AGREEMENT AND PLAN OF MERGER AND REORGANIZATION dated as of October 1, 1999 (the
"Agreement") by and among Third Enterprise Service Group, Inc., a Florida
corporation ("Third Enterprise") and Competitive Companies Inc., a Nevada
corporation ("your name").
R E C I T A L S
The respective Boards of Directors of Third Enterprise and Competitive
Companies deem it desirable and in the best interests of their respective
corporations, and of their respective shareholders, subject to, among other
things, the approval of the shareholders of Third Enterprise and Competitive
Companies, Competitive Companies shall merge with and into Third Enterprise; as
a result of which the holders of shares of capital stock of Competitive
Companies will, in the aggregate, receive the consideration hereinafter set
forth (collectively, the "Merger"). Upon the terms and subject to the conditions
of this Agreement, at the Effective Date (as defined in Section 2.3 of this
Agreement) in accordance with the merger laws of the state of Nevada ("MERGER
LAWS"), Competitive Companies shall be merged with and into Third Enterprise and
the separate existence of Competitive Companies shall thereupon cease. Third
Enterprise shall be the surviving corporation in the Merger and is hereinafter
sometimes referred to as the "Surviving Corporation."
NOW, THEREFORE, in consideration of the terms, conditions, agreements and
covenants contained herein, and in reliance upon the representations and
warranties contained in this Agreement, the parties hereto agree as follows:
I. RECITALS; TRUE AND CORRECT
The above stated recitals are true and correct and are incorporated into
this Agreement.
II. MERGER
2.1 Merger. In the manner and subject to the terms and conditions set forth
herein, Competitive Companies shall merge with and into Third Enterprise, and
Third Enterprise shall be the surviving corporation after the Merger and shall
continue to exist as a corporation governed by the laws of Nevada.
2.2 Incorporation and Name Change. Prior to the closing of the merger,
Third Enterprise shall change its state of incorporation to Nevada and in so
doing adopt Competitive Companies's Articles of Incorporation and Bylaws (the
"Reincorporation"). Upon the Closing of the Merger, Third Enterprise shall
change its name to Competitive Companies, Inc. (the "Name Change").
2.3 Effective Date. If all of the conditions precedent to the obligations
of each of the parties hereto as hereinafter set forth shall have been satisfied
or shall have been waived, the Merger shall become effective on the date (the
"Effective Date") the Articles of Merger, together with Plans of Merger
reflecting the Merger, shall be accepted for filing by the Secretary of State of
Nevada.
2.4 Securities of the Corporations. The authorized capital stock of
Competitive Companies is as set forth in the registration statement, (the
"Competitive Companies Stock"), of which
o 4,907,061 common shares
o 4,000,000 shares of Class A Convertible Preferred Stock
o 2,440,436 shares of Class B common stock
are issued and outstanding.
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There are options to acquire an additional 5,295,000 shares of common stock
The authorized capital stock of Third Enterprise is comprised of 50,000,000
shares of Common Stock, no par value per share (the "Third Enterprise Stock"),
of which 6,032,061 125,000 shares will be issued and outstanding as of the date
of closing of the Merger. In addition, Third Enterprise has authorized but
unissued 20,000,000 shares of no par value Preferred Stock
2.5 Shares of the Constituent and Surviving Corporations. The manner and
basis of converting the shares of Competitive Companies Stock into shares of
Third Enterprise Stock shall be as follows:
At the Effective Date, by virtue of the Merger and without any action on the
part of any holder of any capital stock of either Third Enterprise or
Competitive Companies, each share of Competitive Companies Stock issued and
outstanding shall be converted into the right to receive one share of Third
Enterprise Stock, the preferred shares having the same terms and conditions (the
"Exchange Ratio").
There shall also be issued the same number options for acquisition of the same
number of additional shares on the same terms and conditions as are currently
outstanding in Competitive Companies.
2.6 Effect of the Merger. As of the Effective Date, all of the following shall
occur:
(a) The separate existence and corporate organization of Competitive
Companies shall cease (except insofar as it may be continued by statute), Third
Enterprise shall exist as a surviving corporation.
(b) Except as otherwise specifically set forth herein, the corporate
identity, existence, purposes, powers, franchises, rights and immunities of
Third Enterprise shall continue unaffected and unimpaired by the Merger, and the
corporate identity, existence, purposes, powers, franchises and immunities of
Competitive Companies shall be merged with and into Third Enterprise as the
surviving corporation, shall be fully vested therewith.
(c) Neither the rights of creditors nor any liens upon or security
interests in the property of Competitive Companies shall be impaired by the
Merger.
(d) All corporate acts, plans, policies, agreements approvals and
authorizations of the shareholders and Board of Directors of Competitive
Companies and of its respective officers, directors and agents, which were valid
and effective immediately prior to the Effective Date, shall be the acts, plans,
policies, agreements, approvals and authorizations of Third Enterprise and shall
be as effective and binding on Third Enterprise as the same were on Competitive
Companies.
(e) Third Enterprise shall be liable for all of the obligations and
liabilities of Competitive Companies.
(f) The rights, privileges, goodwill, inchoate rights, franchises and
property, real, personal and mixed, and debts due on whatever account and all
other things in action belonging to Competitive Companies, shall be, and they
hereby are, bargained, conveyed, granted, confirmed, transferred, assigned and
set over to and vested in Third Enterprise, without further act or deed.
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(g) No claim pending at the Effective Date by or against any of Competitive
Companies, or any stockholder, officer or director thereof, shall xxxxx or be
discontinued by the Merger, but may be enforced, prosecuted, settled or
compromised as if the Merger had not occurred.
(h) All rights of employees and creditors and all liens upon the
property of Competitive Companies shall be preserved unimpaired, limited in lien
to the property affected by such liens at the Effective Date, and all the debts,
liabilities and duties of Competitive Companies shall attach to Third Enterprise
and shall be enforceable against Third Enterprise to the same extent as if all
such debts, liabilities and duties had been incurred or contracted by
Competitive Companies.
(i) The Articles of Incorporation of Third Enterprise, as in effect on
the Effective Date, shall continue to be the Articles of Incorporation of Third
Enterprise without change or amendment.
(j) The Bylaws of Third Enterprise, as in effect on the Effective
Date, shall continue to be the Bylaws of Third Enterprise without change or
amendment until such time, if ever, as it is amended thereafter in accordance
with the provisions thereof and applicable laws.
(k) Upon the Effective Date, the Board of Directors of Third
Enterprise shall consist of those persons set forth in the registration
statement, and the officers of Third Enterprise shall be the officers specified
in the registration statement.
III. CONDUCT OF BUSINESS PENDING CLOSING; STOCKHOLDER APPROVAL
Competitive Companies and Third Enterprise covenant that between the date
hereof and the date of the Closing:
3.1 Access to Competitive Companies. Competitive Companies shall (a) give
to Third Enterprise and to Third Enterprise's counsel, accountants and other
representatives reasonable access, during normal business hours, throughout the
period prior to the Closing Date (as defined in Section 6.1), to all of the
books, contracts, commitments and other records of Competitive Companies and
shall furnish Third Enterprise during such period with all information
concerning Competitive Companies that Third Enterprise may reasonably request;
and (b) afford to Third Enterprise and to Third Enterprise's representatives,
agents, employees and independent contractors reasonable access, during normal
business hours, to the properties of Competitive Companies, in order to conduct
inspections at Third Enterprise's expense to determine that Competitive
Companies is operating in compliance with all applicable federal, state, local
and foreign statutes, rules and regulations, and all material building, fire and
zoning laws or regulations and that the assets of Competitive Companies are
substantially in the condition and of the capacities represented and warranted
in this Agreement; provided, however, that in every instance described in (a)
and (b), Third Enterprise shall make arrangements with Competitive Companies
reasonably in advance and shall use its best efforts to avoid interruption and
to minimize interference with the normal business and operations of Competitive
Companies. Any such investigation or inspection by Third Enterprise shall not be
deemed a waiver of, or otherwise limit, the representations, warranties or
covenants of Competitive Companies contained herein.
3.2 Conduct of Business. During the period from the date hereof to the
Closing Date, Competitive Companies shall and shall use reasonable efforts, to
the extent such efforts are within Competitive Companies's control, to cause its
business to be operated in the usual and ordinary course of business and in
material compliance with the terms of this Agreement.
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3.3 Exclusivity to Third Enterprise. Until either the merger agreement is
terminated or the merger closed, Competitive Companies agrees not to solicit any
other inquiries, proposals or offers to purchase or otherwise acquire, in a
merger transaction or another type of transaction, the business of Competitive
Companies or the shares of capital stock of Competitive Companies. Any person
inquiring as to the availability of the business or shares of capital stock of
Competitive Companies or making an offer therefor shall be told that Competitive
Companies is bound by the provisions of this Agreement. Competitive Companies as
well as its officers, directors, representatives or agents further agree to
advise Third Enterprise promptly of any such inquiry or offer.
3.4 Access to Third Enterprise. Third Enterprise shall (a) give to
Competitive Companies and to Competitive Companies's counsel, accountants and
other representatives reasonable access, during normal business hours,
throughout the period prior to the Closing Date, to all of the books, contracts,
commitments and other records of Third Enterprise and shall furnish Competitive
Companies during such period with all information concerning Third Enterprise
that Competitive Companies may reasonably request; and (b) afford to Competitive
Companies and to Competitive Companies's representatives, agents, employees and
independent contractors reasonable access, during normal business hours, to the
properties of Third Enterprise in order to conduct inspections at Competitive
Companies's expense to determine that Third Enterprise is operating in
compliance with all applicable federal, state, local and foreign statutes, rules
and regulations, and all material building, fire and zoning laws or regulations
and that the assets of Third Enterprise are substantially in the condition and
of the capacities represented and warranted in this Agreement; provided,
however, that in every instance described in (a) and (b), Competitive Companies
shall make arrangements with Third Enterprise reasonably in advance and shall
use its best efforts to avoid interruption and to minimize interference with the
normal business and operations of Third Enterprise. Any such investigation or
inspection by Competitive Companies shall not be deemed a waiver of, or
otherwise limit, the representations, warranties or covenants of Third
Enterprise contained herein.
3.5 Conduct of Business. During the period from the date hereof to the
Closing Date, the business of Third Enterprise shall be operated by Third
Enterprise in the usual and ordinary course of such business and in material
compliance with the terms of this Agreement.
3.6 Exclusivity to Competitive Companies. Until either the merger agreement
is terminated or the merger closed, Third Enterprise has agreed not to make any
other inquiries, proposals or offers to purchase or otherwise acquire, in a
merger transaction or another type of transaction, the business or the shares of
capital stock of any other company. Any person inquiring as to the possibility
of being acquired by Third Enterprise or making an offer therefore shall be told
that Third Enterprise is bound by the provisions of this Agreement. Each of
Third Enterprise and its officers, directors, representatives or agents further
agree to advise PC Universe promptly of any such inquiry or offer.
3.7 Stockholder Approval. (a) As promptly as reasonably practicable
following the date of this Agreement, Third Enterprise shall take all action
reasonably necessary in accordance with the laws of the State of Florida and its
Articles of Incorporation and Bylaws to secure written consents for the approval
and adoption of the Merger and the Merger Agreement, as well as the
Reincorporation and Name Change. The Board of Directors of Third Enterprise
shall unanimously recommend that Third Enterprise's shareholders vote to approve
and adopt the Merger, this Agreement and any other matters to be submitted to
Third Enterprise's shareholders in connection therewith. Third Enterprise shall,
subject as aforesaid, use its best efforts to solicit and secure from
shareholders of Third Enterprise such approval and adoption.
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(b) As promptly as reasonably practicable following the date of this
Agreement, Third Enterprise shall prepare and file with the SEC under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated by the SEC thereunder a registration statement on Form
S-4 (or other form of registration statement as agreed by the parties) (the
"registration statement")covering all shares of Third Enterprise Stock issuable
as a consequence of the Merger. Third Enterprise may also register shares of
existing shareholders for resale on a companion S-1 or SB-2 filing. Competitive
Companies shall cooperate fully with Third Enterprise in the preparation and
filing of the Registration Statement and any amendments and supplements thereto,
including, without limitation, the furnishing to Third Enterprise of such
information regarding Competitive Companies as shall be required by each of the
Securities Act and the Exchange Act and the respective rules and regulations
promulgated by the SEC thereunder.
(d) As promptly as practicable but in no event later than the Effective
Date, Third Enterprise shall prepare and forward to a market maker to file with
the NASD OTC Bulletin Board ("BB"), an application to have the Third Enterprise
Stock listed for trading on BB.
IV. REPRESENTATIONS AND WARRANTIES OF Competitive Companies
Competitive Companies represents and warrants to Third Enterprise as follows,
with the knowledge and understanding that Third Enterprise is relying materially
upon such representations and warranties:
4.1 Organization and Standing. Competitive Companies is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada. Competitive Companies has all requisite corporate power to carry on its
business as it is now being conducted and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary under applicable law, except where the failure to
qualify (individually or in the aggregate) does not have any material adverse
effect on the assets, business or financial condition of Competitive Companies,
and all states in which each is qualified to do business as of the date hereof,
are listed in the information in the registration statement concerning
Competitive Companies. The copies of the Articles of Incorporation and Bylaws of
Competitive Companies, as amended to date, delivered to Third Enterprise, are
true and complete copies of these documents as now in effect. Except as
otherwise set forth in the information in the registration statement concerning
Competitive Companies, Competitive Companies does not own any interest in any
other corporation, business trust or similar entity. The minute book of
Competitive Companies contains accurate records of all meetings of its
respective Board of Directors and shareholders since its incorporation.
4.2 Capitalization. The authorized capital stock of Competitive Companies,
the number of shares of capital stock which are issued and outstanding and par
value thereof are as set forth in the Registration Statement. All of such shares
of capital stock are duly authorized, validly issued and outstanding, fully paid
and nonassessable, and were not issued in violation of the preemptive rights of
any person. There are no subscriptions, options, warrants, rights or calls or
other commitments or agreements to which Competitive Companies is a party or by
which it is bound, calling for any issuance, transfer, sale or other disposition
of any class of securities of Competitive Companies. There are no outstanding
securities convertible or exchangeable, actually or contingently, into shares of
common stock or any other securities of Competitive Companies. Competitive
Companies has no subsidiaries except as set forth in the registration statement.
4.3 Authority. This Agreement constitutes, and all other agreements
contemplated hereby will constitute, when executed and delivered by Competitive
Companies in accordance therewith (and assuming due execution and delivery by
the other parties hereto), the valid and binding obligation of Competitive
Companies, enforceable in accordance with their respective terms, subject to
general principles of equity and bankruptcy or other laws relating to or
affecting the rights of creditors generally.
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4.4 Properties. Except as set forth on the information in the registration
statement concerning Competitive Companies, Competitive Companies has good title
to all of the assets and properties which it purports to own as reflected on the
balance sheet included in the Financial Statements (as hereinafter defined), or
thereafter acquired. Competitive Companies has a valid leasehold interest in all
material property of which it is the lessee and each such lease is valid,
binding and enforceable against Competitive Companies, as the case may be, and,
to the knowledge of Competitive Companies, the other parties thereto in
accordance with its terms. Neither Competitive Companies nor the other parties
thereto are in material default in the performance of any material provisions
thereunder. Neither the whole nor any material portion of the assets of
Competitive Companies is subject to any governmental decree or order to be sold
or is being condemned, expropriated or otherwise taken by any public authority
with or without payment of compensation therefor, nor, to the knowledge of
Competitive Companies, any such condemnation, expropriation or taking been
proposed. None of the assets of Competitive Companies is subject to any
restriction which would prevent continuation of the use currently made thereof
or materially adversely affect the value thereof.
4.5 Contracts Listed; No Default. All contracts, agreements, licenses,
leases, easements, permits, rights of way, commitments, and understandings,
written or oral, connected with or relating in any respect to present or
proposed future operations of Competitive Companies (except employment or other
agreements terminable at will and other agreements which, in the aggregate, are
not material to the business, properties or prospects of Competitive Companies
and except governmental licenses, permits, authorizations, approvals and other
matters referred to in Section 4.17), which would be required to be listed as
exhibits to a Registration Statement on Form S-4 or an Annual Report on Form
10-K if Competitive Companies were subject to the reporting requirements of the
Exchange Act (individually, the "Competitive Companies Contract" and
collectively, the "Competitive Companies Contracts"), are listed and described
in the information in the registration statement concerning Competitive
Companies. Competitive Companies is the holder of, or party to, all of the
Competitive Companies Contracts. To the knowledge of Competitive Companies, the
Competitive Companies Contracts are valid, binding and enforceable by the
signatory thereto against the other parties thereto in accordance with their
terms. Neither Competitive Companies nor any signatory thereto is in default or
breach of any material provision of the Competitive Companies Contracts.
Competitive Companies's operation of its business has been, is, and will,
between the date hereof and the Closing Date, continue to be, consistent with
the material terms and conditions of the Competitive Companies Contracts.
4.6 Litigation. Except as disclosed in the information in the registration
statement concerning Competitive Companies, there is no claim, action,
proceeding or investigation pending or, to the knowledge of Competitive
Companies, threatened against or affecting Competitive Companies before or by
any court, arbitrator or governmental agency or authority which, in the
reasonable judgment of Competitive Companies, could have any materially adverse
effect on Competitive Companies. There are no decrees, injunctions or orders of
any court, governmental department, agency or arbitration outstanding against
Competitive Companies.
4.7 Taxes. For purposes of this Agreement, (A) "Tax" (and, with correlative
meaning, "Taxes") shall mean any federal, state, local or foreign income,
alternative or add-on minimum, business, employment, franchise, occupancy,
payroll, property, sales, transfer, use, value added, withholding or other tax,
levy, impost, fee, imposition, assessment or similar charge, together with any
related addition to tax, interest, penalty or fine thereon; and (B) "Returns"
shall mean all returns (including, without limitation, information returns and
other material information), reports and forms relating to Taxes or to any
benefit plans.
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Competitive Companies has duly filed all Returns required by any law or
regulation to be filed by it, except for extensions duly obtained. All such
Returns were, when filed, and to the knowledge of Competitive Companies are,
accurate and complete in all material respects and were prepared in conformity
with applicable laws and regulations in all material respects. Competitive
Companies has paid or will pay in full or has adequately reserved against all
Taxes otherwise assessed against it through the Closing Date, and the assessment
of any material amount of additional Taxes in excess of those paid and reported
is not reasonably expected.
Competitive Companies is not a party to any pending action or proceeding by any
governmental authority for the assessment of any Tax, and no claim for
assessment or collection of any Tax has been asserted against Competitive
Companies that has not been paid. There are no Tax liens upon the assets (other
than the lien of property taxes not yet due and payable) of Competitive
Companies. There is no valid basis, to the knowledge of Competitive Companies,
except as set forth in the information in the registration statement concerning
Competitive Companies, for any assessment, deficiency, notice, 30-day letter or
similar intention to assess any Tax to be issued to Competitive Companies by any
governmental authority.
4.8 Compliance with Laws and Regulations. To its knowledge, Competitive
Companies is in compliance, in all material respects, with all laws, rules,
regulations, orders and requirements (federal, state and local) applicable to it
in all jurisdictions where the business of Competitive Companies is currently
conducted or to which Competitive Companies is currently subject which has a
material impact on Competitive Companies, including, without limitation, all
applicable civil rights and equal opportunity employment laws and regulations,
and all state and federal antitrust and fair trade practice laws and the Federal
Occupational Health and Safety Act. Competitive Companies knows of no assertion
by any party that Competitive Companies is in violation of any such laws, rules,
regulations, orders, restrictions or requirements with respect to its current
operations, and no notice in that regard has been received by Competitive
Companies. To the knowledge of Competitive Companies, there is not presently
pending any proceeding, hearing or investigation with respect to the adoption of
amendments or modifications to existing laws, rules, regulations, orders,
restrictions or requirements which, if adopted, would materially adversely
affect the current operations of Competitive Companies.
4.9 Compliance with Laws. (a) To its knowledge, the business, operations,
property and assets of Competitive Companies (and, to the knowledge of
Competitive Companies, the business of any sub-tenant or licensee which is
occupying or has occupied any space on any premises of Competitive Companies and
the activities of which could result in any material adverse liability to
Competitive Companies) (i) conform with and are in compliance in all material
respects with all, and are not in material violation of any applicable federal,
state and local laws, rules and regulations, including, but not limited to, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended (including the 1986 Amendments thereto and the Superfund Amendments and
Reauthorization Act) ("CERCLA"), and the Resource Conservation and Recovery Act
("RCRA"), as well as any other laws, rules or regulations relating to tax,
product liability, controlled substances, product registration, environmental
protection, hazardous or toxic waste, employment, or occupational safety
matters; and (ii) have been conducted and operated in a manner such that, to
Competitive Companies's knowledge, Competitive Companies has foreseeable
potential liabilities for environmental clean-up under CERCLA, RCRA or under any
other law, rule, regulation or common or civil law doctrine.
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(b) To its knowledge, no predecessor-in-title to any real property now or
previously owned or operated by Competitive Companies, nor any predecessor
operator thereof conducted its business or operated such property in violation
of CERCLA and RCRA or any other applicable federal, state and local laws, rules
and regulations relating to environmental protection or hazardous or toxic waste
matters.
(c) Except as disclosed in the information in the registration statement
concerning Competitive Companies, no suit, action, claim, proceeding, nor
investigation, review or inquiry by any court or federal, state, county,
municipal or local governmental department, commission, board, bureau, agency or
instrumentality, including, without limitation, any state or local health
department (all of the foregoing collectively referred to as "Governmental
Entity") concerning any such possible violations by Competitive Companies is
pending or, to the knowledge of Competitive Companies, threatened, including,
but not limited to, matters relating to diagnostic tests and products and
product liability, environmental protection, hazardous or toxic waste,
controlled substances, employment, occupational safety or tax matters.
Competitive Companies does not know of any reasonable basis or ground for any
such suit, claim, investigation, inquiry or proceeding. For purposes of this
Section 4.9, the term "inquiry" includes, without limitation, all pending
regulatory issues (whether before federal, state, local or inter-governmental
regulatory authorities) concerning any regulated product, including, without
limitation, any diagnostic drugs and products.
4.10 Information. Competitive Companies has furnished Third Enterprise all
information necessary to prepare the registration statement.
4.11 Condition of Assets. The equipment, fixtures and other personal
property of Competitive Companies, taken as a whole, is in good operating
condition and repair (ordinary wear and tear excepted) for the conduct of the
business of Competitive Companies as is contemplated to be conducted.
4.12 No Breaches. To its knowledge, the making and performance of this
Agreement and the other agreements contemplated hereby by Competitive Companies
will not (i) conflict with or violate the Articles of Incorporation or the
Bylaws of Competitive Companies; (ii) violate any material laws, ordinances,
rules or regulations, or any order, writ, injunction or decree to which
Competitive Companies is a party or by which Competitive Companies or any of its
respective assets, businesses, or operations may be bound or affected; or (iii)
result in any breach or termination of, or constitute a default under, or
constitute an event which, with notice or lapse of time, or both, would become a
default under, or result in the creation of any encumbrance upon any asset of
Competitive Companies under, or create any rights of termination, cancellation
or acceleration in any person under, any Competitive Companies Contract.
4.13 Employees. Except as set forth in the information in the registration
statement concerning Competitive Companies, none of the employees of Competitive
Companies is represented by any labor union or collective bargaining unit and,
to the knowledge of Competitive Companies, no discussions are taking place with
respect to such representation.
4.14 Financial Statements. To its knowledge, the information in the
registration statement concerning Competitive Companies contains, as to
Competitive Companies, certain financial statements (the "Financial
Statements"). The Financial Statements present fairly, in all respects, the
consolidated financial position and results of operations of Competitive
Companies as of the dates and periods indicated, prepared in accordance with
generally accepted accounting principles consistently applied ("GAAP"). The
Financial Statements, when submitted to Third Enterprise for inclusion in the
Registration Statement, will have been prepared in accordance with Regulation
S-X of the SEC and, in particular, Rules 1-02 and 3-05 promulgated thereunder.
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Without limiting the generality of the foregoing, (i) there is no basis for any
assertion against Competitive Companies as of the date of the Financial
Statements of any debt, liability or obligation of any nature not fully
reflected or reserved against in the Financial Statements; and (ii) there are no
assets of Competitive Companies as of the date of the Financial Statements, the
value of which is overstated in the Financial Statements. Except as disclosed in
the Financial Statements, Competitive Companies has no known contingent
liabilities (including liabilities for Taxes), forward or long-term commitments
or unrealized or anticipated losses from unfavorable commitments other than in
the ordinary course of business. Competitive Companies is not a party to any
contract or agreement for the forward purchase or sale of any foreign currency
that is material to Competitive Companies taken as a whole.
4.15 Absence of Certain Changes or Events. Except as set forth in the
information in the registration statement concerning Competitive Companies,
since the date of the last financial statement included in the registration
statement, there has not been:
(a) Any material adverse change in the financial condition, properties,
assets, liabilities or business of Competitive Companies;
(b) Any material damage, destruction or loss of any material properties of
Competitive Companies, whether or not covered by insurance;
(c) Any material change in the manner in which the business of Competitive
Companies has been conducted;
(d) Any material change in the treatment and protection of trade secrets or
other confidential information of Competitive Companies;
(e) Any material change in the business or contractual relationship of
Competitive Companies with any customer or supplier which might reasonably be
expected to materially and adversely affect the business or prospects of
Competitive Companies;
(f) Any agreement by Competitive Companies, whether written or oral, to do
any of the foregoing; and
(g) Any occurrence not included in paragraphs (a) through (f) of this
Section 4.16 which has resulted, or which Competitive Companies has reason to
believe, in its reasonable judgment, might be expected to result, in a material
adverse change in the business or prospects of Competitive Companies.
4.16 Governmental Licenses, Permits, Etc. To its knowledge, Competitive
Companies has all governmental licenses, permits, authorizations and approvals
necessary for the conduct of its business as currently conducted ("Licenses and
Permits"). The information in the registration statement concerning Competitive
Companies includes a list of all Licenses and Permits. All Licenses and Permits
are in full force and effect, and no proceedings for the suspension or
cancellation of any thereof is pending or threatened.
4.17 Employee Agreements. (a) For purposes of this Agreement, the following
definitions apply:
(1) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any regulations promulgated thereunder.
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(2) "Multi-employer Plan" means a plan, as defined in ERISA Section
3(37), to which Competitive Companies contributes or is required to contribute.
(3) "Employee Plan" means any pension, retirement, profit sharing,
deferred compensation, vacation, bonus, incentive, medical, vision, dental,
disability, life insurance or any other employee benefit plan as defined in
Section 3(3) of ERISA other than a Multi-employer Plan to which Competitive
Companies contributes, sponsors, maintains or otherwise is bound to with regard
to any benefits on behalf of the employees of Competitive Companies.
(4) "Employee Pension Plan" means any Employee Plan for the provision
of retirement income to employees or which results in the deferral of income by
employees extending to the termination of covered employment or beyond as
defined in Section 3(2) of ERISA.
(5) "Employee Welfare Plan" means any Employee Plan other than an
Employee Pension Plan.
(6) "Compensation Arrangement" means any plan or compensation
arrangement other than an Employee Plan, whether written or unwritten, which
provides to employees of Competitive Companies, former employees, officers,
directors or shareholders of Competitive Companies any compensation or other
benefits, whether deferred or not, in excess of base salary or wages, including,
but not limited to, any bonus or incentive plan, stock rights plan, deferred
compensation arrangement, life insurance, stock purchase plan, severance pay
plan and any other employee fringe benefit plan.
(b) The information in the registration statement concerning Competitive
Companies lists, all (1) employment agreements and collective bargaining
agreements to which Competitive Companies is a party; (2) Compensation
Arrangements of Competitive Companies; (3) Employee Welfare Plans; (4) Employee
Pension Plans; and (5) consulting agreements under which Competitive Companies
has or may have any monetary obligations to employees or consultants of
Competitive Companies or their beneficiaries or legal representatives or under
which any such persons may have any rights. Competitive Companies has previously
made available to Third Enterprise true and complete copies of all of the
foregoing employment contracts, collective bargaining agreements, Employee Plans
and Compensation Arrangements, including descriptions of any unwritten
contracts, agreements, Compensation Arrangements or Employee Plans, as amended
to date. In addition, with respect to any Employee Plan which continues after
the Closing Date, Competitive Companies has previously delivered or made
available to Third Enterprise (1) any related trust agreements, master trust
agreements, annuity contracts or insurance contracts; (2) certified copies of
all Board of Directors' resolutions adopting such plans and trust documents and
amendments thereto; (3) current investment management agreements; (4) custodial
agreements; (5) fiduciary liability insurance policies; (6) indemnification
agreements; (7) the most recent determination letter (and underlying application
thereof and correspondence and supplemental material related thereto) issued by
the Internal Revenue Service with respect to the qualification of each Employee
Plan under the provisions of Section 401(a) of the Code; (8) copies of all
"advisory opinion letters," "private letter rulings," "no action letters," and
any similar correspondence (and the underlying applications therefor and
correspondence and supplemental material related thereto) that was issued by any
governmental or quasigovernmental agency with respect to the last plan year; (9)
Annual Reports (Form 5500 Series) and Schedules A and B thereto for the last
plan year; (10) all actuarial reports prepared for the last plan year; (11) all
certified Financial Statements for the last plan year; and (12) all current
Summary Plan Descriptions, Summaries of Material Modifications and Summary
Annual Reports. All documents delivered by Competitive Companies to Third
Enterprise as photocopies faithfully reproduce the originals thereof, such
originals are authentic and were, to the extent execution was required, duly
executed.
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(c) Except as otherwise disclosed in the information in the registration
statement concerning Competitive Companies:
(1) It is not a party to and has, in effect or to become effective
after the date of this Agreement, any bonus, cash or deferred compensation,
severance, medical, health or hospitalization, pension, profit sharing or
thrift, retirement, stock option, employee stock ownership, life or group
insurance, death benefit, welfare, incentive, vacation, sick leave, cafeteria,
so-called "golden parachute" payment, disability or trust agreement or
arrangement.
4.18 Brokers. Competitive Companies has not made any agreement or taken any
action with any person or taken any action which would cause any person to be
entitled to any agent's, broker's or finder's fee or commission in connection
with the transactions contemplated by this Agreement.
4.19 Business Locations. Competitive Companies does not nor does it own or
lease any real or personal property in any state except as set forth on the
information in the registration statement concerning Competitive Companies.
Competitive Companies does not have a place of business (including, without
limitation, Competitive Companies's executive offices or place where Competitive
Companies's books and records are kept) except as otherwise set forth on the
information in the registration statement concerning Competitive Companies.
4.20 Intellectual Property. The information in the registration statement
concerning Competitive Companies lists all of the Intellectual Property (as
hereinafter defined) used by Competitive Companies which constitutes a material
patent, trade name, trademark, service xxxx or application for any of the
foregoing. "Intellectual Property" means all of Competitive Companies's right,
title and interest in and to all patents, trade names, assumed names,
trademarks, service marks, and proprietary names, copyrights (including any
registration and pending applications for any such registration for any of
them), together with all the goodwill relating thereto and all other
intellectual property of Competitive Companies. Other than as disclosed in the
information in the registration statement concerning Competitive Companies,
Competitive Companies does not have any licenses granted by or to it or other
agreements to which it is a party, relating in whole or in part to any
Intellectual Property, whether owned by Competitive Companies or otherwise. All
of the patents, trademark registrations and copyrights listed in the information
in the registration statement concerning Competitive Companies that are owned by
Competitive Companies are valid and in full force and effect. To the knowledge
of Competitive Companies, it is not infringing upon, or otherwise violating, the
rights of any third party with respect to any Intellectual Property. No
proceedings have been instituted against or claims received by Competitive
Companies, nor to its knowledge are any proceedings threatened alleging any such
violation, nor does Competitive Companies know of any valid basis for any such
proceeding or claim. To the knowledge of Competitive Companies, there is no
infringement or other adverse claims against any of the Intellectual Property
owned or used by Competitive Companies. To the knowledge of Competitive
Companies, its use of software does not violate or otherwise infringe the rights
of any third party.
4.21 Warranties. The information in the registration statement concerning
Competitive Companies sets forth a true and complete list of the forms of all
express warranties and guaranties made by Competitive Companies to third parties
with respect to any services rendered by Competitive Companies.
4.22 Suppliers. Except as set forth in the information in the registration
statement concerning Competitive Companies, Competitive Companies knows and has
no reason to believe that, either as a result of the transactions contemplated
hereby or for any other reason (exclusive of expiration of a contract upon the
passage of time), any present material supplier of Competitive Companies will
not continue to conduct business with Competitive Companies after the Closing
Date in substantially the same manner as it has conducted business prior
thereto.
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4.23 Accounts Receivable. The accounts receivable reflected on the balance
sheets included in the Financial Statements, or thereafter acquired by
Competitive Companies, consists, in the aggregate in all material respects, of
items which are collectible in the ordinary and usual course of business.
4.24 Governmental Approvals. To its knowledge, other than as set forth
herein, no authorization, license, permit, franchise, approval, order or consent
of, and no registration, declaration or filing by Competitive Companies with,
any governmental authority, federal, state or local, is required in connection
with Competitive Companies's execution, delivery and performance of this
Agreement.
4.25 No Omissions or Untrue Statements. None of the information relating to
Competitive Companies supplied or to be supplied in writing by it specifically
for inclusion in the Registration Statement, at the respective times that the
Registration Statement becomes effective (or any registration statement included
therein), the Proxy Statement is first mailed to Third Enterprise's shareholders
and the meeting of Third Enterprise's shareholders takes place, as the case may
be, contains or will contain any untrue statement of a material fact or omits or
will omit to state a 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. Third Enterprise shall give notice to
Competitive Companies in advance of the dates of such effectiveness, mailing and
meeting sufficient to permit Competitive Companies to fulfill its obligations
under the second sentence of this Section.
4.26 Information in the Registration Statement concerning Competitive
Companies Complete. Competitive Companies shall promptly provide to *our name
notice concerning any of the information in the registration statement
concerning Competitive Companies if events occur prior to the Closing Date that
would have been required to be disclosed had they existed at the time of
executing this Agreement. The information provided to *our name concerning
Competitive Companies, as supplemented prior to the Closing Date, will contain a
true, correct and complete list and description of all items required to be set
forth therein. The information provided to *our name for inclusion in the
registration statement concerning Competitive Companies, as supplemented prior
to the Closing Date, is expressly incorporated herein by reference.
Notwithstanding the foregoing, any such supplement to the information in the
registration statement concerning Competitive Companies following the date
hereof shall not in any way affect *our name's right not to consummate the
transactions contemplated hereby as set forth in Section 8.2 hereof.
V. REPRESENTATIONS AND WARRANTIES OF Third Enterprise
Third Enterprise represents and warrants to Competitive Companies as
follows, with the knowledge and understanding that Competitive Companies is
relying materially on such representations and warranties:
5.1 Organization and Standing of Third Enterprise. Third Enterprise is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida, and has the corporate power to carry on its business as
now conducted and to own its assets and it not required to qualify to transact
business as a foreign corporation in any state or other jurisdiction. The copies
of the Articles of Incorporation and Bylaws of Third Enterprise, delivered to
Competitive Companies, are true and complete copies of those documents as now in
effect. Third Enterprise does not own any capital stock in any other
corporation, business trust or similar entity, and is not engaged in a
partnership, joint venture or similar arrangement with any person or entity. The
minute books of Third Enterprise contain accurate records of all meetings of its
incorporator, shareholders and Board of Directors since its date of
incorporation.
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5.2 Third Enterprise's Authority. Third Enterprise's Board of Directors has
approved and adopted this Agreement and the Merger and has resolved to recommend
approval and adoption of this Agreement and the Merger by Third Enterprise's
shareholders.
5.3 Due Execution. This Agreement constitutes, and all other agreements
contemplated hereby will constitute, when executed and delivered by Third
Enterprise in accordance herewith (and assuming due execution and delivery by
the other parties hereto), the valid and binding obligations of Third
Enterprise, enforceable in accordance with their respective terms, subject to
general principles of equity and bankruptcy or other laws relating to or
affecting the rights of creditors generally.
5.4 No Breaches. To its knowledge, the making and performance of this
Agreement (including, without limitation, the issuance of the Third Enterprise
Stock) by Third Enterprise will not (i) conflict with the Articles of
Incorporation or the Bylaws of Third Enterprise; (ii) violate any order, writ,
injunction, or decree applicable to Third Enterprise; or (iii) result in any
breach or termination of, or constitute a default under, or constitute an event
which, with notice or lapse of time, or both, would become a default under, or
result in the creation of any encumbrance upon any asset of Third Enterprise
under, or create any rights of termination, cancellation or acceleration in any
person under, any agreement, arrangement or commitment, or violate any
provisions of any laws, ordinances, rules or regulations or any order, writ,
injunction or decree to which Third Enterprise is a party or by which Third
Enterprise or any of its assets may be bound.
5.5 Capitalization. The authorized capital stock of *our name, the number
of shares of capital stock which are issued and outstanding and par value
thereof are as set forth in the Registration Statement. All of the outstanding
Third Enterprise Stock is duly authorized, validly issued, fully paid and
nonassessable, and was not issued in violation of the preemptive rights of any
person. The Third Enterprise Stock to be issued upon effectiveness of the
Merger, when issued in accordance with the terms of this Agreement shall be duly
authorized, validly issued, fully paid and nonassessable. Other than as stated
in this Section 5.5, there are no outstanding subscriptions, options, warrants,
calls or rights of any kind issued or granted by, or binding upon, Third
Enterprise, to purchase or otherwise acquire any shares of capital stock of
Third Enterprise, or other equity securities or equity interests of Third
Enterprise or any debt securities of Third Enterprise. There are no outstanding
securities convertible or exchangeable, actually or contingently, into shares of
Third Enterprise Stock or other stock of Third Enterprise.
5.6 Business. Third Enterprise, since its formation, has engaged in no
business other than to seek to serve as a vehicle for the acquisition of an
operating business, and, except for this Agreement, is not a party to any
contract or agreement for the acquisition of an operating business.
5.7 Governmental Approval; Consents. To its knowledge, except for the
reports required to be filed in the future by Third Enterprise, as a reporting
company, under the Exchange Act, and under the Securities Act with respect to
the shares of Third Enterprise Stock issuable upon exercise of the Third
Enterprise Warrants, the filing of the Registration Statement under the
Securities Act, the Proxy Statement under the Exchange Act for the purpose of
seeking stockholder approval of the Merger referred to in Section 2.1 and the
issuance of the Third Enterprise Stock pursuant to the Merger and the filing of
the S-4 Registration Statement (or other form of registration statement as
agreed by the parties), no authorization, license, permit, franchise, approval,
order or consent of, and no registration, declaration or filing by Third
Enterprise with, any governmental authority, federal, state or local, is
required in connection with Third Enterprise's execution, delivery and
performance of this Agreement. No consents of any other parties are required to
be received by or on the part of Third Enterprise to enable Third Enterprise to
enter into and carry out this Agreement.
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5.8 Financial Statements. To its knowledge, the financial statements of
Third Enterprise previously furnished to Competitive Companies (collectively,
the "Third Enterprise Financial Statements") present fairly, in all material
respects, the financial position of Third Enterprise as of the respective dates
and the results of its operations for the periods covered in accordance with
GAAP. Without limiting the generality of the foregoing, (i) except as set forth
in the Third Enterprise Disclosure Schedule, there is no basis for any assertion
against Third Enterprise as of the date of said balance sheets of any material
debt, liability or obligation of any nature not fully reflected or reserved
against in such balance sheets or in the notes thereto; and (ii) there are no
assets of Third Enterprise, the value of which (in the reasonable judgment of
Third Enterprise) is materially overstated in said balance sheets. Except as
disclosed therein, Third Enterprise has no known material contingent liabilities
(including liabilities for taxes), unusual forward or long-term commitments or
unrealized or anticipated losses from unfavorable commitments. Third Enterprise
is not a party to any contract or agreement for the forward purchase or sale of
any foreign currency.
5.9 Adverse Developments. Except as expressly provided or set forth in, or
required by, this Agreement, or as set forth in the Third Enterprise Financial
Statements, since the last date of its financial information in the registration
statement, there have been no materially adverse changes in the assets,
liabilities, properties, operations or financial condition of Third Enterprise,
and no event has occurred other than in the ordinary and usual course of
business or as set forth in Third Enterprise's Registration statement or in the
Third Enterprise Financial Statements which could be reasonably expected to have
a materially adverse effect upon Third Enterprise, and Third Enterprise does not
know of any development or threatened development of a nature that will, or
which could be reasonably expected to, have a materially adverse effect upon
Third Enterprise's operations or future prospects.
5.10 Contracts Listed. All material contracts, agreements, licenses,
leases, easements, permits, rights of way, commitments, and understandings,
written or oral, connected with or relating in any respect to the present
operations of Third Enterprise are, with the exception of this Agreement,
described in Third Enterprise's Registration statement.
5.11; No Default. All of the contracts, agreements, leases, commitments and
understandings, written or oral, and any other contract, agreement, lease,
commitment or understanding, written or oral, binding upon Third Enterprise
referred to in section 5.10 above, are listed in the Third Enterprise Disclosure
Schedule (the "Third Enterprise Contracts"). To the knowledge of Third
Enterprise, the Third Enterprise Contracts are valid, binding and enforceable by
Third Enterprise against the other parties thereto in accordance with their
terms. Neither Third Enterprise nor, to the knowledge of Third Enterprise, any
of the other parties thereto is in default or breach of any material provision
of the Third Enterprise Contracts. Third Enterprise has furnished Competitive
Companies with a true and complete copy of each Third Enterprise Contract, as
amended.
5.12 Taxes. Third Enterprise has duly filed all Returns required by any law
or regulation to be filed by it except for extensions duly obtained. All such
Returns were, when filed, and to the best of Third Enterprise's knowledge are,
accurate and complete in all material respects and were prepared in conformity
with applicable laws and regulations. Third Enterprise has paid or will pay in
full or has adequately reserved against all Taxes otherwise assessed against it
through the Closing Date, and the assessment of any material amount of
additional Taxes in excess of those paid and reported is not reasonably
expected.
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Third Enterprise is not a party to any pending action or proceeding by any
governmental authority for the assessment of any Tax, and no claim for
assessment or collection of any Tax has been asserted against Third Enterprise
that has not been paid. There are no Tax liens upon the assets of Third
Enterprise (other than the lien of personal property taxes not yet due and
payable). There is no valid basis, to the best of Third Enterprise's knowledge,
except as set forth in the Third Enterprise Disclosure Schedule, for any
assessment, deficiency, notice, 30-day letter or similar intention to assess any
Tax to be issued to Third Enterprise by any governmental authority.
5.13 Litigation. Except as disclosed in the Third Enterprise Disclosure
Schedule, there is no claim, action, proceeding or investigation pending or, to
Third Enterprise's knowledge, threatened against or affecting Third Enterprise
before or by any court, arbitrator or governmental agency or authority which, in
the reasonable judgment of Third Enterprise, could have a materially adverse
effect on Third Enterprise. There are no decrees, injunctions or orders of any
court, governmental department, agency or arbitration outstanding against Third
Enterprise.
5.14 Compliance with Laws and Regulations. To its knowledge, Third
Enterprise is in compliance, in all material respects, with all laws, rules,
regulations, orders and requirements (federal, state and local) applicable to it
in all jurisdictions in which the business of Third Enterprise is currently
conducted or to which Third Enterprise is currently subject, which may have a
material impact on Third Enterprise, including, without limitation, all
applicable civil rights and equal opportunity employment laws and regulations,
all state and federal antitrust and fair trade practice laws and the Federal
Occupational Health and Safety Act. Third Enterprise does not know of any
assertion by any party that Third Enterprise is in violation of any such laws,
rules, regulations, orders, restrictions or requirements with respect to its
current operations, and no notice in that regard has been received by Third
Enterprise. To Third Enterprise's knowledge, there is not presently pending any
proceeding, hearing or investigation with respect to the adoption of amendments
or modifications of existing laws, rules, regulations, orders, restrictions or
requirements which, if adopted, would materially adversely affect the current
operations of Third Enterprise.
5.15 Compliance with Laws. (a) To its knowledge, the business operations,
property and assets of Third Enterprise (and to the knowledge of Third
Enterprise, the business of any sub-tenant or license which is occupying or has
occupied any space on any premises of Third Enterprise and the activities of
which could result in any material adverse liability to Third Enterprise) (i)
conform with and are in compliance in all material respects with all, and are
not in material violation of any applicable federal, state and local laws, rules
and regulations, including, but not limited to, CERCLA and RCRA, as well as any
other laws, rules or regulations relating to tax, product liability, controlled
substances, product registration, environmental protection, hazardous or toxic
waste, employment, or occupational safety matters; and (ii) have been conducted
and operated in a manner such that, to Third Enterprise's knowledge, Third
Enterprise has no foreseeable potential liabilities for environmental clean-up
under CERCLA, RCRA or under any law, rule, regulation or common or civil law
doctrine.
(b) To its knowledge, no predecessor-in-title to any real property now or
previously owned or operated by Third Enterprise, nor any predecessor operator
thereof conducted its business or operated such property in violation of CERCLA
and RCRA or any other applicable, federal, state and local laws, rules and
regulations relating to environmental protection or hazardous or toxic waste
matters.
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(c) Except as disclosed in the Third Enterprise Disclosure Schedule, no
suit, action, claim, proceeding nor investigation review or inquiry by any
Government Entity (as defined in Section 4.9) concerning any such possible
violations by Third Enterprise is pending or, to Third Enterprise's knowledge,
threatened, including, but not limited to, matters relating to diagnostic tests
and products and product liability, environmental protection, hazardous or toxic
waste, controlled substances, employment, occupational safety or tax matters.
Third Enterprise does not know of any reasonable basis or ground for any such
suit, claim, investigation, inquiry or proceeding.
5.16 Governmental Licenses, Permits, Etc. To its knowledge, Third
Enterprise has all governmental licenses, permits, authorizations and approvals
necessary for the conduct of its business as currently conducted. All such
licenses, permits, authorizations and approvals are in full force and effect,
and no proceedings for the suspension or cancellation of any thereof is pending
or threatened.
5.17 Brokers. Third Enterprise has not made any agreement or taken any
action with any person or taken any action which would cause any person to be
entitled to any agent's, broker's or finder's fee or commission in connection
with the transactions contemplated by this Agreement.
5.18 Employee Plans. Except as listed in Third Enterprise's Registration
statement, Third Enterprise has no employees, consultants or agents, and Third
Enterprise has no Employee Plans or Compensation Arrangements.
VI. STOCKHOLDER APPROVAL; CLOSING DELIVERIES
6.1 Stockholder Approval. Competitive Companies shall submit the Merger and
this Agreement to its shareholders for approval and adoption at the Meeting or
by written consent as soon as practicable following the date the SEC declares
the registration statement effective in accordance with Section 3.7 hereof.
Subject to the Merger and this Agreement receiving all approvals of Competitive
Companies and Competitive Companies shareholders and regulatory approvals and
the absence of 81.3% or more of the non-affiliated shareholders of Competitive
Companies (i) voting against the Merger; and (ii) requesting redemption of their
shares of Competitive Companies Stock in the manner to be set forth in the
Information Statement, and subject to the other provisions of this Agreement,
the parties shall hold a closing (the "Closing") no later than the fifth
business day (or such later date as the parties hereto may agree) following the
later of (a) the date of the Meeting of Shareholders of Competitive Companies to
consider and vote upon the Merger and this Agreement or the receipt of the
requisite percentage of written consents or (b) the business day on which the
last of the conditions set forth in Articles VII and VIII hereof is fulfilled or
waived (such later date, the "Closing Date"), at 10:00 A.M. at the offices of
XXXXXXXX LAW GROUP, P.A., or at such other time and place as the parties may
agree upon.
6.2 Closing Deliveries of Competitive Companies. At the Closing, Competitive
Companies shall deliver, or cause to be delivered, to Third Enterprise:
(a) A certificate dated as of the Closing Date, to the effect that the
representations and warranties of Competitive Companies contained in this
Agreement are true and correct in all material respects at and as of the Closing
Date and that Competitive Companies has complied with or performed in all
material respects all terms, covenants and conditions to be complied with or
performed by Competitive Companies on or prior to the Closing Date;
(b) An opinion of Competitive Companies's counsel in form and
substance reasonably satisfactory to Third Enterprise, in a form to be mutually
agreed to prior to the Closing;
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(c) a certificate, dated as of the Closing Date, certifying as to the
Articles of Incorporation and Bylaws of Competitive Companies, the incumbency
and signatures of the officers of each of Competitive Companies and copies of
the directors' and shareholders' resolutions of Competitive Companies approving
and authorizing the execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby;
(d) Such other documents, at the Closing or subsequently, as may be
reasonably requested by Third Enterprise as necessary for the implementation and
consummation of this Agreement and the transactions contemplated hereby.
6.3 Closing Deliveries of Third Enterprise. At the Closing, Third
Enterprise shall deliver to Competitive Companies:
(a) A certificate of Third Enterprise, dated as of the Closing Date,
to the effect that the representations and warranties of Third Enterprise
contained in this Agreement are true and correct in all material respects and
that Third Enterprise has complied with or performed in all material respects
all terms, covenants and conditions to be complied with or performed by Third
Enterprise on or prior to the Closing Date;
(b) A certificate, dated as of the Closing Date, executed by the
Secretary of Third Enterprise, certifying the Articles of Incorporation, Bylaws,
incumbency and signatures of officers of Third Enterprise and copies of Third
Enterprise's directors' and shareholders' resolutions approving and authorizing
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(c) An opinion of Third Enterprise's counsel, XXXXXXXX LAW GROUP, P.A., in
form and substance reasonably satisfactory to Competitive Companies, in a form
to be mutually agreed to prior to the Closing;
(d) The written resignations of all officers, and all directors of Third
Enterprise.
(e) Certificates representing the Third Enterprise Stock issuable upon
consummation of the Merger;
(f) The books and records of Third Enterprise; and
(h) Documentation satisfactory to Competitive Companies evidencing the fact
that the signatories on all relevant bank accounts of Third Enterprise have been
changed to signatories designated by Competitive Companies.
VII. CONDITIONS TO OBLIGATIONS OF Competitive Companies
The obligation of Competitive Companies to consummate the Closing is
subject to the following conditions, any of which may be waived by Competitive
Companies in its sole discretion:
7.1 Compliance by Third Enterprise. Third Enterprise shall have performed
and complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by Third Enterprise
prior to or on the Closing Date.
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7.2 Accuracy of Third Enterprise's Representations. Third Enterprise's
representations and warranties contained in this Agreement (including the Third
Enterprise Disclosure Schedule) or any schedule, certificate or other instrument
delivered pursuant to the provisions hereof or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects at and as of the Closing Date (except for such changes permitted by
this Agreement) and shall be deemed to be made again as of the Closing Date.
7.3 Material Adverse Change. No material adverse change shall have occurred
subsequent to the date of the last financial information in the registration
statement in the financial position, results of operations, assets, liabilities
or prospects of Third Enterprise, nor shall any event or circumstance have
occurred which would result in a material adverse change in the financial
position, results of operations, assets, liabilities or prospects of Third
Enterprise within the reasonable discretion of Competitive Companies.
7.4 Documents. All documents and instruments delivered by Third Enterprise
to Competitive Companies at the Closing shall be in form and substance
reasonably satisfactory to Competitive Companies and its counsel.
7.5 Capitalization. At the Closing Date, Third Enterprise shall have the
number of shares as set forth in the registration statement issued and
outstanding.
7.6 Effectiveness of Registration Statement; No Stop Order. The
Registration Statement shall be effective under the Securities Act and shall not
be subject to a stop order or any threatened stop order.
7.7 Reorganization. The Merger shall qualify as a tax-free reorganization
under Section 368 of the Code.
7.8 Litigation. No litigation seeking to enjoin the transactions
contemplated by this Agreement or to obtain damages on account hereof shall be
pending or, to Competitive Companies's knowledge, be threatened.
7.9 Dissenters' Rights. It is a condition to Competitive Companies's
obligations to consummate the merger that the holders of no more than 10% of the
outstanding shares of Competitive Companies's common stock are entitled to
dissenters' rights. If demands for payment are made with respect to more than
10%, of the outstanding shares of Competitive Companies's common stock, and, as
a consequence more than 10% of the shareholders of Competitive Companies's
become entitled to exercise dissenters' rights, then Competitive Companies will
not be obligated to consummate the merger.
VIII. CONDITIONS TO Third Enterprise'S OBLIGATIONS
Third Enterprise's obligation to consummate the closing is subject to the
following conditions, any of which may be waived by Third Enterprise in its sole
discretion:
8.1 Compliance by Competitive Companies. Competitive Companies shall have
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with prior to
or on the Closing Date.
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8.2 Accuracy of Competitive Companies's Representations. Competitive
Companies's representations and warranties contained in this Agreement
(including the exhibits hereto and the Third Enterprise Disclosure Schedule) or
any schedule, certificate or other instrument delivered pursuant to the
provisions hereof or in connection with the transactions contemplated hereby
shall be true and correct in all material respects at and as of the Closing Date
(except for such changes permitted by this Agreement) and shall be deemed to be
made again as of the Closing Date.
8.3 Material Adverse Change. No material adverse change shall have occurred
subsequent to the last date of the financial statement of Competitive Companies
in the registration statement in the financial position, results of operations,
assets, liabilities or prospects of Competitive Companies taken as a whole, nor
shall any event or circumstance have occurred which would result in a material
adverse change in the business, assets or condition, financial or otherwise, of
Competitive Companies taken as a whole, within reasonable discretion of Third
Enterprise.
8.4 Litigation. No litigation seeking to enjoin the transactions
contemplated by this Agreement or to obtain damages on account hereof shall be
pending or, to Third Enterprise's knowledge, be threatened.
8.5 Reorganization. The Merger shall qualify as a tax-free reorganization
under Section 368 of the Code and there are no material adverse tax consequences
to the Merger.
8.6 Documents. All documents and instruments delivered by Competitive
Companies to Third Enterprise at the Closing shall be in form and substance
reasonably satisfactory to Third Enterprise and its counsel.
IX. INDEMNIFICATION
9.1 By Competitive Companies. Subject to Section 9.4, Competitive Companies
shall indemnify, defend and hold Third Enterprise, its directors, officers,
shareholders, attorneys, agents and affiliates, harmless from and against any
and all losses, costs, liabilities, damages, and expenses (including legal and
other expenses incident thereto) of every kind, nature and description,
including any undisclosed liabilities (collectively, "Losses") that result from
or arise out of (i) the breach of any representation or warranty of Competitive
Companies set forth in this Agreement or in any certificate delivered to Third
Enterprise pursuant hereto; or (ii) the breach of any of the covenants of
Competitive Companies contained in or arising out of this Agreement or the
transactions contemplated hereby.
9.2 By Third Enterprise. Subject to Section 9.4, Third Enterprise shall
indemnify, defend, and hold Competitive Companies its directors, officers,
shareholders, attorneys, agents and affiliates harmless from and against any and
all Losses that arise out of (i) the breach of any representation or warranty of
Third Enterprise set forth in this Agreement or in any certificate delivered to
Competitive Companies pursuant hereto; or (ii) the breach of any of the
covenants of Third Enterprise contained in or arising out of this Agreement or
the transactions contemplated hereby.
9.3 Claims Procedure. Should any claim covered by Sections 9.1 or 9.2 be
asserted against a party entitled to indemnification under this Article (the
"Indemnitee"), the Indemnitee shall promptly notify the party obligated to make
indemnification (the "Indemnitor"); provided, however, that any delay or failure
in notifying the Indemnitor shall not affect the Indemnitor's liability under
this Article if such delay or failure was not prejudicial to the Indemnitor. The
Indemnitor upon receipt of such notice shall assume the defense thereof with
counsel reasonably satisfactory to the Indemnitee and the Indemnitee shall
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extend reasonable cooperation to the Indemnitor in connection with such defense.
No settlement of any such claim shall be made without the consent of the
Indemnitor and Indemnitee, such consent not to be unreasonably withheld or
delayed, nor shall any such settlement be made by the Indemnitor which does not
provide for the absolute, complete and unconditional release of the Indemnitee
from such claim. In the event that the Indemnitor shall fail, within a
reasonable time, to defend a claim, the Indemnitee shall have the right to
assume the defense thereof without prejudice to its rights to indemnification
hereunder.
9.4 Limitations on Liability. Neither Competitive Companies nor Third
Enterprise shall be liable hereunder as a result of any misrepresentation or
breach of such party's representations, warranties or covenants contained in
this Agreement unless and until the Losses incurred by each, as the case may be,
as a result of such misrepresentations or breaches under this Agreement shall
exceed, in the aggregate, $200,000 (in which case the party liable therefor
shall be liable for the entire amount of such claims, including the first
$200,000).
X. TERMINATION
10.1 Termination Prior to Closing. (a) If the Closing has not occurred by
any date as mutually agreed upon by the parties (the "Termination Date"), any of
the parties hereto may terminate this Agreement at any time thereafter by giving
written notice of termination to the other parties; provided, however, that no
party may terminate this Agreement if such party has willfully or materially
breached any of the terms and conditions hereof.
(b) Prior to the Termination Date either party to this Agreement may
terminate this Agreement following the insolvency or bankruptcy of the other, or
if any one or more of the conditions to Closing set forth in Article VI, Article
VII or Article VIII shall become incapable of fulfillment and shall not have
been waived by the party for whose benefit the condition was established, then
either party may terminate this Agreement.
10.2 Consequences of Termination. Upon termination of this Agreement
pursuant to this Article X or any other express right of termination provided
elsewhere in this Agreement, the parties shall be relieved of any further
obligation to the others except as follows: As Third Enterprise goes through the
due diligence and filing process, facts and circumstances not known to it when
it started the process leading to closing the merger may come to light that make
proceeding with the transaction inadvisable in the opinion of Third Enterprise.
If this occurs or if Competitive Companies cancels the agreement after paying
the first installment, all fees previously received by Third Enterprise will be
retained. No termination of this Agreement, however, whether pursuant to this
Article X hereof or under any other express right of termination provided
elsewhere in this Agreement, shall operate to release any party from any
liability to any other party incurred before the date of such termination or
from any liability resulting from any willful misrepresentation made in
connection with this Agreement or willful breach hereof.
XI. ADDITIONAL COVENANTS
11.1 Mutual Cooperation. The parties hereto will cooperate with each other,
and will use all reasonable efforts to cause the fulfillment of the conditions
to the parties' obligations hereunder and to obtain as promptly as possible all
consents, authorizations, orders or approvals from each and every third party,
whether private or governmental, required in connection with the transactions
contemplated by this Agreement.
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11.2 Changes in Representations and Warranties of Competitive Companies.
Between the date of this Agreement and the Closing Date, Competitive Companies
shall not, directly or indirectly, except as contemplated in the information in
the registration statement concerning Competitive Companies, enter into any
transaction, take any action, or by inaction permit an event to occur, which
would result in any of the representations and warranties of Competitive
Companies herein contained not being true and correct at and as of (a) the time
immediately following the occurrence of such transaction or event or (b) the
Closing Date. Competitive Companies shall promptly give written notice to Third
Enterprise upon becoming aware of (i) any fact which, if known on the date
hereof, would have been required to be set forth or disclosed pursuant to this
Agreement and (ii) any impending or threatened breach in any material respect of
any of the representations and warranties of Competitive Companies contained in
this Agreement and with respect to the latter shall use all reasonable efforts
to remedy same.
11.3 Changes in Representations and Warranties of Third Enterprise. Between
the date of this Agreement and the Closing Date, Third Enterprise shall not,
directly or indirectly, enter into any transaction, take any action, or by
inaction permit an event to occur, which would result in any of the
representations and warranties of Third Enterprise herein contained not being
true and correct at and as of (a) the time immediately following the occurrence
of such transaction or event or (b) the Closing Date. Third Enterprise shall
promptly give written notice to Competitive Companies upon becoming aware of (i)
any fact which, if known on the date hereof, would have been required to be set
forth or disclosed pursuant to this Agreement and (ii) any impending or
threatened breach in any material respect of any of the representations and
warranties of Third Enterprise contained in this Agreement and with respect to
the latter shall use all reasonable efforts to remedy same.
XII. MISCELLANEOUS
12.1 Expenses. Third Enterprise will pay for its counsel and financial
consultant and all their costs. Competitive Companies will pay for your
accountants and attorneys and all their costs. Competitive Companies will be
responsible for paying the SEC filing fee, and state filing fees and all costs
of converting your documents to they can be filed with the SEC.
12.2 Survival of Representations, Warranties and Covenants. All statements
contained in this Agreement or in any certificate delivered by or on behalf of
Competitive Companies or Third Enterprise pursuant hereto or in connection with
the transactions contemplated hereby shall be deemed representations, warranties
and covenants by Competitive Companies or Third Enterprise, as the case may be,
hereunder. All representations, warranties and covenants made by Competitive
Companies and by Third Enterprise in this Agreement, or pursuant hereto, shall
survive through the Closing Date.
12.3 Nondisclosure. Third Enterprise will not at any time after the date of
this Agreement, without Competitive Companies' consent, divulge, furnish to or
make accessible to anyone (other than to its representatives as part of its due
diligence or corporate investigation) any knowledge or information with respect
to confidential or secret processes, inventions, discoveries, improvements,
formulae, plans, material, devices or ideas or know-how, whether patentable or
not, with respect to any confidential or secret aspects (including, without
limitation, customers or suppliers) ("Confidential Information") of Competitive
Companies.
Competitive Companies will not at any time after the date of this Agreement,
without Third Enterprise's consent (except as may be required by law), use,
divulge, furnish to or make accessible to anyone any Confidential Information
(other than to its representatives as part of its due diligence or corporate
investigation) with respect to Third Enterprise. The undertakings set forth in
the preceding two paragraphs of this Section 12.3 shall lapse if the Closing
takes place as to Third Enterprise and Competitive Companies, but shall not
lapse as to the officers and directors of Third Enterprise, individually.
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Any information, which (i) at or prior to the time of disclosure by either
of Competitive Companies or Third Enterprise was generally available to the
public through no breach of this covenant, (ii) was available to the public on a
non-confidential basis prior to its disclosure by either of Competitive
Companies or Third Enterprise or (iii) was made available to the public from a
third party, provided that such third party did not obtain or disseminate such
information in breach of any legal obligation to Competitive Companies or Third
Enterprise, shall not be deemed Confidential Information for purposes hereof,
and the undertakings in this covenant with respect to Confidential Information
shall not apply thereto.
12.4 Succession and Assignments; Third Party Beneficiaries. This Agreement
may not be assigned (either voluntarily or involuntarily) by any party hereto
without the express written consent of the other party. Any attempted assignment
in violation of this Section shall be void and ineffective for all purposes. In
the event of an assignment permitted by this Section, this Agreement shall be
binding upon the heirs, successors and assigns of the parties hereto. Except as
expressly set forth in this Section, there shall be no third party beneficiaries
of this Agreement.
12.5 Notices. All notices, requests, demands or other communications with
respect to this Agreement shall be in writing and shall be (i) sent by facsimile
transmission, (ii) sent by the United States Postal Service, registered or
certified mail, return receipt requested, or (iii) personally delivered by a
nationally recognized express overnight courier service, charges prepaid, to the
addresses specified in writing by each party.
Any such notice shall, when sent in accordance with the preceding sentence,
be deemed to have been given and received on the earliest of (i) the day
delivered to such address or sent by facsimile transmission, (ii) the fifth
(5th) business day following the date deposited with the United States Postal
Service, or (iii) twenty-four (24) hours after shipment by such courier service.
12.6 Construction. This Agreement shall be construed and enforced in accordance
with the internal laws of the State of Florida without giving effect to the
principles of conflicts of law thereof, except to the extent that the Securities
Act or the Exchange Act applies to the Registration Statements and the Proxy
Statement.
12.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same Agreement.
12.8 No Implied Waiver; Remedies. No failure or delay on the part of the
parties hereto to exercise any right, power or privilege hereunder or under any
instrument executed pursuant hereto shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. All rights, powers and privileges granted herein shall be in addition
to other rights and remedies to which the parties may be entitled at law or in
equity.
12.9 Entire Agreement. This Agreement, including the Exhibits and Schedules
attached hereto, sets forth the entire understandings of the parties with
respect to the subject matter hereof, and it incorporates and merges any and all
previous communications, understandings, oral or written, as to the subject
matter hereof, and cannot be amended or changed except in writing, signed by the
parties.
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12.10 Headings. The headings of the Sections of this Agreement, where
employed, are for the convenience of reference only and do not form a part
hereof and in no way modify, interpret or construe the meanings of the parties.
12.11 Severability. To the extent that any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
12.12 Public Disclosure. From and after the date hereof through the Closing
Date, Third Enterprise shall not issue a press release or any other public
announcement with respect to the transactions contemplated hereby without the
prior consent of Competitive Companies, which consent shall not be unreasonably
withheld or delayed. It is understood by Competitive Companies that Third
Enterprise is required under the Exchange Act to make prompt disclosure of any
material transaction.
THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, HAVE HAD THE
OPPORTUNITY TO CONSULT WITH INDEPENDENT COUNSEL OF THEIR OWN CHOICE, AND
UNDERSTAND EACH OF THE PROVISIONS OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
Third Enterprise Service Group, Inc.
By:____________________________
Its:_____________________________
Competitive Companies, Inc.
By:____________________________
Its:____________________________
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