Construction Partners, Inc. 10-K

Item 3. Legal Proceedings. Due to the nature of our business, we are involved in routine litigation or subject to other disputes or claims related to our business activities, including, among other things, workers’ compensation claims, employment-related disputes and issues related to liability, breach of contract or tortious conduct in connection with our performance of services and provision of materials. We are also subject to government inquiries in the ordinary course of business seeking information concerning our compliance with government construction contracting requirements and various laws and regulations, the outcome of which cannot be predicted with certainty. We are a party to an arbitration proceeding that commenced in March 2020 relating to a transaction in which a former stockholder of the Company agreed in March 2016 to sell shares of the Company’s common stock to a third party, with the certificates representing the shares to be held in escrow and released over time as installment payments were made. In January 2017, the Company paid a cash 22 Table of Contents dividend to its stockholders. The seller alleges that he was entitled to receive approximately $1.5 million in dividends with respect to shares for which the stock certificates were still in escrow at the time the dividend was paid. The seller also has claimed an unspecified amount of damages arising out of his allegation that the Company provided insufficient information to him prior to the transaction regarding the status and timing of the Company’s initial public offering in May 2018. The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in this proceeding; however, there can be no assurances that it will be successful in its efforts. In the opinion of our management, after consultation with legal counsel, none of the pending inquiries, litigation, disputes or claims against us, if decided adversely to us, would have a material adverse effect on our financial condition, cash flows or results of operations. Item 4. Mine Safety Disclosures. The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 C.F.R. Part 229.104) is included in Exhibit 95.1 to this report. 23 Table of Contents PART II