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AGREEMENT AND PLAN OF MERGER
AMONG COMMUNICATIONS CONSTRUCTION GROUP, INC.,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, DYCOM INDUSTRIES, INC.
AND DYCOM ACQUISITIONS, INC.
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is entered
into this 7th day of July, 1997 among Communications Construction
Group, Inc., a Pennsylvania corporation ("Communications"), ▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ (collectively "Communications
Shareholders"), Dycom Industries, Inc., a Florida corporation
("Dycom"), and Dycom Acquisitions, Inc., a Pennsylvania corporation
("Acquisitions").
W I T N E S S E T H
WHEREAS, the parties hereto desire that Acquisitions be merged
with and into Communications (the "Merger") upon the terms and
subject to the conditions set forth in this Agreement and in
accordance with the Business Corporation Law of the Commonwealth of
Pennsylvania, all for the purpose of carrying out a reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties herein contained the
parties hereto agree as follows:
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ARTICLE I
Merger
Section 1.1 Surviving Corporation. At the Effective Time,
as defined in Section 1.2, Acquisitions shall be merged into
Communications which shall be the surviving corporation (the
"Surviving Corporation").
Section 1.2 Effective Time. Subject to the terms of this
Agreement, the Merger shall become effective at 12:00 midnight on
July 31, 1997(the "Effective Time"), unless the Articles of Merger
are filed subsequent to July 31, 1997, in which event the merger
shall become effective at the time the Articles of Merger are filed
with the Secretary of the Commonwealth of Pennsylvania. The
Articles of Merger shall be filed with the Commonwealth of
Pennsylvania in substantially the form of Exhibit A hereto or such
other form reasonably satisfactory to the parties hereto (the
"Articles of Merger") and consistent with this Agreement.
Section 1.3 Further Assurances. If at any time after the
Effective Time, either party shall determine that any further
assignments, assumptions or assurances in law or any other things
are necessary or desirable to vest, perfect or confirm of record or
otherwise, in any party the title to any property or right acquired
or to be acquired by reason or as a result of the Merger, the
proper officers and directors of the Surviving Corporation or, as
the case may be, the Communications Shareholders and Dycom shall
execute and deliver all deeds, assignments and assurances in law
and do all things reasonably necessary or proper to vest, perfect
and confirm title to such property or rights and otherwise to carry
out the terms and conditions of this Agreement, all at the cost and
expense of the Surviving Corporation.
Section 1.4 By-Laws. The by-laws of Acquisitions in effect
immediately prior to the Effective Time shall be and, until amended
as therein provided, continue to be the by-laws of the Surviving
Corporation after the Effective Time.
Section 1.5 Articles of Incorporation. The Articles of
Incorporation of Acquisitions as amended and in effect immediately
prior to the Effective Time shall be and, until further amended as
provided by law, continue to be the Articles of Incorporation of
the Surviving Corporation.
Section 1.6 Directors. The members of the Board of
Directors of Acquisitions immediately prior to the Effective Time
shall constitute the Board of Directors of the Surviving
Corporation after the Effective Time until their successors shall
have been elected and qualified as provided in the by-laws of the
Surviving Corporation and this Agreement.
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ARTICLE II
Conversion of Shares
At the Effective Time:
Section 2.1 Acquisitions Stock. Each share of the common
stock of Acquisitions issued and outstanding immediately prior to
the Effective Time shall by reason of the merger and without any
action on the part of the holder thereof, be converted into and
become one share of the common stock of the Surviving Corporation,
and each certificate representing outstanding shares of the common
stock of Acquisitions immediately prior to the Effective Time shall
thereupon become and be deemed for all corporate purposes to
evidence the ownership of the same number of fully paid and non-assessable
shares of the common stock of the Surviving Corporation.
Section 2.2 Communications Common Stock. Each and every
share of the common stock of Communications, $1.00 par value and
preferred shares of Communications, $25.00 par value
("Communications Shares"), issued and outstanding immediately prior
to the Effective Time (other than treasury shares, if any, held by
Communications, all of which treasury shares shall be canceled as
of the Effective Time) shall be converted automatically and without
any action on the part of the holder thereof into the number of
shares of the common stock of Dycom ("Dycom Shares") equal to the
quotient of: (i) 28,000,000 divided by the number of Communications
shares issued and outstanding immediately prior to the Effective
Time (other than Communications Shares held by Communications as
treasury shares); divided by (ii) the mean average of the
respective prices of Dycom common stock (as reported in the Wall
Street Journal) for the five (5) business days immediately
preceding the date of this Agreement.
Section 2.3 Surrendering Procedure. Upon the Effective
Time, Communications shall cause all certificates which previously
represented outstanding shares of its capital stock to be canceled
and surrendered to the Surviving Corporation or any agent
designated by it, and, upon such cancellation and surrender, the
Surviving Corporation or its agent, as agent for Dycom, shall
deliver in substitution therefor certificates representing the
number of full Dycom Shares (no fractional shares or cash in lieu
thereof shall be delivered) into which such shares have been
converted as aforesaid.
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ARTICLE III
Effect of Merger
Section 3 Upon the Effective Time:
(a) Acquisitions and Communications shall become a single
corporation of which Communications shall be the Surviving
Corporation and continue its corporate existence under the laws of
the Commonwealth of Pennsylvania; the name of the Surviving
Corporation shall be "Communications Construction Group, Inc."
(b) The separate existence of Acquisitions shall cease, and
the Surviving Corporation shall possess all the rights, privileges,
immunities and franchises, of a public as well as of a private
nature, of Communications and of Acquisitions. All property, real,
personal and mixed, all debts due on whatever account, all other
choses in action and all and every other interest of or belonging
to or due to Communications or Acquisitions shall be taken and
deemed to be transferred to and vested in the Surviving Corporation
without further act or deed; and the title to any real estate, or
any interest therein, vested in Communications or Acquisitions
shall not revert or be in any way impaired by reason of the Merger.
The Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of Communications
and Acquisitions and any claim existing or action or proceeding
pending by or against Communications or Acquisitions may be
prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in place of Communications or
Acquisitions. Neither the right of creditors nor any liens upon
the property of Communications or Acquisitions shall be impaired by
the Merger.
ARTICLE IV
Representations and Warranties of Communications
and the Communications Shareholders
Communications and each of the Communications Shareholders
represent and warrant (except as indicated to the contrary below)
to Acquisitions and Dycom as follows:
Section 4.1 Due Incorporation, etc.. Communications is a
validly organized and existing corporation in subsistence under the
laws of the Commonwealth of Pennsylvania and satisfactory evidence
of such good standing has heretofore been or will promptly be
delivered to Acquisitions and Dycom. Communications has all
requisite corporate powers to carry on its business as it is now
being conducted, is qualified to do business and is in good
standing in every jurisdiction in which the character and location
of its assets or the nature of the business transacted by it
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requires such qualification, except where the failure to be so
qualified and in good standing would not have a material and
adverse effect on Communications. The copies of the Articles of
Incorporation and by-laws, and all amendments thereto, of
Communications, which have heretofore been or promptly will be
delivered to Acquisitions and Dycom, are complete and correct.
Section 4.2 Shareholders and Directors. The shareholders
of Communications, the number of Communications Shares held by each
shareholder, and all directors of Communications are listed on
Schedule 4.2 hereto.
Section 4.3 Capitalization. The authorized capital stock
of Communications consists of 1000 shares of Communications common
stock, having a par value of $1.00 per share, of which 140 shares
are issued and outstanding, and 2000 shares of preferred stock,
having a par value of $25.00 per share, all of which are issued and
outstanding. All of the outstanding Communications Shares have been
validly issued and are fully paid and nonassessable.
Communications does not have any commitment to issue or sell shares
of its stock or any securities or obligations convertible into or
exchangeable for, or giving any person any right to acquire from
Communications any shares of its stock, except for certain buy/sell
agreements between Communications and/or the Communications
Shareholders which agreements shall be canceled at the Effective
Time.
Section 4.4 Financial Statements. The audited financial
statements of Communications as of May 31, 1996, consisting of a
balance sheet, statement of operations, a statement of cash flows,
and a statement of changes in stockholders' equity for the twelve
months ended that date which Communications has delivered to
Acquisitions and Dycom have been certified by Norwalk & Associates,
independent certified public accountants. Such financial
statements present fairly the financial position of Communications
and the results of its operations and changes in financial
positions as of the date and for the period indicated, in
conformity with generally accepted accounting principles
consistently applied during such period. As of May 31, 1996, there
were no material obligations or liabilities (whether accrued,
absolute, contingent or otherwise) of Communications not adequately
reflected on the balance sheet (and the notes thereto) as of such
date.
On or before seven (7) days prior to the Effective Time,
Communications agrees to deliver to Dycom audited financial
statements for the year ended May 31, 1997.
Section 4.5 Document List. Communications has furnished,
or will furnish at the time of the execution of this Agreement, to
Acquisitions and Dycom, a written list (the "Document List"),
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attached hereto as Schedule 4.5, dated the date of this Agreement,
which, to the best knowledge of Communications Shareholders after
such inquiry as they determine to be appropriate, identifies and
describes all contracts, agreements and instruments, whether
written or oral, which are material to the conduct of the business
of Communications. Without limiting the generality of the
foregoing, the Document List shall include the following contracts,
agreements and instruments to which Communications is a party or is
otherwise subject or affected:
(i) all instruments or arrangements creating liens,
encumbrances, mortgages, or charges on any real or personal
property of Communications;
(ii) all indentures, trust agreements, credit agreements
or other instruments relating to any issue of bonds,
debentures, notes or other evidences of indebtedness; all
employment contracts; all contracts with labor unions
representing or attempting to represent employees of
Communications; all contracts relating to engineering, legal,
accounting, management, consulting and other services; and all
material contracts for the purchase of real property, personal
property or any interest therein;
(iii) all bonus, pension, profit sharing, buy/sell,
retirement, stock option, hospitalization or insurance plans
or agreements, including without limitation all workers'
compensation plans; vacation pay or severance pay, and other
plans or arrangements of Communications providing benefits to
officers, employees or agents;
(iv) all leases, or other agreements to which
Communications is a party relating to real or personal
property or any interest therein which either do not terminate
or are not terminable by Communications within six (6) months
from the date hereof;
(v) all policies of fire, liability and other forms of
insurance (including title insurance) held by and/or covering
assets of Communications;
(vi) all letters of credits, bank accounts or safe
deposit box arrangements of Communications;
(vii) all material licenses, permits, filings or
authorizations required by any jurisdiction or authority in
connection with the business of Communications; and
(viii) all contracts or agreements that obligate
Communications to perform, provide or purchase goods or
services which have an individual value of more than $5,000.
Section 4.6 Asset Descriptions. Communications has
furnished, or will furnish at the time of the execution of this
Agreement, to Acquisitions and Dycom, a list (the "Asset List"),
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attached hereto as Schedule 4.6, dated the date of this Agreement,
describing all motor vehicles and testing equipment owned by
Communications. Not later than twenty (20) days prior to the
Closing Date as defined in Section 18.3 hereof, Communications
shall furnish to Acquisitions and Dycom a supplemental list which
identifies all assets owned by Communications.
Section 4.7 Litigation List. Communications has also
furnished, or will furnish at the time of the execution of this
Agreement, to Acquisitions and Dycom, a written description (the
"Litigation List"), attached hereto as Schedule 4.7 , dated the
date of this Agreement, of all civil or criminal actions,
proceedings, arbitrations or investigations pending, or, to the
best knowledge of the corporate officers or directors of
Communications or the Communications Shareholders, after such
inquiry as they determine to be appropriate, threatened by or
before any court, governmental agency, regulatory authority or
arbitrator against Communications or any director or officer of
Communications, in such capacity, as either plaintiff or defendant.
Section 4.8 No Material Adverse Change. Since May 31,
1997, there has not been (i) any material adverse change in the
financial condition, business properties or assets of
Communications in the aggregate; (ii) any loss or damage to any of
the properties or assets of Communications (whether or not covered
by insurance) which has materially and adversely affected
Communications or impaired the ability of Communications to conduct
its business; (iii) any other event or condition of any character
which has materially and adversely affected the business of
Communications; (iv)any mortgage or pledge of any of the properties
or assets of Communications (other than as disclosed on the
Document List); (v) any purchase, redemption, or other acquisition
by Communications of any shares of the stock of Communications;
(vi) any declaration or payment of any dividend or other
distribution in respect of the stock of Communications; or (vii)
any increase paid or agreed to be paid in compensation, retirement
benefits or other commitments to employees, other than in the
ordinary course of Communications' business.
Section 4.9 Good Title, etc. Communications has title to
all of its properties, including, without limitation, all property
reflected on the balance sheet of Communications dated as of May
31, 1996 (but excluding property disposed of subsequent to May 31,
1996 and prior to the date hereof in the ordinary course of
business), as well as all property reflected on the balance sheet
of Communications to be dated May 31, 1997 and provided to Dycom
and Acquisitions pursuant to Section 4.4 hereof (but excluding
property disposed of subsequent to May 31, 1997, and prior to the
date hereof), free and clear of any mortgage, lien, pledge, charge,
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claim or encumbrance except as disclosed in the Document List
pursuant to Section 4.5 hereof.
Section 4.10 Working Order. Except as described on Schedule
4.10 hereto, all material machinery and equipment of Communications
are in working order and repair (normal wear and tear and normal
repair or maintenance excepted). Except as set forth in the
Document List, Communications has the unrestricted right to use its
properties for its operations as presently conducted.
Section 4.11 No Breach. Except as otherwise disclosed in
writing, Communications has not breached, nor is in default under
the terms of any indenture, agreement, employee benefit plan, lease
or license to which it is subject or bound that is material to the
business of Communications, and, to the best knowledge of the
Communications Shareholders after such inquiry as they determine to
be appropriate, each such indenture, agreement, employee plan,
lease and license is valid and effective. Communications is not in
default with respect to any order of any court, regulatory agency
or other private or governmental authority, specifically pertaining
to Communications.
Section 4.12 Tax Returns. Except as otherwise disclosed in
writing, Communications has filed all applicable United States,
state and local tax returns required to be filed, and any and all
other material tax returns required to be filed. Communications
has paid or provided for the payment in full of all taxes due to
any governmental entity, and has not executed, or agreed to
execute, any waivers of any statutes of limitations on the right of
any taxing authority to assess additional taxes or to contest the
income or loss reported with respect to any tax period. No issues
have been raised (and are currently pending) as of the date of this
Agreement by the Internal Revenue Service or any other taxing
authority in connection with any of the aforesaid tax returns.
There are no material taxes or levies of any nature due or payable
to any local, state or federal government nor, to the best of their
knowledge, shall the consummation of the transactions contemplated
by this Agreement result in any such taxes or levies being due and
payable. The receipts and expenditures reflected on the U.S.
income tax returns (including the supporting schedules filed
therewith and as a part thereof) filed by Communications for the
fiscal years ended May 31, 1994, 1995 and 1996 and all other open
years, copies of which have been supplied (or will be promptly
supplied) to Dycom, accurately reflect the receipts and
expenditures of Communications, as well as the taxable income and
tax deductions for the respective tax years, and the same were
derived from the books and records of Communications.
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Section 4.13 This Agreement Not a Default. Compliance
with the terms of this Agreement and consummation of the
transactions contemplated by this Agreement will not materially
violate or result in a material breach of or constitute a material
default under any statute, ordinance or governmental regulation, or
any provision of the Articles of Incorporation and by-laws of
Communications, or the provisions of any indenture, mortgage, lien,
lease, agreement, instrument, order, judgment, decree, or any other
restriction of any kind or character to which any property of
Communications is bound or by which Communications is bound.
Section 4.14 No Other Commitments. Except for the
making of capital expenditures in amounts less than $5,000 each and
except for the making of capital expenditures which are disclosed
in the Asset List (which includes all such expenditures which
individually totaled $5,000 or more), since May 31, 1997
Communications has not entered into any transaction or commitment
other than in the ordinary course of business.
Section 4.15 Information Accurate. All information in
writing concerning Communications furnished at or prior to the
Effective Time by or on behalf of Communications to Dycom for
inclusion in, or use in preparation of, or on behalf of any
application or statement or notice made or to be made by Dycom, or
filed by Dycom with the Securities and Exchange Commission, any
stock exchange or other regulatory agency shall when furnished be
true and correct in all material respects without omission of any
material fact necessary to be stated to make the information not
misleading. Communications may provide Dycom and Acquisitions
with a list of all writings so furnished and in the event it does
so, shall only warrant the truth and correctness of said writings
and any other such additional writings identified in writing by
Dycom and provided to Communications, without the omission of any
material fact necessary to be stated to make the information not
misleading. Communications will provide Dycom in writing such
information as Dycom may reasonably request and require in
connection with any aforesaid application, statement or notice.
Dycom shall furnish Communications a copy of all filings prior to
their submission to any governmental or regulatory agency.
Section 4.16 Share Ownership. The Communications
Shareholders are the record and beneficial owner of all of the
Communications Shares and hold the Communications Shares free and
clear of any lien, encumbrance, pledge, charge or claim, and have
full and absolute right and power to assign, transfer and sell
their respective Communications Shares.
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SECTION 4.17 Due Authorization, etc. The execution and
delivery of this Agreement by Communications and the performance by
Communications of its obligations under this Agreement have been
authorized by its Board of Directors; and Communications has all
requisite authority to enter into and perform this Agreement,
subject only to the approval of this Agreement by PNC Bank,
National Association ("PNC") and Comcast Cable Communications, Inc.
Subject to the foregoing, this Agreement is a valid and binding
agreement of Communications and the Communications Shareholders,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, or other similar laws of general
application affecting the enforcement of creditors' rights
generally.
Section 4.18 Subsidiaries. Communications does not control
(as such term is defined in Section 368(c) of the Code), directly
or indirectly, any corporation, association or other business
entity.
Section 4.19 Consent. Except as provided in Sections 11.10
and 17.1 hereof, no consent, approval or authorization of or
registration, qualification, designation, declaration or filing
with any governmental authority or private person or entity on the
part of the shareholders of Communications is required in
connection with the execution and delivery of this Agreement or the
consummation of any transaction contemplated hereby.
Section 4.20 Patents, etc. Except as described in Schedule
4.20 hereto, Communications does not own or have any patents,
applications for patents, written disclosures of inventions, trade
names, trademarks, trademark registrations, or agreements,
including agreements with its employees, under which Communications
is either a licensee and/or licensor (and no such agreements are
being negotiated). No amounts are or will at any time hereafter be
owing to any employee of Communications in connection with any
patent or invention.
Section 4.21 Broker's or Finder's Fees, etc. No agent,
broker, investment banker, person or firm acting on behalf of
Communications or the Communications Shareholders or under the
authority of Communications or the Communications Shareholders is
or will be entitled to any broker's or finder's fee or any other
commission or similar fee directly or indirectly from any of the
parties hereto in connection with any of the transactions
contemplated herein.
Section 4.22 ERISA. No Reportable Event (as described in
Section 4043(c) of the Employee Retirement Income Security Act of
1974 ("ERISA") has occurred with respect to any Plan (as defined
below) that is subject to the provisions of Title IV of ERISA, and
no event with respect to any Plan has occurred which would impose
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any liability on Communications other than contributions for the
plan year ended May 31, 1997. Each Plan is in material compliance,
and has been administered materially in accordance, with the
applicable provisions of the Code and ERISA. The term "Plan" means
any plan described in Section 3(3) of ERISA established by
Communications. No transactions prohibited by Section 406 of ERISA
and not exempt under Sections 407 and 408 of ERISA has occurred
with respect to any Plan established by Communications. The
provisions of this Section 4.22 shall also apply to any Plan which
is described in Section 3(3) of ERISA and under which
Communications has contributed.
Section 4.23 Employees. Communications has furnished, or
will furnish at the time of the execution of this Agreement, to
Dycom, a list (the "Employee List"), attached hereto as Schedule
4.23, dated the date of this Agreement, identifying all individuals
in the employ of Communications as of the date of this Agreement,
their current periodic compensation, and any extraordinary
compensation due them for work performed prior to such date.
Except as identified on Schedule 4.23 attached hereto,
Communications has no collective bargaining agreement with any of
its employees, and except as disclosed in the Document List and/or
Litigation List, Communications has not engaged in any discussions
with respect to the establishment by any of its employees of a
collective bargaining unit or to the execution of a collective
bargaining agreement; and except as disclosed in the Litigation
List, no election with respect to the unionization of any group of
Communications employees has taken place and there are not
currently, nor have there been in the past, any such discussions or
elections threatened or contemplated.
Section 4.24 Insurance. Communications keeps all of its
business and properties which are of an insurable nature insured,
with insurers reasonably believed by Communications to be
responsible against loss or damage or arranges with others to do
so.
Section 4.25 Compliance with Applicable Law. To the best
knowledge of Communications Shareholders after inquiry as they
determine to be appropriate, Communications is in compliance in all
material respects with all laws, regulations, governmental orders
or judgments applicable to its business as a whole, and has all
material licenses, permits and other governmental authorizations
necessary for the conduct of its business as a whole.
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Section 4.26 Untrue Statements. No representation or
warranty by Communications or the Communications Shareholders in
this Agreement contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
No written information, statement or certificate furnished to
Acquisitions or Dycom by Communications or the Communications
Shareholders pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
No breach under this Article IV shall have occurred if any matter
which is required to be disclosed on a particular list hereunder is
not disclosed on that list, but appears on a different list
furnished in accordance with this Article IV.
Section 4.27 Environmental Permits, etc. Communications
Shareholders warrant that to the best of their knowledge,
Communications: (a) is not required to obtain any permits, licenses
and other authorizations required under federal, state, local and
foreign environmental laws, statutes and ordinances, including but
not limited to the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C. 9601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. 6901
et seq., the Federal Water Pollution Control Act, 33 U.S.C. 1251
et seq., the Clean Air Act, 41 U.S.C. 2601 et seq., as amended,
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
136 to 1364, the Occupational Safety and Health Act of 1970, 29
U.S.C. 651 to 678, and any applicable state or local law
relating to the protection of the environment, and including any
rules, regulations, orders, decrees, plans, codes, judgments,
injunctions, notices or demand letters, prohibitions, obligations,
schedules, timetables, standards, conditions or requirements
issued, entered, approved or promulgated thereunder, relating to
pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, wastewater, industrial
substances, toxic substances, hazardous substances (as defined in
Section 101(14) of CERCLA, 41 U.S.C. 9601(14)), or solid or
hazardous wastes in, into, onto or upon the environment (including,
without limitation, ambient air, surface water, ground water, or
land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, collection, accumulation, storage,
disposal, transport, or handling of pollutants, contaminants,
chemicals, wastewater, or industrial, toxic or hazardous substances
or wastes (collectively the "Environmental Laws"); and (b) is in
compliance with all applicable Environmental Laws. Communications
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has not received (i) any notice of the violation or alleged
violation of, or noncompliance or alleged noncompliance with, any
of the Environmental Laws, permits, licenses or other
authorizations; (ii) any notice, demand, claim, order or request
for the performance of, or the payment of costs or expenses for,
any test, investigation, assessment, examination, cleanup, removal,
remediation, mitigation, response, treatment or restoration with
regard to environmental conditions; or (iii) any notice, or have
knowledge of, any environmental contamination or the disposal of
any hazardous substance, pollutant or contaminant at, in, into,
onto, upon, by or from any real property owned, operated, possessed
or used by Communications or the environment; and there is not now
and has not been, as a result of Communications' activities (y) any
violation or alleged violation, or noncompliance or alleged
noncompliance with, any of the Environmental Laws, permits,
licenses, or other authorizations; or (z) any environmental
contamination of, or the disposal of any hazardous substance,
pollutant or contaminant at, in, into, onto, upon, by or from any
real property owned, operated, possessed or used by Communications
or the environment. Communications has not disposed of, has not
arranged for the disposal of, nor has any knowledge of the disposal
of, any hazardous substance on any real property that is covered by
this Agreement.
ARTICLE V
Representations and Warranties of Dycom and Acquisitions
Dycom and Acquisitions represent and warrant to
Communications as follows:
Section 5.1 Due Incorporation, etc. Dycom and Acquisitions
are validly organized and existing corporations in good standing
and in subsistence under the laws of Florida and Pennsylvania,
respectively. Each of Dycom and Acquisitions has all requisite
corporate power to carry on its business as now conducted, and is
qualified to do business in every jurisdiction in which the
character and location of its assets or the nature of the business
transacted by it requires such qualification, except where the
failure to be so qualified and in good standing would not have a
material and adverse effect on Dycom or Acquisitions. The copies
of the Articles of Incorporation and by-laws, and all amendments
thereto, of Dycom and Acquisitions, which have heretofore been or
will promptly be delivered to Communications, are complete and
accurate.
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Section 5.2 Financial Statements. The consolidated
financial statements of Dycom as of July 31, 1996, consisting of
the consolidated balance sheets, statement of operations,
statements of stockholders' equity and statements of cash flows,
for the twelve months ended that date, which Dycom has or will have
delivered to Communications and the Communications Shareholders,
have been audited by Deloitte & Touche L.L.P., independent
certified public accountants. Such statements present fairly the
consolidated financial position of Dycom and subsidiary companies
as of July 31, 1996, and the results of their operations and
changes in financial position for the period ended that date, in
conformity with generally accepted accounting principles
consistently applied during such period. As of July 31, 1996,
there were no material obligations or liabilities (whether accrued,
absolute, contingent or otherwise) of Dycom and its subsidiary
companies, taken as a whole, not adequately reflected in the
aforesaid financial statements.
Section 5.3 Capitalization. The authorized capital stock
of Dycom as of the date of this Agreement consists of 50,000,000
shares of common stock, $.33 1/3 par value, of which 8,805,943
shares are issued and outstanding, and 1,000,000 shares of
preferred shares, $1.00 par value, of which none are issued and
outstanding. All of the shares of Dycom stock outstanding have
been validly issued and are fully paid and nonassessable, and Dycom
holds no such shares as treasury stock. The Dycom Shares, when
delivered pursuant to this Agreement, will be validly issued and
outstanding and fully paid and nonassessable. The authorized
capital stock of Acquisitions consists entirely of 1000 shares of
common stock, $1.00 par value, 100 of which are issued and
outstanding in the name of Dycom. Acquisitions is a first tier
subsidiary of Dycom.
Section 5.4 Accuracy of Information. All information in
writing concerning Dycom and Acquisitions furnished by Dycom and
Acquisitions to Communications for inclusion in or use in
preparation of, any application or statement made or to be made by
Communications or the Communications Shareholders to any
governmental body or private party in connection with the
transactions contemplated by this Agreement, shall when furnished
be true and correct in all material respects without omission of
any material fact necessary to be stated to make the information
not misleading.
Section 5.5 Due Authorization of Dycom. The execution and
delivery of this Agreement by Dycom and the performance by Dycom of
its obligations under this Agreement have been authorized by its
Board of Directors and no shareholder action is required. Except
for the consent of the Lenders, as defined in that certain Credit
15
Facility Agreement, dated April 28, 1997, by and among Dycom and
Dresdner Bank Lateinamerika Aktiengesellschaft, Miami Agency, Bank
Leumi Trust Company of New York, and Republic National Bank of
Miami, N.A., and subject to Section 17.1, no further consents of
other parties are necessary to consummate this transaction, and
Dycom will have all requisite authority to enter into this
Agreement and to perform its obligations under this Agreement.
Subject to the foregoing, this Agreement, when duly executed and
delivered, will constitute a valid and binding agreement of Dycom,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general
application affecting the enforcement of creditors' rights
generally.
Section 5.6 Due Authorization of Acquisitions. The
execution and delivery of this Agreement by Acquisitions and the
performance by Acquisitions of its obligations under this Agreement
have been authorized by its Board of Directors and its sole
shareholder, Dycom. Subject to the foregoing, Acquisitions will
have all requisite authority to enter into this Agreement and to
perform its obligations under this Agreement. Subject to the
foregoing, this Agreement, when duly executed and delivered, will
constitute a valid and binding agreement of Acquisitions, except as
the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws or general
application affecting the enforcement of creditors' rights
generally.
Section 5.7 This Agreement Not a Default. Subject to the
accuracy of the representations of Communications and the
Communications Shareholders in Article IV hereof and compliance
with the terms of this Agreement, the consummation of the
transactions contemplated by this Agreement, will not materially
violate or result in a material breach of or constitute a material
default under any statute, ordinance or government regulation, or
any provision of the Articles of Incorporation or by-laws of Dycom
or Acquisitions, or any provision of any indenture, mortgage, lien,
lease, agreement, instrument, order, judgment, decree, or any other
restriction of any kind or character to which any property of Dycom
or Acquisitions is subject or by which Dycom or Acquisitions is
bound, except for the consent of the Lenders, as provided in
Section 5.5, which consent shall be received prior to the Effective
Time.
16
Section 5.8 Broker's or Finder's Fees, etc. Except as
described on Schedule 5.8 hereto, no agent, broker, investment
banker, person or firm acting on behalf of Dycom or any of its
subsidiaries or under the authority of any of them is or will be
entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly from any of the parties hereto
in connection with any of the transactions contemplated hereby.
Section 5.9 Securities and Exchange Commission Filings,
etc. Dycom has delivered to the Communications Shareholders true
copies of Dycom's Annual Report and Form 10-K for the fiscal year
ended July 31, 1996, and the 1996 Proxy Statement relating to its
1996 annual meeting of stockholders, all as filed with the
Securities and Exchange Commission, and all other reports,
registrations and similar filings filed by Dycom with the
Securities and Exchange Commission after July 31, 1996 and all such
mailings or similar communications to its stockholders. The
information provided in said filings is true and correct in all
material respects without omissions of any material fact necessary
to be stated to make the information not misleading. There have
been no material change in its assets, liabilities or products
since Dycom's 10-Q for the quarter ended April 30, 1997, delivered
to Communications pursuant to this Agreement.
Section 5.10 Registration If Dycom receives a request
signed by the Communications Shareholder stating that the
Communications Shareholders propose to sell or distribute publicly
in a firm underwriting up to the greater of (a) 1,000,000 or (b)
fifty percent (50)% of the Dycom Shares and that the Communications
Shareholders desire to have such shares registered under the
Securities Act of 1933 (the "Act"), Dycom shall use its best
efforts to (a) file within one hundred and twenty (120) days of
such request a registration statement under the Act covering the
proposed sale or distribution referred to in such notice (the
"Registration Statement"), (b) cause such Registration Statement to
become effective under the Act as soon as possible after the filing
thereof, and (c) cause such Registration Statement to remain
effective, with a prospectus at all times meeting the requirements
of the Act, for so long as a prospectus may be required to be
delivered pursuant to the Act. Pursuant to Section 6(a) of the
Act, the officers and directors of Dycom shall sign the
Registration Statement.
To the extent permitted without destroying the pooling of
interests as determined by the opinion of Deloitte & Touche L.L.P.,
Dycom shall be responsible for all costs and expenses of any such
Registration Statement, including the legal, accounting and
printing costs. Dycom shall also qualify such shares (at Dycom's
expense) in such states as Dycom qualifies other shares included in
17
the offering. Dycom's obligations hereunder are expressly
conditioned on the Communications Shareholders furnishing Dycom in
writing such information concerning the Communications Shareholders
and the terms of the proposed offering as Dycom shall reasonably
request or require for inclusion in the Registration Statement.
Section 5.11 Untrue Statements. No representation or
warranty by Dycom or Acquisitions in this Agreement nor any
information, statement or certificate furnished or to be furnished
to Communications pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any
untrue statement of a material fact, or omits or will omit to state
a material fact necessary to make the statements contained therein
not misleading.
Section 5.12 No Material Adverse Change. Since July 31,
1996, there has not been (i) any material adverse change in the
financial condition, business properties or assets of Dycom and its
subsidiaries taken as a whole; (ii) any loss or damage to any of
the properties or assets of Dycom or its subsidiaries (whether or
not covered by insurance) which has materially and adversely
affected Dycom or impaired the ability of Dycom to conduct its
business; (iii) any other event or condition of any character which
has materially and adversely affected the business of Dycom or its
subsidiaries; (iv) any mortgage or pledge of any of the properties
or assets of Dycom other than those disclosed in materials
furnished to Communications; (v) any purchase, redemption, or other
acquisition by Dycom of any shares of the stock of Dycom; or (vi)
any declaration or payment of any dividend or other distribution in
respect of the stock of Dycom. Neither Dycom nor any subsidiary is
in material violation of any law, regulation, governmental order or
judgment necessary to the conduct of its respective business which
violation has a material adverse effect on the financial condition,
business, properties or assets of Dycom and its subsidiaries taken
as a whole.
Section 5.13 Litigation. Dycom has furnished or will
furnish at the time of the execution of this Agreement, to the
Communications Shareholders a written description (the "Litigation
List") dated the date of this Agreement, of all material civil or
criminal actions, proceedings or investigations pending or
threatened by or before any court, governmental agency, regulatory
authority or arbitrator against Dycom and its subsidiaries or any
director or officer of Dycom, in such capacity, or its
subsidiaries, as either plaintiff or defendant. The Litigation
List will be supplemented from time to time as necessary prior to
the Closing Date.
Section 5.14 Tax Returns. Dycom has filed all applicable
United States, state and local tax returns required to be filed,
18
and all other material tax returns required to be filed. Dycom has
paid or provided for the payment in full of all taxes due to any
governmental entity, and has not executed, or agreed to execute,
any waivers of any statutes of limitations on the right of any
taxing authority to assess additional taxes or to contest the
income or loss reported with respect to any tax period. No issues
have been raised (and are currently pending) as of the date of this
Agreement by the Internal Revenue Service or any other taxing
authority in connection with any of the aforesaid tax returns.
There are no material taxes or levies of any nature due or payable
to any local, state or federal government nor shall the
consummation of the transactions contemplated by this Agreement
result in any such taxes or levies being due and payable. The
receipts and expenditures reflected on the U.S. income tax returns
(including the supporting schedules filed therewith and as a part
thereof) filed by Dycom for the fiscal years ended July 31, 1994,
1995, and 1996, copies of which have been supplied (or will be
promptly supplied) to the Communications Shareholders, state
accurately the receipts and expenditures of Dycom and its
subsidiaries, as well as the taxable income and tax deductions for
the respective tax years, and the same were derived from the books
and records of Dycom and its subsidiaries.
Section 5.15 Continuity Acquisitions and Dycom's intent,
upon the consummation of the Merger, is to continue the business of
Communications, as presently conducted.
ARTICLE VI
Conduct of Business of Communications
Prior to Effective Time
Section 6.1 Normal Operation of Business. After the date
of this Agreement and prior to the Effective Time, Communications
and the Communications Shareholders agree that Communications:
(a) will use its reasonable efforts to preserve intact
its business and operate its business only in the usual,
regular and ordinary manner consistent with prior practices
and, to the extent consistent with such operation, will use
its reasonable efforts to (i) preserve its present
advantageous relationships with persons and entities having
business dealings with it, and (ii) preserve all of its
licenses, franchises, patents, trademarks, copyrights and
other rights;
(b) will maintain its properties in customary repair,
order and condition, reasonable wear and use excepted, and
will maintain in full force and effect insurance substantially
comparable in amount and scope to that which it has as of the
19
date of this Agreement upon all of its properties and with respect
to the conduct of its business;
(c) will maintain its books, accounts and records in the
usual, regular and ordinary manner, on a basis consistent with
prior years, and will duly comply in all material respects
with all laws applicable to it and to the conduct of its
business; and
(d) will advise Dycom of all unusual or extraordinary
requests and opportunities to provide service or expand its
business.
Section 6.2 Restricted Acts. Without the prior written
consent of Acquisitions and Dycom, Communications and the
Communications Shareholders agree that, prior to the Effective
Time, Communications will not:
(a) cause or permit its Articles of Incorporation or its
by-laws to be amended;
(b) purchase, redeem or retire any shares of its capital
stock;
(c) merge or consolidate with, or sell any of its assets
to (other than in the ordinary course of business), or
purchase or otherwise acquire all or a major part of the stock
or assets of, any other corporation or partnership, or in any
way change the character of its business;
(d) encumber or mortgage any of its property or assets or
enter into any transaction or make or enter into any contract
or commitment which is not in the ordinary course of business,
or, other than in the ordinary course of its business, incur
any obligation (contingent or otherwise) or transfer or convey
any material assets or property;
(e) enter into any arrangement, agreement or undertaking
for, or pay or promise to pay or grant any stock option,
bonus, special compensation, or general or uniform increase in
rates or pay, salary or other benefits to employees or enter
into any employment agreements with officers or management
personnel other than as specifically contemplated by this
Agreement;
(f) declare or pay any dividend or make any other
distribution or payment on or in respect of its stock;
(g) other than in the ordinary course of business, waive
any claims having value or release any rights under contracts,
leases or license agreements;
(h) without notifying Acquisitions and Dycom and
discussing the matter with it, and other than in the ordinary
course of business, bring suit, or file a complaint or be
named as a party plaintiff in any suit, action or proceeding,
by or before any court, governmental agency or regulatory
20
authority or before an arbitrator; or
(i) organize or cause to be organized any subsidiary.
Section 6.3 No Stock Issued. No increase will be made in
the number of shares of the capital stock of Communications issued
and outstanding, and no warrant or any other right to purchase or
convert any obligation or security into shares of capital stock of
Communications will be granted or issued.
Section 6.4 Supplements to Lists. Until the Closing Date,
Communications shall from time to time prepare and furnish to Dycom
lists of schedules (individually, a "Supplemental List" or
"Supplemental Schedule," respectively) which shall supplement, as
the case may be, the Document List, Asset List, Litigation List,
Employee List, or any other lists or schedules which Communications
shall have delivered hereunder, as necessary to keep such list or
schedule current and accurate. Each Supplemental List and each
Supplemental Schedule shall not be deemed to change in any respect
the representations and warranties given as of the date of this
Agreement, provided, however, that Dycom and Acquisition's sole
remedy, in the event any such Supplemental List or lists
individually or collectively materially changes the original list
or lists, shall be to terminate this Agreement. At the request of
Dycom, Communications shall deliver to Dycom copies of any
documents pertaining to the matters listed or described in any such
lists or schedules.
ARTICLE VII
Covenants of Communications and the
Communications Shareholders.
Communications and the Communications Shareholders covenant as
follows:
Section 7.1 Right of Access and Furnishing Information.
Communications will furnish to Dycom or its duly appointed
representatives such access to all of the properties, books,
contracts, commitments and records of Communications, and will
furnish to Dycom all such documents and copies of documents and
records and information with respect to the affairs of
Communications and will make its officers and employees available
to Dycom or such representatives for such consultation, at
reasonable times, as Dycom shall from time to time reasonably
request. Communications will furnish Dycom all the information
concerning Communications required for inclusion in any application
or statement or notice made or to be made by Dycom to any
governmental body, stock exchange or essential private party in
connection with the transactions contemplated by this Agreement.
21
Section 7.2 Confidentiality. Communications, the
Communications Shareholders and their representatives will hold in
confidence the existence and substance of this Agreement and any
data and information obtained with respect to Dycom or Acquisitions
or their businesses from any representative, officer, director or
employee of Dycom or Acquisitions, or from any books or records of
either of them in connection with this Agreement, and shall not use
such data or information or disclose the same to others, except to
the extent such data or information is published or is a matter of
public knowledge or is required by any applicable law or regulation
to be disclosed, or until the transactions contemplated hereunder
shall have been consummated. If this Agreement is terminated for
any reason, all written data and information obtained from Dycom or
Acquisitions in connection with the Agreement shall be returned to
Dycom or Acquisitions, and Communications and the Communications
Shareholders will use all reasonable efforts to keep confidential
any information obtained by them from Dycom or Acquisitions in
connection with the Agreement unless and until such information is
ascertainable from public or published information or trade sources
or is otherwise a matter of public knowledge.
Section 7.3 Consents. Communications shall obtain the
necessary consents and approvals to the extent the same are so
required, of other persons and governmental authorities to the
transactions contemplated by this Agreement, to the performance by
Communications of its obligations under this Agreement and to the
right of the Surviving Corporation by the Merger to succeed to the
rights of Communications. In the event that Communications,
through its reasonable efforts, is unable to secure the necessary
consents and approvals, this Agreement may be terminated.
Section 7.4 Tax Liabilities In the event a review or audit
of Communications' tax returns for any year prior to the Closing
Date results in an assessment for additional taxes due from
Communications, based upon a determination by the assessing tax
authority that such additional taxes are due because of (a) a
finding of fraud and/or (b) the disallowance of any deduction taken
by Communications and determined to be a personal expense of either
of the Communications Shareholders, the Communications Shareholders
shall indemnify the Surviving Corporation for any and all taxes,
including interest and penalties, if any, assessed against the
Surviving Corporation.
22
ARTICLE VIII
Covenants of Dycom and Acquisitions
Dycom and Acquisitions covenant as follows:
Section 8.1 Furnishing of Information. Dycom and
Acquisitions shall furnish Communications and the Communications
Shareholders all information concerning Dycom and Acquisitions
required for inclusion in any application, statement or notice made
by Communications or the Communications Shareholders to, or filed
by Communications or the Communications Shareholders with, any
governmental body in connection with the matters contemplated by
this Agreement.
Section 8.2 Confidentiality. Dycom, Acquisitions and their
representatives will hold in confidence the existence and substance
of this Agreement and any data and information obtained with
respect to Communications or the business of Communications or any
of the Communications Shareholders from any representative,
officer, director or employee of Communications, or from any books
or records of Communications in connection with this Agreement, and
shall not use such data or information or disclose the same to
others, except to the extent such data or information is published
or is required by any applicable law, rule or regulation including,
without limitation, the Securities Exchange Act of 1934 and the
rules of any stock exchange, to be disclosed, or until the
transaction contemplated hereunder shall have been consummated. If
this Agreement is terminated for any reason, all written data and
information obtained by Dycom or Acquisitions from Communications
in connection with this Agreement shall be returned to
Communications, and Dycom and Acquisitions will use all reasonable
efforts to keep confidential any information obtained by them
unless and until such information is ascertainable from public or
published information or trade sources or is otherwise a matter of
public knowledge. Dycom and Acquisitions shall notify and discuss
beforehand with the Communications Shareholders disclosure with
respect to this Agreement that Dycom or Acquisitions makes to the
news media.
Section 8.3 Personal Guaranties. Dycom agrees to use
its best efforts to remove and replace the Communications
Shareholders as personal guarantors of lines of credit of
Communications. Communications Shareholders warrant that there are
no amounts in excess of $5,337,456.76 due under such lines
of credit as of the date hereof. If Dycom is unsuccessful in
removing and replacing the Communications Shareholders as
guarantors, Dycom agrees to indemnify Communications Shareholders
for any claims made on such guaranty agreements.
23
Section 8.4 Loans to Communications Shareholders. Dycom
shall satisfy or cause Communications to satisfy all loans or
amounts payable by Communications to the Communications
Shareholders, if any, within eight (8) months after the Closing
Date. Communications Shareholders warrant that the total of the
debts due Communications Shareholders as of the date hereof does
not exceed $670,000.
Section 8.5 Securities and Exchange Commission Filings,
etc. Until the Closing Date, Dycom shall furnish to Communications
and the Communications Shareholders promptly after such filings or
communications are made, copies of any reports, statement or other
filings filed by it with the Securities and Exchange Commission and
the New York Stock Exchange and all mailings or similar
communications to its stockholders.
Section 8.6 Stock Transfer Taxes. Dycom shall pay any and
all documentary stamp taxes, transfer taxes or other stock issued
taxes of any kind due upon any issue, exchange or transfer of the
Dycom Shares in connection with this Agreement.
ARTICLE IX
Transferability of Dycom Shares
Section 9.1 Share Certificate Legend. Each certificate
evidencing the Dycom Shares shall bear a legend to disclose the
limitations upon its transferability by virtue of the requirements
of the Securities Act of 1933, as amended. The aforesaid legend
shall read as follows:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, (THE
"ACT") IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION PROVIDED IN SECTION 4(2) OF THE
ACT, NOR WITH ANY STATE SECURITIES REGULATORY
AUTHORITY IN RELIANCE UPON PARTICULAR
STATUTORY TRANSACTIONAL EXEMPTIONS. IT IS
UNLAWFUL TO CONSUMMATE A SALE OR OTHER
TRANSFER OF THESE SECURITIES WITHOUT PRIOR
REGISTRATION UNDER THE ACT AND APPLICABLE
STATE STATUES OR RECEIPT OF AN OPINION OF
COUNSEL FOR THE ISSUER TO THE EFFECT THAT SUCH
PROPOSED SALE OR OTHER TRANSFER DOES NOT
AFFECT THE EXEMPT STATUS OF THE ORIGINAL
ISSUANCE AND SALE OF THIS SECURITY AND IS IN
COMPLIANCE WITH ALL APPLICABLE FEDERAL AND
STATE SECURITIES LAWS.
Dycom shall make a notation in its records of the foregoing
24
limitations on transferability, and shall so advise its transfer
agent. The foregoing legend shall be removed from a certificate
representing shares covered by an effective registration statement
under the Securities Act of 1933 or shares as to which, in the
opinion of Chopin, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, or other counsel
satisfactory to Dycom, such registration is not required, and any
stop transfer instructions with the transfer agent will be revoked
promptly.
Section 9.2 Subsequent Sale of Securities. The
Communications Shareholders acknowledge that the Dycom Shares to be
delivered at the Closing will not have been registered under the
Securities Act of 1933, as amended, or under any state securities
act, in reliance upon the applicable federal or state exemption for
private offerings, and the Communications Shareholders agree and
covenant that the shares to be received by them at the Closing are
being acquired solely for their own account, for investment and not
with a view to the sale or distribution thereof.
ARTICLE X
Conditions Precedent to Obligations of
Dycom and Acquisitions
All obligations of Dycom and Acquisitions hereunder are
subject to the fulfillment (unless specifically waived in writing
by Dycom and Acquisitions subsequent to the execution of this
Agreement) of each of the following conditions at or before the
Closing Date:
Section 10.1 Warranties True. All representations and
warranties of Communications and the Communications Shareholders
contained in this Agreement shall in all material respects be true
on, and with the same force and effect as though made on, the
Closing Date, except for changes permitted by this Agreement.
Section 10.2 No Loss or Calamity. Communications shall not
have suffered, at or prior to the Closing Date, on account of any
cause whatsoever, any loss which materially and adversely affects
the value of its assets or business (whether or not such loss shall
have been insured).
Section 10.3 Communications' and the Communications
Shareholders' Performance. Communications and the Communications
Shareholders shall have performed in all material respects all
obligations and agreements required of them and complied with all
covenants applicable to them as contained in this Agreement, to be
performed and complied with by them on or prior to the Closing
Date.
25
Section 10.4 Good Standing. There shall have been delivered
to Dycom and Acquisitions evidence, whether in the form of
telegrams, certificates or otherwise, satisfactory to Dycom and
Acquisitions to establish that Communications is in subsistence (i)
in the state of its incorporation; and (ii) in every jurisdiction,
in which the character and location of its assets or the nature of
the business transacted by it requires that it be qualified to do
business.
Section 10.5 Opinion of Counsel for Communications and the
Communications Shareholders. Dycom and Acquisitions shall have
been furnished with an opinion, dated the Closing Date, of ▇▇▇▇▇▇
and ▇▇▇▇▇▇, counsel for Communications and the Communications
Shareholders, to the effect that:
(i) Communications is a validly organized and existing
corporation in subsistence under the laws of the Commonwealth
of Pennsylvania. Communications is duly qualified and in good
standing as a foreign corporation authorized to do business in
each jurisdiction where, because of the nature of its business
or properties, such qualification is required, except where
the failure to be so qualified and in good standing would not
have a material or adverse affect on the financial condition,
business properties or assets of Communications.
Communications has all requisite corporate power under its
statutes and articles to carry on its business as then being
conducted;
(ii) The authorized capital stock of Communications
consists of 1000 shares of common stock, $1.00 par value, of
which 140 shares are issued and outstanding and 2000 shares of
preferred stock, $25.00 par value, all of which are issued and
outstanding. All such outstanding shares have been duly and
validly authorized and issued and are fully paid and
nonassessable;
(iii) The execution, delivery and performance of this
Agreement by Communications have been duly and validly
authorized by its Board of Directors and approved by all of
its shareholders in compliance with Pennsylvania law and its
Articles of Incorporation and by-laws, and this Agreement
constitutes the valid and binding obligation of Communications
and the Communications Shareholders, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general
application affecting the enforcement of creditors' rights
generally;
(iv) All consents or approvals (including authorizations
or orders of any private person, entity or governmental body)
required for Communications or the Communications Shareholders
26
to enter into and perform this Agreement and the transactions
contemplated hereby, and all supplements thereto, have been
obtained;
(v) All other actions and proceedings required by law to
be taken by Communications and the Communicating Shareholders
at or prior to the Closing Date in connection with this
Agreement and the transactions provided for herein have been
duly and validly taken;
(vi) Except as may be specified by such counsel, they do
not know after inquiry of Communications and the
Communications Shareholders, of any material litigation,
proceeding or governmental investigation pending or threatened
against or relating to Communications, or any properties or
business, or any litigation, proceeding or governmental
investigations, pending or threatened, relating to the
transactions contemplated by this Agreement;
(vii) The execution, delivery and performance of this
Agreement by Communications and the Communications
Shareholders will not materially violate or result in a
material breach of or constitute a material default under any
provision of Communications' Articles of Incorporation or by-laws, or
any indenture, mortgage, lien, lease agreement,
instrument, order, judgment decree, or any other restriction
of any kind or character to which any property of
Communications is subject or bound; and
(viii) The Articles of Merger referred to in Section 1.2
has been duly executed by Communications in accordance with
Pennsylvania law. To the best of counsel's knowledge, upon
the filing of the Articles of Merger with the Department of
State of the Commonwealth of Pennsylvania, the Merger will
become effective as provided in the Articles of Merger. Each
share of Communications capital stock issued and outstanding
immediately prior to the Effective Time will, at the effective
time stated in the Articles of Merger with the Department of
State of the Commonwealth of Pennsylvania, automatically and
without any action on the part of the holder thereof, be
converted into the Dycom Shares as provided in Article II
hereof.
In rendering such opinions, such counsel may rely, as to
factual matters, upon certificates required by Section 10.4 hereof
as well as any other certificates such counsel may request to be
furnished by officers, directors, or shareholders of Communications
and upon such other documents and data as such counsel deem
appropriate as a basis for its opinion. Such counsel may state
that they are admitted to practice only in the Commonwealth of
Pennsylvania, that they are not admitted to the Bar in any other
27
state and are not expert in the law of any other state, and that to
the extent their opinion concerns the laws of any other state, such
counsel has relied upon the opinion of counsel reasonably
satisfactory to such counsel who are admitted to practice in such
state.
Section 10.6 Communications Shares. The Communications
Shares shall be free and clear of all claims and encumbrances
whatsoever.
Section 10.7 Absence of Litigation. There shall not be any
actual or threatened action, proceeding or investigation which is
directed towards challenging, restraining, prohibiting or
invalidating the Merger or which, in the reasonable judgment of
Dycom or Acquisitions, could affect the right of the Surviving
Corporation to own, operate or control after the Effective Time any
material part of the property or business of Acquisitions or
Communications.
Section 10.8 Employment Agreement. Communications and the
Communications Shareholders shall have terminated by mutual
agreement any existing employment agreement(s) between them, and
the Communications Shareholders shall have entered into employment
agreements with Communications in the form and substance attached
hereto as Exhibits "B.1" and "B.2" for each such shareholder,
respectively.
Section 10.9 Environmental Indemnity etc. Communications
and Communications Shareholders shall have furnished to Dycom and
Acquisitions copies of any and all presently existing
environmental, audits, reports or studies within their possession
or control regarding any real estate owned, operated, possessed, or
used by Communications on or before the Effective Time and,
thereafter, also provide Dycom and Acquisitions copies of any such
audits, reports or studies. Communications Shareholders shall have
executed an indemnity in favor of Dycom whereby the Communications
Shareholders, jointly and severally, indemnify and hold Dycom and
the Surviving Corporation harmless from and against any losses,
claims, damages, liabilities, and necessary costs and expenses,
including, without limitation, reasonable legal, consulting,
engineering and other expenses and any fines or penalties, arising
out of or in connection with any Environmental Conditions which
existed as of and/or prior to the Closing Date and which are the
result of Communications' activities and not those of its
predecessors in title or interests or other third parties. Losses
shall include losses, claims, damages, liabilities, and necessary
costs and expenses, including, without limitation, reasonable
legal, consulting, engineering and other expenses which may be
incurred by Dycom or the Surviving Corporation resulting from
claims for damages for bodily injury or property damages which
28
arose out of or in connection with any Environmental Conditions
which existed as of and/or prior to the Closing Date and which were
the result of Communications' activities. Losses shall also
include all costs incurred to remedy to the satisfaction of any
governmental authority, any Environmental Conditions which existed
as of and/or prior to the Closing Date and which were the result of
Communications' activities.
For purposes of this Section 10.9, "Environmental Conditions"
shall mean any conditions that requires remedial action and/or may
result in claims, demands and liabilities to the Communications
Shareholders or the Surviving Corporation with respect to the
alleged generation, emission, storage, disposal, discharge or
release or threatened release of Hazardous Substances into soil,
surface waters, ground waters, streams, ponds, basins or lagoons,
wherever located. For these purposes, "Hazardous Substances" shall
mean any pollutants or contaminants, toxic substances, hazardous
wastes, or hazardous substances (as defined in or pursuant to the
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., as
amended, and the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. 9601 et seq., as
amended), and petroleum products.
ARTICLE XI
Conditions Precedent to Obligations
of Communications and the
Communications Shareholders
All obligations of Communications and the Communications
Shareholders hereunder are subject to the fulfillment (unless
specifically waived in writing by Communications and the
Communications Shareholders subsequent to the execution of this
Agreement) of each of the following conditions at or before the
Closing Date.
Section 11.1 Warranties True. All representations and
warranties of Dycom and Acquisitions contained in this Agreement
shall in all material respects be true on, and with the same force
and effect as though made on, the Closing Date except for changes
permitted by this Agreement.
Section 11.2 No Loss or Calamity. Neither Dycom nor
Acquisitions shall have suffered, at or prior to the Closing Date,
on account of any cause whatsoever, any loss which materially and
adversely affects the value of its assets or business (whether or
not such loss shall have been insured).
Section 11.3 Performance by Dycom and Acquisitions. Dycom
and Acquisitions shall have performed in all material respects all
obligations and agreements and complied with all covenants
29
contained in this Agreement, to be performed and complied with by
it at or prior to the Closing Date.
Section 11.4 Certificate of Officer. Dycom and Acquisitions
shall deliver to Communications a certificate of their President
certifying to the matters contained in Sections 11.1, 11.2 and
11.3.
Section 11.5 Opinion of Counsel for Dycom and Acquisitions.
Communications and the Communications Shareholders shall have been
furnished with an opinion, dated the Closing Date, of Chopin,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, counsel for Dycom and Acquisitions, to the
effect that:
(i) Dycom and Acquisitions are validly organized and
existing corporations in good standing under the laws of the
Florida and Pennsylvania, respectively. Each has all
requisite corporate power to carry on its respective business
as then conducted and is qualified to do business in every
jurisdiction in which the character and location of its assets
or the nature of the business transacted by it requires such
qualification except where the failure to be so qualified and
in good standing would not have a material and adverse effect
on the financial condition, business, properties or assets of
Dycom, its subsidiaries and Acquisitions taken as a whole.
Dycom and Acquisitions each has all requisite power under its
Articles of Incorporation to carry on its business as then
being conducted.
(ii) The authorized stock of Dycom consists of
50,000,000 shares of common stock, $.33 1/3 par value, of
which 8,805,943 shares are issued and outstanding, and
1,000,000 shares of preferred stock, $1.00 par value, of which
none are issued and outstanding. The authorized stock of
Acquisitions consists of 1,000 shares of common stock, $1.00
par value, of which 100 shares are issued and outstanding and
held by Dycom. All of the issued common stock of Dycom and
Acquisitions has been duly and validly authorized and issued
and is fully paid and nonassessable.
(iii) The execution, delivery and performance of this
Agreement by Dycom and the issuance by Dycom of the Dycom
Shares as contemplated by this Agreement, have been duly and
validly authorized and approved by its Board of Directors, as
required by any applicable laws, regulation, or articles of
incorporation, by-laws or agreement, and no further
proceedings of each of Dycom and Acquisitions are required
therefor; and this Agreement constitutes a valid and binding
obligation of Dycom and Acquisitions except as the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general
30
application affecting the enforcement of creditors' rights
generally.
(iv) The Dycom Shares to be delivered to the
Communications Shareholders pursuant to this Agreement, when
delivered, will be duly authorized and validly issued and
outstanding and fully paid and nonassessable.
(v) All consents and approvals required for Dycom or
Acquisitions to enter into and perform this Agreement and the
transactions contemplated hereby have been obtained.
(vi) All other actions and proceedings required by law
to be taken by each of Dycom and Acquisitions at or prior to
the Closing Date in connection with this Agreement and the
transactions provided for herein have been duly and validly
taken.
(vii) Neither the execution, delivery and performance of
this Agreement by either Dycom or Acquisitions, nor the
issuance of the Dycom Shares pursuant hereto, will materially
violate or result in a material breach of or constitute a
material default under any provision of each of Dycom's or
Acquisitions's Articles of Incorporation or by-laws, or, to
the best knowledge of such counsel after due investigation,
any indenture, mortgage, lien, lease, agreement, instrument,
order, judgment, decree or any other restriction of any kind
or character to which any property of each of Dycom and
Acquisitions is subject or by which each of Dycom and
Acquisitions is bound.
(viii) Except as may be specified by such counsel, they
do not know after inquiry of each of Dycom and Acquisitions of
any material litigation, proceeding or governmental
investigation pending or threatened against or relating to
each of Dycom and Acquisitions, its properties or business, or
any litigation, proceeding or governmental investigation,
pending or threatened, relating to the transactions
contemplated by this Agreement.
(ix) The Articles of Merger referred to in Section 1.2
has been duly executed by Acquisitions in accordance with
Pennsylvania law. To the best of counsel's knowledge, upon
the filing of the Articles of Merger with the Secretary of
the Commonwealth of Pennsylvania, the Merger will be effective
as provided in the Articles of Merger. Each share of
Communications capital stock issued and outstanding
immediately prior to the Effective Time will, at the effective
time stated in the Articles of Merger, automatically and
without any action on the part of the holders thereof, be
converted into the Dycom Shares as provided in Article II
hereof.
31
In rendering such opinions, such counsel may rely on the
certificates delivered under Section 11.4 and as to factual matters
upon certificates furnished by officers or directors of Dycom or
Acquisitions or by government officials, and upon such other
documents and data as such counsel deem appropriate as a basis for
their opinion. Such counsel may state that they are admitted to
practice only in the States of Florida, Louisiana, Georgia and
Connecticut, that they are not admitted to the Bar in any other
state and are not experts in the law of any other state, and that
to the extent their opinions concern the laws of any other state
such counsel has relied upon the opinion of counsel reasonably
satisfactory to such counsel who are admitted to practice in such
state.
Section 11.6 Absence of Litigation. There shall not be any
actual or threatened action, proceeding or investigation which is
directed towards, restraining, prohibiting or invalidating this
Merger.
Section 11.7 Employment Agreement. Communications shall
have entered into a separate employment agreement with the
Communications Shareholders, respectively, in the form and
substance attached hereto as Exhibits "B.1" and "B.2."
Section 11.8 Release. Communications and the Communications
Shareholders shall execute a release in the form attached hereto as
Exhibit "C."
Section 11.9 Consents. The consents of the Board of
Directors of Dycom, the Board of Directors of Acquisitions, and the
Lenders, as provided in Section 5.5 hereof, shall be delivered to
the Communications Shareholders.
Section 11.10 PNC and Comcast Cable Communications, Inc.
shall have consented to the Merger on or before the Closing Date.
ARTICLE XII
EXPENSES
Section 12.1 Parties to Pay Own Expenses. Dycom,
Communications, Acquisitions and the Communications Shareholders
will pay their respective expenses, if any, incurred in connection
with the transactions contemplated by this Agreement.
ARTICLE XIII
TERMINATION AND AMENDMENT
Section 13.1 Termination. This Agreement may be
terminated without liability, at any time prior to the Closing,
only on the following conditions or occurrences:
32
(a) by the joint agreement of Dycom, Acquisitions,
Communications and the Communications Shareholders;
(b) by Dycom and Acquisitions, if they have not
received an opinion by Deloitte & Touche L.L.P. that the
Merger will qualify as a pooling of interests;
(c) by Dycom and Acquisitions or Communications and
the Communications Shareholders, if the Closing shall not
have been consummated on or before July 31, 1997, unless
adjourned to a later date by mutual consent in writing; or
(d) by Dycom and Acquisitions, if any matters come to
their attention relating to the business of Communications
which could materially and adversely affect the financial
condition, business, properties or assets of Communications;
provided, however, that an adverse change or effect which
results only from a general decline in economic or industry
conditions not related specifically to Communications will
not be deemed to be an event included in or contemplated by
this paragraph.
(e) by Communications or the Communications
Shareholders, if any matters come to their attention
relating to the business of Dycom which could materially and
adversely affect the financial condition, business,
properties or assets of Dycom; provided, however, that an
adverse change or effect which results only from a general
decline in economic or industry conditions not related
specifically to Dycom will not be deemed to be an event
included in or contemplated by this paragraph.
Section 13.2 Amendment. Dycom, Acquisitions,
Communications and the Communications Shareholder may, in a
writing signed and duly authorized by all of them, amend, modify
or supplement this Agreement at any time.
ARTICLE XIV
Binding Agreement
Section 14.1 Succession. All terms, covenants,
representations, warranties and conditions of this Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors
and permitted assigns.
Section 14.2 Assignment. Dycom shall not be permitted
to assign its interest in this Agreement.
33
ARTICLE XV
Survival of Warranties
Section 15.1 Except as otherwise provided in the
Agreement, all representations, warranties and covenants of the
parties made herein or in connection herewith shall survive the
Closing for a period of one year. Those contained in Sections
9.1, 9.2 and 18.8 shall not be limited in term, those contained
in Section 8.1 shall survive for five years, and those made by
Communications and the Communications Shareholders which (a)
relate to tax or environmental matters or (b) are contained in
Section 4.22 shall survive for the greater of, in each case, five
years or the expiration of all statutes of limitations applicable
with respect thereto.
ARTICLE XVI
Dycom Directorship
Section 16.1 Subject to the provisions hereof, ▇▇▇▇▇▇
▇▇▇▇▇▇ shall have the right to nominate a person, including
himself, to be a member of Dycom's Board of Directors. Any such
nominee shall by subject to approval by Dycom and, in the event
required by Dycom's Articles of Incorporation and/or by-laws, to
the approval of Dycom shareholders. The right to propose a
nominee for Dycom's Board of Directors, as provided in this
Article, shall be exercisable only (a) after the expiration of
six (6) months following the Closing Date, (b) during the initial
term of ▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ employment agreement, and (c) while
▇▇▇▇▇▇ ▇▇▇▇▇▇ remains record owner of 250,000 Dycom shares
acquired by him as a result of the Merger or otherwise.
ARTICLE XVII
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT FILING
Section 17.1 The parties will file all required
notification and report forms pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976 (the "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act")
and they will promptly respond to all requests for additional
information made by either the Federal Trade Commission ("FTC")
or the Department of Justice. Each party will notify the other
party and their counsel promptly of any requests for additional
information, comments or questions by the FTC or the Antitrust
Division of the U.S. Department of Justice ("Antitrust Division")
as to such filings and will promptly keep the other informed with
respect to filings and communications between a party or its
34
representatives, on the one hand, and the FTC or the Antitrust
Division, on the other hand, with respect to this Agreement or
the transactions contemplated hereby.
ARTICLE XVIII
Notices and Provisions of General Application
Section 18.1 Limitations for Breach or Pursuant to
Indemnity. Notwithstanding anything contained herein to the
contrary, the Communications Shareholders' liability for any
breach of warranty or covenant or pursuant to any indemnity given
under this Agreement shall be limited to the extent that such
liabilities exceed $375,000.00, and in no event shall
Communications Shareholders' liability exceed $2,800,000.00. The
limitation of liability set forth in this section shall be
applicable to any and all causes of action.
Section 18.2 Notices. All notices, requests, waivers and
other communications required or permitted to be given pursuant
to this Agreement shall be in writing and shall be deemed to have
been duly given if delivered personally, given by prepaid
telegram or mailed registered or certified first-class mail,
postage prepaid, as follows:
If to Communications or Communications Shareholders:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
c/o Communications Construction Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esquire
▇▇▇▇▇▇ and ▇▇▇▇▇▇
Union Meeting Corporate Center V
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
35
If to Dycom and/or Acquisitions:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Dycom Industries, Inc.
First Union Center
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies to:
L. ▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
Chopin, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Section 18.3 Place of Closing, Closing Date. The Closing
shall take place at the Palm Beach, Florida offices of Chopin,
▇▇▇▇▇▇ & Yudenfreund on July 31, 1997, or at such other place,
and at such time, as the parties may mutually agree. The date of
Closing is herein called the "Closing Date." At Closing, the
parties to this Agreement will exchange certificates, opinions
and other documents in order to determine whether the terms and
conditions of this Agreement required to be satisfied at or prior
thereto have been satisfied. If the terms and conditions
required to be satisfied have been so satisfied, the surrender
and exchange of certificates representing the Communications
Shares and Dycom common stock shall occur as provided in Section
2.2 hereof and the Articles of Merger, theretofore duly executed,
shall be filed with the Department of State of the Commonwealth
of Pennsylvania, pursuant to Pennsylvania law, in order to
consummate the Merger.
Section 18.4 Entire Understanding. This Agreement
constitutes the entire agreement and supersedes all prior
agreements, both written and oral, among the parties hereto with
respect to the subject matter hereof.
Section 18.5 Waivers. The failure of any party at any
time or times to require performance of any provision hereof
shall in no manner affect its right at a later time to enforce
the same. No waiver by any party of any condition or of any
breach of any term, covenant, representation or warranty
contained in this Agreement shall be effective unless in writing,
and no waiver in any one or more instances shall be deemed to be
a further or continuing waiver of any such condition or breach in
36
other instances or a waiver of any other condition or breach of
any other term, covenant, representation or warranty.
Section 18.6 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
Section 18.7 Headings. The headings preceding the text of
Sections of this Agreement are for convenience only and shall not
be deemed part of this Agreement.
Section 18.8 Applicable Law. This Agreement shall be
governed by and construed and enforced in accordance with the
laws of the State of Florida.
Section 18.9 Attorney's Fees. In the event any party
shall be required to file suit or otherwise retain counsel to
enforce or assist in the enforcement of any of the terms of this
Agreement or to recover damages for the breach of this Agreement,
the prevailing party shall be entitled to recover attorney's fees
and costs incurred at all levels of proceedings. This provision
shall survive the Closing.
37
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first above written.
ATTEST: COMMUNICATIONS CONSTRUCTION
GROUP, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: President
(Corporate Seal)
COMMUNICATIONS SHAREHOLDERS
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, Individually
ATTEST: DYCOM INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Its: Chairman & CEO
(Corporate Seal)
ATTEST: DYCOM ACQUISITIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Its: Chairman & President
(Corporate Seal)