Exhibit 2.3
STOCK PURCHASE & REGISTRATION RIGHTS AGREEMENT
This STOCK PURCHASE AND REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of December 31, 1998, is made and entered into by and between
Americable, Inc., a Minnesota corporation (the "Investor") and Vicom, Inc.,
a Minnesota corporation (the "Company").
WHEREAS, the Investor has effective December 31, 1998, acquired one million
three hundred fifty thousand (1,350,000) common shares (the "Securities") of
Vicom, Inc., pursuant to the terms and conditions of an Asset Purchase Agreement
between Enstar Networking Corporation and Company dated as of December 31, 1998
(the "Asset Purchase Agreement").
WHEREAS, it is a condition to the obligations of the parties to the Asset
Purchase Agreement to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for the other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
I. Sales and Securities. The Company hereby sells and transfers the
Securities to the Investor for the consideration set forth in the Asset Purchase
Agreement and subject to the additional terms and conditions of this Agreement.
II. Investor Representations. The Investor has been advised that these
Securities have not been registered under the Securities Act of 1933, as
amended, because in the opinion of the Company the sale of Securities to the
Investor is an exempt transaction under the Securities Act of 1933, as amended.
The Investor acknowledges that the Company's reliance on the exemption under
that Securities Act of 1933, as amended, is predicated upon the representations
made by the Investor in this Agreement. The Company has also advised the
Investor that these Securities are not being and have not been registered under
the Minnesota Securities Law because in the opinion of the Company the
transaction is exempt from registration under the Minnesota Securities Law.
The Investor hereby represents to the Company that these Securities are
being acquired for investment for the Investor's own account and not with
current intention to resell or otherwise distribute these Securities in
contravention of Section 5 of the Securities Act of 1933, as amended, or
applicable State Laws. In making these representations, the Investor
understands that the exemptions under the Securities Act of 1933, as amended
may not be applicable to this transaction if the Investor intends to acquire
these Securities for resale or distribution on behalf of other persons or
entities. The Investor also acknowledges that resale or distribution of these
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Securities may result in the Investor being deemed an "underwriter" within the
meaning of Section 2 (11) of the Securities Act of 1933, as amended, which could
give rise to civil and criminal liabilities.
The Investor warrants that its financial condition is presently adequate to
justify its investment in these Securities and the Investor warrants that is
experienced in investments and business matters and is aware of the financial
risks involved in investing in the Company's Securities.
The Investor acknowledges receipt of all financial and business information
related to the Company and its business, which it considers necessary and
advisable to form a decision concerning this investment. The Investor has
discussed the Company's business activities (including future plans) and the
Company's financial statements with its officers and does not desire any further
information or data concerning the Company. The Investor acknowledges that the
Company has offered and agreed to supply the Investor, and its accountants and
attorneys, with any information, data, memorandums, financial statements or
corporate records which pertain to the Company, and the Investor has been given
full access to all corporate records and financial statements of the Company.
The Investor will refrain from transferring or otherwise disposing of any
of the Securities, or any interest therein, in such manner as to cause the
Company to be in violation of the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act"), or applicable state securities
or blue sky laws.
The Investor agrees that the following legend shall be placed on the
Securities to be issued by the Company:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE THE SUBJECT OF A STOCK
PURCHASE AND REGISTRATION RIGHTS AGREEMENT SIGNED BY THE OWNER OF THESE
SECURITIES AND HENCE THESE SECURITIES MAY NOT BE SOLD, ASSIGNED,
DISTRIBUTED, PLEDGED, TRADED, TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT COMPLYING WITH THE TERMS AND CONDITIONS OF SAID INVESTMENT LETTER,
WHICH IS INCORPORATED HEREIN BY REFERENCE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER EITHER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES
LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND SUCH LAWS COVERING SUCH SECURITIES, OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY STATING
THAT SUCH SALE, TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER DISTRIBUTION
FOR VALUE IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
THE ARTICLES OF INCORPORATION OF THE CORPORATION SET FORTH THE RIGHTS,
PREFERENCE, PRIVILEGES, RESTRICTIONS AND OTHER MATTERS RELATING TO THE 8%
CLASS A CUMULATIVE CONVERTIBLE PREFERRED STOCK AND 10% CLASS B CONVERTIBLE
PREFERRED STOCK AND AUTHORIZE THE BOARD OF DIRECTORS TO FURTHER DESIGNATE
AND DIVIDE THE REMAINING SHARES OF UNDESIGNATED SHARES OF CAPITAL STOCK
INTO ONE OR MORE ADDITIONAL CLASSES OR SERIES AND TO ESTABLISH THE
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RELATIVE RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS RELATING THERETO.
THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT
CHARGE, A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND
RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OR SERIES AUTHORIZED TO BE
ISSUED. THE BOARD OF DIRECTORS HAS AUTHORITY TO DETERMINE THE RELATIVE
RIGHTS AND PREFERENCES OF SUBSEQUENT CLASSES OR SERIES WITHOUT SHAREHOLDER
APPROVAL.
III. Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Investor
which representations and warranties survive the acquisition of the
Securities by the Investor:
1. Corporate Existence and Power. The Company is duly incorporated,
validly existing and in good standing under the laws of the State of Minnesota.
The Company has all corporate powers and authority and all governmental
licenses, authorizations, consents and approvals (collectively, the "Permits")
required to carry on its business as now conducted, except where the failure to
obtain such Permits, individually or in the aggregate, would not have a Material
Adverse Effect (as defined below) on the Company. The Company is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect. The Company has made available
to the Company true and complete copies of the Company's articles of
incorporation and bylaws as currently in effect. For purposes of this
Agreement, a "Material Adverse Effect" means a material adverse effect, on the
condition (financial or otherwise), business, assets or properties of the
Company or on the ability of the Company to perform its obligations hereunder.
For purposes of this Agreement, any reference to any event, change or effect
being "material" means an event, change or effect, whether existing or
prospective, which is material in relation to the condition (financial or
otherwise), business, assets or properties of the Company or on the ability of
the Company to perform its obligations hereunder.
2. Corporate Authorization. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby and thereby are within the Company's corporate
powers and have been duly authorized by all necessary corporate action. This
Agreement constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except as such enforcement may
be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (b) general principles of equity (whether considered in a proceeding in
equity or at law).
3. Consents; Approvals. The execution, delivery and performance
by the Company of the Agreement and the consummation of the transactions
contemplated hereby by the Company require no action, by or in respect of,
notices to, or filing with, any governmental body, agency, official or authority
or any third party, other than those that have been or will be taken or made in
a timely manner.
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4. Non-Contravention. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (except in the case of
clauses (b), (c), and (d) of this Section 4, for any such matters that,
individually or in the aggregate, have not had, and will not have, a Material
Adverse Effect on the Company) (a) contravene or conflict with the articles of
incorporation or by laws of the Company (b) contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company or any of
its properties or assets, (c) constitute a default under or give rise to a right
of termination, cancellation, restriction or acceleration of any right or
obligation of the Company or to a loss of any benefit to which the Company is
entitled under any provision of any agreement, contract or other instrument
binding upon or applicable to the Company or any of its properties or assets or
any license, franchise, permit or other similar authorization held by or
applicable to the Company, or (d) result in the creation or imposition of any
Lien on any asset of the Company. For purposes of this Agreement, "Lien" means,
with respect to any asset, mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.
5. Capitalization. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock and 335,000 shares of preferred
stock, par value $ .01 per share (the "Preferred Stock"). As of the date hereof
(i) 2,156,236 shares of Common Stock are issued and outstanding and (ii) not
more than 60,000 shares of Preferred Stock are issued and outstanding. As of
the date hereof 1,100,000 shares of Common Stock are reserved for issuance
pursuant to employee stock options, warrants, and preferred stock conversions.
All outstanding shares of capital stock of the Company have been duly authorized
and validly issued, are fully paid and non-assessable, are free from preemptive
rights and were issued in compliance with all state and federal securities law.
Assuming proper payment is made therefore, the Securities are duly authorized,
validly issued and outstanding, fully paid and non-assessable, free from
preemptive rights and issued in compliance with all state and federal securities
laws.
Except as set forth in this Section, there are outstanding (a) no
other shares of capital stock or other voting securities of the Company, (b) no
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company, and (c) no other options or other
rights to acquire from the Company, and no obligation of the Company to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items in
clauses (a), (b), and (c) being referred to collectively as the "Company
Securities"). There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any Company Securities.
6. Financial Statements: SEC Filings. The Company has delivered to
the Investor copies of its unaudited balance sheet, as of November 30, 1998,
(the "Latest Balance Sheet") and the unaudited statements of earnings,
shareholders' equity and cash flows of the Company for the 11 month period ended
of such date (such statements and the Latest Balance Sheet being herein referred
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to as the "Latest Financial Statements"), and (b) its Annual Report to
Shareholders containing financial statements for the year ended December 31,
1997 (the "Annual Report"), including the audited balance sheets, as of
December 31, 1997, and December 31, 1996, and the audited statements of
earnings, shareholders' equity cash flows of the Company for each of the years
ended December 31, 1997, December 31, 1996, and December 31, 1995 (collectively,
the "Annual Financial Statements"). The Latest Financial Statements and the
Annual Financial Statements are based upon the information contained in the
books and records of the Company and fairly present the financial condition of
the Company as of the dates thereof and results of operations for the periods
referred to therein. The Annual Financial Statements have been prepared in
accordance with generally accepted accounting principles, consistently applied
throughout the periods indicated. The Latest Financial Statements have been
prepared in accordance with generally accepted accounting principles applicable
to unaudited interim financial statements (and thus may not contain all notes
and may not contain prior period comparative data which are required to be
prepared in accordance with generally accepted accounting principles)
consistently with Annual Financial Statements and reflect all adjustments
necessary to a fair statement of the results of the interim period(s) presented,
except for valuation reserves of $750,000. The Company has filed any and all
reports and other documents required to be filed under the rules and regulations
of the Securities and Exchange Commission (the "Commission") and is in
compliance with its reporting requirements under such rules and regulations.
7. Absence of Undisclosed Liabilities. Except as reflected in the
Latest Balance Sheet, the Company has no liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due, whether
known or unknown, and regardless of when asserted) arising out of transactions
or events heretofore entered into, or any action or inaction, or any state of
facts existing, with respect to or based upon transactions or events heretofore
occurring, except liabilities which have arisen after the date of the Latest
Balance Sheet in the ordinary course of business (none of which is a material
uninsured liability for breach of contract, breach of warranty, tort,
infringement, claim or lawsuit).
8. Litigation. There is no action, suit, investigation or
proceeding (or any basis therefor) pending against or, to the knowledge of the
Company, threatened against or affecting, the Company or any of its properties
before any court or arbitrator or any governmental body, agency or official
which, if determined or resolved adversely to the Company, could reasonable be
expected to have a Material Adverse Effect on the Company, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against the Company having, or which, insofar as can reasonably be foreseen,
may have, any such effect.
9. Full Disclosure: No Misrepresentations. No information
contained in the representations and warranties of the Company set forth in
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statement contained herein or
therein, in light of the circumstances under which they made, not misleading.
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To the knowledge of the Company, there is no fact or condition which has not
been hereto disclosed to Purchasers in writing which has a Material Adverse
Effect on the Company, or reasonably could be expected to have a Material
Adverse Effect on the Company.
IV. Additional Obligations of the Company and the Investor.
1. Legal Opinion. Simultaneous to, and as a condition to the
Investor's willingness to enter into this Agreement, the Investor shall receive
the opinion of Winthrop & Weinsteine, P.A., special counsel for the Company,
dated the date of this Agreement, substantially in the form attached hereto as
Exhibit A.
2. Registration Rights:
(a) As soon as practicable following a request by Investor, but
no later than 90 days following such request, the Company shall at its
own expense file a registration statement under the Securities Act of
1933 (the "Act") covering resale or distribution of the Securities by
the Investor or an affiliate of the Investor or take such other
actions required under the federal and state securities laws to permit
distribution of the Securities to the shareholders of an affiliate of
Americable. The Company will use its best efforts to cause such
registration statement, which shall be on Form S-1 or another
appropriate form, or other statement to become effective as soon as
practicable. For purposes of this Section, Securities and similar
references shall refer to the Securities and any additional securities
issued with respect to the Securities upon any stock split, stock
dividend, recapitalization or similar event.
(b) In connection with the Company's obligations, the Company
will:
(i)use its best efforts to cause the registration statement
or other statement to remain effective for such period as may be
reasonably necessary to effect for such period the sale or
distribution of such shares, not to exceed two years;
(ii) in the case of a registration statement, prepare and
file with the Commission such amendments to such registration
statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for
such period as may be reasonably necessary to effect the sale of
such securities, not to exceed two years;
(iii) in the case of a registration statement, furnish to
the Investor and to the underwriters of the securities being
registered, if any, such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus
and such other documents as the Investor and underwriters may
reasonably request in order to facilitate the public offering of
such securities;
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(iv) use its best efforts to register or qualify the
securities covered by such registration statement or to be
distributed under such state securities or blue sky laws of such
jurisdictions as the Investors or the underwriters may reasonably
request within 20 days following the original filing of such
registration statement or other statement, except that the Company
shall not for any purpose be required to execute a general consent
to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not qualified; and
(v) prepare and promptly file with the Commission and
promptly notify the Investor of the filing of such amendment or
supplement to such registration statement or prospectus or other
statement as may be necessary to correct any statements of
omissions if, at the time when a prospectus or information
statement relating to such securities is required to be delivered
under the Securities Act, any event shall have occurred as the
result of which any such prospectus or any other prospectus or
information statement as then in effect would include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading.
(c) With respect to any registration of shares or other mechanism
of distribution pursuant to the Agreement, the Company shall bear the
following fees, costs and expenses: all registration, filing and NASD
fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, fees and disbursements of counsel for the
underwriter or underwriters of such securities (if the Company and/or
selling security holder are required to bear such fees and
disbursements), all internal Company expenses, the premiums and other
costs of policies of insurance against liability arising out of the
public offering, and all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be
registered or qualified. Fees and disbursements of counsel and
accountants for the Investor, underwriting discounts and commissions
and transfer taxes for the Investor and any other expenses incurred by
Investor not expressly included above shall be borne by Investor.
(d) In connection with the registration or distribution of the
Securities:
(i) The Company will indemnify and hold harmless the
Investor from and against any and all loss, damage, liability,
cost and expense to which the Investor may become subject under
the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement
or alleged untrue statement of any material fact contained in such
registration statement or information statement, any prospectus
contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state
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therein 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; providing, however, that the
Company will not be liable in any such case to the extent that any
such loss, damage, liability, cost or expense arises out of or is
based upon an untrue statement or omission or alleged omission so
made in conformity with information furnished by the Investor.
(ii) The Investor will indemnify and hold harmless the
Company from and against any and all loss, damage, liability, cost
or expense to which the Company may become subject under the
Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged
untrue statement of any material fact contained in such
registration statement or information statement, any prospectus
contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to
state therein 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, in each
case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in strict conformity
with information furnished by the Investor.
(iii) Promptly after receipt by an indemnified party pursuant
to the provisions of paragraph (a) or (b) of this section of
notice of the commencement of any action involving the subject
matter of the foregoing indemnity provisions, such indemnified
party will, if a claim thereof is to be made against the
indemnifying party pursuant of the provisions of said paragraph
(a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the
indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than hereunder. In
case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to
the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however,
if the defendants in any action include both the indemnified party
and the indemnifying party and there is a conflict of interest
which would prevent counsel for the indemnifying party from also
representing the indemnified party, the indemnified party or
parties shall have the right to select separate counsel to
participate in the defense or such action on behalf of such
indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to paragraph (a) or (b) for any legal
or other expense subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs
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of investigation, unless (i) the indemnified party shall have
employed counsel in accordance with the proviso of the preceding
sentence, (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of
commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party
at the expense of the indemnifying party.
3. Lock-Up Provision. The Investor agrees that for a period of two
years it will sell Securities only pursuant to the registration statement
required by paragraph IV.2 of this Agreement; provided, however, that such
provision shall not apply to a distribution of the Securities to the
shareholders of an affiliate of Investor. During such period, the Investor
agrees to sell no more than 5% of the outstanding voting securities of the
Company during any calendar quarter (based on the number of outstanding voting
securities at the beginning of such calendar quarter).
Company agrees to provide Investor with a stock certificate (or evidence
thereof) for the common shares acquired hereunder on the Closing Date (as
defined in the Asset Purchase Agreement).
4. Anti-Dilution Provision. For purposes of this Section, Securities
and similar references shall refer to the Securities and any additional
securities issued with respect to the Securities upon any stock split, stock
dividend, recapitalization or similar event. In the event that the Company
sells any shares of its voting stock for a price of less than $2.00 per share
(as adjusted to reflect any adjustments in the Securities pursuant to the
previous sentence) (the "Issuance"), Investor shall have the right for a period
of nine months following the Issuance to purchase that number of shares of
voting securities, for a purchase price of $.01 per share, that would result in
the Investor owning the same percentage of voting securities of the Company as
it owned immediately prior to the Issuance. The provisions of this Section
shall not apply to any issuance of common stock pursuant to the exercise of
outstanding stock options or warrants as disclosed in Section III.5 of this
Agreement. In the event that the representations in Section III.5 relating to
capitalization prove to be inaccurate and the result is that Investor receives
a lower percentage of the Company's common stock on a fully diluted basis than
indicated in such representation, the Company shall take all necessary actions
to issue to Investor such additional number of shares of its common stock, at a
price of $.01 per share, that will result in the percentage ownership by
Investor indicated by such representation.
5. Amendment and Waiver. This Agreement may not be amended or waived
except in writing executed by the party against which such amendment or waiver
is sought to be enforced. No course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to modify or
amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
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6. Assignment. This Agreement and all of the provisions hereof will
be binding upon and insure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by
either party hereto without prior written consent of the other party.
7. Complete Agreement. This Agreement and the other documents
referred to herein contain the complete agreement between the parties and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter
hereof in any way.
8. Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
9. Governing Law. The internal law, without regard to conflicts of
law principles, of the State of Minnesota will govern all questions concerning
the construction, validity and interpretation of this Agreement and the
performance of the obligations imposed by this Agreement.
10. Survival. The representations, warranties and covenants made in
this Agreement and in any agreement or instrument executed and delivered in
connection with this Agreement shall survive the Closing (as defined in the
Asset Purchase Agreement).
11. Representation of Investor. Investor is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Minnesota. Investor is the only shareholder of Enstar Networking
Corporation.
IN WITNESS THEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
VICOM, INC.
AMERICABLE, INC.
By
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Its
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