EX-2.2
Asset Purchase Agreement
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), dated as of _________, 2000, is
between Huntington Telecommunications Partners, LP, a California limited
partnership ("Seller"), Third Enterprise Service Group, Inc., a Florida
corporation ("Purchaser") and Competitive Companies, Inc., a Nevada corporation,
("COCO").
R E C I T A L S
A. Purchaser was organized for the purpose of acquiring one or more privately
held companies desiring to become a reporting company;
B. On the terms and subject to the conditions of this Agreement, Seller
intends to sell and Purchaser intends to purchase all the assets of
Seller which are part of the private telephone and cable television
systems listed herein;
C. Purchaser and COCO are parties to that certain Agreement and Plan of
Merger dated as of __________ 2000 (the "Merger Agreement") whereby
simultaneously with, and as a condition concurrent to closing under this
Agreement, Purchaser will (i) merge with COCO with Purchaser as the
surviving corporation, (ii) reincorporate in Nevada and (iii) change its
name to "Competitive Companies, Inc. " (collectively, the "Merger").
A G R E E M E N T
In consideration of the Recitals, which are herein incorporated by reference,
and of the mutual covenants, representations, warranties and agreements herein
contained, the parties hereto agree as follows:
1. TRANSFER OF ASSETS.
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1.1 Sale of Assets. On the terms and subject to the conditions of this
Agreement, at the Closing (as defined below) Seller will sell
Seller's right, title and interest in and to the "Assets"(as defined
below) to Purchaser
1.2 Description of Assets. The "Assets" are the assets of Seller which
are used in the operation of, and in connection with certain
telephone and cable television systems listed on Schedule 4.7
(individually a "System" and collectively the "Systems") with such
changes, deletions or additions thereto as may occur from the date
hereof to the Closing in the ordinary course of business and
consistent with the terms and conditions of this Agreement,
including, without limitation, the following: (i) the agreements
listed on Schedule 4.7 (ii) the assets of Seller used to operate the
Systems including its telephone switching and voice mail equipment,
and cable television equipment (where specified in Schedule 4.7),
all cable (including without limitation aerial cable and underground
cable), conduit, and all spare parts and other items used in the
agreements listed on Schedule 4.7; (iii) business records pertaining
to the subscribers of each System ("Customers"); and (v) all leases,
easements and licenses to use real property and leases of personal
property disclosed and attached as part of Exhibit 3.2(b). The
Assets excludes all other items, including without limitation, any
goodwill, intellectual property or software.
1.3 Assignment and Assumption. At the Closing, Seller will assign to
Purchaser and Purchaser will assume (i) each of the agreements
listed on Schedule 4.7, and (ii) liability for personal property
taxes as apportioned pursuant to Section 3.5. Purchaser's assumption
of all obligations and liabilities described in this Section 1.3
will accrue following Closing (but not before). Except as expressly
provided in this Section 1.3, Purchaser assumes no liabilities or
debts of Seller of any nature whatsoever.
2. PURCHASE PRICE.
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2.1 Initial Purchase Price. The purchase price payable by Purchaser to
Seller at Closing (the "Initial Purchase Price") for the Assets is
One Million shares of common stock of Purchaser (the "Common
Stock").
2.2 Adjustment to Purchase Price. The Initial Purchase Price will be
increased, if at all, as provided in this Section. If the average of
the closing bid price for the Purchaser's Common Stock for the
Adjustment Period (the "Opening Price") is less than $3.00 per
share, Purchaser will issue to Seller additional shares of its
Common Stock (the "Additional Shares") so that the total number of
shares received by the Seller on account of this Agreement,
including Common Stock delivered on account of the Initial Purchase
Price, when valued at the Opening Price shall have an aggregate
nominal value of $3,000,000. If the Opening Price is $3.00 or over
per share, no additional shares shall be issued. For purposes of
determining the Opening Price, purchases of Common Stock by the
Purchaser or its Affiliates or persons controlled by the Purchaser
or its Affiliates shall be disregarded. The Initial Purchase Price,
as adjusted, if at all, in accordance with this Section, shall be
referred to as the "Purchase Price" and the Common Stock
representing the Purchase Price shall be referred to as the
"Shares." The term (i) "Affiliate" refers to the term "affiliate" as
defined in the rules and regulations promulgated under the
Securities Act of 1933, as amended (the "Securities Act") and (ii)
"Adjustment Period" refers to the five business day period
immediately following the Closing; provided however, that if trades
have not been executed on at least three of those five days, the
Adjustment Period shall be extended until the Common Stock shall
have been traded on at least three days, and the average closing bid
price for those three trading days shall be the Opening Price.
Except as contemplated by this Agreement or the Merger Agreement,
the Company shall not authorize or implement any recapitalization,
including, without limitation, any stock split or reverse stock
split, or take any other action that would impair the rights of
Seller under this Section. Except as set forth in this Agreement, no
representation or warranty is made that a market for the Common
Stock will exist either upon Closing or thereafter, and Seller
assumes the risk that no such market for the Common Stock is
guaranteed.
3. CLOSING.
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3.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at 10:00 a.m., Los Angeles
time on ___________, 2000. The closing will take place at the
offices of Seller or at such other place as mutually agreed to by
the parties to this Agreement.
3.2 Deliveries by Seller. At Closing, Seller will execute (if
applicable) and deliver: (i) a Xxxx of Sale in the form attached
hereto as Exhibit 3.2(a); (ii) assignment of the agreements listed
on Schedule 4.7 and attached as Exhibit 3.2(b); (iii) releases of
financing statements and other recorded encumbrances terminating any
liens and encumbrances against, and security interests in, any of
the Assets; (iv) a certificate signed by Seller, certifying that the
closing conditions to be satisfied by Seller have been met as of
Closing, Seller's representations are true and correct in all
material respects and that Seller has materially performed its
covenants; and (v) such other documents and instruments including
1999 [audited] financial statements as Purchaser may reasonably
require to effectuate or evidence the transactions contemplated by
this Agreement.
3.3 Deliveries by Purchaser and COCO. At Closing, Purchaser will execute
(if applicable) and deliver: (i) share certificates evidencing the
Common Stock issued as the Initial Purchase Price; (ii) a
certificate signed by Purchaser, certifying that the closing
conditions to be satisfied by Purchaser have been met as of Closing,
Purchaser's representations are true and correct in all material
respects and that Purchaser has materially performed its covenants;
and (iii) such other documents and instruments as Seller may
reasonably require to effectuate or evidence the transactions
contemplated by this Agreement. At Closing, COCO will execute and
deliver (i) a certificate signed by COCO, certifying that the
closing conditions to be satisfied by COCO have been met as of
Closing, COCO's representations are true and correct in all material
respects and that COCO has materially performed its covenants; and
(ii) such other documents and instruments as Seller may reasonably
require to effectuate or evidence the transactions contemplated by
this Agreement
3.4 Possession. Purchaser will take possession of the Assets as of the Closing
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Date.
3.5 Taxes. All property taxes attributable to any of the Assets will be
apportioned as of Closing. Purchaser shall be solely responsible for
payment of any sales, use or other taxes or charges or fees due on
or with respect to the sale or transfer of the Assets to the
Purchaser, excepting only income taxes, if any, due and owing by
Seller.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Except as set forth in the
Sellers Disclosure Schedule, attached hereto, Seller, as of the date of
this Agreement and as of the Closing Date, represents and warrants to
Purchaser as follows:
4.1 Organization, Good Standing, Power, etc. Seller is a limited
partnership duly organized, validly existing and in good standing
under the laws of the state of California. Seller has all requisite
partnership power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated by this
Agreement.
4.2 Authorizations and Enforceability. This Agreement has been duly and
validly authorized, executed and delivered by Seller and constitutes
the valid and binding obligation of Seller, fully enforceable in
accordance with its terms. In connection therewith, the Partnership
Agreement of Seller, true and correct with all amendments as
certified in writing by the General Partner of the Seller has been
delivered to Purchaser. Under the Partnership Agreement or any other
applicable law or agreement, no consent of any limited partner or of
any party not a partner in the partnership is required for the sale
of the Assets hereunder.
4.3 Restrictions; Burdensome Agreements. Seller is not a party to any
material contract, commitment or agreement, and neither Seller nor
the Assets are subject to or bound or affected by any charter,
bylaw, partnership agreement or other partnership restriction, or
any material order, judgment, decree, law, statute, ordinance, rule,
regulation or other restriction of any kind or character, which
would prevent Seller from entering into this Agreement or from
consummating the transactions contemplated by this Agreement.
4.4 Consent and Approvals. As of Closing, Seller will have obtained all
material consents or approvals of and waivers or revisions by, and
will have delivered all material notices to, any third party that
are necessary in connection with the execution and delivery by
Seller of this Agreement and the consummation of the transactions
contemplated by this Agreement.
4.5 Title to Property.
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(a) Tangible Personal Property. Seller owns or has licenses or other rights
adequate to use all property necessary for the operation of the Assets.
(b) Title. Seller has good and marketable title to the Assets. Any Asset which
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requires the consent of a third party for assignment to
Purchaser is described as such on Schedule 4.5. All required
consents have
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been obtained and are also attached as part of said schedule.
Every other Asset is fully assignable to Purchaser without the
consent of any other person, except where the failure to
obtain the consent would not have a material adverse effect
on the Assets or Seller's ability to consummate the
transactions contemplated by this Agreement.
(c) All Assets sold under this Agreement will be free and clear of
all liens, claims and encumbrances except as set forth in
Schedule *** to this Agreement.
4.6 Condition of Assets. The Assets were acquired and have been
maintained in the ordinary course of its business and to Sellers
knowledge have been properly maintained in good working condition,
ordinary wear and tear excepted.[COCO has maintained the equipment]
4.7 Lease and Access Agreements. Stated on Schedule 4.7 is a complete
and accurate list of all of the Lease and Access Agreements
presently owned by Seller which constitute part of the Assets. A
complete copy of each such Lease and Access Agreement (including
amendments thereto) has been provided to Purchaser as Exhibit
3.2(b). Each of the Lease and Access Agreements is
valid and binding, and is in full force and effect. Neither Seller,
nor to the actual knowledge of Seller, any owner of a property
served by a Lease and Access Agreement (a "Property Owner"), is in
default under any Lease or Access Agreement, except where such
default would not have a material adverse effect on the Assets or
Seller's ability to consummate the transactions contemplated by
this Agreement.
4.8 The Seller represents, warrants and covenants to COCO and Purchaser
as follows, realizing that it intends to rely on these
representations, which shall survive the issuance to Seller of the
Shares pursuant to this Agreement:
(a) Seller acknowledges that it has been given full and fair
access to all material information, including but not limited
to all underlying documents in connection with this
transaction as well as such other information as he or its
Purchaser Representative, if retained, deems necessary or
appropriate as a prudent and knowledgeable entity evaluating
the purchase of the Shares. Seller acknowledges that COCO
and Purchaser have made available to it the opportunity to
obtain additional information to evaluate the merits and
risks of its investment. Seller acknowledges that
Seller has had the opportunity to ask questions of, and
receive satisfactory answers from, the officers of COCO and
Purchaser concerning the terms and conditions of the offering
and the business of COCO and Purchaser.
(b) Seller can bear the economic risk of losing its entire
investment in the Shares.
(c) Seller is acquiring the Shares for its own account, for
investment only and not with a view toward the resale,
fractionalization, division or distribution thereof and Seller
has no present plans to enter into any contract, undertaking,
agreement or arrangement for any such resale, distribution,
division or fractionalization thereof.
(d) SELLER UNDERSTANDS THAT THE SHARES ARE SPECULATIVE INVESTMENTS
WHICH INVOLVE A HIGH DEGREE OF RISK OR LOSS OF ITS ENTIRE
INVESTMENT
(e) Seller, acting alone or with its representatives, has
sufficient knowledge and expertise in the risks of investing
in similar projects. Seller understands that an investment in
COCO and Purchaser is not suitable for any person who does not
so understand such risks.
(f) The Seller fully understands all tax aspects and risks
associated with this investment or has consulted with its own
financial or tax adviser who has advised him thereof and that
the Seller has no questions with respect thereto; and that
any tax effects which may be expected by COCO and Purchaser,
are not susceptible to accurate prediction and depend upon
the recognition of certain factual patterns and matters which
may be subject to various interpretations, including ones
which may substantially eliminate the tax consequences sought
by COCO and Purchaser. moreover, new developments in rulings
of the Internal Revenue Service, court decisions or
legislative changes may have an adverse effect on one
or more of the tax consequences sought by COCO and Purchaser.
NO TAX OPINION IS BEING FURNISHED TO SELLERS.
(g) All information which Seller has provided to COCO and
Purchaser concerning its financial position and knowledge of
financial business matters is correct and complete as of the
date of this Agreement, and if there should be any material
change in such information prior to acceptance of this
Subscription Agreement by COCO and Purchaser, Seller will
immediately provide COCO and Purchaser with such information.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND COCO. Except as set forth
in Purchaser and COCO's Disclosure Schedule, attached hereto, Purchaser
and COCO, as of the date of this Agreement and as of the Closing Date
(including after giving effect to the Merger), represents and warrants to
Seller as follows:
5.1 Organization, Good Standing, Power, etc. Purchaser and COCO are
corporations duly organized, validly existing and in good standing
under the laws of their respective states of incorporation.
Purchaser and COCO have all requisite corporate power and authority
to execute, deliver and perform this Agreement and to consummate the
transactions contemplated by this Agreement.
5.2 Authorizations and Enforceability. This Agreement has been duly and
validly authorized, executed and delivered by Purchaser and COCO and
constitutes the valid and binding obligations of Purchaser and COCO,
fully enforceable in accordance with its terms.
5.3 Restrictions; Burdensome Agreements. Neither Purchaser nor COCO is a
party to any material contract, commitment or agreement, nor subject
to or bound or affected by any charter, bylaw, or other corporate
restriction, or any material order, judgment, decree, law, statute,
ordinance, rule, regulation or other restriction of any kind or
character, which would prevent either Purchaser or COCO from
entering into this Agreement or prevent Purchaser or COCO from
consummating the transactions contemplated by this Agreement or the
Merger Agreement.
5.4 Consent and Approvals. Purchaser and COCO have obtained all material
consents or approvals of, filings or registrations with or material
notices to any third party or public body or authority that may be
necessary in connection with the execution and delivery by Purchaser
and COCO of this Agreement and the consummation of the transactions
contemplated by this Agreement and the Merger Agreement.
5.5 Merger. The Merger Agreement has been duly authorized, executed and
delivered by the parties thereto, and subject to any requisite
shareholder approval, is enforceable against the parties in
accordance with its terms.
5.6 No Violation. The execution, delivery and performance of this Agreement and
all other agreements entered into in connection with the transactions
contemplated hereby by Purchaser and COCO does not and will not violate,
conflict with, result in a breach of or constitute a default under (or an
event which with due notice or lapse of time, or both, would constitute a
material breach of or default under), result in the creation of any lien,
security interest or other encumbrance under or accelerate the obligations
of Purchaser or COCO under (a) their respective charter documents, (b) any
note, agreement, contract, license, instrument, lease or other obligation
to which Purchaser or COCO is a party or by which either is bound or to
which any property or assets of either are subject, (c) any judgment,
order, decree, ruling or injunction applicable to Purchaser or COCO, or (d)
any statute, law, regulation or rule of any governmental agency or
authority applicable to Purchaser or COCO.
5.7 Initial Purchase Price. The Common Stock issuable to Seller for the
Initial Purchase Price will, when issued at Closing, be duly
authorized, fully paid and nonassessable, and the Common Stock
issuable to Seller as Additional Shares, if and when issued, will be
duly authorized, fully paid and nonassessable.
5.8 Capitalization. The authorized and outstanding capitalization of
Purchaser and COCO consists of the following[Current?] :
(a) Purchaser.
(1) Fifty Million (50,000,000) shares of common stock are
presently authorized. As of December 15, 1999,
Purchaser's had One Million shares of common stock
outstanding.
(2) Twenty Million (20,000,000) shares of preferred shares
are currently authorized. As of December 15, 1999,
Purchase had no preferred stock outstanding.
(b) COCO.
(1) Forty-Six Million (46,000,000) shares of common stock of
COCO are presently authorized. Excluding shares of
common stock issued or issuable upon exercise of
outstanding options or warrants or which may be
converted from COCO's preferred stock after the date of
this Agreement, as of December 31, 1999, COCO had
4,852,061 shares of common stock outstanding.
(2) Four Million (4,000,000) shares of preferred stock are
authorized, of which Four Million shares are designated
Class A Convertible Preferred Stock with maximum
conversion to twenty million shares. As of December 15,
1999, Four Million shares of the COCO's Class A
Convertible Preferred Stock were outstanding.
(3) Except for (i) the conversion privileges of the
Preferred Stock set forth the in the Articles; (ii) the
COCO's stock option plan and stock options, of which
there are Five Million Two Hundred Ninety
Five Thousand outstanding as of December 15, 1999, there
were no outstanding convertible securities, options,
warrants, rights (including conversion or preemptive
rights) or agreements for the purchase or acquisition
from COCO of any shares of its capital stock.
(c) Surviving Entity. Immediately after the Closing, and
after giving effect to the Merger, the issued and
outstanding capital stock of Purchaser or its successor,
on a fully diluted basis determined using the treasury
stock method, will be as set forth on Schedule 5.8.
5.9 Financial Statements. COCO has previously furnished Seller with true
and complete copies of the balance sheets of COCO for fiscal year
1999 and the related consolidated statements of cash flows, changes
in shareholder's equity and changes in financial position for the
periods then ended, accompanied by the audit report of Xxxxxxx
Xxxxxx & Xxxx P.A., independent certified public accountants for
fiscal year 1999. All such financial statements and information,
including the related notes where applicable, are in accordance with
the books and records of COCO, present fairly the financial
position, cash flows, changes in COCO's equity, and changes in
financial position of COCO as of the respective dates and for the
respective periods indicated, and have been prepared in accordance
with generally accepted accounting principles, consistently applied.
Purchaser has previously furnished Seller with true and complete
copies of the balance sheets of Purchaser for fiscal year 1999 and
the related consolidated statements of cash flows, changes in
shareholder's equity and changes in financial position for the
periods then ended, accompanied by an audit report, if available, of
an independent certified public accountant for fiscal year 1999. All
such financial statements and information, including the related
notes where applicable, are in accordance with the books and records
of Purchaser, present fairly the financial position, cash flows,
changes in Purchaser's equity, and changes in financial position of
Purchaser as of the respective dates and for the respective periods
indicated, and have been prepared in accordance with generally
accepted accounting principles, consistently applied
5.10 Absence of Litigation; Compliance with Laws, etc.
(a) There is no material action, suit, proceeding, claim or
investigation pending or, to the knowledge of Purchaser or
COCO, threatened against, or directly or indirectly involving,
Purchaser or COCO or any assets, business or operations of
Purchaser or COCO or the transactions contemplated hereby or
by the Merger Agreement. There is no unsatisfied or
outstanding order, stop order, writ, rescission
notices, judgment, injunction, decree or administrative
decree or mandate affecting Purchaser or COCO or their assets,
businesses or operations.
(b) Purchaser and COCO have complied with and are in material compliance with
all laws applicable to them or their properties, assets, operations and
businesses, and there does not exist any basis for any claim of default
under or violation of any such law, judgment, order or decree except for
any such noncompliance or such defaults or violations or such bases for any
claims of such defaults or violations, if any, that in the
aggregate do not
and will not materially and adversely affect the property, operations or
financial condition of Purchaser or COCO. Neither Purchaser nor COCO has
received any written opinion or memorandum from any legal counsel to the
effect that there is any liability that is material and adverse to
Purchaser or COCO. Without limiting the foregoing, Purchaser and COCO are
in material compliance with (i) all applicable laws concerning or related
to environmental protection, including, without limitation, regulations
establishing quality criteria and standards for air, water, land and
hazardous materials, (ii) all applicable laws concerning the protection,
health and safety of employees or workers, including without limitation the
Occupational Safety and Health Act of 1970, as amended, and comparable
workplace-safety laws of all other jurisdictions and all rules, regulations
and orders thereunder and (iii) all applicable laws affecting labor union
activities, civil rights or employment, including without limitation, the
Civil Rights Act of 1964, as amended, the Age Discrimination in Employment
Act of 1967, as amended, the Equal Employment Opportunity Act of 1972, as
amended, the Employee Retirement Income Security Act of 1974, as amended,
the Equal Pay Act and the National Labor Relations Act, as amended.
5.11 .Government Licenses and Permits. Purchaser and COCO have all
authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental or regulatory bodies necessary
to own or lease its properties and assets and to conduct its
business as currently conducted except to the extent the lack of any
such authorization, approval, order, license, certificate or permit
does not and will not materially and adversely affect the property,
operating, or financial condition of Purchaser nor COCO.
5.12 SEC Reports.
(a) None of the information supplied or to be supplied by either Purchaser or
COCO for inclusion or incorporation by reference in the Registration
Statement on Form S-4 to be filed with the Securities and Exchange
Commission ("SEC") by Purchaser in connection with the issuance of the
shares of Common Stock in connection with this transaction and the Merger
(the "Form S-4") will, from the time the Form S-4 is filed with the SEC
through the time it becomes effective under the Securities Act of 1933, as
amended (the "Securities Act"), contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
5.13 No Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf of Purchaser or COCO is or will be
entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly in connection with any of the
transactions contemplated herein or in the Merger Agreement.
6. COVENANTS OF THE PARTIES.
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6.1 Operation of Business. During the period from the date of this
Agreement and the earlier of the termination of this Agreement or
the Closing, Seller covenants to Purchaser that it will operate its
business with respect to the Assets in the usual, regular and
ordinary manner; and, to the extent consistent with such operation,
use its commercially reasonable efforts to preserve its present
business relationships, including those with its Customers and the
Property Owners. Seller will not enter into any transaction or take
any action which would result in any of the representations and
warranties of Seller contained in this Agreement not being
materially true and correct at and as of (i) the time immediately
after such action or transaction was undertaken or entered into with
the same force and effect as though made on such date, and (ii) the
Closing, with the same force and effect as though made on such date.
6.2 Consents. Although not required by the Lease and Access Agreement,
Seller will give all notices and use its commercially reasonable
efforts to obtain consents from each Property Owner.
6.3 Access to Properties and Records; Confidentiality.
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(a) During the period from the date of this Agreement to the earlier of the
termination of this Agreement or the Closing, Seller will make available to
Purchaser all books, papers and records relating to the Assets. Sell will
not be required to provided access to or disclose information where such
access or disclosure would jeopardize the attorney-client privilege of
Seller or would contravene any law, rule, regulation, order, judgment,
decree or binding agreement entered into prior to the date hereof. The
parties will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
(b) All information furnished by Seller to Purchaser with respect
to any Asset pursuant to, or in the negotiation in connection
with, this Agreement will be treated as the sole property of
Seller. Purchaser will keep confidential all such information
and will not directly or indirectly use such information for
any competitive or other commercial purpose. The obligation to
keep such information confidential will continue indefinitely.
6.4 Confidentiality of Terms of Agreement. After the execution of this
Agreement, Purchaser, COCO and Seller will maintain the
confidentiality of the terms of this Agreement. No such party will,
except on a need-to-know basis, disclose the terms of the
transactions contemplated by this Agreement to any person or entity.
The foregoing does not preclude such parties from informing any
other person or entity of the fact that the Systems, the Lease and
Access Agreements and other Assets relating to the Systems will be
or has been transferred to Purchaser, so long as such communication
does not disclose any further details regarding the transaction. Any
press release to be disclosed to the public regarding any other the
terms of this Agreement shall be reviewed by and agreed upon by both
parties in writing prior to release. Notwithstanding the foregoing,
all such information required to be disclosed pursuant to any
applicable law, including all applicable federal securities laws,
shall be disclosed.
6.5 Accounts Receivable Matters. Seller will retain all payments on
Customer's accounts received by Seller through . Commencing
thereafter, all payments received by Seller will be endorsed and
immediately forwarded to COCO, and accounts receivables will be
transferred to COCO and all billing for services to be provided to
Customers shall be made by COCO in the name of COCO or one of its
subsidiaries. COCO shall be responsible for notifying Customers of
the new billing information and remittance address(es).
6.6 Preparation of Form S-4. Purchaser shall promptly prepare and file
with the SEC a Form S-4 registering the issuance by Purchaser of the
Initial Purchase Price and the Additional Shares, if any, to Seller.
Purchaser shall use its best efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable after
such filing. Purchaser shall also take any action (other than
qualifying to do business in any jurisdiction in which it is now not
so qualified) required to be taken under any applicable state
securities laws in connection with the issuance of the Common in
this transaction and the Merger.
6.7 Quotation of Common Stock. Purchaser shall use all reasonable
efforts to cause the Common Stock of Purchaser to be issued pursuant
to this Agreement and the Merger Agreement to be approved for
quotation on the over the counter market, subject to official notice
of issuance, after execution of this Agreement.
6.8 1934 Act Registration Statement. A registration statement registering the
Common Stock under the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") on Form 8-A shall have been filed with the SEC with a
request that the registration statement be declared effective
simultaneously with the S-4.
6.9 SEC Filings. Purchaser covenants and agrees to comply in all
material respects with the reporting obligations imposed by the
federal securities laws on issuers with a class of securities
registered pursuant to the Securities Act and Exchange Act.
7. CLOSING CONDITIONS.
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7.1 Conditions to the Obligations of Seller under this Agreement. The
obligations of Seller under this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following
conditions, any one or more of which may be waived by Seller:
(a) Each of the obligations and covenants of Purchaser and COCO
required to be performed or complied with at or prior to the
Closing pursuant to the terms of this Agreement are duly
performed and complied with in all material respects.
(b) The representations and warranties of Purchaser and COCO
contained in this Agreement are true and correct in all
material respects as of the date of this Agreement, and will
be true and correct in all material respects as of the Closing
Date as though made at and as of the Closing Date, except as
to any representation or warranty that specifically relates to
an earlier date.
(c) The SEC shall have declared effective the registration statement on Form
S-4 registering the Common Stock to be received by Seller pursuant to this
Agreement and the registration statement on Form 8-A, no stop order
suspending the effectiveness of the registration statement or any part
thereof shall have been issued by the SEC and no proceeding for that
purpose shall have been initiated or threatened by the SEC; all requests
for additional information on the part of the SEC shall have been complied
with to the reasonable satisfaction of the parties hereto; and Purchaser
shall have received all "blue sky" permits and authorizations necessary to
issue Common Stock pursuant to this Agreement and the Merger Agreement.
(d) The shares of Common Stock of Purchaser received by Seller on
account of the Purchase Price shall be approved for quotation
on the over the counter bulletin board.
7.2 Conditions to the Obligations of Purchaser under this Agreement. The
obligations of Purchaser under this Agreement are further subject to
the satisfaction, at or prior to the Closing Date, of the following
conditions, any one or more of which may be waived by Purchaser:
(a) Each of the obligations and covenants of Seller required to be
performed or complied with at or prior to the Closing Date
pursuant to the terms of this Agreement will have been duly
performed and complied with in all material respects.
(b) The representations and warranties of Seller contained in this
Agreement are true and correct in all material respects as of
the date of this Agreement, and will be true and correct in
all material respects as of the Closing as though made at and
as of the Closing, except as to any representation or warranty
that specifically relates to an earlier date.
8. MUTUAL CONDITIONS. The obligations of Purchaser and Seller under this
Agreement with respect to the Assets are further subject to the
satisfaction, at or prior to the Closing, of the following conditions, any
one or more of which may be mutually waived by the parties:
(a) Seller shall have obtained an executed Acknowledgment and
Consent in the form of Exhibit 8 with respect to the Lease and
Access Agreements from each Property Owner.
(b) The Merger between Purchaser and COCO shall have become
effective in accordance with its terms concurrently with the
Closing under this Agreement.
9. INDEMNIFICATION.
---------------
9.1 Indemnification. Each party hereto will defend, indemnify and hold
harmless the other party and any person claiming by or through them
or any of their successors and assigns (each an "Indemnitee") from,
against and in respect of any and all costs, losses, claims,
liabilities, fines, penalties, damages and expenses (including,
without limitation, court costs, reasonable fees and disbursements
of counsel with or without suit and on appeal) (collectively,
"Losses") incurred by the Indemnitee in connection with:
(a) any breach of (a) any of the representations and warranties
of the indemnifying party or (b) any covenant or agreement
made by the indemnifying party in this Agreement;
(b) with respect to a Seller Indemnitee, obligations specifically
assumed by Purchaser with respect to any Asset and which arise
after the Closing Date;
(c) with respect to a Purchaser Indemnitee, any alleged or
asserted debt, obligation, liability or commitment of Seller
not expressly assumed by Purchaser hereunder; and
(d) any action, suit, proceeding, compromise, settlement,
assessment or judgment arising out of or incident to any of
the matters indemnified against in this Section 9.
9.2 Limitations and Procedures.
(a) The indemnification rights and obligations set forth in this Section 9
shall survive the Closing Date and shall expire on the later of (i) one
year after the Closing or (ii) the satisfaction of the obligation in
Section 2.2; provided, however, that with respect to claims notified in
good faith to the indemnifying party prior to the expiration of the
indemnity rights, the parties' obligations with respect to its indemnity
rights and obligations shall continue in effect until payment or other
resolution of such claims.
(b) The parties hereto shall not have any liability, whether pursuant to this
Section 9 or otherwise, for breach of any covenant or warranty, for
misrepresentation, or otherwise, unless any individual claim exceeds
$50,000 or the aggregate amount of all claims for which such party would,
but for this Section 9, be liable, exceeds $200,000 on a cumulative basis.
If a party's aggregate liability for such claims exceeds the applicable
minimum amount individually or on a cumulative basis, then such party shall
be liable for only such claims, or portions thereof which exceed the
minimum.
(c) In no event shall the aggregate liability of either party for
indemnity to the other party hereto pursuant to this Section
9, or otherwise, exceed $1 million.
(d) All claims for indemnity shall be net of any tax deductions or
other tax benefits derived from the state of facts giving rise
to the indemnity claim and net of any applicable insurance
proceeds.
(e) The Seller shall have the right to satisfy any indemnity claim asserted
against it in either cash or Common Stock of Purchaser, valued at its fair
market value. For purposes of determining the fair market value of
Purchaser Common Stock under this Section the following shall apply: (i)
for purposes of any claim for indemnity asserted against the Seller within
six months from the Closing Date, the fair market value shall be deemed to
be $3.00 per share; (ii) in all other cases, the fair market value shall be
deemed to be (x) if Purchaser's Common Stock is publicly traded at the time
an indemnity claim is asserted by Purchaser, the average daily closing
trading price for the thirty day period preceding the date the indemnity
claim is asserted or (y) in all other cases, the amount agreed to in
writing by Purchaser and Seller, or if they are unable to so agree, the
fair market value determined by PriceWaterhouseCoopers LLP, or such other
accounting firm as may be mutually agreed by Purchaser and Seller (the
"Appraiser"). Any party may retain the Appraiser to determine fair market
value if the parties have been unable to agree after meeting and conferring
in good faith. The parties shall cooperate in providing financial
information to the Appraiser for purposes of determining fair market value.
Purchaser and Seller shall split the cost of the Appraiser.
9.3 Indemnification and Covenant Not to Xxx. Notwithstanding Section 9.1
and 9.2 above, the parties hereto covenant and agree that the sole
shareholder of Purchaser existing immediately prior to Closing shall
not be liable for any liabilities attributed to Purchaser, whether
arising under this Agreement, the Merger Agreement or the
transactions contemplated hereby or thereby, and the parties hereto
further agree not to seek, demand, request or xxx such shareholder
in respect of any Losses caused by or attributed to Purchaser.
10. TERMINATION. Anything herein to the contrary notwithstanding, this
Agreement may be terminated at any time before the Closing, as follows, and
in no other manner:
(a) By mutual written consent of the parties.
(b) Purchaser may, without liability to Seller, terminate this
Agreement by notice to Seller at any time prior to the Closing
if material default shall be made by Seller in the observance
or in the due and timely performance of any of the terms
hereof to be performed by Seller that cannot be cured at or
prior to the Closing.
(c) Seller may, without liability to Purchaser, terminate this
Agreement by notice to Purchaser at any time prior to the
Closing if material default shall be made by Purchaser in the
observance or in the due and timely performance of any of the
terms hereof to be performed by Purchaser that cannot be cured
at or prior to the Closing.
(d) By either Seller or Purchaser if the Closing shall not have
occurred by December 31, 2000 (which date may be extended by
mutual written agreement of the parties) unless such failure
is due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants, agreements and
conditions hereof to be performed or observed by such party at
or before the Closing Date.
11. GENERAL.
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11.1 Survival of Representations and Warranties. The representations,
warranties, covenants, indemnities and agreements stated in this
Agreement, the Exhibits or Schedules, any other written
representation and in any ancillary document with respect to any
Asset will survive Closing for a period of one year following the
Closing Date. Notwithstanding the foregoing, Purchaser's obligations
in Section 2.2 shall survive Closing until the obligation is
satisfied.
11.2 Severability. Any provisions of this Agreement which are invalid or
unenforceable will be ineffective to the extent of such invalidity
or unenforceability without invalidating or rendering unenforceable
the remaining provision hereof.
11.3 Further Assurances. Each party to this Agreement will take all
actions, subject to the terms and conditions of this Agreement, that
are necessary or desirable to carry out the purposes of this
Agreement, including actions after Closing.
11.4 All notices, requests, demands or other communications hereunder
must be in writing and must be given by delivery in person, by
registered or certified mail (postage prepaid and return receipt
requested) to the respective parties as follows:
(a) If to Seller, to:
Huntington Telecommunications Partners, L.P.
40 Vienna
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxx Xxxxxx
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Xx.
(b) If to Purchaser, to:
Third Enterprise Service Group, Inc.
0000 X. Xxxxxxx Xx.
Xxxxx, Xxxxxxx 00000
(c) If to COCO, to:
Competitive Companies, Inc.
0000 Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
Or such other address as is furnished in writing by any party to the other party
in accordance herewith, except that notices of change of address is only
effective upon receipt.
11.5 Parties in Interest; Assignment. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by a
party without the prior written consent of the others, which shall
not be unreasonably withheld.
11.6 Entire Agreement; Amendment. This Agreement (including the Exhibits
and Disclosure Schedules hereto) and the Merger Agreement constitute
the entire agreement and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with
respect to the subject matter hereof and may not be amended,
modified or terminated unless in a written instrument executed by
the party or parties sought to be bound.
11.7 Venue. Any dispute arising from this Agreement shall be brought
solely within the courts of Riverside County, state of California,
unless the federal jurisdiction applies, in which case such dispute
shall be brought within the federal courts of California.
11.8 Attorneys' Fees. If any legal action or other proceeding is brought
to enforce the terms of this Agreement (whether or not suit is
brought and including any appeal) the prevailing party or parties
will be entitled to reasonable attorneys' fees and other costs and
expenses incurred in that action or proceeding.
11.9 Governing Law. This Agreement, in all respects, including all matters of
construction, validity and performance, is governed by the internal laws of
the state of California.
11.10 Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile, all of which will be considered one
and the same agreement, and each of which will be deemed an
original.
In witness whereof, the parties hereto have executed this Agreement as of the
day and year first written above.
SELLER: Huntington Telecommunications Partners, LP,
By:___KBL Investment Co. General Partner________________
By:___Huntington Partners, Inc. its General Partner_____
By:___/s/Xxxxx X. Hewitt________________________________
Name & Title:____David X. Xxxxxx President_____________
PURCHASER: Third Enterprise Service Group, Inc.
By:____/s/ Xxxxxxx X. Williams__________________________
Name & Title:__Michael X. Xxxxxxxx President___________
COCO:
By:__/s/ Xxxxx Xxxxxxxx, _______________________________
Name & Title:__Larry Xxxxxxxx, CFO______________________
Seller's Disclosure Schedule
NONE
Purchasers and COCO's Disclosure Schedule
5.10(a) Arbitrated agreement re: Xxxxxxx of Trussville System
Letter from Attorney Xxxxxxxx X. Xxxx
Exhibits:
--------
Exhibit 3.2(a) Xxxx of Sale
Exhibit 3.2(b) Leases, Easements and Licenses to Use Real Property
Exhibit 8 Form of Acknowledgment & Consent
Schedules:
---------
Schedule 2.3 Allocation of Purchase Price
Schedule 4.5 Third Party Acknowledgment & Consent
Schedule 4.7 Leases and Access Agreements
Schedule 5.8 Fully Diluted Capitalization Table
EXHIBIT 3.2(a)
XXXX OF SALE
Seller, for good and valuable consideration given pursuant to an Asset Purchase
Agreement dated _August 7__, 2000 (the "Purchase Agreement") between Huntington
Telecommunications Partners, LP, and Third Enterprise Service Group, Inc.
("Purchaser"), the receipt and sufficiency of which consideration is hereby
acknowledged, does hereby sell, assign, transfer and set over to Purchaser, in
accordance with the Purchase Agreement, all of Seller's right, title and
interest in and to the Systems (as defined in the Purchase Agreement) and
related equipment installed at the apartment complexes described on Schedule 4.7
attached hereto.
Date: __August 7_______, 2000
SELLER: Huntington Telecommunications Partners, LP
By:_KBL Investment Co., General Partner_______
By:_Huntington Partners, Inc., General Partner
By:_/s/ Xxxxx X. Hewitt_______________________
Name & Title:__David C. Hewitt________________
EXHIBIT 3.2(b)
LEASES, EASEMENTS AND LICENSES TO USE REAL PROPERTY
EXHIBIT 8
FORM OF ACKNOWLEDGMENT AND CONSENT
This Acknowledgment and Consent is executed by___________________________
("Owner"), who is the Owner of the multi-family residential complex known as
_______________________________________________ (the "Property"), located at
_______________________________________________, the legal description of which
is attached hereto as Exhibit A.
Huntington Telecommunications Partners, LP, a California limited partnership
("Operator"), is the provider of television and/or telephone service to the
Property under a Lease and Access Agreement dated ____________________ (the
"Agreement").
Third Enterprise Service Group, Inc., a Florida corporation ("TESGI") is the
parent company of CCI Residential Services, Inc., a California corporation
("CCIRS"). CCIRS has been providing operations and management services to the
Property for the Operator through Competitive Communications, Inc. ("CCI") since
service commencement. On ________________, 2000, Operator and TESGI signed an
agreement for TESGI to acquire the Operator's interest in the Agreement and all
assets of Operator which are part of or related to the _______________________
system(s) on the Property, including all Operator's wiring, electronics devices,
hardware and other equipment.
In consideration of the acquisition, Operator has received an equity interest in
TESGI.
Owner represents and warrants that as of the date hereof (a) the Agreement is in
full force and effect and there are no amendments, modifications or supplements
thereto, either oral or written; (b) Owner has not assigned, transferred or
hypothecated the Agreement or any interest therein, except as described herein;
and (c) to the knowledge of Owner, no default or event exists with respect to
the Agreement that, with notice or the passage of time or both, would result in
the termination of the Agreement. Owner irrevocably consents to the assignment
by Operator of its right, title and interest in the Agreement to TESGI and
CCIRS.
Date: ___________________________
PROPERTY OWNER:
---------------------------------------
By:____________________________________
Name & Title:___________________________
SCHEDULE 2.3
ALLOCATION OF PURCHASE PRICE
SCHEDULE 4.5
THIRD PARTY ACKNOWLEDGMENT & CONSENT
NONE
SCHEDULE 4.7
LEASE AND ACCESS AGREEMENTS
Attached Attached
Property Number Lease & Access Agreement Assets
Name Of Units Agreement Name Date Exhibit
---- -------- -------------- ---- -------
Durham Greens 316 Telephone and 11/20/1993 A
Television Lease and
Access Agreement
Xxxxxxx Xxxxxxx 000 Telephone and 11/20/1993 B
Television Lease and
Access Agreement
Clarendon Hills 285 Telecommunications 11/7/1994 C
Service and License
Agreement
Rollingwood 272 Telecommunications 9/29/1998 D
Commons Service and License
Agreement & Amendment
SCHEDULE 5.8
FULLY DILUTED CAPITALIZATION TABLE
