SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: December 29, 1999
(Date of earliest event reported)
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
Exact name of registrant as specified in its charter
Nevada 0-15413 95-3480640
State of other jurisdiction of Commission File No. I.R.S. Employer
incorporation or organization ID No.
601 Cleveland Street, Suite 930, Clearwater, Florida 33755
(Address of principal executive offices)
Registrant's telephone number, including area code: (727) 466-9898
N/A
(Former name or former address if changed since last report)
Item 6. OTHER EVENTS
On December 29, 1999 Progressive Telecommunications Corporation
(the "Registrant") and CorpHQ, Inc. ("CorpHQ") entered into a non-binding
letter of intent pursuant to which the Registrant has agreed to acquire 100%
of the issued and outstanding common stock of CorpHQ from its shareholders.
The Registrant will acquire the CorpHQ shares at the rate of $1.50 per share
payable in common shares of the Registrant. There are 4,412,780 shares of
CorpHQ issued and outstanding, based on the current market price of
($4.31) the Registrant would be obligated to issue an aggregate of 1,535,770
shares to the shareholders of CorpHQ.
The closing of the transaction is conditioned upon, among other things, an
audit of the financial statements of CorpHQ, due diligence and approval of
the board of directors of each company.
The transaction will be two-tiered, with shareholders owning in excess of 80%
of CorpHQ exchanging their shares for the Registrant's shares at the first
closing. Thereafter, the Registrant will file a registration statement under
the Securities Act of 1933, as amended, and Proxy Statement to offer shares
of the Registrant to the remaining shareholders of CorpHQ.
The description contained herein of the transaction is qualified in its
entirety by reference to the Letter of Intent and their Press Release dated
December 29, 1999, which are attached as Exhibits 2.1 and 99.1, respectively.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements
None.
(b) Pro Forma Financial Information
None.
(c) Exhibits
2.1 Letter of Intent dated December 29, 1999 between Progressive
Telecommunications Corporation and CorpHQ, Inc.
99.1 Progressive Telecommunications Corporation Press Release dated
December 29, 1999.
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROGRESSIVE TELECOMMUNICATIONS
CORPORATION
By: /s/ Barry Shevlin
Barry Shevlin, CEO
Dated: January 12, 2000
P9725290
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
601 Cleveland Street, Suite 930
Clearwater, FL 33755
_____________
TELEPHONE NO. (727) 466-9898
December 29, 1999
CorpHQ, Inc.
110 W. Ocean Boulevard, Suite 604
Long Beach, CA 90802
Att: Steven Crane
Re: Acquisition Proposal
Dear Mr. Crane:
The purpose of this letter ("Letter") is to set forth certain proposals and
certain binding agreements between Progressive Telecommunications
Corporation, a Nevada corporation ("Progressive"), and CorpHQ, Inc. ("HQ"),
with respect to the possible acquisition by Progressive of all of the
outstanding shares of HQ, on the terms and subject to the conditions set
forth below (the "Acquisition").
The following numbered paragraphs reflect our understanding of the matters
described in them, but are not to constitute a complete statement of, or a
legally binding or enforceable agreement or commitment on the part of,
Progressive or HQ an enforceable duty or obligation to negotiate towards or
conclude any such agreement or commitment.
1. ACQUISITION AGREEMENT.
On the terms and subject to the conditions to be set forth in a definitive,
legally binding, written agreement to be negotiated and entered into by all
of the shareholders of HQ (the "HQ Shareholders") and Progressive
(the "Agreement") and, subject to the approval of the board of directors of
Progressive, Progressive will acquire all of the outstanding shares of HQ's
capital stock (approximately 4,412,780) at the rate of $1.50 per share
payable in shares of Common Stock of Progressive. Such number of shares are
determined by dividing the sum of 4,412,780 x 1.50 = 6,619,170 by the average
closing bid price ("Average Price") of Progressive's shares for the five
days preceding closing. Assuming Progressive's Average Price was $2.75 per
share, Progressive would issue an aggregate of 2,406,971 shares.
2. CONDITIONS PRECEDENT
The acquisition of HQ by Progressive proposed herein is subject to the
following conditions:
(a) The approval of the proposed acquisition and related transactions by
both entities' Board of Directors;
(b) Proof that holders of more than 80% of the outstanding shares of HQ
representing less than 35 persons have approved the transactions and have
agreed to deliver their shares at the first closing. The balance of the
Shares shall be delivered to the remaining shareholders upon the effective
date of a Form S-4 registering the shares; and
(c) The delivery of such documents and information as are reasonably
requested by each party.
3. OTHER PROVISIONS
The Agreement will contain usual and customary representations, warranties,
covenants, and other agreements on behalf of Progressive and the HQ
Shareholders and closing will be subject to usual and customary and
conditions, including:
(a) Obtaining of necessary consents or approvals of governmental bodies,
lenders, lessors, or other third parties;
(b) absence of pending or threatened litigation;
(c) satisfactory completion of the parties' due diligence investigation;
(d) delivery of customary legal opinions, closing certificates, and other
documentation;
(e) the absence of any material adverse change in the assets, liabilities or
operations of HQ;
(f) the receipt of a favorable opinion of tax counsel acceptable to HQ that
the Acquisition will not result in its shareholders recognizing gain; and
(g) All shares rendered by progressive to the HQ Shareholders will be
registered on Form S-4 or Form S-3 as the case may be, with an effective
date of not later than one hundred eighty (180) days after closing.
(h) Holders of 80% of HQ's shares will agree to a one year lock-up of ninety
(90) percent of shares owned by them.
(i) Progressive will enter into two-year employment contracts with management
at mutually agreed compensation levels.
(j) Progressive will acquire management's stock options in HQ by issuing
Progressive options on identical terms.
(k) HQ will retire non-compete agreements with the principals of its
subsidiary, Source Capital Partners, thus canceling the issuance of an
additional one million nine hundred sixty-eight thousand fifty four (1,968,054)
shares of HQ common stock.
(l) HQ shall deliver consolidated audited financial statements for 1998 and
1999 prior to closing.
(m) Progressive shall file Form 10-K with the Securities and Exchange
Commission prior to closing.
4. BINDING AGREEMENTS.
Upon execution of counterparts of this Letter by you, the following lettered
paragraphs will constitute the legally binding and enforceable agreement of
Progressive and HQ (in recognition of the significant costs to be borne by
Progressive and HQ in pursuing this transaction and further in consideration
of their mutual undertakings as to the matters described herein).
(a) Access. Subject to the terms set forth in paragraph (g) below
respecting confidentiality and certain other matters, each of HQ and
Progressive will afford the other parties' employees, auditors, legal
counsel, and other authorized representatives all reasonable opportunity and
access during normal business hours to inspect, investigate, and audit the
respective assets, liabilities, contracts, operations, and business of HQ
and Progressive before the Agreement and closing. Each party will conduct
this inspection, investigation, and audit in a reasonable manner during
regular business hours.
(b) Consents. Progressive and HQ will cooperate with one another and
proceed, as promptly as reasonably practicable, to endeavor to comply with
all other legal or contractual requirements necessary for or preconditions
to the execution and consummation of the Agreement, including the preparation
of a proxy statement, if required.
(c) Exclusive Dealing. Neither HQ nor Progressive will offer any of its
respective material assets for sale to any person other than the other party
nor will HQ, Progressive or any of their respective officers, shareholders
or affiliates enter into negotiation with any other party for the
disposition of the business, assets or stock of HQ during the pendency of
negotiations between Progressive and HQ, and neither Progressive nor HQ will
unilaterally terminate these negotiations without cause unless:
(1) the transactions contemplated by the Agreement shall not have been
approved by the respective boards of directors of Progressive and HQ, on or
before December 20, 1999; or
(2) a material change or event (exclusive of a competing offer) shall have
occurred that would make proceeding with such execution and approval of the
Agreement or such Acquisition illegal, invalid, or contrary to the fiduciary
duties of the board of directors of Progressive or HQ; or the Agreement has
not been executed by the parties on or before January 30, 2000.
(d) Costs. Each party will be solely responsible for and bear their own
expenses, including, without limitation, expenses of legal counsel,
accountants, and other advisors, incurred at any time in connection with
pursuing or consummating the Agreement ("Expenses") and the transactions
contemplated thereby. The provisions of this paragraph (d) shall survive
termination or expiration of this letter.
(e) Public Disclosure. Before the Closing, neither Progressive nor HQ
shall make any public release of information regarding the matters
contemplated herein except (i) that a joint press release in agreed form
shall be issued by Progressive and HQ as promptly as is practicable after
the execution of this letter, (ii) that Progressive and HQ may each continue
such communications with employees, customers, suppliers, franchisees,
lenders, lessors, shareholders, and other particular groups as may be legally
priate and not inconsistent with the best interests of the other party or the
prompt consummation of the transactions contemplated by this letter, and
(iii) as required by law.
(f) Confidentiality. Progressive and HQ each agrees that (except as may
be required by law) it will not disclose or use and it will cause its
officers, directors, employees, representatives, agents, and advisors not to
disclose or use, any Confidential Information (as hereinafter defined) with
respect to the other party furnished, or to be furnished, to it in connection
herewith at any time or in any manner and will not use such information
other than in connection with its evaluation of the Acquisition.
graph (f) "confidential information" means any information identified as
such in writing by the disclosing party. If the Acquisition is not
consummated, the receiving party will promptly return all documents,
contracts, records, or properties to the disclosing party. The provisions of
this paragraph (f) shall survive the termination or expiration of this Letter.
(g) Termination. Except with respect to the provisions of paragraph (f),
either party hereto may terminate this letter and thereafter this letter
shall have no force and effect and the parties shall have no further
obligations hereunder if the Agreement is not signed on or before January
27, 2000 if such terminating party is not in breach of any of the binding
provisions hereof.
5. FINDERS FEE
Other than National Capital, Inc. and Equity net Research, no person has
been authorized by either party, or by anyone acting on behalf of either
party or their respective officers, directors, employees or trustees, to act
as a broker, finder or any other similar capacity in connection with the
transactions contemplated by this Letter in such manner as to give rise to
any valid claim against Progressive or HQ for any brokers' or finder's fee
or commission or similar type of compensation.
[SIGNATURE PAGE FOLLOWS]
Please sign and date this Letter in the spaces provided below to confirm our
mutual understandings and agreements as set forth in this Letter and return
a signed copy to the undersigned. If we do not receive a signed copy of
this letter on or before 5:00 PM, New York Time on January 7, 2000, we will
assume you have no further interest in pursuing this matter.
Very truly yours,
/s/ Barry L. Shevlin
Barry L. Shevlin, CEO
Acknowledged and agreed to:
CorpHQ, Inc.
By: /s/ Steven Crane
Steven Crane, CEO
Date: December 29, 1999
CorpHQ, Inc.
December 29, 1999
Page 6
Letter of Intent - CORPHQ
Progressive Telecommunications Corporation Announces
Acquisition of CorpHQ Inc.
BusinessMall.com to Integrate B2B Pioneer
CLEARWATER, Fla. -- (BUSINESS WIRE) -- Dec. 30, 1999 -- Progressive
Telecommunications Corporation (OTCBB:PTCI - news), an emerging
communications and Internet company, today announced that it had entered
into a letter of intent to acquire CorpHQ Inc. (OTC:COHQ) in an all stock
transaction valued at $6.6 million.
CorpHQ Inc. is a pioneer in the Internet's business-to-business segment,
having operated an online business marketplace since 1993. CorpHQ provides
an online "corporate headquarters'' at www.corphq.com for independent
professionals and service providers, where it aggregates their collective
capabilities into a cohesive line of services which are marketed at
extremely high value points. CorpHQ's award winning "virtual organization"
allows small business and enterprise clients to receive the innovation,
quality and pricing of a freelance relationship with the assurances,
security and quality control of a major vendor.
``This is another major step in the development of BusinessMall.com into a
top-tier business-to-business portal on the Internet. CorpHQ's virtual
organization and brick and mortar distributor network creates a powerful
competitive advantage for BusinessMall.com,'' said Progressive's CEO Barry
L. Shevlin. ``For the first time, enterprise-level clients will be able to
purchase business and professional services on the Internet with the same
degree of confidence as they would have with a major vendor in their local
area."
The BusinessMall.com is an integral piece of Progressive's ongoing business
strategy to capitalize on the business-to-business e-commerce revolution. As
an Internet portal and e-commerce site, BusinessMall.com will provide a
single point of contact for all business needs. It is expected that the large
CorpHQ.com site will be integrated into BusinessMall.com, and that the
combined site will launch during the first quarter of 2000.
About Progressive Telecommunications: Progressive Telecommunications is an
integrated telecommunications company with a commitment to achieving new
horizons through integrated technology and the Internet. Progressive offers
a complete array of communications and enhanced computer telephony services
for small to medium sized businesses.
About CorpHQ: CorpHQ operates a portal and series of vertical communities for
small office / home office businesses and independent professionals at
http://www.corphq.com, "the bridge between the Entrepreneur and the
Enterprise." CorpHQ's unique, virtual business model aggregates the
capabilities of its diverse subscribers into a virtual corporation that
provides numerous services to larger organizations through the Internet and
independent distributors.
This press release contains forward-looking statements. The words
``estimates'', ``pursuing'' and ``seeking'' and similar expressions identify
forward-looking statements, which speak only as to the date of the statement
was made. The Company undertakes no obligation to publicly update or revise
any forward-looking statements, whether because of new information, future
events or otherwise. Forward-looking statements are inherently subject to
risks and uncertainties, some of which cannot be predicted or quantified.
Future events and actual results could differ materially from those set forth
in, contemplated by, or underlying the forward-looking statements. The risks
and uncertainties to which forward-looking statements are subject to include,
but not limited to, the effect of government regulation, competition and
other material risks.
