<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 5, 1997
CONCEPTRONIC, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19589 02-0413153
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File No.) Identification No.)
One Church Street 20850
Rockville, Maryland (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (301) 315-0027
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On March 5, 1997, White Mountain Cable Construction Corp. ("White
Mountain") was merged with and into White Mountain Acquisition Company, Inc., a
wholly-owned subsidiary of Conceptronic, Inc. (the "Company"). The merger
consideration paid by the Company to the stockholders of White Mountain was
based on the fair market value of White Mountain on the transaction date and
consisted of (i) 1,571,326 shares of the Common Stock, $.01 par value per share
(the "Common Stock"), of the Company, of which 181,818 shares were deposited in
an escrow account as security for a breach of the representations, warranties
and agreements made by the stockholders of White Mountain in the merger
agreement and (ii) $8,642,293 in cash, $1,000,000 of which was deposited in the
escrow account. Additionally, the Company granted certain registration rights
to the stockholders of White Mountain providing for the registration under the
Securities Act of 1933, as amended, of the shares of the Company's Common Stock
issued to them in the merger. The Company also entered into employment
agreements with the two former principals of White Mountain pursuant to which,
in addition to a base salary, each has the opportunity to receive an annual
bonus of up to $200,000 in the event that White Mountain exceeds certain
earnings targets. In connection with the transactions discussed above, the
Company also entered into a guarantee agreement pursuant to which it guaranteed
approximately $4.5 million of the bank debt of White Mountain.
White Mountain is engaged in the construction, reconstruction,
maintenance, repair and expansion of communications systems, cable television
and data systems, including providing aerial construction and splicing of both
fiber optic and coaxial cable to major telecommunications customers. White
Mountain will be operated as a wholly-owned subsidiary of the Company.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Audited balance sheet of White Mountain Cable Construction Co.
as of December 31, 1996 and 1995 and related statements of
income, retained earnings and cash flows for the years then
ended.
(b) Pro Forma Financial Information.
Pro forma balance sheet of Conceptronic, Inc. at December 31,
1996 and statement of income of Conceptronic, Inc. for the
fiscal year ended December 31, 1996.
(c) Exhibits.
2 Agreement and Plan of Merger, dated February 26, 1997,
by and between Dennis A. Nolin, David Pouliotte, White
Mountain Cable Construction Corp., Conceptronic, Inc.
and White Mountain Acquisition.
2
<PAGE> 3
Company, Inc.
10 Guarantee Agreement, dated March 5, 1997, by
Conceptronic, Inc. in favor of Citizens Bank New
Hampshire.
23 Consent of John Killion, PC
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Conceptronic, Inc.
-----------------------------------
(Registrant)
March 18, 1997
-----------------------------------
Rainer H. Bosselmann
Chairman of the Board
and Chief Executive Officer
4
<PAGE> 5
Financial Statements of Business
Acquired
WHITE MOUNTAIN CABLE CONSTRUCTION CORP.
FINANCIAL REPORT
DECEMBER 31, 1996 and 1995
<PAGE> 6
JOHN KILLION, PC
CERTIFIED PUBLIC ACCOUNTANT
-----
210 RUMFORD STREET
CONCORD, NEW HAMPSHIRE 03301
TELEPHONE (603) 224-7491
FAX (603) 224-6550
To the Board of Directors
White Mountain Cable Construction Corp.
Epsom, New Hampshire
We have audited the accompanying balance sheets of White Mountain Cable
Construction Corp. as of December 31, 1996 and 1995, and the related statements
of income, retained earnings, and cash flows for the years then ended. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and the significant
estimates made by management, as well as evaluating the overall financial
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of White Mountain Cable
Construction Corp. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ John Killion, P.C.
January 30, 1997
-1-
<PAGE> 7
WHITE MOUNTAIN CABLE CONSTRUCTION CORP.
<TABLE>
BALANCE SHEET
DECEMBER 31,
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 15,227 $ 31,333
Accounts receivable, net 4,403,582 1,261,905
Inventory 289,913 159,386
Prepaid expenses 73,725 55,786
---------- ----------
Total current assets 4,782,447 1,508,410
PROPERTY AND EQUIPMENT
Fixed assets, net 3,675,925 2,783,589
---------- ----------
TOTAL ASSETS $8,458,372 $4,291,999
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $1,421,743 $ 833,674
Billings in excess of costs 1,994,843 -0-
Accounts payable 980,901 710,520
---------- ----------
Total current liabilities 4,397,487 1,544,194
---------- ----------
NONCURRENT LIABILITIES
Long-term debt, less current portion 2,110,990 1,422,231
Deferred income taxes 446,093 340,327
---------- ----------
Total noncurrent liabilities 2,557,083 1,762,558
---------- ----------
TOTAL LIABILITIES 6,954,570 3,306,752
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, no par value; 300 shares
authorized, issued, and outstanding 15,132 15,132
Additional paid-in capital 5,661 5,661
Retained earnings 1,483,009 964,454
---------- ----------
Total stockholders' equity 1,503,802 985,247
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $8,458,372 $4,291,999
========== ==========
</TABLE>
See accompanying notes and accountants' report
-2-
<PAGE> 8
WHITE MOUNTAIN CABLE CONSTRUCTION CORP.
<TABLE>
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CONSTRUCTION REVENUES $15,008,780 $12,526,804
COST OF CONSTRUCTION REVENUES 10,460,599 8,841,545
----------- -----------
GROSS PROFIT 4,548,181 3,685,259
OPERATING EXPENSES 3,456,612 3,348,114
----------- -----------
OPERATING INCOME 1,091,569 337,145
NONOPERATING INCOME (EXPENSE) (232,490) (179,606)
----------- -----------
INCOME BEFORE INCOME TAXES 859,079 157,539
PROVISION FOR INCOME TAXES 340,530 150,355
----------- -----------
NET INCOME 518,549 7,184
RETAINED EARNINGS, BEGINNING OF YEAR 964,454 957,270
----------- -----------
RETAINED EARNINGS, END OF YEAR $ 1,483,003 $ 964,454
=========== ===========
</TABLE>
See accompanying notes and accountants' report
-3-
<PAGE> 9
WHITE MOUNTAIN CABLE CONSTRUCTION CORP.
<TABLE>
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 518,549 $ 7,184
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation $ 563,307 $ 511,335
Deferred income taxes 105,766 84,426
(Increase) Decrease in current assets:
Accounts receivable (3,141,677) 206,254
Inventory (130,527) (26,744)
Prepaid expenses (17,939) 50,612
Increase (Decrease) in current liabilities:
Billings in excess of costs 1,994,843 -0-
Accounts payable 132,294 (68,804)
Accrued expenses and taxes 138,087 125,411
----------- -----------
Net cash provided by operating activities 162,703 889,674
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,494,522) (1,262,758)
Retired assets 57,360 -0-
Gain (Loss) on sales of fixed assets (18,475) 4,616
----------- -----------
Net cash used in investing activities (1,455,637) (1,258,142)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on financing (3,010,192) (1,064,175)
Proceeds from new financing 4,287,020 1,395,000
----------- -----------
Net cash provided from financing
activities (1,276,828) 330,825
----------- -----------
NET DECREASE IN CASH (16,106) (37,643)
CASH, BEGINNING OF YEAR 31,333 68,976
----------- -----------
CASH, END OF YEAR $ 15,227 $ 31,333
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 205,769 $ 191,288
Income taxes 65,006 60,344
</TABLE>
See accompanying notes and accountants' report
-4-
<PAGE> 10
WHITE MOUNTAIN CABLE CONSTRUCTION CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity:
The company provides design, technical support, construction
management, and construction services (builds; rebuilds; retrofits; and
Premiss wiring with coax and fiber optic cable) to the CATV;
Electrical; Telephone; and Computer Network industries (voice, data and
video). Projects are located from Texas to Maine. The length of the
projects vary but are typically less than a year.
Basis of accounting:
The Company recognizes revenues on projects on the percentage of
completion method measured by the percentage of cost incurred to date
to estimated total cost for each project. Because of inherent
uncertainties in estimating costs, it is at least reasonably possible
that the estimates used will change within the near term. Billings are
issued based on production reports and established per unit contract
prices.
Project costs include all direct material, labor costs, subcontractor
costs, and those indirect costs related to project performance, such as
indirect labor, per diem, insurance, depreciation, supplies and vehicle
expenses. Selling, general and administrative costs are charged to
expense as incurred. Provisions for estimated losses on uncompleted
projects are made in the period in which the losses are determined.
Changes in job performance, job conditions, and estimated profitability
may result in revisions to costs and income, which are recognized in
the period in which the revisions are determined. Changes in estimated
project profitability resulting from project performance, project
conditions, claims, and settlements are accounted for as changes in
estimates in the current period.
The liability, "Billings in excess of costs" represents billings in
excess of revenues recognized.
Inventories:
Inventories are valued at the lower of cost or market, determined
principally by using the first-in, first-out (FIFO) method.
Property and equipment:
Property and equipment are recorded at cost. Depreciation is provided
on the straight-line method over the estimated useful lives of the
assets in the following ranges: Building improvements (25-40 years);
transportation equipment (5-8 years); Equipment (5-10 years); Furniture
and fixtures (5-10 years); Land improvements (10-25 years).
Income Taxes
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences in the depreciation
methods used for property and equipment between financial and income
tax reporting.
-5-
<PAGE> 11
WHITE MOUNTAIN CABLE CONSTRUCTION CORP.
<TABLE>
NOTES TO FINANCIAL STATEMENTS
<CAPTION>
NOTE 2. NOTES PAYABLE
1996 1995
---------- ----------
<S> <C> <C>
Note payable, with interest at 8.25%,
collateralized by all assets with monthly
payments of $21,840.18 plus interest,
due 10/2001 $1,266,731 $ -0-
Note payable, equipment line of credit,
with interest at 8.25%, collateralized by all assets,
due 04/2002. A sixty month amortization begins
in April, 1997 1,050,396 -0-
Note payable, line of credit, with interest
at 8.25%, collateralized by all assets, due
on demand 1,015,606 -0-
Note payable, with interest at 9.0%,
collateralized by all assets with monthly
payments of $55,837.32 including interest,
due 11/98 -0- 1,755,905
Note payable, line of credit, with interest
at 9.0%, collateralized by all assets, due
on demand -0- 300,000
Note payable, stockholders, unsecured,
with interest at 12% 200,000 200,000
---------- ----------
3,532,733 2,255,905
Less amount due within one year 1,421,743 833,674
---------- ----------
Long-term debt $2,110,990 $1,422,231
========== ==========
Aggregate maturities required on long-term
debt at December 31, 1996 are as follows:
Year ending December 31, 1997 $1,421,743
Year ending December 31, 1998 440,940
Year ending December 31, 1999 478,725
Year ending December 31, 2000 519,748
Year ending December 31, 2001 671,577
----------
$3,532,733
==========
</TABLE>
-6-
<PAGE> 12
WHITE MOUNTAIN CABLE CONSTRUCTION CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 3. PROFIT-SHARING PLAN
The Company has a trusteed, noncontributory profit-sharing plan
covering substantially all of its employees. The company made
contributions totaling $200,000 for the year ended December 31, 1996
and 1995.
NOTE 4. RELATED PARTY TRANSACTIONS
The Company rents its headquarters and contracts for management and
development services from entities owned by the shareholders. Payments
to these related entities amounted to $2,798,000 in 1996 and $2,728,000
in 1995.
NOTE 5. INCOME TAXES
<TABLE>
The provision for income taxes differs from the expense that would
result from applying statutory rates to income before income taxes
because of the tax treatment of certain expenses. Provision for income
taxes was computed as follows:
<CAPTION>
1996 1995
<S> <C> <C>
Income before Income taxes $ 859,079 $ 157,539
Depreciation (316,406) (240,695)
Per Diem Meals and entertainment 160,240 146,115
Non deductible expenses 5,185 6,651
--------- ---------
Taxable Income $ 708,098 $ 69,610
========= =========
State income tax $ 64,848 $ 6,306
Federal income tax 169,916 59,622
Deferred income tax 105,766 84,427
--------- ---------
Provision For Income Taxes $ 340,530 $ 150,355
========= =========
</TABLE>
NOTE 6. CONCENTRATION OF CREDIT RISK
The company extends credit to customers in the CATV industry in the
normal course of business. The concentration of credit risk within this
specific industry may be affected by changes in economic and other
conditions and may, accordingly, impact the company's overall credit
risk. One customer with multiple ongoing project represents over fifty
percent of annual revenues and outstanding accounts receivable.
Management believes that constant monitoring of accounts receivable
reduces the credit risk to the company.
-7-
<PAGE> 13
PRO FORMA FINANCIAL INFORMATION
The accompanying pro forma consolidated financial statements of operations
presents the results of operations of the Company and White Mountain Cable Corp.
as if the acquisition of White Mountain Cable Corp. had occurred as of January
1, 1996. The pro forma consolidated balance sheet reflects the pro forma
consolidated financial position of the companies as if the acquisition had
occurred December 31, 1996. The pro forma information reflects the total
consideration paid and the issuance of 1,571,326 shares of the Company's common
stock. The pro forma data is not necessarily indicative of what the results
would have been if the acquisition had occurred on the dates indicated.
<PAGE> 14
<TABLE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1996
<CAPTION>
Conceptronic as Pro Forma WMCC Pro Forma Consolidated
Reported Adjustments for(1) Acquisition Adjustments(1) Pro Forma
Conceptronic as Reported for WMCC
<S> <C> <C> <C> <C> <C>
Net Sales $15,652,792 $15,008,780 $30,661,572
Cost of Sales 11,258,630 - 10,460,599 - 21,719,229
----------- ----------- ----------- ----------- -----------
Gross Profit 4,394,162 4,548,181 8,942,343
Operating Expense 4,012,867 806,389(2) 3,456,612 (2,570,000)(5) 5,705,868
----------- ----------- ----------- ----------- -----------
Earnings from 381,295 (806,389) 1,091,569 2,570,000 3,236,475
Operations
----------- ----------- ----------- ----------- -----------
Other Expense, Net 277,879 712,990(3) 232,490 1,223,359
Income Before Taxes 103,416 (1,519,379) 859,079 2,570,000 2,031,116
Income Tax Provision 15,416 (285,196)(4) 340,530 1,009,525(6) 1,080,275
----------- ----------- ----------- ----------- -----------
Net Income $ 88,000 $(1,234,183) $ 518,549 $ 1,560,475 $ 932,841
=========== =========== =========== =========== ===========
Weighted Shares
Outstanding 2,082,266 1,571,326(7) 3,653,592
=========== ========= ==========
Earnings per Share $ .04 $ .26
=========== ==========
<FN>
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
1) Reflects adjustments for the 1997 first quarter acquisition as if it had
taken place on January 1, 1996.
2) Reflects current year amortization of $16,127,784 of goodwill over 20
years.
3) Reflects adjustment for imputed interest expense on acquisition financing.
4) Adjustment for income tax provision at an effective rate of 40% on the
imputed interest adjustment in footnote 3.
5) Reflects elimination of fees paid to outside management group.
6) Adjustment for income tax provision at approximately 40%.
7) Represents additional shares issued for acquisition.
</TABLE>
After giving effect to the Company's net operating loss carry-forward and
removing from the above pro forma presentation interest that was imputed on the
acquisition financing ( which interest was not incurred as a result of the
recent private placement of securities), the pro forma net earnings per share
for the Company as of year-ending December 31, 1996 would have been 51 cents.
<PAGE> 15
<TABLE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
Year Ended December 31, 1996
<CAPTION>
WMCC
Conceptronic as Acquisition Pro Forma Consolidated
Reported as Reported Adjustments(1) Pro Forma
<S> <C> <C> <C> <C>
Cash $10,317,822 $ 15,227 $(8,989,293)(2) $ 1,343,756
Accounts Receivable, Net 2,917,016 4,403,582 7,320,598
Inventory, Net 4,133,367 289,913 4,423,280
Prepaid Expenses 338,834 73,725 412,559
----------- ---------- ----------- -----------
Total Current Assets 17,707,039 4,782,447 (8,989,293) 13,500,193
Prop, Equip & Other Assets 1,400,283 3,675,925 16,127,784(3) 21,203,992
----------- ---------- ----------- -----------
TOTAL ASSETS $19,107,322 $8,458,372 $ 7,138,491 $34,704,185
=========== ========== =========== ===========
Current Liabilities $3,297,775 $4,397,487 $ 7,695,262
Non-Current Liabilities 1,037,937 2,557,083 3,595,020
----------- ---------- ----------- -----------
TOTAL LIABILITIES 4,335,712 6,954,570 - 11,290,282
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
Stockholders' Equity 14,771,610 1,503,802 7,138,491 (4) 23,413,903
----------- ---------- ----------- -----------
TOTAL LIABILITIES &
----------- ---------- ----------- -----------
STOCKHOLDERS' EQUITY $19,107,322 $8,458,372 $ 7,138,491 $34,704,185
=========== ========== =========== ===========
<FN>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
1) Reflects adjustments for the 1997 first quarter acquisition as if it had
occurred on December 31, 1996.
2) Reflects the cash element of the Company's purchase and other acquisition
costs for White Mountain Cable Corp.
3) Reflects the estimated goodwill on the acquisition.
4) Reflects the net impact of shares issued for the acquisition.
</TABLE>
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, made this ____ day of ___________,
1997, by and between DENNIS A. NOLIN ("Nolin") and DAVID POULIOTTE ("Pouliotte")
(hereinafter collectively referred to as "Securityholder"), WHITE MOUNTAIN CABLE
CONSTRUCTION CORP., a New Hampshire corporation (the "Company"), CONCEPTRONIC,
INC., a Delaware corporation, (the "Parent"), and WHITE MOUNTAIN ACQUISITION
COMPANY, INC., a 100% subsidiary of Parent ("Acquisition").
INTRODUCTORY STATEMENT
----------------------
A. Securityholder owns three hundred (300) shares of capital stock of
the Company, which shares constitute all of the issued and outstanding capital
stock ("Stock") of the Company, a New Hampshire corporation doing business as
White Mountain Cable Construction Corp.
B. The Company is 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 the Securityholders for Parent to acquire the
Company by means of a merger of the Company with and into 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, Acquisition and the Company have each approved the plan of merger to
merge the
<PAGE> 2
Company with and into the Acquisition (the "Merger") in accordance with the
applicable provisions of the New Hampshire General Corporation Law (the "NHGCL")
and the Delaware General Corporation Law (the "DGCL"), 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, $0.01 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.
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.
"Acquisition" has the meaning set forth in the preface above.
-----------
"ACT" shall mean the Securities Act of 1933, as the same has
been and shall be amended from time to time.
- 2 -
<PAGE> 3
"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 that value of the
Company, determined in accordance with generally accepted accounting principles
consistently applied, and based on the Audit, equal to the product of FOUR and
ONE-HALF(4 1/2) times the difference between (a) that number equal to the net
income of the Company for calendar year 1996, adjusted by adding back all
deductions taken in determining such number, if any, for interest, depreciation,
income taxes and 1996 compensation or dividends actually paid to Nolin and
Pouliotte, and (b) Five Hundred Fifty Thousand Dollars ($550,000).
"Agreement" means this AGREEMENT AND PLAN OF MERGER.
---------
"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.
"AUDIT" shall mean the audit of the Company for tax years 1995
and 1996, as of December 31, 1996, prepared in accordance with generally
accepted accounting principles consistently applied by the accounting firm of
John Killion, P.C. and acceptable to the accounting firm of KPMG Peat Marwick.
"CERTIFICATE OF MERGER" has the meaning set forth in Section
1.2 below.
- 3 -
<PAGE> 4
"CLOSING" means the transfer of the Stock to the CNCP and the
payment of the Purchase Price to Securityholder pursuant to this Agreement.
"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.
"CNCP" shall mean the Parent, Conceptronic, Inc., a Delaware
corporation with its principal offices located at 6 Post Road, Portsmouth, New
Hampshire 03081, and its successors and assigns.
"CNCP STOCK" shall mean all of the authorized issued and
outstanding capital stock of CNCP, including all warrants, options, convertible
securities or right (contingent or otherwise) to purchase or acquire stock of
CNCP.
"DGCL" has the meaning set forth in the introductory
statement.
"EMPLOYMENT AGREEMENT" means the Employment Agreements
executed by the Company, Nolin and Pouliotte pursuant to Section 6.7 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, unctions, 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,
- 4 -
<PAGE> 5
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.
"ESCROW AGREEMENT" shall mean the Escrow Agreement executed by
the Securityholder, Company and CNCP pursuant to Section 6.19 and 2.3 hereof.
"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 STATEMENTS" means the audited financial statements
of the Company for the Company's fiscal years ending in 1995 and 1996, including
the notes thereto, prepared by John Killion, P.C., the Company's regular
independent certified public accountant, and accepted by the accounting firm of
KPMG Peat Marwick.
"GAAP" shall mean in accordance with generally accepted
accounting principles, consistently applied.
"MERGER CONSIDERATION" means the aggregate consideration set
forth in Article II hereof.
- 5 -
<PAGE> 6
"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 prepared in accordance with Section
4.4 hereof.
"NHGCL" has the meaning set forth in the introductory
statement above.
"NOLIN" shall mean Dennis A. Nolin, a stockholder, officer and
director of the Company, and a signatory to this Agreement.
"POULIOTTE" shall mean David Pouliotte, a stockholder, officer
and director of the Company, and a signatory to this Agreement.
"PRESIDENT" shall mean the president elected and named
pursuant to Section 12.3, hereof.
"REAL PROPERTY" shall mean that parcel of land located on the
Southerly side of U.S. Route 4, Epsom, New Hampshire, more particularly
described in the deed dated March 24, 1988 by and among the Company, as grantor,
and Nolin and Pouliotte, as collective grantees, and recorded among the land
records of Merrimack County at Book 1712, Page 0135.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement executed by the Securityholder and CNCP pursuant to Section
6.17 hereof.
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<PAGE> 7
"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.
ARTICLE I
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 NHGCL and the DGCL, Parent shall, as of the
Closing, acquire the Company by means of the company being merged with and into
Acquisition, where by the separate corporate existence of the Company shall
cease, and Acquisition shall continue as the surviving corporation. Acquisition
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 NHGCL and the CGCL (the "Certificates of Merger"),
together with any required related certificates, with the Secretary of State of
the State of New Hampshire and the Secretary of State of the State of Delaware,
respectively, in such form as required by, and executed in accordance with the
relevant provisions of, the NHGCL and the DGCL ("Filing Date").
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<PAGE> 8
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 NHGCL and the DGCL.
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 Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
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 Acquisition, 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 Acquisition, 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 Acquisition
immediately prior to the consummation of the Merger shall be the initial
directors of the Surviving
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Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Acquisition 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.
1.6 Securityholder hereby further assigns to the Surviving
Corporation, to the extent not assigned pursuant to the merger hereinabove, all
right, title and interest in and to the mailing lists, customer lists, and
telephone number(s) currently used by the Company. Securityholder shall execute
any and all documents or consents necessary to convey the telephone number(s) to
CNCP.
1.7 Securityholder hereby further assigns to the Surviving
Corporation, to the extent not assigned pursuant to the merger hereinabove, all
right, title and interest in and to the name "White Mountain Cable Construction
Corp.", "White Mountain Fiber Optics Cable Construction Corp.", and all other
names or other intellectual property used by or in the business of the Company
to CNCP. Securityholder does hereby grant to Surviving Corporation the exclusive
use of the above names and agrees that Surviving Corporation may use the names
in all advertising, including but not limited to telephone listing, print and
media advertisements.
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<PAGE> 10
ARTICLE II
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 stock of CNCP and in cash ("Merger
Consideration"), without interest, determined in accordance with Section 2.2.
2.2 MERGER CONSIDERATION. The total merger consideration to be
paid by CNCP and Acquisition to Securityholder shall be an amount equal to the
Agreed Value of the Company, as that term is defined in this Agreement, and set
forth on Exhibit 2.2. 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 pro rata to each Securityholder,
as follows:
(a) At Closing, each Securityholder shall receive, less any
shares placed in Escrow pursuant to Section 2.3, below, his pro rata share of
the aggregate sum equal to One-Half (1/2) of the Agreed Value of the Company
through the issuance of shares of the authorized capital stock of CNCP ("CNCP
Stock") as set forth in Exhibit 2.2(a). For the purposes of determining the
number of shares of CNCP Stock to be issued to the Securityholder pursuant to
this paragraph 2.2(a), the value of each share of CNCP Stock shall be FIVE and
50/100 DOLLARS ($5.50).
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<PAGE> 11
(b) At Closing, each Securityholder shall receive his pro
rata share of the aggregate sum equal to One-Half (1/2) of the Agreed Value of
the Company, less any amounts placed in escrow pursuant to Section 2.3, below,
in cash, wire transfer, or certified funds as set forth on Exhibit 2.2(b)
2.3. ESCROW OF PURCHASE PRICE. At Closing Date One Million
Dollars ($1,000,000) in cash and One Hundred Eighty-One Thousand Eight Hundred
Eighteen (181,818) shares of CNCP Stock of the Merger Consideration defined in
Section 2.2 shall be deposited in an escrow account pursuant to the terms and
conditions of the Escrow Agreement attached as Exhibit 2.3.
ARTICLE III
CLOSING
-------
The Closing of the Merger shall occur at the offices of
Conceptronic, One Church Street, Suite 302, Rockville, Maryland 20852, at 2:00
p.m. on the 28th day of February, 1997, or at such other time, date and place as
CNCP and Securityholder may agree (the "Closing Date"). At the Closing:
3.1 Cancellation.
------------
(a) Upon filing of the Certificate of Merger,
each such share of the Stock shall be cancelled 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
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<PAGE> 12
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, subject to the provisions of the Escrow Agreement,
the holder of such Certificates shall be entitled to receive in exchange
therefore their pro rata share of the Merger Consideration as provided in
Section 2.2(a) and (b) above, and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered, 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, Acquisition 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. Parent shall be entitled
to deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any holder of the Stock such amounts as Parent is
required to deduct
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<PAGE> 13
and withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent, such withheld amount shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares in respect of
which such deduction and withholding was made by Parent.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS OF SECURITYHOLDER AND THE COMPANY
-------------------------------------------
As a material inducement to induce the CNCP and Acquisition to
consummate the Merger under this Agreement, Securityholder and Company represent
and warrant to CNCP each of the matters set forth in this Article IV are true
and correct as of the date hereof, and acknowledge that CNCP's entry into this
Agreement and the performance of its 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 the
Securityholder shall survive as set forth in Section 12.13, 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 New
Hampshire. Attached as Exhibit 4.1 is a list of all states in which the company
is qualified to do
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<PAGE> 14
business. The Company is duly qualified as a foreign corporation in each other
jurisdiction in which the failure to be qualified would have a materially
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 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 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,
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<PAGE> 15
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 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, and (iv) the Company has no obligation or
commitment to register under the Act any securities issued or to be issued by
it. All of the issued and outstanding shares of the capital stock of the Company
have been
- 15 -
<PAGE> 16
validly issued in compliance with all federal and state securities laws an are
fully paid and non-assessable.
4.4 FINANCIAL STATEMENTS. The Company has delivered to
CNCP the Financial Statements, exclusive of the Audit, which will be delivered
to the CNCP prior to Closing. Such preliminary Financial Statements 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, and the results
of its operations for the respective periods then ended. 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 affects 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 destruction, damage or loss relating
to its assets or the conduct of its business whether or not covered by
insurance;
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<PAGE> 17
(d) Suffered, permitted or incurred 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 may have a material adverse
effect on its assets or the conduct of its business;
(g) Waived, canceled, sold or otherwise disposed of,
for less than the face amount thereof, any claim or right relating to its assets
or the conduct of its business, which it has against others;
(h) Declared, promised or made any 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 obligation
for any payment for, any contribution or other amount to, or with respect to,
any employee
- 17 -
<PAGE> 18
benefit plan, or paid or agreed to pay any bonus or salary increase to the its
executive officers or directors, or made any increase in the pension, retirement
or other benefits of its directors or executive officers;
(j) Committed, suffered, permitted, incurred or
entered into any transaction or event which would 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 disrupt its business relationship with said customer or client
or could result in the 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 Securityholder threatened against or affecting the
Securityholder, 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 Securityholder. The foregoing
includes, without limiting its generality, actions pending or threatened (or
any basis therefor known to the Company or Securityholder) involving the prior
employment of any employees or prospective employees of the Company or its use,
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<PAGE> 19
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. 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"). 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 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, 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
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<PAGE> 20
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
- 20 -
<PAGE> 21
such leases or agreements existing any default of the Company, or 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 or the Securityholder'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
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<PAGE> 22
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 CNCP or the Surviving Corporation will have any liability for payment or
otherwise. After the Closing, there does 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.
4.11 CONTRACTS, OTHER AGREEMENTS. Attached hereto as Exhibit
4.11 is a true and complete list of each material contract, agreement and other
instrument to which the Company is a party. At CNCP's request, the Company shall
deliver to
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<PAGE> 23
CNCP a true and complete copy of any such contract, agreement or instrument. All
of the contracts, agreements, and instruments described in Exhibit 4.11 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 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.
4.12 GOVERNMENTAL APPROVALS. 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.
4.13 LACK OF DEFAULTS. The Company and Securityholder 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 an adverse effect
on the assets or business of the Company. The Company and Securityholder 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
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<PAGE> 24
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
CNCP true, correct and complete copies of all Employee Benefit Plans.
(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.
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<PAGE> 25
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 neither the Company has received any
notice of cancellation or termination of any of these policies.
4.16 LABOR MATTERS. None of the Company's employees are
covered by 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 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 the Securityholder nor the Company has not incurred or
become liable for any commission, fee or other similar payment to any broker,
finder, agent or other
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<PAGE> 26
intermediary in connection with the negotiation or execution of this Agreement
or the consummation of the transactions contemplated hereby. Securityholder
agrees to be responsible for paying all Broker fees incurred by the Company as a
result of this transaction.
4.18 Accounts Receivable.
-------------------
(a) All accounts receivable of the Company shown on
the unaudited balance sheets of the Company as of December 31, 1996, and all
notes and accounts receivable acquired by the Company subsequent to December 31,
1996, reflect actual transactions, have arisen in the ordinary course of
business and have been collected or are 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 December 31, 1996.
(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
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<PAGE> 27
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 regulate the Company's business. Except as listed on
Exhibit 4.20(b), the Company has complied in all 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,
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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. The Securityholder 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 the
Securityholder nor, to the knowledge of the Securityholder, any of the
Securityholder'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
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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. Each of the
Securityholders represents and warrants that such Security holder, 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 NHGCL, (iv) has received a copy of resolutions approving the
Merger in accordance with the NHGCL, and (v), to the extent such Securityholder
owes any amounts to the Company pursuant to any Promissory Note issued by such
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Securityholder to the Company, consents to the use of a portion of the Merger
Consideration payable to such Securityholder to pay off each such Promissory
Note.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS OF CNCP AND ACQUISITION
---------------------------------
CNCP and Acquisition represent and warrant to the
Securityholder that each of the matters set forth in this Article 5 are true and
correct as of the date hereof and acknowledges that Securityholders 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.
5.1 ORGANIZATION, STANDING, ETC. CNCP and Acquisition 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 CNCP and of Acquisition, enforceable against them in accordance
with the terms of this Agreement.
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ARTICLE VI
CONDITIONS TO CLOSING
CNCP'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 CNCP:
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 Securityholders 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
December 31, 1996.
6.3 FINANCIAL STATEMENTS. CNCP shall have received an audited
balance sheet and profit and loss statement for the Company as of December 31,
1995 and December 31, 1996.
6.4 LACK OF DEFAULTS. No Event of Default (as defined in
Article X 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 EXECUTION OF CONTRACT OF SALE TO PURCHASE REAL PROPERTY.
Securityholder and the CNCP shall have entered into a Contract of Sale to
Purchase Real Property, a copy of which is attached hereto as Exhibit 6.5,
pursuant to which CNCP shall purchase the Real Property from the Securityholder
at a price
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<PAGE> 32
determined by appraisal and mutual agreement of the parties. Settlement of the
transfer of the Real Property shall occur within sixty (60) days of Closing.
6.6 AUDIT. The Securityholder shall cause the Audit to be
completed and delivered to CNCP, at CNCP's expense.
6.7 EMPLOYMENT AGREEMENTS. Nolin, Pouliotte, and those
employees designated as key employees on Exhibit 4.14(b) and the Company shall
have executed the Employment Agreements or Non-Competition Agreements, copies of
which are attached hereto as Exhibits 6.7(a) - 6.7(f).
6.8 OPINION OF COUNSEL. CNCP 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 6.8.
6.9 COMPLIANCE CERTIFICATE. The Company shall have delivered
to CNCP a certificate executed by its President, dated the Closing Date,
certifying the fulfillment of the conditions specified in this Article 6 and the
accuracy of the representations and warranties contained in Article 4 hereof.
6.10 KEY-PERSON TERM LIFE INSURANCE. The Company shall have
applied for an insurance policy on the lives of Nolin and Pouliotte, such
policies (a) to name the CNCP as sole beneficiary, (b) to be in form and
substance satisfactory to the CNCP, and (c) to be in the amount of FOUR MILLION
and NO/100 DOLLARS ($4,000,000.00) each.
6.11 RELEASE OF SECURITYHOLDER FROM PERSONAL OBLIGATION. The
Company shall obtain as of the date of Closing, the release of Securityholder
from
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the personal guaranty of all monies due pursuant to the loan agreement with
Citizens Bank NH.
6.12 BY-LAW AMENDMENTS. The Company shall have amended its
By-Laws and taken any other action required by corporate law to allow for an
increase in the number of the Company's Board of Directors from three (3) to
five (5).
6.13 RELEASE OF NOLIN AND POULIOTTE. Nolin and Pouliotte
shall execute and deliver to the CNCP, in a form satisfactory to CNCP's counsel,
a release of any claim that either of them may have against the Company for the
repayment of any loan, claim for unpaid compensation, claim for indemnification
or otherwise except for the notes set forth in Exhibit 6.13 which will be paid
according to their terms.
6.14 CORPORATE DOCUMENTS. CNCP 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 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
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(b) such additional supporting documents and other
information with respect to the operations and affairs of the Company as
CNCP may reasonably request.
All such documents described in (a) and (b) shall be
satisfactory in form and substance to CNCP and its counsel.
6.15 CORPORATE FILINGS. All relevant incorporation and
merger documents shall be filed with the appropriate governmental agencies and
shall be attached hereto as Exhibit 6.15.
6.16 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.
6.17 REGISTRATION RIGHTS AGREEMENT. The Securityholders
and CNCP shall have executed the Registration Rights Agreement, a copy of which
is attached hereto as Exhibit 6.17.
6.18 NET WORTH. The Company shall have, as of the Closing
Date, a Net Worth greater than or equal to $1.5 million, excluding tax
liabilities, if any, resulting from tax audit examinations.
6.19 ESCROW AGREEMENT. Securityholder, Company, CNCP and
Acquisition shall have executed the Escrow Agreement, a copy of which is
attached hereto as Exhibit 6.19.
6.20 EMPLOYEE STOCK OPTIONS. CNCP resolves to take any and
all actions necessary, including soliciting the approval of its shareholders, to
grant
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unqualified stock options to the employees and in the amounts designated in
Exhibit 6.20.
ARTICLE VII
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. In order to assure
protection and preservation of the company assets and the Stock to be exchanged
at Closing, and to enable CNCP to prepare for settlement at the Closing, CNCP,
Securityholder 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 CNCP 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,
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and will permit any of CNCP'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 CNCP's appropriate officers and
managers, legal counsel, accountants and auditors, all at normal business hours
and as often as CNCP 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 CNCP,
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 CNCP 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 6.10 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
similar businesses operating in the same vicinity, and in amounts not less than
those (i) recommended by major
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insurance companies for similar businesses or (ii) required 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 CNCP 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 Securityholder, the Company or any
of their assets;
(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 CNCP's rights
under this Agreement, the Note, or the Related Agreements.
7.6 BOARD OF DIRECTORS' MEETINGS. CNCP shall be entitled
to designate two individuals as members of the Board of Directors of the Company
and
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the Company shall take all appropriate actions to ensure that CNCP's designees
are elected to the Board of Directors. The Board of Directors of the Company
shall meet no less than once during each calendar quarter. Immediately after the
execution hereof, the Company shall take all appropriate action to increase the
Board of Directors in number to five (5), consisting of Nolin, Pouliotte, the
President, Ranier Bosselman, and one other representative of the CNCP, and shall
not make any change to the membership thereof prior to Closing without the prior
written consent of CNCP.
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.
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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, (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 Certificate of Incorporation or Bylaws if the result of any
such amendment will have an adverse effect on CNCP's rights under this
Agreement.
7.12 JUDGMENTS AND LIENS. Neither the Securityholders nor
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 them 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;
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(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.
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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
CNCP.
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.
The Company is further prohibited from declaring or
distributing, without the prior written approval of CNCP in its sole discretion,
any executive bonus or other form of additional compensation.
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
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<PAGE> 42
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 CNCP, 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 Seventy-Five
Thousand Dollars ($75,000) are outside of the ordinary course of the Company's
business, without the consent of CNCP.
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
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not giving a permitted notice of termination) any contract, lease or obligation,
(i) outside the ordinary course of business or (ii) which is not cancelable by
it on notice of not more than thirty (30) days and without liability, penalty,
or premium. 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 CNCP.
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.
ARTICLE VIII
COVENANTS NOT TO COMPETE
------------------------
8.1 COVENANT NOT TO COMPETE. Securityholder 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, Securityholder shall not, during such period, disclose,
divulge, communicate, use to the detriment of the Company or CNCP 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
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addition, Securityholder 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.
Securityholder agrees that CNCP 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.
ARTICLE IX
INDEMNIFICATION BY SECURITYHOLDER AND THE COMPANY
-------------------------------------------------
Securityholder and the Company, to the extent set forth in
this Agreement, shall indemnify and hold harmless Parent, Acquisition and
Surviving Corporation against and in respect to the following, in addition to
the other losses otherwise specifically indemnified against in this Agreement,
as follows:
9.1 Indemnification by the Securityholders and the Company.
------------------------------------------------------
(a) BREACH. Subject to the provision of this Section 9.1,
each of the Securityholders and the Company (each in his or her capacity as an
indemnifying party, an "Indemnifying party") covenants and agrees to jointly
and severally indemnify, defend, protect, and hold harmless each of Parent,
Acquisition, 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
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<PAGE> 45
representation or warranty of the Company or the Securityholders set forth in
Section 4 of this Agreement, (ii) any breach or nonfulfillment by the Company or
the Securityholders of, or any noncompliance by the Company or the
Securityholders 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 inaccuracy of any any list,
certificate or other instrument delivered by or on behalf of Securityholder 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 Securityholder or the Company contained in this
Agreement or made in connection with the transactions contemplated hereby,
including, but not limited to all losses, liabilities, damages, costs and
expenses (including reasonable attorneys' fees), incurred by CNCP if this
Agreement is terminated pursuant to Article 10 hereof.
(b) ENVIRONMENTAL INDEMNIFICATION. The Company, and
Securityholder 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
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<PAGE> 46
disbursements) of any kind and nature whatsoever resulting from the operation
of the Company's business: (i) which (x) is imposed upon, or incurred by, CNCP
by reason of, relating to or arising out of any environmental laws, rules or
regulations of any governmental body or agency having jurisdiction over the
premises, or (y) arises out or the actual, alleged or threatened discharge,
dispersal, release, storage, treatment, generation, disposal or escape of any
Hazardous Materials, on or from the premises, or (z) actually or allegedly
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 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, CNCP by reason of or relating to any breach, act,
omission or misrepresentation contained in Section 4.20.
(c) TAX MATTERS. Company and each Securityholder 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
December 31, 1996 or resulting in
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<PAGE> 47
any way from this transaction, including, but not limited to, any taxes imposed
as a result of the disqualification of this transaction as a tax free
reorganization under the Code, except that if such disqualification occurs
because of the misinformation or misrepresentation of CNCP then the
Securityholder shall be relieved of any indemnity obligation resulting from such
disqualification.
(i) For purposes of paragraph (c), whenever
it is necessary to allocate an item of income, gain, deduction, loss or credit
to either a taxable year or period that ends on or before December 31, 1996 or
a taxable year or period that begins after the Closing Date, rules consistent
with those in Treasury Regulation Section 1.502-76(b) shall be applied.
(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 December 31, 1996, and to compromise, settle, or contest any tax claims
in connection therewith in its sole discretion, except that Securityholder shall
have the sole right to defend (a) any tax audit, or administrative or court
proceeding against the Company, CNCP or Surviving Corporation brought by a
taxing authority as a result of any matter currently under investigation by any
taxing authority, and (b) any action brought by a third party against any
Indemnitee which could result in liability to any Indemnifying Party hereunder.
Securityholders may not undertake the defense of any action under Paragraph
(ii)(b) without the prior written consent of CNCP, which consent shall not
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be unreasonably withheld. No Indemnitee shall pay any tax which may be the
subject of indemnification by the Securityholders (an "Indemnified Tax"),
without giving the Securityholder notice in writing of its intent to do so, and
the reasons therefore. Upon receipt of such notice, the Securityholders shall
in or within thirty (30) days thereupon pay such Indemnified Tax unless they
promptly deliver to the Indemnitee an opinion of tax counsel, which opinion and
counsel shall be reasonably satisfactory to the Indemnitee and shall be at the
expense of the Securityholders, to the effect that the relevant Indemnitee is
more likely than not on the merits to obtain a refund of such Indemnified Tax
if payment is made but a suit for refund is thereafter instituted, the
Indemnitee shall cooperate with the Securityholders in his prosecution of such
suit, such cooperation to include, without limitation, furnishing the
Securityholders with any books, records or information reasonably requested by
the Securityholders that are in the Indemnitee's possession. If a refund of the
Indemnified Tax is paid as a result of such suit, the Securityholders shall be
entitled to such refund to the extent of the amount of his prior indemnity
payment in respect of such Indemnified Tax.
(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.
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<PAGE> 49
(e) SET-OFF. Except as otherwise provided in this
Agreement, CNCP shall be entitled to set-off Securityholder or the Company's
liability to CNCP for indemnification under this Article 9, or under any other
paragraph of this Agreement, by first crediting the amount of liability against
the monies being held in escrow pursuant to Section 2.2 of this Agreement, and
then by reducing the amount of CNCP Stock issued to Securityholder pursuant to
Section 2.1(a).
(f) COSTS AND EXPENSES. Except as otherwise provided in
this Agreement, all amounts indemnified pursuant to this Article IX 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.
(g) TERMINATION OF COMPANY'S OBLIGATION. Company's
obligation to indemnify CNCP, or to contribute to any party indemnifying CNCP,
pursuant to this Article 9 shall expire as of the Filing Date.
9.2 NO CIRCULAR RECOVERY. Each Securityholder hereby
agrees that he or she will not make any claim for indemnification against either
Parent or Acquisition by reason of the fact that he or she 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
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<PAGE> 50
Corporation, and their respective Subsidiaries and Affiliates against the
Securityholders.
ARTICLE X
TERMINATION
-----------
10.1 TERMINATION BY CNCP. This Agreement may be terminated by
CNCP, on or before the Closing Date, upon the occurrence of the following:
(a) If any of the conditions specified in Article 6
shall not have been met prior to the Closing Date.
(b) If an event of default, as defined in Article 11,
has occurred, and has not been cured during any applicable cure period.
If CNCP terminates this Agreement because of a failure of any
one or more of the conditions set forth above, the CNCP shall be indemnified
pursuant to the terms and conditions of Article 10 for any damage, cost or
expense, including reasonable attorneys' fees, incurred as a result of the
preparation of this Agreement, or otherwise, not to exceed Ten Thousand Dollars
($10,000).
10.2 TERMINATION BY SECURITYHOLDER. This Agreement may be
terminated by Securityholder, on or before the Closing Date if any of the
conditions specified in Article 5 shall not have been met prior to Closing.
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<PAGE> 51
ARTICLE XI
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 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 CNCP. Any failure by CNCP to insist upon
strict performance by the Securityholder 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 CNCP shall have the right thereafter to insist
upon strict performance thereof by the Securityholder or the Company.
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<PAGE> 52
ARTICLE XII
MISCELLANEOUS
12.1 COSTS. Except for expenses relating to the preparation of
the 1995 and 1996 audits, 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 New Hampshire.
12.3 EMPLOYMENT OF PRESIDENT. Subject to the approval of the
CNCP, the Securityholder resolves to conduct a search and hire a President for
the Company, upon the terms specified in a valid three-year employment contract.
12.5 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 the Securityholder, Company and CNCP, the
provisions of this Agreement shall control.
12.6 TITLES AND CAPTIONS. All article or section titles or
captions in this Agreement are for convenience of reference and are not part of
this Agreement and
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<PAGE> 53
shall in no way define, limit, extend or describe the scope or intent of
provisions herein.
12.7 EXHIBITS. The Exhibits and Schedules referred to herein
are hereby made a part hereof.
12.8 APPLICABLE LAW. This Agreement is to be governed by, and
construed, interpreted, and enforced in accordance with the laws of Delaware.
12.9 BINDING EFFECT AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of the
parties. Notwithstanding the foregoing, neither the Company nor CNCP 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.
12.10 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 Securityholder Nolin then: Dennis A. Nolin
White Mountain Cable Construction Corp.
Rt. 4, P.O. Box 459
Epsom, NH 03234
Counsel for Nolin: Edmund J. Waters
210 Rumford St., P.O. Box 2227
Concord, NH 03302
If Securityholder Pouliotte
then: David Pouliotte
White Mountain Cable Construction Corp.
Rt. 4, P.O. Box 459
Epsom, NH 03234
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<PAGE> 54
Counsel for Pouliotte: Edmund J. Waters
210 Rumford St., P.O. Box 2227
Concord, NH 03302-2227
If CNCP then: Conceptronic, Inc.
One Church Street, Suite 302
Rockville, Maryland 20850
Attn: Haywood Miller
Counsel for CNCP: Bleecker & Bleecker
51 Monroe Street
Suite 1210
Rockville, Maryland 20850
Attn: Steven S. Bleecker
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.
12.11 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.
12.12 ACCEPTANCE OR APPROVAL. By accepting all or approving
anything required to be observed, performed, or fulfilled, or to be given to
CNCP 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, CNCP shall not be
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<PAGE> 55
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.
12.13 SURVIVAL. All covenants, representations, and warranties
made by the Securityholder and CNCP in this Agreement shall survive the Closing
hereunder for a period of three (3) years.
12.14 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.
12.15 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which together shall constitute one instrument.
12.16 SECURITY MATTERS. (a) By executing this Agreement, CNCP
acknowledges that: (i) CNCP has been advised that the Stock has not been and
will not have been registered under the Act or the New Hampshire or other
applicable securities laws of any state, that the Securityholder in transferring
such shares to the CNCP 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
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<PAGE> 56
the Act as a consequence of which CNCP 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 CNCP for
purposes other than "distribution" as that term is used in Section 2(11) of the
Act, and (iv) CNCP will execute, if Securityholder 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 CNCP 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 CNCP Stock hereunder is
exempt from registration under the 1933 Act pursuant to Section 4(2) thereof and
CNCP's reliance on such exemption is predicated on Securityholder's
representations set forth herein.
This Agreement is made in reliance upon Securityholder's
representations to CNCP that the shares of CNCP 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 Securityholders have no present intention of selling,
granting participation in or otherwise distributing the same.
Securityholders hereby represent that they are experienced in
evaluating and investing in companies such as the CNCP, 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
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<PAGE> 57
this investment. Securityholders further represent that during the course of
the transaction they have had the opportunity to ask questions of, and receive
answers from, representatives of CNCP concerning the CNCP.
Securityholders hereby agree that the CNCP 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 CNCP
Stock, or an available exemption from registration under the 1933 Act, the CNCP
Stock must be held indefinitely. In particular, and without limiting the
foregoing, Securityholders are aware that the CNCP Stock may be not be sold
pursuant to Rule 144 promulgated under the 1933 Act unless all conditions of
that Rule are met.
Securityholders hereby agree that in no event will they
transfer any of the Stock other than pursuant to an effective Registration
Statement under the 1933 Act, or pursuant to the conditions of any legend
appearing on said Stock.
12.17 PREPARATION AND FILING OF SEC DOCUMENTS. If and
whenever, as a result of the transaction contemplated hereunder, the CNCP 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"),
Securityholder shall assist the CNCP 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 CNCP.
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<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
ATTEST: WHITE MOUNTAIN CABLE CONSTRUCTION CORP.
____________________ By: ______________________________
Title: ___________________________
ATTEST: CONCEPTRONIC, INC.
____________________ By: ______________________________
Title: ___________________________
WITNESS:
____________________ _____________________________(SEAL)
DENNIS A. NOLIN
____________________ _____________________________(SEAL)
DAVID POULIOTTE
ATTEST: WHITE MOUNTAIN ACQUISITION COMPANY, INC.
____________________ By: ______________________________
Title: ___________________________
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<PAGE> 59
PAGE 58 OF 58 OF AGREEMENT AND PLAN OF MERGER
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<PAGE> 1
EXHIBIT 10
GUARANTEE AGREEMENT
-------------------
IN CONSIDERATION of credit heretofore or hereafter extended by Citizens
Bank New Hampshire, a guaranty savings bank organized under the laws of the
State of New Hampshire, with a mailing address of One Capital Plaza, Concord,
New Hampshire 03301 (herein called the "Bank") to White Mountain Cable
Construction Corp., a New Hampshire corporation (herein called the "Borrower"),
and to enable such credit to be obtained or maintained by Borrower, the
undersigned guarantor, Conceptronics, Inc., a Delaware corporation, with an
address of ______________________________, _______________, _______________
(herein called the "Guarantor") does hereby guarantee to Bank the prompt payment
at maturity, expressed or declared, of all liabilities, primary, secondary,
direct, contingent, sole, joint, several or joint and several, and interest
thereon, including, without limitation, the obligations contemplated by a Line
of Credit Demand Note to Bank, by Borrower in the principal amount of One
Million Five Hundred Thousand Dollars ($1,500,000.00), an Equipment Term Note to
Bank by Borrower in the principal amount of One Million Seven Hundred Eighty
Nine Thousand Five Hundred Eighty Nine Dollars and Thirty Cents ($1,789,589.30)
and a Term Note to Bank by Borrower in the principal amount of One Million Three
Hundred Ten Thousand Four Hundred Ten Dollars and Seventy Cents ($1,310,410.70)
plus interest, and all dated October 4, 1996, and any other loan agreement,
mortgage or other loan document executed on behalf of Borrower (hereinafter
"Instruments"), whether present or future, matured or contingent, along with all
other present or future liabilities of Borrower, and/or Borrower and others to
Bank (herein collectively called "Liabilities" and singly called "Liability"),
as and when due in accordance with their original tenor, without regard to
subsequent modification or suspension of Borrower's liability thereon, however
arising. If any Liability is not paid by Borrower to Bank promptly when due,
Guarantor agrees to pay the same, or, at Bank's option, all Liabilities of
Borrower forthwith to Bank upon demand. Guarantor further guarantees to Bank
that Borrower will fully, promptly and punctually perform and observe each and
every agreement, covenant or condition of any loan agreement, note or mortgage
on the part of Borrower to be performed and observed. Guarantor further agrees
to pay to Bank upon demand all costs and expenses, including counsel fees, which
may be incurred in collection of the Liabilities and/or of Guarantor's
Liabilities under this Guarantee.
1. Guarantor hereby: (a) assents to all terms made or to be made with
Bank by Borrower; (b) consents that Bank may: (1) exchange or surrender any
collateral now or hereafter held as security for any Liability; (2) waive,
release or delay the exercise of any of Bank's rights or remedies with respect
to the Liabilities or this Guarantee; (3) renew, extend or modify the terms of
any Liability or any instrument evidencing the same; or, (4) advance or
readvance to Borrower without prior notice to Guarantor, such advances or
readvances to enjoy the full protection of this Guarantee; (c) waives all
suretyship defenses and defenses in the nature thereof; and, (d) waives all
notices whatsoever in respect to this Guarantee and all liabilities, including,
but not limited to, notice of Bank's acceptance hereof or of its intention to
act, or of its action in reliance hereon, or of the present existence or future
incurring of any Liability or any terms or amounts thereof or any default
thereon.
1
<PAGE> 2
2. Guarantor's liability under this Guarantee is absolute and
unconditional, and shall not be affected or released by reason of any action
taken or not taken by Bank which is herein consented or agreed to, or of any
lack of prior enforcement or retention of any rights, against Borrower,
Guarantor or any other person or any property. Bank may release all or any part
of any liability of any of Guarantor, if more than one, and any such release
shall not affect or release any liability hereunder of any of Guarantor not so
released. No delay in making demand on Guarantor for payment of the liabilities
of Guarantor hereunder shall prejudice Bank's right to enforce such payment. All
of Bank's rights and remedies shall be cumulative.
3. If any Liability of Borrowers shall not be paid to Bank when due, or
if any agreement, covenant or condition of any security agreement, note or any
of the Instruments shall not be promptly and punctually performed by Borrower,
all Liabilities shall be deemed, for the purposes of this Guarantee, to be
immediately due, and the obligations of Guarantor hereunder shall be forthwith
due, and Bank may forthwith recover from Guarantor the whole amount due
hereunder. Bank shall not be bound to exhaust its recourse against Borrower or
other persons or upon any collateral or liens it may hold before being entitled
to payment from Guarantor of the Liabilities. This is a guarantee of payment,
when due, and not merely of collectibility. It is the intention of the parties
that this Guarantee may be resorted to in full, and that all Liabilities will
become immediately due and owing, notwithstanding that Bank is unable to pursue
or exhaust its remedies against Borrower, whether as a consequence of
intervening bankruptcy of Borrower, or for any other reasons whatsoever.
4. Guarantor hereby expressly and irrevocably waives all rights of
subrogation, contribution, reimbursement or any other rights in the nature
thereof as against Borrower arising in any way from payment made to Bank
hereunder and does hereby expressly waive any right, title or interest in or to
any of the Liabilities or any proceeds thereof or to any property securing the
Liabilities, and Guarantor does hereby expressly acknowledge and agree that
Guarantor is not a creditor of Borrower by virtue of this Guarantee. Under no
circumstances shall Bank have the obligation to assign, or be deemed to have
assigned, its rights in instruments or in security documents to Guarantor in
connection with any payments made to Bank by Guarantor pursuant to this
Guarantee.
5. Guarantor hereby irrevocably assigns to Bank, until all Liabilities
are paid in full, and its obligations to Bank have terminated, all rights of
subrogation and rights in the nature thereof which Guarantor may from time to
time have against Borrower by reason of payments made to Bank by Borrower under
this Guarantee, and Borrower further agrees with Bank that it may exercise all
rights attendant to such subrogation claims as it sees fit, without the prior
consent of Guarantor, and may apply all proceeds realized from the subrogation
claims, after payment of expenses, to Guarantor's obligations hereunder. Upon
payment in full of all Liabilities, and termination of the Instruments, Bank
shall reassign any remaining subrogation rights to Guarantor, without recourse.
2
<PAGE> 3
6. In the event of a petition by or against Borrower, pursuant to 11
U.S.C.101 ET. SEQ., this Guarantee shall not be referred to or considered by a
bankruptcy court in making determinations of "adequate protection" pursuant to
11 U.S.C.361 or "indubitable equivalency" pursuant to 11
U.S.C.1129(b)(2)(A)(iii).
7. This Guarantee has been delivered by Guarantor for BONA FIDE
business and/or personal reasons, to wit: Guarantor is the sole shareholder of
Borrower, and as such Guarantor will receive direct and financial benefit and
advantage from any extension of credit to Borrower from Bank.
8. For purposes of this Guarantee and notwithstanding contrary
provisions in any document executed by Bank and Borrower, all Liabilities shall
be deemed immediately accelerated, without notice or demand, and shall become
immediately due and owing upon occurrence of any of the following events:
8.1 In the event Borrower or Guarantor makes an assignment for
the benefit of creditors, files a petition in bankruptcy, has an order for
relief entered against him, petitions or applies to any tribunal for a receiver
or any trustee of any substantial part of its property; or commences any
proceeding related to Borrower or Guarantor, under any reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect, or if there is commenced
against Borrower or Guarantor, any such proceeding, or Borrower or Guarantor,
by any act indicates his consent to, approval of, or acquiescence to, any such
proceeding or the appointment of any receiver of, custodian or trustee for
Borrower, or any substantial part of his property, or upon the issuance of any
attachment or execution against Borrower or Guarantor, or any governmental
agency or instrumentality shall seize, appropriate, condemn, occupy or
interfere in any manner with any of Borrower's or Guarantor's operation of, all
or any substantial portion of his property, or such property or any right of
Borrower therein shall be subject to judicial process or condemnation or
forfeiture proceedings; or,
8.2 The substantial diminution of Guarantor's net worth as the
same exists as of the date hereof, without the prior written consent of Bank;
or,
8.3 Insolvency of Guarantor.
9. Guarantor shall furnish Bank within one hundred twenty (120) days
of its fiscal year-end consolidating audited financial statements for Guarantor
and each subsidiary of Guarantor for such year prepared by an independent
Certified Public Accountant reasonably satisfactory to Bank in accordance with
generally accepted accounting principles consistently applied.
3
<PAGE> 4
10. If this Guarantee is executed by more than one party, references to
Guarantor include each and all of them and they shall be jointly and severally
liable hereunder. It is agreed that Guarantor's liability is independent of any
other guaranties at any time in effect with respect to all or any part of the
Liabilities, and Guarantor's liability and obligations hereunder may be enforced
regardless of the existence of any such other guaranties. This Guarantee shall
inure to the benefit of Bank, its successors, assigns, endorsees and any person
to whom Bank may grant any interest in any Liability, and shall be binding upon
Guarantor and the successors, assigns, heirs, executors, administrators and
other legal representatives thereof. This Guarantee shall continue in full force
and effect until released by Bank, even if the Liabilities are $0.00.
IN WITNESS WHEREOF, Guarantor has executed this Guarantee Agreement and
delivered the same to Bank this ___ day of February, 1997.
CONCEPTRONICS, INC.
________________________________ By: ________________________________
Witness Name:
Title:
STATE OF NEW HAMPSHIRE
COUNTY OF _______________
On this the ___ day of February, 1997 before me, the undersigned
officer, personally appeared ______________________, who acknowledged himself to
be the _________________ of Conceptronics, Inc., a corporation, and that he as
such _________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained on behalf of the corporation.
____________________________________
Notary Public/Justice of the Peace
My Commission Expires:
4
<PAGE> 1
EXHIBIT 23
CONSENT OF JOHN KILLION, PC
We consent to the incorporation by reference of our report dated January 30,
1997, filed as an exhibit to the Conceptronic, Inc. (the "Company") Form 8-K,
dated March 5, 1997 (the "Form 8-K"), in the Company's Registration Statement
on Form S-8 (Commission File No. 333-19277) and in the Form 8-K.
JOHN KILLION, PC
/s/ John J. Killion, Jr.
- ------------------------
John J. Killion, Jr.
Concord, New Hampshire
March 14, 1997
