EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and entered into the 23rd of December, 2002 by
and between DIGITAL SERVICE, INC., a Washington Corporation ("DSI"), and CABLE
CONCEPTS, INC., dba DIRECT DIGITAL COMMUNICATIONS, a Washington Corporation
("CCI") a wholly owned subsidiary of USA Broadband, a Delaware Corporation.
RECITALS
DSI is in the business of acquiring and owning rights of entry to
construct, install, operate and maintain satellite master antenna television
operations in multi-family residential developments (herein referred to as
"Systems"). CCI is also in the business of designing, constructing, owning and
managing Systems.
DSI desires to purchase from CCI, and CCI is willing to sell to DSI or
its assigns, all of its assets, including, Systems and Rights of Entry, for all
systems listed on Exhibit "A" attached hereto, all pursuant to the terms and
conditions set forth hereafter.
Accordingly, in consideration of the mutual covenants herein, the
parties agree as follows:
1. DEFINITIONS
1.01 "RIGHT OF ENTRY AGREEMENTS" shall mean agreements between CCI
and apartment owners under which CCI has agreed to operate and
maintain the Systems.
1.02 "BANK NOTES" shall mean the promissory notes held by Pacifica
Bank, and Advanta Credit. Said notes are included in the list of
Assumed Liabilities attached hereto as Exhibit B. These notes
have outstanding balances of not more than $1,600,000.00 and
$15,500 respectively.
1.03 "PURCHASED ASSETS" shall mean all of the property of CCI, real
and personal, tangible and intangible, to be purchased by DSI
hereunder, including but not limited to, CCI's Right of Entry
Agreements, Systems, Management Agreements, inventory and
equipment listed in Exhibit A. The inventory shall include, at a
minimum, two hundred and twenty five (225) digital satellite
receivers complete with access cards, or if access cards are not
available, two hundred and twenty five (225) digital satellite
receivers and the parts and materials currently stored in the
mini-storage facilities in Dallas and Houston, Texas.
Irrespective of where stored, inventory shall also include all
of the test equipment and tools provided by CCI to its Texas
based personnel and/or agents specific to the support and
maintenance of any of the Systems located in the State of Texas.
Provided that, at Closing, CCI's contractual obligations that
relate to the above referenced mini-
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storage are not in arrears, DSI shall assume all responsibility
for CCI's said mini-storage contractual obligations. All
programming agreements that pertain to the Purchased Asset are
included in the Purchased Assets but may or may not be included
on Exhibit A. To the extent that those agreements are not listed
in Exhibit A, those items will be identified and transferred
after the execution of this Agreement at or prior to Closing.
(a) PINNACLE PROPERTY. In addition to the Purchased Assets,
CCI shall transfer to DSI all of the property of CCI,
real and personal, tangible and intangible, in the
Pinnacle Property, including but not limited to, CCI's
Right of Entry Agreements, Systems, Management
Agreements, inventory and equipment that pertains
thereto. The Pinnacle Property is more fully described
in Exhibit C attached hereto.
1.07 "RETAINED ASSETS" shall mean the property of CCI, which is not
being purchased by DSI hereunder, as described on Exhibit D
attached hereto.
1.08 "RIGHTS OF ENTRY AGREEMENTS" shall mean the agreements between
CCI and the owners of multi-family residential properties
pursuant to which CCI has the exclusive right to construct,
install, own and operate Systems on the properties. Provided,
however, this definition shall also apply to the right of entry
agreement for the Foxfire property which the parties acknowledge
is a non-exclusive right of entry.
1.09 "SYSTEMS" shall mean all of the tangible and intangible assets
relating to ownership, operation and maintenance of satellite
master antenna television operations in multi-family residential
properties, including but not limited to cable, head-end
equipment, satellite dishes, subscriber boxes, amplifiers,
structures, subscriber lists, subscriber agreements, subscriber
accounts, leases, programming agreements, contract rights, spare
parts, tools, Rights of Entry Agreements and Management
Agreements.
1.10 "UNITS" shall mean the right to provide cable television service
to an apartment residential unit pursuant to a Right of Entry
Agreement purchased by DSI hereunder.
2. PURCHASE AND SALE
CCI will sell and transfer to DSI, and DSI will purchase and take
delivery from CCI, all of the Purchased Assets, pursuant to the terms
and subject to the conditions set forth in this Agreement.
3. PURCHASE PRICE
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The purchase price for the Purchased Assets shall be described and
applied as follows:
3.01 UNITS. The purchase price per unit which are so identified on
Exhibit A shall be one hundred ninety seven dollars and 50/100
($197.50) per Unit. Based on the units reflected on Exhibit A,
there are a total 8,533 units, excluding Pinnacle on Lake
Washington, valued at $1,685,267.50.
3.02 APPLICATION OF PURCHASE PRICE. Eighty percent (80%) of the
purchase price shall be paid hereunder shall be applied to the
acquisition of the Rights of Entry and twenty percent (20%) to
the equipment and the rest of the assets purchased by DSI
hereunder.
3.03 ASSUMPTION OF PACIFICA BANK AND ADVANTA CREDIT OBLIGATION NOTES.
CCI has certain financial obligations owed to Pacifica Bank, and
Advanta Credit. Said obligations are based on and arise out of
the documentation attached hereto as Exhibit E. DSI shall assume
said obligations. PROVIDED, HOWEVER, the obligation owed to
Pacifica Bank by CCI shall not exceed one million six hundred
thousand dollars ($1,600,000.00); the CCI obligation owed to
Advanta Credit shall not exceed fifteen thousand five hundred
dollars ($15,500.00).
3.04 ASSUMPTION OF ADDITIONAL LIABILITIES. Other than the assuming
set forth herein above, if an excess balance due to CCI exists,
determined by deducting the Pacifica Bank Note and Advanta
Credit from the gross transaction value, this balance will be
reduced by assigning additional debt or liabilities equivalent
to this remaining balance and agreeable to both CCI and DSI. DSI
shall not assume, and shall have no liability for, any
obligations of CCI which do not arise under the Right of Entry
Agreements or under the Management Agreements, and shall not
assume the obligations under the Right of Entry Agreements or
the Management Agreements which were required to be performed
prior to the respective dates of transfer of such assets or with
respect to which CCI is in default as of the respective dates of
transfer of such assets unless agreed upon between DSI and CCI.
3.05 TAXES. The purchase price for the Purchased Assets set forth in
this Section 4 excludes all sales, use, excise transfer and
similar taxes which may be imposed by any governmental agency as
a result of the transfer of the Purchased Assets to DSI. CCI
shall pay all sales, use, property, or other taxes associated
with respect to cable television service and related sales to
the subscribers of each property due at the time of transfer of
each System, and shall provide evidence thereof to DSI. In lieu
of such evidence, DSI may, in its sole discretion, pay any tax
owed and deduct any tax it so paid from the purchase price or
deposit in escrow the tax amount. The amount of such taxes shall
be separately identified in each transfer document. In any
event, CCI shall indemnify DSI and hold it harmless from and
against any such tax liability, including interest and
penalties, and from any costs
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and expenses of defending against any such claimed deficiency,
including reasonable attorneys' fees and costs.
3.06 CALCULATION OF AMOUNT OWED TO CCI. The entire Purchase Price
Subtotal shall be calculated by the number of Units on Exhibit A
times the per door amount as described in 4.01 herein. All
liabilities assumed by DSI or owed to DSI by CCI pursuant to
this contract or otherwise, shall be subtracted from the
Purchase Price Subtotal. Further, the subscriber deposits
addressed in paragraph 17 shall be deducted from the Purchase
Price Subtotal. After said deductions, the result of this
calculation shall be the total Amount Owed by DSI to CCI.
3.07 ACCOUNTS RECEIVABLE: all subscriber accounts receivable prior to
December 1, 2002 remain the property of CCI. DSI will provide to
CCI assistance and access to subscriber accounts to facilitate
collection efforts.
3.08 PINNACLE PROPERTY. The purchase price for the Pinnacle Property
shall not be included in the calculations set forth in
paragraph 4.06 above. In consideration for the transfer of the
Pinnacle Property, DSI shall assume and hold CCI harmless from
CCI's obligations to pay Broadband Concepts for CCI's
outstanding account payable obligations to Broadband Concept,
Inc. The amount of said obligation is not more than one hundred
twenty thousand dollars ($120,732.17). CCI's account payable
obligations to Broadband Concepts in more fully described in the
documents attached hereto as Exhibit F.
4. PAYMENT TERMS
The Amount Owed described in Section 4 above shall be paid as follows:
4.01 PROMISSORY NOTE. It the Amount Owed is a positive number, DSI
shall execute a promissory note (hereinafter referred to as the
"Promissory Note") payable to CCI in the Amount Owed. Said
Promissory Note shall not bare any interest. If, after the
making of the Promissory Note CCI is, for any reason, obligated
to DSI for any additional sums not previously included in the
agreed calculation of the sum owed in the Promissory Note then
DSI, in its sole discretion, may deduct said additional sums
from the balance of the Promissory Note as if paid.
4.02 PROMISSORY NOTE TERMS. DSI shall pay the Promissory Note balance
in quarterly payments that shall be equal to twenty five percent
(25%) of the net profits it generates in its operation of the
Purchased Assets until the earlier of the balance having been
paid in full or 18 months from the closing of this Purchase and
Sale Agreement. The first payment shall be due ninety days (90)
after the Closing of this Purchase and Sale Agreement.
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4.03 TRANSFER OF PURCHASED ASSETS. CCI specifically acknowledges that
it will not have any interest in the Purchased Assets after the
Closing of this Purchase and Sale Agreement. CCI further
specifically agrees that DSI, in its sole discretion, may sell
some, or all, of the Purchased Assets to third parties. However,
if any of the Purchased Assets are sold, all of the net proceeds
therefrom shall be applied to the balances of the obligations
set forth in paragraph 4.03 hereinabove. If any of the net
proceeds are not so applied then twenty five percent (25%) of
the net proceeds that are not so applied shall be paid to CCI,
and the balance of the Promissory Note shall be reduced by an
equal amount. If all of the Purchased Assets are sold, and after
all payments are made and applied to the Promissory Note balance
as required herein, there are still sums owing pursuant to the
Promissory Note, then the balance shall be paid in equal
quarterly payments over a period not to exceed six months from
the date of the last transfer of a Purchased Asset by DSI to a
third party.
4.05 IF AMOUNT OWED IS A NEGATIVE NUMBER. CCI warrants that the
Amount Owed is not a negative.
5. SIGNORS GUARANTY/WARRANTEE
5.01 XXXXXX'X AUTHORITY. The person who executes this Purchase and
Sale Agreement on behalf of CCI hereby warrants and guarantees
that said person is duly and fully authorized by CCI to execute
this agreement on CCI's behalf.
6. CLOSING
6.01 CLOSING DATE. Closing of all of the Purchased Assets shall occur
on the _____ day of _______ 200__ even though the transfer of
some of the Purchased Assets may occur before or after that
date. As used in this Purchase and Sale Agreement, the term
"Closing Date" shall be the 1st day of December, 2002. The
transfer of all assets shall be done in such a manner to
preserve in DSI any priority to title to any Purchased Asset in
any government record where such interest is recorded. Closing,
shall occur at the Santa Fe Springs office or at such other
place, as CCI and DSI shall mutually agree.
7. REPRESENTATIONS OF SELLER
CCI represents and warrants to DSI, as of the date of this Agreement and
as of the Closing Date, as follows:
7.01 ORGANIZATION, GOOD STANDING AND POWER. CCI:
(a) is a corporation duly organized, validly existing
and in good
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standing under the laws of the State of Washington;
(b) is not required to be authorized or licensed to do
business as a foreign corporation in any other
jurisdiction by reason of the nature of the business
conducted by it or the properties owned or leased or
operated by it; and
(c) has the requisite power and authority to own, lease
and operate its properties, and to carry on its business
as currently conducted.
7.02 AGREEMENTS RELATING TO STOCK. Neither CCI, nor any of its
shareholders, is or are a party or parties to any written or
oral agreement, understanding, arrangement or commitment, or is
bound by any certification of incorporation, bylaws or other
instrument, which creates any rights with respect to the voting
of any securities of CCI.
7.03 AUTHORIZATIONS AND ENFORCEABILITY. CCI has the requisite power
and authority to execute, deliver and perform this Purchase and
Sale Agreement and to consummate the transactions contemplated
hereby. This Purchase and Sale Agreement has been duly and
validly executed and delivered by CCI, and has been duly and
validly authorized by each shareholder of CCI, and it
constitutes the valid and binding obligation of CCI fully
enforceable in accordance with its terms.
7.04 EFFECTIVENESS OF AGREEMENT. The execution, delivery and
performance of this Purchase and Sale Agreement by CCI and the
consummation of the transactions contemplated hereby will not,
with or without the giving of notice or the lapse of time, or
both:
(a) Violate any provision of law, statute, rule or
regulation to which CCI is subject;
(b) Violate any judgment, writ or decree of any court,
arbitrator or governmental agency applicable to CCI;
(c) Have any adverse effect on any of the Purchased
Assets; or
(d) Result in the breach of or conflict with any term,
covenant, condition or provision of, or result in the
modification or termination of, constitute a default
under, or result in the creation or imposition of any
lien, security interest, charge or encumbrance upon any
of the Purchased Assets.
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7.05 RESTRICTIONS. CCI is not a party to any contract, commitment or
agreement, and none of the Purchased Assets are subject to or
bound or affected by any bylaw or other corporate restriction,
or any order, judgment, decree, law, statute, ordinance, rule,
regulation or other restriction of any kind, which would:
(a) Prevent CCI from entering into this Purchase and
Sale Agreement or from consummating the transactions
contemplated hereby; or
(b) materially and adversely affect, or in the future
may materially and adversely affect, the Purchased
Assets or the ability of DSI to carry on a business
similar to that presently conducted by CCI, or the
ability of DSI to use the Purchased Assets in the manner
in which they are presently used.
7.06 GOVERNMENT AND OTHER CONSENTS. No consent, authorization or
approval, or exemption by, or filing with any governmental,
public or self-regulatory body or authority is required in
connection with the execution, delivery and performance by CCI
of this Agreement or any of the instruments or agreements herein
referred to, or the taking of any action contemplated by this
Agreement.
7.07 VIOLATION OF LAWS. CCI is not in default or in violation of any
executive, legislative, judicial or administrative ruling,
order, injunction or decree.
7.08 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES. CCI owns
and has good and marketable title to the Purchased Assets, free
and clear of all mortgages, security interests, liens,
encumbrances, use restrictions and other defects in title,
except liens, easements, restrictions and other encumbrances on
the property subject to the Right of Entry Agreements which are
part of the Purchased Assets. By way of illustration of the
foregoing exception, a permitted lien would include a lender's
mortgage, which constitutes a lien on the apartment complex
covered by a Right of Entry Agreement. A second exception hereto
shall be those security interests that are listed on Exhibit E.
Each of the agreements and other instruments constituting part
of the Purchased Assets, including but not limited to, the Right
of Entry Agreements and the Management Agreements, is in full
force and effect.
7.12 CONDITION OF EQUIPMENT. All of the equipment and other tangible
personal property constituting part of the Purchased Assets are
in good condition and repair (ordinary wear and tear which are
not such as to adversely affect the operation of any such
property excepted) and are suitable for the uses for which they
are intended. All such property is operative in conformity with
all applicable laws,
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ordinances, regulations and other governmental requirements
currently in effect.
7.13 ACCURACY OF REPRESENTATIONS. No representation, covenant or
warranty by CCI contained in this Purchase and Sale Agreement
contains or will contain at Closing any untrue statement of a
material fact or will omit to state a material fact necessary in
order to make the statements contained therein not misleading.
7.15 SYSTEMS. Each of the Systems set forth on Exhibit A is fully
contained within the property covered by a related Right of
Entry Agreement. Each of the Systems is fully operational and
currently delivering all of the channel line-ups that CCI
publishes in its promotional material specific to each Unit. All
Systems are functioning under standard operating procedures. All
programming fees for community service and basic service are
paid current by CCI at or before Closing. If said fees are not
paid at or prior to Closing, DSI, in it's sole discretion, may
pay the same and deduct an amount equal thereto from the Amount
Owed pursuant to paragraph 4.06 hereinabove. All of CCI's
revenue sharing obligations shall be paid in full prior to or at
the time of Closing. If said obligations not paid prior to or at
Closing, DSI, in its sole discretion, may pay the same and
deduct an amount equal thereto from the Amount Owed pursuant to
paragraph 4.06 hereinabove.
7.16 MAINTENANCE OF BUSINESS RECORDS. Until Closing, CCI shall
continue to maintain the Systems that have not been previously
transferred to DSI to operate pending Closing and CCI shall keep
all of its business books, records and files, all in the
ordinary course of business, in accordance with past practices
consistently applied.
8. REPRESENTATIONS AND WARRANTIES OF DSI
DSI represents and warrants to CCI, as follows:
8.01 ORGANIZATION, GOOD STANDING AND POWER. DSI:
(a) is a corporation duly organized, validly existing
and in good standing under the laws of the State of
Washington;
(d) has the requisite power and authority to own, lease
and operate the Purchased Assets, and to carry on its
business as currently conducted.
8.02 AUTHORIZATION AND ENFORCEABILITY. DSI has the requisite power
and authority to execute, deliver and perform this Purchase and
Sale Agreement and to consummate the transactions contemplated
hereby. This Purchase and Sale Agreement has been duly and
validly executed and delivered by DSI, and has
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been duly and validly authorized by each shareholder of DSI, and
it constitutes the valid and binding obligation of DSI fully
enforceable in accordance with its terms.
8.03 EFFECTIVE AGREEMENT, CONSENTS. No consent, authorization or
approval or exemption by, or filing with, any governmental or
public body or authority is required in connection with
execution, delivery and performance by DSI of this Agreement or
the taking of any actions contemplated herein.
9. CONDITIONS PRECEDENT TO DSI'S OBLIGATION TO CLOSE
DSI's obligation to close the transactions contemplated herein are
subject to the fulfillment, at or prior to Closing, of each of the
following condition, any one or more of which may be waived by DSI:
9.01 REPRESENTATION AND WARRANTIES. All representations and
warranties of CCI made hereunder shall be true and correct at
Closing.
9.05 FORM OF AGREEMENTS. The form and substance of the documents
constituting the Right of Entry Agreements and the Management
Agreements shall be satisfactory to DSI.
9.06 TRANSFER OF PURCHASED ASSETS. The Purchased Assets shall have
been transferred and delivered to DSI, in such form as is
satisfactory to DSI.
9.07 SALES TAX. CCI shall have provided to DSI evidence satisfactory
to DSI that CCI has paid all sales taxes, which it is required
to pay by virtue of the transfer of Right of Entry Agreements to
DSI pursuant to this Agreement.
10. CONDITIONS PRECEDENT TO CCI'S OBLIGATIONS TO CLOSE
CCI's obligation to close the transactions contemplated herein are
subject to the fulfillment, at or prior to Closing, of each of the
following conditions, any one or more of which may be waived by CCI:
10.01 NOTE. CCI shall have received the Promissory Note in the
amount described in paragraph 5.01 hereinabove.
11. CCI'S INDEMNITY
CCI shall defend, indemnify and hold DSI and its shareholders,
successors and assigns,
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harmless from and against:
(a) All debts, liabilities, damages, losses, costs,
taxes, attorneys' fees, judgments, assessments, expense,
or claims owing by, incurred or accrued against CCI or
DSI or against any of the Purchased Assets as of or
prior to Closing, or arising out of the sale of any
Purchased Assets or CCI's business operations or
ownership of the Purchased Assets by CCI prior to
Closing, or any obligation of CCI under the Purchased
Assets which are required to be performed prior to
Closing.
(b) All liabilities, costs, damages, expenses and losses
paid or incurred, or to be paid or incurred hereafter,
by DSI arising out of any inaccurate representations or
breaches of representations or warranties by CCI herein,
or any attempt by any person to cause or require DSI to
pay or discharge, obligation, liability or commitment of
CCI which is not specifically assumed by DSI pursuant to
this Agreement.
(c) Any reasonable costs and expenses of DSI related to
the foregoing, including reasonable attorneys' fees in
connection with the protection, defense or appeal of any
demand, suit or action in connection with the foregoing,
or for enforcing this indemnity.
(d) In addition to any other remedies which DSI may have
against CCI at law or pursuant to this Purchase and Sale
Agreement, DSI may offset against payment of any amount
of the purchase price hereunder, including the payment
of any amounts payable pursuant to the Promissory Note
described in paragraph 5.01, any and all amounts to
which DSI is entitled to indemnification pursuant to
this paragraph.
12. DSI'S INDEMNITY
DSI shall indemnify and hold CCI harmless from and against:
(a) All damages, expenses and losses suffered, paid or
incurred, or to be suffered, paid or incurred after
Closing by CCI arising out of any inaccurate
representations or breaches of warranties or
representations by DSI hereunder.
(b) DSI's ownership, operation and conduct of any
Purchased Assets after Closing.
(c) All reasonable costs and expenses of CCI related to
the foregoing, including reasonable attorneys' fees in
connection with the prosecution,
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defense or appeal of any demand, suit or action in
connection with the foregoing or enforcing this
indemnity.
13. ASSIGNMENT OF CONTRACT RIGHTS
DSI agrees to pay all or any portion of the Purchase Price required
hereunder, and make the Promissory Note described in paragraph 5.01
hereof payable to any party designated by CCI, to the extent that CCI
directs in writing, and provided that DSI is held harmless from any
liability for having responded to such direction. Any payment by DSI
hereunder pursuant to such direction shall be deemed payment for the
Purchased Assets hereunder as fully as though it were made to CCI. The
foregoing shall not obligate DSI to make any payment in total amounts
greater than, or on dates prior to, amounts or dates required under this
Purchase and Sale Agreement.
14. PROGRAMMING AGREEMENTS
To the extent that programming agreements held by CCI affecting any of
the Systems acquired by DSI hereunder are retained by CCI, CCI agrees to
take such actions, including executing such amendments, and providing
such notices and other communications to the other parties to the
programming agreements, as may be requested by DSI, for so long as such
programming agreements affect programs provided to Systems acquired by
DSI hereunder.
15. MISCELLANEOUS
15.01 DISCLOSURE. CCI shall disclose and make available to DSI, all
documents, data and other information within CCI's possession
and control relating to the Purchased Assets.
15.02 SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, and their respective
successors and assigns.
15.03 REPRESENTATIONS AND WARRANTIES SHALL SURVIVE. All
representations and warranties by the parties contained herein,
and otherwise made in writing pursuant to this Purchase and Sale
Agreement, shall survive Closing.
15.04 ENTIRE AGREEMENT. This Purchase and Agreement contains the
entire agreement of the parties relating to the rights granted
and obligations assumed under this Purchase and Sale Agreement,
and supersedes all prior agreements, understanding or
representations, whether written or oral, with respect to the
subject matter hereof. There are no other verbal or other
agreements which modify or affect this Purchase and Sale
Agreement. This Purchase and Sale Agreement may only be amended
in writing, signed by the parties hereto.
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15.05 NOTICES. All notices or other communications hereunder, shall be
deemed to have been given, when personally delivered or when
deposited in the U.S. Mail, registered or certified, postage
prepaid and addressed as follows:
To CCI: USA Broadband
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx, CFO
To DSI: Digital Service, Inc.
0000 00xx Xxxxxx XX
Xxxxxx, XX 00000
Attn: Xxx Xxxxxx, President
15.06 CCI SHALL EXECUTE ALL DOCUMENTS. CCI shall execute all documents
that are reasonably necessary to fulfill the intent of this
Purchase and Sale Agreement and to complete the transfer of any
of the Purchased Assets. Any such documents shall be in such
form as is acceptable to DSI. CCI's obligations hereunder shall
survive Closing.
15.07 ATTORNEYS' FEES. In the event legal action is taken by either
party to enforce this Purchase and Sale Agreement, or any action
arising out of the representations, warranties, and covenants
contained herein, all costs and expenses, including reasonable
attorneys' fees, incurred by the prevailing party shall be paid
by the non prevailing party.
15.08 JURISDICTION AND VENUE. This Purchase and Sale agreement shall
be construed in accordance with the laws of the State of
Washington venue shall lie in Xxxxxx County, WA Superior Court.
16. SUBSCRIBER DEPOSITS
CCI shall provide DSI with complete and accurate accounting of all
subscriber deposits that pertain to any of the Purchased Assets
including the Pinnacle Property. DSI shall assume all responsibility to
said subscribers for return of said deposit as is required by the
subscriber agreements with CCI. The total amount of said deposits shall
be deducted for the Amount Owed set forth in paragraph 4.06.
17. ESTOPPEL CERTIFICATES - ASSIGNMENT AGREEMENT
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CCI shall obtain an executed Estoppel Certificate from each of the
owners of each of the properties for each and every Right of Entry
Agreement that is included in the Purchased Assets. The Estoppel
Certificates shall include, but not necessarily be limited to, an owner
affirmation that CCI's Rights of Entry Agreements that are included in
the Purchased Assets are in full force and effect and that CCI is not in
default in any of CCI's obligations owed to the respective property
owner. The Estoppel Certificates shall be in the form of Exhibit G
attached hereto. CCI shall deliver all Estoppel Certificates along with
an assignment agreement as required hereunder to DSI within ninety (90)
days of closing.
18. USA BROADBAND, INC.'S GUARANTEE
USA Broadband, Inc., hereby guarantees performance of each and every
obligation of CCI that arises out of this Purchase and Sale Agreement,
including but not limited to all of CCI's duties, obligations and
liabilities arising out of this contract that occur after Closing.
19. DEFAULT DECLARED BY APARTMENT OWNER IN 60 DAYS.
In the event that within 60 days after Closing, any apartment owner of
any of the Units shall in any manner notify any party hereto that said
property owner believes that the operation of the System in said
property owners apartment complex has not been maintained or operated in
accordance with the applicable Right of Entry Agreement and provided
that DSI is not able, after reasonable efforts that does not include any
further financial expenditure by DSI, resolve the apartments owner's
related concerns to the satisfaction of the apartment owner and the
apartment owner declares the Right of Entry Agreement to be in default,
then DSI may, within 30 days after the declared default, in its sole
discretion, elect a remedy of returning said Units to CCI and the Amount
Owed shall be reduced by a sum equal to the Purchase Price for said
Units or secure additional units from CCI in exchange for the Units in
default. All other remedies available to DSI for all other issues shall
be unaffected hereby.
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IN WITNESS WHEREOF, the parties have executed this Purchase and Sale
Agreement as of the date first above written.
CCI: CABLE CONCEPTS, INC. A WHOLLY
OWNED SUBSIDIARY OF USA BROADBAND
/s/ Xxxxx Xxxxxx
---------------------------------------
By: Xxxxx Xxxxxx
Title: CFO USA Broadband
DSI: DIGITAL SERVICE, INC.
/s/ Xxx Xxxxxx
---------------------------------------
By: Xxx Xxxxxx
Title: President. Digital Service, Inc.
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Exhibit A
Systems and Right of Entry Agreements
Number of
Name of Property City State Units
----------------------------------------------------------------
Arizona
Desert Mirage Gilbert AZ 106
Foxfire Tempe AZ 000
Xxxxxxx Xxxxx Xxxx XX 27
------------------
3 321
Dallas
Bear Creek Euless TX 250
Bluebonnet Ennis TX 64
Home of Persimmons Dallas TX 000
Xxxxxxxx Xxxxx Xxxxx XX 61
Legends of Eagle Mtn. Forth Worth TX 000
Xxxx Xxx Xxxxx Xxxxxxx XX 000
Xxxxxxxxxxx Xxxxx Xxxxxxx XX 244
Willows, The Ennis TX 84
5600 Dallas TX 13
Athenian Dallas TX 00
Xxxxxx Xxxxx Xxxxxx XX 00
Xxxxxxxxxx Xxxxxx XX 00
Xxxx Xxxxx Xxxxxx XX 00
Xxxxx Xxxxxx Xxxxxx XX 00
Xxxxxxxxx Xxxxxx XX 00
Xxxxxx Xxxxxxx Xxxxxx XX 10
Kahluha Dallas TX 00
Xxxxx Xxxxxxxx Xxxxxx XX 22
Oaks, The Dallas TX 16
Paree Dallas TX 37
Pink Adobe Dallas TX 00
Xxxxx Xxxxx Xxxxxx XX 000
Xxxxxxx Xxxx Xxxxxx XX 00
Xxxxxx Xxxxx Xxxxxx XX 54
Strand, The Dallas TX 00
Xxxxx Xxxx Xxxxxx XX 000
Xxxxxxx Xxxxxx XX 320
------------------
27 2,767
Number of
Name of Property City State Units
----------------------------------------------------------------
Houston
Cornerstone Ranch Katy TX 000
Xxxxxxxx Xxxxxxx TX 000
Xxxxxxxx Xxxx Xxxxxxx XX 000
Xxxxxx Xxxxx Xxx Xxxxxxx XX 000
Xxxxxxxx Xxxxxxx XX 000
Xxxx xx Xxxxxxx Xxxxxx XX 000
Xxxxx Xxxxx Xxxxxxx XX 000
Xxxx Xxxxx Xxxxxxx XX 000
Xxxxx Xxxx Xxxxxxx Xxxxx XX 000
Xxxx Xxxx Xxxxxxxxx XX 00
Xxxxxxxxxx Xxxxx XX 00
Xxxxxxxx Xxxxxx Xxxxxxx XX 000
Xxxxxxx Xxxxx Xxxxxx XX 00
Xxxxxx Xxxxx Xxxxxxx XX 000
Xxxxxxxxxx Xxxxxxxxx Xxxxxxx XX 00
Xxxxxx Xxxxx Xxxxxxxxxx Xxxxxxx XX 174
Willows, The Houston TX 000
Xxxx xx Xxxxx Xxxxx Xxxxxxxx XX 76
------------------
17 3,524
Northern California
Aspen Park Sacramento CA 000
Xxxxxxxxxx Xxxxx Xxxxxxxxxx XX 000
Xxx Xxxxxx Xxxxx Xxxxxxxxx XX 000
Xxxxxxxx Xxxxxxx Xxxxxxxxxx XX 000
Xxx Xxxxxx Xxxxxxxxxx XX 000
Xxxxxx Xxxxx Xxxxxxxxxx XX 000
Xxxxxxx Xxxxxxxx Xxxxxxxxxx XX 000
Xxxxxx Xxxxx Xxxxxxxxxx XX 661
------------------
8 1,921
15
Exhibit B
Financial Liabilities
Pacifica Bank - Account # 200275 - Balance Due - $ 1,581,779.27
Advanta Credit - Account # - Balance Due - $ 15,445.87
16
Exhibit C
Pinnacle on Lake
Washington - 180 Units located in Renton, WA
17
Exhibit D
Systems and Units Owned by Cable Concepts, Inc. dba Direct Digital
Communications
PROPERTY NAME CITY ST UNITS
--------------------------------------------------------------
Acropolis San Jose CA 00
Xxxxxx Xxxxx Xxx Xxxx XX 948
Cascades, The Sunnyvale CA 000
Xxxx Xxxxxxx (XXX) Xxxxxxx XX 138
Hayward (MHP) Hayward CA 000
Xxxxxxx Xxxxxx Xxx Xxxxxxxxx XX 81
Landing @ Xxxx Xxxxxx Oakland CA 282
Masson Apts San Jose CA 15
San Xxxxx Square San Jose CA 32
Sun Valley (MHP) Livermore CA 000
Xxxxxxxxx Xxxxx XX Xxxxxx Xxxx XX 000
Xxxxxxxx Xxxx Xxxxx XX 000
Xxxxxxxx Xxxxxxxxx XX 000
Xxxxxxxx Xxxxxxxx XX 000
Xxxxxxxx Xxxxxxxx CA 000
Xx. Xxxxxxx Xxxxx
(bulk w/DTV) San Francisco CA 000
Xxxxx Xxxxxx Xxxxxxx Xxxxx Xxxx XX 189
Chateau Marina Marina Del Ray CA 334
Fiji Villas Marina Del Ray CA 156
Regatta, The Marina Del Ray CA 000
Xxxxxxx Xxxxxxx Xxxx Xxxxxx XX 188
0000 Xxxxx Xxx. Xxxxx Xxxxxx XX 000
Xxxxxxx Xxxxx Xx Xxxxx XX 110
PROPERTY NAME CITY ST UNITS
--------------------------------------------------------------
Kiowa Apartments Los Angeles CA 19
Legacy @ Westwood Los Angeles CA 187
Medici, The Los Angeles CA 000
Xxx Xxxx Van Nuys CA 00
Xxxxxx Xx Xxxxx Xxxxxx XX 132
Plaza @ Arboretum Santa Monica CA 000
Xxxxxxx Xxxx Xxxxxxxxx XX 000
Xxxxxxx Xxxxxx Xxxxxx XX 000
Xxxxx Xxxxx Xxxxxxxxxx XX 000
Xxxx Xxxxxxx Xxxxxxxxxx XX 000
Xxxxxxxxx Xxxxxxx XX 000
Xxxxx Xxxxx Xxxxxxxx XX 000
Xxxxxxx Xxxxxxx Xxxxxxx XX 121
Echelon @ the Ballpark Memphis TN 300
Preserve @ Southwind Memphis TN 000
Xxxxxx Xxxxxx Xxxxxxx XX 100
Xxxxxxx Fargo ND 000
Xxxxxxxx Xxxxx XX 00
Xxxx Xxxxx Xxxxx XX 00
Xxxxx Xxxxx Xxxxx XX 000
Xxxxx Xxxxxx Xxxxx XX 000
Xxxxxx Xxxxxx Xxxxx Xxxxx XX 48
18
Exhibit E
(Attach Bank Statements)
19
Exhibit F
On December 31, 2002, [check date: should this be 2001 ???]Digital Service, Inc.
acquired the assets of Broadband Concepts. Broadband Concepts had entered into a
contractual agreement with Cable Concepts, Inc. dba Direct Digital
Communications ("DDC"). The agreement was to purchase certain assets from DDC
and to supply project management and engineering services. The outstanding
balance due to Broadband Concepts for engineering and project management is
$166,855.17. The outstanding debt owed to DDC for purchase of assets is
$46,123.00 making the net due to Digital Service One Hundred Twenty Thousand
Seven Hundred Thirty Two Dollars and 17/100 ($120,732.17).
20
Exhibit G
Estopple Language
On (xxx date), (property name) entered into a Right of Entry Agreement with
Cable Concepts, Inc. dba Direct Digital Communications, allowing access and the
installation, operations for a video communications distribution system.
I (owner's representative) hereby attest that the Right of Entry Agreement
between (property name) and Cable Concepts, Inc. dba Direct Digital
Communications attached hereto is operational and in good standing and all
material covenants of the Right of Entry Agreement operational and or satisfied.
-----------------------------------
Owner's Representative
21
