effect whether such accounts may be collected.
4.18 Permits; Compliance with Law. The Company holds all permits,
certificates, licenses, franchises, privileges, approvals, registrations and
authorizations required under any applicable law in connection with the
operation of its assets and Business ("Permits"). All Permits of the Company are
listed on Schedule 4.18. Each Permit is valid, subsisting and in full force and
effect. The Company is in compliance with and has fulfilled and performed its
obligations under each Permit, and no event or condition or state of facts
exists (or would exist upon the giving of notice or lapse of time or both) that
could constitute a breach or default under any Permit. The Business is and has
been operated in material compliance therewith and all laws and regulations
(federal, state, local, and foreign) applicable to it, and all required reports
and filings with governmental authorities have been properly made. No
investigation, proceeding or review is currently in effect or threatened (a)
with respect to alleged violation by the Company of any law or Permit or (b)
with respect to any alleged failure by the Company to have any Permit, except
for those that, in the aggregate, will not have a material adverse effect on the
Company, its business or operations. No event has occurred or condition or state
of facts exists that could give rise to any such violation of any law or Permit.
4.19 Employees. Schedule 4.19 hereto contains a list of the names , office
locations, compensation, and date of hire of all full- and part-time employees
of the Company as of a date no earlier than 15 days prior to the date hereof and
a description of all employee "perks" or other benefit practices. No strike or
labor dispute involving the Company has occurred during the last three years or
is threatened. Except as set forth on Schedule 4.19, none of the Company's
employees are covered by any union or collective bargaining agreement. No key
employee of the Company has indicated to the Company that he or she is
considering terminating his or her employment with the Company. The Company has
complied with applicable wage and hour, equal employment, safety, and other
legal requirements relating to its employees. The consummation of the
transactions contemplated by this Agreement will not give rise to any liability
of the Company for severance pay or termination pay.
12
4.20 Insurance. Schedule 4.20 hereto contains a complete and correct list
of all policies of insurance of any kind or nature covering the Company,
including, without limitation, policies of life, fire, theft, casualty, product
liability, workmen's compensation, business interruption, employee fidelity, and
other casualty and liability insurance, indicating the type of coverage, name of
insured, the insurer, the premium, the expiration date of each policy and the
amount of coverage. All such policies (i) are with insurance companies
reasonably believed by the Company and the Sellers to be financially sound and
reputable and are in full force and effect; (ii) are sufficient for compliance
with all requirements of law and of all applicable leases, mortgages and other
agreements; (iii) are valid, outstanding and enforceable policies; and (iv)
provide insurance coverage for the assets and operations of the Company in
amounts consistent with the past insurance practices of the Company. Complete
and correct copies of such policies have been furnished to Buyer. Since the
Audited Balance Sheet Date, the Company has not been denied any insurance
coverage which it has requested or made any material reduction in the scope or
change in the nature of its insurance coverage. Schedule 4.20 further states
whether the personal injury insurance maintained by the Company has been on an
"occurrence" or "claims made" basis during the one-year period prior to the date
hereof.
4.21 Litigation. Schedule 4.21 contains a complete and correct list of all
actions, suits, proceedings, claims, or governmental investigations pending or
threatened (i) against the Company or any of its assets, officers, or directors
or (ii) in connection with the Company's Business (provided that for the
purposes of this sentence, a lawsuit which has been filed but which has not been
served shall be deemed to be merely threatened and not pending and a
governmental investigation which has been initiated but for which no notice has
been given to the Company shall also be deemed to be merely threatened and not
pending). There are no facts or state of facts existing that (with or without
the giving of notice or the
passage of time or both) could form the basis for any such suit, proceeding,
action, claim or investigation.
4.22 Transactions with Affiliates. Except as set forth in Schedule 4.22 and
except for ordinary dealings with its employees, since the Audited Balance Sheet
Date, the Company has had no direct or indirect dealings with any key employee,
officer, director or shareholder of the Company or with any of their affiliates,
associates, or relatives. Except as set forth in Schedule 4.22 and except for
employment arrangements with its employees, the Company has no obligation to or
claim against any key employee, officer, director or shareholder of the Company,
or any of their affiliates, associates, or relatives, and no such person or
entity has any obligation to or claim against the Company. Schedule 4.22
reasonably describes the nature and extent of any products, services, or
benefits provided since the Audited Balance Sheet Date to the Company by any
such person or entity other than ordinary employment services and indicates
whether there was a corresponding charge equal to the value of such products,
services or benefits. To the knowledge of Sellers, none of any key employee,
officer, director or shareholder of the Company, or any of their affiliates,
associates, or relatives has any direct or indirect interest of any kind in any
business or entity which is engaged in business of the same nature as the
Business of the Company.
4.23 Books and Records. The books and records of the Company are complete and
correct in all material respects and have been maintained in accordance with
good business practices.
4.24 Improper Payments. The Company and its officers and agents have not made
any illegal or improper payments to, or provided any illegal or improper benefit
or inducement for, any governmental official, supplier, customer, or other
person, in an attempt to influence any such person to take or to refrain from
taking any action relating to the Company. The Company's employees may from time
to time have made customary holiday gifts of nominal value to suppliers or
customers.
13
4.25 Officers and Directors; Bank Accounts, etc. Schedule 4.25 hereto lists
all officers and directors of the Company; all bank accounts and safe deposit
boxes maintained by the Company and all authorized signatories therefor,
specifying their respective authority; and all credit cards under which
employees of the Company may incur liability, and the persons holding such
cards. Except for a power of attorney held by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ for purposes of
conducting business with the Internal Revenue Service, no person or entity holds
any general or special power of attorney from the Company.
4.26 No Misstatements. No representation, warranty, or other statement by the
Sellers or Company herein or in any Sellers' Document contains or will contain
an untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading. The Company is not aware of any matter that could reasonably be
expected to have a materially adverse effect on the Company's Business or
prospects that has not been disclosed in writing to Buyer.
4.27 Securities Laws. Each Seller is acquiring stock issuable as part of the
Stock Consideration for his own account, with the intent of holding such
securities for investment, and without the intent of participating, directly or
indirectly, in a distribution of such securities in any manner which would
violate federal or applicable state securities laws. Each Seller, by reason of
his business or financial experience, has the capacity to protect his interests
in connection with his purchase of such securities. Upon receipt of such
securities, each Seller will be the sole beneficial owner thereof. Each Seller
acknowledges that the offer and sale of such securities have not been and will
not be accomplished or accompanied by the means of any form of general or public
solicitations or advertisements.
ARTICLE V
Representations and Warranties of Buyer and Able Telcom
Buyer and Able Telcom represent, warrant and agree that:
5.1 Corporate Status of Buyer and Able Telcom. Each of Buyer and Able Telcom
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida. Buyer is qualified to do business and in good
standing in each jurisdiction where the operation of its business requires that
it be so qualified. Each of Buyer and Able Telcom has all requisite corporate
power and authority to own, operate and lease its properties and assets, to
conduct its business as it is now being conducted, to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby.
5.2 Authority Concerning this Agreement. The execution, delivery and
performance by Buyer and Able Telcom of this Agreement and any Buyer's Document
and the consummation of the transactions contemplated hereby and thereby, have
been duly and validly authorized and approved by all necessary corporate action.
This Agreement is (and, when executed and delivered, each Buyer's Document will
be) valid and binding upon Buyer and Able Telcom and enforceable against each of
Buyer and Able Telcom in accordance with their respective terms, except to the
extent that enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency or moratorium laws, or other laws affecting the
enforcement of creditors' rights or by the principles governing the availability
of equitable remedies.
14
5.3 No Violation. The authorization, execution, delivery, and performance of
this Agreement and any Buyer's Document and the consummation of the transactions
as contemplated hereby and thereby do not and will not (1) violate any of the
provisions of the Governing Documents of Buyer or Able Telcom; (2) violate,
conflict with, result in the breach of or constitute a default under, require
any notice or consent under, give rise to a right of termination of, or
accelerate the performance required by, any terms or provisions of any material
agreement, instrument, or writing of any nature to which Buyer or Able Telcom is
a party or is bound; (3) violate, or result in the breach of, conflict with, or
require any notice, filing or consent under any statute, rule, regulation or
other provision of law, or any order, judgment or other direction of a court or
other tribunal, or any other governmental requirement, permit, registration,
license or authorization applicable to Buyer or Able Telcom; or (4) result in
the creation of any lien, claim, encumbrance, or restriction on any of its
Assets.
5.4 Governing Documents of Buyer and Able Telcom. Buyer and Able Telcom have
heretofore delivered to Seller true and current copies of the Governing
Documents of Buyer and Able Telcom as in effect as of the date hereof.
5.5 Capitalization. The authorized capital of Buyer consists of 1,000 shares
of common stock, par value $0.01 per share, of which 800 shares are issued and
outstanding, all of which are owned by Able Telcom. The outstanding shares of
Buyer are validly issued, fully paid and nonassessable. No shares of the Buyer
are reserved for issuance for any purpose, nor are there any securities of Buyer
outstanding that are convertible into any class or series of stock of Buyer. The
authorized capital of Able Telcom is 25,000,000 shares of common stock, par
value .001 per share, of which 8,203,212 shares were outstanding as of November
26, 1996, and 1,000,000 shares of preferred stock, par value $.10 per share,
none of which are outstanding.
5.6 Periodic Reports. Able Telcom has heretofore provided to Sellers a true
and correct copy of all reports ("Exchange Act Reports") filed with the
Securities and Exchange Commission during the last twelve months pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Company has made no filings pursuant to the Securities Act
of 1933 during the last twelve months. No Exchange Act Report contains any
untrue statement of a material fact or fails to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading. The financial
statements of Able Telcom contained in its Exchange Act Reports or incorporated
by reference therein fairly present the results of operations and financial
position of Able Telcom for the periods covered by and as of the dates of such
financial statements, in accordance with GAAP consistently applied. Since
October 31, 1995, Able Telcom has timely filed all reports required to be filed
by it pursuant to the Exchange Act and the rules promulgated thereunder.
5.7 Securities. Able Telcom Shares, when issued and paid for pursuant to the
terms of this Agreement, will be duly authorized, validly issued, fully paid,
nonassessable and free and clear of all Encumbrances. In issuing the Stock
Consideration, Able Telcom will have complied with all state and federal laws
regulating the issuance and sale of securities.
5.8 Litigation. Except as set forth on Schedule 5.8, there is no material
litigation pending or threatened against Buyer or Able Telcom that is likely to
have a material adverse effect on the consolidated financial condition, results
of operations, or business or prospects of Buyer or Able Telcom, or to prevent
the consummation of the transactions contemplated hereby.
15
5.9 No Misstatements. No representation, warranty, or other statement by the
Buyer or Able Telcom herein or in any Buyers' Document contains or will contain
an untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading. Able Telcom is not aware of any matter that could reasonably be
expected to have a materially adverse effect on its business or prospects and
that is required to be disclosed in its Exchange Act Reports other than those
matters disclosed in such Exchange Act Reports.
ARTICLE VI
Covenants of Seller
6.1 September 30, 1996 Financial Statements. No later than five days prior to
the Closing, Sellers shall deliver to Buyer a balance sheet of the Company as at
September 30, 1996 and the related statements of income, retained earnings and
statements of cash flow for the nine-month period then ended (the Company's
balance sheet as at September 30, 1996 is referred to herein as the "Audited
Balance Sheet" and September 30, 1996 as the "Audited Balance Sheet Date"). The
Audited Balance Sheet shall be prepared in accordance with GAAP. Without
limiting the generality of the foregoing:
(i) Liabilities. All liabilities of the Company (whether accrued,
unmatured, contingent, or otherwise and whether due or to become due) will be
adequately reserved against in accordance with GAAP or disclosed and included in
the Audited Balance Sheet.
(ii) Assets. The assets of the Company will be reflected on the
Audited Balance Sheet or, under GAAP, will not be required to be reflected
thereon.
(iii) Taxes. All unpaid federal, foreign, state, local, and other
taxes, fees, assessments, duties, and other similar governmental charges payable
by the Company or which will, with the passage of time, become payable by the
Company (including interest and penalties) as of the Audited Balance Sheet Date
whether or not disputed with respect to any period prior to the Audited Balance
Sheet Date will be adequately reserved against in accordance with GAAP and
included in the Audited Balance Sheet.
The results of all prior audits by the Internal Revenue Service and the relevant
state, local and foreign tax authorities will be properly reflected in the
Audited Balance Sheet.
(iv) Accounts Receivable. All of the Company's accounts receivable
will be reflected in the Audited Balance Sheet in accordance with GAAP.
6.2 Profit Sharing Plan. Sellers shall continue to serve as trustees of the
Company's profit sharing plan and shall continue, in accordance with all
applicable laws, the termination of the Company's existing Profit Sharing Plan
as soon as practicable after the Closing.
6.3 Transfer of Promissory Note. Sellers agree that they will not negotiate
or transfer the Promissory Note or any interest therein until the expiration of
18 months from the date of the Closing except with the consent of Able Telcom,
which consent shall not be unreasonably withheld.
6.4 Payment of Notes Payable. At the time for payment of the Post-Closing
Adjustment, as provided in Section 2.3 hereof, Sellers shall pay in full all
notes payable by them to the Company.
16
6.5 Restrictive Covenants. The parties hereby acknowledge that the Company
carries on its business throughout the Central and North Florida (the
"Territory"), that the Company distributes and markets its products and services
throughout the Territory including, without limitation, the business of
underground construction throughout the Territory, and that a substantial
portion of the value of the Shares and the Business being purchased hereby is
the goodwill the Company has built up throughout the Territory and Buyer would
not be purchasing the Shares but for such goodwill. Accordingly, for three years
after the Closing Date, neither Seller shall:
(a) without the Buyer's prior written consent, by himself or herself or in
partnership or in conjunction with or as an employee, officer, director,
manager, consultant or agent of any other person, firm, corporation or other
entity, either directly or indirectly, undertake or carry on or be engaged or
have any financial or other interest in, or in any other manner advise or assist
any person, firm, corporation or other entity engaged or interested in, any
business, activity, or enterprise that is engaged in the business of the same
nature as the Business;
(b) directly or indirectly, for himself or herself or for any other person
or entity (i) attempt to employ, employ or enter into any contractual
arrangement with any employee or former employee of the Company or the Buyer
unless such employee or former employee has not been employed, by the Company,
the Buyer or its affiliates or predecessors in interest, for a period in excess
of six months nor (ii) call on or solicit any of the actual or targeted
prospective Customers (as hereafter defined) of the Company or the Buyer or its
affiliates or predecessors in interest with respect to any matters related to or
competitive with the Business. For the purposes of this subsection, the term
"Customer" shall mean any individual or entity to whom the Company has sold or
currently sells goods or services in connection with the Business.
(c) disclose to any other person any secret or confidential information
(including, without limitation, any trade secrets, customer or supplier lists,
pricing information, marketing arrangements, or strategies, business plans,
internal performance statistics, training manuals, or other information
concerning the Company or its affiliates that is competitively sensitive or
confidential, other than such information as is publicly available from a source
other than Sellers, the Company or its officers and directors) relating to the
Business or, without the prior written consent of Buyer, to disclose such
information to anyone other than (i) disclosure to Buyer and those designated by
Buyer, and (ii) any disclosure which is required by law.
ARTICLE VII
Covenants of Buyer and Able Telcom
7.1 Piggy Back Registration Rights.
(a) If, at any time or from time to time after the Closing, the Board of
Directors of Able Telcom shall authorize the filing of a registration statement
on any form for the general registration of securities (hereafter, as amended
and supplemented, referred to as a Registration Statement), under the Securities
Act of 1933, as amended (the "Securities Act") in connection with a proposed
public offering of any Able Telcom Shares, Able Telcom shall, in the case of
each such filing (i) notify Sellers of such authorization and (ii) at the
request in writing, not more than fifteen days after the date of the mailing of
such notification, of Sellers, include in the Registration Statement, to the
extent then permissible under the Securities Act and the rules and regulations
thereunder, to the extent permitted by, and on the terms and conditions then
required by, the managing underwriter of such offering, and to the extent that
it will not violate any contractual obligation of Able Telcom, a number of Able
Telcom Shares owned by Sellers ("Sellers' Shares") not to exceed (in the
aggregate for all such filings) half of the number of Able Telcom Shares
comprising the Stock Consideration.
17
(b) Able Telcom shall not be required to include any Sellers' Shares in
any Registration Statement unless Sellers agree, if so required by Able Telcom
(i) to offer and sell such Sellers' Shares to or through an underwriter selected
by Able Telcom and, to the extent possible, under substantially the same terms
and conditions (except as to expenses other than underwriting discounts) as
those under which the other securities included in such Registration Statement
are to be offered and sold and (ii) to comply with any arrangements with respect
to the offer and sale of the securities to be registered thereunder to which the
holders of such securities will be required to agree as a condition to the
inclusion of securities held by them in the Registration Statement.
(c) It shall be a condition precedent to Able Telcom's obligation to
register any Sellers' Shares pursuant to the provisions hereof that Sellers
shall provide promptly to Able Telcom such information as Able Telcom may
reasonably request at any time and from time to time upon reasonable prior
notice to enable it to comply with any applicable law or regulation or to
facilitate the preparation of the Registration Statement.
(d) Able Telcom shall pay all of the expenses of each Registration
Statement arising as a result of the inclusion of any Sellers' Shares, other
than underwriting discounts and applicable transfer taxes. Unless all of the
shares included in the Registration Statement are offered and sold to or through
the managing underwriter referred to in Section 7.1(a), Able Telcom shall amend
such Registration Statement or amend or supplement the prospectus forming a part
thereof, to the extent necessary to permit the Sellers' Shares included therein
to be sold pursuant thereto for a period of not less than ninety days after the
securities registered thereunder may first be sold.
(e) Able Telcom shall indemnify and hold harmless Sellers, in the event
Sellers' Shares are included in a Registration Statement, from and against, and
will reimburse Sellers with respect to, any and all Losses that are caused by
any untrue statement or allegedly untrue statement of any material fact
contained in such Registration Statement or that 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;
provided, however, that Able Telcom shall not be liable in any such case to the
extent that any such Losses arise out of or are based upon any untrue statement
or allegedly untrue
statement or any omission or alleged omission so made in conformity with
information furnished by Sellers specifically for use in the preparation
thereof.
7.2 Profit Sharing Plan. Buyer and Able Telcom shall not interfere or
hinder the performance of Sellers of their obligations pursuant to Section 6.2
hereunder.
7.3 Indemnification of Personal Guarantees. Buyer and Able Telcom shall
indemnify and hold Sellers harmless for any Loss incurred on personal guarantees
("Seller Guarantees") of any debt of the Company appearing on the Audited
Balance Sheet ("Company Debt"). At the Closing, Buyer and Able Telcom shall pay
and satisfy the Company's indebtedness to ▇▇▇▇▇▇▇ Bank, N.A., Tallahsassee,
Florida. Buyer and Able Telcom shall diligently seek and procure within a
reasonable time releases of all Seller Guarantees or otherwise shall cause
Company Debts with respect to which there are Seller Guarantees to be paid
within a reasonable time.
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7.4 Information Available for Closing Balance Sheet. Buyer and Able Telcom
shall make available such documents and other information as reasonably
necessary in order to permit Sellers accountants to prepare, in accordance with
Section 6.1, the Closing Balance Sheet.
ARTICLE VIII
Miscellaneous Provisions
8.1 Nature and Survival of Representations and Warranties.
All representations and warranties made by Buyer, Able Telcom and Sellers
hereunder shall survive the Closing for a period of five years except that with
respect to a breach of the representations and warranties relating to taxes,
such representations and warranties shall survive the Closing until six months
after the expiration of the applicable statute of limitations and with respect
to breach of representations and warranties relating to title to the Shares,
such representations and warranties shall survive indefinitely. The expiration
of any representation or warranty shall not affect any claim made in writing
prior to the date of such expiration. The representations and warranties
hereunder shall not be affected or diminished by any investigation made or any
information provided at any time by or on behalf of the party for whose benefit
such representations and warranties were made or by the closing of the
transactions contemplated hereby.
8.2 Further Actions. At any time and from time to time after the Closing, at
Buyer's request and without further consideration, Sellers shall cooperate and
execute and deliver such other instruments of sale, conveyance, transfer,
assignment and confirmation and take such further action as Buyer may reasonably
deem necessary or desirable in order to more effectively convey, transfer and
assign to Buyer, and to confirm Buyer's title to, all of the Shares of Sellers,
to put Buyer in actual possession and operating control of the Company and the
Business, and to assist Buyer in exercising all rights with respect thereto.
8.3 Brokers. Each party represents to the other that it has had no dealings
with any broker or finder representing any party or its agents in connection
with the transactions contemplated by this Agreement. Should any claim be made
for a broker's, finder's or similar fee, on account of any actions or dealings
by a party or its agents, such party shall indemnify, defend, protect and hold
the other party harmless from and against any and all liability and expenses,
including reasonable attorneys' fees, incurred by reason of any claim made by
such broker.
8.4 Indemnification.
(a) By Sellers. Sellers shall, jointly and severally, indemnify, defend,
protect and hold harmless Buyer and Able Telcom, promptly upon demand at any
time and from time to time, against any and all Losses incurred by Buyer or Able
Telcom arising out of or in connection with any of the following:
(i) subject to the provisions of Sections 8.4(c) and 8.4(d) hereof
(a) any misrepresentation or breach of any warranty made by Sellers or the
Company in any Sellers' Document (other than a breach of Section 4.12); (b) any
breach or nonfulfillment of any covenant or agreement made by Sellers or the
Company in Sellers' Documents; (c) the claims of any broker or finder engaged by
Sellers; and (d)without in any manner limiting the foregoing, any liabilities or
obligations of, or claims or causes of action against, Sellers which arise with
respect to or relate to any period or periods on or prior to the Closing Date
19
hereof, except for those which are set forth or reserved against in the Closing
Balance Sheet or are set forth in a schedule hereto, or were incurred in the
ordinary course of business as heretofore conducted and are not materially
adverse to the operations or prospects of the Business;
(ii) any violation prior to Closing by Sellers or the Company of any
applicable Environmental Law or regulation or arising with respect to or
relating to any environmental activity conducted on or with respect to any Real
Property owned by the Company at or prior to the Closing or any environmental
condition existing on or with respect to such property at or prior to the
Closing, in each case whether or not the Company or Sellers permitted or
participated in such act or omission;
(iii) any pension, retirement, profit sharing, deferred compensation,
stock option, stock purchase, bonus, medical, welfare, disability, severance or
termination pay, insurance or incentive plan, and each other employee benefit
plan, program, agreement or arrangement, whether funded or unfunded, qualified
or unqualified, in existence on the Closing Date and sponsored, maintained or
contributed to or required to be contributed to by the Company or by any trade
or business of the Company, whether or not incorporated, for the benefit of any
employee or terminated employee of the Company or any affiliate thereof, to the
extent such Losses arise from a violation of ERISA or the regulations
promulgated thereunder; and
(iv) a misrepresentation or breach of any warranty made by Sellers or
the Company in Section 4.12 hereof.
(b) By Buyer.Subject to the provisions of Sections 8.4(c)and 8.4(d)hereof,
Buyer and Able Telcom shall, jointly and severally, indemnify, defend, protect
and hold Sellers harmless, promptly upon demand at any time and from time to
time, against any and all Losses arising out of or in connection with any of the
following: (a) any misrepresentation or breach of any warranty made by Buyer or
Able Telcom in any Buyer's Documents; (b) any breach or nonfulfillment of any
covenant or agreement made by Buyer or Able Telcom in any Buyer's Documents; (c)
the claims of any broker or finder engaged by Buyer; and (d) without in any
manner limiting the foregoing, any liabilities or obligations or claims of the
Company which arise with respect to or relate to any period or periods after
Closing Date.
(c) Threshold for Indemnification.
(i) Sellers shall not be required to indemnify Buyer or Able Telcom
pursuant to Section 8.4(a)(i) unless Buyer provides written notice to Sellers of
the nature of indemnification being sought and a reasonable time (not to exceed
60 days) to cure such default and (ii) in cases where Buyer or Able Telcom seeks
indemnification pursuant to Section 8.4(a)(i), except to the extent that the
aggregate amount
required to be paid thereunder exceeds $25,000, in which case Seller shall then
be required to indemnify Buyer and Able Telcom for any and all damages exceeding
$25,000; and
(ii) Buyer and Able Telcom shall not be required to indemnify Sellers
pursuant to Section 8.4(b)(i) unless Sellers provide written notice to Buyer and
Able Telcom of the nature of indemnification being sought and a reasonable time
(not to exceed 60 days) to cure such default and (ii) in cases of
indemnification arising as a result of Able Telcom's obligations under Section
7.1 hereof, except to the extent that the aggregate amount required to be paid
thereunder exceeds $25,000, in which case Buyer and Able Telcom shall then be
required to indemnify Sellers for any and all damages exceeding $25,000.
20
(d) Insurance proceeds. The liability of either party with respect to any
claim for indemnification shall be reduced by the tax benefit actually realized
and any insurance proceeds received by the other as a result of any Loss upon
which the claim for indemnification is based. In addition, Sellers shall not be
obligated to indemnify Buyer or Able Telcom for any Loss that would have been
covered by insurance having coverage limits equal to those maintained by the
Company immediately prior to and on the Closing Date.
(e) Defense. An indemnified party shall promptly give written notice to
the indemnifying party after the indemnified party has knowledge that any legal
proceeding has been instituted or any claim has been asserted, in respect of
which indemnification may be sought under the provisions of Section 8.4,provided
that failure to give such notice shall not preclude indemnification with respect
to such proceeding or claim except to the extent of any additional or increased
Losses directly caused by such failure. In any action against the indemnified
party with respect to which indemnification is sought, the indemnifying party
shall have the right to intervene and defend in such action jointly with the
indemnified party.
8.5 Notices. All notices or other communications in connection with this
Agreement shall be in writing and shall be considered given when personally
delivered or when mailed by registered or certified mail, postage prepaid,
return receipt requested, or when sent via commercial courier or telecopier,
directed as follows:
If to Sellers:
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
Pennington, Culpepper, Moore, Wilkinson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
21
If to Buyer:
Telecommunication Services Group, Inc.
c/o Able Telcom Holding Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
With a copy to:
Holland & Knight
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
8.6 Miscellaneous.
(a) Entire Agreement. This Agreement (which includes the schedules and
exhibits hereto) sets forth the parties' final and entire agreement with respect
to its subject matter and supersedes any and all prior understandings and
agreements, including, but not limited to the Letter of Intent. This Agreement
can be amended, supplemented, or changed, and any provision hereof can be
waived, only by a written instrument making specific reference to this Agreement
signed by the party against whom enforcement of any such amendment, supplement,
change, or waiver is sought.
(b) Successors. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors, and assigns; provided,
however, that neither this Agreement nor any right or obligation hereunder may
be assigned or transferred, except that Buyer may assign this Agreement and its
rights hereunder to any direct or indirect wholly-owned subsidiary of Buyer and
to financial institutions providing financing for the transaction, but no such
assignment shall relieve Able Telcom of its respective obligations under and
pursuant to this Agreement.
(c) Construction of Agreement. The section headings in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When the context in which the words are used
in this Agreement indicates that such is the intent, words in the singular
number shall include the plural and vice versa. References to any gender shall
include any other gender that may be applicable in the circumstances. This
Agreement shall be construed without regard to any presumption or other rule
requiring construction against the party causing this Agreement to be drafted.
(d) Publicity. No party shall issue any press release or make any other
publicly available disclosure of the terms of this transaction without the prior
written consent of Buyer and Sellers; provided, however, that the restrictions
of this covenant shall not apply (i) if otherwise required by law,
22
(ii) if necessary or appropriate in connection with the transactions
contemplated hereunder, and (iii) to the extent such information shall have
otherwise become publicly available.
(e) Severability. If any provision of this Agreement shall be held by any
court of competent jurisdiction to be illegal, invalid, or unenforceable, such
provision shall be construed and enforced as if it had been more narrowly drawn
so as not to be illegal, invalid or unenforceable, and such illegality,
invalidity or unenforceability shall have no effect upon and shall not impair
the enforceability of any other provision of this Agreement.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each one of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of this Agreement via telephone facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Agreement.
23
IN WITNESS WHEREOF, on the date first above written, the parties have duly
executed this Agreement.
Telecommunication Services Group, Inc.
a Florida corporation
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Chairman
Able Telcom Holding Corp.
a Florida corporation
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President
Dial Communications, Inc.
a Florida corporation
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇