EXHIBIT 10.16
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), dated May 23,2001
("Effective Date"), is between GREAT WEST SERVICES, LTD., a Colorado limited
partnership d/b/a SIMCOM ("Seller"), USOL, Inc., a Delaware corporation
("Purchaser"), USOL Holdings, Inc., an Oregon corporation ("Holdings") and
▇▇▇▇▇▇▇ Housing Limited Partnership, a Colorado Limited Partnership ("▇▇▇▇▇▇▇
Housing").
On the terms and subject to the conditions of this Agreement, Seller
intends to sell and Purchaser intends to purchase all the assets of Seller which
are part of the private telephone and cable television systems listed on
(individually a "System" and collectively the "Systems") that are
subject to the Right of Entry Agreements (each a "Right of Entry Agreement"), as
defined below, and other assets as specified in this Agreement.
The parties agree as follows:
1. TRANSFER OF ASSETS.
1.1 Sale of Assets. On the terms and subject to the conditions of this
Agreement, Seller will sell good and marketable right, title and
interest in and to the "Assets", as defined below, to Purchaser. All
Assets sold under this Agreement will be free and clear of all liens,
claims and encumbrances except as otherwise provided in this
Agreement.
1.2 Description of Assets. The "Assets" are all of the assets of Seller
which comprise the Systems existing as of the date of this Agreement
or acquired by Seller prior to Closing in the ordinary course of
business (including without limitation all of the Right of Entry
Agreements specified on Schedule 4.7). Specifically, the Assets
consist of (i) the assets of Seller used to operate the Systems
including its telephone switching and voice mail equipment, cable
television equipment, all cable (including without limitation aerial
cable and underground cable, conduit, and all spare parts and other
items used in the maintenance, repair and testing of the Systems), all
as specifically listed on Schedule 1.2 ("Equipment"); (ii) good and
marketable right, title and interest in and to the Right of Entry
Agreements and the Other Contracts listed on Schedule 4.7; (iii)
business records pertaining to the subscribers of each System
("Customers"); and (iv) all leases, easements and licenses in the
states in which Systems are located, to use real property and leases
of personal property disclosed on Schedule 4.7 and the following other
contractual arrangements: Circuit and Service Agreements with
ILECs/CLECs, Long Distance Agreements with IXCs, E911 Services, all
oral and written contracts included in the Assets, including all
Customer contracts, programming agreements, franchise agreements,
construction contracts, right-of-use agreements, pole attachments and
conduit rights, Retransmission Consents with television broadcast
stations, Operator Services Agreements, Internet Service Agreements
(Reflex, Darwin, etc.), Security / Alarm Services Agreements (for
equipment rooms, etc.), Utilities agreements (for equipment rooms,
etc.) (all such leases, easements, licenses and other contractual
arrangements being hereinafter collectively referred to as the "Other
Contracts"). The Assets exclude all other items, including without
limitation, any goodwill, intellectual property or software. The
Assets will include the Other Contracts only to the extent Purchaser
elects to take assignment (and Seller has the right to sell or assign)
one or more of the Other Contracts by so notifying Seller prior to the
end of the Inspection Period ("Selected Other Contracts"). Seller and
Purchaser acknowledge and agree that Seller has not yet identified all
of the Other Contracts to Purchaser. Within fifteen (15) days of the
date of this Agreement Seller will furnish Purchaser with a complete
written list of the Other Contracts and all such Other Contracts shall
automatically become part of the Other Contracts under this Agreement
and shall automatically be added to Schedule 4.7 hereof.
1.3 Assignments and Assumption. Seller will assign to Purchaser and
Purchaser will assume (i) the obligations arising after the Closing
Date of the Selected Other Contracts and each of the Right of Entry
Agreements listed on Schedule 4.7, and (ii) liability for personal
property taxes accruing and arising after the Closing Date. Seller
shall be liable for and obligated to pay all personal property taxes
accruing prior to the Closing Date. Purchaser's assumption of the
obligations and liabilities described in this Section 1.3 will accrue
following Closing (but not before). Except as expressly
provided in this Section 1.3, Purchaser assumes no liabilities or
debts or other obligations of Seller of any nature whatsoever. The
assignment and assumption described in this Section 1.3 shall be
effected through the execution by Seller and Purchaser of the
Assignment And Assumption Agreement in the form attached hereto as
Exhibit 3.2(b).
1.4 Reference is made to the headend equipment (the "▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Equipment") located on the ▇▇▇▇▇▇ I and ▇▇▇▇▇▇ ▇▇ properties (such
properties are more particularly identified on Schedule 4.7). If
Purchaser elects prior to the Closing Date to make the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Equipment part of the Assets, such equipment shall be included in the
Assets conveyed to Purchaser at the Closing and the cash portion of
the Purchase Price shall be increased by $___________. If Purchaser
does not elect before the Closing Date to make the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Equipment part of the Assets, such equipment will not be conveyed to
Purchaser at the Closing and Seller may elect either of the following
items (a) or (b) and Seller will notify Purchaser of its election
within 10 days of the Closing Date ("▇▇▇▇▇▇ Post Closing Election"):
(a) Seller may elect to remove the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Equipment by
notifying Purchaser within 10 days of the Closing Date and it may
remove such equipment from the ▇▇▇▇▇▇ I and ▇▇▇▇▇▇ ▇▇ properties
within 30 days of the Closing Date ("▇▇▇▇▇▇ Removal Election"), or (b)
Seller may request Purchaser to use commercially reasonable efforts to
sell the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Equipment on behalf of Seller by notifying
Purchaser within 10 days of the Closing Date ("▇▇▇▇▇▇ Sale Election").
If Seller fails to timely give Purchaser a ▇▇▇▇▇▇ Post Closing
Election, on the eleventh day after the Closing Date Seller will be
deemed to have chosen the ▇▇▇▇▇▇ Removal Election. In the event of a
▇▇▇▇▇▇ Removal Election (actual or deemed) and Seller's failure to
remove the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Equipment on or before 30 days after the
Closing Date (through no fault of Purchaser), Seller shall be deemed
to have abandoned such equipment and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Equipment
shall belong to Purchaser. In the event of a ▇▇▇▇▇▇ Sale Election,
Purchaser will notify Seller of the price offers it receives for the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Equipment within 30 days of the Closing Date and will
not consummate the sale of such equipment unless Seller has approved
one of the offered sales prices. If Seller approves an offered sales
price for the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Equipment within 35 days of the Closing
Date, Seller will consummate such sale and remit the proceeds of the
sale to Seller within 10 days of receipt of such proceeds. If Seller
does not approve any offered sales price for the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Equipment within 35 days of the Closing Date, Purchaser's obligations
to attempt to sell such equipment shall cease and Seller may remove
such equipment from the ▇▇▇▇▇▇ I and ▇▇▇▇▇▇ ▇▇ properties within 45
days of the Closing Date; if Seller fails to so remove the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Equipment within 45 days of the Closing Date, Seller shall be
deemed to have abandoned such equipment and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Equipment shall belong to Purchaser. Seller shall repair all damages
to the ▇▇▇▇▇▇ I and ▇▇▇▇▇▇ ▇▇ properties caused by its removal of the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Equipment.
2. PURCHASE PRICE AND INSPECTION PERIODS.
2.1 Purchase Price. The purchase price ("Purchase Price") for the Assets
is Four Million Dollars ($4,000,000) in cash, and Six Hundred Thousand
(600,000) shares of common stock of Holdings subject to the Lock-Up
Agreement (Exhibit 3.2(g)) and Registration Rights Agreement (Exhibit
3.3(d)) attached hereto. The portion of the Purchase Price that is
comprised of common stock of Holdings is sometimes hereinafter
referred to as the "Shares."
2.2 Allocation of Purchase Price. Seller and Buyer agree that the Purchase
Price shall be allocated amongst the three categories listed below and
in the proportions listed below:
Moveable Equipment and Trade Fixtures 10%
Right of Entry Agreements and Selected Other Contracts 80%
Real Property Improvements and Fixtures 10%
Seller and Purchaser agree that any filings, returns or other
documents they submit to the Internal Revenue Service or other taxing
authorities related to this transaction shall contain information
consistent with the allocations specified in this Section 2.2.
2.3 Inspection Periods. The Purchaser shall have until July 1, 2001 (the
"Inspection Period") within which to make any and all reasonable
inspections of the Assets as the Purchaser may desire. In the event
Purchaser shall notify Seller in writing on or before the expiration
of the Inspection Period that Purchaser, for any reason whatsoever,
does not desire to consummate this Agreement, then, and in such event,
this Agreement shall terminate and all of the ▇▇▇▇▇▇▇ Money shall be
immediately refunded to Purchaser.
3. CLOSING.
3.1 Closing. The closing of the transaction contemplated by this Agreement
(the "Closing") will take place no later than July 1, 2001 ("Closing
Date") if Purchaser has not terminated the Agreement prior to the end
of the Inspection Period. The Closing will take place at the offices
of Seller or at such other place as mutually agreed by the parties to
this Agreement. Purchaser will take possession of the Assets as of the
Closing Date subject to the terms of the Transition Services
Provisions described on Exhibit 3.6. Purchaser may elect to accelerate
the Closing Date to an earlier date as long as it provides Seller with
at least 15 day's advance notice of such earlier Closing Date.
3.2 Deliverables by Seller. At Closing, Seller will execute and deliver
originals of all of the following (the "Seller Closing Deliverables"):
(a) a ▇▇▇▇ of Sale in the form attached hereto as Exhibit 3.2(a) (the
"▇▇▇▇ of Sale"); (b) the Assignment and Assumption of the Agreements
(Right of Entry Agreements and Selected Other Contracts) in the form
attached hereto as Exhibit 3.2(b) (the "Assignment and Assumption
Agreement"); (c) releases of financing statements and other recorded
encumbrances terminating all liens and encumbrances against, and
security interest in, any of the applicable portion of the Assets
("Releases"); (d) a certificate signed by Seller, certifying that the
closing conditions to be satisfied by Seller, have been met as of
Closing Date (the "Certificate"); (e) the Option Agreement ("Option
Agreement") executed by ▇▇▇▇▇▇▇ Housing in the form attached hereto as
Exhibit 3.2(e); (f) all of the original Right of Entry Agreements
specified on Schedule 4.7, executed by ▇▇▇▇▇▇▇ Housing (and by
property owners other than ▇▇▇▇▇▇▇ Housing, hereafter "Other Owners,"
as the case may be) and Seller, in the forms attached hereto as
Exhibit 3.2(f) (the "Right of Entry Agreements"); (g) the Lock-Up
Agreement in the form attached hereto as Exhibit 3.2(g) (the "Lock-Up
Agreement"); (h) all of the Subordination, Nondisturbance and
Attornment Agreements ("SNDAs") for all of the Right of Entry
Agreements; (i) certified copies of resolutions evidencing Seller's
and ▇▇▇▇▇▇▇ Housing's authority to enter into this Agreement and to
execute and deliver the instruments specified in this Agreement
(collectively the "Seller Resolutions"); (j) the Registration Rights
Agreement; (k) the Escrow Agreement in the form attached hereto as
Exhibit 3.5 ("Escrow Agreement"); and (l) a closing statement in a
form reasonably agreed to by Seller and Purchaser ("Closing
Statement").
3.3 Deliverables by Purchaser. At Closing, Purchaser (or Holdings as the
case may be) will execute and/or deliver all of the following
("Purchaser Closing Deliverables"): (a) cash funds in accordance with
Section 2.1; (b) the Assignment and Assumption Agreement; (c) the
Shares; (d) the Registration Rights Agreement in the form attached
hereto as Exhibit 3.3(d) (the "Registration Rights Agreement"); (e)
the Option Agreement in the form attached hereto as Exhibit 3.2(e);
(f) the Lock-Up Agreement executed by Holdings in the form attached
hereto as Exhibit 3.2(g) ; (g) Purchaser's signature to all SNDAs
provided by Seller; (h) certified copies of resolutions evidencing
Purchaser's and Holdings' authority to enter into this Agreement and
to execute and deliver the items specified in this Agreement
(collectively the "Purchaser Resolutions"); (i) the Escrow Agreement;
and (j) the Closing Statement in a form reasonably agreed to by Seller
and Purchaser.
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3.4 ▇▇▇▇▇▇▇ Money. Within five (5) business days of execution of this
Agreement, Purchaser will deposit $250,000 with Seller as ▇▇▇▇▇▇▇
Money (herein so called), in accordance with the wiring instructions
in Exhibit 2.1. The failure of Purchaser to deliver the ▇▇▇▇▇▇▇ Money
to Seller within the time period provided in the preceding sentence
shall constitute a breach by Purchaser pursuant to Section 9.1(c) of
this Agreement. At Closing, the ▇▇▇▇▇▇▇ Money shall be applied against
the Purchase Price. In the event Purchaser does not terminate this
Agreement prior to the end of the Inspection Period or pursuant to the
terms of this Agreement through no fault of Seller and this Agreement
does not close, Seller shall retain the paid ▇▇▇▇▇▇▇ Money as
liquidated damages and as its sole remedy and sole recourse against
Purchaser. In the event Purchaser terminates this Agreement because of
Seller's default hereunder or prior to the end of the Inspection
Period, the ▇▇▇▇▇▇▇ Money shall be immediately paid to Purchaser.
3.5 Escrow. At the Closing, Purchaser, Seller, and ▇▇▇▇▇ Fargo Bank -
Investment Management and Trust Department in Austin, Texas as escrow
agent ("Escrow Agent") shall enter into the Escrow Agreement and
$500,000 of the cash portion of the Purchase Price ("Escrow Funds")
shall be deposited and held with Escrow Agent for a period of six (6)
months pursuant to the terms of the Escrow Agreement. The Escrow Funds
shall be used to secure Seller's compliance with all of the terms of
this Agreement. The disbursement of the Escrow Funds shall be governed
by the terms and conditions contained in the Escrow Agreement.
3.6 Transition Services Provisions. Seller agrees that it will perform the
services described in Exhibit 3.6 attached hereto after the Closing
Date and through the dates indicated in the Transition Services
Provisions attached hereto as Exhibit 3.6. Seller and Purchaser agree
to the fee, expense and revenue provisions described in Exhibit 3.6.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to
Purchaser as follows:
4.1 Organization, Good Standing, Power, Etc. Seller is a limited
partnership duly organized, validly existing and in good standing
under the laws of the state of Colorado. Seller has all requisite
partnership power and authority to execute, deliver and perform this
Agreement. Seller has all requisite partnership power and authority to
consummate the transactions contemplated by this Agreement.
4.2 Authorizations and Enforceability. This Agreement has been duly and
validly authorized, executed and delivered by Seller and constitutes
the valid and binding obligation of Seller, fully enforceable in
accordance with its terms.
4.3 Restrictions: Burdensome Agreements. Seller is not a party to any
contract, commitment or agreement, and neither Seller nor the Assets
are subject to or bound or affected by any charter, bylaw, partnership
agreement or other corporate or partnership restriction, or any order,
judgment, decree, law, statute, ordinance, rule, regulation or other
restriction of any kind or character, which would prevent Seller from
entering into this Agreement or from consummating the transactions
contemplated by this Agreement.
4.4 Consents and Approvals. As of Closing, Seller will have obtained all
consents or approvals of and waivers or revisions by, and will have
delivered all notices to, any third party and any governmental entity
that are necessary in connection with the execution and delivery by
Seller of this Agreement and the consummation of the transactions
contemplated by this Agreement.
4.5 Title to Property.
(a) Tangible Personal Property. Seller owns or has licenses or other
rights adequate to use all property necessary for the operation
of its business and the Assets.
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(b) Title. Seller currently has, and as of the Closing will have good
and indefeasible title to the Assets, free and clear of all
mortgages, pledges, liens, security agreements, rights of first
refusal, conditional sales agreement, leases, claims, charges or
other encumbrances of any kind ("Liens"), except as set forth on
Schedule 4.7(b). Any Asset which requires the consent and/or a
release of Liens of a third party for assignment to Purchaser is
described as such on Schedule 4.7(b). Every other Asset is fully
assignable free and clear of all Liens to Purchaser without the
consent of any other party.
(c) Title Transfer. At Closing, Purchaser will acquire good and
marketable right, title and interest to the Systems and Assets,
free and clear of all Liens.
4.6 Condition of Assets. The Assets were acquired and have been maintained
in the ordinary course of business; have been properly maintained in
accordance with industry standards; and are in good working condition.
4.7 Right of Entry Agreements. Stated on Schedule 4.7 is a complete and
accurate list and description of all of the Right of Entry Agreements
which will be owned by Seller as of the Closing Date and which will
constitute part of the Assets as of the Closing Date. A true, correct
and complete executed original of each Right of Entry Agreement
(including amendments thereto) will be provided to Purchaser on or
prior to the Closing Date. All notices of actual or alleged breach of
such agreements sent by or received by Seller have been provided to
Purchaser. Each of the Right of Entry Agreements is valid and binding,
and is in full force and effect. Neither Seller nor the owner of a
property served by a Right of Entry Agreement (the "Property Owner")
nor any other party under any such agreement, is in default under any
Right of Entry Agreement; and no event has occurred which, with the
passage of time, the giving of notice, or other subsequent action or
inaction, will result in the occurrence of a default under any such
agreement. Except as set forth in Schedule 4.7, (a) the Right of Entry
Agreements are valid, binding and enforceable in accordance with their
terms, (b) the Seller has performed, or is now performing, the
obligations of, and is not in default (and would not by lapse of time
or the giving of notice, or both, be in default) under, any Right of
Entry Agreements, (c) no party has notified the Seller of any claim,
dispute or controversy or withheld payments from the Seller with
respect to any Right of Entry Agreements, which claim, dispute,
controversy or withholding of payment could, if such party were to
prevail, have a material adverse effect on the Right of Entry
Agreements, (d) no other party to a Right of Entry Agreement is in
default or has breached any term or provision of such Right of Entry
Agreements that has not previously been cured, (e) Seller has not
received notice or warning of alleged non-performance, delay in
delivery or other non-compliance with respect to any of the Right of
Entry Agreements, and (f) Seller has not received any notice that any
other parties to the Right of Entry Agreements may totally or
partially terminate any of the Right of Entry Agreements.
4.7A Other Contracts. Stated on Schedule 4.7 is a complete and accurate
list and description of all of the Other Contracts. A true, correct
and complete executed copy of each Other Contract (including
amendments thereto) will be provided to Purchaser within 15 days of
the date of this Agreement. All notices of actual or alleged breach of
such agreements sent by or received by Seller will be provided to
Purchaser within 15 days of the date of this Agreement. To the best of
Seller's knowledge and belief, each of the Other Contracts is valid
and binding, and is in full force and effect. To the best of Seller's
knowledge and belief, neither Seller nor the other parties to the
Other Contracts is in default under any Other Contract. To the best of
Seller's knowledge and belief, no event has occurred which, with the
passage of time, the giving of notice, or other subsequent action or
inaction, will result in the occurrence of a default under any Other
Contract. Except as set forth in Schedule 4.7 and to the best of
Seller's knowledge and belief, (a) the Other Contracts are valid,
binding and enforceable in accordance with their terms, (b) the Seller
has performed, or is now performing, the obligations of, and is not in
default (and would not by lapse of time or the giving of notice, or
both, be in default) under, any Other Contracts, (c) no party has
notified the Seller of any claim, dispute or controversy or withheld
payments from the Seller with respect to any Other Contracts, which
claim, dispute, controversy or withholding of payment
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could, if such party were to prevail, have a material adverse effect
on the Other Contracts, (d) no other party to a Other Contract is in
default or has breached any term or provision of such Other Contracts
that has not previously been cured, (e) Seller has not received notice
or warning of alleged non-performance, delay in delivery or other
non-compliance with respect to any of the Other Contracts, and (f)
Seller has not received any notice that any other parties to the Other
Contracts may totally or partially terminate any of the Other
Contracts.
4.8 Brokers. Seller has not entered into and will not enter into any
agreement, arrangement or understanding with any broker regarding any
matter related to this Agreement.
4.9 Litigation, Taxes, and Disclosure. Except as disclosed on Schedule
4.9, there is no claim, action, litigation, proceeding or
investigation pending, or threatened before any court or government
entity, nor is there any outstanding judgment, order, decree, award,
stipulation or injunction issued by any court or governmental entity
which may affect any of the Assets or impair the Seller from
performing its obligations under this Agreement. All taxes related to
the Assets, related to taxable periods or portions thereof ending on
or prior to the applicable Closing Date, have been reported and duly
paid, collected or withheld and remitted to the appropriate
governmental agency, except for current taxes not due and payable on
or prior to the applicable Closing Date. No written information
contained in any Schedule or Exhibit delivered pursuant to this
Agreement at the Closing contains or will contain any untrue statement
of a material fact or omit to state a material fact required to make
the statements not misleading. All documents requested in writing by
Purchaser have been delivered by Seller to Purchaser and constitute
true, complete and accurate copies of the documents requested.
4.10 Financial Information. Attached hereto as Schedule 4.10 are Seller's
(i) list of subscribers at the Properties and (ii) Property-specific
revenue summaries for the periods listed thereon ("Financial
Information"). The Financial Information is in accordance with the
books and records of Seller and is true, correct, and complete. None
of the Financial Information contains any untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made.
4.10AAbsence of Certain Changes or Events. Since the date of the most
recent Financial Information to the date of this Agreement, there has
not been (i) any change that would have a material adverse effect on
Seller (a "Seller Material Adverse Change"), nor has there been any
occurrence or circumstance that with the passage of time would
reasonably be expected to result in a Seller Material Adverse Change,
or (ii) any damage, destruction or loss, whether or not covered by
insurance, that has or would have or is reasonably likely to have a
material adverse effect on Seller.
4.11 Representations and Warranties of Seller with Respect to the Shares.
Seller hereby makes the following representations and warranties to
Purchaser. Seller acknowledges that Purchaser is relying on these
representations and warranties in connection with Purchaser's
execution of this Agreement and the issuance of the Shares.
(a) Investment. The Shares will be acquired by Seller for its own
account for investment and not with a view to resale or
distribution; Seller is not acquiring the Shares as a nominee for
any other person or entity; Seller has no present intention of
selling, granting any participation in or otherwise distributing
the Shares; Seller does not have any agreement (verbal or
written) with any person to sell, transfer or grant an interest
in the Shares; Seller does not have any reason to anticipate any
change of its circumstances or any event which would cause Seller
to sell the Shares.
(b) Disclosure of Information. Seller has received all periodic
reports filed with the Securities and Exchange Commission ("SEC")
by Purchaser within the previous 12
6
months and has had an opportunity to review this information in
full. Seller has had an opportunity to ask questions of a
representative of the Company concerning the terms and conditions
of this investment including the business, properties, prospects
and financial condition of Purchaser. All of Seller's questions
have been answered to Seller's satisfaction. Seller has received
all information that it considers necessary or appropriate for
deciding whether to acquire the Shares. In addition, Purchaser
has made available to Seller the opportunity to obtain additional
information and to evaluate the merits and risks of this
investment.
(c) Investment Experience. Seller has made other risk capital
investments or other investments of a speculative nature and, by
reason of its business and financial experience or the business
and financial experience of those it has retained to advise it,
has acquired the capacity to protect its own interest in
investments of this nature. Seller has carefully evaluated its
financial resources and investments and is able to bear the
economic risks of this investment. Seller has not been organized
for the purpose of acquiring the Shares.
(d) Accredited Investor. Seller is an "accredited investor" within
the meaning of Rule 501 D promulgated under the Securities Act of
1933, as amended (the "Securities Act").
(e) Restricted Securities. Seller is aware that (i) its investment in
the Shares is speculative and involves a high degree of risk of
loss and that Seller must bear the economic risk of this
investment for an indefinite period of time, (ii) no assurances
can be made regarding any economic advantages (including tax)
which may inure to the benefit of the Seller, (iii) no assurances
can be made concerning return on investment, and (iv) no
assurances can be made concerning any tax consequences from the
investment. In addition, Seller understands that the Shares it is
receiving are "restricted securities" under the federal
securities laws because they are being acquired from Purchaser in
a transaction not involving a public offering and that under such
laws the Shares may be resold without registration under the
Securities Act only in certain limited circumstances. Seller
represents that it is familiar with Rule 144 promulgated under
the Securities Act and understands the resale limitations imposed
thereby and by the Securities Act.
(f) No Representations by Purchaser. Neither Purchaser, any of
Purchaser's employees, officers or agents nor anyone else has
represented, guaranteed or warranted to Seller, expressly or by
implication, as to any of the following: (i) the percentage of
profit and/or amount of or type of consideration, profit or loss
to be realized, if any, as a result of this investment; or (ii)
that the past performance or experience on the part of Purchaser,
or any future projections will in any way indicate the
predictable results of the overall financial performance of
Purchaser.
(g) Confidential Information. Seller understands that all non-public
information made available to it in connection with its
investment in the Shares is and shall remain confidential in all
respects and may not be reproduced, distributed or used for any
other purpose without the prior written consent of the Company so
long as such information remains non-public and confidential.
(h) Resident State of Seller. Seller is a resident of the State of
Colorado.
(i) Legends. Seller understands that standard restrictive legends
will be placed on any certificates or other documents evidencing
the Shares regarding the fact that the Shares have not been
registered and under the Securities Act until such time as Shares
have been registered. Other legends may be placed on the
certificates or other documents evidencing the Shares regarding
the terms of the Lock-Up Agreement.
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4.12 Insurance. Seller carries insurance with insurers that are, to the
best of the Company's knowledge, solvent, in amount and types of
coverage which, to the best of Seller's knowledge, are customary in
the industry and against risks and losses which are usually insured
against by persons holding or operating similar properties and similar
businesses. No material claims have been asserted under any of such
insurance policies or relating to the properties, assets or operations
of Seller.
4A. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇ HOUSING. ▇▇▇▇▇▇▇ Housing
represents and warrants to Purchaser as follows:
4A.1 Organization, Good Standing, Power, Etc. ▇▇▇▇▇▇▇ Housing is a limited
partnership duly organized, validly existing and in good standing
under the laws of the State of Colorado. ▇▇▇▇▇▇▇ Housing has all
requisite corporate power and authority to execute, deliver and
perform this Agreement and the Right of Entry Agreements and the
Option Agreement. ▇▇▇▇▇▇▇ Housing has all requisite corporate power
and authority to consummate the transactions contemplated by this
Agreement and the Right of Entry Agreements and the Option Agreement.
4A.2 Authorization of Agreement and Enforceability. This Agreement has been
duly and validly authorized, executed and delivered by ▇▇▇▇▇▇▇ Housing
and constitutes the valid and binding obligation of ▇▇▇▇▇▇▇ Housing
fully enforceable in accordance with its terms.
4A.3 Restrictions: Burdensome Agreements. ▇▇▇▇▇▇▇ Housing is not a party to
any contract, commitment or agreement, and is not subject to or bound
or affected by any charter, bylaw or other corporate restriction, or
any order, judgment, decree, law, statute, ordinance, rule regulation
or other restriction of any kind or character, which would prevent
▇▇▇▇▇▇▇ Housing from entering into this Agreement or prevent ▇▇▇▇▇▇▇
Housing from consummating the transactions contemplated by this
Agreement.
4A.4 Effect of Agreement, Consents, Etc. As of the Closing, ▇▇▇▇▇▇▇ Housing
shall have obtained any and all consents or approvals of, filings or
registrations with or notices to any third party or public body or
authority that may be necessary in connection with the execution and
delivery by ▇▇▇▇▇▇▇ Housing of this Agreement and the consummation of
the transactions contemplated by this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to Seller as follows:
5.1 Organization, Good Standing, Power, Etc. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware. Purchaser has all requisite corporate power
and authority to execute, deliver and perform this Agreement.
Purchaser has all requisite corporate power and authority to
consummate the transactions contemplated by this Agreement.
5.2 Authorization of Agreement and Enforceability. This Agreement has been
duly and validly authorized, executed and delivered by Purchaser and
constitutes the valid and binding obligation of Purchaser fully
enforceable in accordance with its terms.
5.3 Restrictions: Burdensome Agreements. Purchaser is not a party to any
contract, commitment or agreement, and is not subject to or bound or
affected by any charter, bylaw or other corporate restriction, or any
order, judgment, decree, law, statute, ordinance, rule regulation or
other restriction of any kind or character, which would prevent
Purchaser from entering into this Agreement or prevent Purchaser from
consummating the transactions contemplated by this Agreement.
8
5.4 Effect of Agreement, Consents, Etc. As of the Closing, Purchaser shall
have obtained any and all consents or approvals of, filings or
registrations with or notices to any third party or public body or
authority that may be necessary in connection with the execution and
delivery by Purchaser of this Agreement and the consummation of the
transactions contemplated by this Agreement; provided, however,
Purchase cannot guaranty that the Securities and Exchange Commission
will allow registration of the Stock.
5.5 Due Diligence. Purchaser and its representatives (a) have been
permitted access to the books and records, facilities, equipment, tax
returns, contracts, insurance policies (or summaries), and other
properties and assets of Seller, (b) have been given a full and
complete opportunity to perform such due diligence investigation of
Seller and the Assets as Purchaser has required, and (c) have had an
opportunity to meet with the officers and employees of Seller to
discuss Seller and the Assets. Notwithstanding any such access,
meetings and discussions or any other provision of this Agreement,
Purchaser acknowledges that it has not received and is not relying
upon any representation or warranty, expressed or implied, by
operation of law or otherwise, as to the accuracy or completeness of
any information regarding Seller or the Assets made available to
Purchaser or its representatives, except as expressly set forth in
this Agreement.
5A. REPRESENTATIONS AND WARRANTIES OF HOLDINGS. Holdings represents and
warrants to Seller as follows:
5A.1 Organization, Good Standing, Power, Etc. Holder is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Oregon. Holdings has all requisite corporate power and
authority to execute, deliver and perform this Agreement and the
Registration Rights Agreement. Holdings has all requisite corporate
power and authority to consummate the transactions contemplated by
this Agreement and the Registration Rights Agreement.
5A.2 Authorization of Agreement and Enforceability. This Agreement has been
duly and validly authorized, executed and delivered by Holdings and
constitutes the valid and binding obligation of Holdings fully
enforceable in accordance with its terms.
5A.3 Restrictions: Burdensome Agreements. Holdings is not a party to any
contract, commitment or agreement, and is not subject to or bound or
affected by any charter, bylaw or other corporate restriction, or any
order, judgment, decree, law, statute, ordinance, rule regulation or
other restriction of any kind or character, which would prevent
Holdings from entering into this Agreement or prevent Holdings from
consummating the transactions contemplated by this Agreement.
5A.4 Effect of Agreement, Consents, Etc. As of the Closing, Holdings shall
have obtained any and all consents or approvals of, filings or
registrations with or notices to any third party or public body or
authority that may be necessary in connection with the execution and
delivery by Holdings of this Agreement and the consummation of the
transactions contemplated by this Agreement; provided, however, that
Holdings cannot guaranty that the Securities and Exchange Commission
will allow registration of the Stock; provided, further, however,
Holdings acknowledges its obligations under the Registration Rights
Agreement.
5A.5 Validity of Shares. The Shares, when issued and delivered in
accordance with the terms of this Agreement, will be duly and validly
authorized and issued, fully paid, non-assessable and free and clear
of all encumbrances or restrictions on transfer except those imposed
by applicable securities laws, this Agreement and the Lock-Up
Agreement.
5A.6 SEC Documents. Since January 1, 2000, Holdings has filed all reports,
schedules, forms, statements and other documents required to be filed
by it with the Securities and Exchange Commission ("SEC Documents").
All of the SEC Documents (other than preliminary material or material
which was subsequently amended), as of their respective filing dates,
complied with, in all material respects, with all applicable
requirements of the Securities Act and the Securities
9
and Exchange Act of 1934, as amended (the "Exchange Act") and, in each
case, the rules and regulations promulgated thereunder applicable to
the SEC Documents. None of the SEC Documents at the time of filing and
effectiveness contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to
the extent such statements have been amended, modified or superseded
by later SEC Documents. The consolidated financial statements of
Holdings included in the SEC Documents complied with as to form, in
all material respects, with applicable accounting requirements and the
published rules and regulations of the Securities and Exchange
Commission with respect thereto, have been prepared in accordance with
Generally Accepted Accounting Principles ("GAAP")(except, in the case
of unaudited statements, as permitted by Form 10-Q promulgated under
the Exchange Act or as otherwise noted in such statements) applied on
a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented, in accordance
with the applicable requirements of GAAP, the consolidated financial
position of Holdings as of the dates thereof and the consolidated
results of operations and cash flows for the periods then ended
(subject in the case of unaudited statements, to normal and recurring
year-end audit adjustments which were not or are not expected to be
material in amount).
5A.7 Absence of Certain Changes or Events. Except as disclosed in the SEC
Documents filed with the SEC prior to the date hereof and except with
respect to Holdings' second tier subsidiary The Resident Club, Inc.,
since the date of the most recent financial statements included in the
SEC Documents (the "Financial Statement Date") to the date of this
Agreement, there has not been (i) any change that would have a
material adverse effect on Holdings (a "Material Adverse Change"), nor
has there been any occurrence or circumstance that with the passage of
time would reasonably be expected to result in a Material Adverse
Change, (ii) any split, combination or reclassification of any
Holdings capital stock or a stock dividend with respect thereto, (iii)
any damage, destruction or loss, whether or not covered by insurance,
that has or would have or is reasonably likely to have a material
adverse effect, or (iv) any change in accounting methods, principles
or practices by Holdings, except insofar as required by a change in
GAAP.
5A.8 Subsidiary. Purchaser is a wholly owned subsidiary of Holdings.
6. COVENANTS OF THE PARTIES.
6.1 Operation of Business. During the period from the date of this
Agreement and the later of the termination of this Agreement or the
expiration of the Transition Period (as defined in the Transition
Services Provisions of the Exhibit 3.6), Seller covenants to Purchaser
that it will operate its business with respect to the Assets in the
usual, regular and ordinary manner; and, to the extent consistent with
such operation, use its reasonable best efforts to preserve its
present business relationships, including those with the Customers,
its employees, and the Property Owner; and conduct business in
compliance with all applicable laws and regulations. During the period
from the Closing Date until the expiration of the Transition Period,
Seller covenants that it will abide by all of the terms and conditions
of the transition services provisions specified in Exhibit 3.6. Seller
will not enter into any transaction or take any action which would
result in any of the representations and warranties of Seller
contained in this Agreement not being true and correct at and as of
(i) the time immediately after such action or transaction was
undertaken or entered into with the same force and effect as though
made on such date, and (ii) the Closing Date, with the same force and
effect as though made on such date.
6.2 Right of Entry Agreements, Consents, and SNDAs. Seller will give all
notices, and will use its commercially reasonable best efforts to
obtain all fully executed Right of Entry Agreements and consents,
necessary under all Right of Entry Agreements and Selected Other
Contracts to assign such Right of Entry Agreements and Selected Other
Contracts to Purchaser. Seller shall also use its commercially
reasonable best efforts to obtain SNDAs from all persons holding
("Mortgagees") a mortgage or deed of trust lien against the
Properties; Seller and ▇▇▇▇▇▇▇
10
Housing shall exercise such efforts to obtain the SNDAs prior to the
end of the Inspection Period. The SNDAs must contain provisions in
which each Mortgagee agrees that (a) its liens do not cover any of the
Assets, and (b) if such Mortgagee forecloses on the Property, it will
recognize and agree to be bound by the Right of Entry Agreements.
6.3 Access to Properties and Records; Confidentiality.
(a) During the period from the date of this Agreement to the earlier
of the Closing Date or the termination of this Agreement, Seller
will permit Purchaser reasonable access to its Assets, and
employees, Property owners, Customers, suppliers, and others
connected with the operation of the Systems; and will disclose
and make available to Purchaser all books, papers and records
relating to the Assets. Seller will not be required to provide
access to or disclose information where such access or disclosure
would jeopardize the attorney-client privilege of Seller or would
contravene any law, rule, regulation, order, judgment, decree or
binding agreement entered into prior to the date hereof. The
parties will make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding
sentence apply. Notwithstanding the foregoing, Seller agrees to
provide Purchaser with reasonable access to reasonably requested
information regarding the Assets in Seller's files, for one (1)
year following the Closing Date, to assist Purchaser in the
transition of the Assets to Purchaser.
(b) All information furnished by Seller to Purchaser with respect to
any Asset pursuant to, or in the negotiation in connection with,
this Agreement will be treated as the sole property of Seller
until Closing and, if Closing does not occur, Purchaser and its
agents and advisers will return to Seller all documents or other
materials containing, reflecting or referring to such
information, will keep confidential (subject to applicable law
that might otherwise require or mandate disclosure of such
information) all such information and will not directly or
indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information
confidential will continue indefinitely.
6.4 Confidentiality of Terms of Agreement. After the execution of
Agreement, Purchaser and Seller will maintain the confidentiality of
the terms of this Agreement. No such party will, except on a
need-to-know basis or as required by law, court order or
administrative order, 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 Right of Entry Agreements,
the Selected Other Contracts and other Assets relating to the Systems
will be or have been transferred to Purchaser, so long as such
communication does not disclose any further details regarding the
transaction; and further provided, the foregoing does not preclude
such parties from informing ▇▇▇▇▇▇▇ Housing and the Mortgagees of the
terms of the Right of Entry Agreements and the terms necessary for the
SNDAs. Any press release to be disclosed to the public regarding the
terms of this Agreement or which otherwise includes the other party's
name, shall be reviewed by and agreed upon by both parties in writing
prior to release, such agreement not to be unreasonably withheld,
conditioned or delayed.
6.5 Use of Trade Name. For a period of 150 days after the Closing Date,
Purchaser may continue (but only to the extent reasonably necessary
and consistent with the Transition Services Provisions of the Exhibit
3.6) to operate the Systems using the trade names currently used with
respect to the operations and all derivations and abbreviations of
such names and related trade names and marks in use in the operations
on the Closing Date, such use to be in a manner consistent with the
way in which Seller had used the marks. Within 150 days after the
Closing Date (unless extended by Seller), Purchaser will discontinue
using and will dispose of all items of stationery, business cards and
literature bearing such names or marks. Notwithstanding the foregoing,
Purchaser will not be required to remove or discontinue using any such
name or ▇▇▇▇ that is affixed to items of fixed assets, including
assets in or to be used in customer homes or properties or in premises
from which
11
Seller provides service, or as are used in similar fashion making such
removal or discontinuation impracticable for Purchaser.
6.6 Satisfaction of Conditions. After execution of this Agreement
Purchaser and Seller shall each use their commercially reasonable
efforts to fulfill their respective obligations pursuant to this
Agreement.
6.7 Employees. Seller and Purchaser acknowledge that Purchaser may hire as
of or after the Transition Services Date certain employees who have
been employed by Seller and have been working with the Systems and
operations. However, Purchaser does not have any obligation to do so.
In the event the Closing does not occur pursuant to the terms of this
Agreement, Purchaser shall not hire or attempt to hire any employees
of Seller.
6.8 Lock-up. Seller hereby covenants and agrees with Purchaser and
Holdings that during the period between the Closing Date and the date
the registration statement to be filed pursuant to Section 1.1 of the
Registration Rights Agreement becomes effective (provided such
registration statement is filed within 120 days of the Closing Date,
or if such registration statement is not filed within such 120 days,
ending 120 days following the Closing Date), shall not sell, transfer,
assign or otherwise dispose of the Shares to any person or entity
other than a person or entity that, directly or indirectly through one
or more intermediaries, controls Seller is controlled by Seller, or is
under common control with Seller, without the prior written consent of
Holdings, which consent Holdings shall be entitled to withhold in its
sole and absolute discretion.
6.9 Payment of Certain Expenses and Taxes. Except as otherwise provided
herein, each party will be liable for its own costs and expenses
incurred in connection with the negotiation, preparation, execution or
performance of this Agreement and with the transactions contemplated
hereby including, without limitation, all fees of legal counsel,
auditors and financial advisors. The Purchase Price includes (i) all
real estate transfer taxes, recording fees, filing fees and similar
taxes or fees, if any, in connection with the transfer of any
interests in real property to Purchaser, and (ii) all use, transfer
and sales taxes and similar taxes, if any, in connection with the sale
of the Assets. Seller shall pay to the appropriate taxing authority
(i) all real estate transfer taxes, recording fees, filing fees and
similar taxes or fees, if any, in connection with the transfer of any
interests in real property to Purchaser, and (ii) all use, transfer
and sales taxes and similar taxes, if any, in connection with the sale
of the Assets.
6.10 Option Agreement. At the Closing, ▇▇▇▇▇▇▇ Housing and Purchaser shall
enter into the form of the Option Agreement attached hereto as Exhibit
3.2(e).
6.11 Nonsolicitation of Seller and Holdings Employees. For a period of
three (3) years following the Closing Date, Seller agrees that it will
not induce or attempt to persuade any current or future employee,
agent, manager, officer, consultant, or other participant in
Purchaser's or Holdings' business to terminate such employment or
other relationship in order to enter into any relationship with
Seller, any business organization in which the Seller is a participant
in any capacity whatsoever, or any other business organization in
competition with Purchaser or Holdings.
7. CLOSING CONDITIONS.
7.1 Conditions to the Obligations of Purchaser Under This Agreement. The
obligations of Purchaser under this Agreement with respect to the
Assets are subject to the satisfaction, at or prior to the Closing
Date, of the following conditions, any one or more of which may be
waived by Purchaser:
(a) Each of the obligations and covenants of Seller required to be
performed or complied with at or prior to the Closing Date
pursuant to the terms of this Agreement are duly performed and
complied with in all material respects.
12
(b) The representations and warranties of Seller contained in this
Agreement are true and correct in all material respects as of the
date of this Agreement, and will be true and correct in all
material respects as of the Closing Date as though made at and as
of the Closing Date, except as to any representation or warranty
that specifically relates to an earlier date.
(c) Seller will have given all notices, obtained all consents and
taken all other action necessary under all Right of Entry
Agreements and Selected Other Contracts to assign such Right of
Entry Agreements and Selected Other Contracts to Purchaser free
and clear of all Liens. Without limiting the foregoing, Seller
will have obtained an executed Consent in the form of Exhibit
7.1(c) with respect to all the Right of Entry Agreements.
(d) Purchaser will have obtained fully executed Right of Entry
Agreements in a form substantially similar to the form attached
hereto as Exhibit 3.2(f) from all of the owners on the Properties
and as more particularly identified on Schedule 4.7.
(e) Seller will have executed and delivered (or caused to be executed
and delivered in cases in which the documents include third
parties) to Purchaser all of the Seller Closing Deliverables.
(f) ▇▇▇▇▇▇▇ Housing shall have executed and delivered to Purchaser
the Option Agreement.
7.2 Conditions to the Obligations of Seller Under This Agreement. The
obligations of Seller under this Agreement with respect to the Assets
are subject to the satisfaction, at or prior to the Closing Date, of
the following conditions, any one or more of which may be waived by
Seller:
(a) Each of the obligations and covenants of Purchaser 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 Purchaser 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
which specifically relates to an earlier date.
(c) Purchaser shall have executed and delivered to Seller the
Purchaser Closing Deliverables.
7.3 Condition to Each Party's Obligations. The obligations of each party
under this Agreement are subject to the fulfillment, at or prior to
Closing, of the following conditions (unless waived in writing by both
parties): No claims, action, suit, investigation, injunction or
proceeding is pending against either of the Purchaser or Seller for
the purpose of enjoining or preventing the consummation of the
transactions contemplated in this Agreement or otherwise claiming that
either this Agreement or the consummation of the transactions
contemplated in this Agreement are illegal.
8. INDEMNIFICATION.
Each party hereto will defend, indemnify and hold harmless the other party
and any person claiming by or through them or any of their successors and
assigns (each an "Indemnitee") from, against and in respect of any and all
costs, losses, claims, liabilities, fines, penalties, damages and expenses
(including, without limitation, court costs, reasonable fees and disbursements
of counsel with or without suit and on appeal) incurred by the Indemnitee which,
in the aggregate exceed $25,000, in connection with:
13
8.1 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;
8.2 with respect to a Seller Indemnitee, obligations specifically incurred
by Purchaser with respect to any Asset and which arise after the
Closing Date, and with respect to a Purchaser Indemnitee, any alleged
or asserted debt, obligation, liability or commitment of Seller not
expressly assumed by Purchaser hereunder; and
8.3 any action, suit, proceeding, compromise, settlement, assessment or
judgment arising out of or incident to any of the matters indemnified
against in this Section 8.
9. GENERAL.
9.1 Right to Terminate. Notwithstanding anything to the contrary in this
Agreement, this Agreement may be terminated and the transactions
contemplated in this Agreement abandoned at any time prior to Closing
as follows:
(a) Mutual Consent. By mutual written consent of Purchaser and
Seller;
(b) Court Order. By either Seller or Purchaser if a court order or
governmental agency of competent jurisdiction has issued an
order, decree, or ruling permanently restraining, enjoining, or
otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling, or other action has
become final and non-appealable;
(c) Breach by Purchaser. By Seller, (i) if Purchaser breaches any of
its representations or warranties in any material respect, or
(ii) if Purchaser fails to comply in any material respect with
any of its covenants or agreements contained in this Agreement
and such breach remains uncured 10 days after written notice of
same; in which event Seller shall be entitled to retain the paid
▇▇▇▇▇▇▇ Money as liquidated damages as Seller's sole remedy and
recourse against Purchaser. If Purchaser breaches this Agreement
by not paying Seller the ▇▇▇▇▇▇▇ Money within the time frame
specified in this Agreement or within any mutually agreed to
extension for the payment thereof, then Seller may terminate the
transaction contemplated in this Agreement without recourse by
either party hereto; or
(d) Breach by Seller. By Purchaser, (i) if Seller breaches any of its
representations or warranties in any material respect, or (ii) if
Seller fails to comply in any material respect with any of its
covenants or agreements contained in this Agreement and such
failure remains uncured 10 days after written notice of same; in
which event Purchaser shall be entitled to a refund of the paid
▇▇▇▇▇▇▇ Money and all such other remedies as applicable law shall
permit.
9.2 Survival of Representations and Warranties. Representations,
warranties, covenants (as specified in this Agreement), indemnities
and agreements stated in this Agreement, the Disclosure Schedules, any
other written representation and in any ancillary document with
respect to any Asset will survive Closing for a period of eighteen
months following the Closing Date.
9.3 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.
9.4 Further Assurances. Each party to this Agreement will take all
actions, subject to the terms and conditions of this Agreement, that
are reasonably necessary or desirable to carry out the purposes of
this Agreement, including actions after Closing.
14
9.5 Notices. All notices, requests, claims, demands or other
communications hereunder must be in writing and must be given by
delivery in person, by registered or certified mail (postage prepaid
and return receipt requested) to the respective parties as follows:
(a) If to Seller, to:
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Housing Limited Partnership
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ Housing Limited Partnership
ATTN: ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(b) If to Purchaser, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, President and COO
USOL, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, Martens & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(c) If to Holdings, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, President and COO
USOL Holdings, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(d) If to ▇▇▇▇▇▇▇ Housing, to:
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Housing Limited Partnership
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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.
9.6 Parties in Interest; Assignment. This Agreement will be binding upon
and will inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement
nor any of the rights, interests or obligations hereunder may be
assigned by either party. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other person any rights
or remedies under or by reason of this Agreement.
9.7 Entire Agreement; Amendment. This Agreement (including the Exhibits
and Schedules attached hereto) constitutes 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.
9.8 Intentionally Deleted.
15
9.9 Governing Law. This Agreement, in all respects, including all matters
of construction, validity and performance, is governed by the laws of
the state of Texas.
9.10 Venue. Any dispute arising regarding the subject matter of this
Agreement shall be brought solely within the courts of ▇▇▇▇▇▇ County,
state of Texas, unless the federal jurisdiction applies, in which
instance such dispute shall be brought within the federal courts of
the Western District of Texas, Austin, Texas division.
9.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same
agreement, and each of which will be deemed an original. Facsimile
signatures executing this Agreement are acceptable by all parties
hereto.
[ remainder of this page intentionally blank - signature page follows ]
16
Executed to be effective as of the Effective Date.
SELLER: GREAT WEST SERVICES, LTD.,
a Colorado limited partnership
By: QRS Communications, LLC,
a Colorado limited liability company,
General Partner
By: _____________________________________
Name: ▇▇▇▇ ▇▇▇▇▇
Title: General Manager
▇▇▇▇▇▇▇ HOUSING: ▇▇▇▇▇▇▇ Housing Limited Partnership
A Colorado limited partnership
By: Paloma LLC
its general partner
By:________________________________________
Name:______________________________
Title:_____________________________
(▇▇▇▇▇▇▇ Housing is executing this Agreement solely for purposes
of confirming its agreement to the following portions of the
Agreement: Sections 4A, 6.11 and 7.1(f); Exhibits 2.1, 3.2(b),
3.2(e), 3.2(f), 3.4, 3.6 and 7.1(c); and Schedules 1.2, 4.7 and
4.7(b))
PURCHASER: USOL, INC.
A Delaware corporation
By: _____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO
HOLDINGS: USOL HOLDINGS, INC.
An Oregon corporation
By: _____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO
(Holdings is executing this Agreement solely for purposes of
confirming its agreement to the following portions of the
Agreement: Sections 2.1, 2.4, 5A, 6.9 and 6.12; and Exhibits
3.2(g) and 3.3(d))
17
Exhibits: Schedules:
Exhibit 2.1 Transfer Account Schedule 1.2 Description of all Assets (Excluding
only the Right of Entry Agreements and
Other Contracts which are specified on
Schedule 4.7)
Exhibit 3.2 (a) ▇▇▇▇ of Sale Schedule 4.4(a) Governmental Permits, Registration,
Authorizations and Approval
Requirements
Exhibit 3.2 (b) Assignment and Assumption of Schedule 4.4(b) Seller Material Violations
Agreements (Right of Entry
Agreements and Selected Other
Contracts)
Exhibit 3.2 (e) Option Agreement Schedule 4.7 List of all Right of Entry Agreements,
Other Contracts and locations of all
Properties
Exhibit 3.2 (f) Right of Entry Agreement Forms Schedule 4.7(b) Liens, Encumbrances and Required Third
Party Consents
Exhibit 3.2 (g) Lock-Up Agreement Schedule 4.9 Exceptions to Litigation, Taxes and
Disclosure Matters
Exhibit 3.3(d) Registration Rights Agreement Schedule 4.10 Financial Information
Exhibit 3.5 Escrow Agreement
Exhibit 3.6 Transition Services Provisions
Exhibit 7.1 (c) Form of Consent
18
Exhibit 2.1
-------------
*[Intentionally Omitted]
*Confidential Treatment Requested. Confidential portions of this document have
been redacted and filed separately with the Commission.
19
Exhibit 3.2(a)
----------------
▇▇▇▇ OF SALE
("Seller"), for good and valuable consideration given pursuant to an Asset
Purchase Agreement dated __________________, 2001 (the "Purchase Agreement")
between Great West Services, Ltd., Colorado limited partnership ("Seller"), and
USOL, Inc., a Delaware corporation ("Purchaser"), the receipt and sufficiency of
which consideration is hereby acknowledged, does hereby sell, assign, transfer
and set over to Purchaser good and indefeasible right, title and interest in and
to the Systems and the Equipment (as defined in the Purchase Agreement) (as more
particularly described on Annex A attached hereto and made a part hereof) free
and clear of all liens and encumbrances.
Date: ______________________________, 2001.
SELLER: Great West Services, Ltd., d/b/a Simcom
By: QRS Communications, LLC,
a Colorado limited liability company,
General Partner
By: _________________________________
Name: ▇▇▇▇ ▇▇▇▇▇
Title: General Manager
[ attach acknowledgement of signature ]
20
Annex A to ▇▇▇▇ of Sale
[Attach an itemized list of all of the Assets
(including all Equipment, Systems
and Property locations) other than the
Right of Entry Agreements and the
Selected Other Contracts]
21
Exhibit 3.2(b)
--------------
ASSIGNMENT AND ASSUMPTION OF AGREEMENT (RIGHT OF ENTRY AGREEMENTS
AND SELECTED OTHER CONTRACTS)
THIS GENERAL ASSIGNMENT (this "Assignment") is made as of _______________, 2001,
by and between GREAT WEST SERVICES, LTD., a Colorado limited partnership
("Assignor"), and USOL, INC., a Delaware Corporation ("Assignee").
Recitals
This Assignment is made with respect to the following facts:
A. Assignor has this date conveyed to Assignee the assets described in the
Agreement attached hereto (the "Assets").
B. In connection with its conveyance of the Real Property to Assignee,
Assignor has agreed to assign to Assignee good and marketable right, title and
interest in and to certain property and contract rights and other matters more
fully described below.
Assignment
NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Assignment. Assignor hereby transfers, grants, conveys and assigns to
Assignee good and indefeasible right, title and interest in and to the
following:
(a) The Right of Entry Agreements more particularly identified on
Annex A attached hereto (the "Service Agreements");
(b) Any and all unexpired warranties, guaranties and sureties
relating to the Assets, to the extent the same are assignable;
(c) Any and all governmental permits, licenses, certificates and
authorizations, relating to the use or operation of the Assets,
to the extent that they are assignable and only to the extent
that they relate to the Assets;
(d) Any and all other rights, privileges and appurtenances owned by
Assignor and in any way related to, or used in connection with
the operation of the Assets to the maximum extent permitted by
applicable law.
(e) Any Selected Other Contracts to the extent assignable and to
maximum extent permitted by applicable law more particularly
described on Annex B attached hereto.
2. Indemnity by Assignor. Assignor agrees to indemnify, defend and hold
harmless Assignee from and against any and all claims, damages,
liabilities, losses, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) asserted against
or suffered or incurred by Assignee as a result of or in connection
with any liabilities or obligations under the Service Agreements
relating to periods prior to the date hereof.
3. Assumption. Assignee hereby assumes all liability and obligations of
Assignor under the Service Agreements which relate to the periods from
and after the date hereof and agrees to perform all obligations of
Assignor under the Service Agreements which are to be performed or
which become due on or after the date hereof.
22
4. Indemnity by Assignee. Assignee agrees to indemnify, defend and hold
harmless Assignor from and against any and all claims, damages,
liabilities, losses, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) asserted against
or suffered or incurred by Assignor as a result of or in connection
with any liabilities or obligations under the Service Agreements
relating to periods from and after the date hereof.
5. Successors and Assigns. This Assignment shall be binding upon and
inure to the benefit of the parties' respective successors and
assigns.
6. Counterparts. This Assignment may be executed in counterparts, each of
which shall be deemed a duplicate original. Facsimile signatures
executing this Assignment are acceptable by all parties hereto.
IN WITNESS WHEREOF, the parties have executed this Assignment as of the date
first set forth above.
ASSIGNOR:
GREAT WEST SERVICES, LTD., a Colorado limited
partnership
By: QRS Communications, LLC, A Colorado
limited liability company, General
Partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
ASSIGNEE:
USOL, INC., a Delaware Corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
23
Annex A
To Exhibit 3.2(b)
24
Annex B
To Exhibit 3.2(b)
25
Exhibit 3.2(e)
--------------
OPTION AGREEMENT
This Option Agreement (the "Agreement") dated , 2001 (the "Effective
Date"), by and between ▇▇▇▇▇▇▇ HOUSING LIMITED PARTNERSHIP, a Colorado limited
partnership ("Owner"), and USOL, INC., a Delaware corporation ("Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Owner and Purchaser have entered into that certain Asset Purchase
Agreement of even date herewith Owner has sold to Purchaser and Purchaser has
purchased from Owner certain assets of Owner as set forth therein; and
WHEREAS, Owner agrees to grant Purchase a right of first offer to provide
telephone, cable television and internet services to certain properties that
Owner may hereafter acquire or otherwise requires such services.
NOW, THEREFORE, in consideration of the mutual promises hereunder and for
other good and valuable consideration, the receipt and legal sufficiency of
which is hereby acknowledged, the Owner and Purchaser hereby agree as follows:
1. Option. If, at any time during the period that is two (2) years from the
Effective Date, either:
(a) Owner acquires any residential property located in Colorado,
Oregon or Texas which is not subject to existing agreements for one or more
of the Services; or
(b) a contract for the provision of any of the Telecommunications
Services, Video Services or Internet Services (as defined in Section 2 of
this Agreement) is terminated at any residential property located in
Colorado, Oregon or Texas that is currently owned by Owner.
then, except as otherwise provided herein, Purchaser will have a one time
initial right to provide the applicable Services to said property prior to Owner
soliciting the provision of such Services from , or negotiating with, any other
services provider for that property. Owner must first offer Purchaser the right
to provide the applicable Services by giving a written notice (the "Notice") to
Purchaser. Within thirty (30) days from Purchaser's receipt of the Notice,
Purchaser will submit to Owner an agreement ("Agreement") to provide the
applicable Service to the property executed by Purchaser in one of the forms
attached hereto as an Exhibit. The Agreement for Telecommunication Services
shall be in the from attached hereto as Exhibit "A" and the Agreement for Video
and Internet Services shall be in the form attached hereto as Exhibit "B". In
addition to the foregoing, and as a condition to the obligation of Owner to
execute the applicable Service agreement, Purchaser shall pay Owner the amounts
per apartment unit in the property which is the subject of the Notice for each
Service as follows ("Key Fees"):
Video and Internet Services $100.00
Video, Telecommunications and Internet Services $150.00
USOL's total capital investment (i.e. Key Fees and construction costs)
shall not exceed $600.00 per Video passing and $500.00 per Telecommunication
passing ("Cost Limits"); if USOL's total capital investment on a given property
will exceed the Cost Limits ("Excess Property"), the Key Fees for such property
shall be reduced by the amount necessary to cause such total capital investment
not to exceed the Cost Limits. If the reduction in the Key Fees is insufficient
to cause USOL's total capital investment on the Excess Property to be less than
the Cost Limits and USOL still wishes to provide Services to such property, USOL
may elect (a) to bear the excess costs above the Cost Limits and submit an
Agreement to Owner (within 30 days of receiving the Notice) that contains
provisions in which USOL agrees to bear such excess costs or (b) request Owner
to bear the excess costs above the Cost Limits and, if Owner agrees, change the
Agreement accordingly to be evidenced only by Owner's written consent within 30
days of USOL's receipt of the Notice. In the event that USOL's total capital
investment on an
26
Excess Property will exceed the Cost Limits and neither (a) nor (b) in the
preceeding sentence has occurred within 30 days of USOL's receipt of the Notice,
USOL's rights under this Agreement will cease with respect to such Excess
Property.
In the event Purchaser shall fail to submit an Agreement for the applicable
Service within thirty (30) days from the Notice, Purchaser shall have no further
right with respect to the applicable Service on the property covered by the
Notice; and Owner shall be free to seek the provision of the applicable Service
for the property from other third parties.
Notwithstanding anything else to the contrary contained herein, Owner shall
have no obligation to obtain any Service from Purchaser unless:
(a) In the event that Purchaser, in the reasonable judgement of Owner,
has provided a poor level of service to the majority of the then current
properties under agreement with Owner, then Purchaser's rights under this
Agreement will be suspended until such time as Purchaser corrects the
reported deficiencies to Owner's reasonable satisfaction. Owner will notify
Purchaser in writing of any performance or service level issues that may
impact Purchaser's rights under this Agreement.
(b) Purchaser agrees to use the latest commercially available
technology, similar to the technology deployed by like kind operators on
comparable projects within 20 miles of the property, to provide the
applicable Service to the property which is the subject of the Notice.
2. Services.
(a) "Telecommunications Services" shall mean telephone and
communication services including two-way voice or data service, conference
calling, call waiting, call forwarding, speed dialing, internet access,
paging, information services, audio on demand and other similar services;
(b) "Video Services" shall mean multi-channel video and audio
programming, including cable television services, satellite mater
intellivision, L-Band and digital conversion, direct feed from a local
franchise cable provider or video delivery provider, multi-channel,
multi-point distribution service, direct broadcast satellite, telephone
company provided video programming delivery services, video on demand,
pay-per-view programming and music or other audio programming delivered to
a television; and
(c) "Internet Services" shall mean computer services including
internet access, internet mail, internet news groups, internet worldwide
web services, multi-media services, membership services for user
authentication and personalization services for customizing content.
(d) "Services" shall mean collectively Telecommunication Services,
Video Services and Internet Services.
3. Confidentiality. Purchaser covenants that it will keep confidential any
information concerning Owner's business and affairs that Purchaser may receive
pursuant to this Agreement and will not disclose any such information to the
public; provided, however, Purchaser may disclose such information as is
necessary in litigation between Owner and Purchaser or as otherwise required by
law.
4. Notices. All notices, requests, claims, demands or other communications
hereunder must be in writing and must be given by delivery in person, by
registered or certified mail (postage prepaid and return receipt requested) to
the respective parties as follows:
(a) If to Owner, to:
27
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Housing Limited Partnership
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ Housing Limited Partnership
Attn: ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(b) If to Purchaser, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇
USOL, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, Martens & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
or such other address as is furnished by any party to the other party in
accordance herewith, except that notices of change of address is only effective
upon receipt.
5. Governing Law. This agreement shall be governed and construed under the
laws of the State of Texas.
6. No Other Agreements. Except as expressly set forth herein and in the
Asset Purchase Agreement, there are no other agreements, either oral or written,
between the parties with respect to the subject matter contained herein.
7. No Oral Modification. This Agreement may not be modified, amended or
waived except by an instrument in writing signed by both parties hereto.
8. Assignment. Purchaser may not assign or transfer this Agreement to any
entity that is not an Affiliate (as defined below) of Purchaser without the
written consent of the Owner, which consent will not be unreasonably withheld;
except that, upon written notice to the Owner, Purchase may, without obtaining
Owner's prior consent, assign this Agreement to an entity or company which
controls, is controlled by, or is under common control with Purchaser
("Affiliate"). Purchaser may also assign this Agreement for security purposes,
to any entity which provides financing to Purchaser ("Lender"). The Lender will
not be liable for any of the obligations of Purchaser hereunder, unless Lender
notifies Owner in writing that it has elected to succeed Purchaser as assignee.
9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the Effective Date.
OWNER:
-----
▇▇▇▇▇▇▇ Housing Limited Partnership,
a Colorado limited partnership
By: Paloma LLC
its general partner
By:
------------------------
Name:
----------------------
Title:
---------------------
PURCHASER:
---------
USOL, INC.,
a Delaware corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
29
Exhibit A
to Option Agreement
[attach final form of the Telecommunication Services Agreement]
30
Exhibit B
to Option Agreement
[attach final form of the Video and Internet Services Agreement]
31
Exhibit 3.2(f)
--------------
RIGHT OF ENTRY AGREEMENT FORMS
32
Exhibit 3.2(g)
--------------
LOCK-UP AGREEMENT
This Lock-Up Agreement (the "Agreement") is entered into effective
_______________ 2001 (the "Effective Date"), by and between Great West Services,
Ltd., a Colorado limited partnership d/b/a SIMCOM ("SIMCOM"), and USOL Holdings,
Inc., an Oregon corporation ("Holdings" or the "Company").
A. SIMCOM and Holdings are parties to that certain Asset Purchase
Agreement dated _____________, 2001 (the "Purchase Agreement")
pursuant to which a wholly owned subsidiary of Holdings is purchasing
substantially all of the assets of SIMCOM in exchange for $4,000,000
in cash and 600,000 shares of Holdings' common stock (the "Shares").
B. Exhibit 3.3(d) of the Purchase Agreement sets forth the agreement of
the parties with respect to the registration of the Shares (the
"Registration Rights Agreement").
C. Pursuant to the provisions of Section 2.4 of the Purchase Agreement,
SIMCOM and Holdings are entering into this Agreement pursuant to which
SIMCOM has agreed to certain restrictions with respect to the transfer
of the Shares.
NOW, THEREFORE, it is hereby agreed as follows: 1. Lock-Up Period.
Reference is made to the date that is the earlier of (i) the effective date of a
registration statement filed by the Company under the Securities Act of 1933
registering the Shares, or (ii) 120 days after the Closing Date of the Purchase
Agreement in the event Company exercises its rights under Section 2.7 o the
Registration Rights Agreement (such earlier date being the "Registration Date")
Except in the case of a Release Event (defined below), SIMCOM shall not, without
the prior written consent of the Company, which consent may be withheld for any
reason, sell, offer to sell, contract to sell, grant any option for the purchase
of, transfer, assign, pledge, or otherwise dispose of, or transfer the economic
risk of ownership of (collectively, "Transfer") any of the Shares, any
securities of the Company received as a result of SIMCOM's ownership of the
Shares, or any securities of the Company into which such Shares are sub-divided
or converted (the "Relevant Securities") during the period beginning with the
Registration Date until the date that is 365 days subsequent to the Registration
Date except in accordance with the follow schedule:
a. During the period beginning on the Registration Date until the
date that is 30 days after the Registration Date, SIMCOM will not
Transfer more than 100,000 of the Relevant Securities.
b. During the period beginning on the date that is 30 days after the
Registration Date until the date that is 90 days after the
Registration Date, SIMCOM will not Transfer more than an
additional 100,000 of the Relevant Securities (200,000 in the
aggregate).
c. During the period beginning on the date that is 90 days after the
Registration Date until the date that is 180 days after the
Registration Date, SIMCOM will not Transfer more than an
additional 100,000 of the Relevant Securities (300,000 in the
aggregate).
d. During the period beginning on the date that is 180 days after
the Registration Date until the date that is 270 days after the
Registration Date, SIMCOM will not Transfer more than an
additional 100,000 Relevant Securities (400,000 in the
aggregate).
e. During the period beginning on the date that is 270 days after
the Registration Date until the date that is 365 days after the
Registration Date, SIMCOM will not transfer more than an
additional 100,000 of the Relevant Securities (500,000 in the
aggregate).
33
f. During the period beginning on the date that is 365 days after
the Registration Date until the date that is 450 days after the
Registration Date, SIMCOM will not transfer more than an
additional 100,000 of the Relevant Securities (600,000 in the
aggregate).
Notwithstanding any of the foregoing, SIMCOM may transfer any of the Shares
to any person or entity that SIMCOM directly or indirectly, through one ore more
intermediaries controls, is controlled by, or is under common control with
("Affiliate"), provided such Affiliate agrees to the terms and conditions of
this Agreement and the Registration Rights Agreement and provided SIMCOM pays
all of Company's costs related to such transfer (including without limitation
its legal costs).
2. Stop Transfer Instructions. SIMCOM consents to the entry of stop
transfer instructions with the Company's transfer agent against the transfer of
the Relevant Securities accept in accordance with this Agreement and applicable
securities laws. SIMCOM also acknowledges that, upon issuance, the share
certificates representing the Shares will include standard legends regarding
this Agreement and relevant securities laws.
3. Release Event. The Lock-Up Agreement shall terminate if, (i) during any
calendar month of the second, third or fourth calendar quarter after the
Registration Date, the average daily closing sale price of the Company's
publicly traded common stock is, for 45 consecutive trading days preceding the
first day of such calendar month, greater than or equal to $10.00 per share (as
adjusted for any stock splits or stock dividends that may occur after the
Effective Date), and (ii) the average daily trading volume of the Company's
publicly traded common stock is, for such 45 day period, greater than or equal
to 250,000 shares (a "Release Event").
4. Miscellaneous Clauses.
a. Except with respect to the Transfer of Shares by SIMCOM to
Affiliates, this Agreement hall not be assignable by any party
hereto without the prior written consent of the other parties.
This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective heirs,
executors, administrators, successors and assigns. SIMCOM agrees
that this agreement is irrevocable and shall be binding upon its
legal representatives, successors and assigns.
b. This Agreement may be amended only by a written instrument signed
by each party hereto. No provisions of this Agreement may be
waived except by an instrument in writing signed by the party
sought to be bound.
c. This Agreement and any amendment hereof may be executed in one or
more counterparts and by each party on a separate counterpart,
each of which when executed and delivered shall be an original,
and all of which together shall constitute one instrument. In
proving this agreement it shall not be necessary to produce or
account for more than one such counterpart signed by the party
against whom enforcement is sought.
d. Any provisions of this Agreement shall also be modified to the
extent necessary to equitably adjust the parties' respective
rights and obligations hereunder.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.
e. This Agreement constitutes 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.
f. This Agreement shall be governed by and construed and enforced in
accordance with the law (other than the law governing conflict of
law questions) of the State of Texas.
g. Every covenant, term, and provision of this Agreement shall be
construed simply according to its fair meaning and not strictly
for or against any party.
34
h. SIMCOM acknowledges and agrees that the Company would be damaged
irreparably if any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise
are breached. Accordingly, SIMCOM agrees that the Company shall
be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions of this Agreement in
any action instituted in any court of the United States or any
state thereof having jurisdiction over the parties and the matter
in addition to any other remedy to which they may be entitled, at
law or in equity.
i. Venue. Any dispute arising regarding the subject matter of this
Agreement shall be brought solely within the courts of ▇▇▇▇▇▇
County, state of Texas, unless the federal jurisdiction applies,
in which instance such dispute shall be brought within the
federal courts of the Western District of Texas, Austin, Texas
division.
Executed to be effective as of the Effective Date.
GREAT WEST SERVICES, LTD.,
A Colorado limited partnership
By: QRS Communications, LLC,
A Colorado limited liability company,
General Partner
By:
------------------------------------
▇▇▇▇ ▇▇▇▇▇
General Manager
USOL HOLDINGS, INC.,
An Oregon corporation
By:
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
35
Exhibit 3.3(d)
--------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
__________, 2001, by and between USOL Holdings, Inc., an Oregon corporation (the
"Company"), and Great West Services, Ltd., a Colorado limited partnership d/b/a
Simcom ("Simcom").
The parties to this Agreement, along with certain of their affiliates, are
parties to that certain Asset Purchase Agreement, dated as of the ____ day of
__________________, 2001 (the "Purchase Agreement"). In order to induce Simcom
to enter into the Purchase Agreement, the Company has, inter alia, agreed to
provide the Holders registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the Closing under the
Purchase Agreement. Unless otherwise provided in this Agreement, capitalized
terms used herein shall have the meanings set forth in Section 7 hereof.
The parties agree as follows:
1. Required Registration.
1.1 Registration Obligation. As soon as practicable following the date
hereof, but no later than one hundred twenty (120) days after the date
hereof, the Company shall use commercially reasonable efforts to file with
the Commission a shelf Registration Statement (the "Shelf Registration
Statement") on the appropriate form for an offering to be made on a
continuous basis pursuant to Rule 415 under the Securities Act (or such
successor rule or similar provision then in effect) covering all of the
Registrable Securities (a "Shelf Registration"). Once the Shelf
Registration Statement is effective, the Company shall use commercially
reasonable efforts to keep such Shelf Registration Statement continuously
effective for a period beginning on the effective date and ending eighteen
(18) months following such date; provided however, that the Company shall
not be required to keep the Registration Statement effective after all of
the securities covered by such Registration Statement have been sold or
distributed in accordance with the intended method of distribution.
2. Conditions to and Restrictions on Registration. Anything in this Agreement to
the contrary notwithstanding, the Company shall not be required to register
Registrable Securities on behalf of any Holder to the following extent and
subject to the following conditions:
2.1 No Person may participate in any registration hereunder unless
such Person executes and agrees to be bound by that certain Lock-Up
Agreement, the form of which is attached as Exhibit 3.2(g) to the Purchase
Agreement.
2.2 The Holders on whose behalf such Registrable Securities are to be
included shall be required to furnish the Company in a timely manner with
all information required by the applicable rules and regulations of the
Commission concerning the proposed method of sale or other disposition of
such Registrable Securities and such other information as may be reasonably
requested by the Company or its counsel to prepare and file such
Registration Statement in accordance with applicable provisions of the
federal and state securities laws;
2.3 If Registrable Securities are to be sold and distributed over a
period of time, or from time to time, at the prevailing market prices, then
the holder of such Registrable Securities shall execute and deliver to the
Company such written undertakings as the Company and its counsel may
reasonably request in order to assure full compliance with applicable
provisions of the Securities Act and the Exchange Act;
2.4 Upon receipt of any notice from the Company of the existence of
any event of the nature referred to in paragraph 3(v), such Holder will
immediately discontinue disposition of Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by such paragraph, or until it is advised in writing by the
Company that the use of the
36
Prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the Prospectus,
and, if so directed by the Company, such Holder will deliver to the Company
all copies, other than permanent file copies then in such holder's
possession, of the Prospectus covering such Registrable Securities current
at the time of receipt of such notice;
2.5 The Holders, as a condition to any proposed sale or distribution
of any Registrable Securities, will comply in connection with such proposed
sale or distribution with applicable prospectus delivery requirements and
will sell or distribute such Registrable Securities in accordance with the
method of distribution set forth in the Registration Statement;
2.6 In the case of an underwritten registration in which Holders of
Registrable Securities are participating, each Holder participating in such
offering must (i) agree to sell its Registrable Securities on the basis
provided in underwriting arrangements reasonably approved by the Company
that are consistent with customary industry practice, and (ii) complete and
execute all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents that are consistent with customary industry
practice and required under the terms of such underwriting arrangements;
2.7 The Company may postpone the filing of any registration statement
for a reasonable period of time, not to exceed 90 days, if the Company has
been advised by legal counsel that such filing would require the disclosure
of material information that the Company has a bona fide business purpose
for preserving as confidential and that is not then otherwise required to
be disclosed, and the Company determines reasonably and in good faith that
such disclosure would have a detrimental effect on the Company;
3. Registration Procedures. Whenever the Company is required to register any
Registrable Securities pursuant to this Agreement, the Company will use its
commercially reasonable efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible:
(i) prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities and use its
best efforts to cause such Registration Statement to become
effective (provided that before filing a Registration Statement
or prospectus or any amendments or supplements thereto, the
Company will furnish to the counsel selected by the Holders of a
majority of the Registrable Securities covered by such
Registration Statement copies of all such documents proposed to
be filed,
(ii) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such
Registration Statement effective or for the time period specified
in Section 1.1 for a Shelf Registration and comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during
such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement;
(iii) furnish to each seller of Registrable Securities such
number of copies of such Registration Statement, each amendment
and supplement thereto, the prospectus included in such
Registration Statement (including each preliminary prospectus)
and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities
owned by such seller;
(iv) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky
laws of such jurisdictions as any seller reasonably requests and
do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities
owned by such seller (provided that the Company will not be
37
required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify
but for this subparagraph, (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process
in any such jurisdiction);
(v) notify each seller of such Registrable Securities, at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such Registration
Statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not
misleading, and, at the request of any such seller, the Company
will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;
(vi) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by
the Company are then listed and, if not so listed on an exchange,
the Nasdaq Stock Market or such other stock market as the
Company's similar securities are quoted or listed;
(vii) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
Registration Statement;
(viii) enter into such customary agreements (including
underwriting agreements, if applicable, in customary form) and
take all such other actions as the holders of a majority of the
Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
(ix) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any
disposition pursuant to such Registration Statement and any
attorney, accountant or other agent retained by any such seller
or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in
connection with such Registration Statement; and
(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission.
4. Registration Expenses.
4.1 Expenses to be Paid by Company. Except as provided in Section 4.2,
all expenses incident to the Company's performance of or compliance with
this Agreement or otherwise related to the registration of the Registrable
Securities, including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of
counsel for the Company and all independent certified public accountants,
underwriters (excluding discounts and commissions) and other Persons
retained by the Company will be paid by the Company.
38
4.2 Expenses to be Paid by Holder. The Holders shall pay, pro rata,
(i) underwriting discounts and commissions and transfer taxes, if any,
relating to the sale of the Registrable Securities or (ii) any fees or
expenses of any counsel, accountants or other persons retained or employed
by the Holders.
5. Indemnification.
5.1 Indemnification by Company. The Company agrees to indemnify, to
the extent permitted by law, each Holder and their respective partners,
officers, directors, and employees and each Person who controls such Holder
(within the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses caused by any untrue or alleged untrue
statement of material fact contained in any Registration Statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such Holder expressly
for use therein or by such Holder's failure to deliver a copy of the
prospectus or any amendments or supplements thereto after the Company has
furnished such Holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification of the
Holders.
5.2 Indemnification by Holders. In connection with any registration
statement in which a Holder is participating, each such Holder will furnish
to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such Registration
Statement or prospectus and, to the extent permitted by law, will indemnify
the Company, its directors and officers and each Person who controls the
Company (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the Registration
Statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit so furnished in
writing by such Holder; provided that the obligation to indemnify will be
individual to each Holder and will be limited to the net amount of proceeds
received by such holder from the sale of Registrable Securities pursuant to
such Registration Statement.
5.3 Survival of Indemnification. The indemnification provided for
under this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and will survive
the transfer of securities. The Company also agrees to make such
provisions, as are reasonably requested by any indemnified party, for
contribution to such party in the event the Company's indemnification is
unavailable for any reason.
6. Participation in Underwritten Registrations. No Person may participate in any
registration hereunder that is underwritten unless such Person (a) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Person or Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
7. Definitions.
"Commission" means the United States Securities and Exchange Commission or
any other U.S. federal agency at the time administering the Securities Act
and the Securities and Exchange Act of 1934, as amended;
39
"Holder" means any holder of Registrable Securities.
"Person" means and includes any individual, corporation, joint venture,
partnership, association, limited liability company, trust, estate,
governmental body or other entity.
"Register," "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance
with the Securities Act and the declaration or ordering of effectiveness of
such registration statement by the Commission.
"Registrable Securities" means (i) any Common Stock issued to Simcom
pursuant to the Purchase Agreement, (ii) any other Common Stock issued or
issuable with respect to the securities referred to in clause (i) and by
way of a stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization.
As to any particular Registrable Securities, such securities will cease to
be Registrable Securities when a registration statement covering such
Registrable Securities has been declared effective, such Registrable
Securities are or are eligible to be transferred to any Person pursuant to
Rule 144 under the Securities Act (or any similar provision then in force),
including a sale pursuant to the provisions of Rule 144(k), or such
Registrable Securities have been sold through the public markets pursuant
to the Registration Statement.
"Registration Statement" means any registration statement of the Company,
including the prospectus included or deemed included in the Registration
Statement and all amendments and supplements to the Registration Statement
or the prospectus, including post-effective amendments, and all exhibits
to, and all materials incorporated by reference in, such registration
statement.
"Securities Act" means the Securities Act of 1933, as amended.
8. Miscellaneous.
8.1 No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable
Securities in this Agreement.
8.2 Adjustments Affecting Registrable Securities. The Company will not
take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
Holders to include such Registrable Securities in a registration undertaken
pursuant to this Agreement.
8.3 Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law. The parties hereto agree
and acknowledge that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
8.4 Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and permitted assigns of the
parties hereto whether so expressed or not. The provisions of this
Agreement which are for the benefit of the Holders of Registrable
Securities are also for the benefit of, and enforceable by, any subsequent
Holder so long as such Holder agrees to be bound by all of the provisions
hereof.
8.5 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.
40
8.6 Notices. All notices, requests, claims, 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:
If to Holders:
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Housing Limited Partnership
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ Housing Limited Partnership
Attn: ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to Company, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, President and COO
USOL Holdings, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, Martens & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
or in the care of a Holder, such address in the Company's stockholder's
records, or to such other address or to the attention of such other person
as the recipient party has specified by prior written notice to the sending
party.
8.7 Entire Agreement; Amendment. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the registration rights
of the Holders and may not be amended, modified or terminated unless in a
written instrument executed by the Company and the Holders of the Majority
of the Registrable Securities.
8.8 Intentionally Deleted.
8.9 Governing Law. This Agreement, in all respects, including all
matters of constructions, validity and performance, is governed by the laws
of the state of Texas.
8.10 Venue. Any dispute arising regarding the subject matter of this
Agreement shall be brought solely within the courts of ▇▇▇▇▇▇ County, state
of Texas, unless the federal jurisdiction applies, in which instance such
dispute shall be brought within the federal courts of the Western District
of Texas, Austin, Texas division.
8.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement,
and each of which will be deemed an original. Facsimile signatures
executing this Agreement are acceptable by all parties hereto.
41
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
USOL HOLDINGS, INC.
By:
-----------------------------------------
Name:
---------------------------------
Its:
---------------------------------
GREAT WEST SERVICES, LTD.
d/b/a/ SIMCO
By: QRS Communications, LLC
By:
---------------------------
▇▇▇▇ ▇▇▇▇▇, General Manager
42
Exhibit 3.5
-----------
ESCROW AGREEMENT
This ESCROW AGREEMENT ("Agreement") is entered into as of , 2001, by and among
USOL, INC., a Delaware corporation ("Buyer"), GREAT WEST SERVICES, LTD., a
Colorado limited partnership ("Seller"), and ▇▇▇▇▇ Fargo -- Investment
Management and Trust ("Escrow Agent") (Buyer, Seller and Escrow Agent are
referred to severally as a "Party" and collectively as the "Parties").
W I T N E S S E T H :
WHEREAS, Seller and Buyer entered into that certain Asset Purchase
Agreement ("Contract") dated , 2001, which relates to the sale of certain
private telephone, internet and cable television systems as described therein;
and
WHEREAS, Seller and Buyer now mutually agree that the amount to be escrowed
("Escrow Amount") pursuant to the Contract shall be $________; and
WHEREAS, Seller hereby deposits with Escrow Agent the Escrow Amount
pursuant to the Contract, to be held and disbursed in accordance herewith.
NOW, THEREFORE, the Parties, for the mutual and dependent consideration
herein recited, and for other good and valuable consideration, hereby agree as
follows:
1. Escrow. Seller hereby delivers, in escrow, to Escrow Agent the Escrow
Amount, to hold and disburse same in accordance with this Agreement, and Escrow
Agent hereby acknowledges receipt of the Escrow Amount pursuant to the wiring
instructions attached hereto as Exhibit 1.
2. Investment. The Escrow Amount shall be invested in an interest bearing
account or investment suitable to Seller, pursuant to written instructions
provided to Escrow Agent by Seller. If invested in an account, it may be in a
single bank or other institution acceptable to Seller and Buyer. Interest earned
on the Escrow Amount shall be paid to Seller on a monthly basis. Seller's
Federal Taxpayer I.D. Number is __________.
3. Release.
(a) In the event Buyer reasonably determines that Seller made a
misstatement or an omission, or otherwise breached any provision or
covenant in the Contract, any of which has resulted in a decrease in the
value of the Assets (as defined in the Contract) or has otherwise caused
damages to Buyer, Buyer shall submit to Escrow Agent and Seller on or
before , 200___, a written statement which specifies (i) the misstatement
or omission or breach by Seller and (ii) a computation of the decrease in
the value of the Assets resulting from such misstatement or omission or
breach by Seller (the "Decreased Value Amount"). Within ten (10) days after
receipt by Seller of the information referred to above, Seller shall notify
Buyer and Escrow Agent in writing that either (i) Seller agrees with the
claims by Buyer and authorizes Escrow Agent to disburse the Decreased Value
Amount to Buyer, or (ii) Seller disputes the claim by Buyer. If Seller
disputes the claim by Buyer, Escrow Agent shall continue to hold the
Decreased Value Amount until either (i) Seller and Buyer direct Escrow
Agent to disburse the Decreased Value Amount, or (ii) Escrow Agent is
instructed to disburse such amount by a court of competent jurisdiction. If
Seller agrees with the claims by Buyer and authorizes Escrow Agent to
disburse the Decreased Value Amount to Buyer, or if Seller fails to respond
within said 10 day period, Escrow Agent shall immediately disburse to Buyer
the Decreased Value Amount.
(b) On , 200__, Escrow Agent shall deliver to Seller the Escrow Amount
less any portion thereof which has become the Decreased Value Amount
pursuant to the provisions of (a) above or which remains in dispute
awaiting disbursement instructions from a court of competent jurisdiction.
43
4. Termination. This Agreement shall terminate and be null and void upon
the happening of any of the following events:
(a) Upon the mutual written agreement of Seller, Buyer, and Escrow
Agent; or
(b) Upon the disbursement of the entire Escrow Amount pursuant to the
terms of this Agreement.
5. Authority. Any of the Parties may act hereunder through an escrow agent
or attorney-in-fact, provided satisfactory written evidence for such authority
is first furnished to the other Parties.
6. Escrow Agent Liability. The Parties agree that the following provisions
shall control with respect to the rights, duties, liabilities, privileges and
immunities of the Escrow Agent:
(a) The Escrow Agent is not a party to and is not bound by, or charged
with notice of, any agreement out of which this escrow may arise, except
for the provisions of this Agreement.
(b) The Escrow Agent acts hereunder as a depository and disbursing
Escrow Agent only and is not responsible or liable in any manner whatsoever
for the sufficiency, correctness, genuineness or validity of the
instruments or funds which are the subject of this Agreement.
(c) In the event the Escrow Agent becomes involved in litigation in
connection with this Agreement not arising as a result of any negligence or
willful misconduct on the part of Escrow Agent, the non-prevailing party,
jointly and severally, agrees to indemnify and save the Escrow Agent
harmless from all loss, cost, damages, expenses and attorneys' fees
suffered or incurred by the Escrow Agent as a result thereof. The
obligations of the undersigned under this paragraph shall be performed at
the office of the Escrow Agent in Seattle, Washington.
(d) The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization,
power of attorney or other paper or document which the Escrow Agent, in
good faith, believes to be genuine and what it purports to be.
(e) The Escrow Agent shall act hereunder in accordance with ordinary
business practices and shall not be liable for anything which it may do or
refrain from doing in connection herewith, except its own negligence or
willful misconduct.
(f) In the event of any good faith disagreement between any of the
Parties, or between them or any of them and any other person, resulting in
adverse claims or demands being made in connection with this Agreement or
in the event that the Escrow Agent, in good faith, is in doubt as to what
action it should take hereunder, the Escrow Agent may, at its option, by
written notice to the Parties, refuse to comply with any claims or demands
on it or refuse to take any other action hereunder so long as such
disagreement continues or such doubt exists; and in any such event, the
Escrow Agent shall not be or become liable in any way or to any person for
its failure or refusal to act, and the Escrow Agent shall be entitled to
continue so to refrain from acting until (i) the rights of all parties
shall have been fully and finally adjudicated by a court of competent
jurisdiction, or (ii) all differences shall have been adjusted and all
doubt resolved by agreement among all of the interested persons, and the
Escrow Agent shall have been notified thereof, in writing, signed by all
such persons. The rights of the Escrow Agent under this paragraph are
cumulative of all other rights which it may have, by law or otherwise.
(g) Reasonable compensation for the escrow services herein required of
the Escrow Agent, if any, shall be paid by Seller.
7. Notice. All notices or other communications required or permitted to be
given pursuant hereto shall be in writing and shall be deemed served and given
at the time of (i) deposit in a depository receptacle under the care and custody
of the United States Postal Service, properly addressed to the designated
address of the
44
addressee as set forth below, postage prepaid, registered or certified mail with
return receipt requested, (ii) delivery to the designated address of the
addressee set forth below by a third party commercial delivery service, or (iii)
receipt at the facsimile or telex receiving facility of the addressee if
transmitted by facsimile or telex transmission. Notice given in any other manner
shall be effective only if and when received by the addressee. For purposes of
notices, the addresses, facsimile and telex numbers of the Parties shall be as
follows:
Buyer: USOL, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Seller: Great West Services, Ltd.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Escrow Agent: ▇▇▇▇▇ Fargo
Investment Management & Trust
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Senior VP, Trust Manager
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
8. Resignation of Escrow Agent. Escrow Agent shall have the right to resign
as Escrow Agent hereunder at any time by giving sixty (60) days' prior written
notice of such resignation to all of the other Parties hereto. In the event that
Escrow Agent shall at any time fail or refuse to serve or shall resign as Escrow
Agent hereunder, then Buyer shall have the right to designate a successor Escrow
Agent which shall be an independent third party. If any such successor Escrow
Agent hereunder shall at any time fail or refuse to act as Escrow Agent in
accordance with the provisions hereof, then a further successor shall be
selected by Buyer.
9. Effect. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
10. Counterparts. To facilitate execution, this instrument may be executed
in as many counterparts as may be convenient or required. It shall not be
necessary that the signature of, or on behalf of, each party, or that the
signature of all persons required to bind any party appear on each counterpart.
All counterparts shall collectively constitute a single instrument. It shall not
be necessary in making proof of this instrument to produce or account for more
than a single counterpart containing the respective signatures of, or on behalf
of, each of the parties hereto. Any signature page to any counterpart may be
detached from such counterpart without impairing the legal effect of the
signatures thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature pages.
11. Expenses. All costs of this escrow arrangement charged by the Escrow
Agent shall be paid for by the Seller.
12. Records. The Escrow Agent shall maintain a record of all Claims against
the Escrow Fund filed with it pursuant to this Agreement, a record of all such
Claims which shall become payable thereunder and a record of all payments from
the Escrow Fund to Buyer or Seller.
13. Governing Law. This Escrow Agreement shall be governed by and
interpreted in accordance with the laws of the State of Texas without regard to
the choice of law principles thereof.
45
EXECUTED as of the date first above written
BUYER:
-----
USOL, INC
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SELLER:
------
GREAT WEST SERVICES, LTD.,
a Colorado limited partnership
By: QRS Communications, LLC,
a Colorado limited liability company,
General Partner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ESCROW AGENT:
------------
▇▇▇▇▇ Fargo
Investment Management and Trust
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
46
Exhibit 3.6
-----------
TRANSITION SERVICES PROVISIONS
For purposes of this Exhibit 3.6, "Revenues" are gross ▇▇▇▇▇▇▇▇ from
Customers attributable to the period from the Closing Date until each Cutover
Date for each Right of Entry Agreement. Seller will assist in the transition of
operations to Purchaser after the Closing by continuing to provide cable and
telephone and internet services, installations, repairs, maintenance, general
operations, customer call center, and billing support (the "Operations") until
all operations for the Right of Entry Agreements and Customers are transitioned
to the Purchaser's billing platform and operations, up to a 120 days after
Closing Date ("the Transition Period"). Purchaser may elect to effect transition
of the Operations for each Right of Entry Agreement to Purchaser's Operations by
notifying Seller in writing at least 30 days prior to each transition date (each
a "Cutover Date"); the parties understand and agree that Purchaser may elect, in
its sole discretion, to effect the transition of the Operations of any one or
more of the Right of Entry Agreements at any time during the Transition Period
as long as all of the Operations for all of the Right of Entry Agreements are
transferred to Purchaser by the end of the Transition Period; and further
provided, however, that each Cutover Date must include an entire metropolitan
market (i.e., no partial cutovers of individual metropolitan markets will be
permitted). If Purchaser receives any subscriber fees attributable to the
Transition Period that belong to Seller under the terms of this Exhibit 3.6,
Purchaser shall immediately remit such fees to Seller. If Seller receives any
subscriber fees attributable to the time after the Transition Period, Seller
shall immediately remit such fees to Purchaser.
Seller will be responsible for all Costs of Goods Sold ("COGS") and
Operating Costs incurred in connection with each Right of Entry Agreement from
the Closing Date until each Cutover Date (collectively "Seller Costs"). COGS
include all direct product costs including but not limited to cable television
programming, telephone local and long-distance costs. "Operating Costs" include
all other costs necessary to perform the Operations from the Closing Date until
each Cutover Date for each Right of Entry Agreement. Purchaser agrees to pay
Seller the Seller Costs provided, however, that Purchaser shall pay the Seller
Costs only to the extent the Revenues are sufficient to pay the such amounts.
Seller agrees that it shall not be entitled to payment for the Seller Costs from
any source except the Revenues. Seller shall collect the Revenues during the
Transition Period on Purchaser's behalf. Seller shall apply the Revenues in the
following order of priority: First, Seller shall pay to Purchaser all portions
of the Revenues that are attributable to taxes, copyright fees or other
regulatory fees ("Taxes"); Second, Seller may retain from the Revenues an amount
up to the Seller Costs; and Third, Seller shall remit to Purchaser the excess of
the total Revenues over the total Seller Costs and Taxes within 30 days after
the expiration of the Transition Period. Seller Costs shall not include any
expenses related to interest, depreciation, amortization, government fees or
Taxes.
Seller will provide Purchaser a monthly financial statement and subscriber
report on or before the 10th business day of the following each month during the
Transition Period and for three months after the expiration of such Transition
Period; such statements must account for all Revenues and Seller Costs during
the Transition Period.
Seller shall not ▇▇▇▇ any Customers for any particular Right of Entry
Agreement for any period after the Cutover Date for each Right of Entry
Agreement. Seller will be responsible for all account receivables and
collections billed by Seller upon each Cutover date. After receiving notice of
each Cutover Date, (a) Seller will give advanced notice to all subscribers of
each Property of the change in operations from Seller to Purchaser, (b) Seller
will render a final ▇▇▇▇, within thirty (30) days after each respective Cutover
date, which notice shall be in a form mutually agreed upon in writing by Seller
and Purchaser, and (c) Seller will give such other advanced notices to all
subscribers of each Property as may be required by applicable law.
47
Exhibit 7.1(c)
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CONSENT
This Consent is executed by ▇▇▇▇▇▇▇ Housing Limited Partnership, a Colorado
limited partnership ("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.
Great West Services, Ltd., a Colorado limited partnership ("Operator"), is the
provider of telephone and cable television service to the Property under a
___________________________ Agreement dated ____________________ ("Agreement").
USOL, Inc., a Delaware corporation ("USOL") intends to acquire Operator's
interest in the Agreement and all of the assets of Operator which are part of or
related to the telephone and cable television system on the Property, including
all Operator's wiring, conduit, electronic devices, hardware, and other
equipment comprising the System described in the Agreement (the "Equipment").
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;
(c) 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; (d) Owner does not claim ownership of any of the Equipment. Owner
irrevocably consents to the assignment by Operator of its right, title and
interest in the Agreement to USOL.
DATED ________________, 2001.
PROPERTY OWNER:
▇▇▇▇▇▇▇ Housing Limited Partnership
By: Paloma, LLC
its general partner
By:_________________________________
Name:____________________________
Title:___________________________
48
Schedule 1.2
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ASSETS (OTHER THAN THE RIGHT OF ENTRY AGREEMENTS AND OTHER CONTRACTS)
[ATTACH DETAILED ITEMIZED DESCRIPTION OF ALL OF THE ASSETS
(INCLUDING ALL EQUIPMENT COMPRISING THE SYSTEMS)]
[NOTE: BE SURE TO INCLUDE the two DXC 4-K phone switches]
49
Schedule 4.4(a)
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GOVERNMENTAL PERMITS, REGISTRATION, AUTHORIZATIONS
AND APPROVAL REQUIREMENTS
None
50
Schedule 4.4(b)
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SELLER MATERIAL VIOLATIONS
The following include all material violation of any (i) applicable
government permit, registration, authorization or other approval, (ii) zoning
regulation or ordinance, (iii) environmental, Federal Occupational, Safety and
Health Act, or comparable state laws, regulations and rulings, or (iv) other
law, order, regulation or requirement relating to operations of the Systems or
the Assets and known by Seller:
NONE.
51
Schedule 4.7
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*[Intentionally Omitted]
52
*Confidential Treatment Requested. Confidential portions of this document have
been redacted and filed separately with the Commission.
Schedule 4.7(b)
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LIENS, ENCUMBRANCES AND REQUIRED THIRD PARTY CONSENTS
Following are all liens and encumbrances (which must be released prior to
Closing), and third party consents required with respect to the transfer of the
Systems and Assets:
[Include Subordination, Nondisturbance and Attornment Agreements from all
holders of mortgages or deed of trust liens against the Properties]
53
Schedule 4.9
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Exceptions to Litigation, Taxes and Disclosure Matters
NONE.
54
Schedule 4.10
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Financial Information
55