UNITED STATES
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
January 30, 1998
-----------------------------------------------
Date of Report(Date of earliest event reported)
CANMAX INC.
-----------------------------------------------------
Exact Name of Registrant as Specified in its Charter)
Wyoming 0-22636 75-2461665
---------------- ----------- -----------------
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
150 West Carpenter Freeway
Irving, Texas 75039
--------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(972) 541-1600
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(Registrant's Telephone Number, Including Area Code)
----------------------------
(Former Name or Former Address, If Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 30, 1998, Canmax Inc., a Wyoming corporation (the
"Company"), acquired USCommunication Services, Inc., a Delaware
corporation ("USC"), pursuant to the terms of an Agreement and
Plan of Merger dated as of January 30, 1998 (the "Merger
Agreement") by and among the Company, USC and CNMX MergerSub,
Inc., a Delaware corporation and wholly owned subsidiary of the
Company ("CMI"). Pursuant to the terms of the Merger Agreement,
USC was merged with and into CMI, with CMI being the surviving
corporation in the merger (the "Surviving Corporation") and
electing to continue its operations under the name
"USCommunication Services, Inc."
Pursuant to the Merger Agreement, the former stockholders of
USC received an aggregate of 1.5 million shares of common stock,
no par value per share, of the Company ("Common Shares"),
warrants to acquire 1.5 million Common Shares at an exercise
price of $1.25 per share that are immediately exercisable, and
warrants to acquire 1.0 million Common Shares at an exercise
price of $2.00 per share exercisable during the five (5) year
period commencing on January 30, 2000 (collectively, the "Merger
Consideration"). Pursuant to the terms of the Merger Agreement
and the Escrow Agreement executed in connection therewith,
300,000 shares of Canmax Common have been withheld from the
Merger Consideration and placed in an escrow to satisfy a certain
indemnification obligations of USC. The Company estimates that
the approximate value of the Merger Consideration is $3.0
million. The terms of the Merger Agreement were determined by
arms-length negotiation among the parties.
James C. Bernet, the former President of USC, will remain as
President of the Surviving Corporation and is anticipated to join
the Company's Board of Directors. Mr. Bernet has executed an
Employment Agreement with the Surviving Corporation and the
Company, pursuant to which he will receive $150,000 per year as
salary and no less than $30,000 per year in bonuses, subject to
annual adjustments. In addition, Mr. Bernet received in
connection with his Employment Contract (a) warrants to acquire
1.0 million Common Shares at an exercise price of $2.00 per
share, the vesting of which is dependent upon the business
operations of the Surviving Corporation generating after tax
earnings of at least $5.0 million (subject to certain
adjustments), and (b) warrants to acquire 1.0 million Common
Shares at an exercise price of $3.00 per share, the vesting of
which is dependent upon the business operations of the Surviving
Corporation generating after tax earnings of at least $8.625
million (subject to certain adjustments). Each of the warrants
granted in connection with Mr. Bernet's Employment Contract must
vest, if at all, on or before January 30, 2001.
During the period in which the Merger Agreement was being
negotiated, the Company advanced approximately $250,000 to USC,
which amount became an intra-company debt upon the consummation
of the Merger Agreement. Prior to the consummation of the
transactions contemplated by the Merger Agreement, no other
material relationship existed between (a) USC or the shareholders
of USC and (b) the Company or CMI, any officer, director or
affiliate of the Company or CMI or any associate of any such
officer or director.
<PAGE>
On February 2, 1998, the Company issued a news release
relating to the Agreement, the form of which is attached as
Exhibit 99.1 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
It is impracticable to provide the financial statements
of the business acquired and described in Item 2 above at
this time. The Company intends to prepare the required
financial statements and file same as an amendment to this
Form 8-K as soon as practicable, but not later than April
15, 1998.
(b) PRO FORMA FINANCIAL INFORMATION.
It is impracticable to provide the pro forma financial
information required pursuant to Article 11 of Regulation S-
X with respect to the transaction described in Item 2 above
at this time. The Company intends to prepare the required
pro forma financial statements and file same as an amendment
to this Form 8-K as soon as practicable, but not later than
April 15, 1998.
(c) EXHIBITS.
Exhibit No. Document Description
----------- --------------------
2.1 Agreement and Plan of Merger dated as of
January 30, 1998, among Canmax Inc.,
CNMX MergerSub, Inc. and USCommunication
Services, Inc.*
9.1 Voting Trust Agreement of Nationwide
Transportation Products, Inc.
(subsequently known as USCommunication
Services, Inc.) made as of May 1, 1997.*
9.2 First Amendment to Voting Trust
Agreement of USCommunication Services,
Inc. dated as of December 1, 1997.*
10.1 Common Stock Purchase Warrant dated
January 30, 1998, between Canmax Inc.
and Delia O'Donnell, Trustee.*
10.2 Common Stock Purchase Warrant dated
January 30, 1998, between Canmax Inc.
and Delia O'Donnell, Trustee.*
10.3 Employment Contract dated as of January
30, 1998 among Canmax Inc.,
USCommunication Services, Inc. and James
C. Bernet.*
<PAGE>
10.4 Common Stock Purchase Warrant dated
January 30, 1998 between Canmax Inc. and
James C. Bernet.*
10.5 Common Stock Purchase Warrant dated
January 30, 1998 between Canmax Inc. and
James C. Bernet.*
23.1 Consent of Ernst & Young LLP,
independent certified accountants (to be
filed by amendment).
99.1 February 2, 1998 Press Release.*
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* Filed herewith
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
CANMAX INC.
DATE: February 9, 1998 By: /s/ PHILIP M. PARSONS
----------------------------
Philip M. Parsons
Executive Vice President and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Document Description
----------- --------------------
2.1 Agreement and Plan of Merger dated as of
January 30, 1998, among Canmax Inc.,
CNMX MergerSub, Inc. and USCommunication
Services, Inc.*
9.1 Voting Trust Agreement of Nationwide
Transportation Products, Inc.
(subsequently known as USCommunication
Services, Inc.) made as of May 1, 1997.*
9.2 First Amendment to Voting Trust
Agreement of USCommunication Services,
Inc. dated as of December 1, 1997.*
10.1 Common Stock Purchase Warrant dated
January 30, 1998, between Canmax Inc.
and Delia O'Donnell, Trustee.*
10.2 Common Stock Purchase Warrant dated
January 30, 1998, between Canmax Inc.
and Delia O'Donnell, Trustee.*
10.3 Employment Contract dated as of January
30, 1998 among Canmax Inc.,
USCommunication Services, Inc. and James
C. Bernet.*
10.4 Common Stock Purchase Warrant dated
January 30, 1998 between Canmax Inc. and
James C. Bernet.*
10.5 Common Stock Purchase Warrant dated
January 30, 1998 between Canmax Inc. and
James C. Bernet.*
23.1 Consent of Ernst & Young LLP,
independent certified accountants (to be
filed by amendment).
99.1 February 2, 1998 Press Release.*
* Filed herewith
PURSUANT TO ITEM 601 (b)(2) OF REGULATION S-K, THIS EXHIBIT OMITS
CERTAIN NONMATERIAL SCHEDULES AND EXHIBITS COMPRISING A PART OF
ORIGINAL DOCUMENT. EACH OF THE SCHEDULES LISTED ON PAGE (iv)
AND EACH OF THE EXHIBITS LISTED ON PAGE (v) HEREOF HAVE BEEN
OMITTED. THE COMPANY AGREES TO SUPPLEMENTALLY FURNISH A COPY
OF ANY OF THE OMITTED ITEMS TO THE SECURITIES AND EXCHANGE
COMMISSION UPON REQUEST.
AGREEMENT AND PLAN OF MERGER
by and among
CANMAX INC.
(a Wyoming corporation)
and
CNMX MERGERSUB, INC.
(a Delaware corporation)
and
USCOMMUNICATION SERVICES, INC.
(a Delaware corporation)
Dated as of
January 30, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. CLOSING; DEFINITIONS................................1
1.1. Closing............................................1
1.2. Definitions........................................1
ARTICLE 2. EFFECT OF MERGER AND CONSIDERATION TO BE RECEIVED
BY THE SHAREHOLDERS AT CLOSING......................7
2.1. Effect of Merger...................................7
2.2. Description of Consideration.......................7
2.3. Categories of Stock................................7
2.4. Escrow Account.....................................7
2.5 Exchange Requirements..............................8
2.6. Dividends..........................................8
2.7. Return of Canmax Common............................9
2.8. No Further Ownership Rights in Common Stock........9
2.9. Closing of USC Transfer Books......................9
2.10. Dissenters' Rights.................................9
2.11. Further Assurances.................................9
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.....................10
3.1 Representations and Warranties of USC.............10
3.1.1. Authorization, etc. .......................10
3.1.2. Corporate Status...........................10
3.1.3. No Conflicts, etc. ........................11
3.1.4. Financial Statements.......................12
3.1.5. Absence of Undisclosed Liabilities.........12
3.1.6. Taxes......................................12
3.1.7. Absence of Changes.........................13
3.1.8. Litigation.................................14
3.1.9. Compliance with Laws; Governmental
Approvals and Consents; Governmental
Contracts................................14
3.1.10. Operation of the Business..................14
3.1.11. Assets.....................................15
3.1.12. Contracts..................................15
3.1.13. Territorial Restrictions...................16
3.1.14. Inventories................................16
3.1.15. Customers..................................16
3.1.16. Suppliers..................................17
3.1.17. Intellectual Property......................18
3.1.18. Insurance..................................18
3.1.19. Real Property..............................18
3.1.20. Environmental Matters......................18
3.1.21. Employees, Labor Matters, etc..............18
3.1.22. Employee Benefit Plans.....................19
3.1.23. Confidentiality............................19
3.1.24. Records....................................19
3.1.25. Brokers, Finders, etc......................19
3.1.26. Receivables................................19
3.1.27. Backlog....................................20
(i)
<PAGE>
3.1.28. Liabilities to Affiliates..................20
3.1.29. Bank Accounts..............................20
3.1.30. Disclosure.................................20
3.2. Representations and Warranties of CMI................20
3.2.1. Corporate Status; Authorization, etc.......20
3.2.2. No Conflicts, etc..........................21
3.2.3. Litigation.................................21
3.2.4. Brokers, Finders, etc......................21
3.2.5 Exchange Act Reports.......................21
3.2.6. Securities to be Issued....................21
3.2.7. Consents...................................21
3.3. Representations and Warranties of Trustee............22
3.3.1. Authorization, etc.........................22
3.3.2. Organization of Voting Trust...............22
3.3.3. Ownership of USC Shares....................22
3.3.4. Investment Intent..........................22
3.3.5. Notices of Withdrawal......................22
ARTICLE 4. COVENANTS.......................................22
4.1. Covenants of USC.....................................22
4.1.1. Conduct of Business........................22
4.1.2. No Solicitation............................22
4.1.3. Access and Information.....................23
4.1.4. Additional Financial Statements............24
4.1.5. Public Announcements.......................24
4.1.6. Further Actions............................24
4.1.7. Delivery of Audited Financial Statements...25
4.2. Covenants of Canmax and CMI..........................25
4.2.1. Public Announcements.......................25
4.2.2. Access.....................................25
4.2.3. Further Actions............................25
4.2.4. Further Assurances.........................25
ARTICLE 5. ADDITIONAL AGREEMENTS...........................25
5.1. Shareholder Approvals................................25
5.2. Compliance with the Securities Act...................26
5.3. Listing of Merger Shares.............................26
5.4. HSR Act Filings......................................26
5.5. Termination of Affiliate Agreements..................26
5.6. Covenant Regarding Trust.............................26
5.7. Appointment of Director..............................26
ARTICLE 6. CONDITIONS PRECEDENT............................27
6.1. Conditions to Obligations of Each Party..............27
6.2. Conditions to Obligations of Canmax and CMI..........27
6.2.1. Representations............................27
6.2.2. Covenants..................................27
6.2.3. Consents...................................27
6.2.4. No Material Adverse Effect.................28
6.2.5. Opinion of Counsel.........................28
6.2.6. Required USC Vote..........................28
6.2.7. Corporate Documents........................28
6.2.8. Accredited Investor Letter.................28
(ii)
<PAGE>
6.2.9. Non-Competition Agreement;
Employment Contract......................28
6.2.10. Employees..................................28
6.2.11. Bank Accounts..............................28
6.2.12. Officers and Directors.....................29
6.2.13. Resignation and Withdrawal of Trustee......29
6.2.14. Convertible Instruments....................29
6.3. Conditions to Obligations of USC.....................29
6.3.1. Representations............................29
6.3.2. Covenants..................................29
6.3.3. Required USC Vote..........................29
6.3.4. Opinion of Counsel.........................29
6.3.5. Corporate Documents........................29
6.3.6. Consents and Approvals.....................30
6.3.7. Non-Competition Agreement and
Employment Contract......................30
ARTICLE 7. ALLOCATION AND TAX ADVICE.......................30
7.1. Allocation...........................................30
7.2. Tax Advice...........................................30
ARTICLE 8. ESCROW AGREEMENT AND RELATED PROVISIONS.........30
8.1. Escrow Agreement.....................................30
8.2. Indemnification Procedure............................31
8.3. Shareholders Representative..........................32
ARTICLE 9. TERMINATION.....................................32
9.1. Termination..........................................32
9.2. Effect of Termination................................33
ARTICLE 10. MISCELLANEOUS...................................33
10.1. Expenses...........................................33
10.2. Severability.......................................33
10.3. Notices............................................33
10.4. Headings...........................................34
10.5. Entire Agreement...................................34
10.6. Counterparts.......................................35
10.7. Governing Law, etc.................................35
10.8. Binding Effect.....................................35
10.9. Assignment.........................................35
10.10. No Third Party Beneficiaries.......................35
10.11. Amendment; Waiver, etc.............................35
(iii)
<PAGE>
SCHEDULES
List of Subsidiaries............................Schedule 3.1.2(a)
Jurisdictions of Business.......................Schedule 3.1.2(b)
List of Shareholders and Outstanding Shares
of Subsidiaries...............................Schedule 3.1.2(e)
Exceptions to No Conflicts......................Schedule 3.1.3
Taxes...........................................Schedule 3.1.6(a)
Conduct of Business Outside the Ordinary
Course of Business............................Schedule 3.1.7
Exceptions to Compliance with Applicable Laws...Schedule 3.1.9(a)
Government Approvals and Other Consents.........Schedule 3.1.9(b)
Contracts with Governmental Authorities.........Schedule 3.1.9(c)
Operation of the Business.......................Schedule 3.1.10
Title and Liens Against Assets
(Other than Permitted Liens)..................Schedule 3.1.11
Contracts, Agreements, Commitments,
Instruments and Arrangements..................Schedule 3.1.12(a)
Territorial Restrictions........................Schedule 3.1.13
Unusable and/or Unsalable Inventories...........Schedule 3.1.14
Customers.......................................Schedule 3.1.15
Suppliers.......................................Schedule 3.1.16
Intellectual Property...........................Schedule 3.1.17(a)
Intellectual Property Transfer Exceptions.......Schedule 3.1.17(b)
Insurance Policies..............................Schedule 3.1.18
Leases, including, Address, Landlord
and Tenant....................................Schedule 3.1.19(b)
Receivables as of the Cut-Off Date..............Schedule 3.1.26
Backlog.........................................Schedule 3.1.27
Liabilities to Officers, Directors,
Shareholders or Affiliates....................Schedule 3.1.28
Bank Accounts and Safe Deposit Boxes
Including Persons Authorized on Each..........Schedule 3.1.29
(iv)
<PAGE>
EXHIBITS
Exhibit A - Accredited Investor Letter
Exhibit B - Escrow Agreement
Exhibit C - Non-Competition Agreement
Exhibit D - Employment Contract
(v)
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (together with the
Exhibits and Schedules hereto, the "Agreement"), is executed to
be effective as of January 30, 1998, by and among CANMAX
INC., a Wyoming corporation ("Canmax"), CNMX MERGERSUB, INC.,
a Delaware corporation ("CMI"), and USCOMMUNICATION SERVICES,
INC., a Delaware corporation ("USC") formerly known as
Nationwide Transportation Products, Inc., Delia O'Donnell, as
trustee (in such capacity, the "Trustee") of the trust (the
"Trust") created under the Voting Trust Agreement of Nationwide
Transportation Products, Inc. made as of May 1, 1997, as
amended by the First Amendment to Voting Trust Agreement dated
December 1, 1997 and Delia O'Donnell, individually ("Founder").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Canmax, CMI
and USC have approved a plan of reorganization which contemplates
the merger of USC with and into CMI (the "Merger"), pursuant to
which the outstanding shares of capital stock of USC will be
converted into shares of no par value common stock of Canmax
("Canmax Common") and warrants to acquire shares of Canmax
Common;
WHEREAS, the parties hereto desire to enter into this
Agreement for the purpose of setting forth certain
representations, warranties, covenants and agreements by and
among the parties and to set forth the terms and conditions of
the Merger; and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and promises herein contained, and on the terms
and subject to the conditions herein set forth, the parties
hereto agree as follows:
ARTICLE 1. CLOSING; DEFINITIONS
1.1. CLOSING. The closing for the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices
of Arter & Hadden LLP, 1717 Main Street, Suite 4100, Dallas,
Texas 75201, on a date (the "Closing Date") selected by Canmax
within five (5) Business Days of the satisfaction or waiver of
all conditions precedent set forth in Article 6 hereof and
communicated to USC not later than two (2) Business Days
immediately prior thereto. The Certificate of Merger shall be
filed with the appropriate authorities in the State of Delaware
on or as soon as practicable after the Closing Date.
1.2. DEFINITIONS. The terms defined in this Section 1.2,
whenever used in this Agreement (including the Schedules), shall
have the respective meanings indicated below for all purposes of
this Agreement. All references herein to a Section, Article or
Schedule are to a Section, Article or Schedule of or to this
Agreement, unless otherwise indicated.
Accredited Investor Letter: the Accredited Investor
Letter in the form of Exhibit A hereto, to be executed and
delivered by the Trustee and the Founder at the Closing.
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<PAGE>
Affiliate: of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first
Person. "Control" (including the terms "controlled by" and
"under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction
of the management policies of a person, whether through the
ownership of voting securities, by contract or credit
arrangement, as trustee or executor, or otherwise.
Agreement: as defined in the Preamble to this
Agreement.
Applicable Law: all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the
common law), rules, regulations, ordinances, codes or orders
of any Governmental Authority, (ii) Governmental Approvals
and (iii) orders, decisions, injunctions, judgments, awards
and decrees of or agreements with any Governmental
Authority.
Beneficiary: as defined in Section 3.3.2.
Bernet: James C. Bernet, the President of USC.
Business Day: a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are
authorized or required to close.
Canmax: as defined in the Preamble of this Agreement.
Canmax's Accountants: Ernst & Young, LLP.
Canmax Common: as defined in the Recitals to this
Agreement.
Canmax Materials: Canmax's annual report on Form 10-K
for the period ended October 31, 1996, Canmax's quarterly
reports on Form 10-Q for the periods ended January 31, 1997,
April 30, 1997 and July 31, 1997 and Canmax's registration
statement on Form S-3 (file no. 333-33523) declared
effective by the SEC on November 26, 1997.
Certificate of Merger: the certificate of merger to be
filed with the appropriate authorities in the State of
Delaware, which is required to effect the Merger in
accordance with the Applicable Law of Delaware.
Certificate: as defined in Section 2.5.
Closing: as defined in Section 1.1.
Closing Date: as defined in Section 1.1.
CMI: as defined in the Preamble of this Agreement.
Code: the Internal Revenue Code of 1986, as amended.
-2-
<PAGE>
Consent: any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license,
exemption or order of, registration, certificate,
declaration or filing with, or report or notice to, any
Person, including but not limited to any Governmental
Authority.
Contingent Amount: as defined in Section 2.3.
Contract: as defined in Section 3.1.12(a).
Conversion Amount: as defined in Section 2.3.
Covered Returns: as defined in Section 3.1.6(a).
Covered Taxes: as defined in Section 3.1.6(a).
Cut-off Date: December 31, 1997.
Cut-off Date Balance Sheet: as defined in
Section 3.1.5.
Damages: any and all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs,
damages, expenses (including attorneys' fees and expenses
and reasonable costs of settlement) whether fixed or
contingent, suffered or incurred by a Person, without regard
to the timing of any payment or performance.
Effective Time: the date and time at which the filing
of the Certificate of Merger in the State of Delaware has
occurred in the manner required to cause the Merger to
become effective under Applicable Law in Delaware.
Employee: as defined in Section 3.1.22.
Employee Benefit Plan: as defined in Section 3.1.22.
Environmental Laws: all Applicable Law relating to the
protection of the environment, to human health and safety,
or to any emission, discharge, generation, processing,
storage, holding, abatement, existence, release, threatened
release or transportation of any hazardous substances,
including, without limitation, (i) the Comprehensive
Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, and the Occupational
Safety and Health Act, (ii) all other requirements
pertaining to reporting, licensing, permitting,
investigation or remediation of emissions, discharges,
releases or threatened releases of hazardous materials into
the air, surface water, ground water or land, or relating to
the manufacture, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport or handling
of hazardous substances, and (iii) all other requirements
pertaining to the protection of the health and safety of
employees or the public.
ERISA: the Employee Retirement Income Security Act of
1974, as amended.
-3-
<PAGE>
Escrow Account: the separate accounts or funds
maintained by the Escrow Agent pursuant to the Escrow
Agreement for purposes of holding and administering (i) the
Canmax Common comprising the Contingent Amount, and (ii)
cash for purposes of purchasing fractional shares of Canmax
Common and any other amounts that may be contained therein
from time to time, as required by Section 2.5.
Escrow Agent: the bank or trust company selected to
administer the Escrow Agreement, as contemplated by
Section 8.1.
Escrow Agreement: the Escrow Agreement among the
Escrow Agent, the Shareholders Representative, Canmax and
CMI, in the form of Exhibit B hereto.
Exchange Act: the Securities Exchange Act of 1934, as
amended.
Financial Statements: each of the financial statements
required to be provided by Section 3.1.4.
Founder: as defined in the Preamble of this Agreement.
GAAP: generally accepted accounting principles as in
effect in the United States as of the date of any
application thereof, consistently applied.
Governmental Approval: any Consent of, with or from
any Governmental Authority.
Governmental Authority: any nation or government, any
state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government,
including, without limitation, any government authority,
agency, department, board, commission or instrumentality of
the United States, any State of the United States or any
political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction, and any
self-regulatory organization.
HSR Act: The Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
Indemnified Party: as defined in Section 8.2.
Indemnifying Party: as defined in Section 8.2.
Initial Amount: as defined in Section 2.3.
Intellectual Property: any and all United States and
foreign: (a) patents (including design patents, industrial
designs and utility models) and patent applications
(including reexaminations, docketed patent disclosures
awaiting filing, reissues, divisions, continuations-in-part
and extensions), patent disclosures awaiting filing,
provisional applications, reissues, divisions,
contributions, continuations-in-part and extensions,
inventions and improvements thereto; (b) trademarks, service
marks, trade names, trade dress, logos, business and product
names, slogans, and registrations and applications for
registration thereof; (c) copyrights (including all
software) and registrations thereof; (d) inventions,
processes, designs, formulae, trade secrets, know-how,
-4-
<PAGE>
industrial models, confidential and technical information,
manufacturing, engineering and technical drawings, product
specifications and confidential business information; (e)
mask work and other semiconductor chip rights and
registrations thereof; (f) intellectual property rights
similar to any of the foregoing; and (g) copies and tangible
embodiments thereof (in whatever form or medium, including
electronic media).
IRS: the Internal Revenue Service.
Leased Real Property: all interests leased pursuant to
the Leases.
Leases: the real property leases, subleases, licenses
and occupancy agreements pursuant to which USC or any
Subsidiary is the lessee, sublessee, licensee or occupant.
Lien: any mortgage, pledge, hypothecation, right of
others, claim, security interest, encumbrance, lease,
sublease, license, occupancy agreement, adverse claim or
interest, easement, covenant, encroachment, burden, title
defect, title retention agreement, voting trust agreement,
interest, equity, option, lien, right of first refusal,
charge or other restrictions or limitations of any nature
whatsoever, including but not limited to such as may arise
under any Contracts.
Material Adverse Effect: with regard to any Person,
any event, occurrence, fact, condition, change or effect
that individually or in the aggregate with related events,
occurrences, facts, conditions, changes or effects will or
can reasonably be expected to result in a cost, expense,
charge, liability, loss of revenue or diminution in value
equal to or greater than $10,000.
Merger: as defined in the Recitals to this Agreement.
Merger Shares: as defined in Section 2.2.
Permitted Liens: deposits under worker's compensation,
unemployment insurance or social security laws, or to secure
statutory obligations or surety or other similar bonds;
mechanic's, suppliers', carriers', warehousemen's or similar
liens; liens securing Taxes, government charges or other
governmental levies which are not yet due and payable, or
are being contested in good faith by appropriate proceedings
with adequate reserves in conformity with generally accepted
accounting principles; and the interest or title of any
lessor in property subject to a lease of property.
Person: any natural person, firm, partnership,
association, corporation, company, limited liability
company, limited partnership, trust, business trust,
Governmental Authority or other entity.
Rule 145 Affiliates: as defined in Section 5.2.
SEC: the Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as
amended.
Series A Warrants: as defined in Section 2.2.
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Series B Warrants: as defined in Section 2.2.
Shareholder: as defined in Section 2.2.
Shareholders Representative: as defined in
Section 8.3.
Subsequent Monthly Financial Statements: as defined in
Section 4.1.4.
Subsidiaries: each corporation or other Person in
which a Person owns or controls, directly or indirectly,
capital stock or other equity interests representing at
least 50% of the outstanding voting stock or other equity
interests or conferring the power to name a majority of the
members of the Board of Directors or other governing body or
otherwise direct the management or policies thereof.
Surviving Corporation: as defined in Section 2.1.
Tax: any federal, state, provincial, local, foreign or
other income, alternative minimum, accumulated earnings,
personal holding company, franchise, capital stock, net
worth, capital, profits, windfall profits, gross receipts,
value added, sales, use, goods and services, excise, customs
duties, transfer, conveyance, mortgage, registration, stamp,
documentary, recording, premium, severance, environmental
(including taxes under Section 59A of the Code), real
property, personal property, ad valorem, intangibles, rent,
occupancy, license, occupational, employment, unemployment
insurance, social security, disability, workers'
compensation, payroll, health care, withholding, estimated
or other similar tax, duty or other governmental charge or
assessment or deficiencies thereof (including all interest
and penalties thereon and additions thereto whether disputed
or not).
Tax Return: any return, report, declaration, form,
claim for refund or information return or statement relating
to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
Transaction Expenses: as defined in Section 10.1.
Trust: as defined in the Preamble of this Agreement.
Trustee: as defined in the Preamble of this Agreement.
USC Common: as defined in Section 3.1.2(d).
USC's Accountants: Ernst & Young, LLP
Warrants: the Series A Warrants and the Series B
Warrants.
Withholding Taxes: as defined in Section 3.1.6(a).
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ARTICLE 2. EFFECT OF MERGER AND CONSIDERATION TO BE
RECEIVED BY THE SHAREHOLDERS AT CLOSING
2.1. EFFECT OF MERGER. At the Effective Time, subject in
all instances to each of the terms, conditions, provisions and
limitations contained in this Agreement (i) USC will merge with
and into CMI by the filing with the Secretary of State of
Delaware of a Certificate of Merger, with CMI being the surviving
corporation in the Merger (the "Surviving Corporation"); (ii)
each share of USC Common outstanding at the Effective Time shall
be automatically converted into the number of shares of Canmax
Common and Warrants described in Section 2.2 below; (iii) each
share of common stock of CMI outstanding prior to the Merger
shall be automatically transformed and converted into one share
of common stock of the Surviving Corporation, so that thereafter
Canmax will be the sole and exclusive owner of equity securities
of the Surviving Corporation; (iv) the Surviving Corporation
shall amend its Certificate of Incorporation to change its name
to "USCommunication Services, Inc."; and (v) the Surviving
Corporation shall be the owner of all of the business, assets,
rights and other attributes thereto of, or held by, either USC or
CMI.
2.2. DESCRIPTION OF CONSIDERATION. The Trustee is the
record holder of all outstanding shares of USC Common (in such
capacity, the "Shareholder"). At the Effective Time, pursuant to
and in the manner herein provided, all of the outstanding shares
of USC Common will be converted into and exchanged for an
aggregate of (a) 1.5 million shares of Canmax Common (the "Merger
Shares"), (b) warrants to acquire 1.5 million shares of Canmax
Common at an exercise price of $1.25 per share (the "Series A
Warrants") in the form attached as Exhibit A to the Escrow
Agreement and (c) warrants to acquire 1.0 million shares of
Canmax Common Stock at an exercise price of $2.00 per share (the
"Series B Warrants") in the form attached as Exhibit B to the
Escrow Agreement (collectively, the Merger Shares, the Series A
Warrants and the Series B Warrants are referred to as the "Merger
Consideration"). The Merger Consideration shall constitute all
of the consideration to be issued to the Shareholder or any other
person in respect of USC Common or any option, warrant, note or
other securities convertible into or exchangeable for any USC
Common or any other capital stock of USC or any of its
Affiliates.
2.3. CATEGORIES OF STOCK. The Merger Consideration to be
delivered to the Shareholder upon the conversion of the
outstanding shares of USC Common as described in Section 2.2
above, shall be divided into two categories, (a) the "Initial
Amount," which shall be 1.2 million shares of Canmax Common and
the Series A Warrant and the Series B Warrant and (b) the
"Contingent Amount," which shall be 0.3 million shares of Canmax
Common. The Initial Amount shall be delivered to the Shareholder
at or as soon as practicable following the Effective Time,
subject to the compliance by the Shareholder with the exchange
requirements relating thereto set forth in Section 2.5 below.
The Contingent Amount shall be deposited with the Escrow Agent
and either delivered in whole or part to the Shareholder or
returned in whole or in part to Canmax as provided hereafter and
in the Escrow Agreement. At the Effective Time, the outstanding
shares of USC Common shall be converted into the right to receive
the number of shares of Canmax Common (the "Conversion Amount")
equal to the sum of (i) the Initial Amount and (ii) upon the
expiration of the Escrow Agreement and after any adjustments for
the payment of any Damages, as described in Article 8 herein, the
Contingent Amount, as contemplated by Section 2.5 hereof.
2.4. ESCROW ACCOUNT. At the Closing, CMI shall deposit with
the Escrow Agent shares of
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Canmax Common representing the Contingent Amount of the Canmax
Common to be held in the Escrow Account and administered in
accordance with the Escrow Agreement. The Escrow Agent shall
administer the Escrow Account, as it may exist from time to time,
on behalf of Canmax, CMI, the Shareholder, subject to the Escrow
Agreement, for the purposes of securing the Shareholder's
indemnity obligations under Article 8 hereof.
2.5. EXCHANGE REQUIREMENTS. Immediately prior to the
Effective Time, Canmax shall deposit with the Escrow Agent shares
of Canmax Common, the Series A Warrant and the Series B Warrant
representing the Initial Amount to be held by the Escrow Agent
and distributed to the Shareholder in accordance with this
Agreement and the Escrow Agreement. As soon as practicable after
the Effective Time, the Escrow Agent shall mail or deliver to
the Shareholder a letter of transmittal, which shall specify that
delivery shall be effected, and risk of loss and title to the
certificates representing shares of USC Common (the
"Certificates") shall pass, only upon actual delivery of the
Certificates to the Escrow Agent and shall contain instructions
for use in effecting the surrender of the Certificates in
exchange for the Conversion Amount. Upon surrender of a
Certificate for cancellation to the Escrow Agent, together with
such letter of transmittal, duly executed, the holder of such
Certificate shall receive in exchange therefor that portion of
the Initial Amount and shall be entitled to receive, upon the
expiration of the escrow established under the Escrow Agreement,
that portion of the Contingent Amount (as adjusted for the
payment of any Damages in accordance with Article 8) for the
shares of USC Common represented by such Certificate, and the
Certificate so surrendered shall forthwith be cancelled. Until
surrendered as contemplated by this Section 2.5, each Certificate
shall, at and after the Effective Time, be deemed to represent
only the right to receive, upon surrender of such Certificate,
that portion of the Initial Amount and the Contingent Amount,
with respect to each share of USC Common represented thereby in
accordance with the terms of this Agreement, as follows:
a) At the Effective Time, each holder of a
Certificate shall receive that portion of the Initial Amount
for the USC Common represented by such Certificate;
b) Upon the expiration of the escrow established
under the Escrow Agreement and upon the satisfaction of the
conditions set forth in Article 8 with respect to the
adjustments for the payment of Damages provided for therein,
each holder of a Certificate shall be entitled to receive
that portion of the Contingent Amount for the USC Common
represented by such Certificate. If the portion of the
Contingent Amount allocable to any Shareholder shall result
in a fractional share of Canmax Common being allocated to
such Shareholder, such Shareholder shall receive only the
number of whole shares so allocated and any such fractional
shares shall be repurchased by Canmax (at $1.25 per share)
and the amount payable with respect thereto shall be paid to
such Shareholder out of the cash funds in the Escrow Account
to be used for such purpose; and
c) Any payment to be made to the Shareholder for
fractional shares shall be made at the time of the
distribution of the Contingent Amount.
2.6. DIVIDENDS. No dividends or other distributions that
are declared on or after the Effective Time on Canmax Common or
which are otherwise payable to the holders of record of Canmax
Common on or after the Effective Time will be paid to Persons
entitled by reason of the Merger to receive Canmax Common until
such Persons surrender their Certificates, as provided in this
Article 2. Subject to the effect of Applicable Law, there shall
be paid to the record holders of Canmax
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Common (i) at the time of such surrender or as promptly as
practicable thereafter, the amount of any dividends or other
distributions theretofore paid with respect to whole shares of
Canmax Common and having a record date on or after the Effective
Time and a payment date prior to such surrender and (ii) at the
appropriate payment date or as promptly as practicable
thereafter, the amount of dividends or other distributions
payable with respect to Canmax Common and having a record date on
or after the Effective Time but prior to surrender and a payment
date subsequent to surrender. In no event shall the Person
entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other
distributions.
2.7. RETURN OF CANMAX COMMON. Any portion of the Merger
Consideration and any dividends or distributions with respect
thereto which remain undistributed to the former holders of USC
Common for three (3) months after the expiration of escrow
established under the Escrow Agreement shall be delivered to
Canmax, upon demand of Canmax, and any former holders of USC
Common who have not theretofore complied with this Article 2
shall thereafter look only to Canmax for payment of their
Conversion Amount into which such shares of USC Common are
convertible, any cash in lieu of fractional shares of Canmax
Common, and any dividends or distributions with respect to the
Canmax Common.
2.8. NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. All
shares of Canmax Common issued, and any cash paid pursuant to
this Article 2, upon the surrender in exchange for Certificates
in accordance with the terms hereof, shall be deemed to have been
issued or paid, as the case may be, in full satisfaction of all
rights pertaining to the shares of USC Common arising out of or
in any way relating to this Agreement and the Merger contemplated
hereby.
2.9. CLOSING OF USC TRANSFER BOOKS. At the Effective Time,
the stock transfer books of USC shall be closed and no transfer
of shares of USC Common shall thereafter be made. If, after the
Effective Time, Certificates are presented to Canmax, they shall
be cancelled and exchanged as provided in this Article 2.
2.10. DISSENTERS' RIGHTS. To the extent that any
Shareholder exercises dissenters' rights pursuant to applicable
provisions of the Delaware General Corporation Law, and Canmax
elects, in its discretion to proceed to consummate the Merger,
each share of USC Common of such holder shall not be converted
into a right to receive the Initial Amount or the Contingent
Amount, but the Warrants and the shares of Canmax Common
representing the Initial Amount and the Contingent Amount
attributable to such shares shall be held by the Escrow Agent
subject to the provisions of such law. In such event, if any
such Shareholder fails to perfect or withdraws or loses its
dissenters' rights, such shares of USC Common shall then be
treated as if they had been converted as of the Effective Time
into a right to receive the Initial Amount and the Contingent
Amount (in accordance with Section 2.3).
2.11. FURTHER ASSURANCES. If at any time after the
Effective Time the Surviving Corporation shall reasonably
determine that any deeds, bills of sale, assignments or
assurances or any other acts or things are necessary, desirable
or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or
interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of USC or (ii) otherwise to
carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their
designees shall be authorized to execute and deliver, in the name
and on behalf of each of such corporations, all such deeds, bills
of sale, assignments and assurances and do, in the name and on
behalf of each of such corporations, all
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such other acts and things necessary, desirable or proper to
vest, perfect or confirm its right, title or interest in, to or
under any of the rights, privileges, powers, franchises,
properties or assets of such corporation and otherwise to carry
out the purposes of this Agreement and the transactions
contemplated hereby.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES OF USC. USC represents
and warrants to Canmax and CMI as follows:
3.1.1. AUTHORIZATION, ETC. USC has the corporate
power and authority to execute and deliver this Agreement
and each of the other agreements required to be executed and
delivered by it hereunder or pursuant hereto, and to perform
fully its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby.
The execution and delivery by USC of this Agreement have
been, and the execution and delivery of each of the other
agreements required to be executed and delivered by it
hereunder or pursuant hereto and the consummation of the
transactions contemplated hereby and thereby will not later
than Closing have been, duly authorized by all requisite
corporate action of USC. USC has duly executed and
delivered this Agreement and on the Closing Date will have
duly executed and delivered each of the other agreements
required to be executed and delivered by it hereunder or
pursuant hereto. This Agreement is, and on the Closing Date
each of the other agreements required to be executed and
delivered by USC hereunder or pursuant hereto will be,
legal, valid and binding obligations of USC, enforceable
against USC, in accordance with their respective terms.
3.1.2. CORPORATE STATUS.
a. USC is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware, with full corporate power and
authority to carry on its business and to own or lease
and to operate its properties as and in the places
where such business is conducted and such properties
are owned, leased or operated. Schedule 3.1.2(a) lists
each Subsidiary of USC. Except as set forth on
Schedule 3.1.2(a), USC does not own, directly or
indirectly, any shares of stock or any other equity or
securities of any corporation or have any equity
interest in any other Person. Each Subsidiary is duly
organized, validly existing and, if applicable, in good
standing under the laws of the State set forth opposite
its name on Schedule 3.1.2(a), with full power and
authority to carry on its business and to own or lease
and to operate its properties as and in the places
where such business is conducted and such properties
are owned, leased or operated.
b. USC and each Subsidiary are duly qualified or
licensed to do business and are in good standing in
each of the jurisdictions specified in
Schedule 3.1.2(b) (except as otherwise noted therein),
which are the only jurisdictions in which the conduct
of their businesses or the character of the properties
owned, leased or operated by them makes such
qualification or licensing necessary.
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c. USC has delivered to Canmax and CMI complete
and correct copies of the articles of incorporation or
other organizational documents of USC and each
Subsidiary, in each case, as amended and in effect on
the date hereof. Neither USC nor any Subsidiary is in
violation of any of the provisions of its respective
articles of incorporation or any other organizational
documents.
d. The authorized capital stock of USC consists
of Twenty Four Million (24,000,000) shares of Class A
common stock, par value $0.001 per share (the "USC
Common") of which 20,000,000 shares are issued and
outstanding, and five million (5,000,000) shares of
Class B common stock, par value $.001 per share, none
of which is outstanding. All of the issued and
outstanding shares of capital stock of USC (i) are
owned by the Shareholder, (ii) have been duly
authorized and validly issued, free of any pre-emptive
rights of shareholders, and (iii) are fully paid and
non-assessable. There are no rights, subscriptions,
warrants, options, conversion rights or agreements of
any kind outstanding to purchase or otherwise acquire
from USC any shares of capital stock of USC or any
securities or other obligations of any kind of USC
convertible into or exchangeable for any shares of
capital stock of USC, other than voting trust
certificates issued pursuant to the terms of the Trust.
e. The authorized capital stock of each
Subsidiary consists of the shares of capital stock and
are issued and outstanding in the respective amounts
set forth on Schedule 3.1.2(e). All of the issued and
outstanding shares of capital stock of each Subsidiary
are owned of record and beneficially by the Persons in
the respective amounts set forth as to each Person on
Schedule 3.1.2(e), and all of such shares of capital
stock of each Subsidiary have been duly authorized and
validly issued, free of any pre-emptive rights of
shareholders, and are fully paid and non-assessable.
There are no rights, subscriptions, warrants, options,
conversion rights or agreements of any kind outstanding
to purchase or otherwise acquire from any Subsidiary,
any shares of capital stock of any Subsidiary or
securities or other obligations of any kind of any
Subsidiary convertible into or exchangeable for any
shares of capital stock of any Subsidiary.
3.1.3. NO CONFLICTS, ETC. The execution, delivery
and performance by USC or any Subsidiary of this Agreement
and the other agreements executed and delivered by it
hereunder or pursuant hereto and the consummation of the
transactions contemplated hereby and thereby, do not and
will not conflict with or result in a violation of or a
default under (with or without the giving of notice or the
lapse of time or both) (i) any Applicable Law applicable to
USC, or any of its Subsidiaries or any of the properties or
assets of USC or any Subsidiary, (ii) the articles of
incorporation or other organizational documents of USC or
any Subsidiary, or (iii) except as set forth in
Schedule 3.1.3, any Contract or other contract, agreement or
other instrument to which USC or any Subsidiary is a party
or by which USC or any Subsidiary or any of their respective
properties or assets may be bound or affected. Except as
specified in Schedule 3.1.3, no Governmental Approval or
other Consent is required to be obtained or made by USC or
any Subsidiary in connection with the execution and delivery
of this Agreement or any of the other agreements to be
executed and delivered by any of them hereunder or pursuant
hereto or the consummation of the transactions contemplated
hereby or thereby, except such required Governmental
Approvals and Consents which, if not obtained, would not,
individually or in the aggregate, cause a Material Adverse
Effect.
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3.1.4. FINANCIAL STATEMENTS. USC has delivered to
Canmax and CMI USC's consolidated annual financial
statements for the fiscal year ending, including balance
sheets as of, December 31, 1997 together with related
statements of income and supporting schedules and ledgers
for such periods collectively, (the "Financial Statements").
The Financial Statements have been prepared from, and are in
accordance with, the books and records of USC and fairly
present, in all material respects, the financial position of
USC and each Subsidiary as of the date thereof and the
results of operations and changes in financial position
therefor for the period then ended, in each case in
conformity with the GAAP, consistently applied (subject, in
the case of unaudited statements, to normal year-end
adjustments which will not be material in amount or in
effect). Since December 31, 1997, there has been no change
in accounting principles applicable to, or methods of
accounting utilized by, USC, except as noted in the
Financial Statements. The books and records of USC have
been and are being maintained in accordance with good
business practices, reflect only valid transactions, are
complete and correct in all material respects, and fairly
present in all material respects a basis for the financial
position and results of operation of USC set forth in the
Financial Statements.
3.1.5. ABSENCE OF UNDISCLOSED LIABILITIES. USC and
its Subsidiaries do not have liabilities or obligations of
any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due,
except (a) as and to the extent disclosed or reserved
against in the balance sheet included in the Financial
Statements for the period ended as of the Cut-Off Date (the
"Cut-off Date Balance Sheet"), and (b) for liabilities and
obligations that (i) were incurred after the Cut-off Date in
the ordinary course of business consistent with prior
practice and (ii) individually and in the aggregate are not
material to USC or any Subsidiary and have not had or
resulted in, and will not have or result in, a Material
Adverse Effect. None of the employees of USC or any
Subsidiary is now or will by the passage of time hereinafter
become entitled to receive any vacation time, vacation pay
or severance pay attributable to services rendered prior to
such date that is not reflected as an accrued liability on
the Cut-off Date Balance Sheet.
3.1.6. TAXES.
a. USC has (or by the Closing will have) duly
and timely filed all Tax Returns relating to USC and
its Subsidiaries with respect to Taxes required to be
filed on or before the Closing Date ("Covered
Returns"). Except for Taxes set forth on Schedule
3.1.6(a), which are being contested in good faith and
by appropriate proceedings, the following Taxes
("Covered Taxes") have (or by the Closing Date will
have) been duly and timely paid: (i) all Taxes shown
to be due on the Covered Returns, (ii) all deficiencies
and assessments of Taxes of which notice has (or by the
Closing Date will have) been received by USC or any
Subsidiary that are or may become payable by Canmax,
CMI or any Subsidiary or chargeable as a Lien upon any
of the properties or assets of Canmax, CMI or any
Subsidiary following the Merger, and (iii) all other
Taxes due and payable on or before the Closing Date for
which neither filing of Covered Returns nor notice of
deficiency or assessment is required, if USC is or
reasonably should be (or by the Closing Date will be or
reasonably should be) aware that these other Taxes are
or may become payable by Canmax, CMI or any Subsidiary
or chargeable as a Lien upon any of the properties or
assets of Canmax, CMI or any Subsidiary following the
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Merger. All Taxes required to be withheld by or on
behalf of USC and each Subsidiary in connection with
amounts paid or owing to any employee, independent
contractor, creditor or other party with respect to USC
and each Subsidiary ("Withholding Taxes") have been
withheld, and such withheld Taxes have either been duly
and timely paid to the proper Governmental Authorities
or set aside in accounts for such purpose.
b. No agreement or other document extending, or
having the effect of extending, the period of
assessment or collection of any Covered Taxes or
Withholding Taxes, and no power of attorney with
respect to any such Taxes, has been filed with the IRS
or any other Governmental Authority.
c. There are no Covered Taxes or Withholding
Taxes asserted by any Governmental Authority to be due,
and no issue has been raised by any Governmental
Authority in the course of any audit with respect to
Covered Taxes or Withholding Taxes. No Covered Taxes
and no Withholding Taxes are currently under audit by
any Governmental Authority.
d. There is no litigation or administrative
appeal pending or, to the best knowledge of USC
threatened against or relating to USC or any
Subsidiary, in connection with Covered Taxes.
3.1.7. ABSENCE OF CHANGES. Except as set forth in
Schedule 3.1.7, since the Cut-off Date, USC and each
Subsidiary has conducted its respective business, only in
the ordinary course consistent with prior practice and has
not, on behalf of, in connection with or relating to its
business:
a. suffered or permitted to have occurred any
Material Adverse Effect;
b. incurred any Lien, obligation or liability,
absolute, accrued, contingent or otherwise, whether due
or to become due, except current liabilities for trade
or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of
business consistent with prior practice, none of which
Liens or liabilities, in any case or in the aggregate,
have had or could have a Material Adverse Effect;
c. sold, transferred, leased to others or
otherwise disposed of any of its material assets,
except for inventory sold in the ordinary course of
business, or cancelled or compromised any debt or
claim, or waived or released any right of substantial
value;
d. received any notice of termination of any
contract, lease or other agreement or suffered any
damage, destruction or loss (whether or not covered by
insurance) which, in any case or in the aggregate, has
had or could have a Material Adverse Effect;
e. made any material change in the rate of
compensation, commission, bonus or other direct or
indirect remuneration payable, or paid or agreed or
orally promised to pay, conditionally or otherwise, any
bonus, incentive, retention or other compensation,
retirement, welfare, fringe or severance benefit or
vacation pay, to or in respect of any of its directors,
officers, employees, salesmen, distributors or agents;
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f. made any capital expenditures or capital
additions or improvements in excess of an aggregate of
$10,000;
g. lost or terminated any key employees or
terminated or, to the knowledge of USC, lost any
customers or suppliers that has had or could have any
Material Adverse Effect;
h. materially amended, modified or terminated,
or agreed to amend, modify or terminate, any existing
(or entered or committed to enter into any new)
material contract, agreement, plan, lease, license,
permit or franchise; or
i. taken any action or omitted to take any
action that would result in the occurrence of any of
the foregoing.
3.1.8. LITIGATION. There is no action, claim,
demand, suit, proceeding, arbitration, grievance, citation,
summons, subpoena, inquiry or investigation of any nature,
civil, criminal, regulatory or otherwise, in law or in
equity, pending or, to the best knowledge of USC threatened,
against USC or any Subsidiary and USC does not know or have
reason to be aware of any basis for the same. No citations,
fines or penalties have been asserted against USC or any
Subsidiary under any Environmental Law or any foreign,
federal, state or local law relating to occupational health
or safety.
3.1.9. COMPLIANCE WITH LAWS; GOVERNMENTAL APPROVALS
AND CONSENTS; GOVERNMENTAL CONTRACTS.
a. Except as disclosed in Schedule 3.1.9(a), USC
and each Subsidiary have, to the best of its knowledge,
after investigation, complied in all material respects
with all Applicable Laws applicable to or otherwise in
any manner affecting it, and neither USC nor any
Subsidiary has received any notice alleging any failure
to so comply.
b. Schedule 3.1.9(b) sets forth all Governmental
Approvals and other Consents necessary for, or
otherwise material to, the conduct of the business of
USC and each Subsidiary. Except as set forth in
Schedule 3.1.9(b), all such Governmental Approvals and
Consents have been duly obtained and are in full force
and effect, and, to the best knowledge of USC after
investigation, USC and each Subsidiary are in
compliance with each of such Governmental Approvals and
Consents held by them.
c. Neither USC nor any Subsidiary is a party to
any Contracts with any Governmental Authority.
d. USC has filed with the proper authorities all
statements and reports required by the Applicable Laws
to which it and its Subsidiaries or any of their
employees (because of his or her activities on behalf
of his or her employer) is subject.
3.1.10. OPERATION OF THE BUSINESS. USC has conducted
its business directly and through each Subsidiary as
described on Schedule 3.1.10, and not through any other
Affiliate.
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3.1.11. ASSETS. Except as disclosed in Schedule
3.1.11, USC and each Subsidiary has good and marketable
title to all of its assets free and clear of any and all
Liens (other than Permitted Liens). The assets set forth on
or detailed in the Cut-off Date Balance Sheet comprise all
assets used or useable by USC and each Subsidiary in their
respective businesses. Except as disclosed in Schedule
3.1.11, there are no assets or properties used by USC or any
Subsidiary in the operation of its respective businesses and
owned by any Person other than USC or such Subsidiary, that
will not be leased or licensed to CMI under valid, current
leases or license arrangements. The assets reflected on the
Cut-off Date Balance Sheet are in all material respects
adequate for the purposes for which such assets are
currently used or are held for use, and are in reasonably
good repair and operating condition (subject to normal wear
and tear).
3.1.12. CONTRACTS.
a. Schedule 3.1.12(a) contains a complete and
correct description of all material agreements,
contracts, commitments and other instruments and
arrangements (whether written or oral) of the types
described below by which USC or any Subsidiary is a
party or bound (the "Contracts"):
(i) Leases, Governmental Approvals and other
contracts concerning or relating to the Leased
Real Property;
(ii) employment, employee benefits,
consulting or other similar contracts, agreements,
and other instruments and arrangements relating to
or for the benefit of current, future or former
employees, officers, directors, sales
representatives, distributors, dealers, agents,
independent contractors or consultants;
(iii) loan agreements, pledge agreements,
guarantees, and other agreements and instruments
relating to the borrowing of money or obtaining of
or extension of credit;
(iv) licenses, licensing arrangements and
other contracts providing in whole or in part for
the use of, or limiting the use of, any
Intellectual Property;
(v) brokerage or finder's agreements;
(vi) contracts (including, without
limitation, for the purchase or sale of inventory)
with respect to which the aggregate amount that
could reasonably expected to be paid or received
thereunder in the future exceeds $10,000;
(vii) sales agency, manufacturer's
representative, marketing or distributorship
agreements;
(viii) contracts, agreements or
commitments (designated on such Schedule as an
"affiliate agreement") with any director, officer,
employee, or Affiliate of USC, or any Subsidiary;
and
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(ix) any other contracts, agreements or
commitments that are material to the business of
any of USC or any Subsidiary.
b. USC has delivered to Canmax and CMI complete
and correct copies of all written Contracts, together
with all amendments thereto, and accurate descriptions
of all material terms of all oral Contracts, set forth
or required to be set forth in Schedule 3.1.12(a).
c. All Contracts are in full force and effect
and enforceable against each party thereto. Neither
USC nor any Subsidiary has received notice of any plan
or intention of any party to any Contract to exercise
any right to cancel or terminate any Contract. To the
best knowledge of USC, there does not exist under any
Contract any event of default or event or condition
that, after notice or lapse of time or both, would
constitute a violation, breach or event of default
thereunder on the part of USC or any Subsidiary or, to
the best of USC's knowledge, any other party thereto,
except for such events or conditions that, individually
and in the aggregate, (i) has not had or resulted in,
and will not have or result in, a Material Adverse
Effect, and (ii) have not and will not materially
impair the ability of USC to perform USC's obligations
under this Agreement or any of its obligations under
any other agreement executed and delivered by it
hereunder or pursuant hereto.
d. Neither USC nor any Subsidiary has granted
any power of attorney which is currently outstanding.
3.1.13. TERRITORIAL RESTRICTIONS. Neither USC nor
any of its Subsidiaries is restricted by any written
agreement or understanding with any other Person from
carrying on its respective business anywhere in the world.
3.1.14. INVENTORIES. Except as specifically
described on Schedule 3.1.14 hereto, all inventories
reflected on the Cut-off Date Balance Sheet and all
inventories acquired by USC after the Cut-off Date consist
of items of quality and quantity which are useable or
saleable in the ordinary course of business of USC and its
Subsidiaries. The values at which the inventories are
carried on the Cut-off Date Balance Sheet as at the Cut-off
Date and the values at which inventories are carried on the
books and records of USC for periods subsequent to the Cut-
off Date with respect to inventories acquired after the Cut-
off Date reflect the normal valuation policy of USC, in
setting inventory at the lower of cost or net realizable
market values, all in accordance with GAAP. Since the
Cut-off Date, inventories have been maintained at normal and
adequate levels for the continuation of the business of USC
and its Subsidiaries, in its normal course, no change has
occurred in such inventories which affect or will affect the
usability or salability thereof, no write-downs or write-ups
of the value of such inventories has occurred and no
additional amounts have been reserved with respect to such
inventories. Schedule 3.1.14 lists the locations of all
inventories, together with a brief description of the type
and amount at each location.
3.1.15. CUSTOMERS. Schedule 3.1.15 sets forth (a)
the names of all customers of USC and its Subsidiaries, and
(b) the locations at which such products, goods or services
were
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provided. Except as set forth on Schedule 3.1.15, neither
USC nor any Subsidiary has received any notice or has any
substantial reason to believe that any significant customer
of USC or any Subsidiary (i) has ceased, or will cease, to
use the products, goods or services of USC or such
Subsidiary, (ii) has substantially reduced, or will
substantially reduce, the use of products, goods or services
of USC or such Subsidiary, or (iii) has sought, or is
seeking, to reduce the price it will pay for products, goods
or services of USC or such Subsidiary, including in each
case after the consummation of the transactions contemplated
hereby. To the best knowledge of USC, no customer of USC or
any Subsidiary described in clause (a) of this section has
otherwise threatened to take any action described in the
preceding sentence as a result of the consummation of the
transactions contemplated by this Agreement or any other
agreement executed and delivered by USC hereunder or
pursuant hereto.
3.1.16. SUPPLIERS. Schedule 3.1.16 sets forth (a) the
names of all suppliers from which USC and its Subsidiaries
ordered inventories, and other products, goods and services
with an aggregate purchase price for each such supplier of
$25,000 or more during the twelve month period ended
December 31, 1997, and (b) the amount for which each such
supplier invoiced USC or such Subsidiary during such period.
Neither USC nor any Subsidiary has received any notice from
any such supplier indicating that there is or will be any
material change in the price of such items or services, and
neither USC nor any Subsidiary has any reason to believe
that there will be any such material change in the price of
any such item or services, or that any such suppliers will
not sell such items or provide any such services to Canmax
or CMI at any time after the Closing Date on terms and
conditions similar to those used in its current sales to USC
and its Subsidiaries, subject to general and customary price
increases.
3.1.17. INTELLECTUAL PROPERTY.
a. TITLE. Schedule 3.1.17(a) contains a
complete and correct list and a brief description of
all Intellectual Property that is owned, licensed or
used by USC and its Subsidiaries. USC or the
applicable Subsidiary owns or has the exclusive right
to use pursuant to license or sublicense agreements all
of its Intellectual Property, free from any Liens
(other than Permitted Liens) and free from any
requirement of any past, present or future royalty
payments, license fees, charges or other payments, or
conditions or restrictions which are not set forth on
Schedule 3.1.17(a). No Affiliate of USC or any
Subsidiary owns or has any interest in or with respect
to any Intellectual Property of USC or such Subsidiary
and the Intellectual Property set forth on
Schedule 3.1.17(a) comprises all of the Intellectual
Property necessary for CMI to conduct and operate the
business of USC and its Subsidiaries following the
Closing as now being conducted by USC and such
Subsidiaries.
b. TRANSFER. Except as set forth on Schedule
3.1.17(b), immediately after the Closing, CMI will have
all of USC and its Subsidiaries rights with respect to
all of the Intellectual Property owned, licensed or
used by each of them, free from any liens (other than
Permitted Liens) and on the same terms and conditions
as in effect prior to the Closing.
c. NO INFRINGEMENT. The conduct of the business
of USC and its Subsidiaries by them does not infringe
or otherwise conflict with any rights of any Person
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in respect of any Intellectual Property owned by any of
them and, to the best of their knowledge, does not
infringe or otherwise conflict with any rights of any
Person in respect of any Intellectual Property owned by
others.
3.1.18. INSURANCE. Schedule 3.1.18 contains a
complete and correct list and summary description of all
insurance policies maintained by USC and its Subsidiaries.
USC has delivered to Canmax and CMI complete and correct
copies of all such policies together with all riders and
amendments thereto. Such policies are in full force and
effect, and all premiums due thereon have been paid. To the
best knowledge of USC, USC and each Subsidiary has complied
in all material respects with the terms and provisions of
such policies. Schedule 3.1.18 sets out all claims made by
USC and each Subsidiary under any policy of insurance during
the past two years and in the opinion of USC reasonably
formed and held, there is no basis on which a claim should
or could be made under any such policy with respect to it.
3.1.19. REAL PROPERTY.
a. Neither USC nor any Subsidiary owns, directly
or indirectly, or has any fixed or contingent
obligation to acquire, any interest in any real
property that is used in any manner in connection with
its respective business.
b. Schedule 3.1.19(b) contains a complete and
correct list of all Leases, setting forth the address,
landlord and tenant for each Lease, along with the
address to which rental payments are made and the name
and phone number of a contact person at such address.
USC has delivered to Canmax and CMI correct and
complete copies of the Leases. Each Lease is legal,
valid, binding, enforceable, and in full force and
effect. Neither USC, any Subsidiary nor any other
party is in default, violation or breach in any
material respect under any Lease, and no event has
occurred and is continuing that constitutes or, with
notice or the lapse of time or both, would constitute a
default, violation or breach in any respect under any
Lease. USC and its Subsidiaries enjoy peaceful and
undisturbed possession under the Leases.
c. The Leased Real Property constitutes all of
the real property leased, occupied or utilized by USC
and its Subsidiaries in any manner in connection with
the conduct or operation of their respective
businesses.
3.1.20. ENVIRONMENTAL MATTERS. To the best knowledge
of USC, USC and each Subsidiary have complied and are in
compliance in all material respects with all applicable
Environmental Laws pertaining to the Leased Real Property
and all other properties and assets of their respective
businesses and the use and ownership thereof, and otherwise
in connection with the operation of their respective
businesses. No violation by USC or any Subsidiary is being
alleged of any applicable Environmental Law relating to any
of the properties or assets of its business, including the
Leased Real Property, or any use or ownership thereof, or
otherwise in connection with the operation of its business.
3.1.21. EMPLOYEES, LABOR MATTERS, ETC. There are no
labor disputes currently subject to any grievance procedure,
arbitration or litigation and there is no petition pending
or, to the best knowledge of USC, threatened with respect to
any employee employed in the operation of any of
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USC's or any of its Subsidiaries' businesses. To the best
knowledge of USC, USC and each Subsidiary have complied with
all provisions of Applicable Law pertaining to the
employment of employees, including, without limitation, all
such Applicable Law relating to labor relations, equal
employment, fair employment practices, entitlement,
prohibited discrimination or other similar employment
practices or acts, except for any failure so to comply that,
individually or together with all such other failures, has
not and will not result in a material liability or
obligation on the part of Canmax, CMI or any of their
Affiliates following the Closing, and has not had or
resulted in, and will not have or result in, a Material
Adverse Effect.
3.1.22. EMPLOYEE BENEFIT PLANS. Neither USC, its
Subsidiaries or any predessor thereto maintain, or have in
the past five (5) years maintained, any "employee benefit
plan," as such term is defined in Section 3(3) of ERISA,
whether or not subject to ERISA, or any bonus, incentive or
deferred compensation, severance, phantom stock or other
benefit or compensation plan, whether written or unwritten,
that provides benefits or compensation in respect of any
employee or former employee of USC or any Subsidiary or the
beneficiaries or dependents of any such employee or former
employee (such employees, former employees, beneficiaries
and dependents collectively, the "Employees") or under which
any Employee is or may become eligible to participate or
derive a benefit and that is or has been maintained or
established by USC or any Subsidiary (collectively, the
"Employee Benefit Plans"). Neither USC nor any Subsidiary
has communicated to any Employee any intention or commitment
to modify any Employee Benefit Plan or to establish or
implement any other employee or retiree benefit or
compensation arrangement.
3.1.23. CONFIDENTIALITY. To the best knowledge of
USC, USC and each Subsidiary have taken all reasonable steps
to preserve the confidential nature of all material
confidential information (including, without limitation, any
proprietary information) with respect to their respective
businesses, including but not limited to information
relating to the distribution, marketing or pricing of any of
its products or services or any promotional plans related
thereto.
3.1.24. RECORDS. The minute books of USC and each
Subsidiary are substantially complete and correct in all
material respects. The books of account of USC and each
Subsidiary are sufficient to prepare the Financial
Statements in accordance with GAAP. There are no false or
fictitious entries on the books and records of USC or any
Subsidiary.
3.1.25. BROKERS, FINDERS, ETC. All negotiations
relating to this Agreement and the transactions contemplated
hereby, have been carried on without the participation of
any Person acting on behalf of USC or any Affiliate of USC
in such manner as to give rise to any valid claim against
USC or any Subsidiary for any brokerage or finder's
commission, fee or similar compensation, or for any bonus
payable to any officer, director, employee, agent or sales
representative of or consultant to USC or any Subsidiary or
any other Affiliate of USC upon consummation of the
transactions contemplated hereby or otherwise.
3.1.26. RECEIVABLES. All of the accounts receivable
which have arisen in connection with the business of USC and
each Subsidiary and which are reflected in the Financial
Statements, have arisen, and all of such accounts receivable
which will be created between the date of the Cut-Off Date
Balance Sheet and the Closing Date will arise, only from
bona fide transactions in the ordinary course of business,
and, with respect to accounts receivable arising between the
date of the Cut-Off Date Balance Sheet and the Closing Date,
the reserves established in connection
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therewith have been established in accordance with past
practice and in no event greater than the percentages
established for determining the reserves for "current"
accounts receivable on the Cut-Off Date Balance Sheet. USC
has no knowledge of any facts or circumstances generally
(other than general economic conditions) which would result
in any material increase in the uncollectability of such
receivables in excess of the reserves therefor set forth on
the Cut-off Date Balance Sheet. Schedule 3.1.26 accurately
lists as of the Cut-off Date all receivables arising out of
or relating to the business of USC, and each Subsidiary, the
amount owing and the aging of such receivables. USC has
made available to Canmax and CMI complete and correct copies
of all instruments, documents and agreements evidencing such
receivables.
3.1.27. BACKLOG. All of the backlog of unfilled
orders for products manufactured or sold and services
performed by USC and each Subsidiary represent bona fide
transactions incurred in the ordinary course of the business
of USC and each Subsidiary, as the case may be, and are set
forth in Schedule 3.1.27.
3.1.28. LIABILITIES TO AFFILIATES. Except as set
forth on Schedule 3.1.28, neither USC nor any Subsidiary
owes any money or otherwise has any obligation to any
officer, director, shareholder or Affiliate of USC, any
Subsidiary or any other Person acting as a transferee of any
of them.
3.1.29. BANK ACCOUNTS. Schedule 3.1.29 sets forth a
list of all (i) bank accounts and lock box accounts of USC
and each Subsidiary and the Persons authorized to draw
thereon, and (ii) safe deposit boxes of USC and each
Subsidiary and the Persons who are authorized to have access
thereto.
3.1.30. DISCLOSURE. No representation or warranty by
USC contained in this Agreement nor any certificate or
agreement furnished or to be furnished by or on behalf of
USC to Canmax or CMI or their representatives in connection
herewith or pursuant hereto contains or will at Closing
contain any untrue statement of a material fact, or omits or
will omit to state any material fact required to make the
statements contained herein or therein not misleading.
There is no fact (other than matters of a general economic
or political nature which do not affect USC and its
Subsidiaries uniquely) known to USC that has not been
disclosed by USC to Canmax and CMI that might reasonably be
expected to have or result in a Material Adverse Effect.
3.2. REPRESENTATIONS AND WARRANTIES OF CMI. Canmax and CMI,
jointly and severally, represent and warrant to USC as follows:
3.2.1. CORPORATE STATUS; AUTHORIZATION, ETC. Each
of Canmax and CMI is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation with full corporate power
and authority to execute and deliver this Agreement and each
of the agreements to be executed and delivered by it
hereunder or pursuant hereto, and to perform its obligations
hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery
by each of Canmax and CMI of this Agreement, and the
consummation of the transactions contemplated hereby, have
been, and on the Closing Date the other agreements to which
it is a party will have been, duly authorized by all
requisite corporate action of Canmax and CMI. Each of
Canmax and CMI has
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duly executed and delivered this Agreement and on the
Closing Date each of Canmax and CMI will have duly executed
and delivered the other agreements to which it is a party.
This Agreement is, and on the Closing Date, each of the
other agreements to be executed and delivered by Canmax or
CMI hereunder or pursuant hereto will be, valid and legally
binding obligations of Canmax or CMI, as the case may be,
enforceable against Canmax or CMI, as the case may be, in
accordance with its respective terms.
3.2.2. NO CONFLICTS, ETC. The execution, delivery
and performance by each of Canmax and CMI of this Agreement
and each of the other agreements to be executed and
delivered by Canmax or CMI hereunder or pursuant hereto, and
the consummation of the transactions contemplated hereby and
thereby, do not and will not conflict with or result in a
violation of or under (with or without the giving of notice
or the lapse of time, or both) (i) the certificate of
incorporation or bylaws of Canmax or CMI, (ii) any
Applicable Law applicable to Canmax, CMI, or any of their
Affiliates or any of their properties or assets or (iii) any
Contract, or other agreement or instrument applicable to
Canmax, CMI or any of their Affiliates or any of their
properties or assets. Except as disclosed in Section 3.2.7
below, no Governmental Approval or other Consent is required
to be obtained or made by Canmax or CMI in connection with
the execution and delivery of this Agreement or the other
agreements to be executed and delivered by it hereunder or
pursuant hereto or the consummation of the transactions
contemplated hereby or thereby.
3.2.3. LITIGATION. There is no action, claim, suit
or proceeding pending, or to the best knowledge of Canmax or
CMI threatened, by or against or affecting Canmax, CMI or
any of their Affiliates in connection with or relating to
the transactions contemplated by this Agreement or of any
action taken or to be taken in connection herewith or which
would in any way interfere with the consummation of the
transactions contemplated hereby.
3.2.4. BROKERS, FINDERS, ETC. All negotiations
relating to this Agreement and the transactions contemplated
hereby have been carried on without the participation of any
Person acting on behalf of Canmax or CMI in such manner as
to give rise to any valid claim against USC for any
brokerage or finder's commission, fee or similar
compensation.
3.2.5. EXCHANGE ACT REPORTS. Canmax has duly filed
all reports required to be filed by it with the SEC under
the Securities Act and the Exchange Act. All such reports
are complete and correct in all material respects and
conform in all material respects with the requirements of
the Securities Act and the Exchange Act, and the rules and
regulations thereunder.
3.2.6. SECURITIES TO BE ISSUED. When delivered to
the Shareholder pursuant to this Agreement, the Canmax
Common will have been duly and validly issued (free of any
pre-emptive rights of shareholders), and will be fully paid
and non-assessable.
3.2.7. CONSENTS. No Consent is required to be made
or obtained by Canmax or CMI in connection with the
execution and delivery of this Agreement by Canmax or the
consummation by Canmax and CMI of the transactions
contemplated hereby, except for (i) any necessary filings
pursuant to Securities Act, and the rules and regulations
promulgated by the SEC thereunder, (ii) the filing of the
Certificate of Merger in the State of Delaware in accordance
with the Applicable Law of such state, (iii) any consent or
approvals required under the HSR Act, and (iv) such
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consents, approvals, orders or authorizations which if not
obtained, or registration, declarations or filings which if
not made, would not materially adversely affect the ability
of Canmax to consummate the transactions contemplated
hereby.
3.3. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants to Canmax, CMI and Surviving
Corporation as follows:
3.3.1. AUTHORIZATION, ETC. Trustee has the power and
authority to approve the Merger and to execute this
Agreement and each of the other agreements to be executed
and delivered by her hereunder or pursuant hereto, and to
perform fully any obligations hereunder and thereunder, and
to consummate the transactions contemplated hereby and
thereby. This Agreement is, and on the Closing Date each of
the other agreements required to be executed and delivered
by the Trustee hereunder or pursuant hereto will be, legal,
valid and binding obligations of the Trustee in accordance
with their respective terms.
3.3.2. ORGANIZATION OF VOTING TRUST. The Trust was
created on May 1, 1997 and all requisite action has been
taken to vest in the Trustee the rights and powers set forth
in the Voting Trust Agreement.
3.3.3. OWNERSHIP OF USC SHARES. Trustee is the
record holder of all outstanding shares of USC Common.
Except for the shares of USC Common held by Trustee, there
are no other outstanding shares of capital stock of USC or
rights or options to acquire the same.
3.3.4. INVESTMENT INTENT. Trustee is acquiring the
Merger Shares for her own account for investment and not
with the view to, or for sale in connection with, a
distribution of such Merger Shares or any part thereof.
Trustee understands that the Merger Shares acquired
hereunder have not been, and will not be, registered under
the Securities Act or under any state's securities laws, and
are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public
offering. Trustee is a sophisticated investor with
knowledge and experience in business and financial matters
and is experienced in the evaluation of businesses similar
to Canmax and its Subsidiaries. Trustee has received
information concerning Canmax and its Subsidiaries,
including without limitation the Canmax Materials, and has
been afforded, prior to the Closing Date, the opportunity to
ask questions of, and receive answers from, Canmax, its
Subsidiaries and their respective officers and directors and
to obtain any additional information, to the extent
available to Canmax without unreasonable effort or expense,
necessary for Trustee to make an informed decision with
regard to the Merger and its receipt of the Merger Shares.
3.3.5. NOTICES OF WITHDRAWAL. Trustee has not
received any notices from any Beneficiary of the Trust of
their intent to terminate the Trust or withdraw any shares
therefrom.
ARTICLE 4. COVENANTS
4.1. COVENANTS OF USC.
4.1.1. CONDUCT OF BUSINESS. From the date hereof to
the Closing Date, except as expressly permitted or required
by this Agreement or as otherwise consented to by Canmax and
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CMI in writing, USC will, and will cause each Subsidiary to:
a. carry on its business in the ordinary course,
in substantially the same manner as heretofore
conducted, and use all reasonable efforts to preserve
intact its present business organization, maintain its
properties in good operating condition and repair, keep
available the services of its present officers and
significant employees, and preserve its relationship
with customers, suppliers and others having business
dealings with it, with the goal and intent that its
goodwill and ongoing business shall be in all material
respects unimpaired following the Closing;
b. pay all accounts payable and other
obligations relating to its business when they become
due and payable in the ordinary course of business
consistent with prior practice;
c. perform in all material respects all of its
obligations under all Contracts and other agreements
and instruments relating to or affecting its business
or any of its assets, and comply in all material
respects with all Applicable Laws applicable to it or
its business:
d. other than sales and purchases of inventories
and supplies in the ordinary course, not enter into or
assume any material agreement, contract or instrument
relating to its business, or enter into or permit any
material amendment, supplement, waiver or other
modification in respect thereof;
e. continue all policies of insurance relating
to its business in full force and effect;
f. not grant (or commit to grant) any increase
in the compensation (including incentive or bonus
compensation) of any employee employed in the operation
of its business or institute, adopt or amend (or commit
to institute, adopt or amend) any compensation or
benefit plan or arrangement applicable to any such
employee;
g. not declare or pay any dividends or make any
distribution in respect of its equity interests; and
h. not take any action, or knowingly omit to
take any action, which would result in a breach of any
of the representations and warranties set forth in
Section 3.1.
4.1.2. NO SOLICITATION. So long as this Agreement
remains in effect, neither USC, any Subsidiary nor any
Affiliate nor any Person acting on their behalf shall (i)
solicit or encourage any inquiries or proposals for, or
enter into any discussions with respect to, the acquisition
of any properties and assets held for use in connection
with, necessary for the conduct of, or otherwise material
to, the business of USC or any Subsidiary, or (ii) furnish,
or cause to be furnished, any non-public information
concerning USC or any Subsidiary to any Person (other than
Canmax and CMI and their agents and representatives), other
than in the ordinary course of business without notice to
Canmax and CMI or pursuant to Applicable Law and after prior
written notice to Canmax.
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4.1.3. ACCESS AND INFORMATION. So long as this
Agreement remains in effect, and subject to such reasonable
limitations as may be necessary to prevent unreasonable
disruptions of its business, USC will (and will cause its
Subsidiaries, Affiliates and their respective accountants,
counsel, consultants, employees and agents to) give Canmax
and CMI, and their respective accountants, counsel,
consultants, employees and agents, full access during normal
business hours to, and furnish them with all documents,
records, work papers and information with respect to, all of
the assets, books, contracts, commitments, reports and
records relating to USC and each Subsidiary, as Canmax or
CMI shall from time to time reasonably request. In addition
and subject to such reasonable limitations as may be
necessary to prevent unreasonable disruptions of their
business, USC will permit Canmax and CMI, and their
respective accountants, counsel, consultants, employees and
agents, reasonable access to such personnel of USC and each
Subsidiary during normal business hours as may be necessary
or useful to Canmax or CMI in its review of the assets and
business affairs of the business of USC and each Subsidiary
and the above-mentioned documents, records and information.
USC and each Subsidiary will keep Canmax and CMI generally
informed as to the affairs of their businesses.
4.1.4. ADDITIONAL FINANCIAL STATEMENTS. Until the
earlier of the termination of this Agreement or the Closing,
on or before the 21st day of each calendar month, USC shall
deliver to Canmax and CMI unaudited financial statements of
USC and each Subsidiary as, at and for the monthly period
ending the last day of the preceding month (the "Subsequent
Monthly Financial Statements"), which shall include, in each
case, a balance sheet and statement of income. At the time
the Subsequent Monthly Financial Statements are delivered to
Canmax and CMI, USC shall, by such delivery, be deemed to
have made as to the Subsequent Monthly Financial Statements
just delivered the representations and warranties to Canmax
and CMI which are set forth in Section 3.1.4 hereof with
respect to Subsequent Monthly Financial Statements.
4.1.5. PUBLIC ANNOUNCEMENTS. Except as required by
Applicable Law, USC shall not, and shall not permit any
Subsidiary or Affiliate to, make any public announcement in
respect of this Agreement or the transactions contemplated
hereby without the prior written consent of Canmax and CMI,
which consent shall not be unreasonably withheld.
4.1.6. FURTHER ACTIONS.
a. USC agrees to use all reasonable efforts to
take all actions and to do all things necessary, proper
or advisable to consummate the transactions
contemplated hereby; provided, however, that the
refusal by USC to provide economic incentives to
induce, or to commence litigation to compel the
consummation of the transactions contemplated by this
Agreement, will not be deemed a failure by USC to use
such reasonable efforts.
b. USC, as promptly as practicable, will use all
reasonable efforts to obtain, or cause to be obtained,
all Consents (including, without limitation, all
Governmental Approvals and any Consents required under
any contract) necessary to be obtained by it or the
Subsidiaries in order to consummate the Merger and the
consummation of the other transactions contemplated
hereby.
c. At all times prior to the Closing, USC shall
promptly notify Canmax and
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CMI in writing of any fact, condition, event or
occurrence known to it in the exercise of reasonable
business prudence that will or may result in the
failure of any of the conditions contained in Sections
6.1 and 6.2 to be satisfied, promptly upon becoming
aware of the same.
4.1.7. DELIVERY OF AUDITED FINANCIAL STATEMENTS. At
the Closing, or as soon as practicable thereafter, USC shall
cooperate with Canmax in the preparation of audited
financial statements of USC for the periods required to be
reported by Canmax under applicable securities laws.
4.2. COVENANTS OF CANMAX AND CMI.
4.2.1. PUBLIC ANNOUNCEMENTS. Prior to the Closing,
except as required by Applicable Law, neither Canmax nor CMI
shall, and neither Canmax nor CMI shall permit any Affiliate
to, make any public announcement in respect of this
Agreement or the transactions contemplated hereby without
the prior written consent of USC, which consent will not be
unreasonably withheld.
4.2.2. ACCESS. At reasonable times, prior to
Closing, Canmax will afford USC's employees, accountants,
legal counsel, financial advisors and other authorized
representatives the opportunity to perform reasonable due
diligence with respect to Canmax and CMI.
4.2.3. FURTHER ACTIONS.
a. Canmax and CMI agree to use all reasonable
efforts to take all actions and to do all things
necessary, proper or advisable to consummate the
transactions contemplated hereby.
b. At all times prior to the Closing, Canmax and
CMI shall promptly notify USC in writing of any fact,
condition, event or occurrence that will or may result
in the failure of any of the conditions contained in
Sections 6.1 and 6.3 to be satisfied, promptly upon
becoming aware of the same.
4.2.4. FURTHER ASSURANCES. Following the Closing,
Canmax and CMI each shall, and each shall cause its
Affiliates to, from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances
and take such other actions as shall be necessary to confirm
and assure that its obligations provided for in this
Agreement have been satisfied and to render effective the
consummation of the transactions contemplated hereby.
ARTICLE 5. ADDITIONAL AGREEMENTS
5.1. SHAREHOLDER APPROVALS. USC shall take all action
necessary in accordance with Applicable Law and in accordance
with its articles of incorporation and bylaws to convene meetings
of the Shareholder as promptly as practicable to consider and
vote upon the approval of this Agreement, the Merger and the
other transactions contemplated hereby, including the approval of
the Shareholders Representative and the Escrow Agent, as
contemplated by Article 8 hereof. Prior to any such meeting,
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USC shall deliver to the Shareholder the Canmax Materials. USC,
acting through its Board of Directors, shall recommend to its
Shareholder the approval of this Agreement, the Merger and the
other transactions contemplated hereby and thereby, including the
approval of the Shareholder's Representative and the Escrow
Agent, as contemplated by Article 8 hereof, and shall use all
reasonable efforts to obtain such approval by such Shareholder.
5.2. COMPLIANCE WITH THE SECURITIES ACT. The Trustee is the
only Person who, as of the date hereof, may be deemed to be an
"Affiliate" of USC, as that term is defined under Paragraphs (c)
and (d) of Rule 145 of the Securities Act ("Rule 145 Affiliate"),
and prior to the Closing Date, USC shall cause to be prepared and
delivered to Canmax and CMI an updated list (reasonably
satisfactory to counsel for Canmax and CMI) identifying all
Persons who at the time of the shareholders' meetings described
above may be deemed to be a Rule 145 Affiliate.
5.3. LISTING OF MERGER SHARES. Canmax shall file with the
National Association of Securities Dealers, Inc. a Nasdaq Stock
Market Notification Form for Listing Additional Shares and
Notification pursuant to SEC Rule 10b-17 with regard to the
Merger Shares to permit trading in such shares from and after the
Closing Date.
5.4. HSR ACT FILINGS. USC and Canmax will cooperate in
preparing and filing any notification and report forms and
related material that it may be required to file with the Federal
Trade Commission and the Anti-Trust Division of the United States
Department of Justice under the HSR Act, and will use their
respective best efforts to obtain an early termination of the
applicable waiting period, and will make any further filings
pursuant thereto that may be necessary, proper or advisable.
5.5. TERMINATION of Affiliate Agreements. At or prior to
the Closing, Canmax and CMI shall have the right to designate any
Contracts or other arrangements with Affiliates of USC and each
Subsidiary to be terminated (without liability or the payment of
consideration not otherwise due under such Contract or
arrangement) or fully performed at Closing, and USC shall fully
perform or shall terminate (without liability or the payment of
consideration not otherwise due under such Contract or
arrangement) or cause to be terminated such Contracts or other
arrangements at or prior to the Closing.
5.6. COVENANT REGARDING TRUST. Trustee hereby agrees to
provide Canmax prompt written notice of the receipt of any notice
of termination of the Trust by any beneficiary of the Trust or
election by any beneficiary of the Trust to withdraw shares from
the Trust, in either case prior to the Closing Date. Trustee
hereby agrees that no Merger Shares shall be distributed from the
Trust unless the beneficiary receiving such shares delivers to
the Trustee an investment representation letter in the form as
Exhibit A attached hereto. Further, Trustee covenants that
immediately following the Effective Time, Trustee shall exercise
her right as a beneficiary of the Trust to withdraw from the
Trust any Merger Shares for which she is the beneficiary and
resign in her capacity as Trustee of the Trust. Trustee further
covenants and agrees to take no other actions to cause a
dissolution of the Trust.
5.7. APPOINTMENT OF DIRECTOR. At Closing, Canmax will use
its best efforts to take all necessary corporate action in order
to cause two persons ("Designees") designated by Bernet to serve
on the Board of Directors of Canmax. The qualification of such
Designees shall be subject to the reasonable approval of the
Board of Directors of Canmax, and at least one Designee shall not
be an employee of Canmax or USC following the Closing. Such
approved Designees shall serve in such capacity until the next
regularly scheduled annual meeting of the shareholders of Canmax.
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ARTICLE 6. CONDITIONS PRECEDENT
6.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY. The
obligations of the parties to consummate the transactions
contemplated hereby shall be subject to the conditions that (i)
the transactions contemplated hereby shall not have been
restrained, enjoined or otherwise prohibited by any Applicable
Law, including any order, injunction, decree or judgment of any
court or other Governmental Authority; (ii) no court or other
Governmental Authority shall have determined that any Applicable
Law makes illegal the consummation of the transactions
contemplated hereby or by any other agreement to be executed and
delivered hereunder or pursuant hereto; (iii) no proceeding with
respect to the application of any such Applicable Law to such
effect shall be pending; and (iv) any applicable waiting period
under the HSR Act shall have expired or been terminated.
6.2. CONDITIONS TO OBLIGATIONS OF CANMAX AND CMI. The
obligations of Canmax and CMI to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or
waiver by Canmax and CMI, in their sole discretion) on or prior
to the Closing Date of the following additional conditions:
6.2.1. REPRESENTATIONS. The representations and
warranties of USC and the Trustee contained in this
Agreement (i) shall be true and correct in all respects (in
the case of any representation or warranty containing any
materiality qualification) or in all material respects (in
the case of any representation or warranty without any
materiality qualification) at and as of the date hereof, and
(ii) shall be repeated and shall be true and correct in all
respects (in the case of any representation or warranty
containing any materiality qualification) or in all material
respects (in the case of any representation or warranty
without any materiality qualification) on and as of the
Closing Date with the same effect as though made on and as
of the Closing Date.
6.2.2. COVENANTS. USC and the Trustee shall have
duly performed and complied in all material respects with
all covenants and conditions required by this Agreement to
be performed or complied with by it hereunder and with
respect to each of the other agreements to be executed and
delivered by it hereunder or pursuant hereto to be performed
or complied with by it prior to or on the Closing Date.
6.2.3. CONSENTS. USC shall have obtained and shall
have delivered to Canmax and CMI copies of (i) all
Governmental Approvals required to be obtained by USC in
connection with the execution and delivery of this Agreement
and the other agreements to be executed and delivered by USC
hereunder or pursuant hereto and the consummation of the
transactions contemplated hereby or thereby, unless the
failure to obtain any such Governmental Approval would not,
individually or in the aggregate, have a Material Adverse
Effect and (ii) all Consents (including, without limitation,
all Consents required under any Contract), other than
elective notices to creditors permitted under applicable
bulk transfer laws, if any, necessary to be obtained in
order to consummate the Merger pursuant to this Agreement
and the consummation of the other transactions contemplated
hereby and by the other agreements to be executed and
delivered by USC hereunder or pursuant hereto, unless the
failure to obtain any such Consent would not, individually
or in the aggregate, have a Material Adverse Effect.
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6.2.4. NO MATERIAL ADVERSE EFFECT. No event,
occurrence, fact, condition, change, development or effect
shall have occurred, exist or come to exist since the
Cut-off Date, that, individually or in the aggregate, has
constituted or resulted in, or could reasonably be expected
to constitute or result in, a Material Adverse Effect.
6.2.5. OPINION OF COUNSEL. USC shall have delivered
to Canmax and opinion of counsel in form and substance
reasonably acceptable to Canmax regarding the transactions
contemplated hereby.
6.2.6. REQUIRED USC VOTE. The Shareholder of USC
shall have duly adopted and approved this Agreement, the
Merger, and the other transactions contemplated hereby and
thereby, including the appointment of the Shareholder
Representative and the Escrow Agreement, by the affirmative
vote of 100% of the outstanding shares of capital stock of
USC entitled to vote thereon, and shall have authorized and
approved such other matters as may be required or
appropriate in connection with Applicable Law (collectively,
the "Required USC Vote"), and the Trustee shall not have
received any notice from any beneficiary of the Trust
electing to terminate the Trust or withdraw any shares
therefrom, except as contemplated in Section 5.6 hereof.
6.2.7. CORPORATE DOCUMENTS. All corporate
proceedings of USC in connection with this Agreement, the
Merger and the transactions contemplated hereby and thereby,
and all documents and instruments incident thereto, shall be
reasonably satisfactory in substance and form to Canmax, CMI
and their counsel, and Canmax, CMI and their counsel shall
have received all such documents and instruments, or copies
thereof, certified if requested, as may be reasonably
requested.
6.2.8. ACCREDITED INVESTOR LETTERS. At Closing, the
Shareholder and the Founder shall have executed and
delivered to Canmax and CMI an Accredited Investor Letter,
and the Shareholder shall have retained a qualified
representative to advise her on the investment decisions
regarding the approval of the Merger.
6.2.9. NON-COMPETITION AGREEMENT; EMPLOYMENT
CONTRACT. Bernet shall have duly executed and delivered to
Canmax and CMI a "Non-Competition Agreement" and "Employment
Contract" in the forms of Exhibit C and Exhibit D attached
hereto.
6.2.10. EMPLOYEES. Canmax and CMI shall have
received assurances, reasonably satisfactory to Canmax and
CMI, that the employees of USC and each Subsidiary which
Canmax and CMI wish to continue to employ following the
Merger will continue such employment on terms and conditions
satisfactory to Canmax and CMI, in their discretion.
6.2.11. BANK ACCOUNTS. USC and the Subsidiaries
shall have irrevocably instructed all banks and other
financial institutions where USC and any Subsidiary
maintains an account, lock box, safety deposit box or
similar arrangement, to change the persons authorized to
make withdrawals therefrom or deposits thereto or otherwise
to transact business in connection therewith, to such
persons as Canmax and CMI shall designate in writing at
least two (2) Business Days prior to the Closing Date.
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6.2.12. OFFICERS AND DIRECTORS. USC and each
Subsidiary shall have taken such action, corporate and
otherwise, as may be necessary or appropriate to change the
officers and directors of USC and each Subsidiary as may be
designated by Canmax and CMI.
6.2.13. RESIGNATION AND WITHDRAWAL OF TRUSTEE. The
Trustee shall have delivered to the Trust an irrevocable
resignation of her position as Trustee, and the Trustee, in
her capacity as a beneficiary of the Trust, shall, pursuant
to Section 6 of the Voting Trust Agreement deliver written
notice of her election to withdraw her shares from the Trust
and surrender her voting trust certificates.
6.2.14. CONVERTIBLE INSTRUMENTS. Any instrument or
other document giving any Person the right to acquire shares
of USC Common shall have been terminated or resolved to the
satisfaction of Canmax.
6.2.15. WAIVER OF CLAIMS. Bernet shall have waived
any claim to receive compensation from USC attrituble to
periods prior to the Closing Date, and shall have delivered
to the Surviving Corporation and Canmax written waiver of
any such claims in a form satisfactory to Canmax.
6.3. Conditions to Obligations of USC. The obligation of
USC to consummate the transactions contemplated hereby shall be
subject to the fulfillment (or waived by USC, in its sole
discretion), on or prior to the Closing Date, of the following
additional conditions:
6.3.1. REPRESENTATIONS. The representations and
warranties of Canmax and CMI contained in this Agreement (i)
shall be true and correct in all respects (in the case of
any representation or warranty containing any materiality
qualification) or in all material respects (in the case of
any representation or warranty without any materiality
qualification) at and as of the date hereof and (ii) shall
be repeated and shall be true and correct in all respects
(in the case of any representation or warranty containing
any materiality qualification) or in all material respects
(in the case of any representation or warranty without any
materiality qualification) on and as of the Closing Date
with the same effect as though made at and as of such time.
6.3.2. COVENANTS. Each of Canmax and CMI shall have
duly performed and complied in all material respects with
all covenants and conditions required by this Agreement to
be performed or complied with by it and under or with
respect to each of the other agreements to be executed and
delivered by it hereunder or pursuant hereto to be performed
or complied with by it prior to or on the Closing Date.
6.3.3. REQUIRED USC VOTE. The Required USC Vote
shall have been obtained.
6.3.4. OPINION OF COUNSEL. Canmax and CMI shall
have caused to be delivered to USC an opinion of counsel in
form and substance reasonably satisfactory to USC.
6.3.5. CORPORATE DOCUMENTS. All corporate and other
proceedings of Canmax and CMI in connection with this
Agreement, the Merger and the transactions contemplated
hereby and thereby, and all documents and instruments
incident thereto, shall be reasonably satisfactory in
substance and form to USC and its counsel, and USC and its
counsel shall have received all such
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documents and instruments, or copies thereof, certified if
requested, as may be reasonably requested.
6.3.6. CONSENTS AND APPROVALS. Canmax and CMI shall
have obtained all Governmental Approvals necessary to
consummate the transactions contemplated hereby.
6.3.7. Non-Competition Agreement and Employment
Contract. Canmax and Surviving Corporation shall have duly
executed and delivered to Bernet a "Non-Competition
Agreement" and "Employment Contract" in the forms of Exhibit
C and Exhibit D attached hereto.
ARTICLE 7. ALLOCATION AND TAX ADVICE
7.1. ALLOCATION. Notwithstanding any provision to the
contrary herein contained or any agreements, understandings or
negotiations prior to the date hereof, USC acknowledges that the
issuance of the Merger Shares to the Shareholder pursuant to the
terms hereof is to be made in accordance with instructions
received from USC, and USC for and on its own behalf and on
behalf of such Shareholder hereby expressly release Canmax and
CMI from any and all claims and liabilities in connection with
such allocation.
7.2. TAX ADVICE. Although the parties acknowledge and agree
that the Merger is intended to qualify as a "tax free" exchange
under Section 368(a)(2)(D) of the Code with regard to the Merger
Consideration comprised of Merger Shares, all parties to this
Agreement acknowledge and agree that no representation or
warranty has been made to any party or by any party's officers,
employees, agents, accountants or attorneys, with respect to
federal income or other tax consequences of the transactions
contemplated by this Agreement and the Merger or that such
transactions are or will be "tax free."
ARTICLE 8. ESCROW AGREEMENT AND RELATED PROVISIONS
8.1. ESCROW AGREEMENT. At the Closing, USC shall cause to
be delivered to Canmax and CMI the Escrow Agreement duly executed
by the Shareholders Representative (described in Section 8.2
hereof) and a bank or trust company mutually agreeable to Canmax,
CMI, and USC, as the Escrow Agent. The Contingent Amount held
pursuant to the Escrow Agreement shall be the sole recourse of
Canmax and the Surviving Connection against the Shareholder for
any Damages hereunder other than Damages attributable to fraud or
willful breach of this Agreement. Subject to the provisions of
the Escrow Agreement and the provisions of this Article 8, the
Shareholder (acting through the Shareholders Representative) will
indemnify and hold Canmax and the Surviving Corporation and their
respective Affiliates, officers and directors, agents and
employees harmless from and against:
a. any Damages resulting from the payment or
discharge of any obligation or liability of USC whether
accrued, absolute, fixed, contingent or otherwise,
arising on or before the date of the Cut-off Date
Balance Sheet, or in the balance sheet contained in the
most recent Subsequent Monthly Financial Statement
delivered to Canmax and CMI pursuant to Section 4.1.4
hereof, if applicable, to the extent not reflected in
or reserved
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against in such Cut-off Date Balance Sheet or such
other balance sheet;
b. any Damages resulting from any representation
or warranty of either USC contained in Section 3.1
hereof (and for the representations and warranties in
Section 3.1.4 containing a materiality qualification or
any representations or warranties containing Material
Adverse Effect qualifications, without regard to such
qualifications), or the Trustee contained in Section
3.3 hereof, or elsewhere herein or in any certificate
delivered by USC, the Trustee or the Shareholder
hereunder or pursuant hereto which is false or
misleading;
c. any Damages resulting from the failure by USC
or the Trustee to perform any agreements, covenants or
other obligations contained herein or in any other
agreement executed and delivered by it and required to
be performed by it hereunder or thereunder;
d. any Damages resulting from any Shareholder
immediately prior to the Merger becoming entitled,
under Applicable Law, or otherwise, to receive payment
for such Shareholders' USC Common in excess of the
amount such dissenting Shareholder would otherwise have
received pursuant to this Agreement;
e. any Damages resulting from any Employee
Benefit Plan (including all liabilities to any person
under ERISA and all liabilities to any Governmental
Authority), or for salary or other compensation or
benefits attributable to service or employment by USC
prior to the Effective Time;
f. any Damages resulting from the failure of USC
to comply with Applicable Law, including without
limitation, any local, state or federal laws relating
to the environment or to any employment relationship;
g. any Damages resulting from the failure of USC
to pay or withhold any Tax or adequately reserve for
the same on the Cut-Off Date Balance Sheet.
8.2. INDEMNIFICATION PROCEDURE. A party entitled to
indemnification hereunder (an "Indemnified Party") shall notify
the party against whom a claim of indemnification is to be made
(the "Indemnifying Party") with reasonable promptness of its
discovery of any matter giving rise to a claim of indemnity
pursuant hereto. Such notice shall set forth in reasonable
detail the facts of which the Indemnified Party is aware that may
give rise to the claim hereunder. With respect to any third
party claim or action that could give rise to indemnity
hereunder, the Indemnified Party and the Indemnifying Party shall
each have the opportunity to participate in the defense of such
claim or action with counsel of such party's choice.
Notwithstanding the foregoing, the Indemnified Party shall direct
the defense, but any settlement of a claim or action or the
resolution of any matter giving rise to a claim for indemnity
under Section 8.1 shall be subject to the consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld. The Indemnifying Party shall reimburse the Indemnified
Party, promptly upon request therefor from time to time, for all
amounts owed and unpaid under Section 8.1, including costs of
defense and investigation as they accrue. Notwithstanding the
requirements of the preceding provisions of this Section 8.2, no
failure by an Indemnified Party to provide any notice, permit any
participation or seek any consent under this Section 8.2 shall
relieve the Indemnifying Party of its obligations under Section
8.1, unless and only to the extent that such failure shall
increase
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the Damages indemnified against.
8.3. SHAREHOLDERS REPRESENTATIVE. USC hereby irrevocably
appoints, and by its adoption and approval of this Agreement
pursuant to Section 5.1 hereof, the Shareholder shall be deemed
to have elected and irrevocably appointed Delia O'Donnell as its
representative (the "Shareholders Representative") to act under
the Escrow Agreement solely and exclusively for the benefit of
the Shareholder with full power, without any further consent of
USC or Shareholder to (i) execute and deliver the Escrow
Agreement on behalf of the Shareholder, (ii) give any and all
instructions as may be required or as he in his sole discretion
deems appropriate under any provisions of the Escrow Agreement,
(iii) make all such other determinations and to give all such
other instructions to the Escrow Agent as the Shareholder's
Representative shall deem necessary or desirable to carry out the
provisions of the Escrow Agreement, and (iv) in the name and on
behalf of USC and the Shareholder to make any amendment to or
modification of the Escrow Agreement or make any determination,
compromise, settlement, request or demand or give any waiver,
notice or consent under the Escrow Agreement; and Canmax and the
Surviving Corporation shall be required to look to and may rely
exclusively upon any such instructions, amendments,
modifications, determinations, compromises, settlements, requests
or demands, waivers, notices or consents or other acts of the
Shareholders Representative. The duties of the Shareholders
Representative shall only be those which are specifically
provided in the Escrow Agreement, and the Shareholders
Representative shall incur no liability whatsoever in his
capacity as such except for his willful misconduct or gross
negligence so long as he acts in good faith. The Shareholders
Representative shall be fully protected in following any
instructions given to him by holders of more than 50% of the
outstanding shares of capital stock of USC immediately prior to
the Effective Time, whether such instructions be in writing or by
vote of such Shareholders at a meeting called by the Shareholders
Representative on ten (10) days' notice to such Shareholders at
their addresses as set forth in the stock books of USC
immediately prior to the Effective Time, but the Shareholders
Representative shall be under no duty to apply for such
instructions in making any determination or taking any other
action under the Escrow Agreement.
ARTICLE 9. TERMINATION.
9.1. TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date:
a. by the written agreement of the parties hereto;
b. by any of USC, Canmax or CMI by written notice to
the other parties if the transactions contemplated hereby
shall not have been consummated pursuant hereto by 5:00 p.m.
San Diego, California time on January 31, 1998 unless such
date shall be extended by the mutual written consent the
parties hereto;
c. by Canmax and CMI by written notice to USC if any
of the conditions set forth in Sections 6.1 or 6.2 shall not
have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by 5:00 p.m. San Diego,
California time on January 31, 1998 unless such failure
shall be due to the failure of Canmax or CMI to perform or
comply with any of the covenants, agreements or conditions
hereof to be performed or complied with by it prior to the
Closing; or
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d. by USC by written notice to Canmax and CMI if any
of the conditions set forth in Sections 6.1 or 6.3 shall not
have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by 5:00 p.m. San Diego,
California time on January 31, 1998 unless such failure
shall be due to the failure of USC to perform or comply with
any of the covenants, agreements or conditions hereof to be
performed or complied with by it prior to the Closing.
9.2. EFFECT OF TERMINATION. In the event of the termination
of this Agreement pursuant to the provisions of Section 9.1
hereof, this Agreement shall become void and have no effect,
without any liability to any Person in respect hereof or in
connection with the transactions contemplated hereby on the part
of any party hereto, or any of its directors, officers,
employees, agents, consultants, representatives, advisers,
stockholders or Affiliates, except (i) as specified in
Section 10.1 hereof, (ii) for any Damages suffered by Canmax and
CMI resulting from USC's material breach of the covenants set
forth in Section 4.1 hereof, or the confidentiality provisions
contained in the letter of intent executed in connection herewith
(or nondisclosure agreement referred to therein), and (iii) for
any Damages suffered by USC resulting from Canmax or CMI's
material breach of the covenants set forth in Section 4.2 hereof
or the confidentiality provisions contained in the letter of
intent executed in connection herewith (or nondisclosure
agreement referred to therein).
ARTICLE 10. MISCELLANEOUS.
10.1. EXPENSES. USC on the one hand, and Canmax and
CMI, on the other hand, shall bear their respective expenses,
costs and fees (including attorneys', auditors' and financing
commitment fees) in connection with the transactions contemplated
hereby, including the preparation, execution and delivery of this
Agreement and compliance herewith (the "Transaction Expenses"),
whether or not the transactions contemplated hereby shall be
consummated; provided that, in the event of the termination of
this Agreement by any party for any reason other than
attributable to the breach of any representation, warranty or
covenant contained herein, the non-terminating party shall be
entitle to recover from the terminating party up to $30,000 of
the accounting and legal fees and expenses incurred in connection
herewith.
10.2. SEVERABILITY. If any provision of this Agreement,
including any phrase, sentence, clause, section or subsection is
inoperative or unenforceable for any reason, such circumstances
shall not have the effect of rendering the provision in question
inoperative or unenforceable in any other case or circumstance,
or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent
whatsoever.
10.3. NOTICES. All notices, requests, demands, waivers
and other communications required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have
been duly given if (a) delivered personally, (b) sent by
reputable next-day or overnight mail or delivery, proof of
delivery requested, or (c) sent by facsimile (receipt confirmed)
to the numbers set forth below:
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(i) if to Canmax or CMI,
Canmax Inc.
150 W. Carpenter Freeway
Irving, Texas 75039
Attention: Philip M. Parsons
Facsimile No.: (972) 281-2388
with a copy to:
William L. Rivers, Esq.
Arter & Hadden LLP
1717 Main Street, Suite 4100
Dallas, Texas 75201
Facsimile No.: (214) 741-7139
(ii) if to USC,
USCommunications, Inc.
13553 Poway Road, #1506.
Poway, California 92064
Attention: James C. Bernet
Facsimile No.: (619) 748-2806
with a copy to:
Ross G. Simmons, Esq.
Suite 157, The Promontory
11440 West Bernardo Court
San Diego, California 92127-1642
Facsimile No.: (619) 676-1839
or, in each case, at such other address as may be specified in
writing to the other parties hereto.
All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (x) if by
personal delivery on the day of such delivery, (y) if by next-day
or overnight mail or delivery, on the day delivered, or (z) if by
facsimile (receipt confirmed), the date of transmission.
10.4. HEADINGS. The headings contained in this
Agreement are for purposes of convenience only and shall not
affect the meaning or interpretation of this Agreement.
10.5. ENTIRE AGREEMENT. This Agreement (including the
Schedules hereto) and the other agreements executed and delivered
by the parties hereunder or pursuant hereto (when executed and
delivered) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among
the parties hereto with respect to the subject matter hereof.
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10.6. COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be deemed an original
and all of which shall together constitute one and the same
instrument. Executed signature pages of this Agreement may be
transmitted to other parties to this Agreement by facsimile and,
if so transmitted, shall be deemed valid and binding on the party
transmitting its signature by facsimile. That party shall
undertake to transmit original signature pages as soon as
possible thereafter.
10.7. GOVERNING LAW, ETC. This Agreement shall be
governed in all respects, including as to validity,
interpretation and effect, by the internal laws of the State of
Texas without giving effect to the conflict of laws rules
thereof.
10.8. BINDING EFFECT. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and
their respective heirs, successors and permitted assigns.
10.9. ASSIGNMENT. This Agreement shall not be
assignable or otherwise transferable by any party hereto without
the prior written consent of the other parties hereto.
10.10. NO THIRD PARTY BENEFICIARIES. Nothing in this
Agreement shall confer any rights upon any Person or entity other
than the parties hereto and their respective, successors and
permitted assigns.
10.11. AMENDMENT; WAIVERS, ETC. No amendment,
modification or discharge of this Agreement, and no waiver
hereunder, shall be valid or binding unless set forth in writing
and duly executed-by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such
waiver shall constitute a waiver only with respect to the
specific matter described in such writing and shall in no way
impair the rights of the party granting such waiver in any other
respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the
parties, on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other
breach or default of a similar nature, or as a waiver of any of
such provisions, rights or privileges hereunder. The rights and
remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law
or in equity.
[Signature Pages Following]
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
CANMAX INC.
By: /s/ PHILIP M. PARSONS
--------------------------------
Name: Philip M. Parsons
------------------------------
Title: Treasurer
-----------------------------
CNMX MERGERSUB, INC.
By: /s/ PHILIP M. PARSONS
--------------------------------
Name: Philip M. Parsons
------------------------------
Title: Treasurer
-----------------------------
USCOMMUNICATION SERVICES, INC.
By: /s/ JAMES C. BERNET
--------------------------------
Name:
------------------------------
Title: President
-----------------------------
/s/ DELIA O'DONNELL
-----------------------------------
Delia O'Donnell,
as Trustee of the trust created
under the Voting Trust Agreement of
National Transportation Products,
Inc. dated as of May 1, 1997 and
amended December 1, 1997.
/s/ DELIA O'DONNELL
-----------------------------------
Delia O'Donnell, Individually
-36-
Nationwide Transportation Products, Inc.
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT ("Agreement") is made as of May
1, 1997, between and among Delia O'Donnell, an individual; Alan
Anderson, an individual; Brian P. O'Donnell, an individual; Lisa
Bernet, an individual; Arthur Haesche, an individual; David
Huscher, an individual; Gerald Zoarski, an individual; Richelle
Lambert, an individual; William Palumbo, an individual; Bruce's
Truck Stops, a []; Joyce Mitstifer, an individual; Douglas Pratt,
an individual; Deanna O'Donnell, an individual; C & B
Investments, a []; James T. Underwood, an individual; Roland
McKenzie, an individual; Ray Pratt, an individual; Mark Leone, an
individual; Robert Candee, an individual; Thomas P. Underwood, an
individual; [] DeMarsilis, an individual; Florence Bush, an
individual; Kathy V. Caruthers, an individual; and Blanche Brown,
an individual ("Certificate Holders") who, upon issuance, desire
to become the owners of shares of stock of Nationwide
Transportation Products, Inc. ("Corporation"), and Delia
O'Donnell ("Trustee").
RECITALS
A. The Trustee is the founder of Corporation and
Certificate Holders desire to acquire shares of stock in
Corporation.
B. The Trustee and Certificate Holders believe it to be in
the best interests of Corporation for its stock to be held by a
diverse group of persons and entities.
C. However, Certificate Holders wish management and
control of Corporation to be centralized during the initial phase
of the business of Corporation, so that the Corporation will not
be hampered or otherwise negatively impacted by the breadth of
stock ownership.
D. Subject to their right to terminate this Agreement as
provided herein, the Certificate Holders desire to grant the
Trustee the maximum amount of control and autonomy possible in
voting the shares governed hereby.
AGREEMENT
1. ISSUANCE OF VOTING TRUST CERTIFICATES. Upon issuance
of common stock by Corporation, Trustee shall subscribe for the
purchase of One Thousand, two hundred and fifty (1,250) shares
thereof, and shall cause the shares to be held in the name of
Trustee on the Corporation's books. Trustee shall so subscribe
for the number of shares of common stock shown opposite the
respective names of Certificate Holders, below. Upon issuance of
such common stock, Trustee shall issue and deliver to each of the
Certificate Holders a voting trust certificate, in the form shown
in Exhibit A to this Agreement, for the number of shares
-1-
<PAGE>
transferred to the Trustees on account and for the benefit of the
respective Certificate Holder. The Trustee shall hold the shares
transferred to her in trust, subject to the terms of this
Agreement.
2. ACCRUALS TO THE ACCOUNT OF CERTIFICATE HOLDERS. The
Trustee shall also hold in trust, and subject to the terms of
this Agreement, any and all other stock which is received on
account of, or as a replacement for the shares held under this
Agreement. The interest herein of each of the Certificate
Holders shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Stock of the
Corporation resulting from: (i) a subdivision or consolidation
of shares; (ii) the payment of a stock dividend; and (iii) any
other increase or decrease in the number of such shares effected
without receipt of consideration by the Corporation. In
connection with a merger or other restructuring of the
Corporation, the Trustee may tender the stock governed hereby,
and upon receipt of shares of stock or other consideration in
exchange therefor, administer such replacement stock pursuant to
the terms hereof. Provided, that all dividends, cash sale
proceeds or other cash shall be immediately distributed to
Certificate Holders according to their interest herein.
3. TRUSTEES' POWERS AND DUTIES.
(a) VOTING OF SHARES. During the existence of this trust,
the Trustee shall have the sole and exclusive right to vote all
shares issued to her pursuant to the terms hereof, in person or
by proxy, at all shareholder meetings and in all proceedings in
which the vote or consent of shareholders may be required or
authorized, and shall have all the rights, privileges, and powers
of shareholders except as otherwise provided in this Agreement.
This right is expressly intended to extend to all matters of any
character whatsoever on which a shareholder vote or approval is
permitted or required by the Certificate of Incorporation or
bylaws of Corporation, or as a matter of law, or which is
otherwise submitted to the shareholders for approval. The
Trustee shall exercise such voting rights as she determines in
the sound exercise of her discretion.
(b) NUMBER OF TRUSTEES. The number of Trustees under
this Agreement shall be one (1).
(c) OTHER TRUSTEE ACTIVITIES. The Trustee may also be
a party to this Agreement as a share owner holding voting trust
certificates. Additionally, she may serve the Corporation as an
officer or director or in any other capacity, and may receive
compensation from the Corporation for such services.
(d) SCOPE OF TRUSTEE AUTHORITY. The Trustee is
expressly authorized to vote the shares of stock governed by this
Agreement in connection with any and all matters for which
approval of outstanding shares is required, including without
limitation fundamental changes to the Corporation. The Trustee
is hereby granted the sole and exclusive right to vote such
stock, by, on behalf of and in lieu of Certificate Holders in
connection with the sale or other transfer of all or
substantially all of Corporation's assets other than in the
ordinary course of business, mergers or reorganizations of
Corporation, or the voluntary dissolution of Corporation. The
Certificate Holders desire that the authority of the Trustee to
vote the stock granted herein be interpreted as broadly as
possible.
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<PAGE>
(e) REPLACEMENT OR REMOVAL OF TRUSTEE. In case of a
Trustee's death, resignation, or inability to act, the owners of
two thirds of the shares subject to this Agreement shall elect a
successor Trustee to act under this Agreement. Any Trustee may
be removed from office by the affirmative vote of the owners of
two thirds of the shares subject to this Agreement.
(f) COMPENSATION. The Trustee shall receive no
compensation for her services except for reimbursement, by the
certificate holders, of expenses incurred in the administration
of her duties.
(g) TRUSTEE'S LIABILITY. The Trustee shall not be
liable for any error of judgment or mistake of fact or law, or
for any act or omission made in good faith in connection with
their powers and duties under this Agreement, except for the
Trustee's own willful misconduct or gross negligence. The
Trustee shall not be liable in acting on any notice, consent,
certificate, instruction, or other paper or document or signature
believed by them to be genuine and to have been signed by the
proper party or parties. The Trustee may consult with legal
counsel, and any of her acts or omissions made in good faith in
accordance with the opinion of legal counsel shall be binding and
conclusive on the parties to this Agreement.
4. TERMINATION. This Agreement shall terminate five
(5) years after the date of this Agreement or on any later date
to which the term is extended, as provided below, without notice
by or to, or action on the part of, the Trustee or the
Certificate Holders. This Agreement may be terminated at an
earlier date by the vote or written consent of Certificate
Holders representing two thirds (2/3) of the shares subject to
this Agreement, upon ten (10) days' written notice to the
Trustee. As soon as practicable after termination of this
Agreement, the Trustee shall re-deliver share certificates
representing the appropriate number of shares, properly endorsed
for transfer, to the respective Certificate Holders of record,
and the Certificate Holders shall surrender to the Trustee their
voting trust certificates properly endorsed, together with
payment of sums sufficient to cover any taxes and other expenses
relating to the transfer or delivery of the share certificates.
If any Certificate Holder refuses to surrender voting trust
certificates in exchange for shares, or cannot be located, the
Trustees may deliver the share certificates due that Certificate
Holder to any bank or trust company in California for the benefit
of the person or persons entitled thereto, and thereupon shall be
fully discharged with respect to those share certificates.
5. EXTENSION OF AGREEMENT. The terms of this Agreement,
as prescribed in Paragraph 4, may be extended from the original
termination date of this Agreement or from the termination date
as last extended in accordance with this paragraph, provided that
within two years before the date as originally fixed or as last
extended, one or more Certificate Holders, by written agreement,
and with the Trustees' written consent, may extend the term of
this Agreement with respect to their shares for an additional
term. In the event of extension, duplicate copies of this
Agreement and of the extension agreement shall be filed with the
secretary of the Corporation and shall be open for inspection on
the same conditions as the Corporation's record of shareholders.
6. WITHDRAWAL OF SHARES. If otherwise permissible by law
(accounting for any restriction on transfer otherwise applicable
to such shares, if any), any Certificate Holder may
-3-
<PAGE>
withdraw his or her shares from this Agreement at any time upon
giving the Trustee ninety (90) days' written notice before the
effective date of withdrawal and surrendering his or her voting
trust certificates to the Trustee. The Trustee shall deliver the
withdrawn shares properly endorsed for transfer as in the case of
termination under Paragraph 4 above.
7. NOTICES, DIVIDENDS, AND DISTRIBUTIONS. The Trustee
shall promptly forward copies of all notices, reports,
statements, and other communications received from the
Corporation to the Certificate Holders, indicating the date of
receipt. The Trustees shall promptly distribute all dividends
and other distributions received from the Corporation to the
Certificate Holders in proportion to their respective interests.
If any dividend or stock split consists of additional shares
having voting rights, the Trustee shall hold these shares in
trust subject to the terms of this Agreement, and if appropriate,
shall issue new voting trust certificates, representing the
additional shares, to the Certificate Holders in proportion to
their respective interests.
8. REPRESENTATION BY COUNSEL. Each of the Parties has
been represented by counsel in entering into this Agreement.
Each of the Parties affirms to the other that it has consulted
and discussed the provisions of this Agreement with its counsel
and fully understands the legal effect to each such provision.
THE DRAFTER OF THIS DOCUMENT SOLELY REPRESENTS THE CORPORATION,
DOES NOT REPRESENT EITHER THE TRUSTEE NOR ANY CERTIFICATE HOLDER
HEREUNDER, AND DOES NOT OPINE NOR RENDER ANY OPINION AS TO THE
EFFICACY, TAX EFFECT, OR ANY OTHER MATTER ASSOCIATED WITH THE
EXECUTION HEREOF. ALL PARTIES ARE ADVISED AND URGED TO SEEK
INDEPENDENT LEGAL COUNSEL PRIOR TO EXECUTION HEREOF.
Dated: May 1, 1997.
TRUSTEE
-----------------------------------
Delia O'Donnell
13553 Poway Road, #1506
Poway, California 92064
-4-
<PAGE>
CERTIFICATE HOLDERS
Number of Shares Percentage of
Signature of Corporation Outstanding Address
- --------- ---------------- ------------- ------------
785.9375 62.875
Delia O'Donnell
128.125 10.25
Alan Anderson
37.5 3.00
Brian P. O'Donnell
37.5 3.00
Lisa Bernet
37.5 3.00
Arthur Haesche
37.5 3.00
David Huscher
25 2.00
Gerald Zoarski
18.75 1.50
Richelle Lambert
12.5 1.00
William Palumbo
12.5 1.00
[], for
Bruce's Truck Stops, Inc.
-5-
<PAGE>
Number of Shares Percentage of
Signature of Corporation Outstanding Address
- --------- --------------- ------------- -----------
12.5 1.00
Joyce Mitstifer
12.5 1.00
Douglas Pratt
12.5 1.00
Deanna O'Donnell
12.5 1.00
[], for
C & B Investments
12.5 1.00
James T. Underwood
12.5 1.00
Roland McKenzie
6.25 0.50
Ray Pratt
6.25 0.50
Mark Leone
6.25 0.50
Robert Candee
6.25 0.50
Thomas P. Underwood
-6-
<PAGE>
Number of Shares Percentage of
Signature of Corporation Outstanding Address
- --------- ---------------- ------------- ---------
6.25 0.50
Florence Bush
6.25 0.50
[] DeMarsilis
3.25 0.25
Kathy V. Caruthers
1.5625 0.13
Blanche Brown
-7-
<PAGE>
EXHIBIT A
Nationwide Transportation Products, Inc.
VOTING TRUST CERTIFICATE
CERTIFICATE NO. ______ ____ SHARES
This certifies that the undersigned Trustee has received a
certificate(s) for shares of common stock of Nationwide
Transportation Products, Inc. ("Corporation") on account and for
the benefit of:
[name of shareholder] (Shareholder)
and that the Trustee holds these shares subject to the terms and
conditions of a voting trust agreement (the "Agreement") dated
May 1, 1997, between, inter alia, Shareholder, who owns shares of
stock in the Corporation, and the undersigned ("Trustee"). This
certificate is Exhibit A to the Agreement. A copy of the
Agreement is on file with the secretary of the Corporation.
1. During the term of the Agreement, the Trustees shall be
entitled to vote the shares covered by this certificate and to
exercise those rights, privileges, and powers of shareholders as
provided in the Agreement.
2. During the term of the Agreement, the Shareholders
shall be entitled to all the benefits of the Agreement, and shall
be subject to the terms and conditions arising from the issuance
of their shares with the Trustee in accordance with the
Agreement.
3. This certificate has been issued under an exemption
from the registration provisions of the Securities Act of 1933,
as amended, and applicable state law. This certificate may not
be sold or transferred absent registration or compliance with an
applicable exemption.
4. Upon termination of the Agreement, and subject to the
terms and conditions of the Agreement, the Trustee shall deliver
to the Certificate Holders properly endorsed share certificates
representing the number of shares owned by each Certificate
Holder, and the Certificate Holders shall surrender their voting
trust certificates to the Trustees, properly endorsed, together
with payment of a sum sufficient to cover any taxes and other
expenses relating to the transfer or delivery of the share
certificates.
Dated:_______________________ ________________________
Delia O'Donnell, Trustee
USCommunication Services, Inc.
First Amendment to
VOTING TRUST AGREEMENT
THIS FIRST AMENDMENT TO VOTING TRUST AGREEMENT ("Agreement")
is made as of December 1, 1997, with reference to that voting
trust agreement dated May 1, 1997 ("the Trust"), between and
among Delia O'Donnell, an individual; Alan Anderson, an
individual; Brian P. O'Donnell, an individual; Tara Goldstone, an
individual; Arthur Haesche, an individual; David Huscher, an
individual; Gerald Zoarski, an individual; Richelle Lambert, an
individual; William Palumbo, an individual; Bruce's Truck Stops,
Inc., a California corporation; Joyce Mitstifer, an individual,
Douglas Pratt, an individual; Deanna O'Donnell, an individual;
C & B Investments, a Trust; James T. Underwood, an individual;
Roland McKenzie, an individual; Mark Leone, an individual; Robert
Candee, an individual; Thomas P. Underwood, an individual; Mark
Leone, an individual; Florence Bush, an individual; Kathy V.
Caruthers, an individual; Blanche Brown, an individual, George
Krieger, an individual; Jack Wilson, an individual; Teja Shariff,
an individual; and Sam Qasm, an individual ("Certificate
Holders") and Delia O'Donnell ("Trustee").
RECITALS
A. The Trustee subscribed for the purchase of 1,250 shares
of common stock in NATIONWIDE TRANSPORTATION PRODUCTS, INC., a
Delaware corporation ("Company") and those shares have since been
issued to Trustee.
B. On August 19, 1997, the name of the Company was changed
to U.S. Communication Services, Inc.
C. On November 26, 1997, the Company effected a 16,000 for
1 stock split, and while the number of shares held by each
Certificate Holder as provided in the Trust has been adjusted
accordingly (whether or not so reflected in the voting trust
certificates), the percentage of outstanding shares attributable
to each Certificate Holder has not changed.
D. The Certificate Holders and the Trustee desire to amend
the terms of the Trust as set forth hereinbelow.
AGREEMENT
1. REPLACEMENT OR REMOVAL OF TRUSTEE. Paragraph 3(e) of
the Trust is amended in its entirety to read as follows:
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<PAGE>
In the event Delia O'Donnell should resign or
otherwise be unable or unwilling to serve as Trustee,
the successor Trustee shall be Alan Anderson. In all
other events, in case of a Trustee's death,
resignation, or inability to act, the owners of two
thirds of the shares subject to this Agreement shall
elect a successor Trustee to act to act under this
Agreement. Any Trustee may be removed from office by
the affirmative vote of the owners of two thirds of the
shares subject to this Agreement.
2. FURTHER ACTS ON TERMINATION OR WITHDRAWAL. In the
event of Termination of the Trust as set forth on Paragraph 4
thereof, or upon the withdrawal of a Certificate Holder under
Paragraph 6 thereof, Certificate Holders shall execute such
reasonable documentation and engage in such further acts as are
reasonably required by the Company, its successors or assigns, to
effect the transfer of stock in the Company from the Trustee to
the subject Certificate Holder(s) upon the surrender of that
Certificate Holder's endorsed voting trust certificate. Such
documentation and acts include, without limitation, execution of
an investment representation letter or other documentation
reasonably required by Company in order to secure registration of
the stock of Company under federal and state securities laws, or
to otherwise secure the transfer's federal and state exemption
therefrom.
3. CONFIRMATION OF TRUST. As amended by this Agreement,
Certificate Holders and the Trustee confirm the Trust, and all
provisions thereof shall remain in full force and effect.
Dated: December 1, 1997
TRUSTEE
_____________________________
Delia O'Donnell
CERTIFICATE HOLDERS
_____________________________
Delia O'Donnell
_____________________________
Alan Anderson
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<PAGE>
_____________________________
Brian P. O'Donnell
_____________________________
Tara Goldstone
_____________________________
Arthur Haesche
_____________________________
David Huscher
_____________________________
Gerald Zoarski
_____________________________
Richelle Lambert
_____________________________
William Palumbo
_____________________________
for Bruce's Truck Stops, Inc.
_____________________________
Joyce Mitstifer
_____________________________
Douglas Pratt
_____________________________
Deanna O'Donnell
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<PAGE>
_____________________________
for C & B Investments
_____________________________
James T. Underwood
_____________________________
Roland McKenzie
_____________________________
Mark Leone
_____________________________
Robert Candee
_____________________________
Thomas P. Underwood
_____________________________
Florence Bush
_____________________________
John DeMarsilis
_____________________________
Kathy V. Caruthers
_____________________________
Blanche Brown
_____________________________
George Krieger
-4-
<PAGE>
_____________________________
Jack Wilson
_____________________________
Teja Shariff
_____________________________
Sam Shariff
-5-
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
UNDER ANY APPLICABLE LAW OR REGULATION OF ANY STATE. THIS COMMON
STOCK WARRANT MAY NOT BE SOLD, OFFERED, ASSIGNED OR TRANSFERRED
UNLESS THE WARRANT IS REGISTERED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, OR UNLESS SUCH OFFERS, SALES,
ASSIGNMENTS AND TRANSFERS ARE MADE PURSUANT TO THE AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
CANMAX INC.
COMMON STOCK PURCHASE WARRANT
DATED: January 30, 1998
<TABLE>
<S> <C> <C> <C>
Number of Common Shares: 1,500,000 Holder: Delia O'Donnell, Trustee
Purchase Price: $1.25 per share 13533 Poway Road, Suite 1506
Expiration Date: January 31, 2003 Poway, CA 92064
For identification only. The governing terms of this Warrant are set forth below.
</TABLE>
CANMAX INC., a Wyoming corporation (the "Company"), hereby
certifies that, for value received, Delia O'Donnell, Trustee of
the trust created under agreement dated May 1, 1997 and amended
December 1, 1997 (the "Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company at any time
or from time to time prior to January 31, 2003 (the "Exercise
Period"), at the Purchase Price hereinafter set forth, One
Million Five Hundred Thousand (1,500,000) fully paid and
nonassessable shares of Common Stock (as hereinafter defined) of
the Company. The number and character of such shares of Common
Stock and the Purchase Price are subject to adjustment as
provided herein.
The purchase price per share of Common Stock issuable upon
exercise of this Warrant (the "Purchase Price") shall initially
be $1.25; provided, however, that the Purchase Price shall be
adjusted from time to time as provided herein.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" shall mean Canmax Inc. and any
entity that shall succeed or assume the obligations of such
corporation hereunder.
(b) The term "Common Stock" means the Company's common
stock, no par value per share.
(c) The term "Fair Market Value" means the closing
price of the shares of Common Stock on the date of delivery
of any Notice of Exercise as reported on the Nasdaq SmallCap
Market (or other exchange on which the Common Stock is
traded or,
-1-
<PAGE>
if not traded on any exchange, then the closing bid price as
of such date on the over-the-counter market or, if not
quoted on the over-the-counter market, then as determined by
the Board of Directors).
(d) The term "Warrant Shares" means as of any date
during the Exercise Period, that number of shares of Common
Stock which shall be exercisable by the Holder hereof
pursuant to the terms of this Warrant.
1. EXERCISE OF WARRANT.
1.1. METHOD OF EXERCISE. This Warrant may be exercised
in whole or in part (but not as to a fractional share of
Common Stock), at any time and from time to time during the
Exercise Period for up to, but not more than, the number of
Warrant Shares at such time, by the Holder hereof by
delivery to the Company at its principal office of (i) a
notice of exercise (a "Notice of Exercise") substantially in
the form attached hereto as Exhibit A, (ii) evidence
satisfactory to the Company of the authority of the person
executing such Notice of Exercise, (iii) this Warrant, and
(iv) payment of the Purchase Price multiplied by the number
of shares of Common Stock for which this Warrant is being
exercised (the "Exercise Price"). Payment of the Exercise
Price shall be made (A) by check or bank draft payable to
the order of the Company or by wire transfer to the account
of the Company or (B) by Holder's surrender to the Company
of a number of shares of Common Stock owned by Holder for at
least six months having an aggregate Fair Market Value equal
to the Exercise Price. The shares so purchased shall be
deemed to be issued as of the close of business on the date
on which the Company shall have received from the Holder
payment in full of the Exercise Price and the other
documents referred to herein (the "Exercise Date").
1.2. REGULATION D RESTRICTIONS. The Holder hereof
represents and warrants to the Company that it has acquired
this Warrant and anticipates acquiring the shares of Common
Stock issuable upon exercise of the Warrant solely for its
own account for investment purposes and not with a view to
or for distributing such securities unless such distribution
has been registered with the Securities and Exchange
Commission or an applicable exemption is available therefor.
At the time this Warrant is exercised, the Company may
require the Holder to state in the Notice of Exercise such
representations concerning the Holder as are necessary or
appropriate to assure compliance by the Holder with the
Securities Act.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE.
As soon as practicable after the exercise of this Warrant,
the Company will cause to be issued in the name of and
delivered to the Holder a certificate for the number of
fully paid and nonassessable shares of Common Stock to which
the Holder shall be entitled on such exercise, plus, in lieu
of any fractional share to which the Holder would otherwise
be entitled, cash equal to such fraction multiplied by the
then applicable Purchase Price, together with any other
stock or other securities and property (including cash,
where applicable) to which the Holder is entitled upon such
exercise pursuant to Section 1 or otherwise.
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<PAGE>
3. ADJUSTMENTS ON CERTAIN CAPITAL TRANSACTIONS. On the
occurrence of any of the following events, the following
adjustments to the rights granted under this Warrant shall be
made:
3.1. In case the number of outstanding shares of Common
Stock of the Company shall be increased by way of a stock
dividend, stock split, recapitalization, or other similar means,
the number of unexercised shares of Common Stock covered by this
Warrant shall be increased by the amount that a like number of
shares of outstanding Common Stock shall have been increased as a
result of such stock increase and the Purchase Price shall be
adjusted by multiplying the Purchase Price in effect immediately
prior to such stock increase by a fraction, the numerator of
which shall be the number of unexercised shares covered by this
Warrant immediately prior to such stock increase and the
denominator of which shall be the number of unexercised shares of
Common Stock covered by this Warrant as adjusted for such stock
increase.
3.2. In case the number of outstanding shares of Common
Stock of the Company shall be reduced by recapitalization,
reverse stock split or otherwise, the number of unexercised
shares covered by this Warrant shall be reduced by the
amount that a like number of shares of outstanding Common
Stock shall have been reduced as a result of such stock
reduction and the Purchase Price shall be adjusted by
multiplying the Purchase Price in effect immediately prior
to such stock reduction by a fraction, the numerator of
which shall be the number of unexercised shares covered by
this Warrant immediately prior to such stock reduction and
the denominator of which shall be the number of unexercised
shares covered by this Warrant as adjusted for such stock
reduction.
3.3. In case the Company shall consolidate with or
merge into another corporation, the holder of this Warrant
will thereafter receive, upon the exercise thereof in
accordance with the terms of this Warrant, the securities or
property to which the holder of the number of shares of
Common Stock then deliverable upon the exercise of this
Warrant would have been entitled upon such consolidation or
merger ("Other Securities") and the Company shall take such
steps in connection with such consolidation or merger as may
be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or property thereafter
deliverable upon the exercise of this Warrant.
4. RIGHTS AS A SHAREHOLDER. Holder shall not have
any rights as a shareholder of the Company with respect to
the shares subject to this Warrant.
5. SECURITIES LAW REQUIREMENTS. Neither this Warrant nor
the Warrant Shares have been registered under the Securities Act
or any state securities or blue sky laws. Accordingly, upon (a)
any transfer of this Warrant, any transferee of this Warrant or
(b) the exercise of this Warrant in whole or in part, and if the
Warrant Shares have not been registered under the Securities Act,
Holder or any other person exercising this Warrant shall, as
applicable, represent and agree in writing satisfactory to the
Company that Holder or such other person (a) is acquiring
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<PAGE>
the shares for the purpose of investment and not with a view to
distribution thereof, (b) knows the shares have not been
registered under the Securities Act or any state securities or
blue sky laws, (c) understands that he must bear the economic
risk of said investment for an indefinite period of time until
the shares are registered under the Securities Act and applicable
state securities or blue sky laws or an exemption from such
registration is available, and (d) will not solicit any offer to
sell or sell all or any portion of the shares other than pursuant
to an opinion of counsel reasonably satisfactory to the Company.
6. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF
WARRANT. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of
this Warrant, all shares of Common Stock (or Other Securities)
from time to time issuable on the exercise of this Warrant.
7. REPLACEMENT OF WARRANT. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security satisfactory in form and
amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new warrant
of like tenor.
8. NOTICES, ETC. All notices and other communications
hereunder shall be personally delivered, telecopied or mailed by
first class registered or certified mail, postage prepaid, at
such address of facsimile numbers as may have been furnished to
each party by the other in writing.
9. MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the internal laws of the State of Texas. The headings in this
Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
[SIGNATURE PAGE FOLLOWS]
-4-
<PAGE>
DATED as of January 30, 1998.
CANMAX INC.
By: /s/ PHILIP M. PARSONS
-------------------------------------
Name: Philip M. Parsons
Title: Treasurer
Address: 150 West Carpenter Freeway
Irving, Texas 75039
Fax: (972) 281-2388
HOLDER:
/s/ DELIA O'DONNELL
----------------------------------------
DELIA O'DONNELL, TRUSTEE OF THE TRUST
CREATED UNDER AGREEMENT DATED MAY 1,
1997 AND AMENDED DECEMBER 1, 1997
Address: 13533 Poway Road, Suite 1506
Poway, CA 92064
Fax: (619) 748-2806
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<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE - WARRANT
------------------------------------
(To be executed only upon exercise or conversion
of the Warrant in whole or in part)
To Canmax Inc.
The undersigned registered holder of the accompanying
Warrant hereby exercises such Warrant or portion thereof for, and
purchases thereunder, ______________<F1> shares of Common Stock
(as defined in such Warrant) and herewith makes payment therefor
of (a) $__________ or (b) __________ shares of Common Stock duly
endorsed to Canmax, Inc. having an aggregate Fair Market Value of
_____________, in each case as of the date written below. The
undersigned requests that the certificates for such shares of
Common Stock be issued in the name of, and delivered to,
______________________________________________ whose address is
_______________________________________________________________.
Dated: ____________________________
___________________________________
(Name must conform to name of
holder as specified on the face of
the Warrant)
By: ______________________________
Name:______________________________
Title:_____________________________
Address of holder:
___________________________________
___________________________________
___________________________________
Date of exercise: ____________________
<F1> Insert the number of shares of Common Stock as to which the
accompanying Warrant is being exercised. In the case of a partial
exercise, a new Warrant or Warrants will be issued and delivered,
representing the unexercised portion of the accompanying Warrant,
to the holder surrendering the same.
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
UNDER ANY APPLICABLE LAW OR REGULATION OF ANY STATE. THIS COMMON
STOCK WARRANT MAY NOT BE SOLD, OFFERED, ASSIGNED OR TRANSFERRED
UNLESS THE WARRANT IS REGISTERED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, OR UNLESS SUCH OFFERS, SALES,
ASSIGNMENTS AND TRANSFERS ARE MADE PURSUANT TO THE AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
CANMAX INC.
COMMON STOCK PURCHASE WARRANT
DATED: January 30, 1998
<TABLE>
<S> <C> <C> <C>
Number of Common Shares: 1,000,000 Holder: Delia O'Donnell, Trustee
Purchase Price: $2.00 per share 13533 Poway Road, Suite 1506
Expiration Date: January 31, 2005 Poway, CA 92064
For identification only. The governing terms of this Warrant are set forth below.
</TABLE>
CANMAX INC., a Wyoming corporation (the "Company"), hereby
certifies that, for value received, Delia O'Donnell, Trustee of
the trust created under agreement dated May 1, 1997 and amended
December 1, 1997 (the "Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company at any time
or from time to time following the second anniversary of the date
hereof prior to January 31, 2005 (the "Exercise Period"), at the
Purchase Price hereinafter set forth, One Million (1,000,000)
fully paid and nonassessable shares of Common Stock (as
hereinafter defined) of the Company. Holder shall not be
entitled to exercise this Warrant prior to the second anniversary
of the date hereof. The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as
provided herein.
The purchase price per share of Common Stock issuable upon
exercise of this Warrant (the "Purchase Price") shall initially
be $2.00; provided, however, that the Purchase Price shall be
adjusted from time to time as provided herein.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" shall mean Canmax Inc. and any
entity that shall succeed or assume the obligations of such
corporation hereunder.
(b) The term "Common Stock" means the Company's common
stock, no par value per share.
(c) The term "Fair Market Value" means the closing
price of the shares of Common Stock on the date of delivery
of any Notice of Exercise as reported on the
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<PAGE>
Nasdaq SmallCap Market (or other exchange on which the
Common Stock is traded or, if not traded on any exchange,
then the closing bid price as of such date on the over-the-
counter market or, if not quoted on the over-the-counter
market, then as determined by the Board of Directors).
(d) The term "Warrant Shares" means as of any date
during the Exercise Period, that number of shares of Common
Stock which shall be exercisable by the Holder hereof
pursuant to the terms of this Warrant.
1. EXERCISE OF WARRANT.
1.1. METHOD OF EXERCISE. This Warrant may be exercised in
whole or in part (but not as to a fractional share of Common
Stock), at any time and from time to time during the Exercise
Period for up to, but not more than, the number of Warrant Shares
at such time, by the Holder hereof by delivery to the Company at
its principal office of (i) a notice of exercise (a "Notice of
Exercise") substantially in the form attached hereto as Exhibit
A, (ii) evidence satisfactory to the Company of the authority of
the person executing such Notice of Exercise, (iii) this Warrant,
and (iv) payment of the Purchase Price multiplied by the number
of shares of Common Stock for which this Warrant is being
exercised (the "Exercise Price"). Payment of the Exercise Price
shall be made (A) by check or bank draft payable to the order of
the Company or by wire transfer to the account of the Company or
(B) by Holder's surrender to the Company of a number of shares of
Common Stock owned by Holder for at least six months having an
aggregate Fair Market Value equal to the Exercise Price. The
shares so purchased shall be deemed to be issued as of the close
of business on the date on which the Company shall have received
from the Holder payment in full of the Exercise Price and the
other documents referred to herein (the "Exercise Date").
1.2. REGULATION D RESTRICTIONS. The Holder hereof
represents and warrants to the Company that it has acquired
this Warrant and anticipates acquiring the shares of Common
Stock issuable upon exercise of the Warrant solely for its
own account for investment purposes and not with a view to
or for distributing such securities unless such distribution
has been registered with the Securities and Exchange
Commission or an applicable exemption is available therefor.
At the time this Warrant is exercised, the Company may
require the Holder to state in the Notice of Exercise such
representations concerning the Holder as are necessary or
appropriate to assure compliance by the Holder with the
Securities Act.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE.
As soon as practicable after the exercise of this Warrant,
the Company will cause to be issued in the name of and
delivered to the Holder a certificate for the number of
fully paid and nonassessable shares of Common Stock to which
the Holder shall be entitled on such exercise, plus, in lieu
of any fractional share to which the Holder would otherwise
be entitled, cash equal to such fraction multiplied by the
then applicable Purchase Price, together with any other
stock or other securities and property
-2-
<PAGE>
(including cash, where applicable) to which the Holder is
entitled upon such exercise pursuant to Section 1 or otherwise.
3. ADJUSTMENTS ON CERTAIN CAPITAL TRANSACTIONS. On the
occurrence of any of the following events, the following
adjustments to the rights granted under this Warrant shall be
made:
3.1. In case the number of outstanding shares of Common
Stock of the Company shall be increased by way of a stock
dividend, stock split, recapitalization, or other similar means,
the number of unexercised shares of Common Stock covered by this
Warrant shall be increased by the amount that a like number of
shares of outstanding Common Stock shall have been increased as a
result of such stock increase and the Purchase Price shall be
adjusted by multiplying the Purchase Price in effect immediately
prior to such stock increase by a fraction, the numerator of
which shall be the number of unexercised shares covered by this
Warrant immediately prior to such stock increase and the
denominator of which shall be the number of unexercised shares of
Common Stock covered by this Warrant as adjusted for such stock
increase.
3.2. In case the number of outstanding shares of Common
Stock of the Company shall be reduced by recapitalization,
reverse stock split or otherwise, the number of unexercised
shares covered by this Warrant shall be reduced by the
amount that a like number of shares of outstanding Common
Stock shall have been reduced as a result of such stock
reduction and the Purchase Price shall be adjusted by
multiplying the Purchase Price in effect immediately prior
to such stock reduction by a fraction, the numerator of
which shall be the number of unexercised shares covered by
this Warrant immediately prior to such stock reduction and
the denominator of which shall be the number of unexercised
shares covered by this Warrant as adjusted for such stock
reduction.
3.3. In case the Company shall consolidate with or
merge into another corporation, the holder of this Warrant
will thereafter receive, upon the exercise thereof in
accordance with the terms of this Warrant, the securities or
property to which the holder of the number of shares of
Common Stock then deliverable upon the exercise of this
Warrant would have been entitled upon such consolidation or
merger ("Other Securities") and the Company shall take such
steps in connection with such consolidation or merger as may
be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or property thereafter
deliverable upon the exercise of this Warrant.
4. RIGHTS AS A SHAREHOLDER. Holder shall not have
any rights as a shareholder of the Company with respect to
the shares subject to this Warrant.
5. SECURITIES LAW REQUIREMENTS. Neither this Warrant nor
the Warrant Shares have been registered under the Securities Act
or any state securities or blue sky laws. Accordingly, upon (a)
any transfer of this Warrant, any transferee of this Warrant or
(b) the exercise of this
-3-
<PAGE>
Warrant in whole or in part, and if the Warrant Shares have not
been registered under the Securities Act, Holder or any other
person exercising this Warrant shall, as applicable, represent
and agree in writing satisfactory to the Company that Holder or
such other person (a) is acquiring the shares for the purpose of
investment and not with a view to distribution thereof, (b) knows
the shares have not been registered under the Securities Act or
any state securities or blue sky laws, (c) understands that he
must bear the economic risk of said investment for an indefinite
period of time until the shares are registered under the
Securities Act and applicable state securities or blue sky laws
or an exemption from such registration is available, and (d) will
not solicit any offer to sell or sell all or any portion of the
shares other than pursuant to an opinion of counsel reasonably
satisfactory to the Company.
6. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF
WARRANT. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of
this Warrant, all shares of Common Stock (or Other Securities)
from time to time issuable on the exercise of this Warrant.
7. REPLACEMENT OF WARRANT. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security satisfactory in form and
amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new warrant
of like tenor.
8. NOTICES, ETC. All notices and other communications
hereunder shall be personally delivered, telecopied or mailed by
first class registered or certified mail, postage prepaid, at
such address of facsimile numbers as may have been furnished to
each party by the other in writing.
9. MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the internal laws of the State of Texas. The headings in this
Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
[SIGNATURE PAGE FOLLOWS]
-4-
<PAGE>
DATED as of January 30, 1998.
CANMAX INC.
By: /s/ PHILIP M. PARSONS
-------------------------------------
Name: Philip M. Parson
Title: Treasurer
Address: 150 West Carpenter Freeway
Irving, Texas 75039
Fax: (972) 281-2388
HOLDER:
/s/ DELIA O'DONNELL
----------------------------------------
DELIA O'DONNELL, TRUSTEE OF THE TRUST
CREATED UNDER AGREEMENT DATED MAY 1,
1997 AND AMENDED DECEMBER 1, 1997
Address: 13533 Poway Road, Suite 1506
Poway, CA 92064
Fax: (619) 748-2806
-5-
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE - WARRANT
------------------------------------
(To be executed only upon exercise or conversion
of the Warrant in whole or in part)
To Canmax Inc.
The undersigned registered holder of the accompanying
Warrant hereby exercises such Warrant or portion thereof for, and
purchases thereunder, ______________<F1> shares of Common Stock
(as defined in such Warrant) and herewith makes payment therefor
of (a) $__________ or (b) __________ shares of Common Stock duly
endorsed to Canmax, Inc. having an aggregate Fair Market Value of
_____________, in each case as of the date written below. The
undersigned requests that the certificates for such shares of
Common Stock be issued in the name of, and delivered to,
_____________________________________________ whose address is
________________________________________________________________.
Dated: ____________________________
(Name must conform to name of
holder as specified on the face of
the Warrant)
By:_______________________________
Name:_____________________________
Title:____________________________
Address of holder:
___________________________________
___________________________________
___________________________________
Date of exercise: ____________________
____________________
<F1> Insert the number of shares of Common Stock as to which the
accompanying Warrant is being exercised. In the case of a partial
exercise, a new Warrant or Warrants will be issued and delivered,
representing the unexercised portion of the accompanying Warrant,
to the holder surrendering the same.
EMPLOYMENT CONTRACT
EMPLOYMENT CONTRACT ("Contract"), dated as of January, 1998
(the "Effective Date"), between USCOMMUNICATION SERVICES, INC., a
Delaware corporation with offices at 150 West Carpenter Freeway,
Irving, Texas 75039 (the "Company"), CANMAX INC., a Wyoming
corporation ("Canmax"), and JAMES C. BERNET residing at 13553
Poway Road, Suite 1506, Poway, California 92064 (the
"Employee").
RECITALS
WHEREAS, the Company, Canmax and CNMX MergerSub, Inc.
("CMI") are parties to that certain Agreement and Plan of Merger
dated as of January 30, 1998 (the "Merger Agreement"), pursuant
to which the USCommunication Services, Inc. ("USC") was merged
with and into CMI (which concurrently changed its name to
USCommunication Services, Inc.) and CMI (now the Company), as the
surviving corporation, became a wholly owned subsidiary of
Canmax;
WHEREAS, it is a condition precedent to the Closing under
the Merger Agreement that Employee enter into this Contract;
WHEREAS, the Closing is being consummated as of the date of
this Contract;
WHEREAS, Employee has executed a Non-Competition Agreement
as of this date with the Company;
WHEREAS, Employee was an employee of USC through the date of
the Closing and the Company desires to retain Employee upon the
terms set forth in this Contract; and
WHEREAS, Employee desires to be retained by the Company upon
the terms set forth in this Contract.
NOW, THEREFORE, in consideration of the foregoing premises
and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Company and Employee hereby
agree as follows:
1. TERM AND RENEWAL.
The Company agrees to employ Employee, and the Employee
agrees to serve, on the terms and conditions of this Contract,
for a period commencing the Effective Date and ending three (3)
years thereafter, or such shorter period as may be provided for
herein. The period during which Employee is employed hereunder is
hereafter referred to as the "Employment Period."
-1-
<PAGE>
2. DUTIES AND SERVICES.
During the Employment Period, Employee shall be employed as
the President of the Company and shall also perform services in a
responsible executive or managerial capacity for any of the
Company's or Canmax's subsidiary corporations when and as
requested by the Company or Canmax. In the performance of his
duties, Employee shall be subject to the direction of the Chief
Executive Officer of Canmax and the Board of Directors of Canmax.
Employee agrees to his employment as described in this Section 2
and agrees to devote substantially all of his time and efforts to
the performance of his duties under this Agreement. Employee
shall be available to travel as the needs of the business
require.
3. COMPENSATION.
(a) As compensation for his services hereunder, the Company
shall pay Employee, during the Employment Period, a salary
payable in equal monthly installments at the annual rate of
$150,000. Employee shall also participate in any bonus programs
for the Company's executive officers, as provided by the Board of
Directors of Canmax, and shall be guaranteed a minimum annual
bonus of $30,000 per year (which guaranteed bonus amount shall be
reduced by the amount of any future increase in base salary).
During the term of this Agreement, the Company may increase the
base salary payable to Employee, but may not reduce the base
amount of Employee's base salary or Employee will also be
eligible to participate in the regular employee benefit programs
and stock option plans now or hereafter established by the
Company and in any special executive benefits and perquisites
established by the Board of Directors of Canmax.
(b) As additional consideration for Employee's agreeing to
perform the duties and services provided in this Agreement,
Canmax shall grant to the Employee warrants to purchase up to 2.0
million shares of Canmax common stock, which warrants shall be in
form and substance as attached hereto as Exhibit A (the
"Warrants").
(c) During the Employment Term, Employee shall be entitled
to a car allowance equal to his actual expense thereof, but not
in excess of $500 per month.
(d) Employee shall be entitled to reasonable vacations in
accordance with the then regular procedures of the Company
governing executives.
4. EXPENSES.
Employee shall be entitled to reimbursement for travel and
other out-of-pocket expenses incurred by Employee in the
performance of his duties hereunder, upon submission and approval
of written statements and bills in accordance with the then
regular procedures of the Company.
-2-
<PAGE>
5. NON-COMPETITION; NON-SOLICITATION.
Employee agrees that he will not during the Employment
Period engage in, or otherwise directly or indirectly be employed
by, or act as a consultant or lender to, or be a director,
officer, employee, owner or partner of, any other business or
organization that directly or indirectly competes with the
business of the Company, Canmax or any of their respective
subsidiaries; provided, however, that not withstanding the
foregoing, the provisions of this Section 5 will not be deemed
breached merely because Employee owns not more than 1% of the
outstanding equity securities of an entity if, at the time of its
acquisition by Employee, said securities are listed on a national
security exchange, is reported on the Nasdaq stock market CNSM,
or is regularly traded in the over-the-counter market by a member
of a national securities exchange. Executive agrees that he
shall not, during the two-year period after he voluntarily
terminates this Agreement or is terminated pursuant to this
Agreement for "cause" (as defined in Section 7(d) below), solicit
or encourage any employee, consultant, vendor or supplier or
customer of the Company or Canmax or any of their subsidiaries to
leave the employment of, or cease or diminish its relations with,
the Company, Canmax or any of their respective subsidiaries.
6. CONFIDENTIAL INFORMATION.
All confidential information which Employee may now possess,
may obtain from the Company or its subsidiaries during or after
the Employment Period, or may create prior to the end of the
Employment Period or otherwise relating to the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company or of any
customer or supplier of any of them shall not be published,
disclosed, or made accessible by him to any other person or
entity either during or after the termination of his employment
or used by him except during the Employment Period in the
business and for the benefit of the Company and its subsidiaries,
in each case without prior written permission of the Company.
Employee shall deliver to the Company all tangible evidence of
such confidential information prior to or at the termination of
his employment. The provisions of this Section 6 shall survive
the termination of this Contract by either party.
7. TERMINATION.
(a) EMPLOYEE'S DEATH. If Employee shall die during the
Employment Period, this Contract shall terminate, except that
Employee's estate ("Estate") shall be entitled to receive (i) the
base salary payable to Employee through the remaining term of the
Employment Period (but in no event less than $15,000 per month),
in accordance with the regular payroll cycle of the Company and
(ii) any death benefits provided under employee benefit plans
maintained by the Company. In addition, if Employee shall die
during the Employment Period and notwithstanding any contrary
provisions of any Company stock option, warrant or stock option
plan, the Estate shall have the right to retain and exercise (y)
any vested options or warrants outstanding as of the date of
death and (z) any unvested options or warrants outstanding on the
date of death that vest within one (1) year of the date of death,
in each case in accordance with their respective terms.
-3-
<PAGE>
(b) EMPLOYEE'S DISABILITY. If, during the Employment
Period, Employee shall become Disabled (as defined below), this
Agreement shall terminate effective on such incapacity, and
Employee (or his legal representatives) shall be entitled only to
the base compensation earned through the date of termination with
no entitlement to any base salary after the date of termination;
provided, however, that (i) Employee shall be entitled to receive
all benefits to which he may be entitled pursuant to the
Company's employee benefit plans; and (ii) the Company shall not
be obligated to make any payments to Employee under this Section
7(b) to the extent that such payments, when aggregated with all
other salary or disability payments received by Employee (whether
from disability programs maintained by the Company or otherwise)
exceed the then current base salary of Employee. As used herein,
the term "Disabled" or "Disability" shall mean a mental or
physical condition that prevents Employee from performing his
usual duties and services hereunder for a period of six (6)
consecutive months or six (6) non-consecutive months in any
twelve (12) month period, as determined in the reasonable
discretion of the Board of Directors of Canmax; provided that if
Employee disputes such determination by the Board of Directors of
Canmax, Employee (or his legal representatives) shall notify the
Canmax in writing and (x) the Canmax and Employee (or his legal
representatives) shall each designate a licensed physician
practicing in the field to which the alleged Disability relates
within fifteen (15) days of the delivery of such notice, (y) the
designated physicians shall within fifteen (15) days select a
third physician practicing in the field to when the alleged
Disability relates, and (z) the third physician shall determine
whether Employee is or has been Disabled within the meaning of
this Agreement.
(c) TERMINATION BY THE COMPANY WITHOUT CAUSE. This
Agreement may be terminated by the Company without cause upon
thirty (30) days' prior written notice thereof given to Employee.
In the event of termination without cause, the Company shall for
a period of one (1) year continue to pay Employee the base salary
effective at the time of termination in accordance with the
Company's regular payroll cycle. Additionally, Employee shall be
entitled to continue to participate in all regular employee
benefit plans of the Company for a period of one (1) year
following termination without cause; provided, however, that if
Employee accepts another job during such period that provides
employee benefits comparable to those offered by the Company at
such time at a cost to Employee no greater than the cost of the
benefits provided by the Company, the Company's obligation to
extend such benefits to Employee shall cease.
(d) TERMINATION BY THE COMPANY FOR CAUSE. This Agreement
may be terminated by the Company "for cause", as defined below,
by delivering to Employee written notice describing the cause and
granting Employee thirty (30) days to respond to the Board of
Directors of Canmax. If this Agreement is terminated by the
Company for cause, Employee shall only be entitled to the base
salary earned by him to the date of termination with no
entitlement to any base salary continuation payments or benefits
continuation (except as otherwise provided by the terms of an
employee benefit plan of the Company). The determination as to
whether termination shall be for cause shall be made by the Board
of Directors of Canmax in the exercise of its business judgment.
Termination of this Agreement by the Company for cause shall be
deemed to have occurred only if:
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<PAGE>
(i) termination shall have been the result of an act
or acts of dishonesty on the Employee's part constituting a
felony or intended to result directly or indirectly in
substantial gain or personal enrichment to him at the
expense of the Company; or
(ii) termination shall have been the result of the
Employee's willful and continued failure substantially to
perform his duties and responsibilities as an officer of the
Company (other than such failure resulting from his
incapacity due to physical or mental illness) after a demand
for substantial performance is delivered to the Employee by
the Board of Directors of Canmax which specifically
identifies the manner in which the Board of Directors of
Canmax believes that the Employee has not substantially
performed his duties and the Employee is given a reasonable
time after such demand substantially to perform his duties.
Employee's employment shall in no event be considered to
have been terminated by the Company for cause if the act or
failure to act upon which the termination is based (A) was done
or omitted to be done without intent of gaining therefrom
directly or indirectly a profit to which Employee was not legally
entitled and as a result of his good faith belief that such act
or failure to act was in or was not opposed to the interests of
the Company, or (B) is an act or failure to act in respect of
which Employee meets the applicable standard of conduct
prescribed for indemnification or reimbursement of expenses under
the Bylaws of the Company or the laws of its state of
incorporation.
(e) VOLUNTARY TERMINATION BY EMPLOYEE. Employee may
terminate this Agreement at any time upon delivering thirty (30)
days' written notice to the Company. In the event of such
voluntary termination. Employee shall be entitled to his base
salary earned to the date of his resignation, but no base salary
continuation payment or benefits continuation (except as provided
by the terms of the Company's employee benefit plans). On or
after the date the Company receives notice of Employee's
resignation, the Company may, at its option, pay Employee his
base salary through the effective date of his resignation and
terminate his employment immediately.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee may
at any time voluntarily terminate his employment for "good
reason", as defined below, upon thirty (30) days written notice
thereof to the Company; provided that the Company may, at its
option, pay Employee his base salary through the effective date
of his resignation, terminate his employment immediately (except
for the provision of non monetary benefits) and, following the
effective date of such resignation, provide the payments and
benefits provided in Section 7(c). In the event of such
voluntary termination for "good reason", Employee shall be deemed
to have been terminated without cause with the same payments and
benefits set forth in Section 7(c) being applicable to Employee's
termination under this Section 7(f).
For purposes of this Agreement, "good reason" shall
mean the occurrence of any of the following events:
(i) reduction in the base salary payable to Employee;
or
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<PAGE>
(ii) the Company otherwise commits a material breach of
this Agreement;
provided that "good reason" shall not include the temporary
appointment of another person to fulfill Employee's
responsibilities during any period of disability of Employee.
8. CHANGE OF CONTROL
(a) CONCERNS REGARDING CHANGE OF CONTROL. Employee and the
Company agree that the circumstances surrounding a "Change of
Control," as hereinafter defined, impose unique risks to the
Company and Employee and that in response to the unique
circumstances surrounding a Change of Control, the provisions of
this Agreement shall separately consider the parties rights' and
obligations in the event that a Change of Control occurs. This
Section 8 shall be applicable whether or not a Change of Control
is contemplated at this time. Notwithstanding any other provision
of this Agreement, the severance payments and benefits, if any,
payable to Employee shall be determined solely by reference to
this Section 8 in the event that a Change of Control has
occurred, or if Employee is "involuntarily terminated," as
hereinafter defined, in contemplation of a Change of Control.
(b) INVOLUNTARY TERMINATION IN CONTEMPLATION OF, OR WITHIN
TWO YEARS FOLLOWING, A CHANGE OF CONTROL. If Employee is
involuntarily terminated, other than "for cause" (as defined in
Section 7(d)) in contemplation of, or within two (2) years
following, a Change of Control, the Company shall pay Employee
(i) a lump sum severance payment equal to (A) Employee's
annualized base salary in effect at the time of involuntary
termination plus (B) fifty percent (50%) of any bonus paid
during the preceding twelve-month period, payable as a lump sum,
and (ii) continuation of all employee benefits, Employee benefits
and perquisites, or benefits reasonably equivalent thereto, for a
period of one (1) year; provided, however, that if Employee
accepts another job during such period that provides employee
benefits comparable to those offered by the Company at such time
at a cost to Employee no greater than the cost of the benefits
provided by the Company, the Company's obligation to extend such
benefits to Employee shall cease.
For purposes of this Agreement, the following shall be
deemed to constitute involuntary termination:
(i) dismissal of Employee (except termination "for
cause" as defined in Section 7(d) hereof);
(ii) reduction in Employee's base salary;
(iii) reduction in the level of employee benefits
received by Employee, unless substituted with reasonably
comparable benefits;
(iv) requesting Employee to relocate more than 100
miles from his current location other than the relocation of
Employee in connection with the relocation of the
-6-
<PAGE>
Company's corporate headquarters or relocation to another
existing facility of the Company;
(v) removal from the offices Employee holds on the
date of this Agreement or a material reduction in Employee's
authority or responsibility; or
(vi) the Company otherwise commits a material breach of
this Agreement.
In the event that within two (2) years following a
Change of Control, Employee is terminated for cause, Employee
shall only be entitled to his base salary up until the last date
of employment pursuant to the date of termination for cause.
(c) TERMINATION OF THIS AGREEMENT MORE THAN TWO YEARS AFTER
A CHANGE OF CONTROL. The parties' rights and obligations arising
from a termination of this Agreement, whether by Employee or the
Company, that occurs more than two (2) years following a Change
of Control shall be governed by Section 7 of this Agreement.
(d) DEFINITION OF CHANGE OF CONTROL. For purposes of this
Agreement, a Change of Control shall be deemed to exist upon the
occurrence of any of the following:
(i) any "Person" (as such term is used in Section
13(d) and Section 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), is or becomes a
"beneficial owner" (as defined in Section 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company or Canmax representing more than thirty percent
(30%) of the combined voting power of the outstanding
securities of the Company or Canmax;
(ii) at any time during the twenty-four (24) month
period following a merger, tender offer, consolidation, sale
of assets or contested election, or any combination of such
transactions, at least a majority of the Board of Directors
of the Company or Canmax shall cease to be "continuing
directors" (meaning directors of the Company or Canmax prior
to such transaction or who subsequently became directors and
whose election or nomination for election by the
stockholders of the Company or Canmax, was approved by a
vote of at least two-thirds of the directors then still in
office prior to such transaction); or
(iii) the stockholders approve an agreement of sale
or disposition by the Company or Canmax of all or
substantially all of the assets of the Company or Canmax.
(e) NO MITIGATION OF COMPENSATION. Employee shall not be
required to mitigate any severance payments received under this
Section 8 due to his employment with a successor organization.
-7-
<PAGE>
9. SURVIVAL.
The covenants, agreements, representations, and warranties
contained in or made pursuant to this Contract shall survive
Employee's termination of employment.
10. MODIFICATION.
This Contract sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all
existing agreements between them concerning such subject matter,
and may be modified only by a written instrument duly executed by
each party.
11. NOTICES.
Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or by Federal Express,
Express Mail, or similar overnight delivery or courier service or
delivered (in person or by telecopy, telex, or similar
telecommunications equipment) against receipt to the party to
whom it is to be given at the address of such party set forth in
the preamble to this Contract (or to such other address as the
party shall have furnished in writing in accordance with the
provisions of this Section 11). Any notice given to the Company
shall be addressed to the attention of the Corporate Secretary.
Notice to the estate of Employee shall be sufficient if addressed
to Employee as provided in this Section 11. Any notice or other
communication given by certified mail shall be deemed given at
the time of certification thereof, except for a notice changing a
party's address which shall be deemed given at the time of
receipt thereof. Any notice given by other means permitted by
this Section 11 shall be deemed given at the time of receipt
thereof.
12. WAIVER.
Any waiver by either party of a breach of any provision of
this Contract shall not operate as or be construed to be a waiver
of any other breach of that provision or of any breach of any
other provision of this Contract. The failure of a party to
insist upon strict adherence to any term of this Contract on one
or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Contract. Any
waiver must be in writing.
13. BINDING EFFECT.
Employee's rights and obligations under this Contract shall
not be transferable by assignment or otherwise, such rights shall
not be subject to commutation, encumbrance, or the claims of
Employee's creditors, and any attempt to do any of the foregoing
shall be void. The provisions of this Contract shall be binding
upon and inure to the benefit of Employee and his heirs and
personal representatives, shall be binding upon and inure to the
benefit of the Company and its successors and assigns.
-8-
<PAGE>
14. HEADINGS.
The headings of this Contract are solely for the convenience
of reference and shall be given no effect in the construction or
interpretation of this Contract.
15. ATTORNEYS' FEES.
In the event that any person commences any action or
proceeding to enforce the terms of this Contract, the prevailing
party shall be entitled to recover from the other his or its
reasonable attorney's fees.
16. COUNTERPARTS; GOVERNING LAW.
This Contract may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall
be governed by and construed in accordance with the laws of the
State of Texas, without giving effect to the conflict of laws
rules. Any action, suit, or proceeding arising out of, based on,
or in connection with this Contract, any document or instrument
delivered pursuant to, in connection with, or simultaneously with
this Contract, any breach of this Contract or any such document
or instrument, or any transaction contemplated hereby or thereby
may be brought only in the District Courts of Dallas County,
Texas or the United States District Court for the Northern
District of Texas, Dallas Division and each party covenants and
agrees not to assert, by way of motion, as a defense, or
otherwise, in any such action, suit, proceeding, any claim that
such party is not subject personally to the jurisdiction of such
court, that such party's property is exempt or immune from
attachment or execution, that the action, suit or proceeding is
brought in an inconvenient forum, that the venue of the action,
suit, or proceeding is improper, or that this Contract or the
subject matter hereof may not be enforced in or by such court.
17. DEFINITIONS.
Except to the extent specifically defined in this Contract,
all capitalized terms used herein shall have the meanings
ascribed to such terms in the Merger Agreement.
[SIGNATURE PAGE FOLLOWS]
-9-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Contract as of the date first above written.
COMPANY:
USCOMMUNICATION SERVICES, INC.
By: /s/ JAMES C. BERNET
--------------------------------
Name: James C. Bernet
------------------------------
Title:
-----------------------------
EMPLOYEE:
/s/ JAMES C. BERNET
-----------------------------------
JAMES C. BERNET
CANMAX INC.
By: /s/ PHILIP M. PARSONS
--------------------------------
Name: Philip M. Parsons
------------------------------
Title: Treasurer
-----------------------------
-10-
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
UNDER ANY APPLICABLE LAW OR REGULATION OF ANY STATE. THIS COMMON
STOCK WARRANT MAY NOT BE SOLD, OFFERED, ASSIGNED OR TRANSFERRED
UNLESS THE WARRANT IS REGISTERED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, OR UNLESS SUCH OFFERS, SALES,
ASSIGNMENTS AND TRANSFERS ARE MADE PURSUANT TO THE AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
CANMAX INC.
COMMON STOCK PURCHASE WARRANT
DATED: January 30, 1998
<TABLE>
<S> <C> <C> <C>
Number of Common Shares: 1,000,000 Holder: James C. Bernet
Purchase Price: $2.00 per share 13553 Poway Road, Suite 1506
Expiration Date: Five (5) years Poway, CA 92064
from date of vesting
For identification only. The governing terms of this Warrant are set forth below.
</TABLE>
CANMAX INC., a Wyoming corporation (the "Company"), hereby
certifies that, for value received, James C. Bernet (the
"Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time prior
to the earlier of (a) five (5) years following the date of the
vesting, if ever, of the Warrant Shares or (b) the date of the
termination of the employment of James C. Bernet ("Bernet") under
the Employment Contract of even date herewith among Bernet, the
Company and USC either (i) by the Company or USC for "cause" (as
defined therein), or (ii) by Bernet voluntarily (the "Exercise
Period"), at the Purchase Price hereinafter set forth, One
Million (1,000,000) fully paid and nonassessable shares of Common
Stock (as hereinafter defined) of the Company. The number and
character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein.
The purchase price per share of Common Stock issuable upon
exercise of this Warrant (the "Purchase Price") shall initially
be $2.00; provided, however, that the Purchase Price shall be
adjusted from time to time as provided herein.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" means Canmax Inc. and any
entity that shall succeed or assume the obligations of such
corporation hereunder.
(b) The term "Common Stock" means the Company's common
stock, no par value per share.
-1-
<PAGE>
(c) The term "Fair Market Value" means the closing
price of the shares of Common Stock on the date of delivery
of any Notice of Exercise as reported on the Nasdaq SmallCap
Market (or other exchange on which the Common Stock is
traded or, if not traded on any exchange, then the closing
bid price as of such date on the over-the-counter market or,
if not quoted on the over-the-counter market, then as
determined by the Board of Directors).
(d) The term "Tax Withholding Liability" means all
federal and state income taxes, social security taxes and
other taxes applicable to compensation income arising from
the exercise of this Warrant required by applicable law to
be withheld by the Company.
(e) The term "USC" means USCommunication Services,
Inc., a Delaware corporation and wholly owned subsidiary of
the Company.
(f) The term "Warrant Shares" means as of any date
during the Exercise Period, that number of shares of Common
Stock which shall be exercisable (subject to any vesting
requirements) by the Holder hereof pursuant to the terms of
this Warrant.
1. VESTING AND EXERCISE OF WARRANT.
1.1. VESTING. Holder's right to purchase any Warrant Shares
hereunder shall not vest unless the business operations of USC
generate after tax earnings (calculated in accordance with
generally accepted accounting principles) of at least the Target
Earnings (as defined below) for any fiscal year of the Company
ending during the three (3) year period following the date
hereof. As used herein, the term "Target Earnings" shall mean
the product of (a) $1.00 multiplied by (b) the sum of 5.0 million
plus the number of any Acquisition Shares (as defined below); and
the term "Acquisition Shares" shall mean the number of shares of
Common Stock issued in connection with the acquisition (by stock
or asset purchase, merger, business combination or otherwise) of
the business of any person or entity (i) that is similar or
complimentary to the business of USC at the time of acquisition
(as determined in good faith by Holder and the Board of Directors
of the Company), and (ii) the profits and losses from which are
included in determining the after tax earnings of USC for
purposes of this Section 1.1. The Company shall use its best
efforts to cause the business operations of USC to be accounted
for separately from the other business operations of Company and
its subsidiaries for the purpose of making the calculations set
forth in this Section 1.1. Holder shall not have any right to
acquire any Warrant Shares pursuant to this Warrant prior to the
vesting of such rights as set forth in this Section 1.1, and such
right must vest, if at all, within such three (3) year period.
1.2. METHOD OF EXERCISE. This Warrant may be exercised
(subject to the vesting requirements set forth above) by the
Holder hereof in whole or in part (but not as to a
fractional share of Common Stock), at any time and from time
to time during the Exercise Period for up to, but not more
than, the number of vested Warrant Shares at such time, by
delivery to the Company at its principal office of (i) a
notice of exercise (a
-2-
<PAGE>
"Notice of Exercise") substantially in the form attached
hereto as Exhibit A, (ii) evidence satisfactory to the
Company of the authority of the person executing such Notice
of Exercise, (iii) this Warrant, and (iv) payment of (A) the
Purchase Price multiplied by the number of shares of Common
Stock for which this Warrant is being exercised (the
"Exercise Price") and (B) Tax Withholding Liability.
Payment of the Exercise Price and Tax Withholding Liability
shall be made by (a) check or bank draft payable to the
order of the Company or by wire transfer to the account of
the Company, (b) Holder's surrender to the Company of a
number of shares of Common Stock owned by Holder for at
least six (6) months having an aggregate Fair Market Value
equal to the Exercise Price and Tax Withholding Liability,
(c) Holder's authorization for the Company to withhold from
the Warrant Shares a number of shares of Common Stock having
an aggregate Fair Market Value equal to the Exercise Price
and Tax Withholding Liability, or (d) any combination of the
foregoing. The shares so purchased shall be deemed to be
issued as of the close of business on the date on which the
Company shall have received from the Holder payment in full
of the Exercise Price and Tax Withholding Liability and the
other documents referred to herein (the "Exercise Date").
1.3. REGULATION D RESTRICTIONS. The Holder hereof
represents and warrants to the Company that it has acquired
this Warrant and anticipates acquiring the shares of Common
Stock issuable upon exercise of the Warrant solely for its
own account for investment purposes and not with a view to
or for distributing such securities unless such distribution
has been registered with the Securities and Exchange
Commission or an applicable exemption is available therefor.
At the time this Warrant is exercised, the Company may
require the Holder to state in the Notice of Exercise such
representations concerning the Holder as are necessary or
appropriate to assure compliance by the Holder with the
Securities Act.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON
EXERCISE. As soon as practicable after the exercise of
this Warrant, the Company will cause to be issued in the
name of and delivered to the Holder a certificate for the
number of fully paid and nonassessable shares of Common
Stock to which the Holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which
the Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then applicable Purchase Price,
together with any other stock or other securities and
property (including cash, where applicable) to which the
Holder is entitled upon such exercise pursuant to Section 1
or otherwise.
3. ADJUSTMENTS ON CERTAIN CAPITAL TRANSACTIONS. On the
occurrence of any of the following events, the following
adjustments to the rights granted under this Warrant shall be
made:
3.1. In case the number of outstanding shares of Common
Stock of the Company shall be increased by way of a stock
dividend, stock split, recapitalization, or other similar means,
the number of unexercised shares of Common Stock covered by this
Warrant shall be increased by the amount that a like number of
shares of outstanding Common Stock shall have been increased as a
result of such stock increase and the
-3-
<PAGE>
Purchase Price shall be adjusted by multiplying the Purchase
Price in effect immediately prior to such stock increase by
a fraction, the numerator of which shall be the number of
unexercised shares covered by this Warrant immediately prior
to such stock increase and the denominator of which shall be
the number of unexercised shares of Common Stock covered by
this Warrant as adjusted for such stock increase.
3.2. In case the number of outstanding shares of Common
Stock of the Company shall be reduced by recapitalization,
reverse stock split or otherwise, the number of unexercised
shares covered by this Warrant shall be reduced by the
amount that a like number of shares of outstanding Common
Stock shall have been reduced as a result of such stock
reduction and the Purchase Price shall be adjusted by
multiplying the Purchase Price in effect immediately prior
to such stock reduction by a fraction, the numerator of
which shall be the number of unexercised shares covered by
this Warrant immediately prior to such stock reduction and
the denominator of which shall be the number of unexercised
shares covered by this Warrant as adjusted for such stock
reduction.
3.3. In case the Company shall consolidate with or
merge into another corporation, the holder of this Warrant
will thereafter receive, upon the exercise thereof in
accordance with the terms of this Warrant, the securities or
property to which the holder of the number of shares of
Common Stock then deliverable upon the exercise of this
Warrant would have been entitled upon such consolidation or
merger ("Other Securities") and the Company shall take such
steps in connection with such consolidation or merger as may
be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or property thereafter
deliverable upon the exercise of this Warrant.
4. RIGHTS AS A SHAREHOLDER. Holder shall not have
any rights as a shareholder of the Company with respect to
the shares subject to this Warrant.
5. SECURITIES LAW REQUIREMENTS. Neither this Warrant nor
the Warrant Shares have been registered under the Securities Act
or any state securities or blue sky laws. Accordingly, upon (a)
any transfer of this Warrant, any transferee of this Warrant or
(b) the exercise of this Warrant in whole or in part, and if the
Warrant Shares have not been registered under the Securities Act,
Holder or any other person exercising this Warrant shall, as
applicable, represent and agree in writing satisfactory to the
Company that Holder or such other person (a) is acquiring the
shares for the purpose of investment and not with a view to
distribution thereof, (b) knows the shares have not been
registered under the Securities Act or any state securities or
blue sky laws, (c) understands that he must bear the economic
risk of said investment for an indefinite period of time until
the shares are registered under the Securities Act and applicable
state securities or blue sky laws or an exemption from such
registration is available, and (d) will not solicit any offer to
sell or sell all or any portion of the shares other than pursuant
to an opinion of counsel reasonably satisfactory to the Company.
-4-
<PAGE>
6. TRANSFER RESTRICTIONS. This Warrant shall be
exercisable only by Holder and any Permitted Transferees (as
defined below) and shall not otherwise be assignable or
transferable. Except as otherwise provided herein, any attempted
alienation, assignment, pledge, hypothecation, attachment,
execution or similar process, whether voluntary or involuntary,
with respect to all or any part of this Warrant or any right
hereunder, shall be null and void. Notwithstanding the
foregoing, Holder shall have the right to transfer his rights
hereunder by any testamentary or non-testamentary gift, bequest
or devise to his spouse or any of his children, or any trust
established for the benefit of such persons (collectively,
"Permitted Transferees").
7. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF
WARRANT. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of
this Warrant, all shares of Common Stock (or Other Securities)
from time to time issuable on the exercise of this Warrant.
8. REPLACEMENT OF WARRANT. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security satisfactory in form and
amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new warrant
of like tenor.
9. NOTICES, ETC. All notices and other communications
hereunder shall be personally delivered, telecopied or mailed by
first class registered or certified mail, postage prepaid, at
such address of facsimile numbers as may have been furnished to
each party by the other in writing.
10. MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the internal laws of the State of Texas. The headings in this
Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
[SIGNATURE PAGE FOLLOWS]
-5-
<PAGE>
DATED as of January 30, 1998.
CANMAX INC.
By: /s/ PHILIP M. PARSONS
-------------------------------------
Name: Philip M. Parsons
-----------------------------------
Title: Treasurer
----------------------------------
Address: 150 West Carpenter Freeway
Irving, Texas 75039
Fax: (972) 281-2388
HOLDER:
/s/ JAMES C. BERNET
----------------------------------------
James C. Bernet
Address: 13353 Poway Road, Suite 1506
Poway, CA 92064
Fax: (619) 748-2806
-6-
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE - WARRANT
------------------------------------
(To be executed only upon exercise or conversion
of the Warrant in whole or in part)
To Canmax Inc.
The undersigned registered holder of the accompanying
Warrant hereby exercises such Warrant or portion thereof for, and
purchases thereunder, ______________<F1> shares of Common Stock
(as defined in such Warrant) and herewith makes payment therefor
(including any Tax Withholding Liability) of either (a)
$__________, (b) _____________ shares of Common Stock that have
been held by Holder for no less than six (6) months and have an
aggregate Fair Market Value of $_______________, or (c) _________
shares of Common Stock issuable upon the exercise of this
Warrant, which shares are to be withheld by the Company and have
an aggregate Fair Market Value of $____________, in either such
case as of the date written below. The undersigned requests that
the certificates for such shares of Common Stock be issued in the
name of, and delivered to, ________________________ whose address
is ____________________________________________________________.
Dated: ____________________________
(Name must conform to name of
holder as specified on the face of
the Warrant)
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
Address of holder:
-----------------------------------
-----------------------------------
-----------------------------------
Date of exercise:
----------------------
________________
<F1> Insert the number of shares of Common Stock as to which the
accompanying Warrant is being exercised. In the case of a partial
exercise, a new Warrant or Warrants will be issued and delivered,
representing the unexercised portion of the accompanying Warrant,
to the holder surrendering the same.
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
UNDER ANY APPLICABLE LAW OR REGULATION OF ANY STATE. THIS COMMON
STOCK WARRANT MAY NOT BE SOLD, OFFERED, ASSIGNED OR TRANSFERRED
UNLESS THE WARRANT IS REGISTERED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, OR UNLESS SUCH OFFERS, SALES,
ASSIGNMENTS AND TRANSFERS ARE MADE PURSUANT TO THE AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
CANMAX INC.
COMMON STOCK PURCHASE WARRANT
DATED: January 30, 1998
<TABLE>
<S> <C> <C> <C>
Number of Common Shares: 1,000,000 Holder: James C. Bernet
Purchase Price: $3.00 per share 13553 Poway Road, Suite 1506
Expiration Date: Five (5) years Poway, CA 92064
from date of vesting
For identification only. The governing terms of this Warrant are set forth below.
</TABLE>
CANMAX INC., a Wyoming corporation (the "Company"), hereby
certifies that, for value received, James C. Bernet (the
"Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time prior
to the earlier of (a) five (5) years following the date of
vesting, if ever, of the Warrant Shares or (b) the date of the
termination of the employment of James C. Bernet ("Bernet") under
the Employment Contract of even date herewith among Bernet, the
Company and USC either (i) by the Company or USC for "cause" (as
defined therein), or (ii) by Bernet voluntarily (the "Exercise
Period"), at the Purchase Price hereinafter set forth, One
Million (1,000,000) fully paid and nonassessable shares of Common
Stock (as hereinafter defined) of the Company. The number and
character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein.
The purchase price per share of Common Stock issuable upon
exercise of this Warrant (the "Purchase Price") shall initially
be $3.00; provided, however, that the Purchase Price shall be
adjusted from time to time as provided herein.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" means Canmax Inc. and any
entity that shall succeed or assume the obligations of such
corporation hereunder.
(b) The term "Common Stock" means the Company's common
stock, no par value per share.
-1-
<PAGE>
(c) The term "Fair Market Value" means the closing
price of the shares of Common Stock on the date of delivery
of any Notice of Exercise as reported on the Nasdaq SmallCap
Market (or other exchange on which the Common Stock is
traded or, if not traded on any exchange, then the closing
bid price as of such date on the over-the-counter market or,
if not quoted on the over-the-counter market, then as
determined by the Board of Directors).
(d) The term "Tax Withholding Liability" means all
federal and state income taxes, social security taxes and
other taxes applicable to compensation income arising from
the exercise of this Warrant required by applicable law to
be withheld by the Company.
(e) The term "USC" means USCommunication Services,
Inc., a Delaware corporation and wholly owned subsidiary of
the Company.
(f) The term "Warrant Shares" means as of any date
during the Exercise Period, that number of shares of Common
Stock which shall be exercisable (subject to any vesting
requirements) by the Holder hereof pursuant to the terms of
this Warrant.
1. VESTING AND EXERCISE OF WARRANT.
1. VESTING. Holder's right to purchase any Warrant Shares
hereunder shall not vest unless the business operations of USC
generate after tax earnings (calculated in accordance with
generally accepted accounting principles) of at least the Target
Earnings (as defined below) for any fiscal year of the Company
ending during the three (3) year period following the date
hereof. As used herein, the term "Target Earnings" shall mean
the product of (a) $1.50 multiplied by (b) the sum of 5.75
million plus the number of any Acquisition Shares (as defined
below); and the term "Acquisition Shares" shall mean the number
of shares of Common Stock issued in connection with the
acquisition (by stock or asset purchase, merger, business
combination or otherwise) of the business of any person or entity
(i) that is similar or complimentary to the business of USC at
the time of acquisition (as determined in good faith by Holder
and the Board of Directors of the Company), and (ii) the profits
and losses from which are included in determining the after tax
earnings of USC for purposes of this Section 1.1. The Company
shall use its best efforts to cause the business operations of
USC to be accounted for separately from the other business
operations of Company and its subsidiaries for the purpose of
making the calculations set forth in this Section 1.1. Holder
shall not have any right to acquire any Warrant Shares pursuant
to this Warrant prior to the vesting of such rights as set forth
in this Section 1.1, and such right must vest, if at all, within
such three (3) year period.
1.2. METHOD OF EXERCISE. This Warrant may be exercised
(subject to the vesting requirements set forth above) by the
Holder hereof in whole or in part (but not as to a
fractional share of Common Stock), at any time and from time
to time during the Exercise Period for up to, but not more
than, the number of vested Warrant Shares at such time, by
delivery to the Company at its principal office of (i) a
notice of exercise (a
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"Notice of Exercise") substantially in the form attached
hereto as Exhibit A, (ii) evidence satisfactory to the
Company of the authority of the person executing such Notice
of Exercise, (iii) this Warrant, and (iv) payment of (A) the
Purchase Price multiplied by the number of shares of Common
Stock for which this Warrant is being exercised (the
"Exercise Price") and (B) Tax Withholding Liability.
Payment of the Exercise Price and Tax Withholding Liability
shall be made by (a) check or bank draft payable to the
order of the Company or by wire transfer to the account of
the Company, (b) Holder's surrender to the Company of a
number of shares of Common Stock owned by Holder for at
least six (6) months having an aggregate Fair Market Value
equal to the Exercise Price and Tax Withholding Liability,
(c) Holder's authorization for the Company to withhold from
the Warrant Shares a number of shares of Common Stock having
an aggregate Fair Market Value equal to the Exercise Price
and Tax Withholding Liability, or (d) any combination of the
foregoing. The shares so purchased shall be deemed to be
issued as of the close of business on the date on which the
Company shall have received from the Holder payment in full
of the Exercise Price and Tax Withholding Liability and the
other documents referred to herein (the "Exercise Date").
1.3. REGULATION D RESTRICTIONS. The Holder hereof
represents and warrants to the Company that it has acquired
this Warrant and anticipates acquiring the shares of Common
Stock issuable upon exercise of the Warrant solely for its
own account for investment purposes and not with a view to
or for distributing such securities unless such distribution
has been registered with the Securities and Exchange
Commission or an applicable exemption is available therefor.
At the time this Warrant is exercised, the Company may
require the Holder to state in the Notice of Exercise such
representations concerning the Holder as are necessary or
appropriate to assure compliance by the Holder with the
Securities Act.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON
EXERCISE. As soon as practicable after the exercise of
this Warrant, the Company will cause to be issued in the
name of and delivered to the Holder a certificate for the
number of fully paid and nonassessable shares of Common
Stock to which the Holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which
the Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then applicable Purchase Price,
together with any other stock or other securities and
property (including cash, where applicable) to which the
Holder is entitled upon such exercise pursuant to Section 1
or otherwise.
3. Adjustments on Certain Capital Transactions. On the
occurrence of any of the following events, the following
adjustments to the rights granted under this Warrant shall be
made:
3.1. In case the number of outstanding shares of Common
Stock of the Company shall be increased by way of a stock
dividend, stock split, recapitalization, or other similar means,
the number of unexercised shares of Common Stock covered by this
Warrant shall be increased by the amount that a like number of
shares of outstanding Common Stock shall have been increased as a
result of such stock increase and
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<PAGE>
the Purchase Price shall be adjusted by multiplying the
Purchase Price in effect immediately prior to such stock
increase by a fraction, the numerator of which shall be the
number of unexercised shares covered by this Warrant
immediately prior to such stock increase and the denominator
of which shall be the number of unexercised shares of Common
Stock covered by this Warrant as adjusted for such stock
increase.
3.2. In case the number of outstanding shares of Common
Stock of the Company shall be reduced by recapitalization,
reverse stock split or otherwise, the number of unexercised
shares covered by this Warrant shall be reduced by the
amount that a like number of shares of outstanding Common
Stock shall have been reduced as a result of such stock
reduction and the Purchase Price shall be adjusted by
multiplying the Purchase Price in effect immediately prior
to such stock reduction by a fraction, the numerator of
which shall be the number of unexercised shares covered by
this Warrant immediately prior to such stock reduction and
the denominator of which shall be the number of unexercised
shares covered by this Warrant as adjusted for such stock
reduction.
3.3. In case the Company shall consolidate with or
merge into another corporation, the holder of this Warrant
will thereafter receive, upon the exercise thereof in
accordance with the terms of this Warrant, the securities or
property to which the holder of the number of shares of
Common Stock then deliverable upon the exercise of this
Warrant would have been entitled upon such consolidation or
merger ("Other Securities") and the Company shall take such
steps in connection with such consolidation or merger as may
be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or property thereafter
deliverable upon the exercise of this Warrant.
4. RIGHTS AS A SHAREHOLDER. Holder shall not have
any rights as a shareholder of the Company with respect to
the shares subject to this Warrant.
5. SECURITIES LAW REQUIREMENTS. Neither this Warrant nor
the Warrant Shares have been registered under the Securities Act
or any state securities or blue sky laws. Accordingly, upon (a)
any transfer of this Warrant, any transferee of this Warrant or
(b) the exercise of this Warrant in whole or in part, and if the
Warrant Shares have not been registered under the Securities Act,
Holder or any other person exercising this Warrant shall, as
applicable, represent and agree in writing satisfactory to the
Company that Holder or such other person (a) is acquiring the
shares for the purpose of investment and not with a view to
distribution thereof, (b) knows the shares have not been
registered under the Securities Act or any state securities or
blue sky laws, (c) understands that he must bear the economic
risk of said investment for an indefinite period of time until
the shares are registered under the Securities Act and applicable
state securities or blue sky laws or an exemption from such
registration is available, and (d) will not solicit any offer to
sell or sell all or any portion of the shares other than pursuant
to an opinion of counsel reasonably satisfactory to the Company.
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<PAGE>
6. TRANSFER RESTRICTIONS. This Warrant shall be
exercisable only by Holder and any Permitted Transferees (as
defined below) and shall not otherwise be assignable or
transferable. Except as otherwise provided herein, any attempted
alienation, assignment, pledge, hypothecation, attachment,
execution or similar process, whether voluntary or involuntary,
with respect to all or any part of this Warrant or any right
hereunder, shall be null and void. Notwithstanding the
foregoing, Holder shall have the right to transfer his rights
hereunder by any testamentary or non-testamentary gift, bequest
or devise to his spouse or any of his children, or any trust
established for the benefit of such persons (collectively,
"Permitted Transferees").
7. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF
WARRANT. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of
this Warrant, all shares of Common Stock (or Other Securities)
from time to time issuable on the exercise of this Warrant.
8. REPLACEMENT OF WARRANT. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security satisfactory in form and
amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new warrant
of like tenor.
9. NOTICES, ETC. All notices and other communications
hereunder shall be personally delivered, telecopied or mailed by
first class registered or certified mail, postage prepaid, at
such address of facsimile numbers as may have been furnished to
each party by the other in writing.
10. MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the internal laws of the State of Texas. The headings in this
Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
[SIGNATURE PAGE FOLLOWS]
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DATED as of January 30, 1998.
CANMAX INC.
By: /s/ PHILIP M. PARSONS
-------------------------------------
Name: Philip M. Parsons
-----------------------------------
Title: Treasurer
----------------------------------
Address: 150 West Carpenter Freeway
Irving, Texas 75039
Fax: (972) 281-2388
HOLDER:
/s/ JAMES C. BERNET
----------------------------------------
James C. Bernet
Address: 13353 Poway Road, Suite 1506
Poway, CA 92064
Fax: (619) 748-2806
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EXHIBIT A
FORM OF NOTICE OF EXERCISE - WARRANT
------------------------------------
(To be executed only upon exercise or conversion
of the Warrant in whole or in part)
To Canmax Inc.
The undersigned registered holder of the accompanying
Warrant hereby exercises such Warrant or portion thereof for, and
purchases thereunder, ______________<F1> shares of Common Stock
(as defined in such Warrant) and herewith makes payment therefor
(including any Tax Withholding Liability of either (a) ________,
(b) _____________ shares of Common Stock that have been held by
Holder for no less than six (6) months and have an aggregate Fair
Market Value of $_______________, or (c) _____________ shares of
Common Stock issuable upon the exercise of this Warrant, which
shares are to be withheld by the Company and have an aggregate
Fair Market Value of $____________, in either such case as of the
date written below. The undersigned requests that the
certificates for such shares of Common Stock be issued in the
name of, and delivered to,_______________________________________
whose address is _______________________________________________.
Dated: ____________________________
-----------------------------------
(Name must conform to name of
Holder as specified on the face of
the Warrant)
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address of Holder:
-----------------------------------
-----------------------------------
-----------------------------------
Date of exercise:
------------------
____________________
<F1> Insert the number of shares of Common Stock as to which the
accompanying Warrant is being exercised. In the case of a partial
exercise, a new Warrant or Warrants will be issued and delivered,
representing the unexercised portion of the accompanying Warrant,
to the holder surrendering the same.
Exhibit 99.1
CANMAX COMPLETES ACQUISITION
OF USCOMMUNICATION SERVICES
Fast-Growing Niche Provider of Services to Transportation
Industry Broadens Product Offerings, Opens New Markets
IRVING, Texas, Feb. 2 -- Canmax Inc. (Nasdaq: CNMX -
news), a leading supplier of information and automation
solutions to the retail petroleum and convenience store
industries, today announced it has completed the acquisition
of privately held USCommunication Services, Inc. (USC). The
San Diego-based company with operations in 21 states
provides telecommunication products and Internet services to
the transportation industry.
The acquisition was completed through a private stock
transaction. USC's shareholders received 1.5 million shares
of Canmax common stock, plus Canmax has reserved 2.5 million
shares for issuance under warrant agreements with exercise
prices ranging between $1.25 - $2.00 per share. The
acquisition consideration was amended from previously
announced levels based upon certain closing adjustments as
USC was earlier in its billing cycle than previously
estimated.
James C. Bernet, USC's founder and president, has
executed a multi-year employment agreement with Canmax,
including warrants to acquire 2.0 million shares of Canmax
common stock with exercise prices of $2.00 - $3.00 per share
which vest, if at all, upon USC's achievement of specified
earnings levels. Bernet will remain president of USC and
will join Canmax's board of directors.
According to Roger D. Bryant, president and chief
executive officer of Canmax, the acquisition is the first
step in Canmax's previously announced consolidation
strategy. "USC is a fast-growing sales and marketing
organization," Bryant stated. "Canmax has an experienced
management team, operations and customer support
infrastructure, and technology. By joining forces, we create
exciting growth possibilities through broadening Canmax's
traditional market and opening new markets for the products
and services of USC."
Bernet said, "the USC team is excited about merging
with the Canmax organization. Together we will undoubtedly
increase our ability to service our customers and continue
our aggressive expansion plan."
Canmax, Inc. is the holding company for Canmax Retail
Systems, Inc. and USCommunication Services, Inc. The company
develops and provides enterprise-wide telecommunications,
Internet and technology solutions to the convenience store,
retail petroleum and transportation industries, and general
telecommunications and Internet services to a broad market.
This release contains forward-looking statements within
the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934, which represent the company's
expectations or beliefs concerning, among other things,
future operating results and various components thereof and
the adequacy of future operations to provide sufficient
liquidity. The company cautions that such matters
necessarily involve significant risks and uncertainties that
could cause actual operating results and liquidity needs to
differ materially from such statements, including, without
limitation: (i) user acceptance of Windows NT as an
operating system, (ii) concentration of revenues in one
customer and Canmax's relationship with such customer, (iii)
the ability of Canmax to manage its growth, (iv) Canmax's
need for additional financing to fund product development,
marketing and related support services, and acquisitions,
(v) future technological developments and product
acceptance, (vi) intense price and product competition
within the industry, (vii) future operating results and
continued growth of USC's business and (viii) other risks
indicated herein and in filings with the commission.
