EXHIBIT 2.1
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 ("Competitive
Companies"), as amended and restated in its entirety March 31, 2000.
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' 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 4,912,061 common shares
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o 4,000,000 shares of Class A Convertible Preferred Stock
are issued and outstanding.
There are options to acquire an additional 4,470,000 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
6,037,061 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
Competitive Companies agrees to assume Third Enterprise Service Group's obligation
for legal fees payable to Xxxxxxxx Law Group, P.A. for the preparation of this registration
statement in the amount of 2.1% of the issued and outstanding shares following the merger.
Accordingly, Competitive Companies will issue Xxxxxxxx Law Group 125,000 shares upon
effectiveness of this registration statement. Simultaneously, the shares of Third
Enterprise Service Group that were originally issued to Xxxxxxxx Law Group for aggregate
consideration of $79 upon formation of Third Enterprise Service Group will be redeemed
for an aggregate of $79.
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.
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(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.
(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
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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' 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.
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' 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' 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' 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
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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.
(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.
(c) 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.
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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.
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' 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.
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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.
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
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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' 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.
(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.
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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. 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.
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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.
(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
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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.
(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' executive offices or place where Competitive Companies' 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' 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.
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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.
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'
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 Third Enterprise Service Group, Inc. 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 Third
Enterprise Service Group, Inc. 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:
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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.
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.
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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.
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.
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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.
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.
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(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.
(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:
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(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' counsel in form and substance reasonably
satisfactory to Third Enterprise, in a form to be mutually agreed to prior to the
Closing;
(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
(g) 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
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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.
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' knowledge, be threatened.
7.9 Dissenters' Rights. It is a condition to Competitive Companies' obligations
to consummate the merger that the holders of no more than 10% of the outstanding
shares of Competitive Companies' 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' common stock, and, as a consequence more than 10%
of the shareholders of Competitive Companies' become entitled to exercise dissenters'
rights, then Competitive Companies will not be obligated to consummate the merger.
VIII. CONDITIONS TO Third Enterprise'S OBLIGATIONS
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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.
8.2 Accuracy of Competitive Companies' Representations. Competitive Companies'
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.
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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 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
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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.
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.
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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.
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.
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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.
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:____________________________
