AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, made this 2nd
day of January, 1998, by and between XXXXXX X. XXXXXX
("Xxxxxx"), CAN-AM CONSTRUCTION, INC., a California corporation
(the "Company"), ARGUSS HOLDINGS, INC., a Delaware corporation
(the "Parent"), WHITE MOUNTAIN CABLE CONSTRUCTION CORP. ("White
Mountain"), a Delaware corporation and a 100% subsidiary of
Parent.
INTRODUCTORY STATEMENT
X. Xxxxxx owns Fifteen Hundred (1,500) shares of capital
stock of the Company, which shares, constitute all of the
issued and outstanding capital stock ("Stock") of the Company,
a California corporation doing business as Can-Am Construction,
Inc.
B. The Company is a full service multimedia
communications contractor engaged in the construction,
reconstruction, maintenance, repair, and expansion of CATV,
SMATV systems and other related systems in the
telecommunications industry.
C. Parent has agreed with Xxxxxx for Parent to acquire
the Company by means of a merger of the Company with and into
White Mountain, a wholly owned subsidiary of Parent upon the
terms and subject to the conditions set forth herein.
D. In furtherance of such acquisition, the Boards of
Directors of Parent, White Mountain and the Company have each
approved the plan of merger to merge the Company with and into
White Mountain (the "Merger") in accordance with the applicable
provisions of the Delaware General Corporation Law (the
"DGCL"), and the California General Corporation Law ("CGCL"),
and upon the terms and subject to the conditions set forth
herein.
E. Pursuant to the Merger, the record holders of each
outstanding share of the Company's common stock, $10.00 par
value, shall be entitled to receive the Merger Consideration
(as defined in Section 2.1) so that upon receipt of the Merger
Consideration, such share of the Stock shall be cancelled, all
upon the terms and subject to the conditions set forth herein.
F. The parties hereto intend that this transaction
qualify as a tax free reorganization under Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, WITNESSETH, for and in consideration
of the premises and the mutual representations, warranties,
covenants and agreements herein contained and other good and
valuable consideration, receipt of which is hereby
acknowledged, the parties do agree as follows:
DEFINITIONS
The following terms when used in this AGREEMENT AND
PLAN OF MERGER shall have the following meanings:
"Accounts Receivable" means accounts receivable,
notes due from all sources of the Company, and credits for
returned or damaged merchandise.
"Act" shall mean the Securities Act of 1933, as the
same has been and shall be amended from time to time.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, liabilities,
obligations, taxes, liens, losses, expenses, and fees,
including court costs and attorneys' fees and expenses, net of
all tax savings and insurance proceeds actually received by an
Indemnitee with respect to any of the foregoing.
"Agreed Value of the Company" shall mean the value of
the Company based on the July 1997 Audit. For the purposes of
this Agreement the Agreed Value of the Company is Twenty-Four
Million Dollars ($24,000,000).
"Agreement" means this AGREEMENT AND PLAN OF MERGER.
"Arguss" shall mean the Parent, Arguss Holdings,
Inc., a Delaware corporation with its principal offices located
at Xxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000, and
its successors and assigns.
"Arguss Stock" shall mean the authorized capital
stock of Arguss.
"Assets" means all property, rights, things of value
and other assets of the Company described, referred to, or
listed, in Section 4.9 of this Agreement.
"CGCL" has the meaning set forth in the introductory
statement above.
"Certificate of Merger" has the meaning set forth in
Section 1.2 below.
" Closing" means the transfer of the Stock to White
Mountain and the payment of the Purchase Price to Xxxxxx
pursuant to this Agreement.
"Closing Balance Sheet" shall mean the internally
generated balance sheet of the Company as of the Closing Date.
"Closing Date" means the date of Closing, established
under Section 3 of this Agreement.
"Code" means the United States Federal Internal
Revenue Code of 1986, as amended.
"Company" shall mean Can-Am Construction, Inc. at all
times prior to the Closing Date, and shall mean the Can-Am
Division of the Surviving Corporation at all time thereafter.
"DGCL" has the meaning set forth in the introductory
statement.
"Employment Agreement" means the Employment
Agreements to be executed by the Company, Xxxxxx and other key
employees of the Company pursuant to Section 6.5 hereof.
"Environmental, Health, and Safety Laws" means the
United States federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational
Safety and Health Act of 1970, each as amended, together with
all other laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges
thereunder of federal, state, local, and foreign governmental
and all agencies thereof) concerning pollution or protection of
the environment, public health and safety, or employee health
and safety, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants,
or chemical, industrial, hazardous, or toxic materials or
wastes (including asbestos and oil or petroleum) (collectively,
"Hazardous Materials") into ambient air, surface, water, ground
water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
"Extremely Hazardous Substance" has the meaning set
forth in Section 302 of the Emergency Planning and Community
Right-to-Know Act of 1986, as amended.
"Financial Statement" means the audited financial
statements of the Company for the Company's fiscal year ending
in 1996, and the 12 month period ending July 31, 1997,
including the notes thereto, prepared by the accounting firm of
Deloit, Touche, and acceptable to the accounting firm of KPMG
Peat Marwick. If applicable, the Financial Statements shall be
presented after making all appropriate adjustments required to
present them on an accrual basis for a Subchapter C
corporation.
"GAAP" shall mean in accordance with generally
accepted accounting principles, consistently applied.
"July 1997 Audit" shall mean the audit of the
Company for the twelve (12) month period ending July 31, 1997,
prepared in accordance with generally accepted accounting
principles consistently applied by the accounting firm of KPMG
Peat Marwick. If applicable, for the purposes of this
Agreement, the July 1997 Audit shall be presented after making
all appropriate adjustments required to present them on an
accrual basis for a Subchapter C corporation.
"Net Worth" shall mean the total assets of the
Company, reduced by any value placed on the intangible assets
of the Company, including, but not limited to, goodwill, less
the total liabilities of the Company as those terms are shown
on the Financial Statement after making all appropriate
adjustments, if applicable, required to present them on an
accrual basis for a Subchapter C corporation, prepared in
accordance with Section 4.4 hereof.
"Xxxxxx" shall mean Xxxxxx X. Xxxxxx, a stockholder,
officer and director of the Company, and a signatory to this
Agreement.
"Real Property" shall mean the real property owned by
Xxxxxx and more specifically known as 000 Xxxxxxx Xxxxxx, Xxxxx
Xxxx, XX 00000.
"Registration Rights Agreement" shall mean the
Registration Rights Agreement executed by Xxxxxx and Parent
pursuant to Section 6.9 hereof.
"Stock" shall mean all of the authorized issued and
outstanding capital stock of the Company, including all
warrants, options, convertible securities or right (contingent
or otherwise) to purchase or acquire stock of the Company.
"Surviving Corporation" has the meaning set forth in
Section 1.1 below.
"White Mountain" has the meaning set forth in the
preface above.
SECTION 1
THE MERGER
1.1 Effective Time. On the Closing Date (as defined
in Section 3), and subject to and upon the fulfillment or
waiver of the terms and conditions of this Agreement, the DGCL
and the CGCL, Parent shall, as of the Closing, acquire the
Company by means of the company being merged with and into
White Mountain, where by the separate corporate existence of
the Company shall cease, and White Mountain shall continue as
the surviving corporation. White Mountain as the surviving
corporation after the Merger is hereinafter sometimes referred
to as the "Surviving Corporation."
1.2 Certificate of Merger. On the Closing Date,
assuming satisfaction or waiver of the conditions set forth in
Section 6, the parties hereto shall cause the Merger to be
consummated by filing Certificates of Merger as contemplated by
the DGCL and the CGCL (the "Certificates of Merger"), together
with any required related certificates, with the Secretary of
State of the State of Delaware, and the Secretary of the State
of California, respectively, in such form as required by, and
executed in accordance with the relevant provisions of, the
DGCL and the CGCL. The date of filing of the respective
Certificates of Merger shall be deemed the Filing Date.
1.3 Effect of the Merger. Upon the consummation of
the Merger, the effect of the merger shall be as provided in
this Agreement, the Certificates of Merger and the applicable
provisions of the DGCL and the CGCL. Without limiting the
generality of the foregoing, and subject thereto, upon the
consummation of the Merger all the property, rights,
privileges, powers and franchises of the Company and White
Mountain shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and White Mountain
shall become the debts, liabilities and duties of the Surviving
Corporation, except that the cumulative adjustment, if any,
required to convert the Company from a cash to an accrual basis
taxpayer shall be reported on the Company's final tax return
and any tax liability attributable to such cumulative
adjustment as of the Closing Date shall be a liability of
Xxxxxx as the shareholder of the Company for the period covered
by the final return. The cumulative adjustment shall be the
excess of the income which the Company would have reported
under the accrual method of accounting through and including
the Closing Date over the income reported by the Company
through its use of the cash basis of accounting as represented
by the accrual basis assets and liabilities of the Company on
its Closing Date financial statement.
1.4 Certificate of Incorporation, By-Laws.
(i) Certificate of Incorporation. Unless
otherwise determined by Parent prior to the Closing Date, upon
the consummation of the Merger the Certificate of Incorporation
of White Mountain, as in effect immediately prior to the
consummation of the Merger, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter
amended in accordance with the DGCL and such Certificate of
Incorporation.
(ii) By-Laws. Unless otherwise determined by
Parent prior to the consummation of the Merger, the By-Laws of
White Mountain, as in effect immediately prior to the closing
date, shall be the By-Laws of the Surviving Corporation until
thereafter amended in accordance with the DGCL, the Certificate
of Incorporation of the Surviving Corporation and such By-Laws.
1.5 Directors and Officers. The directors of White
Mountain immediately prior to the consummation of the Merger,
with the addition of Xxxxxx shall be the initial directors of
the Surviving Corporation, each to hold office in accordance
with the Certificate of Incorporation and By-Laws of the
Surviving Corporation, and the officers of White Mountain
immediately prior to the consummation of the Merger shall be
the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed
and qualified. Until such time as an insurance policy is in
effect covering Xxxxxx'x actions as an officer or director of
the Surviving Corporation, Xxxxxx shall have the option, in his
sole discretion, of attending all meetings of the Board of
Directors of the Surviving Corporation without becoming a
member.
SECTION 2
MERGER CONSIDERATION
2.1 Shares of Company. As of the Filing Date, each
share of Stock issued and outstanding as of the Closing Date,
shall by virtue of the merger and without any action on the
part of the holder thereof, be converted into the right to
receive an amount per share in Arguss Stock and in cash
(collectively the "Merger Consideration"), without interest,
determined in accordance with Section 2.2.
2.2 Merger Consideration. The total merger
consideration to be paid by Parent and White Mountain to Xxxxxx
shall be an amount equal to the Agreed Value of the Company, as
that term is defined in this Agreement. Each share of Stock
shall be entitled to receive a sum equal to the Agreed Value of
the Company divided by the total number of shares of the Stock.
The Merger Consideration shall be paid to Xxxxxx, as
follows:
(a) At Closing, Xxxxxx shall receive the sum
equal to Fifty Per Cent (50%) of the Agreed Value of the
Company through the issuance of shares of Arguss stock as set
forth in Exhibit 2.2(a). For the purposes of determining the
number of shares of Arguss Stock to be issued to Xxxxxx
pursuant to this paragraph 2.2(a), the value of each share of
Arguss Stock shall be Eight Dollars ($8.00).
(b) At Closing, Xxxxxx shall receive the sum
equal to Fifty Per Cent (50%) of the Agreed Value of the
Company in cash, wire transfer, or certified funds as set forth
on Exhibit 2.2(b).
2.3 Allocation of Merger Consideration. The
allocation of the Merger Consideration by Xxxxxx, if desired,
is set forth in Exhibit 2.3.
SECTION 3
CLOSING
The Closing of the Merger shall occur at the offices
of Arguss Holdings, Inc., Xxx Xxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxx 00000, at 2:00 p.m. on the 2nd day of
January, 1998, or at such other time, date and place as Parent
and Xxxxxx may agree (the "Closing Date"). Parties hereto
agree that the Merger may be Closed in Escrow provided all
transfers of any requisite business licenses has not occurred
on or before February 28, 1998.
3.1 Cancellation.
(a) Upon filing of the Certificate of Merger,
each such share of the Stock shall be canceled and shall
thereafter evidence only the right to receive a pro rata share
of the Merger Consideration.
(b) Upon filing of the Certificate of Merger,
each share of the Stock held in the treasury of the Company and
each share of Stock owned directly or indirectly by any wholly
owned Subsidiary of the Company immediately prior to the
consummation of the Merger shall, by virtue of the Merger and
without any action on the part of the holder thereof, cease to
be outstanding, be canceled and retired without payment of any
consideration therefor and cease to exist.
3.2 Delivery of Cash and Exchange of Certificates.
(a) Exchange Procedures. As of the Filing
Date, upon surrender of the certificates representing shares of
the Stock (the "Certificates") for cancellation to Parent
together with such other customary documents as may be required
to transfer the Stock, Xxxxxx shall be entitled to receive in
exchange therefore the Merger Consideration as provided in
Section 2.2(a) and (b), above, and the Certificates so
surrendered shall forthwith be canceled. Each outstanding
Certificate that, prior to the Closing Date, represented shares
of the Stock will be deemed from and after the Closing Date,
for all corporate purposes, to evidence the right to receive a
pro rata share of the Merger Consideration into which such
shares of the Stock shall have been so converted.
(b) No Liability. Neither Parent, White
Mountain, nor the Company shall be liable to any holder of the
Stock for any Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
(c) Withholding Rights. Xxxxxx will provide
Parent and White Mountain with the appropriate FIRPTA
certificate indicating that no other withholdings are required
by this transaction.
SECTION 4
REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS OF XXXXXX AND THE COMPANY
As a material inducement to induce Parent and White
Mountain to consummate the Merger under this Agreement, Xxxxxx
and Company represent and warrant that each of the matters set
forth in this Section 4 are true and correct as of the date
hereof, and acknowledge that Parent and White Mountain's entry
into this Agreement and the performance of their obligations
hereunder are made in reliance upon the completeness and
accuracy of each of the matters set forth herein. The
representations and warranties being made by the Company shall
survive up and until the Closing Date. The representations and
warranties being made by Xxxxxx shall survive as set forth in
Section 12.11, herein.
4.1 Organization, Qualifications and Corporate
Power.
(a) The Company is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of California. Attached as Exhibit 4.1 is a
list of all states in which the company is qualified to do
business. The Company is duly qualified as a foreign
corporation in each other jurisdiction in which the failure to
be qualified would have a material adverse effect upon the
Company. The Company has the corporate power and authority to
own and hold its properties and to conduct its business as
currently conducted and as proposed to be conducted, to
execute, deliver and perform this Agreement to which it is a
signatory.
(b) Except as listed on Exhibit 4.1, the
Company does not own of record or beneficially, directly or
indirectly, (i) any shares of outstanding capital stock or
securities convertible into capital stock of any other
corporation or (ii) any participating interest in any
partnership, joint venture or other non-corporate business
enterprise.
4.2 Authorization of Agreement.
(a) The execution, delivery and performance by
the Company of this Agreement to which it is a signatory
hereunder have been duly authorized by all requisite corporate
action and will not (i) violate any applicable provision of
law, any order of any court or other agency of government, the
Articles or Certificate of Incorporation or Bylaws of the
Company, or any provision of any indenture, agreement or other
instrument by which the Company, or any of its properties or
assets is bound or affected, or (ii) conflict with, result in a
material breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or
other instrument, or results in being declared void, voidable
or without further binding effect any license, governmental
permit or certification, employee plan, note, bond, mortgage,
indenture, deed of trust, franchise, lease, contract,
agreement, or other instrument or commitment or obligation to
which Company is a party, or by which Company, or any of its
assets, may be bound, subject or affected, (iii) violate any
order, writ, injunction, decree, judgment, or ruling of any
court or governmental authority applicable to Company or any of
its assets, or (iv) except as otherwise provided in this
Agreement, result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever not arising in
the ordinary course of business upon any of the properties or
assets of the Company.
4.3 Capital Stock. The authorized capital stock of
the Company and the holders of the issued and outstanding
shares of such capital stock are set forth in Exhibit 4.3
hereto. Except as disclosed in Exhibit 4.3, there is no (i)
subscription, warrant, option, convertible security or other
right (contingent or otherwise) to purchase or acquire any
shares of any class of capital stock of the Company which is
authorized or outstanding, (ii) the Company has no commitments
to issue any shares, warrants, options or other such rights or
to distribute to holders of any class of its capital stock any
evidence of indebtedness or assets, (iii) the Company has no
obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other
distribution in respect thereof, (iv) the Company has no
obligation or commitment to register under the Act any
securities issued or to be issued by it, and (v) the issued and
outstanding shares are fully transferable in accordance with
this Agreement, subject only to Xxxxxx obtaining the consent to
transfer from the Department of Corporation of the State of
California. All of the issued and outstanding shares of the
capital stock of the Company have been validly issued in
compliance with all federal and state securities laws and are
fully paid and non-assessable.
4.4 Financial Statements. The Company has delivered
to Parent the Financial Statements. Such preliminary Financial
Statements to the best of Xxxxxx'x knowledge are complete and
correct, have been prepared in accordance with GAAP and fairly
present the financial position of the Company as of such
respective dates after making all appropriate adjustments, if
applicable, required to present them on an accrual basis for a
Subchapter C corporation, and the results of its operations for
the respective periods then ended. The data provided to the
accountants by the Company and Xxxxxx which form the basis of
the Financial Statements are complete, correct and accurate in
all material respects. Except as set forth in such Financial
Statements, the Company has no material obligation or
liability, absolute, accrued or contingent.
4.5 Absence of Changes. Except as listed in
Exhibit 4.5 and since the time period covered by the Financial
Statements, the Company has not:
(a) Transferred, assigned, conveyed or
liquidated any of its assets or entered into any transaction or
incurred any liability or obligation which has a material
adverse effect on the assets or the conduct of its business,
other than in the ordinary course of the Company's business;
(b) Incurred any change in its business,
operations, or financial condition which may have a material
adverse effect on its assets or its business, or become aware
of any event which may result in any such adverse change;
(c) Suffered any material destruction, damage
or loss relating to its assets or the conduct of its business
whether or not covered by insurance;
(d) Suffered, permitted or incurred other than
in the ordinary course of business the imposition of any lien,
charge, encumbrance (which as used herein includes, without
limitation, any mortgage, deed of trust, conveyance to secure
debt or security interest) whether or not contingent in nature,
or claim upon any of its assets, except for any current year
lien with respect to personal or real property taxes not yet
due and payable;
(e) Committed, suffered, permitted or incurred
any default in any liability or obligation which, in the
aggregate, have had or will have a material adverse effect upon
its assets or the conduct of its business;
(f) Made or agreed to any change in the terms
of any contract or instrument to which it is a party which has
a material adverse effect on its assets or the conduct of its
business;
(g) Knowingly waived, canceled, sold or
otherwise disposed of other than in the ordinary course of
business, for less than the face amount thereof, any material
claim or right relating to its assets or the conduct of its
business, which it has against others;
(h) Declared, promised or made any material
distribution from its assets or other payment from the assets
to its shareholders (other than reasonable compensation for
services actually rendered) or issued any additional shares or
rights, options or calls with respect to its shares of capital
stock, or redeemed, purchased or otherwise acquired any of its
shares, or made any change whatsoever in its capital structure;
(i) Paid, agreed to pay or incurred any
material obligation for any payment for, any contribution or
other amount to, or with respect to, any employee benefit plan,
or paid or agreed to pay any bonus or salary increase to its
executive officers or directors, or made any increase in the
pension, retirement or other benefits of its directors or
executive officers other than in the ordinary course of
business;
(j) Committed, suffered, permitted, incurred or
entered into any transaction or event other than in the normal
course of business which would materially increase its
liability for any prior taxable year;
(k) Incurred any other liability or obligation
or entered into any transaction other than in the ordinary
course of business which would have a material adverse effect
on its condition (financial or otherwise); or
(l) Received any notices of, or has reason to
believe, that any of its customers or clients have taken or
contemplate any steps which could materially disrupt its
business relationship with said customer or client or could
result in the material diminution in the value of the business
of the Company as a going concern.
4.6 Actions Pending. Except as listed on Exhibit
4.6, there is no action, suit, investigation, or proceeding
pending or, to the knowledge of the Company or Xxxxxx
threatened against or affecting Xxxxxx, the Company or any of
its properties or rights, before any court or by or before any
governmental body or arbitration board or tribunal and no basis
exists for any such action, suit, investigation or proceeding
which will result in any material liability or affirmative or
negative injunction being imposed on the Company or Xxxxxx.
The foregoing includes, without limiting its generality,
actions pending or threatened (or any basis therefor known to
the Company or Xxxxxx) involving the prior employment of any
employees or prospective employees of the Company or its use,
in connection with its business, of any information or
techniques which might be alleged to be proprietary to its
former employer(s).
4.7 Business Property Rights. To the best of the
Company's or Xxxxxx'x knowledge, no person or entity has made
or threatened to make (or has any valid reason to threaten) any
claims that the operation of the business of the Company is or
will be in violation of or infringe on any technology, patents,
copyrights, trademarks, trade names, service marks (and any
application for any of the foregoing) licenses, proprietary
information, know-how, or trade secrets (the "Business Property
Rights"). To the best of the Company's or Xxxxxx'x knowledge
no third party is infringing upon or violating any of the
Company's Business Property Rights and the Company has the
exclusive right to use the same. None of the Company's
employees, directors, or stockholders has any valid claim
whatsoever (whether direct, indirect or contingent) of right,
title or interest in or to any of the Company's Business
Property Rights.
4.8 Liabilities. Except as listed in Exhibit 4.8,
the Company has no liabilities or obligations, whether accrued,
absolute, contingent or otherwise (individually or in the
aggregate), which are of a nature required to be reflected in
financial statements prepared in accordance with GAAP, after
making all appropriate adjustments required to present them on
an accrual basis for a Subchapter C corporation, including
without limitation, any liability which might result from an
audit of its tax returns by any appropriate authority except
(i) the liabilities and obligations set forth in the "Financial
Statements") delivered in accordance with Section 4.4 and (ii)
liabilities and obligations incurred for the purpose of
enabling the Company to conduct its normal business (in each
case in normal amounts and incurred only in the ordinary course
of business). Except as disclosed in the Financial Statements,
the Company is not in default with respect to any liabilities
or obligations and all such liabilities or obligations shown
and reflected in the Financial Statements, and such liabilities
incurred or accrued subsequent to the Companies incorporation,
have been, or are being, paid or discharged as they become due,
and all such liabilities and obligations were incurred in the
ordinary course of business.
4.9 Ownership of Assets and Leases. Attached hereto
as Exhibit 4.9(a) is a complete and correct list and brief
description, as of the date of this Agreement, of all real
property and material items of personal property owned by the
Company and all of the leases and other agreements relating to
any real, personal or intangible property owned, used, licensed
or leased by the Company. The Company has good and marketable
title to all of its assets, including those listed on Exhibit
4.9(a), and any income or revenue generated therefrom, in each
case free and clear of any liens, claims, charges, options,
rights of tenants or other encumbrances, except, (i) as
disclosed and reserved against in the Financial Statements (to
the extent and in the amounts so disclosed and reserved
against), (ii) for liens arising from current taxes not yet due
and payable and (iii) as set forth on Exhibit 4.9(b). Each of
the Company's leases and agreements is in full force and effect
and constitutes a legal, valid and binding obligation of the
Company and the other respective parties thereto, enforceable
in accordance with its terms, except as enforceability may be
limited by applicable equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws from
time to time in effect affecting the enforcement of creditors'
rights generally, and, there is not under any of such leases or
agreements existing any default of the Company, or to the best
of the Company's or Xxxxxx'x knowledge of any other parties
thereto (or event or condition which, with notice or lapse of
time, or both, would constitute a default). The Company has
not received any notice of violation of any applicable
regulation, ordinance or other law with respect to its
operations or assets, and, to the best of the Company's
knowledge there is not any such violation or grounds therefor
which could adversely affect their assets or the conduct of its
business. The Company is not a party to any contract or
obligation whereby an absolute or contingent right to purchase,
obtain or acquire any rights in any of the assets has been
granted to anyone. There does not exist and will not exist by
virtue of the transactions contemplated by this Agreement any
claim or right of third persons which may be legally asserted
against any of the Company's assets.
4.10 Taxes. The Company has paid all taxes due,
assessed and owed by it as reflected on its tax returns and has
timely filed all federal, state, local and other tax returns
which were required to be filed and which were due prior to the
Closing Date, except for those taxes set forth on
Exhibit 4.10(a). All federal, state, local, and other taxes of
the Company accruable since the filing of such returns have
been properly accrued. No federal income tax returns for the
Company have ever been audited by the Internal Revenue Service
or any state or local taxing authority, except as described in
Exhibit 4.10(b). No other proceedings or other actions which
are still pending or open have been taken for the assessment or
collection of additional taxes of any kind from the Company for
any period for which returns have been filed, and to the
Company's knowledge, no other examination by the Internal
Revenue Service or any other taxing authority affecting the
Company is now pending. Except for those taxes set forth on
Exhibit 4.10(a), taxes which the Company were required by law
to withhold or collect subsequent to the Company's
incorporation, have been withheld or collected and have been
paid over to the proper governmental authorities or are
properly held by the Company for such payment and are so
withheld, collected and paid over as of the date hereof. No
waivers of statutes of limitations with respect to any tax
returns of the Company nor extensions of time for the
assessment of any tax have been given by any current employees
of the Company. There is not and there will not be any
liabilities for federal, state and local income, sales, use,
excise or other taxes arising out of, or attributable to, or
affecting the assets or the conduct of the Company's business
through the close of business on the Closing Date, or
attributable to the conduct of the operations of the Company at
any time for which Parent or the Surviving Corporation will
have any liability for payment or otherwise, including, but not
limited to, any tax assessed or imposed as a result of the
conversion, if applicable, of the Company from a Subchapter S
to a Subchapter C corporation. After the Closing, there does
not and will not exist by virtue of the transactions
contemplated by this Agreement any liability for taxes which
may be asserted by any taxing authority against the Company's
assets or the operation of the business, and no lien or other
encumbrance for taxes will attach to such assets or the
operation of the business. If applicable, the Company has
properly elected to be an S corporation for federal (and, where
permitted, for State and local) tax purposes and has continued
to qualify as an S corporation at all times from the date of
the S corporation election. If applicable, the Company will
continue to qualify as an S corporation through and including
the Closing Date.
4.11 Contracts, Other Agreements. Attached hereto as
Exhibit 4.11(a) is a true and complete list of each material
contract, agreement and other instrument to which the Company
is a party, including, but not limited to, all bank and
financing documents. At Parent's request, the Company shall
deliver to Parent a true and complete copy of any such
contract, agreement or instrument. All of the contracts,
agreements, and instruments described in Exhibit 4.11(a) hereto
are valid and binding upon the Company and the other parties
thereto and are in full force and effect, and, neither the
Company, nor to the best of the Company's or Xxxxxx'x knowledge
any other party to any such contract, commitment or arrangement
has breached any provision of, or is in default in any respect
under, the material terms thereof. Except for those listed on
Exhibit 4.11(b), no contract, agreement or other instrument to
which the Company is a party will be materially breached,
violated or result in a default as a result of the transaction
contemplated hereunder.
4.12 Governmental Approvals. Except as set forth on
Exhibit 4.12, no registration or filing with, or consent or
approval of, or other action by, any federal, state or other
governmental agency or instrumentality is or will be necessary
for the valid execution, delivery and performance of this
Agreement by the Company, including, but not limited to, any
approval of the United States Small Business Administration
required to assign any obligation of the Company to the
Surviving Corporation.
4.13 Lack of Defaults. The Company and Xxxxxx know
of no default in performance of any obligation, covenant or
condition contained in any note, debenture, mortgage or other
contract or agreement of any nature or kind to which either is
a party, nor of any default with respect to any order, writ,
injunction or decree of any court, governmental authority or
arbitration board or tribunal to which either is a party, which
would have a material adverse effect on the assets or business
of the Company. The Company and Xxxxxx know of no violation of
any law, ordinance, governmental rule or regulation to which
either is subject, nor has either failed to obtain any
licenses, permits, franchises or other governmental
authorizations necessary for the ownership of their properties
or to the conduct of their business where any such violation or
failure would likely result in a material adverse effect upon
the business of the Company. The Company has conducted and
will conduct its businesses and operations in substantial
compliance with all federal, state, county and municipal laws,
statutes, ordinances and regulations and are in substantial
compliance with all applicable requirements of all federal,
state, county and municipal regulatory authorities.
4.14 Employees and Employee Benefit Plans.
(a) Attached hereto as Exhibit 4.14(a) is a
list of each pension retirement, profit-sharing, deferred
compensation, bonus or other incentive plan, or program
arrangement, agreement or other understanding, or medical,
vision, dental or other health plan, or life insurance or
disability plan, or any other employee benefit plan, including,
without limitation, any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company contributes or
is a party or is bound or under which it may have liability and
under which employees or former employees of the Company (or
their beneficiaries) are eligible to participate or derive a
benefit (the foregoing herein referred to as the "Employee
Benefit Plans). The Company has delivered to Parent true,
correct and complete copies of all Employee Benefit Plans, and
the company has complied in all material aspects with any and
all obligations required of it under the terms of any plan
listed on Exhibit 4.14(a).
(b) Attached hereto as Exhibit 4.14(b) are the
names, social security numbers and current rate of compensation
of all salaried and hourly paid employees employed by the
Company as of the date hereof, with all key employees being so
designated, and at Closing the Company will provide an updated
list of all such employees as of the date of closing, such
updated list to be initialed by both parties at Closing.
4.15 Insurance. Attached hereto as Exhibit 4.15 is a
complete and correct list and description of all of the
policies of liability, property, workers' compensation and
other forms of insurance or bonds carried by the Company for
the benefit of or in connection with its assets and businesses.
All of such policies are in full force and effect and there are
no overdue premiums or other payments on such policies and the
Company has not received any notice of cancellation or
termination of any of these policies. Neither Pierces nor the
Company have knowledge of any change or proposed change to any
of the rates set forth in the policies listed on Exhibit 4.15
other than as set out in the Policies.
4.16 Labor Matters. None of the Company's employees
are covered by a collective bargaining agreement, and no
collective bargaining efforts with respect to any of the
Company's employees are pending or, to the knowledge of the
Company threatened. No labor dispute, strike, work stoppage,
employee collective action or labor relations problem of any
kind which has materially adversely affected or may so affect
the Company or any of its businesses or operations, is pending
or, to the knowledge of the Company is threatened. The Company
has complied in all material respects with the reporting and
withholding provisions of the Code and the Federal Insurance
Contribution Act and all similar state and local laws, and with
the federal, state, and local laws, ordinances, rules and
regulations with respect to employment and employment
practices, terms and conditions of employment and of the
workplace, wages and hours and equal employment opportunity.
4.17 Brokers and Finders. Except for the fees listed
on Exhibit 4.17, neither Xxxxxx nor the Company has incurred or
become liable for any commission, fee or other similar payment
to any broker, finder, agent or other intermediary in
connection with the negotiation or execution of this Agreement
or the consummation of the transactions contemplated hereby.
Xxxxxx agrees to be responsible for paying all Broker fees
incurred by the Company as a result of this transaction, if
any.
4.18 Accounts Receivable.
(a) All accounts receivable of the Company
shown on the audited balance sheets of the Company as of the 12
month period ending July 31, 1997, and all notes and accounts
receivable acquired by the Company subsequent to July 31, 1997,
reflect actual transactions, have arisen in the ordinary course
of business and have been collected or are now in the process
of collection without recourse to any judicial proceedings in
the ordinary course of business in the aggregate recorded
amounts thereof, less the applicable allowances reflected on
such balance sheets with respect to the accounts receivable
shown thereon or set up on the respective books of the Company
with respect to the notes and accounts receivable acquired
subsequent to July 31, 1997.
(b) Except as set forth on Exhibit 4.18(b), the
Company has no knowledge as to any of the Company's accounts
receivable being subject to any lien or claim of offset, set
off or counterclaim not provided for by the Company's allowance
for doubtful accounts as of the date of execution hereof.
4.19 Conflicts of Interests. Except as described in
Exhibit 4.19 (a), no officer, director or stockholder of the
Company was or is, directly or indirectly, a joint investor or
co-venturer with, or owner, lessor, lessee, licensor or license
of any real or personal property, tangible or intangible, owned
or used by, or a lender to or debtor of, the Company and the
Company has no commitments or obligations as a result of any
such transactions prior to the date hereof. Except as
described in Exhibit 4.19 (b), and except for directly or
indirectly holding less than five percent (5%) of the
outstanding shares of stock in a company which is publicly
traded, none of such officers, stockholders, or directors own
or have owned, directly or indirectly, individually or
collectively, an interest in any entity which is a competitor,
customer or supplier of (or has any existing contractual
relationship with) the Company.
4.20 Environmental Compliance. Exhibit 4.20(a) sets
forth all government agencies which substantially regulate the
Company's business. Except as listed on Exhibit 4.20(b), the
Company has complied in all material respects with all
applicable federal, state and local laws, ordinances, rules and
regulations with respect to its premises and its operations and
hazardous materials, including, but not limited to, all rules
and regulations promulgated by the Occupational Safety and
Health Administration and the Federal Communications Commission
and have kept its premises free and clear of any liens and
charges imposed pursuant to such laws, ordinances, rules and
regulations. The Company has not received any notice that any
facts or conditions exist which would give rise to any
violation, claim, charge, penalty or liability relating to any
applicable environmental laws, rules or regulations of any
governmental body or agency having jurisdiction over the
premises. For purposes of this section, "Hazardous Materials"
shall include, without limitation, any pollutants or other
toxic or hazardous substances or any solid, liquid, gaseous or
thermal irritant or contaminant, including smoke, vapor, soot,
fumes, acids, alkalis, chemicals and waste (including materials
to be recycled, reconditioned or reclaimed), flammable
materials, explosives, radioactive materials, hazardous waste,
hazardous or toxic substances, or related materials, asbestos
requiring treatment as a matter of law, or any other substance
or materials defined as hazardous or harmful, or requiring
special treatment or special handling by any federal, state or
local environmental law, ordinance, rule or regulation
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
(33 U.S.C. Sections 1251, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Section 1801, et
seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sections 6901 et seq.), the Occupational Safety and
Health Act of 1970 and the regulations adopted and publications
promulgated pursuant thereto.
4.21 Ownership of the Stock. Xxxxxx owns all of the
Stock beneficially and of record, free and clear of all liens,
restrictions, encumbrances, charges, and adverse claims and the
Stock to be purchased hereunder constitutes One Hundred Per
Cent (100%) of issued and outstanding stock of the Company.
4.22 Absence of Sensitive Payments. Neither Xxxxxx
nor, to the knowledge of Xxxxxx and Company, any of the
Company's directors, officers, or stockholders:
(a) has made or has agreed to make any
contributions, payments or gifts of funds or property to any
governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift
was or is illegal under the laws of the United States, any
state thereof, or any other jurisdiction (foreign or domestic);
(b) has established or maintained any
unrecorded fund or asset for any purpose, or has made any false
or artificial entries on any of its books or records for any
reason; or
(c) has made or has agreed to make any
contribution or expenditure, or has reimbursed any political
gift or contribution or expenditure made by any other person to
candidates for public office, whether federal, state or
local(foreign or domestic) where such contributions were or
would be a violation of applicable law.
4.23 Approval of Merger; Related Matters. Xxxxxx
represents and warrants that Xxxxxx, in his or her capacity as
a shareholder of the Company (i) approves of and consents to
the Merger as set forth in this Agreement, (ii) waives any
notice of a shareholder's meeting or similar corporate
formality in connection with the approval of the transactions
described herein, including, without limitation, the Merger,
(iii) waives any rights to protest or object to the Merger or
to the exercise of any statutory remedy of appraisal as to the
Stock owned by such Security holder as provided in the CGCL,
(iv) has received a copy of resolutions approving the Merger in
accordance with the CGCL, and (v), to the extent such Xxxxxx
owes any amounts to the Company pursuant to any Promissory Note
issued by such Xxxxxx to the Company, consents to the use of a
portion of the Merger Consideration payable to such Xxxxxx to
pay off each such Promissory Note.
4.24 Tax Free Reorganization. Xxxxxx and the Company
represent and warrant that they will take no action which would
disqualify the Merger from being treated as a tax free
reorganization under the Code.
SECTION 5
REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS OF PARENT AND WHITE MOUNTAIN
As a material inducement to induce Xxxxxx to
consummate the Merger under this Agreement, Parent and White
Mountain represent and warrant that each of the matters set
forth in this Section 5 are true and correct as of the date
hereof, and acknowledge that Xxxxxx'x entry into this Agreement
and the performance of their obligations hereunder are made in
reliance upon the completeness and accuracy of each of the
matters set forth herein. The representations and warranties
being made by the Parent and White Mountain shall survive as
set forth in Section 12.11 herein.
5.1 Organization, Standing, etc. Parent and White
Mountain are duly organized, validly existing and in good
standing under the laws of its jurisdiction of their
organization.
5.2 Authorization, etc. The execution and delivery
of this Agreement and any other instruments or documents
required to be executed and delivered hereby, and the purchase
of the Stock contemplated hereby, have been authorized by such
authorities or by such court of competent jurisdiction, if any,
as may be required by applicable law and constitute a valid and
binding obligations of Parent and of White Mountain,
enforceable against them in accordance with the terms of this
Agreement.
5.3 No Breach or Defaults Caused by Agreement. The
making and execution, delivery, and performance by Parent and
White Mountain of this Agreement does and will not breach or
constitute (with due notice or lapse of time or both) any
default in any articles, by-laws, agreements, or instruments of
any kind or character to which Parent or White Mountain are a
signatory or a party, or by which they may be bound, subject
to, or affected, now or in the future.
5.4 Governmental Approvals. Except as set forth in
Section 6.9 and the related Registration Rights Agreement, no
registration or filing with, or consent or approval of, or
other action by, any federal, state, or other governmental
agency or instrumentality, which has not been made or obtained
prior to the execution of this Agreement by Parent or White
Mountain, is or will be necessary for the valid execution,
delivery, and performance of this Agreement by Parent and White
Mountain.
5.5 Brokers Fees. Except for the broker fee owed to
New Venture Capital Corporation set forth in Exhibit 5.5,
Parent and White Mountain represent there are no other brokers
involved in this transaction on their behalf.
5.6 Authorized Shares of Stock. There exists
sufficient authorized, but unissued, shares of Arguss Stock
necessary to enable Parent to satisfy any obligation of it to
issue shares of Arguss Stock pursuant to this Merger Agreement.
5.7 Authorization of Agreement.
(a) The execution, delivery and performance by
Parent or White Mountain of this Agreement to which it is a
signatory hereunder have been duly authorized by all requisite
corporate action and will not (i) violate any applicable
provision of law, any order of any court or other agency of
government, the Articles or Certificate of Incorporation or
Bylaws of the Parent or White Mountain, or any provision of any
indenture, agreement or other instrument by which the Parent or
White Mountain, or any of their properties or assets is bound
or affected, or (ii) conflict with, result in a material breach
of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other
instrument, or results in being declared void, voidable or
without further binding effect any license, governmental permit
or certification, employee plan, note, bond, mortgage,
indenture, deed of trust, franchise, lease, contract,
agreement, or other instrument or commitment or obligation to
which Parent or White Mountain is a party, or by which Parent
or White Mountain, or any of their assets, may be bound,
subject or affected, or (iii) violate any order, writ,
injunction, decree, judgment, or ruling of any court or
governmental authority applicable to Parent or White Mountain
or any of their assets.
5.8 Survival of Can-Am Division. For accounting
purposes, the operations of the Company on the Closing Date
shall remain separate and apart from the other assets,
operations and business of Parent or White Mountain after the
Closing, as a separate and distinct division of Parent and
White Mountain until the initial term of Xxxxxx'x Employment
Agreement has been completed. No intercompany charges or
expenses of Parent or White Mountain unrelated to the Can-Am
Division may be charged against the Company during the
calculation of any bonus under said Employment Agreement.
5.9 Accuracy of Filings. Parent represents and
warrants that all filing required by the Act have been filed
and are complete and correct and fairly present the financial
position of the Parent as of the Closing Date.
5.10 Tax Free Reorganization. Parent and White
Mountain represent and warrant that they will take no action
which would disqualify the Merger from being treated as a tax
free reorganization under the Code.
SECTION 6
CONDITIONS TO CLOSING
A. Parent's obligation to consummate the Merger under
this Agreement shall be subject to fulfillment of all of the
following conditions on or prior to the Closing, any of which
may be waived in writing by Parent.
6.1 Performance of Agreements. The Company shall
have performed all agreements contained herein and required to
be performed by it prior to or at the Closing and all of the
representations and warranties made by it and Pierces in this
Agreement shall be true and correct as of the Closing Date.
6.2 Lack of Material Liabilities. The Company shall
have not incurred any material liability, direct or contingent
(as that term is ordinarily used), other than in the ordinary
course of its business, since July 31, 1997; including, but not
limited to, any tax liability resulting from the transaction
contemplated hereby, or by the Company's compliance with any of
the terms and conditions hereof.
6.3 Financial Statements. Parent shall have
received the financial statements. The financial statements
shall be presented, if applicable, after making all appropriate
adjustments required to present them on an accrual basis for a
Subchapter C corporation
6.4 Lack of Defaults. No Event of Default (as
defined in Section 11 hereof) and no event or condition which,
with notice or the lapse of time, or both, would constitute an
Event of Default, shall exist.
6.5 Employment Agreements. Xxxxxx, and those
employees designated as key employees on Exhibit 4.14(b) and
the Company shall have executed the Employment Agreements,
copies of which are attached hereto as Exhibits 6.5(a) -
6.5(__).
6.6 Opinion of Counsel. Parent shall have received
an opinion of counsel from the attorneys for the Company, dated
as of the Closing Date, in form and substance substantially
similar to that attached hereto as Exhibit 6.6.
6.7 Compliance Certificate. The Company shall have
delivered to Parent a certificate executed by its President,
dated the Closing Date, certifying the fulfillment of the
conditions specified in this Section 6 and the accuracy of the
representations and warranties contained in Section 4 hereof.
6.8 Key-Person Term Life Insurance. The Company
shall have applied for an insurance policy on the live of
Xxxxxx, such policy (a) to name the Parent as sole beneficiary,
(b) to be in form and substance satisfactory to the Parent, and
(c) to be in the amount of Four Million Dollars ($4,000,000).
6.9 Registration Rights Agreement. Xxxxxx and
Parent shall have executed the Registration Rights Agreement, a
copy of which is attached hereto as Exhibit 6.9.
6.10 Employee Stock Options. Parent resolves to take
any and all actions necessary, including soliciting the
approval of its shareholders, to grant unqualified stock
options to the employees and in the amounts designated in
Exhibit 6.10.
6.11 Release from Xxxxxx. Xxxxxx shall execute and
deliver to the Parent, in a form satisfactory to Parent's
counsel, a release of any claim that he may have against the
Company for the repayment of any loan, claim for unpaid
compensation, claim for indemnification or otherwise except for
the notes or other obligations set forth in Exhibit 6.11 which
will be paid according to their terms.
6.12 Corporate Documents. Parent shall have received
copies of the following documents:
(a) a certificate of the President of the
Company dated the Closing Date and certifying (i) that attached
thereto is a true and complete copy of the Articles or
Certificate of Incorporation and Bylaws of the Company as in
effect on the date of such certification; and (ii) that
attached thereto is a true and complete copies of resolutions
adopted by the Board of Directors of the Company authorizing
the execution, delivery and performance of this Agreement, and
that all such resolutions are still in full force and effect
and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement; and
(b) such additional supporting documents
and other information with respect to the operations and
affairs of the Company as Parent may reasonably request.
All such documents described in (a) and (b) shall be
satisfactory in form and substance to Parent and its counsel.
6.13 Corporate Filings. All relevant incorporation
and merger documents shall be filed with the appropriate
governmental agencies and shall be attached hereto as
Exhibit 6.13.
6.14 Trustee of Profit Sharing Plan. The Surviving
Corporation shall at Closing cause a successor trustee, if
necessary, for the Company's profit sharing plans to be
appointed.
6.15 Net Worth. The Company shall have as of the
Closing Date, a Net Worth greater than or equal to $6.0
million. To enable the parties to calculate the Net Worth as
of Closing, Xxxxxx shall cause the Closing Balance Sheet to be
delivered to Parent withing ten (10) days of Closing or by
January 21, 1997, whichever occurs later.
6.16 Xxxxxx'x Guaranty of Company Debt. Parent and
White Mountain shall obtain the release of all of Xxxxxx'x
personal guaranties of the Company's debt set forth on Exhibit
6.16 within thirty (30) days of the Closing Date, and provide
Xxxxxx with written confirmation of such release(s) when
obtained.
6.17 Contract to Lease or Purchase Real Property.
Xxxxxx and Parent shall have executed either a contract to
purchase the Real Property, pursuant to which the Parent shall
acquire the Real Property, within sixty (60) days from the
Closing Date at a mutually agreeable purchase price, or in the
alternative, have entered into a lease at standard market
rates pursuant to which the Can-Am Division of the Surviving
Corporation shall continue to occupy the Real Property.
6.18 Chief Financial Officer. The Company shall, on
or before Closing have hired a chief financial officer to
oversee the financial affairs of Company.
6.19 Exhibits. All exhibits required to be delivered
to Parent and/or White Mountain hereunder which are not
delivered as of the execution of this Agreement shall be
delivered before Closing and shall be acceptable to Parent
and/or White Mountain, in their sole discretion.
X. Xxxxxx'x obligation to consummate the Merger under
this Agreement shall be subject to fulfillment of all of the
following conditions on or prior to the Closing, any of which
may be waived in writing, by Xxxxxx.
6.20 Performance of Agreements. The Company shall
have performed all agreements contained herein and required to
be performed by it prior to or at the Closing and all of the
representations and warranties made by it and Pierces in this
Agreement shall be true and correct as of the Closing Date.
6.21 Lack of Defaults. No Event of Default (as
defined in Section 10 hereof) and no event or condition which,
with notice or the lapse of time, or both, would constitute an
Event of Default, shall exist.
6.22 Compliance Certificate. The Company shall have
delivered to Parent a certificate executed by its President,
dated the Closing Date, certifying the fulfillment of the
conditions specified in this Section 6 and the accuracy of the
representations and warranties contained in Section 5 hereof.
6.23 Registration Rights Agreement. Xxxxxx and
Parent shall have executed the Registration Rights Agreement, a
copy of which has been previously attached hereto as
Exhibit 6.9.
6.24 Corporate Filings. All relevant incorporation
and merger documents shall be filed with the appropriate
governmental agencies and shall be attached hereto as
Exhibit 6.23.
6.25 Corporate Documents. Xxxxxx shall have received
copies of the resolutions adopted by the Board of Directors of
Parent authorizing the execution, delivery and performance of
the Agreement.
6.26 Exhibits. All exhibits required to be delivered
to Xxxxxx hereunder which are not delivered as of the execution
of this Agreement shall be delivered before Closing and shall
be acceptable to Xxxxxx, in his sole discretion.
SECTION 7
TRANSACTIONS PRIOR TO CLOSING
Between the date of this Contract and the Closing,
the executive officers and Board of Directors of the Company
shall retain full control of the management and business of the
Company. To enable Parent to prepare for settlement at the
Closing, Parent, Xxxxxx and the Company agree that between the
date hereof and Closing:
7.1 Taxes. The Company will promptly pay and
discharge, or cause to be paid and discharged, their federal,
state and other governmental taxes, assessments, fees and
charges imposed upon it or on any of its property or assets and
timely file any returns and reports in connection with the
foregoing; provided, however, nothing herein shall require the
Company to pay or cause to be paid any tax, assessment, fee or
charge so long as the validity thereof shall be contested in
good faith by appropriate procedures and the Company has set
aside on its books and maintains adequate reserves with respect
thereto or for which disclosure to Parent has been made
pursuant to Exhibits 4.10(a), (b) and/or (c).
7.2 Books of Record and Account; Inspection. The
Company will maintain at all times proper books of record and
account in accordance with GAAP, and will permit any of
Parent's officers or any of its authorized representatives or
accountants to visit and inspect the offices and properties of
the Company, examine the Company's books of account and other
records, and discuss the Company's affairs, finances and
accounts with Parent's appropriate officers and managers, legal
counsel, accountants and auditors, all at normal business hours
and as often as Parent may request provided any such
discussions with accountants will not cause the Company to
incur any material cost with respect to such accountants and
legal counsel.
7.3 Financial Reports. The Company shall furnish to
Parent, within 20 days after the end of each month (and within
45 days after the end of the last month of the Company's fiscal
year), an unaudited financial report of the Company, which
report shall include profit and loss statement, a consolidated
balance sheet, a cash flow analysis, and such other financial
information that Parent may reasonably request.
7.4 Insurance.
(a) The Company will maintain in effect
liability insurance, property insurance, worker's compensation
insurance, the life insurance policies referenced in Section
6.8 and extended coverage insurance on its personal property
referenced in Section 4.15 above, with responsible insurance
companies, against such risks as are customarily insured
against by similar businesses operating in the same vicinity,
and in amounts not less than those (i) recommended by major
insurance companies for similar businesses or (ii) required by
governmental authorities having jurisdiction over all or part
of the Company's operations.
7.5 Notification. The Company will, within two (2)
business days, advise Parent in writing of the following:
(a) The occurrence of an Event of Default;
(b) The filing of any suit, action, other
proceeding against the Company or any investigation which the
Company learns is pending or threatened against it, if the
amount involved or at risk by nature of such suit, action,
other proceeding or investigation exceeds Seventy-Five Thousand
Dollars ($75,000);
(c) The filing, recording or assessment of a
federal, state or local tax lien against the Company or any of
its assets other than in the ordinary course of business;
(d) The occurrence of any reportable event with
respect to any employee benefit plan of the Company or which is
subject to the provisions of ERISA, including a statement
setting forth details as to the reportable event and the action
proposed to be taken with respect thereto, together with a
copy, if available, of the notice of such reportable event
given to the Pension Benefit Guaranty Corporation; and
(e) Any other condition, act or event which the
Company in its good faith judgment believes will adversely
affect Parent's rights under this Agreement.
7.6 Board of Directors' Meetings. Parent shall be
entitled, upon the giving of written notice, to designate two
individuals to attend the meetings of the Board of Directors of
the Company and the Company shall take all appropriate actions
to ensure that Parent's designees receive notice of and are
invited to attend the meetings of the Board of Directors. The
Board of Directors of the Company shall meet no less than once
during each calendar quarter.
7.7 Corporate Existence. The Company shall at all
times cause to be done every act necessary to maintain and
preserve its existence, rights, franchises, and certifications
in the jurisdictions of their incorporation and to remain
qualified as foreign corporations in every jurisdiction in
which qualification is required.
7.8 Maintenance of Properties. The Company shall
maintain or cause to be maintained in good repair, working
order and condition all tangible properties required for its
business and from time to time make or cause to be made all
appropriate repairs and replacements thereof.
7.9 Trade Secrets. The Company will use its best
efforts to maintain the confidentiality of any Business
Property Rights of the Company and will seek to restrict the
ability of any employee having knowledge of such proprietary
information or trade secrets from competing with the Company
through employment and non-competition agreements and similar
arrangements.
7.10 Mergers and Other Transfers. The Company will
not (i) merge or consolidate with any person, firm, association
or corporation, (ii) transfer, sell, assign, lease or otherwise
abandon or dispose of (whether in one transaction or a series
of transactions) any material part of its assets except in the
normal course of business if such transaction would reduce the
net worth of the Company below $6.5 million, (iii) change the
nature of its business, (iv) create any subsidiaries, or (v)
liquidate, dissolve or cease active business operations.
7.11 Certificate of Incorporation and Bylaws. The
Company will not amend its Articles or Certificate of
Incorporation or Bylaws if the result of any such amendment
will have an adverse effect on Parent's rights under this
Agreement.
7.12 Judgments and Liens. Pierces or the Company
shall not create, incur, assume or permit to exist any
mortgage, lien, security interest, charge or encumbrance on any
property or assets now owned or hereafter acquired by the
Company except:
(a) Liens arising out of judgments or awards
(i) which have been in force less than the applicable appeal
period so long as execution is not levied thereunder, or (ii)
in respect of which the Company shall in good faith be
prosecuting an appeal or proceedings for review and in respect
of which the Company shall have secured a subsisting stay of
execution pending such appeal or proceedings for review;
(b) Liens for taxes, assessments or
governmental charges or levies, provided payment thereof shall
not at the time be required;
(c) Deposits, liens, bonds or pledges to secure
payment of worker's compensation, unemployment insurance,
pensions or other social obligations, surety, stay or appeal
bonds, or other similar obligations arising in the ordinary
course of business;
(d) Mechanic's, worker's, repairmen's,
warehousemen's, vendor's, or carrier's liens, or other similar
liens arising in the ordinary course of business and securing
sums which are not past due, or deposits or pledges to obtain
the release of any such liens;
(e) Liens arising by operation of law under
lease agreements made in the ordinary course of business and
confined to the property rented;
(f) Liens on property securing the purchase
price of property acquired after the date hereof provided that
each of such lien (i) is given solely to secure indebtedness
not exceeding one hundred percent (100%) of the lesser of the
cost or fair market value of such property, (ii) does not
extend to any other property and (iii) is given at the time of
acquisition of the property;
(g) Presently outstanding liens;
(h) liens and encumbrances securing
indebtedness to Senior Creditors; and
(i) Extension, renewal or refunding of
indebtedness secured by liens permitted by this Section 7.12,
provided that the then outstanding amount of such indebtedness
is not increased and such liens do not extend to property not
then encumbered thereby.
7.13 Issuances of Capital Stock. The Company will
not issue any of its capital stock to any person or entity or
grant any person or entity an option, warrant, convertible
security or any other right or agreement to acquire any shares
of its capital stock, without the prior written consent of
Parent.
7.14 Purchase of Securities or Assets. The Company
will not purchase the outstanding equity securities of any
other person, firm, association or corporation, except
obligations issued or guaranteed by the United States
government or any state or political subdivision thereof or
other short-term instruments normally marketed by banks and
nationally recognized brokerage firms, provided nothing herein
shall restrict the Company from maintaining accounts with
federally insured banking institutions or money market funds.
7.15 Declaration of Dividends, etc. The Company will
not (i) make, pay or declare any distributions or dividends of
cash or property with respect to its issued shares of Common
Stock; (ii) directly or indirectly redeem, repurchase or
otherwise reacquire any shares of its Common Stock; (iii)
increase the salary or pay any bonuses to any management
employees, officers or directors of the Company; or (iv) make
any payment to Xxxxxx as holder of the stock to cover any and
all tax liability resulting therefrom, if any of the above
actions decreases the net worth of the Company below
$6.0 million.
7.16 Payments to Officers. Except as described on
Exhibit 7.16, the Company shall not loan or advance any amount
to, or sell, transfer or lease any properties or assets (real,
personal or mixed, tangible or intangible), to, or enter into
any agreement or arrangement with, any of the Company's
officers or directors, except for compensation to officers
pursuant to existing agreements, copies of which have been
delivered to Parent, and reimbursement of expenses incurred by
employees of the Company in connection with their employment.
7.17 Indebtedness. The Company shall not incur any
indebtedness for borrowed money, including pension fund loans,
or purchase money indebtedness or guarantee any such
indebtedness or issue or sell any debt securities of the
Company or guarantee in any manner (including, without
limitation, by agreeing to maintain the financial condition of
another person) any debt securities of others, provided,
however, that the Company shall have the right to incur
indebtedness in the ordinary course of business for office
furniture, equipment, trade payables, machinery and vehicles.
7.18 Expenditures. The Company shall not make any
capital investments or capital expenditures in excess of an
aggregate of One Hundred Thousand Dollars ($100,000.00) which
are outside of the ordinary course of the Company's business,
without the consent of Parent.
7.19 Employee Benefit Plans. The Company shall not
adopt any new Employee Benefit Plans but may expand existing
benefits subject to the approval of the Board of Directors.
7.20 Material Contracts. Except as described on
Exhibit 7.20, the Company shall not enter into, assume, renew
or permit to be renewed (including by not giving a permitted
notice of termination) any contract, lease or obligation
outside the ordinary course of business. Except as expressly
set forth therein, the Company shall not modify, amend,
terminate, waive or release any benefit or right under any
employment agreement, or any other material agreement to which
the Company is a party, without the prior written consent of
Parent.
7.21 Non-business Assets. The Company shall not
apply any corporate funds toward the payment of any principal
or interest due or owing for the purchase of any non-corporate
assets.
SECTION 8
COVENANTS NOT TO COMPETE
8.1 Covenant Not to Compete. Except as authorized
by White Mountain and Parent or by the terms of this Agreement,
Xxxxxx shall not, directly or indirectly, alone of with others,
enter into any business related to the construction,
reconstruction, maintenance, repair and expansion of CATV,
SMATV systems and any other related systems in the
telecommunications industry within the United States for a
period of three (3) years from the date of Closing. Further,
Xxxxxx shall not, during such period, disclose, divulge,
communicate, use to the detriment of the Company or Parent or
for the benefit of any other person or persons, or use in any
way, any confidential information or trade secrets of the
Company, including customer list, personnel information, and
other similar data. In addition, Xxxxxx shall not, during such
period, (i) hire or attempt to hire any employee of the
Company, or (ii) interfere with any contract or other
relationship of the Company and any of its customers or
suppliers. Xxxxxx agrees that Parent shall be entitled to
injunctive relief in the event of any breach of the covenants
set forth in this paragraph together with reasonable attorney's
fees and damages. Damages shall only be collectible from the
party breaching this provision.
SECTION 9
A. INDEMNIFICATION BY XXXXXX AND THE COMPANY
Xxxxxx and the Company, to the extent set forth in
this Agreement, shall indemnify and hold harmless Parent, White
Mountain and Surviving Corporation against and in respect to
the following, in addition to any losses otherwise specifically
indemnified against in this Agreement, as follows:
9.1 Indemnification by Xxxxxx and the Company.
(a) Breach. Subject to the provision of this
Section 9.1 and except as otherwise more specifically set forth
herein, Xxxxxx and the Company (in his capacity as an
indemnifying party, an "Indemnifying party") covenants and
agrees to jointly and severally indemnify, defend, protect, and
hold harmless each of Parent, White Mountain, the Surviving
Corporation and each of their respective Subsidiaries and
Affiliates (each in its capacity as an indemnified party, an
"Indemnitee") at all times from and after the date of this
Agreement from and against all Adverse Consequences incurred by
such Indemnitee as a result of or incident to (i) any breach of
any representation or warranty of the Company or Pierces set
forth in Section 4 of this Agreement, (ii) any material breach
or nonfulfillment by the Company or Xxxxxx of, or any
noncompliance by the Company or Xxxxxx with, any covenants,
agreement, or obligation contained herein or in any certificate
or other document delivered in connection herewith, (iii) all
damage or deficiency resulting directly from the material
inaccuracy of any list, certificate or other instrument
delivered by or on behalf of Xxxxxx or the Company in
connection herewith, whether made as of the date hereof, or as
of the Closing Date hereunder or otherwise, or resulting from
the non-fulfillment of any agreement on the part of Xxxxxx or
the Company contained in this Agreement or made in connection
with the transactions contemplated hereby.
(b) Environmental Indemnification. The
Company, and Xxxxxx shall jointly and severally, hereby
indemnify each Indemnitee and hold each Indemnitee harmless
from and against any and all damages, losses, liabilities,
costs and expenses of removal, relocation, elimination,
remediation or encapsulation of any Hazardous Materials (as
defined in Section 4.20), obligations, penalties, fines,
impositions, fees, levies, lien removal or bonding costs,
claims, actions, causes of action, injuries, administrative
orders, consent agreements and orders, litigation, demands,
defenses, judgments, suits, proceedings, disbursements or
expenses (including without limitation, attorney's and experts'
reasonable fees and disbursements) of any kind and nature
whatsoever resulting from the operation of the Company's
business as of the Closing Date: (i) which (x) is imposed
upon, or incurred by, Parent by reason of, relating to or
arising out of the violation by the Company prior to the
Closing of any environmental laws, rules or regulations of any
governmental body or agency having jurisdiction over the
premises, or (y) arises out of the discharge, dispersal,
release, storage, treatment, generation, disposal or escape of
any Hazardous Materials, on or from the premises as of the
Closing Date, or (z) arises out of the use, specification, or
inclusion of any product, material or process containing
Hazardous Materials, or the failure to detect the existence or
proportion of Hazardous Materials in the soil, air, surface
water or groundwater, or the performance or failure to perform
the abatement of any Hazardous Materials source as of the
Closing Date or the replacement or removal of any soil, water,
surface water, or groundwater containing Hazardous Materials;
and/or (ii) is imposed upon, or incurred by, Parent by reason
of or relating to any material breach, act, omission or
misrepresentation contained in Section 4.20.
(c) Tax Matters. Company and Xxxxxx shall
jointly and severally indemnify each Indemnitee from and
against all Adverse Consequences incurred by any Indemnitee as
a result of or incident to any Income Taxes or other Taxes
imposed on the Surviving Corporation, the Company or any of
their Subsidiaries or for which the Surviving Corporation,
Company or any of its Subsidiaries may otherwise be liable by
law or regulation (including, without limitation, the
provisions of Treasury Regulation Section 1.1502-6) or
contract, for any taxable year or period that ends on or before
Closing or resulting in any way from this transaction, or the
conversion of the company from a cash basis to an accrual basis
taxpayer (including the failure of Pierces to report as taxable
income the cumulative adjustment to an accrual basis as
provided in section 1.3) or otherwise resulting from the
Company conversion from a Subchapter S to a Subchapter C
corporation. Notwithstanding any language to the contrary,
Company and Xxxxxx shall have no duty to Indemnitees to
indemnify against any adverse tax consequences arising from a
disqualification of this transaction as a tax-free
reorganization to the extent:
(1) Said disqualification arises from acts or
omissions on the part of Parent or White Mountain; or,
(2) Parent or White Mountain obtains a gross
tax benefit from the disqualification.
(i) The Company shall furnish to Parent
copies of the federal, state, and local tax returns of the
Company for the period ending on the Closing Date and shall
obtain the consent of Parent before filing such returns which
consent shall not be unreasonably withheld.
(ii) Except as otherwise provided in this
Agreement, Parent shall have the sole right to represent the
interests of any Indemnitee in any tax audit or administrative
or court proceeding relating to any taxable period, including
without limitation taxable periods ending on or before Closing,
and to compromise, settle, or contest any tax claims in
connection therewith in its sole discretion, provided that
Parent shall provide Xxxxxx with written notice of its intent
to exercise its rights hereunder. Xxxxxx shall have the right,
at their expense, to join Parent in any such defense.
(d) Broker Fee. Each Indemnifying Party
jointly and severally indemnifies each Indemnitee from any
claim made by a broker, finder, agent or other intermediary
against the Company after Closing in connection with the
negotiation or execution of this Agreement or the consummation
of the transactions contemplated hereby.
(e) Costs and Expenses. Except as otherwise
provided in this Agreement, all amounts indemnified pursuant to
this Section 9 shall include all costs and expenses of the
Indemnitee, including, but not limited to, the costs of any
actions, reasonable attorneys fees, and other expenses
necessary to enforce the rights granted hereunder.
(f) Termination of Company's Obligation.
Company's obligation to indemnify Parent, or to contribute to
any party indemnifying Parent, pursuant to this Section 9 shall
expire as of the Filing Date.
(g) Termination of Xxxxxx'x Obligation.
Xxxxxx'x obligation to indemnify any Indemnitee, or to
contribute to any party indemnifying any Indemnitee, pursuant
to this Section 9 shall expire three (3) years from the Closing
Date, for non-tax matters, and expire six (6) years from the
Closing Date for tax matters or in the event of actual fraud or
intentional non-disclosure.
9.2 Limits of Indemnification. For the purposes of
this Section 9, the Indemnifying Parties Indemnification shall
be limited to those Adverse Consequences which exceed in the
aggregate One Hundred Thousand Dollars ($100,000).
9.3 No Circular Recovery. Xxxxxx hereby agrees that
he will not make any claim for indemnification against either
Parent or White Mountain by reason of the fact that he was a
director, officer, employee agent or other representative of
the Company of any of its Subsidiaries (whether such claim is
for Adverse Consequences of any kind or otherwise and whether
such claim is pursuant to any statute, charter, by-law,
contractual obligation or otherwise) with respect to any claim
for indemnification brought by Parent, the Surviving
Corporation, and their respective Subsidiaries and Affiliates
against Pierces.
B. INDEMNIFICATION BY PARENT AND WHITE MOUNTAIN
Parent and White Mountain, to the extent set forth in
this Section 9B, shall indemnify and hold harmless Xxxxxx
against and in respect to the following:
9.4 (a) Parent's Broker. Parent and White Mountain
jointly and severally indemnify Xxxxxx from any claim made by
the broker listed on Exhibit 5.5 against Xxxxxx in connection
with the negotiation or execution of this Agreement or the
consummation of the transactions contemplated hereby.
(b) Costs and Expenses. Except as otherwise
provided in this Agreement, all amounts indemnified pursuant to
this Section 9B shall include all costs and expenses of the
Indemnitee, including, but not limited to, the costs of any
actions, reasonable attorneys fees, and other expenses
necessary to enforce the rights granted hereunder.
(c) Tax Liability. Parent and White Mountain,
jointly and severally, indemnify Xxxxxx for any liability
arising from his assumption of tax liability to the Franchise
Tax Board of the State of California arising from the
operations of the Company after the Closing Date.
(d) Termination of Parent's and White
Mountain's Obligation. Parent's and White Mountain's
obligation to indemnify Xxxxxx pursuant to this Section 9B
shall expire three (3) years from the Closing Date, for non-tax
matters, and expire six (6) years from the Closing Date for tax
matters or in the event of actual fraud or intentional non-
disclosure.
SECTION 10
TERMINATION
10.1 Termination by Parent or White Mountain. This
Agreement may be terminated by Parent or White Mountain, on or
before the Closing Date, upon the occurrence of the following:
(a) If any of the conditions specified in
Section 6A shall not have been met prior to the Closing Date.
(b) If an event of default, as defined in
Section 11, has occurred, and has not been cured during any
applicable cure period.
10.2 Termination by Xxxxxx. This Agreement may be
terminated by Xxxxxx, on or before the Closing Date if any of
the conditions specified in Section 6B shall not have been met
prior to Closing.
SECTION 11
DEFAULT
11.1 Events of Default. It shall be considered an
Event of Default if any one or more of the following events
shall occur:
(a) If any statement, certificate, report,
representation or warranty of a material nature made or
furnished by the Company under this Agreement shall prove to
have been false or erroneous in any material respect.
(b) The occurrence of any event of material
default under any other financing agreement, note, lease,
mortgage, security agreement, factoring agreement or any other
obligation of the Company the result of which will have a
material adverse effect on the Company unless any such event of
default shall be timely cured under any applicable cure
provision or waived by the person to whom or to which the
Company is obligated or indebted.
11.2 Waiver by Parent. Any failure by Parent to
insist upon strict performance by Xxxxxx or the Company of any
of the terms and provisions of this Agreement, shall not be
deemed to be a waiver of any of the terms and conditions hereof
and Parent shall have the right thereafter to insist upon
strict performance thereof by Xxxxxx or the Company.
SECTION 12
MISCELLANEOUS
12.1 Costs. Except for expenses relating to the
preparation of the July 1997 Audit, which expense shall be
borne by Parent, each party shall pay its own expenses incident
to the transaction contemplated hereby, including fees and
expenses of their attorneys, accountants, appraisers or
consultants, whether or not those transactions are consummated
at Closing, subject to the indemnification and termination
provisions hereof.
12.2 Sales and Transfer Taxes. All state sales taxes
and all transfer taxes and all documentary taxes, if any,
payable in connection with the Merger shall be paid by the
party to whom such taxes are customarily attributed under the
laws of the State of California.
12.3 Relationships to Other Agreements. In the event
of a conflict between any of the provisions of this Agreement
and any other agreement relating to this transaction between
Xxxxxx, Company and Parent, the provisions of this Agreement
shall control.
12.4 Titles and Captions. All section titles or
captions in this Agreement are for convenience of reference and
are not part of this Agreement and shall in no way define,
limit, extend or describe the scope or intent of provisions
herein.
12.5 Exhibits. The Exhibits and Schedules referred
to herein are hereby made a part hereof.
12.6 Applicable Law. This Agreement is to be
governed by, and construed, interpreted, and enforced in
accordance with the laws of Delaware.
12.7 Binding Effect and Assignment. This Agreement
shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the parties. Notwithstanding the
foregoing, neither the Company nor Parent and/or White Mountain
shall have any right to assign any of its rights or obligations
under this Agreement without the prior written consent of the
other parties hereto.
12.8 Notices. All notices, requests, instructions,
or other documents required hereunder shall be deemed to have
been given or made when delivered by registered or certified
mail, return receipt requested, postage prepaid or by messenger
or overnight delivery service to:
If Xxxxxx then: Xxxxxx X. Xxxxxx
Can-Am Construction, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Counsel for Xxxxxx: Xxxx X. Xxxxxxxx
A Professional Law Corporation
0 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxx, XX 00000
Attn: Xxxx Xxxxxxxx
If Parent then: Arguss Holdings, Inc.
Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Counsel for Parent: Bleecker & Bleecker
00 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
If White Mountain then: White Mountain Cable Construction
Corp.
0 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Counsel for White Mountain: Bleecker & Bleecker
00 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Any party may from time to time give the others
written notice of a change in the address to which notices are
to be sent and of any successors in interest.
12.9 Severability. Inapplicability or
unenforceability of any provision of this Agreement shall not
impair the operation or validity of any other provision hereof.
If any provision shall be declared inapplicable or
unenforceable, there shall be added automatically as part of
this Agreement a provision as similar in terms to such
inapplicable or unenforceable provision as may be possible and
be legal, valid and enforceable.
12.10 Acceptance or Approval. By accepting all
or approving anything required to be observed, performed, or
fulfilled, or to be given to Parent pursuant to this Agreement,
including, but not limited to, any certificate, balance sheet,
statement of profit or loss or other financial statement, or
insurance policy, Parent shall not be deemed to have accepted
or approved the sufficiency, legality, effectiveness or legal
effect of the same, or of any term, provision, or condition
thereof as to third parties.
12.11 Survival. All covenants, representations,
and warranties made by Xxxxxx and Parent and White Mountain in
this Agreement shall survive the Closing hereunder for a period
of three (3) years, except those as to tax matters, which shall
survive Closing for a period of six (6) years.
12.12 Entire Agreement. This Agreement,
including all Exhibits, constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof, and
supersedes all prior agreements and understandings pertaining
thereto. No covenant, representation, or condition not
expressed in this Agreement shall affect or be deemed to
interpret, change or restrict the express provisions hereof and
no amendments hereto shall be valid unless made in writing and
signed by all parties hereto.
12.13 Counterparts. This Agreement may be
executed in any number of counterparts, all of which together
shall constitute one instrument.
12.14 Security Matters. (a) By executing this
Agreement, Parent acknowledges that : (i) Parent has been
advised that the Stock has not been and will not have been
registered under the Act or the California or other applicable
securities laws of any state, that Xxxxxx in transferring such
shares to the Parent will be relying, if applicable, upon the
exemption from such registration requirements contained in
Section 4(1) or 4(2) of the Act as a transaction by a person
other than as issuer, underwriter or dealer and the applicable
state exemption; (ii) the Stock may be "restricted" as that
term is used in Rule 144 under the Act as a consequence of
which Parent may not be able to sell the shares unless such
shares are first registered under the Act and any applicable
state securities laws or unless an exemption from such
registration, is, in the opinion of counsel, available; (iii)
the Stock will be acquired by Parent for purposes other than
"distribution" as that term is used in Section 2(11) of the
Act, and (iv) Parent will execute, if Xxxxxx so requests, an
appropriate letter affirming that its intention with respect to
the proposed acquisition of the Stock is that such acquisition
be for investment purposes only and not with a view toward
resale or distribution thereof.
(b) the shares of Arguss Stock are not
registered under the Securities Act of 1933, as amended (the
"1933 Act"), and are being issued without registration on the
grounds that the sale of Arguss Stock hereunder is exempt from
registration under the 1933 Act pursuant to Section 4(2)
thereof and Parent's reliance on such exemption is predicated
on Xxxxxx'x representations set forth herein.
This Agreement is made in reliance upon Xxxxxx'x
representations to Parent that the shares of Arguss Stock to be
issued will be acquired for investment and not with a view to
the sale or distribution of any part thereof, and that Pierces
have no present intention of selling, granting participation in
or otherwise distributing the same.
Xxxxxx hereby represent that they are experienced in
evaluating and investing in companies such as the Parent, have
such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of this
investment, and have the ability to bear the economic risks of
this investment. Pierces further represent that during the
course of the transaction they have had the opportunity to ask
questions of, and receive answers from, representatives of
Parent concerning the Parent.
Pierces hereby agree that the Arguss Stock may not be
transferred without registration under the 1933 Act or an
exemption therefrom, and that in the absence of an effective
Registration Statement covering the Arguss Stock, or an
available exemption from registration under the 1933 Act, the
Arguss Stock must be held indefinitely. In particular, and
without limiting the foregoing, Pierces are aware that the
Arguss Stock may be not be sold pursuant to Rule 144
promulgated under the 1933 Act unless all conditions of that
Rule are met.
Pierces hereby agree that in no event will they
transfer any of the Arguss Stock other than pursuant to an
effective Registration Statement under the 1933 Act, or
pursuant to the conditions of any legend appearing on said
Arguss Stock.
12.15 Preparation and Filing of SEC Documents.
If and whenever, as a result of the transaction contemplated
hereunder, the Parent is under an obligation to provide
financial information to, or prepare a filing of any kind with,
the United States Securities and Exchange Commission ("SEC"),
Xxxxxx shall assist the Parent in preparing any audited
financial statements required by the SEC for this purpose. The
cost of preparing any such financial statements shall be borne
by the Parent.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
ATTEST: ARGUSS HOLDINGS, INC.
____________________ By: ______________________________
Title: ___________________________
ATTEST: CAN-AM CONSTRUCTION, INC.
____________________ By:______________________________
Title: ___________________________
WITNESS:
____________________
_____________________________(SEAL)
XXXXXX X. XXXXXX
ATTEST: WHITE MOUNTAIN CABLE CONSTRUCTION
CORP.
____________________ By:______________________________
Title: ___________________________
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