AGREEMENT AND PLAN OF REORGANIZATION
by and among
HUNTINGTON TELECOMMUNICATIONS PARTNERS, L.P.,
a California limited partnership,
COMPETITIVE COMPANIES HOLDINGS, INC.,
a Nevada corporation,
and
COMPETITIVE COMPANIES, INC.,
a Nevada corporation.
Dated as of December 19, 2001
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of December 19, 2001, by and
among Huntington Telecommunications Partners, L.P., a California limited
partnership ("HTP"), Competitive Companies Holdings, Inc., a Nevada corporation
("CCH"), and Competitive Companies, Inc., a Nevada corporation ("CCI").
RECITALS
A. HTP owns all of the assets (the "Assets") that are used in the operation
of, and in connection with, certain telephone and cable television systems
listed on Exhibit A (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 Exhibit A; (ii) the assets of HTP used
to operate the Systems including its telephone switching and voice mail
equipment and cable television equipment (where specified in Exhibit A); (iii)
all cable (including without limitation aerial cable and underground cable),
conduit and all spare parts and other items used in the agreements listed on
Exhibit A; (iv) 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 A. The
definition of "Assets" excludes all other assets, including, without limitation,
any goodwill, intellectual property or software, owned or licensed by HTP.
B. HTP and the Board of Directors of CCH and CCI have approved, and deem
it advisable and in the best interests of their respective partners, companies and
stockholders, to consummate the reorganization (the "Reorganization") provided
for herein, pursuant to which (i) CCH will acquire all of the common stock of
CCI through the merger of CCH Acquisition, Inc., a Nevada corporation ("Merger
Sub")] with and into CCI with CCI surviving the Merger; (ii) CCH will acquire
all of HTP's Assets in exchange for the issuance of shares of common stock of
CCH to HTP; and (iii) upon the effectiveness of the merger, the shares of common
stock or preferred stock of CCI will automatically convert into the same number
of shares of common stock or preferred stock of CCH.
C. The constituent entities to the Merger are CCI and the Merger Sub. The
address of CCI is set forth in Section 11.4 and its governing law is the Nevada
Revised Statutes. The address of the Merger Sub is the same as CCI and its
governing law is the Nevada Revised Statutes.
D. For federal income tax purposes, it is intended that the transfer of the
Assets by HTP pursuant to the Reorganization will qualify as an exchange under
the provisions of Section 351 of the Code (as defined below) and the Merger (as
defined below) will qualify as a "reorganization" within the meaning of Section
368(a) of the Code.
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NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such definitions to be equally applicable to
both the singular and plural forms of the terms defined):
"Additional Shares" has the meaning specified in Section 2.2(b)(i).
"Adjusted Price" has the meaning specified in Section 2.2(b)(ii).
"Adjustment Period" means 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 CCH 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.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
under the Exchange Act.
"Agreement" means this Agreement and Plan of Reorganization, including all
schedules and exhibits hereto, as it may be further amended from time to time as
herein provided.
"Appraiser" has the meaning specified in Section 9.2(e).
"Articles of Merger" has the meaning specified in Section 2.3(b).
"Asset Purchase Agreement" has the meaning specified in Section 3.2.
"Assets" has the meaning specified in the Recitals.
"Bylaws" means a corporation's bylaws, code of regulations or equivalent
document.
"CCH" has the meaning specified in the Introduction.
"CCH Common Stock" has the meaning specified in Section 2.4(b)(i).
"CCH Preferred Stock" has the meaning specified in Section 2.4(b)(ii).
"CCI" has the meaning specified in the Introduction.
"CCI Certificate" has the meaning specified in Section 2.5(a).
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"CCI Common Stock" has the meaning specified in Section 2.4(b)(i).
"CCI Option" has the meaning specified in Section 2.4(b)(iii).
"CCI Preferred Stock" has the meaning specified in Section 2.4(b)(ii).
"Charter" means a company's certificate of formation, operating agreement,
partnership agreement, articles of association, articles of incorporation,
certificate of incorporation, or equivalent organizational documents.
"Class B Preferred Stock" has the meaning specified in Section 2.4(c).
"Class C Preferred Stock" has the meaning specified in Section 2.2(b)(ii).
"Closing" means the closing of the transactions contemplated by this Agreement
as specified in Section 3.1.
"Closing Date" has the meaning specified in Section 3.1.
"Code" means the United States Internal Revenue Code of 1986, as amended,
and any successor statute thereto, and the rules and regulations of the IRS
thereunder.
"Contribution" has the meaning specified in Section 2.2.
"Conversion Ratio" has the meaning specified in Section 2.2(b)(ii).
"Customers" has the meaning specified in the Recitals.
"Disclosure Schedule" means the Disclosure Schedule dated as of the date of
this Agreement, as amended in accordance with this Agreement, as delivered to
HTP by CCI and forming a part of this Agreement.
"Effective Time" has the meaning specified in Section 2.1.
"Encumbrance" means any interest (including any security interest), pledge,
mortgage, lien, charge, adverse claim or other right of third Persons.
"Environmental Laws" means all laws, regulations, ordinances, codes,
policies, Governmental Orders and consent decrees currently in effect, and any
judicial and administrative interpretations thereof, of Governmental
Authorities, or any common law doctrines, in effect from time to time relating
to pollution or protection of the environment and natural resources, including
those relating to emissions, discharges, Releases or threatened Releases of
Hazardous Material into the environment (including ambient air, surface water,
groundwater or land), or otherwise relating to the manufacture, processing,
distribution, use, possession, treatment, storage, disposal, transport or
handling of Hazardous Material.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Financial Statements" has the meaning specified in Section 5.8.
"Form SB-2" has the meaning specified in Section 5.11.
"GAAP" means U.S. generally accepted accounting principles, unless expressly
described otherwise.
"Governmental Authority" means any international, national, Federal, state,
municipal or local government, governmental authority, regulatory or
administrative agency, governmental commission, department, board, bureau,
agency or instrumentality, court, tribunal, arbitrator or arbitral body.
"Hazardous Material" means any substance, pollutant, material or waste
which is regulated or shall become regulated under any applicable Environmental
Law, including any such materials regulated as hazardous or toxic substances or
material, and including without limitation any crude oil or fraction thereof and
petroleum products.
"HTP" has the meaning specified in the Introduction.
"Indemnitee" has the meaning specified in Section 9.1.
"Initial Purchase Price" has the meaning specified in Section 2.2(a).
"IRS" means the Internal Revenue Service.
"Liabilities" means any and all debts, liabilities and obligations of any
nature whatsoever, whether accrued or fixed, absolute or contingent or mature or
unmatured.
"Losses" has the meaning specified in Section 9.2.
"Material Adverse Effect" means any event with respect to, changes in, or
effects on, a Person which, individually or in the aggregate, is reasonably
likely to be adverse to the business, results of operations or financial
condition of such Person in a manner that is material to such Person.
"Merger" has the meaning specified in Section 2.3(c).
"Merger Sub" has the meaning specified in the Recitals.
"Opening Price" has the meaning specified in Section 2.2(b)(i).
"Person" shall include any individual, trustee, firm, corporation,
partnership, limited liability company, Governmental Authority or other entity,
whether acting in an individual, fiduciary or any other capacity.
"Purchase Price" has the meaning specified in Section 2.2(b)(iii).
"Property Owner" has the meaning specified in Section 4.7.
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"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment (including the abandonment or discarding of barrels, containers
and other closed receptacles containing any Hazardous Material).
"Reorganization" has the meaning specified in the Recitals.
"Rights Holders" has the meaning specified in Section 2.4(c).
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning specified in Section 2.2(b)(iii).
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, parking, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including Taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated Tax, or other Tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, including such item for
which Liability arises as a transferee, successor-in-interest or by contract, or
as a result of being a member of an affiliated or combined group.
"Tax Return" means any return, declaration, report, claim for refund,
information return or statement relating to Taxes, including any schedules or
attachments thereto, and including any amendment thereof.
"Taxing Authority" means any Governmental Authority responsible for the imposition
or collection of any Tax.
"Third Enterprise" has the meaning specified in Section 3.2.
ARTICLE 2
REORGANIZATION
2.1 Effective Time. The term "Effective Time" shall mean the time and date
which is the date and time of the filing of the certificate of merger relating
to the Merger with the Secretary of State of the State of Nevada (or such other
date and time as may be specified in such certificate as may be permitted by
law) or such other time and date as HTP, CCH and CCI may agree upon.
2.2 HTP's Contribution. Upon the terms and subject to the conditions herein
set forth, simultaneously with the Effective Time, HTP shall contribute,
transfer, convey, assign and deliver to CCH, and CCH shall accept and acquire
from HTP, all of HTP's rights, title and interest to the Assets (the
"Contribution"). In consideration of the Contribution:
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(a) HTP shall initially receive 1,000,000 shares of CCH Common Stock at the
Closing (the "Initial Purchase Price").
(b) The Initial Purchase Price will be increased, if at all, as provided in
this Section.
(i) If the average of the closing bid price for the CCH Common Stock
for the Adjustment Period (the "Opening Price") is less than $3.00 per share, HTP
will be entitled to receive additional shares of CCH Common Stock (the "Additional
Shares") at the end of the Adjustment Period so that the total number of shares
of CCH Common Stock received by HTP on account of the Reorganization, including
the CCH 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 more per share, no additional shares of CCH Common Stock
shall be issued. For purposes of determining the Opening Price, purchases of CCH
Common Stock by CCH or its Affiliates or Persons controlled by CCH or its Affiliates
shall be disregarded. In addition, sales of CCH Common Stock by HTP or its Affiliates
or partners or Persons controlled by HTP or its Affiliates or partners shall be
disregarded.
(ii) The Additional Shares shall be reflected in 1,000,000 shares
of CCH Preferred Stock designated as Class C Convertible Preferred Stock ("Class
C Preferred Stock") to be issued to HTP at the time of the Contribution, which
shares will have the right to convert into shares of CCH Common Stock
automatically and for no additional consideration at the time the Additional
Shares are required to be issued as set forth herein. The number of shares of
CCH Common Stock to which HTP shall be entitled upon conversion of the Class C
Preferred Stock shall be the product obtained by multiplying the Conversion
Ratio by the 1,000,000 shares of Class C Preferred Stock held by HTP. The
"Conversion Ratio" shall be one minus the Adjusted Price divided by the Adjusted
Price. The "Adjusted Price" shall be determined by dividing the Opening Price by
$3.00. For example, assuming an Opening Price of $2.00, and no other adjustments
under the formula, the conversion would occur as follows:
1 - 2/3 = 1/3;
1/3 divided by 2/3 = .5;
.5 x 1,000,000 = 500,000.
Accordingly, 500,000 shares of CCH Common Stock would be issued to HTP upon
conversion of the Class C Preferred Stock. If at any time after the date of this
Agreement, CCH effects a subdivision of its outstanding CCH Common Stock or
Class C Preferred Stock, the Conversion Ratio as determined above will be
proportionately adjusted. HTP, as a holder of Class C Preferred Stock, will not
be entitled to preferential dividend rights, redemption or voting rights. After
conversion of the Class C Preferred Stock into shares of CCH Common Stock, HTP
will have rights identical to the other holders of CCH Common Stock.
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(iii) The Initial Purchase Price, as adjusted to include the
Additional Shares, if at all, in accordance with this Section 2.2, shall be referred
to as the "Purchase Price" and the CCH Common Stock representing the Purchase Price
shall be referred to as the "Shares." Except as contemplated by this Agreement
or the Articles of Merger, CCH 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 HTP under
this Section. Except as set forth in this Agreement, no representation or
warranty is made that a market for the CCH Common Stock will exist either upon
Closing or thereafter, and HTP assumes the risk that no such market for the CCH
Common Stock is guaranteed.
(iv) For so long as at least 50,000 shares of Class C Preferred
Stock remain outstanding, in addition to any other vote or consent required in the
articles or bylaws of CCH, the vote of the holders of 75% of the shares of Class
C Preferred Stock shall be necessary to effect any amendment, alteration or
repeal of any of the provisions of the articles or bylaws that alters or changes
the voting powers, preferences or other special rights or privileges,
qualifications, limitations or restrictions of the Class C Preferred Stock.
2.3 Merger.
(a) Organization of Merger Sub. Immediately prior to the Closing Date, CCH
shall form the Merger Sub as a corporation under the laws of the State of Nevada
and as a wholly owned subsidiary of CCH. Merger Sub shall be organized for the
sole purpose of effectuating the Merger as contemplated herein. The Charter and
Bylaws of Merger Sub shall be substantially in the forms set forth in Exhibit B.
The authorized capital stock of Merger Sub shall consist of 100 shares of common
stock, par value $0.001 per share, all of which shall be issued to CCH at a
price of $1.00 per share.
(b) Actions of Directors and Officers. Immediately prior to the Closing
Date, CCH shall (i) elect the directors of CCH as the directors of Merger Sub,
(ii) cause the directors of Merger Sub to elect the officers of CCH as the
officers of Merger Sub, (iii) ratify and approve this Agreement and the Articles
of Merger substantially in the form of Exhibit C (the "Articles of Merger"),
(iv) execute the Articles of Merger, and (v) cause the directors and officers of
Merger Sub to take such steps as may be necessary or appropriate to complete the
organization of the Merger Sub and to approve and execute the Articles of
Merger.
(c) Merger. Upon the terms and subject to the conditions herein set forth
and in the Articles of Merger, Merger Sub shall be merged with and into CCI (the
"Merger") in accordance with the applicable provisions of the laws of the State
of Nevada. CCI shall be the surviving corporation in the Merger and shall
continue its corporate existence under the laws of the State of Nevada. As a
result of the Merger, CCI shall become a wholly owned subsidiary of CCH. The
effects and consequences of the Merger shall be as set forth in the Articles of
Merger.
2.4 Effect of Merger on Securities of CCH, CCI and Merger Sub.
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(a) Merger Sub Stock. At the Effective Time of the Merger, each share of
the common stock of Merger Sub outstanding immediately prior to the Effective
Time shall be converted into and shall become one share of common stock of the
surviving corporation of the Merger.
(b) Conversion of CCI Stock. At the Effective Time:
(i) each share of common stock, par value $0.001 per share, of CCI
("CCI Common Stock") issued and outstanding at the Effective Time shall be converted
into one share of common stock, par value $0.001 per share, of CCH ("CCH Common
Stock"); and
(ii) each share of preferred stock, par value $0.001 per share,
of CCI ("CCI Preferred Stock") designated as Class A Convertible Preferred Stock
issued and outstanding at the Effective Time shall be converted into one share of
preferred stock, par value $0.001 per share, of CCH ("CCH Preferred Stock") with
the same rights and preferences as the CCI Preferred Stock.
Upon such conversion, all such shares of CCI Common Stock and CCI Preferred
Stock shall be cancelled and cease to exist, and each certificate theretofore
representing any such shares shall, without any action on the part of the holder
thereof, be deemed to represent an equivalent number of shares of CCH Common
Stock or CCH Preferred Stock, as the case may be.
(iii) At the Effective Time, each share of CCI Common Stock or
CCI Preferred Stock which is held in the treasury of CCI immediately prior to the
Effective Time shall, by virtue of the Merger, cease to be outstanding and shall
be cancelled and retired without payment of any consideration therefor.
(iv) At the Effective Time, each outstanding option to purchase
shares of CCI Common Stock issued pursuant to any stock option plan adopted by CCI
or otherwise issued by CCI (each, a "CCI Option") shall be assumed by CCH in such
manner that it is converted into an option to purchase shares of CCH Common
Stock, with each such CCI Option to otherwise be exercisable upon the same terms
and conditions as then are applicable to such CCI Option, including the number
of shares and exercise price provided thereby. At the Effective Time, CCH shall
assume all rights and obligations of CCI under such plan as in effect at the
Effective Time and shall continue such plan in accordance with its terms.
(c) At the Effective Time, in exchange for rights granted to certain
holders of CCH Common Stock ("Rights Holders") in connection with their purchase
of securities in transactions exempt from registration under federal securities
laws, CCH shall issue to the Rights Holders shares of CCH Preferred Stock
designated as Class B Convertible Preferred Stock ("Class B Preferred Stock")
determined by multiplying the Conversion Ratio set forth in Section 2.2(b)(ii)
by the number of shares of CCH Common Stock held by the Rights Holders at the
Effective Time; provided, however, that the average of the opening bid/asked
price for the CCH Common Stock on the first business day during which the CCH
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Common Stock is qualified for quotation on the over the counter bulletin board
shall used in place of the Opening Price in determining the Adjusted Price. The
following example illustrates this conversion process:.
Assuming an opening bid/asked price of $2.00, and no other adjustments
under the formula, the conversion would occur as follows:
1 - 2/3 = 1/3;
1/3 divided by 2/3 = .5;
.5 x each share of CCH Common Stock then held by a Rights Holder
shall be issued on conversion.
At the Effective Time, any other rights of the Rights Holders to acquire shares
of CCI Common Stock shall be null and void.
(d) CCH Stock held by CCI. At the Effective Time of the Merger, (i) any
shares of CCH Common Stock or CCH Preferred Stock issued to CCI, and (ii) the
one share of CCH Common Stock issued to Xxxxx Xxxxxxxx, shall be redeemed by CCH
and cease to be outstanding.
2.5 Mechanics of the Merger.
(a) Notwithstanding any other provisions of this Agreement, no dividends or
other distributions declared after the Effective Time on CCH Common Stock or CCH
Preferred Stock shall be paid with respect to any shares of CCI Common Stock or
CCI Preferred Stock, as the case may be, until a certificate representing such
shares of CCI Common Stock or CCI Preferred Stock (a "CCI Certificate") is
surrendered for exchange as provided herein. Subject to the effect of applicable
laws, following surrender of any such CCI Certificate, there shall be paid to
the holder of the CCH Common Stock or CCH Preferred Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole shares of CCH Common Stock or CCH
Preferred Stock and not paid, less the amount of any withholding Taxes which may
be required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of CCH Common Stock or CCH Preferred Stock, less
the amount of any withholding Taxes which may be required thereon.
(b) At or after the Effective Time, there shall be no transfers on the
stock transfer books of CCI of the shares of CCI Common Stock or CCI Preferred
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, certificates representing any such shares are presented to
the surviving corporation of the Merger or CCH, they shall be cancelled and
exchanged for certificates for the consideration, if any, deliverable in respect
thereof pursuant to this Agreement and the Articles of Merger in accordance with
the procedures set forth in this Article 2.
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(c) None of CCI, CCH or any other Person shall be liable to any former
holder of shares of CCI Common Stock or CCI Preferred Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) In the event that any CCI Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such CCI Certificate to be lost, stolen or destroyed and, if required by CCH,
the posting by such person of a bond in such reasonable amount as CCH may direct
as indemnity against any claim that may be made against it with respect to such
CCI Certificate, CCH will issue in exchange for such lost, stolen or destroyed
CCI Certificate the unpaid dividends and distributions on shares of CCH Common
Stock or CCH Preferred Stock as provided in Section 2.5(a), deliverable in
respect thereof pursuant to this Agreement and the Articles of Merger.
ARTICLE 3
CLOSING
3.1 Closing. Subject to the fulfillment or waiver of the conditions
precedent set forth in Articles 7 and 8, the consummation of the transactions
contemplated by this Agreement and the Articles of Merger (the "Closing") shall
occur at the offices of Xxxxxx, Xxxxx & Bockius LLP, Los Angeles, California, or
by an exchange of executed counterpart copies of this Agreement and the Articles
of Merger via telecopy or overnight courier, on December 19, 2001 and shall
become effective at 12:00 P.M., Pacific Standard Time on such date, or at such
other date, time or place as the parties may agree (the "Closing Date").
3.2 Termination of Prior Agreements. On August 7, 2000, HTP, CCI and Third
Enterprise Service Group, Inc. ("Third Enterprise") executed an Asset Purchase
Agreement (the "Asset Purchase Agreement") in which HTP intended to sell the
Assets Third Enterprise as part of a plan of reorganization of CCI. Several
conditions contained in the Asset Purchase Agreement were not satisfied and, as
a result, the transaction was never closed. The parties to this Agreement hereby
agree to terminate the Asset Purchase Agreement prior to the Closing and
acknowledge that all rights and obligations granted by the Asset Purchase
Agreement will be null and void.
3.3 HTP's Obligations at Closing. At the Closing, HTP shall deliver or
cause to be delivered to CCI and CCH:
(a) a xxxx of sale in the form attached hereto as Exhibit D;
(b) an assignment, in substantially the form of Exhibit E, assigning (i)
each of the agreements listed on Exhibit A, and (ii) Liability for personal
property Taxes;
(c) releases of financing statements and other recorded Encumbrances
terminating any Encumbrances against any of the Assets; and
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(d) certificates of duly authorized officers of HTP, each dated the Closing
Date, certifying as to the matters requested by CCI pursuant to Article 7.
3.4 CCI's Obligations at Closing. At the Closing, CCI shall deliver or
cause to be delivered to HTP:
(a) certificates of duly authorized officers of CCI, each dated the Closing
Date, certifying as to the matters requested by HTP pursuant to Article 8; and
(b) such other documents and instruments as HTP may reasonably require to
effectuate or evidence the transactions contemplated by this Agreement.
3.5 CCH Obligations at Closing. At the Closing, CCH shall deliver or cause
to be delivered to HTP:
(a) certificates representing the CCH Common Stock in the respective
amounts determined in accordance with Section 2.2 and registered in the name of
HTP;
(b) a certificate to the effect that CCH (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has full power and authority to own its assets and properties and to
conduct its business as and where it is then being conducted and (ii) has full
power and authority to enter into this Agreement and the Articles of Mergers and
to consummate the transactions contemplated hereby;
(c) a certificate to the effect that the Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada;
(d) certificates of duly authorized officers of CCH, each dated the Closing
Date, certifying as to the matters requested by HTP pursuant to Article 8; and
(e) such other documents and instruments as HTP may reasonably require to
effectuate or evidence the transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HTP
HTP represents and warrants to CCH and CCI as follows.
4.1 Organization, Good Standing, Power. HTP is a limited partnership duly
organized, validly existing and in good standing under the laws of the state of
California. HTP 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 HTP and constitutes the valid and
binding obligation of HTP, fully enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws and equitable principles related to or limiting
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creditors' rights generally and by general principles of equity.
4.3 Restrictions; Burdensome Agreements. HTP is not a party to any material
contract, commitment or agreement, and neither HTP 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 HTP from entering into this Agreement or from consummating the
transactions contemplated by this Agreement.
4.4 Consent and Approvals. As of the Closing Date, HTP 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 HTP of this Agreement and the
consummation of the transactions contemplated by this Agreement.
4.5 Title to Property.
(a) Tangible Personal Property. Except to the knowledge of CCH or CCI, to
the knowledge of HTP, HTP owns or has licenses or other rights adequate to use
all property necessary for the operation of the Assets.
(b) Title. Except to the knowledge of CCH or CCI, to the knowledge of HTP,
the HTP has good and marketable title to the Assets. Any Asset which requires
the consent of a third party for assignment to CCH is described as such on
Exhibit A. Except to the knowledge of CCH or CCI, to the knowledge of HTP, all
required consents have been obtained and have transmitted to CCH. Every other
Asset is fully assignable to CCH 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 HTP's ability to consummate the transactions contemplated by
this Agreement.
(c) Assets. Except to the knowledge of CCH or CCI, to the knowledge of HTP,
all Assets sold under this Agreement will be free and clear of all Encumbrances
except as set forth in on Exhibit A.
4.6 Condition of Assets. Except to the knowledge of CCH or CCI, to the
knowledge of HTP, the Assets were acquired and have been maintained in the
ordinary course of its business and to HTP's knowledge have been properly
maintained in good working condition, ordinary wear and tear excepted.
4.7 Lease and Access Agreements. Exhibit A includes a complete and accurate
list of all of the Lease and Access Agreements presently owned by HTP which
constitute part of the Assets. A complete copy of each such Lease and Access
Agreement (including amendments thereto) has been provided to CCH and CCI.
Except to the knowledge of CCH or CCI, each of the Lease and Access Agreements
is valid and binding, and is in full force and effect. Except to the knowledge
of CCH or CCI, neither HTP, nor to the knowledge of HTP, any owner of a property
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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 HTP's ability to consummate the
transactions contemplated by this Agreement.
4.8 Investment Representations. HTP represents, warrants and covenants to
CCI and CCH as follows, realizing that it intends to rely on these
representations, which shall survive the issuance to HTP of the Shares pursuant
to this Agreement:
(a) HTP 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 it deems
necessary or appropriate as a prudent and knowledgeable entity evaluating the
purchase of the Shares. HTP acknowledges that CCI and CCH have made available to
it the opportunity to obtain additional information to evaluate the merits and
risks of its investment. HTP acknowledges that it has had the opportunity to ask
questions of, and receive satisfactory answers from, the officers of CCI and CCH
concerning the terms and conditions of the offering and the business of CCI and
CCH.
(b) HTP can bear the economic risk of losing its entire investment in the
Shares.
(c) HTP 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 HTP has no present plans to enter into any contract,
undertaking, agreement or arrangement for any such resale, distribution,
division or fractionalization thereof.
(d) HTP UNDERSTANDS THAT THE SHARES ARE SPECULATIVE INVESTMENTS WHICH
INVOLVE A HIGH DEGREE OF RISK OR LOSS OF ITS ENTIRE INVESTMENT.
(e) HTP, acting alone or with its representatives, has sufficient knowledge
and expertise in the risks of investing in similar projects. HTP understands
that an investment in CCH is not suitable for any person who does not so
understand such risks.
(f) HTP 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 HTP has no questions with respect thereto. Any
Tax effects which may be expected by CCI and CCH 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 CCI and CCH.
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 CCI and CCH. NO TAX OPINION IS BEING FURNISHED TO
HTP.
(g) All information which HTP has provided to CCI and CCH concerning its
financial position and knowledge of financial business matters is correct and
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complete in all material respects as of the date of this Agreement, and if there
should be any material change in such information prior to acceptance of this
Agreement by CCI and CCH, HTP will immediately provide CCI and CCH with such
information.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CCI and CCH
Except as set forth in the Disclosure Schedule attached hereto, CCH and
CCI, as of the date of this Agreement and as of the Closing Date (including
after giving effect to the Merger), represent and warrant to HTP as follows:
5.1 Organization, Good Standing, Power. CCH and CCI are corporations duly
organized, validly existing and in good standing under the laws of Nevada. CCH
and CCI 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 CCH and CCI and constitutes the
valid and binding obligations of CCH and CCI, fully enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
related to or limiting creditors' rights generally and by general principles of
equity.
5.3 Restrictions; Burdensome Agreements. Neither CCH nor CCI 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 CCH or CCI from
entering into this Agreement or prevent CCH or CCI from consummating the
transactions contemplated by this Agreement or the Articles of Merger.
5.4 Consent and Approvals. CCH and CCI 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 CCH and CCI of this Agreement and the consummation of
the transactions contemplated by this Agreement and the Articles of Merger.
5.5 No Violation. The execution, delivery and performance of this Agreement
and all other agreements entered into in connection with the transactions
contemplated hereby by CCH and CCI 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 CCH or CCI under:
(a) their respective charter documents;
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(b) any note, agreement, contract, license, instrument, lease or other
obligation to which CCH or CCI 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 CCH or
CCI; or
(d) any statute, law, regulation or rule of any Governmental Authority
applicable to CCH or CCI.
5.6 CCH Shares. The CCH Common Stock and Class C Preferred Stock (and the
CCH Common Stock issuable upon the conversion of the Class C Preferred Stock)
issuable to HTP for the Purchase Price will, when issued at Closing, be duly
authorized, fully paid and nonassessable, and the CCH Common Stock issuable to
HTP upon conversion of the Class C Preferred Stock, if and when converted, will
be duly authorized, fully paid and nonassessable.
5.7 Capitalization. The authorized and outstanding capitalization of CCH
and CCI consists of the following:
(a) CCH:
(i) Seventy Million (70,000,000) shares of CCH Common Stock are
presently authorized. As of the date of this Agreement, there is One (1) share of
CCH Common Stock issued and outstanding.
(ii) Ten Million (10,000,000) shares of CCH Preferred Stock are
currently authorized. As of the date of this Agreement, there are no shares of CCH
Preferred Stock issued and outstanding.
(b) CCI:
(i) Forty-Six Million (46,000,000) shares of CCI Common Stock are
presently authorized. Excluding shares of CCI Common Stock issued or issuable upon
exercise of outstanding options or warrants or which may be converted from CCI
Preferred Stock after the date of this Agreement, as of the date of this
Agreement, there are Four Million Nine Hundred Twelve Thousand Sixty-One
(4,912,061) shares of CCI Common Stock issued and outstanding.
(ii) Four Million (4,000,000) shares of CCI Preferred Stock are
presently authorized, of which Four Million (4,000,000) shares are designated Class
A with maximum conversion to Twenty Million (20,000,000) shares of CCI Common Stock.
As of November 1, 2001, there are Four Million (4,000,000) shares of CCI Preferred
Stock issued and outstanding.
(iii) Except for (i) the conversion privileges of the CCI Preferred
Stock set forth in CCH's Charter; (ii) CCI's stock option plan and stock options,
of which there are options to purchase Five Million Forty Thousand (5,040,000)
shares of CCI Common Stock, as of the date of this Agreement, there are no
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outstanding convertible securities, options, warrants, rights (including
conversion or preemptive rights) or agreements for the purchase or acquisition
from CCI of any shares of its capital stock.
5.8 Financial Statements. CCI has previously furnished HTP with true and
complete copies of the balance sheets of CCI for fiscal years 1999 and 2000 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 years 1999 and 2000 (the "Financial Statements"). All of
the Financial Statements, including the related notes where applicable, are in
accordance with the books and records of CCI, present fairly the financial
position, cash flows, changes in shareholders' equity, and changes in financial
position of CCI as of the respective dates and for the respective periods
indicated, and have been prepared in accordance with GAAP, consistently applied.
5.9 Absence of Litigation; Compliance with Laws.
(a) There is no material action, suit, proceeding, claim or investigation
pending or, to the knowledge of CCH or CCI, threatened against, or directly or
indirectly involving, CCH, CCI, Third Enterprise or any assets, business or
operations of CCH, CCI, Third Enterprise or the transactions contemplated hereby
or by the Articles of Merger. There is no unsatisfied or outstanding order, stop
order, writ, rescission notices, judgment, injunction, decree or administrative
decree or mandate affecting CCH, CCI, Third Enterprise or their assets,
businesses or operations.
(b) CCH and CCI 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 CCH or CCI.
Neither CCH nor CCI 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 CCH, CCI or Third Enterprise. Without limiting the foregoing, CCH and
CCI are in material compliance with (i) all applicable Environmental Laws,
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.
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5.10 Government Licenses and Permits. CCH and CCI have all authorizations,
approvals, orders, licenses, certificates and permits of and from all
Governmental Authorities 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 CCH or CCI.
5.11 SEC Reports. None of the information supplied or to be supplied by
either CCH or CCI for inclusion or incorporation by reference in the
Registration Statement on Form SB-2 to be filed with the SEC by CCH in
connection with the issuance of the shares of CCH Common Stock and Class C
Preferred Stock in connection with this Reorganization (the "Form SB-2") will,
from the time the Form SB-2 is filed with the SEC through the time it becomes
effective under 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.
5.12 No Broker's or Finder's Fees. No agent, broker, investment banker,
Person or firm acting on behalf of CCH or CCI 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 in this or in
the Articles of Merger.
5.13 Taxes.
(a) CCH and CCI shall be jointly and severally responsible for (i)
all property Taxes attributable to any of the Assets since August 7, 2000, and (ii)
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 CCH.
(b) Except as set forth in the Disclosure Schedule, (i) CCI and
CCH have timely filed or caused to be timely filed (or will timely file or cause
to be timely filed) with the appropriate Taxing Authorities all Tax Returns required
to be filed on or prior to the Closing Date (taking into account all extensions
of due dates) by or with respect to CCI, CCH and the Assets since August 7,
2000, and have timely paid or adequately provided for (or will timely pay or
adequately provide for) all Taxes owed by or with respect to CCI, CCH and the
Assets (whether or not shown on any Tax Return) for the period up to and
including the Closing Date, except where the failure to file such Tax Returns or
pay any such Taxes would not, or could not reasonably be expected to, in the
aggregate have a Material Adverse Effect on CCI, CCH or HTP, taken as whole. No
written claim has been made to CCI or CCH by any Taxing Authority in any
jurisdiction where CCI or CCH do not file Tax Returns asserting that they are
required to file a Tax Return.
(c) Except as set forth in the Disclosure Schedule, (i) there have been no
examinations or audits with respect to any Tax Return of, or which included,
CCI, CCH or the Assets, and (ii) no assessment, deficiency or adjustment for any
Taxes has been asserted in writing or, to the knowledge of CCI or CCH, is
17
proposed with respect to any Tax Return of, or which includes, CCI, CCH or the
Assets.
(d) The Financial Statements fully accrue all actual and contingent
Liabilities for Taxes with respect to all periods through the dates thereof in
accordance with GAAP. CCI and CCH will establish, in the ordinary course of
business and consistent with its past practices, reserves adequate for the
payment of all Taxes for the period from August 7, 2000 through the Closing
Date.
5.14 Accuracy of Information Furnished. No representation or warranty made
by CCI or CCH in this Article 5 and the related Disclosure Schedule contains any
untrue statement of material fact or omits to state, in light of the
circumstances under which it has been made, a material fact necessary to make
such representation or warranty not misleading; provided, however, that no
representation or warranty is made as to projections, forecasts or other forward
looking information furnished by CCI or CCH to HTP.
ARTICLE 6
COVENANTS OF THE PARTIES
6.1 CCI Stockholder Approval. Promptly after the execution of this
Agreement, CCI will seek to obtain approval from its stockholders of this
Agreement and the Reorganization and the Articles of Merger.
6.2 Operation of Business. During the period from the date of this
Agreement until the earlier of the termination of this Agreement or the Closing,
CCI covenants to HTP that it will maintain the Assets and 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 present business relationships, including those with its
Customers and the Property Owners.
6.3 Transfer of CCI. Neither CCH nor CCI, nor any Affiliate of either, has
any plan or intention to cause any transfer or other disposition of all or any
portion of the assets of CCI following the Reorganization, other than in the
ordinary course of business, to any Person, including, without limitation,
through the liquidation of CCI or any merger or other transaction between CCI
and any Person.
6.4 Consents. Although not required by the Lease and Access Agreement, HTP
will assist CCI in giving all required notices to and will use reasonable efforts
to obtain required consents from each Property Owner that has not previously been
provided notice and who has not already consented.
6.5 Access to Properties and Records; Confidentiality. During the period
from the date of this Agreement to the earlier of the termination of this
Agreement or the Closing, HTP will make available to CCH all books, papers and
records relating to the Assets. HTP will not be required to provide access to or
disclose information where such access or disclosure would jeopardize the
attorney-client privilege of HTP or would contravene any law, rule, regulation,
order, judgment, decree or binding agreement entered into prior to the date
18
hereof. The parties will make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence apply.
CCH 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.
6.6 Confidentiality of Terms of Agreement. After the execution of this
Agreement, CCH, CCI and HTP will maintain the confidentiality of the terms of
this Agreement. No such party will, except to its advisors, 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 had been transferred to CCH, 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 all 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. Notwithstanding the
foregoing, all disclosures required to be included in the Form SB-2 according to
the rules and regulations of the SEC shall be included.
6.7 Accounts Receivable Matters. On August 7, 2000, HTP transferred all of
its accounts receivables relating to the Assets to CCI pursuant to the Asset
Purchase Agreement. Since August 7, 2000, CCI has:
(a) been providing all billing for services to Customers; and
(b) retained all payments on Customer's accounts received by it.
HTP and CCI agree that CCI will retain such payments after the Closing Date and
that CCI will be liable for Taxes on such payments since August 7, 2000. CCI has
also been responsible for all related expenses from such date and will continue
to do so after the Closing Date.
6.8 Indemnification for Claims Relating to the Asset Purchase Agreement.
CCH and CCI will defend, indemnify and hold harmless HTP and any Person claiming
by or through them or any of their successors and assigns, including, without
limitation, each of the partners of HTP, from, against and in respect of any and
all Losses incurred by HTP in connection with the Asset Purchase Agreement or
the sale, transfer or disposition of the Assets by HTP.
6.9 Preparation of Form SB-2. CCH shall prepare and file with the SEC as
soon as practicable the Form SB-2 under the Securities Act, with respect to the
shares of CCH Common Stock and Class C Preferred Stock issued to HTP in this
Reorganization. CCH shall use its best efforts to have the Form SB-2 declared
effective under the Securities Act as promptly as practicable after such filing
and to keep the Form SB-2 effective as long as is necessary to consummate the
Reorganization. CCH shall, as promptly as practicable, provide copies of any
19
written or verbal comments received from the SEC with respect to the Form SB-2
to HTP. CCH shall use its best efforts to obtain, prior to the effective date of
the Form SB-2, all necessary state securities law or "blue sky" permits or
approvals required to carry out the transactions contemplated by this Agreement.
CCH agrees that any written information concerning HTP, the Merger or the
Reorganization set forth in the Form SB-2 and each amendment or supplement
thereto, at the time it is filed or becomes effective, will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. CCH 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 Shares in the
Reorganization.
6.10 Quotation of Common Stock. CCH shall use all reasonable efforts to
cause the Shares to be issued to HTP to be qualified for quotation on the
over-the-counter market, subject to official notice of issuance, after execution
of this Agreement.
6.11 1934 Act Registration Statement. CCH shall use all reasonable efforts
to cause a registration statement on Form 8-A under the Exchange Act to be filed
with the SEC, registering the Shares, with a request that the registration
statement be declared effective simultaneously with the Form SB-2.
6.12 SEC Filings. CCH 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.
6.13 CCH Stock Option Plan. CCH and CCI, within a reasonable time after the
date of the Agreement, will adopt a stock option plan with terms and provisions
comparable to the CCI Stock Option Plan and to grant options thereunder to
certain employees of CCH and CCI.
6.14 Reservation of Conversion Shares. CCH and CCI agree to reserve an
appropriate number of shares of CCH Common Stock for issuance upon conversion of
the Class C Preferred Stock.
6.15 Registration of Shares. HTP shall have the right to rescind this
transaction if the following shall occur:
(a) within 210 days following the Closing Date, the SEC (i) has not
declared effective the Form SB-2 registering the CCH Common Stock to be received
by HTP as the Initial Purchase Price pursuant to the Reorganization; (ii) has
issued a stop order suspending the effectiveness of the Form SB-2 or any part
thereof; or (iii) has initiated or threatened to issue a stop order suspending
the effectiveness of the Form SB-2 or any part thereof;
(b) any request for additional information on the part of the SEC
shall not have been complied with to the reasonable satisfaction of HTP;
20
(c) CCH shall not have received all "blue sky" permits and authorizations
necessary to issue the Shares pursuant to this Agreement and the Articles of
Merger; or
(d) the Shares received by HTP on account of the Purchase Price
shall not be qualified for quotation on the over the counter bulletin board.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF HTP
The obligations of HTP to effect the transactions contemplated herein shall
be subject to the fulfillment, satisfaction or waiver, on or before the Closing
Date, of each of the following conditions:
7.1 Conditions to the Obligations of HTP under this Agreement.
(a) Each of the obligations and covenants of CCH and CCI 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 CCH and CCI 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.
7.2 Absence of Governmental Orders. No temporary or permanent order of a
Governmental Authority shall be in effect which prohibits or makes unlawful
consummation of the transactions contemplated hereby.
7.3 Officers' Certificates. CCI shall have furnished HTP with such
certificates of its officers certifying (i) as to compliance with the conditions
set forth in this Article 7 as may be reasonably requested by HTP; and (ii) that
the stockholders of CCI have approved this Agreement and the Reorganization,
including copies of any appropriate stockholder resolutions.
7.4 Termination of Asset Purchase Agreement. The Asset Purchase Agreement
entered into between HTP, CCI and Third Enterprise shall be terminated and all
rights and obligations resulting from the Asset Purchase Agreement shall be null
and void. CCI shall obtain the consent to terminate the Asset Purchase Agreement
from Third Enterprise prior to the Closing and shall provide such consent to
HTP.
7.5 Articles of Merger. CCH, CCI and Merger Sub shall have duly authorized
and executed the Articles of Merger and shall have delivered the same to HTP.
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ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF CCH and CCI
The obligations of CCH and CCI to effect the transactions contemplated
herein shall be subject to the fulfillment, satisfaction or waiver, on or before
the Closing Date, of each of the following conditions:
8.1 Conditions to the Obligations of CCH and CCI under this Agreement.
(a) Each of the obligations and covenants of HTP 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 HTP 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.
8.2 Board Representation. Xxxxx Xxxxxx, the President of the General
Partner of HTP, shall have agreed to become and shall become a member of the
board of directors of CCH upon the Closing of the Merger.
8.3 Absence of Governmental Orders. No temporary or permanent Governmental
Order shall be in effect which prohibits or makes unlawful consummation of the
transactions contemplated hereby.
8.4 Officers' Certificates. HTP shall have furnished CCH and CCI with such
certificates of their officers certifying as to compliance with the conditions
set forth in this Article 8 as may be reasonably requested by CCH and CCI.
ARTICLE 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, including, without limitation, each of the
partners of HTP, (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 (i) any of the representations and warranties of
the indemnifying party, or (ii) any covenant or agreement made by the indemnifying
party in this Agreement;
(b) if HTP is the Indemnitee, obligations specifically assumed by
CCH or CCI with respect to any Asset and which arise after the Closing Date;
22
(c) if CCH or CCI is the Indemnitee, any alleged or asserted debt,
obligation, Liability or commitment of HTP not expressly assumed by CCH or CCI
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 Article 9.
9.2 Limitations and Procedures.
(a) The indemnification rights and obligations set forth in this
Article 9 shall survive the Closing Date and shall expire on the later of (i) one
year after the Closing Date, or (ii) the satisfaction of the obligation in Section
2.2(b); 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 under this Article
9 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 Article 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 Article 9, or otherwise, exceed
$1.0 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) HTP shall have the right to satisfy any indemnity claim asserted
against it in either cash or CCH Common Stock, valued at its fair market value.
For purposes of determining the fair market value of CCH Common Stock under this
Article 9, the following shall apply: (i) for purposes of any claim for
indemnity asserted against HTP 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 the CCH Common Stock is publicly
traded at the time an indemnity claim is asserted by CCH, the average daily
closing trading price for the 30-day period preceding the date the indemnity
claim is asserted, or (y) in all other cases, the amount agreed to in writing by
CCH and HTP, 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 CCH and HTP (the "Appraiser"). Any party may retain the Appraiser to
determine fair market value if the parties have been unable to agree after
23
meeting and conferring in good faith. The parties shall cooperate in providing
financial information to the Appraiser for purposes of determining fair market
value. CCH and HTP shall split the cost of the Appraiser.
9.3 Indemnification and Covenant Not to Xxx. Notwithstanding Sections 9.1
and 9.2, the parties hereto covenant and agree that the sole shareholder of CCH
existing immediately prior to Closing shall not be liable for any Liabilities
attributed to CCH, whether arising under this Agreement, the Articles of Merger
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 CCH.
ARTICLE 10
TERMINATION
10.1 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) by CCH, without Liability to HTP, by notice to HTP at any time
prior to the Closing if material default shall be made by HTP in the observance or
in the due and timely performance of any of the terms hereof to be performed by HTP
that cannot be cured at or prior to the Closing;
(c) by HTP, without Liability to CCH or CCI, by notice to CCH or CCI
at any time prior to the Closing if material default shall be made by CCH or CCI in
the observance or in the due and timely performance of any of the terms hereof to be
performed by CCH or CCI that cannot be cured at or prior to the Closing; and
(d) by HTP or CCH if the Closing shall not have occurred by December
31, 2001 (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.
10.2 Written Notice. In order to terminate this Agreement pursuant to
Section 10.1, the party so acting shall give written notice of such termination
to the other parties, specifying the grounds therefor.
10.3 Waiver. At any time prior to the Closing, HTP, on the one hand, and
CCH and CCI, on the other hand, may:
(a) extend the time for the performance of any of the obligations
or other acts of the other party hereto;
(b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto; or
24
(c) waive compliance with any of the agreement or conditions contained
herein.
ARTICLE 11
GENERAL PROVISIONS
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, CCH'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 Notices. 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, 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.:
(a) If to HTP, to:
Huntington Telecommunications Partners, L.P.
40 Vienna
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
(b) If to CCH, to:
Competitive Companies Holdings, Inc.
0000 Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
(c) If to CCI, to:
Competitive Companies, Inc.
0000 Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
25
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 Articles of Merger 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.
26
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.
HTP: Huntington Telecommunications Partners, L.P.
By: KBL Investment Co.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: President
CCH: Competitive Companies Holdings, Inc.
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: President
CCI:
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Chief Financial Officer
27
Table of Contents
Page
ARTICLE 1 DEFINITIONS...............................................2
1.1 Certain Defined Terms.........................................2
ARTICLE 2 REORGANIZATION............................................5
2.1 Effective Time................................................5
2.2 HTP's Contribution............................................5
2.3 Merger........................................................7
2.4 Effect of Merger on Securities of CCH, CCI and Merger Sub.....7
2.5 Mechanics of the Merger.......................................9
ARTICLE 3 CLOSING...................................................10
3.1 Closing.......................................................10
3.2 Termination of Prior Agreements...............................10
3.3 HTP's Obligations at Closing..................................10
3.4 CCI's Obligations at Closing..................................11
3.5 CCH Obligations at Closing....................................11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF HTP.....................11
4.1 Organization, Good Standing, Power............................11
4.2 Authorizations and Enforceability.............................11
4.3 Restrictions; Burdensome Agreements...........................12
4.4 Consent and Approvals.........................................12
4.5 Title to Property.............................................12
4.6 Condition of Assets...........................................12
4.7 Lease and Access Agreements...................................12
4.8 Investment Representations....................................13
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF CCI and CCH.............14
5.1 Organization, Good Standing, Power............................14
5.2 Authorizations and Enforceability.............................14
5.3 Restrictions; Burdensome Agreements...........................14
5.4 Consent and Approvals.........................................14
5.5 No Violation..................................................14
i
Table of Contents
(continued)
Page
5.6 CCH Shares....................................................15
5.7 Capitalization................................................15
5.8 Financial Statements..........................................16
5.9 Absence of Litigation; Compliance with Laws...................16
5.10 Government Licenses and Permits...............................17
5.11 SEC Reports...................................................17
5.12 No Broker's or Finder's Fees..................................17
5.13 Taxes.........................................................17
5.14 Accuracy of Information Furnished.............................18
ARTICLE 6 COVENANTS OF THE PARTIES..................................18
6.1 CCI Stockholder Approval......................................18
6.2 Operation of Business.........................................18
6.3 Transfer of CCI...............................................18
6.4 Consents......................................................18
6.5 Access to Properties and Records; Confidentiality.............18
6.6 Confidentiality of Terms of Agreement.........................19
6.7 Accounts Receivable Matters...................................19
6.8 Indemnification for Claims Relating to the Asset Purchase
Agreement.....................................................19
6.9 Preparation of Form SB-2......................................19
6.10 Quotation of Common Stock.....................................20
6.11 1934 Act Registration Statement...............................20
6.12 SEC Filings...................................................20
6.13 CCH Stock Option Plan.........................................20
6.14 Reservation of Conversion Shares..............................20
6.15 Registration of Shares........................................20
ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF HTP......................21
7.1 Conditions to the Obligations of HTP under this Agreement.....21
7.2 Absence of Governmental Orders................................21
7.3 Officers' Certificates........................................21
ii
Table of Contents
(continued)
Page
7.4 Termination of Asset Purchase Agreement.......................21
7.5 Articles of Merger............................................21
ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF CCH and CCI..............22
8.1 Conditions to the Obligations of CCH and CCI under this
Agreement.....................................................22
8.2 Board Representation..........................................22
8.3 Absence of Governmental Orders................................22
8.4 Officers' Certificates........................................22
ARTICLE 9 INDEMNIFICATION...........................................22
9.1 Indemnification...............................................22
9.2 Limitations and Procedures....................................23
9.3 Indemnification and Covenant Not to Xxx.......................24
ARTICLE 10 TERMINATION...............................................24
10.1 Termination...................................................24
10.2 Written Notice................................................24
10.3 Waiver........................................................24
ARTICLE 11 GENERAL PROVISIONS........................................25
11.1 Survival of Representations and Warranties....................25
11.2 Severability..................................................25
11.3 Further Assurances............................................25
11.4 Notices.......................................................25
11.5 Parties in Interest; Assignment...............................26
11.6 Entire Agreement; Amendment...................................26
11.7 Venue.........................................................26
11.8 Attorneys' Fees...............................................26
11.9 Governing Law.................................................26
11.10 Counterparts..................................................26
iii
EXHIBIT A
The agreements listed below, which includes all leases, easements and licenses
to use real property and leases of personal property:
Attached Attached
Property Number Lease & Access Agreement
Name Of Units Agreement Name Date
Durham Greens 316 Telephone and 11/20/1993
Television Lease and
Access Agreement
Xxxxxxx Xxxxxxx 000 Telephone and 11/20/1993
Television Lease and
Access Agreement
Clarendon Hills 285 Telecommunications 11/7/1994
Service and License
Agreement
Rollingwood 272 Telecommunications 9/29/1998
Commons Service and License
Agreement & Amendment
The assets of HTP used to operate the Systems including its telephone switching
and voice mail equipment and cable television equipment used in the agreements
listed above.
All cable (including without limitation aerial cable and underground cable),
conduit and all spare parts and other items used in the agreements listed above.
EXHIBIT B
The Articles and Bylaws of CCH ACQUISITION, Inc, a Nevada corporation, as attached.
iv
EXHIBIT C
PLAN AND AGREEMENT OF MERGER
AMONG
COMPETITIVE COMPANIES HOLDINGS, INC.
A Nevada Corporation
AND
CCH ACQUISITION, INC.
A Nevada Corporation
AND
COMPETITIVE COMPANIES, INC.
A Nevada Corporation
THIS PLAN AND AGREEMENT OF MERGER was made and entered into on this __th day of
December, 2001, by and among COMPETITIVE COMPANIES HOLDINGS, INC., a Nevada
Corporation, CCH ACQUISITION, INC., a Nevada Corporation, and COMPETITIVE
COMPANIES, INC., a Nevada Corporation, said Corporations hereinafter sometimes
referred to jointly as the Constituent Corporations.
W I T N E S S E T H :
WHEREAS, CCH ACQUISITION, INC., is a Corporation organized and existing
under the laws of the State of Nevada, its Certificate of Incorporation having
been filed in the Office of the Secretary of State of the State of Nevada in
December, 2001, and the registered office of CCH ACQUISITION, INC., a Nevada
corporation, being located at Corporate Creations Network, Inc., 0000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000.
WHEREAS, CCH ACQUISITION, INC., is a wholly-owned subsidiary of Competitive
Companies Holdings, Inc., a Corporation organized and existing under the laws of
the State of Nevada, its Certificate of Incorporation having been filed in the
Office of the Secretary of State of the State of Nevada in October, 2001, and
the registered office of COMPETITIVE COMPANIES HOLDINGS, INC., a Nevada
corporation, being located at Corporate Creations Network, Inc., 0000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000.
WHEREAS, the total number of shares of stock which CCH ACQUISITION, INC.
AND COMPETITIVE COMPANIES HOLDINGS, INC. have authority to issue is 80,000,000
$.001 Par Value shares, of which 100 shares of common stock and 1 share of
common stock, respectively, are now issued and outstanding, and
WHEREAS, COMPETITIVE COMPANIES, INC. is a corporation organized and
existing under the laws of the State of Nevada, its Articles of Incorporation
having been filed in the office of the Secretary of State of the State of Nevada
v
in March 1998 and a Articles of Incorporation having been issued by said
Secretary of State on that date; and
WHEREAS, the aggregate number of shares which COMPETITIVE COMPANIES, INC.
has authority to issue is as follows:
46,000,000 shares of common stock of which 4,912,061 shares are outstanding; and
4,000,000 shares of preferred stock in series A, of which 4,000,000 shares of
the Class A preferred stock are outstanding; and
WHEREAS, the Board of Directors of each of the Constituent Corporations
deems it advisable that COMPETITIVE COMPANIES, INC., a Nevada corporation, be
merged into CCH ACQUISITION, INC., a Nevada corporation, on the terms and
conditions hereinafter set forth in accordance with the applicable provisions of
the statutes of the State of Nevada and Nevada respectively, which permit such
merger;
NOW THEREFORE, in consideration of the promises and of the agreements,
covenants and provisions hereinafter contained, CCH ACQUISITION, INC. and
COMPETITIVE COMPANIES, INC., by their respective Board of Directors, have agreed
and do hereby agree, each with the other as follows:
ARTICLE I
COMPETITIVE COMPANIES, INC., a Nevada corporation, and CCH ACQUISITION,
INC., a Nevada corporation, shall be merged into a single corporation, in
accordance with applicable provisions of the laws of the State of Nevada and of
the State of Nevada, by COMPETITIVE COMPANIES, INC., a Nevada Corporation,
merging into CCH ACQUISITION, INC., a Nevada Corporation, which shall be the
surviving corporation.
ARTICLE II
Upon the merger becoming effective as provided in the applicable laws of
the State of Nevada, and of the State of Nevada,:
1. The two Constituent Corporations shall be a single corporation, which
shall be CCH ACQUISITION, INC., a Nevada corporation, as the Surviving
Corporation, and the separate existence of COMPETITIVE COMPANIES, INC., a Nevada
corporation, shall cease except to the extent provided by the laws of the State
of Nevada in the case of a corporation after its merger into another
corporation.
2. CCH ACQUISITION, INC., a Nevada corporation, shall thereupon and
thereafter possess all the rights, privileges, immunities and franchises, as
well as the public and the private nature of each of the Constituent
Corporations; all property, real, personal and mixed, all debts due on whatever
vi
account including subscriptions to shares, all other cases in action, and all
and every other interest of or belonging to or due to each of the Constituent
Corporations which shall be taken and deemed to be vested in the Surviving
Corporation without further act of deed; and the title to all real estate, or
any interest therein vested in either of the Constituent Corporations which
shall not revert or be in any way impaired by reason of this merger.
3. CCH ACQUISITION, INC., a Nevada corporation, shall thenceforth be
responsible and liable for all of the liabilities and obligations of each of the
Constituent Corporations; and any claim existing or action or proceeding pending
by or against either of the Constituent Corporations may be prosecuted to
judgment as if the merger had not taken place, or the Surviving Corporation may
be substituted in its place and neither of the rights of creditors nor any liens
upon the property of either of the Constituent Corporations shall be impaired by
the merger.
4. The Surviving Corporation hereby agrees that it may be served with
process in the State of Nevada in any proceeding for the enforcement of any
obligations of COMPETITIVE COMPANIES, INC., a Nevada Corporation, arising from
the merger, including the rights of any dissenting stockholders thereof, and
hereby irrevocably appoints the Secretary of State of Nevada as its agent to
accept service of process in any such suit or other proceedings and agrees that
service of any such process may be made by personally delivering to and leaving
with such Secretary of State of the State of Nevada duplicate copies of such
process; and hereby authorizes the Secretary of State of the State of Nevada to
send forthwith by registered mail one of the such duplicate copies of such
process addressed to the Surviving Corporation, unless said Surviving
Corporation shall hereafter designate in writing to such Secretary of State of
Nevada a different address for such process, in which case the duplicate copy of
such process shall be mailed to the last address so designated.
5. The aggregate amount of the net assets of the Constituent Corporations
which was available for the payment of dividends immediately prior to the merger
to the extent that the value thereof is not transferred to stated capital by the
issuance of shares or otherwise shall continue to be available for the payment
of dividends by the Surviving Corporation.
6. The Bylaws of CCH ACQUISITION, INC., a Nevada Corporation, as existing
and constituted immediately prior to the effective date of merger shall be and
constitute the bylaws of the Surviving corporation.
7. The Board of Directors, the members thereof, and the Officers of
COMPETITIVE COMPANIES, INC., a Nevada corporation, immediately prior to the
effective date of merger shall be and constitute the Board of Directors, the
members thereof, and the Officers of the Surviving Corporation.
vii
ARTICLE III
The Articles of Incorporation of CCH ACQUISITION, INC., a Nevada
corporation, shall not be amended in any respect by reason of this Agreement of
Merger and said Articles of Incorporation, as filed in the office of the
Secretary of State of the State of Nevada in December 2001, shall constitute the
Articles of Incorporation of the Surviving Corporation until amended in the
manner provided by law and is set forth in Exhibit A attached hereto and made a
part of this Plan and Agreement of Merger with the same force and effect as if
set forth in full herein. The Articles of Incorporation as set forth in said
Exhibit A and separate and apart from this Plan and Agreement of Merger may be
certified separately as the Articles of Incorporation of the Surviving
Corporation.
ARTICLE IV
The manner and basis of converting the shares of each of the Constituent
Corporations into shares of COMPETITIVE COMPANIES HOLDINGS, INC. is as follows:
1. After the effective date of the merger, each owner of an outstanding
certificate or certificates theretofore representing shares of common stock
COMPETITIVE COMPANIES, INC., a Nevada corporation, shall be entitled, upon
surrendering such certificate or certificates to the Surviving Corporation, to
receive in exchange therefor a certificate or certificates representing the same
number of shares of stock of COMPETITIVE COMPANIES HOLDINGS, INC. Until so
surrendered, each outstanding certificate which, prior to the effective date of
the merger, represented shares of shall be deemed, for all corporate purposes,
to represent the ownership of the stock of the Surviving Corporation on the
basis hereinbefore provided.
2. After the effective date of the merger, each owner of an outstanding
certificate or certificates theretofore representing shares of Class A preferred
stock COMPETITIVE COMPANIES, INC., a Nevada corporation, shall be entitled, upon
surrendering such certificate or certificates to the Surviving Corporation, to
receive in exchange therefore a certificate or certificates representing the
number of shares of stock of COMPETITIVE COMPANIES HOLDINGS, INC. in the same
class with the same rights and preferences. Until so surrendered, each
outstanding certificate which, prior to the effective date of the merger,
represented shares of COMPETITIVE COMPANIES, INC. shall be deemed, for all
corporate purposes, to represent the ownership of the stock of the Surviving
Corporation on the basis hereinbefore provided.
3. Upon the merger, the Surviving Corporation shall issues shares of Class
B Preferred Stock to the persons who have rights to receive additional shares of
Common Stock in COMPETITIVE COMPANIES HOLDINGS, INC., on the following terms and
conditions:
1 -
the fraction: [average of opening bid and ask price on the over the counter bulletin board/$3.00]
divided by
the fraction: [average of opening bid and ask price on the over the counter bulletin board/$3.00]
viii
For example, assume average opening bid/ask of $2.00. 1 - 2/3 = 1/3. 1/3 divided
by 2/3 = .5 additional share of common stock issued upon conversion
and these rights in COMPETITIVE COMPANIES, INC., a Nevada corporation shall
thereafter be deemed null and void.
4. Upon the merger, COMPETITIVE COMPANIES HOLDINGS, INC.shall issues
options to holders of options in COMPETITIVE COMPANIES, INC., a Nevada
corporation, having the same terms and conditions as the options in COMPETITIVE
COMPANIES, INC., a Nevada corporation, as are issued and outstanding as of the
date of the merger, and the options in COMPETITIVE COMPANIES, INC., a Nevada
corporation shall thereafter be deemed null and void.
ARTICLE V
If at any time the Surviving Corporation shall consider or be advised that
any further assignment of assurance in law are necessary or desirable to vest in
the Surviving Corporation the title to any property or rights of COMPETITIVE
COMPANIES, INC., a Nevada corporation, the proper Officers and Directors of
COMPETITIVE COMPANIES, INC., a Nevada corporation, shall and will execute and
make all such proper assignments and assurances in law and do all things
necessary or proper to thus vest such property or rights in the Surviving
Corporation, and otherwise to carry out the purposes of this Plan and Agreement
of Merger.
ARTICLE VI
This Plan and Agreement of Merger shall be submitted to the stockholders of
each of the Constituent Corporations as provided by law and shall take effect,
be deemed and be taken to be the Plan and Agreement of Merger of said
corporations upon the approval or adoption thereof by the stockholders of each
of the Constituent Corporations in accordance with the requirements of the laws
of the State of Nevada and upon the execution, filing and recording of such
documents and the doing of such acts and things as shall be required for
accomplishing the merger under the provisions of the applicable statutes of the
State of Nevada as heretofore amended and supplemented.
ix
ARTICLE VII
Anything herein or elsewhere to the contrary notwithstanding this Plan and
Agreement of Merger may be abandoned by either of the Constituent Corporations
by an appropriate resolution of its Board of Directors at any time prior to its
approval or adoption by the stockholders thereof or by the mutual consent of the
Constituent Corporations evidenced by appropriate resolution of their respective
Board of Directors at any time prior to the effective date of the Merger.
x
IN WITNESS WHEREOF, COMPETITIVE COMPANIES HOLDINGS, INC., A Nevada
corporation, CCH ACQUISITION, INC., a Nevada corporation, and COMPETITIVE
COMPANIES, INC., a Nevada Corporation, pursuant to the approval and authority
duly given by resolutions adopted by their respective Board of Directors have
caused this Plan and Agreement of Merger to be executed by the President and
Attested by the Secretary of each party hereto.
COMPETITIVE COMPANIES
HOLDINGS, INC. COMPETITIVE COMPANIES, INC.
A Nevada Corporation A Nevada Corporation
ATTEST: ATTEST:
By:____________________________ By:____________________________
PRESIDENT CHIEF FINANCIAL OFFICER
By:____________________________ By:____________________________
SECRETARY SECRETARY
CCH ACQUISITION, INC.
A Nevada Corporation
ATTEST:
By:____________________________
PRESIDENT
By:____________________________
SECRETARY
xi
EXHIBIT D
XXXX OF SALE
Seller, for good and valuable consideration given pursuant to an Agreement and
Plan of Reorganization dated December 17, 2001 (the "Reorganization Agreement")
by and among Huntington Telecommunications Partners, L.P., a California limited
partnership ("HTP"), CCH ACQUISITION, Inc., a Nevada corporation ("CCH"), and
Competitive Companies, Inc., a Nevada corporation ("CCI"), the receipt and
sufficiency of which consideration is hereby acknowledged, does hereby sell,
assign, transfer and set over to CCH, in accordance with the Reorganization
Agreement, all of Seller's right, title and interest in and to the Assets (as
defined in the Reorganization Agreement) described on Exhibit A attached hereto.
Date: December 17, 2001
SELLER: Huntington Telecommunications Partners, LP
By:KBL Investment Co., General Partner
By:Huntington Partners, Inc., General Partner
By: _______________________
Name & Title:Xxxxx X. Xxxxxx,
xii
EXHIBIT E
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").
Competitive Companies, Inc., a Nevada corporation 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
December 4, 2001, Operator and CCH ACQUISITION signed an agreement for CCH
ACQUISITION 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
COMPETITIVE COMPANIES HOLDINGS, INC., a Nevada corporation, the parent of CCH
ACQUISITION.
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 CCH ACQUISITION
and CCIRS.
Date: ___________________________
PROPERTY OWNER:
_________________________________
By:____________________________________
Name & Title:___________________________
xiii
ARTICLES OF MERGER
OF
CCH ACQUISITION, INC.,
a Nevada corporation
AND
COMPETITIVE COMPANIES, INC.,
a Nevada corporation
To the Secretary of State
State of Nevada
Pursuant to the provisions of Chapter 92A, Nevada Revised Statutes, the
constituent domestic corporations herein named do hereby submit the following
Articles of Merger.
1. An Agreement and Plan of Reorganization (the "Plan of Reorganization")
has been adopted by the Board of Directors of CCH Acquisition, Inc., a Nevada
corporation, and by the Board of Directors of Competitive Companies, Inc., a
Nevada corporation, to, among other things, merge CCH Acquisition, Inc. with and
into Competitive Companies, Inc., with Competitive Companies, Inc. surviving the
merger. As a result of the merger, Competitive Companies, Inc. shall become a
wholly owned subsidiary of Competitive Companies Holdings, Inc. The complete
executed Plan of Reorganization is on file at the registered office of
Competitive Companies, Inc., which is 0000 Xxxxxx Xxxxx, Xxxxx X, Xxxxxxxxx,
Xxxxxxxxxx 00000.
2. The Plan of Reorganization was approved by the unanimous written consent
of the stockholders of CCH Acquisition, Inc. pursuant to the provisions of
Chapter 92A, Nevada Revised Statutes.
(i) The designation and the number of votes entitled to be cast by
each class entitled to vote on the said Plan of Reorganization are as follows:
(a) Designation of class: Common Stock
(b) Number of votes of class entitled to be cast: 100
(ii) The total number of undisputed votes cast for the merger herein
provided for by each class entitled to vote on the said Plan of Reorganization
is as follows:
(a) Designation of class: Common Stock
(b) Number of undisputed votes of class cast for Plan of Reorganization: 100
1
(iii) The said number of votes cast for the said Plan of Reorganization
was sufficient for the approval thereof by the said class.
3. The Plan of Reorganization was approved by the written consent of the
stockholders of Competitive Companies, Inc. pursuant to the provisions of Chapter
92A, Nevada Revised Statutes.
(i) The designation and the number of votes entitled to be cast by
each class entitled to vote on the said Plan of Reorganization are as follows:
(a) Designation of class: Common Stock
(b) Number of votes of class entitled to be cast: 4,912,061
(ii) The total number of votes cast for and against the merger herein
provided for by each class entitled to vote on the said Plan of Reorganization is
as follows:
(a) Designation of class: Common Stock
(b) Number of votes of class cast for Plan of Reorganization: 2,528,600
(c) Number of votes of class cast against Plan of Reorganization: not applicable.
(iii) The said number of votes cast for the said Plan of Reorganization
was sufficient for the approval thereof by the said class.
4. No amendments to the Articles of Incorporation of Competitive Companies,
Inc. are effected by the merger herein provided for.
2
Signed on December 21, 2001
Competitive Companies, Inc.
/s/ Xxxxx Xxxxxxxx Xxxxx Xxxxxxxx, Chief Financial Officer
/s/ Xxxxx Xxxxxxxx Xxxxx Xxxxxxxx, Secretary
CCH Acquisition, Inc.
/s/ Xxxxx Xxxxxxxx Xxxxx Xxxxxxxx, President
/s/ Xxxxx Xxxxxxxx Xxxxx Xxxxxxxx, Secretary
