SECURITIES EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
AND
PLAN OF REORGANIZATION
SECURITIES
EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 14, 2005, by
and among Ocean West Holding Corp. a Delaware corporation, with offices located
at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Ocean”),
InfoByPhone, Inc., a Delaware corporation, with offices located at ▇▇ ▇▇▇
▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the “Company”) and the stockholders of the Company
(the “Stockholders”) set forth on Exhibit A hereto.
WHEREAS,
Ocean currently has authorized capital stock consisting of 30,000,000 shares of
common stock, par value $.01 per share (“Ocean West Common Stock”) and
10,000,000 shares of preferred stock, par value $.01 per share; and
WHEREAS,
Ocean will file a definitive Information Statement (the “Information Statement”)
with the Securities and Exchange Commission pursuant to Section 14(c) of the
Securities Exchange Act of 1934 (the “Exchange Act”) and pursuant to such
Information Statement Ocean will revise its Certificate of Incorporation to
change its name to AskMeNow, Inc., and
increase its authorized capital stock to 100,000,000 shares, par value $.01 per
share, of which 5,586,104 shares will be issued and outstanding prior to the
Closing Date (as defined) and 5,000,000 shares of preferred stock, par value
$.01 per share, of which 0 shares are issued and outstanding as of the date
hereof; and
WHEREAS,
the Company has authorized capital stock consisting of 15,000,000 shares of
common stock, par value $.001 per share (the “Company Common Stock”) of which
3,269,790 shares are issued and outstanding (“Target Shares”) and 3,000,000
shares of preferred stock, par value $.001 per share of which 0 shares are
outstanding; and
WHEREAS,
the Stockholders wish to exchange, and Ocean wishes to acquire, all of the
Target Shares on the Closing Date (as defined below), for 6,000,000 shares of
Ocean (the “Exchange”); and
WHEREAS,
simultaneous with the Closing the Company shall close a private placement for no
less 2,500,000 shares and no more than 6,666,667 shares of the Company (as
contemplated in Section 8.1 of this Agreement) with such shares being exchanged
for an equal amount of shares of Ocean West Common Stock at the Closing;
and
WHEREAS,
the Boards of Directors of Ocean and the Company, declaring it advisable and for
the respective benefit of Ocean and the Company have approved the Exchange and
the other transactions contemplated by this Agreement (the “Transactions”) on
the terms and conditions hereinafter set forth, and have approved this Agreement
and authorized the Transactions; and
WHEREAS,
Ocean, and the Company desire to make certain representations, warranties and
agreements in connection with, and establish various conditions precedent to,
the Transactions.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS
For
purposes of this Agreement, the following terms have the meanings specified or
referred to in this Section 1:
“AFFILIATE”--with
respect to any Person, any Person directly or indirectly controlling, controlled
by or under common control with such other Person.
“AGREEMENT”--this
Securities Exchange Agreement and Plan of Reorganization by and among Ocean, the
Company and the Stockholders.
“BUSINESS
DAY”--any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law to be
closed.
“CLOSING”--as
defined in Section 2.3.
“CLOSING
DATE”—as defined in Section 2.3.
“CODE”--the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder and successor laws or regulations.
“COMPANY”--as
defined in the first paragraph of this Agreement.
“COMPANY
COMMON STOCK”--as defined in the preamble of this Agreement.
“CONTRACT”--any
agreement, contract, obligation, promise or undertaking (whether written or oral
and whether express or implied) that is legally binding and shall include any
option or warrant for the purchase of equity securities of a party
hereto.
“CONVERTIBLE
SECURITIES”--as defined in Section 4.3.
“NGCL”—the
Nevada General Corporation Law.
“DISCLOSURE
SCHEDULE”—shall mean the respective the Ocean Disclosure Schedule and Company
Disclosure Schedule to this Agreement delivered by the Company to Ocean and by
Ocean to the Company.
“EFFECTIVE
TIME”—Unless extended by mutual agreement of all parties, May 30,
2005.
“EMPLOYEE
BENEFIT PLAN”--as defined in Section 4.12(a).
“ENCUMBRANCE”--any
charge, claim, community property interest, condition, equitable interest, lien,
option, pledge, security interest, right of first refusal or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership.
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“ENVIRONMENTAL
LAWS” - as defined in Section 4.18.
“ERISA”--the
Employee Retirement Income Security Act of 1974, as amended, or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
“ERISA
AFFILIATE”--as defined in Section 4.12(a).
“EXCHANGE”—the
exchange of securities described in Section 2.1(a) of this
Agreement.
“EXCHANGE
ACT”--the Securities Exchange Act of 1934, as amended, or any successor
law.
“GAAP”--generally
accepted United States accounting principles, applied on a basis consistent with
the basis on which the Financial Statements were prepared.
“GOVERNMENTAL
AUTHORITY”--any court, tribunal, authority, agency, commission, bureau,
department, official or other instrumentality of the United States, any foreign
country or any domestic, foreign, state, local, county, city or other political
subdivision.
“GOVERNMENTAL
ORDER”--any order, ordinance, injunction, judgment, decree or writ issued by any
Governmental Authority.
“INFORMATION
STATEMENT” - as defined in Section 7.4(a).
“IRS”--the
United States Internal Revenue Service or any successor agency and, to the
extent relevant, the United States Department of the Treasury.
“MATERIAL
ADVERSE EFFECT”—the occurrence of any event that is materially adverse to the
business, property, assets, prospects, results of operation or financial
condition of a party to this Agreement; provided,
however, that
none of the following shall be taken into account in determining whether there
has been a Material Adverse Effect: (i) any actions or omissions of any party
hereto taken with the prior written consent of the other party in contemplation
of the Transactions; (ii) the direct effects of compliance with this Agreement
on the operating performance of any party hereto, including expenses incurred by
such party in consummating the Transactions or relating to any litigation
arising as a result of this Agreement or the Transactions; (iii) changes
attributable to or resulting from changes in general economic, financial,
regulatory or political conditions; (iv) changes affecting the industry or
market sector in which such party operates; and (v) the events disclosed in
Section 1 of the Disclosure Schedule.
“OCCUPATIONAL
SAFETY AND HEALTH LAW”--any legal or governmental requirement or obligation
relating to safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
“OCEAN”--
as defined in the first paragraph of this Agreement.
“OCEAN
WEST COMMON STOCK” - as defined in the preamble of this Agreement and which
shall also include the stock of any successor to Ocean in the event Ocean
changes its name as contemplated in the preamble.
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“ORGANIZATIONAL
DOCUMENTS”--(a) the articles or certificate of incorporation and the bylaws or
code of regulations of a corporation; (b) the certificate of formation and
operating agreement of a limited liability company; (c) the partnership
agreement of a partnership; (d) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of any other Person;
and (e) any amendment to any of the foregoing.
“PERMITTED
ENCUMBRANCES”-- all (a) liens for current Taxes not yet due, (b) ▇▇▇▇▇▇▇’▇,
common carrier and other similar liens arising in the ordinary course of
business, and (c) with respect to real property, (i) minor imperfections of
title, if any, none of which is substantial in amount, materially detracts from
the value or impairs the use of the property subject thereto, or impairs the
operations of the Company and (ii) zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject
thereto.
“PERSON”--any
individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or governmental body.
“PROCEEDING”--as
defined in Section 4.14.
“RELATED
PERSON”--as defined in Section 4.23.
“SEC”--the
United States Securities and Exchange Commission.
“SECURITIES
ACT”--the Securities Act of 1933, as amended, or any successor law.
“SUBSIDIARY”--means
any corporation, joint venture, limited liability company, partnership,
association or other business entity of which more than 50% of the total voting
power of stock or other equity entitled to vote in the election of directors or
managers thereof is owned or controlled, directly or indirectly, by the Company
or Ocean, as the case may be.
“SURVIVING
CORPORATION”--as defined in Section 2.1(a).
“TAX”
--as defined in Section 4.6.
“TAX
RETURN” shall mean all returns (whether federal, state, local or otherwise) and
reports (including elections, declarations, disclosures, schedules, estimates
and information returns (including Form 1099 and corporate returns filed on
Form 1120)) required to be supplied to a Tax authority relating to
Taxes.
2. SECURITIES
EXCHANGE
AND REORGANIZATION
2.1
EXCHANGE
AND CANCELLATION OF SECURITIES
Subject
to the terms and upon the conditions set forth herein, each Stockholder agrees
to assign, transfer and deliver to Ocean, and Ocean agrees to acquire from each
Stockholder, one hundred percent (100%) of the Company Common Stock owned by the
respective Stockholder as set forth on Exhibit A attached hereto, in exchange
for the transfer, at the Closing, by Ocean, of 6,000,000 newly-issued shares of
Ocean West Common Stock to be apportioned amongst the Stockholders in proportion
to their ownership of the Company Common Stock immediately prior to the Closing
(excluding the shares issued pursuant to the offering contemplated in Section
8.1). In addition, each share issued in the private placement contemplated in
Section 8.1 will be exchanged for one newly-issued share of Ocean West Common
Stock. Furthermore, each warrant to purchase shares of common stock of the
Company will be converted into a three (3) year warrant to purchase shares of
common stock of the Surviving Company (not to exceed 483,123 underlying shares)
at a price of $2.00 per share so long as such exercise can not be reduced after
the Closing and the exercise can not be a “cashless exercise”. Post Closing,
Ocean is hereinafter referred to as the “Surviving Corporation”.
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2.2 INSTRUMENTS
OF TRANSFER
(a)
Company Common Stock. Each Stockholder shall deliver to Ocean original
certificates evidencing the Company Common Stock along with executed stock
powers, in form and substance satisfactory to Ocean, for purposes of assigning
and transferring all of their right, title and interest in and to the Company
Common Stock. From time to time after the Closing Date, and without further
consideration, the Stockholders will execute and deliver such other instruments
of transfer and take such other actions as Ocean may reasonably request in order
to facilitate the transfer to Ocean of the securities intended to be transferred
hereunder.
(b) Ocean
West Common Stock. The Surviving Corporation shall deliver to the Stockholders
within five days of the Closing Date, original certificates evidencing the Ocean
West Common Stock, in form and substance satisfactory to the Stockholders, in
order to effectively vest in the Stockholders all right, title and interest in
and to the Ocean West Common Stock. From time to time after the Closing Date,
and without further consideration, the Surviving Corporation will execute and
deliver such other instruments and take such other actions as the Stockholders
may reasonably request in order to facilitate the issuance to them of the Ocean
West Common Stock.
2.3 CLOSING.
Unless
this Agreement shall have been terminated and the transactions herein
contemplated shall have been abandoned pursuant to Section 9.1 and subject to
the satisfaction or waiver of the conditions set forth in Sections 7 and 8, the
closing of the Exchange will take place as promptly as practicable (and in any
event within five Business Days) after satisfaction or waiver of the conditions
set forth in Sections 8, 9 and 10 at the offices of ▇▇▇▇▇▇ & ▇▇▇▇, LLP, ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the “Closing”),
unless another date, time or place is agreed to in writing by the parties
hereto, but in no event later than May 30, 2005 (the “Closing Date”).
2.4 TAX
FREE REORGANIZATION
The
parties intend that the transactions under this Agreement qualify as a tax-free
re-organization under Section 368(a) (1) (B) of the Code.
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3. POST-CLOSING
COVENANTS.
3.1 NO
REVERSE SPLIT
FOR ONE YEAR
The
parties hereto agree that there shall be no reverse split of the Common Stock of
the Surviving Corporation for at least one year following the Closing
Date.
3.2 RESTRICTION
ON FUTURE SHARE ISSUANCE
The
parties hereto agree that in the event the Surviving Corporation desires to
issues additional shares of stock of the Surviving Corporation in connection
with an offer to sell equity in the Surviving Corporation during the period that
begins on the Closing Date and ends one (1) year after the Closing Date, VCP (as
defined in Section 8.2) will be provided with a right of first refusal to
purchase any such shares at the same price and on the terms as would be offered
to third party purchasers.
3.3 OCEAN
AUDITS; Reports to securities and exchange commission
Ocean’s
current fiscal year ends on September 30, 2004 and
periodic reports for the quarters ended December 31, 2004 and March 31, 2005.
Ocean will have the responsibility and shall have completed its financial audit
and filing an annual report and any required interim reports with Form 10-K
filing for the fiscal years ended September 30, 2003, and September 30, 2004.
The Surviving Corporation shall have the responsibility for completing all
financial statements for periods ending after March 31, 2005. The current
officers and directors of Ocean shall cooperate with the officers and directors
of the Surviving Corporation in completing this work. Ocean
represents that it currently owes no money to its auditors or company counsel to
date and through the Closing Date, it is further agreed that if the Company
decides not to utilize the services of ▇▇ ▇▇▇▇ & Company, certified public
accountants, that the books and records of Ocean through and including March 31,
2005 will be delivered to a place as requested by the Surviving
Corporation and that
▇▇ ▇▇▇▇ & Company, if required, will consent to the inclusion of its
financial statements in the Company’s reports.
3.4 STOCK
OPTION PLANS
The
Surviving Corporation shall be permitted to establish an employee stock option
plan which may provide for the issuance of non-qualified options, incentive
stock options, stock grants, stock appreciation rights or other forms of equity
based compensation as determined by the management of the Surviving Corporation.
The number of shares that may be issued pursuant to such plans is Two Million
(2,000,000) shares. However, such share shall be restricted from sale or
registration for a period of no less than four (4) months following the Closing
Date.
3.5 EMPLOYMENT
CONTRACTS AND STOCK GRANTS
The
Surviving Corporation shall be permitted to enter into employment contracts with
employees of the Surviving Corporation on such terms and conditions as are
deemed appropriate by management of the Surviving Corporation. In connection
with such employment contracts the Surviving Corporation may issue shares to
certain employees in such amounts and on such terms as management deems
appropriate. However, the Company may not register any of the W-2 employee’s
stock grants or the stock of any other person in an S-8 registration until the
date that is four (4) months following the date of the Closing.
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3.6 REGISTRATION
RIGHTS
The
Surviving Corporation shall file a registration statements with the Securities
and Exchange Commission for the Common Shares of the company sold in the
offering referenced herein within 180 days of the Closing. All cost of such
registration shall be borne by the Company including any legal opinion necessary
to effectuate such registration. Any Stockholder selling pursuant to such
registration shall bear the costs of any commissions incurred as a result of
such sale.
3.7 FLOOR
ON SHARE PRICE FOR FUTURE OFFERINGS
The
parties agree that for at least one year following the Closing Date, the
Surviving Corporation shall not offer, sell, exchange, transfer or engage in any
other transaction with respect to its common stock or
Convertible Securities at an effective price of less than $.45 per share of
common stock.
4. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to Ocean as follows.
4.1 ORGANIZATION
AND GOOD STANDING
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has full corporate power
and authority to own its properties and to carry on its business as it is now
being conducted. The Company is duly qualified to transact business and is in
good standing in each jurisdiction wherein the nature of the business done or
the property owned, leased or operated by it requires such qualification, except
where the failure to be so qualified would not have a Material Adverse Effect.
True, correct and complete copies of the certificate of incorporation and
by-laws of the Company and all amendments thereto have been delivered to Ocean.
The corporate minutes and corporate records of the Company that have been made
available to Ocean are true, correct and complete in all material respects.
4.2 AUTHORITY;
NO CONFLICT
(a) The
Company has the right, power, authority and capacity to execute and deliver this
Agreement, to consummate the Exchange and the other transactions contemplated
hereby and to perform its obligations under this Agreement.
(b) Neither
the execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will,
directly or indirectly (with or without notice or lapse of time or both):
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(i) contravene,
conflict with or result in a violation or breach of (A) any provision of the
Organizational Documents of the Company, (B) any resolution adopted by the Board
of Directors, or any committee thereof, or the stockholders of the Company, (C)
any legal requirement or any Governmental Order to which the Company or any of
the properties or assets owned or used by the Company may be subject, or (D) any
authorization, license or permit of any Governmental Authority, including any
private investigatory license or other similar license, which is held by the
Company or that otherwise relates to the business of, or any of the assets owned
or used by, the Company;
(ii) result in
a violation or breach of or constitute a default, give rise to a right of
termination, cancellation or acceleration, create any entitlement to any payment
or benefit or require the consent or approval of or any notice to or filing with
any third party under any Contract to which the Company is a party or to which
it or its properties or assets may be bound, or require the consent or approval
of or any notice to or filing with any Governmental Authority to which the
Company or its properties or assets may be subject; or
(iii) result in
the imposition or creation of any Encumbrance (other than Permitted
Encumbrances) upon or with respect to any of the properties or assets owned or
used by the Company;
except,
with respect to clauses (i)(C) or (D), (ii) or (iii) of this Section 4.2, where
any such contravention, conflict, violation, breach, default, termination right,
cancellation or acceleration right or Encumbrance would not have a Material
Adverse Effect or would not adversely affect the ability of the Company to
consummate the Exchange or the other transactions contemplated by this
Agreement.
4.3 CAPITALIZATION
The
authorized equity securities of the Company consist solely of 15,000,000 shares
of common stock, par value $0.001 per share, of which 3,269,790
shares are issued and outstanding and 3,000,000 shares of preferred stock, par
value $.001 per share of which 0 shares are outstanding. In addition, there are
outstanding warrants to acquire 483,123 shares of the Company’s common stock.
All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and non-assessable. The
authorized, issued and outstanding shares of each class of capital stock or
other ownership or equity interests of each Subsidiary of the Company are
accurately and completely set forth in Section 4.3(a) of the Company Disclosure
Schedule attached hereto and made a part hereof. There are no voting trusts or
other agreements or understandings to which the Company is a party with respect
to the transfer, voting, issuance, purchase, redemption, repurchase or
registration of the capital stock of the Company. Other than set forth above,
there are no Contracts relating to the issuance, sale or transfer of any equity
securities or other securities of the Company, and there are not outstanding any
options, warrants or other securities exercisable or exchangeable for or
convertible into any shares of equity securities of the Company (“CONVERTIBLE
SECURITIES”). The Company does not own or have any Contract to acquire, any
equity securities or other securities of any Person or any, direct or indirect,
equity or ownership interest in any other business. No Person has any
pre-emptive rights with respect to any security of the Company.
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4.4 FINANCIAL
STATEMENTS
The
Company shall deliver to Ocean true, correct and complete copies of the
following financial statements (“Company Financial Statements”) not later than
two days prior to Closing:
(a) Audited
consolidated balance sheets, consolidated statements of income, stockholders’
equity and cash flows of the Company for the period ended December 31,
2004;
(b) Audited
financial statements for the fiscal year ended December 31, 2004 which reflects
net sales in excess of $5,000.
(c) Audited
financial statements for the fiscal year ended December 31, 2004 which reflect
net losses not in excess of $1,000,000; and
(d) Unaudited
pro forma balance sheets reflecting the Surviving Corporation immediately
following the Closing of this Transaction.
The
Company represents and warrants that the Company Financial Statements (i) shall
have been prepared from the books and records of the Company in accordance with
GAAP, (ii) fully reflect all liabilities and contingent liabilities of the
Company required to be reflected therein on such basis as at the date(s)
thereof, (iii) fairly present in all material respects the consolidated
financial position of the Company as of the date(s) of the balance sheets
included in the Company Financial Statements and the consolidated results of its
operations and cash flows for the periods indicated and (iv) no adverse change
in the financial position of the Company as reflected in the Company Financial
Statements that could result in any Material Adverse Effect shall have occurred
prior to the Effective Date and, as of the Effective Date, the Company has no
knowledge of any future or threatened event which could have a Material Adverse
Effect on the financial position of the Company as reflected in the Company
Financial Statements. At the Closing, the Company’s Director and CFO shall
execute and deliver to the other parties hereto a Certificate attesting to the
foregoing.
4.5 NO
UNDISCLOSED LIABILITIES
Except as
set forth in Section 4.5 of the Company Disclosure Schedule, the Company has no
material liabilities or obligations of any nature (whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the Company Financial Statements and current liabilities
incurred in the ordinary course of business since December 31, 2004, which
current liabilities are consistent with the representations and warranties
contained in this Agreement and will not, individually or in the aggregate, have
a Material Adverse Effect.
4.6 TAXES
The
Company has properly and timely filed all federal, state and local Tax returns
(or properly filed for an extension with respect to such filing) and has paid
all Taxes, assessments and penalties due and payable, except as set forth in
Section 4.6 of the Company Disclosure Schedule. All such Tax returns were
complete and correct in all respects as filed, and no claims have been assessed
with respect to such returns, except as set forth in Section 4.6 of the Company
Disclosure Schedule. The provisions made for Taxes on the balance sheet of the
Company included in the Company Financial Statements are sufficient in all
respects for the payment of all Taxes whether disputed or not that are due or
are hereafter found to have been due with respect to the conduct of the business
of the Company up to and through the date of such Financial Statements. There
are no present, pending, or threatened audit, investigations, assessments or
disputes as to Taxes of any nature payable by the Company, nor any Tax liens
whether existing or inchoate on any of the assets of the Company, except for
current year Taxes not presently due and payable. The federal income Tax returns
of the Company have never been audited. No IRS or foreign, state, county or
local Tax audit is currently in progress. The Company has not waived the
expiration of the statute of limitations with respect to any Taxes. Other than
with respect to the Company, the Company is not liable for Taxes of any other
Person or is currently under any contractual obligation to indemnify any Person
with respect to Taxes or is a party to any Tax sharing agreement or any other
agreement providing for payments by the Company with respect to Taxes.
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For
purposes of this Agreement, the term “TAX” shall mean
(w) any and all taxes, assessments, customs, duties, levies, fees, tariffs,
imposts, deficiencies and other governmental charges of any kind whatsoever
(including, but not limited to, taxes on or with respect to net or gross income,
franchise, profits, gross receipts, capital, sales, use, ad valorem, value
added, transfer, real property transfer, transfer gains, inventory, capital
stock, license, payroll, employment, social security, unemployment, severance,
occupation, real or personal property, estimated taxes, rent, excise, occupancy,
recordation, bulk transfer, intangibles, alternative minimum, doing business,
withholding and stamp), together with any interest thereon, penalties, fines,
damages costs, fees, additions to tax or additional amounts with respect
thereto, imposed by the United States or any state or local or other applicable
jurisdiction; (x) any liability or obligations to a governmental authority
as a result of any escheat or similar law, (y) any liability for the
payment of any amounts described in clause (w) or (x) as a result of being a
member of an affiliated, consolidated, combined, unitary or similar group or as
a result of transferor or successor liability; and (z) any liability for
the payments of any amounts as a result of being a party to any tax sharing
agreement or as a result of any express or implied obligation to indemnify any
other person with respect to the payment of any amounts of the type described in
clause (w), (x) or (y).
4.7 ACCOUNTS
RECEIVABLE; ACCOUNTS PAYABLE
(a) All
accounts receivable of the Company that are reflected in the Company Financial
Statements or on the accounts receivable ledgers of the Company (the “COMPANY
ACCOUNTS RECEIVABLE”) represent valid obligations arising from sales actually
made or services actually performed in the ordinary course of business. All of
the Company Accounts Receivable are or will be current and collectible at the
full recorded amount thereof, less any applicable reserves established in
accordance with GAAP, in the ordinary course of business without resort to
litigation, except for such Company Accounts Receivable, the failure of which to
collect would not have a Material Adverse Effect.
(b) All
accounts payable of the Company that are reflected in the Company Financial
Statements or on the accounts payable ledgers of the Company arose in the
ordinary course of business. All material items which are required by GAAP to be
reflected as payables on the Financial Statements and in the books and records
of the Company are so reflected and have been recorded in accordance with GAAP
in a manner consistent with past practice. There has been no adverse change
since September 30, 2004 in the amount or delinquency of accounts payable of the
Company (either individually or in the aggregate) which would have a Material
Adverse Effect.
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4.8 NO
MATERIAL ADVERSE CHANGE
Since the
date of the Financial Statements, there has not occurred a Material Adverse
Effect and no event has occurred or circumstance exists that may result in a
Material Adverse Effect.
4.9 BOOKS
AND RECORDS
Except as
disclosed in Section 4.9 of the Company Disclosure Schedule, the books of
account and other records of the Company, all of which have been made available
to Ocean, are true, correct and complete. Except as disclosed in Section 4.9 of
the Company Disclosure Schedule, the minute books of the Company contain true,
correct and complete records of all meetings held of, and corporate action taken
by, the stockholders, the Boards of Directors, and committees of the Boards of
Directors of the Company. The stock books of the Company are true, correct and
complete. At the Closing, all of those books and records will be in the
possession of the Company.
4.10 TITLE
TO PROPERTIES; ENCUMBRANCES
Section
4.10 of the Company Disclosure Schedule contains a complete and accurate list of
all real property leaseholds or other interests therein held by the Company. The
Company does not own, nor has owned, any real property. The Company has
delivered or made available to Ocean true, correct and complete copies of the
real property leases to which the Company is a party or pursuant to which it
uses or occupies any real property. Section 4.10 of the Company Disclosure
Schedule also contains a complete and accurate list of all licensed vehicles
owned or leased by the Company and the fixed assets used in the business of the
Company and carried on its books for tax purposes. Except as set forth in
Section 4.10 of the Company Disclosure Schedule, the Company has good title to,
or a valid leasehold, license or other interest in, all of the real and personal
properties and assets, tangible and intangible, it owns or purports to own, hold
or use in its business, including those reflected on their books and records and
in the Financial Statements and Interim Financial Statements (except for
accounts receivable collected and materials and supplies used or disposed of in
the ordinary course of business consistent with past practice after the date of
the Interim Financial Statements), free and clear of all Encumbrances, except
Permitted Encumbrances.
4.11 CONDITION
AND SUFFICIENCY OF ASSETS
Except as
would not be reasonably likely to cause a Material Adverse Effect, the
buildings, vehicles, furniture, fixtures and equipment and other personal
property owned, held or used by the Company are structurally sound, are in good
operating condition and repair, and are adequate for the uses to which they are
being put, and none of such buildings, vehicles, furniture, fixtures or
equipment or other personal property is in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material in nature or
cost. Except as would not be reasonably likely to result in a Material Adverse
Effect, the buildings, vehicles, furniture, fixtures and equipment or other
personal property of the Company are sufficient for the continued conduct of its
business after the Closing in substantially the same manner as conducted prior
to the Closing.
-11-
4.12 EMPLOYEE
BENEFITS
(a) Except as
set forth in Section 4.12 of the Company’s Disclosure Schedule, neither the
Company nor any ERISA Affiliate maintains any Employee Benefit Plans. “EMPLOYEE
BENEFIT Plan” means (other than workers’ compensation required by any state or
subdivision thereof) any “employee benefit plan” as defined in Section 3(3) of
ERISA and any other plan, policy, program, practice, agreement, understanding or
arrangement (whether written or oral) providing benefits to any current or
former director, employee or independent contractor (or to any dependent or
beneficiary thereof) of the Company or any ERISA Affiliate, which are now or
have ever been maintained by the Company or any ERISA Affiliate or under which
the Company or any ERISA Affiliate has any obligation or liability, whether
actual or contingent, including all incentive, bonus, deferred compensation,
vacation, holiday, medical, disability, stock appreciation rights, stock option,
stock purchase or other similar plans, policies, programs, practices,
agreements, understandings or arrangements. “ERISA AFFILIATE” means any entity
(whether or not incorporated) other than the Company that, together with the
Company, is or was a member of (i) a controlled group of corporations within the
meaning of Section 414(b) of the Code, (ii) a group of trades or businesses
under common control within the meaning of Section 414(c), or (iii) an
affiliated service group within the meaning of Section 414(m) of the Code.
(b) Neither
the Company nor any ERISA Affiliate has proposed or agreed to the creation of
any new Employee Benefit Plan.
-12-
4.13 COMPLIANCE
WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
(a) To the
best of the Company’s knowledge, the Company is in compliance with all federal,
state and local laws, authorizations, licenses and permits of any Governmental
Authority and all Governmental Orders affecting the business, operations,
properties or assets of the Company , including, federal, state and local: (i)
Occupational Safety and Health Laws; (ii) private investigatory and other
similar laws; (iii) securities laws; (iv) the Fair Credit Reporting Act and
similar state and local laws; and (v) laws regarding or relating to trespass or
violation of privacy rights. Except as set forth in Section 4.13 of the Company
Disclosure Schedule the Company has not been charged with violating, nor to the
knowledge of the Company, threatened with a charge of violating, nor, to the
knowledge of the Company, is the Company under investigation with respect to a
possible violation of, any provision of any federal, state or local law relating
to any of their respective businesses, operations, properties or assets.
(b) Section
4.13 of the Company Disclosure Schedule contains a complete and accurate list of
each governmental authorization, license or permit that is held by the Company
or that otherwise relates to the business of, or to any of the properties or
assets owned or used by, the Company. Each governmental authorization, license
or permit listed in Section 4.13 of the Disclosure Schedule is valid and in full
force and effect.
4.14 LEGAL
PROCEEDINGS
Except as
set forth in Section 4.14 of the Company Disclosure Schedule, there is no
pending claim, action, investigation, arbitration, litigation, suit or other
proceeding (“PROCEEDING”):
(i) that has
been commenced by or against the Company or that otherwise relates to or may
affect the business of, or any of the properties or assets owned, held or used
by, the Company; or
(ii) that
challenges, or that may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated hereby.
(iii) To the
knowledge of the Company, (A) no such Proceeding has been threatened, and (B) no
event has occurred or circumstance exists that may give rise to or serve as a
basis for the commencement of any such Proceeding. The Company has made
available to Ocean true, correct and complete copies of all pleadings,
correspondence and other documents relating to each Proceeding listed in Section
4.14 of the Disclosure Schedule. The Proceedings listed in Section 4.14 of the
Disclosure Schedule, if decided adversely to the Company or any Subsidiary,
individually or in the aggregate, would not have a Material Adverse Effect,
except as described in Section 4.14 of the Disclosure Schedule.
4.15 ABSENCE
OF CERTAIN CHANGES AND EVENTS
Except as
set forth in Section 4.15 of the Company Disclosure Schedule, since the date of
the Financial Statements, the Company has conducted its business only in the
ordinary course of business consistent with past practice. Without limiting the
generality of the immediately preceding sentence, since September 30, 2004,
there has not been any of the following on the part of the Company:
(a) declaration
or payment of any dividend or other distribution or redemption or repurchase or
other acquisition, directly or indirectly, in respect of shares of capital stock
or Convertible Securities;
(b) issuance
or sale or authorization for issuance or sale, or grant of any options or other
agreements with respect to, any shares of its capital stock or Convertible
Securities, or any change in its outstanding shares of capital stock or other
ownership interests or its capitalization, whether by reason of a
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, stock dividend or otherwise;
(c) payment
or increase of any bonuses, salaries or other compensation to any stockholder,
director, officer, consultant or employee except for increases in bonus
compensation to employees in the ordinary course of business or entry into any
employment, severance or similar Contract with any director, officer or
employee;
-13-
(d) adoption
of, or increase in the payments to or benefits under, any profit sharing, bonus,
deferred compensation, severance, savings, insurance, pension, retirement or
other employee benefit plan for or with any employees;
(e) damage to
or destruction or loss of any property or asset, whether or not covered by
insurance, which may have a Material Adverse Effect;
(f) entry
into, termination of, or receipt of notice of termination of, any Contract or
transaction involving a total remaining commitment by or to the Company or any
Subsidiary of at least $10,000, including the entry into (i) any document
evidencing any indebtedness; (ii) any capital or other lease; or (iii) any
guaranty (including “take-or-pay” or “keepwell” agreements);
(g) sale,
lease or other disposition (other than in the ordinary course of business
consistent with past practice) of any asset or property or mortgage, pledge, or
imposition of any Encumbrance (other than Permitted Encumbrances) on any
material property or asset;
(h) cancellation,
compromise or waiver of any claims or rights with a value to the Company or any
Subsidiary in excess of $10,000;
(i) material
change in the method of accounting of the accounting principles or practices
used by the Company in the preparation of the Financial Statements or the
Interim Financial Statements, except as required by GAAP;
(j) amendment
or other modification of its respective Organizational Documents;
(k) loss of
services of any material Company employee or consultant or any loss of a
material client;
(l) loan or
advance to any Person other than travel and other similar routine advances to
employees in the ordinary course of business consistent with past practice; or
(m) agreement
or commitment, whether oral or written, by the Company to do any of the
foregoing.
4.16 CONTRACTS;
NO DEFAULTS
(a) Section
4.16(a) of the Company Disclosure Schedule contains a complete and accurate
list, and the Company has delivered or made available to Ocean true, correct and
complete copies, of:
(i) each
Contract that involves performance of services or delivery of goods or materials
by the Company of an amount or value in excess of $25,000;
-14-
(ii) each
Contract that involves performance of services or delivery of goods or materials
to the Company of an amount or value in excess of $25,000;
(iii) each
lease, license and other Contract affecting any leasehold or other interest in,
any real or personal property;
(iv) each
licensing Contract with respect to Company Patents, Company Marks, Company
Copyrights, Company trade secrets or other Company Intellectual Property Assets,
including Contracts with current or former employees, consultants or contractors
regarding the appropriation or the non-disclosure of any Intellectual Property
Assets;
(v) each
collective bargaining Contract to or with any labor union or other employee
representative of a group of employees;
(vi) each
joint venture, partnership and other Contract involving a sharing of profits,
losses, costs or liabilities by the Company with any other Person or requiring
the Company to make a capital contribution;
(vii) each
Contract containing covenants that in any way purport to restrict the business
activity of the Company or limit the freedom of the Company to engage in any
line of business or to compete with any Person or hire any Person;
(viii) each
employment Contract providing for compensation, severance or a fixed term of
employment in respect of services performed by any employees of the Company and
each consulting Contract with an independent contractor;
(ix) each
stock option, purchase or benefit plan for employees;
(x) each
power of attorney that is currently effective and outstanding;
(xi) each
Contract for capital expenditures in excess of $25,000;
(xii) each
Contract with an officer or director of the Company or with any Affiliate of any
of the foregoing;
(xiii) each
Contract under which any money has been or may be borrowed or loaned or any
note, bond, factoring agreement, indenture or other evidence of indebtedness has
been issued or assumed (other than those under which there remain no ongoing
obligations of the Company ), and each guaranty (including “take-or-pay” and
“keepwell” agreements) of any evidence of indebtedness or other obligation, or
of the net worth, of any Person (other than endorsements for the purpose of
collection in the ordinary course of business);
(xiv) each
Contract containing restrictions with respect to the payment of dividends or
other distributions in respect of the Company’s capital stock;
(xv) each
other Contract having an indefinite term or a fixed term of more than one (1)
year (other than those that are terminable at will or upon not more than thirty
(30) days’ notice by the Company without penalty) or requiring payments by the
Company of more than $25,000 per year; and
-15-
(xvi) each
standard form of Contract pursuant to which the Company provides services to
clients.
(b) Except as
set forth in Section 4.16(b) of the Company Disclosure Schedule, each Contract
identified or required to be identified in Section 4.16(a) of the Company
Disclosure Schedule is in full force and effect and is valid and enforceable
against the Company and, to the knowledge of the Company, against the other
parties thereto in accordance with its terms.
(c) Except as
set forth in Section 4.16(c) of the Company Disclosure Schedule:
(i) the
Company is in full compliance with all applicable terms and requirements of each
Contract under which the Company has any obligation or liability or by which the
Company or any of the properties or assets owned, held or used by the Company is
bound, except for such noncompliance that would not reasonably be likely to
result in a Material Adverse Effect;
(ii) to the
knowledge of the Company, each other Person that has or had any obligation or
liability under any Contract under which the Company has any rights is in
compliance in all material respects with all applicable terms and requirements
of such Contract; and
(iii) no event
has occurred or, to the knowledge of the Company, circumstance exists that (with
or without notice or lapse of time or both) may result in a violation or breach
of any Contract, which violation or breach would be reasonably likely to result
in a Material Adverse Effect.
4.17 INSURANCE
Section
4.17 of the Company Disclosure Schedule sets forth the premium payments and
describes all the insurance policies of the Company, which policies are now in
full force and effect in accordance with their terms and expire on the dates
shown on Section 4.17 of the Company Disclosure Schedule. Such insurance
policies comply in all respects with the requirements of any leases to which the
Company is a party, including, real property leases. There has been no default
in the payment of premiums on any of such policies, and, to the knowledge of the
Company, there is no ground for cancellation or avoidance of any such policies,
or any increase in the premiums thereof, or for reduction of the coverage
provided thereby. Such policies insure the Company in amounts and against losses
and risks customary and sufficient for businesses similar to that of the
Company, and, to the knowledge of the Company, such policies shall continue in
full force and effect until the expiration dates shown in Section 4.17 of the
Company Disclosure Schedule. Except as disclosed in Section 4.17 of the Company
Disclosure Schedule, there are no pending claims for amounts greater than
$10,000 with respect to the Company or its properties or assets under any such
insurance policy. True, correct and complete copies of all insurance policies
listed in Section 4.17 have been previously furnished to Ocean.
-16-
4.18 ENVIRONMENTAL
MATTERS
The
Company has at all times operated its businesses in material compliance with all
Environmental Laws and all permits, licenses and registrations required under
applicable Environmental Laws (“ENVIRONMENTAL PERMITS”) and, to the Company’s
knowledge, no material expenditures are or will be required by the Company in
order to comply with such Environmental Laws. The Company has not received any
written communication from any Governmental Authority or other Person that
alleges that the Company has violated or is, or may be, liable under any
Environmental Law. There are no material Environmental Claims pending or, to the
knowledge of the Company, threatened (a) against the Company, or (b) against any
Person whose liability for any Environmental Claim the Company has retained or
assumed, either contractually or by operation of law. Neither the Company has
contractually retained or assumed any liabilities or obligations that could
reasonably be expected to provide the basis for any material Environmental
Claim.
“ENVIRONMENTAL
LAWS” means-all applicable statutes, rules, regulations, ordinances, orders,
decrees, judgments, permits, licenses, consents, approvals, authorizations, and
governmental requirements or directives or other obligations lawfully imposed by
governmental authority under federal, state or local law pertaining to the
protection of the environment, protection of public health, protection of worker
health and safety, the treatment, emission and/or discharge of gaseous,
particulate and/or effluent pollutants, and/or the handling of hazardous
materials including without limitation, the Clean Air Act, 42 U.S.C. ss. 7401,
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (“CERCLA”), 42 U.S.C. ss. 9601, et seq., the Federal Water Pollution
Control Act, 33 U.S.C. ss. 1321, et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. ss. 6901, et seq. (“RCRA”), and the Toxic Substances Control Act, 15
U.S.C. ss. 2601, et seq. “ENVIRONMENTAL CLAIMS” means any and all, actions,
orders, decrees, suits, demands, directives, claims, liens, investigations,
proceedings or notices of violation by any Governmental Authority or other
Person alleging potential responsibility or liability arising out of, based on
or related to (a) the presence, release or threatened release of, or exposure
to, any Hazardous Materials (as defined under applicable Environmental Laws) or
(b) circumstances forming the basis of any violation or alleged violation of any
Environmental Law.
4.19 EMPLOYEES
(a) Section
4.19 of the Company Disclosure Schedule contains a complete and accurate list of
the following information for each employee of the Company: name; job title;
current compensation; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under any employee benefit plan of any
nature.
(b) No
employee or director of the Company is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, noncompetition or
proprietary rights agreement, between such employee or director and any other
Person that in any way adversely affects or will affect (i) the performance of
his or her duties as an employee or officer of the Company, or (ii) the ability
of the Company to conduct its business. To the knowledge of the Company, no
officer or other Ocean employee of the Company intends to terminate his or her
employment with the Company.
-17-
4.20 LABOR
RELATIONS
Except as
set forth in Section 4.20 of the Company Disclosure Schedule:
(a) The
Company has satisfactory relationships with its employees.
(b) No
condition or state of facts or circumstances exists which could materially
adversely affect the Company’s relations with its employees, including, to the
best of the Company’s knowledge, the consummation of the transactions
contemplated by this Agreement.
(c) The
Company is in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours and none of them is engaged in any unfair labor
practice.
(d) No
collective bargaining agreement with respect to the business of the Company is
currently in effect or being negotiated. The Company has not encountered any
labor union or collective bargaining organizing activity with respect to its
employees. Neither the Company has any obligation to negotiate any such
collective bargaining agreement, and, to the knowledge of the Company, there is
no indication that the employees of the Company desire to be covered by a
collective bargaining agreement.
(e) There are
no strikes, slowdowns, work stoppages or other labor trouble pending or, to the
knowledge of the Company, threatened with respect to the employees of the
Company , nor has any or the above occurred or, to the knowledge of the Company,
been threatened.
(f) There is
no representation claim or petition pending before the National Labor Relations
Board or any state or local labor agency and, to the knowledge of the Company,
no question concerning representation has been raised or threatened respecting
the employees of the Company .
(g) There are
no complaints or charges against the Company pending before the National Labor
Relations Board or any state or local labor agency and, to the knowledge of the
Company, no complaints or charges have been filed or threatened to be filed
against the Company with any such board or agency.
(h) To the
knowledge of the Company, no charges with respect to or relating to the business
of the Company are pending before the Equal Employment Opportunity Commission or
any state or local agency responsible for the prevention of unlawful employment
practices.
-18-
(i) Section
4.20 of the Company Disclosure Schedule accurately sets forth all unpaid
severance which, as of the date hereof, is due or claimed, in writing, to be due
from the Company to any Person whose employment with the Company was terminated.
(j) The
Company has not received notice of the intent of any Governmental Authority
responsible for the enforcement of labor or employment laws to conduct an
investigation of the Company and no such investigation is in progress.
(k) Neither
the Company, or to the knowledge of the Company, any employee of the Company, is
in violation of any term of any employment agreement, non-disclosure agreement,
non-compete agreement or any other Contract regarding an employee’s employment
with the Company.
(l) The
Company has paid all wages which are due and payable to each employee and has
paid or accrued as a liability all amounts due to each independent
contractor.
4.21 INTELLECTUAL
PROPERTY
(a) INTELLECTUAL
PROPERTY ASSETS--The term “COMPANY INTELLECTUAL PROPERTY ASSETS” includes: (i)
the name “Info By phone”, all fictional business names, trade names, registered
and unregistered trademarks, service marks and applications (collectively,
“COMPANY MARKS”); (ii) all patents, patent applications and inventions and
discoveries that may be patentable (collectively, “COMPANY PATENTS”); (iii) all
copyrights in both published works and unpublished works, including software,
training manuals and videos (collectively, “COMPANY COPYRIGHTS”); and (iv) all
know-how, trade secrets, confidential information, client lists, software,
technical information, data, plans, drawings and blue prints (collectively,
“COMPANY TRADE SECRETS”) owned, used or licensed by the Company as licensee or
licensor.
(b) AGREEMENTS--Section
4.21(b) of the Company Disclosure Schedule contains a true, correct and complete
list and summary description, including any royalties paid or received by the
Company, of all Contracts relating to the Intellectual Property Assets to which
the Company are a party or by which the Company is bound.
(c) KNOW-HOW
NECESSARY FOR THE BUSINESS--The Company Intellectual Property Assets are all
those used in, or related to, the operation of the business of the Company as it
is currently conducted and proposed to be conducted. The Company is the owner or
exclusive licensee of all right, title and interest in and to the Company
Intellectual Property Assets, free and clear of all Encumbrances and have the
right to use without payment to a third party all of the Intellectual Property
Assets. The Company is the owner of all right, title and interest in and to any
(i) business application software and (ii) proprietary management information
systems used in, or related to, the operation of the business of the Company as
it is currently conducted and proposed to be conducted, free and clear of all
Encumbrances, and have a right to use such software and systems without payment
to a third party.
(d) COMPANY
PATENTS—(i) 4.21(d) of the Company Disclosure Schedule contains a true, correct
and complete list of all Company Patents, (ii) the Company is the owner or
exclusive licensee of all right, title and interest in and to the Company
Patents, free and clear of all Encumbrances; (iii) all Company Patents that have
been registered with the United States Patent and Trademark Office are currently
in compliance with all formal legal requirements and are valid and enforceable;
(iv) to the Company’s knowledge no Company Patent is infringed or, to the
knowledge of the Company, has been challenged or threatened in any way, to the
Company’s knowledge. None of the Company Patents used by the Company infringes
or is alleged to infringe any trade name, trademark or service ▇▇▇▇ of any
Person.
-19-
(e) COMPANY
MARKS--(i) Section 4.21(e) of the Company Disclosure Schedule contains a true,
correct and complete list of all Company Marks; (ii) the Company is the owner of
all right, title and interest in and to the Company Marks, free and clear of all
Encumbrances; (iii) all Company Marks that have been registered with the United
States Patent and Trademark Office are currently in compliance with all formal
legal requirements and are valid and enforceable; (iv) no Company ▇▇▇▇ is
infringed or, to the knowledge of the Company, has been challenged or threatened
in any way. None of the Company Marks used by the Company infringes or is
alleged to infringe any trade name, trademark or service ▇▇▇▇ of any Person.
(f) COMPANY
COPYRIGHTS--(i) Section 4.21(f) of the Company Disclosure Schedule contains a
true, correct and complete list of all Company Copyrights; (ii) the Company is
the owner of all right, title and interest in and to the Company Copyrights,
free and clear of all Encumbrances; (iii) all the Company Copyrights have been
registered and are currently in compliance with formal legal requirements, and
are valid and enforceable; (iv) no Company Copyright is infringed or, to the
knowledge of the Company, has been challenged or threatened in any way; (v) none
of the subject matter of any of the Company Copyrights infringes or is alleged
to infringe any copyright of any Person or is a derivative work based on the
work of a third Person; and (vi) all works encompassed by the Company Copyrights
have been marked with the proper copyright notice.
(g) COMPANY
TRADE SECRETS--(i) The Company has taken all reasonable precautions to protect
the secrecy, confidentiality and value of the Company Trade Secrets; and (ii)
the Company has good title and an absolute right to use the Company Trade
Secrets. The Company Trade Secrets, to the knowledge of the Company, have not
been used, divulged or appropriated either for the benefit of any Person (other
than the Company) or to the detriment of the Company. No Company Trade Secret is
subject to any adverse claim or has been challenged or threatened in any
way.
4.22 ABSENCE
OF CERTAIN PAYMENTS
Neither
the Company nor any director, officer, agent or employee of the Company or, to
the knowledge of the Company, any other Person associated with or acting for or
on behalf of the Company, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of the Company or
any Affiliate of the Company, or (iv) in violation of any legal requirement, or
(b) established or maintained any fund or asset that has not been recorded in
the books and records of the Company.
-20-
4.23 RELATIONSHIPS
WITH RELATED PERSONS
Except as
set forth in Section 4.23 of the Company Disclosure Schedule, no officer,
director or employee of the Company, nor any spouse or child of any of them or
any Affiliate of, or any Person associated with, any of them (“RELATED PERSON”),
has any interest in any property or asset used in or pertaining to the business
of the Company that would be required to be disclosed under Item 404 of
Regulation S-K, promulgated under the Securities Act of 1933, as amended. Except
as set forth in Section 4.23 of the Company Disclosure Schedule, no Related
Person has owned or presently owns an equity interest or any other financial or
profit interest in a Person that has (i) had business dealings with the Company,
or (ii) engaged in competition with the Company that would be required to be
disclosed under Item 404 of Regulation S-K, promulgated under the Securities Act
of 1933, as amended. Except as set forth in Section 4.23 of the Company
Disclosure Schedule, no Related Person is a party to any Contract with, or has
any claim or right against, the Company, except for employment agreements listed
in Section 4.16 of the Company Disclosure Schedule.
4.24 BROKERS
OR FINDERS
Except
for VCP, there are no brokers or finders and as such VCP shall be issued 500,000
shares on Closing from the Surviving Company and such shares shall have
piggyback registration rights. During the period beginning on the Closing Date
and ending on the date that is six (6) months from the Closing Date, the
Surviving Corporation shall be permitted to issue up to One Million Five Hundred
Thousand (1,500,000) Common Shares of Ocean West Common Stock to consultants
provided such shares are not registered under a Form S-8 and are restricted from
public sale for a period of no less than six (6) months. From the period
beginning six (6) months after the Closing Date and ending on the date that is
one (1) year after the Closing Date, the Surviving Corporation shall be
permitted to issue an additional Five Hundred Thousand (500,000) Common Shares
of Ocean West Common Stock. Beginning on the date that is one (1)
year after the Closing Date, the Surviving Corporation shall be permitted issue
Common
Shares of Ocean West Common Stock as the
board of directors of the Company deems appropriate.
Notwithstanding the above, the
management, officers and directors of the Company hereby represent under penalty
of perjury that there are no other agreements in writing or otherwise that
promise the issuance of any shares to any individual, corporation or other
entity in the future or which has not been disclosed herein.
4.25 DEPOSIT
ACCOUNTS
Section
4.25 of the Company Disclosure Schedule contains a true, correct and complete
list of (a) the name of each financial institution in which the Company has an
account or safe deposit box, (b) the names in which each account or box is held,
(c) the type of account, and (d) the name of each Person authorized to draw on
or have access to each account or box. No Person holds any power of attorney
from the Company or any Subsidiary, except as listed in Section 4.25 of the
Company Disclosure Schedule.
-21-
4.26 CONDUCT
OF BUSINESS
The
business carried on by the Company has been conducted by the Company directly
and not through any Affiliate or associate of any stockholder, officer, director
or employee of the Company or through any other Person.
4.27 RESTRICTIONS
ON BUSINESS ACTIVITIES
Except as
set forth in section 4.27 of the Company Disclosure Schedule there is no
Contract or Governmental Order binding upon the Company or, to the knowledge of
the Company, threatened that has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of the
Company or the Company (either individually or in the aggregate), any
acquisition of property by the Company or the Company (either individually or in
the aggregate), providing of any service by the Company of the Company or the
hiring of employees or the conduct of business by the Company of the Company
(either individually or in the aggregate) as currently conducted or proposed to
be conducted.
4.28 OUTSTANDING
INDEBTEDNESS
Section
4.28 of the Company Disclosure Schedule sets forth as of a date no earlier than
three (3) days prior to the date hereof and will be amended two days prior to
Closing to reflect at such date (a) the amount of all indebtedness of the
Company then outstanding and the interest rate applicable thereto, (b) any
Encumbrances which relate to such indebtedness, and (c) the name of the lender
or the other payee of each such indebtedness.
4.29 VOTING
REQUIREMENTS
The
affirmative vote or consent of a majority of the outstanding shares of Company
Common Stock is the only vote or consent of the holders of any class or series
of equity securities of the Company necessary to adopt this Agreement and
approve the share exchange and the other transactions contemplated by this
Agreement.
4.30 DISCLOSURE
No
representation or warranty by the Company in this Agreement, nor in any
certificate, schedule or exhibit delivered or to be delivered pursuant to this
Agreement, and no statement in the Company Disclosure Schedule, contains or will
contain any untrue statement of material fact, or omits or will omit to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
5. REPRESENTATIONS
AND WARRANTIES OF OCEAN
Ocean
hereby represents and warrants to Company as follows:
5.1 ORGANIZATION
AND GOOD STANDING
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(a) Ocean is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Ocean has full corporate power and authority to
own its properties and to carry on its business as it is now being conducted.
Ocean is duly qualified to transact business and is in good standing in each
jurisdiction wherein the nature of the business done or the property owned,
leased or operated by it requires such qualification, except where the failure
to be so qualified would not have a Material Adverse Effect. True, correct and
complete copies of the certificate of incorporation and by-laws of Ocean and all
amendments thereto have been delivered to the Company. The corporate minutes and
corporate records of Ocean that have been made available to the Company and are
true, correct and complete in all material respects.
(b) Section
5.1 of the Ocean Disclosure Schedule sets forth a true, correct and complete
list of each Subsidiary of Ocean. Each Subsidiary is a corporation or other
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction or incorporation or organization indicated in Section 5.1 of
the Disclosure Schedule. Each such Subsidiary has full corporate or other power
and authority to own its properties and to carry on its business as it is now
being conducted. Each Subsidiary is duly qualified to transact business and is
in good standing in each jurisdiction wherein the nature of the business or the
property owned, leased or operated by it requires such qualification, except
where the failure to be so qualified would not have a Material Adverse Effect.
All such subsidiaries will be spun off or terminated prior to the Closing. True,
correct and complete copies of the certificate of incorporation and by-laws (or
other Organizational Documents) of each such Subsidiary and all amendments
thereto have been delivered to the Company.
5.2 AUTHORITY;
NO CONFLICT
(a) Ocean has
the right, power, authority and capacity to execute and deliver this Agreement,
to consummate the Exchange and to perform its obligations under this Agreement.
(b) Neither
the execution, delivery or performance of this Agreement by Ocean nor the
consummation by Ocean of the Exchange or any of the other transactions
contemplated hereby will, directly or indirectly (with or without notice or
lapse of time or both):
(i) contravene,
conflict with or result in a violation or breach of (A) any provision of the
Organizational Documents of Ocean, (B) any resolution adopted by the Board of
Directors, or any committee thereof, or the stockholders of Ocean, (C) any legal
requirement or any Governmental Order to which Ocean or any of the properties or
assets owned or used by Ocean may be subject, or (D) any authorization, license
or permit of any Governmental Authority, including any private investigatory
license or other similar license, which is held by Ocean or that otherwise
relates to the business of, or any of the assets owned or used by, Ocean ;
(ii) result in
a violation or breach of or constitute a default, give rise to a right of
termination, cancellation or acceleration, create any entitlement to any payment
or benefit or require the consent or approval of or any notice to or filing with
any third party under any Contract to which the Company is a party or to which
they or their respective properties or assets may be bound, or require the
consent or approval of or any notice to or filing with any Governmental
Authority to which either the Company or their respective properties or assets
may be subject; or
(iii) result in
the imposition or creation of any Encumbrance (other than Permitted
Encumbrances) upon or with respect to any of the properties or assets owned or
used by the Company ;
except,
with respect to clauses (i) (C) or (D), (ii) or (iii) of this Section 5.2, where
any such contravention, conflict, violation, breach, default, termination right,
cancellation or acceleration right or Encumbrance would not have a Material
Adverse Effect or would not adversely affect the ability of the Company to
consummate the Exchange or the other transactions contemplated by this
Agreement.
5.3 CAPITALIZATION
The
authorized equity securities of Ocean shall consist solely of 30,000,000 shares
of common stock, par value $0.01 per share, of which 5,586,104 shares shall be
issued and outstanding, and 5,000,000 shares of preferred stock, par value $0.01
per share, of which 0 shares
are issued and outstanding. There are no outstanding warrants for the purchase
of shares of common stock of Ocean. All of the outstanding equity securities of
Ocean have been duly authorized and validly issued and are fully paid and
non-assessable. The authorized, issued and outstanding shares of each class of
capital stock or other ownership or equity interests of each Subsidiary of Ocean
are accurately and completely set forth in Section 5.3(a) of the Ocean
Disclosure Schedule. All of the outstanding shares of capital stock or other
ownership or equity interests of each such Subsidiary have been duly authorized
and validly issued and are fully paid and non-assessable and owned beneficially
and of record by Ocean free and clear of any and all Encumbrances. No options to
purchase shares of Ocean have been granted. There are no voting trusts or other
agreements or understandings to which the Ocean is a party with respect to the
transfer, voting, issuance, purchase, redemption, repurchase or registration of
the capital stock of Ocean. There are no Contracts relating to the issuance,
sale or transfer of any equity securities or other securities of Ocean, and
there are not outstanding any convertible securities of Ocean. Ocean does not
own or has any Contract to acquire, any equity securities or other securities of
any Person (other than a Subsidiary) or any, direct or indirect, equity or
ownership interest in any other business. No Person has any pre-emptive rights
with respect to any security of Ocean.
5.3A FINANCIAL
STATEMENTS
Ocean has
made available to Company public filings of Ocean which are true, complete and
correct. Not later than two days prior to the Closing, by reason of the spin-off
or other divesture of the assets of its sole Subsidiary, Ocean West Enterprises,
Ocean shall provide un-audited consolidated balance sheets of the Ocean dated as
of March 31, 2005, which shall reflect net tangible assets of $0.
Ocean
represents and warrants that these financial statements (i) shall have been
prepared from the books and records of Ocean in accordance with GAAP, (ii) fully
reflect all liabilities and contingent liabilities of Ocean required to be
reflected therein on such basis as at the date(s) thereof, (iii) fairly present
in all material respects the consolidated financial position of Ocean as of the
date(s) of the balance sheets included in the financial statements and the
consolidated results of its operations and cash flows for the periods indicated
and (iv) no adverse change in the financial position of Ocean as reflected in
the financial statements that could result in any Material Adverse Effect shall
have occurred prior to the Effective Date and, as of the Effective Date, Ocean
has no knowledge of any future or threatened event which could have a Material
Adverse Effect on the financial position of Ocean as reflected in the financial
statements. At the Closing, Ocean’s Director and CFO shall execute and deliver
to the other parties hereto a certificate attesting to the
foregoing.
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5.4 SEC
DOCUMENTS; FINANCIAL STATEMENTS
Ocean has
filed or furnished (i) all reports, schedules, forms, statements,
prospectuses and other documents required to be filed with, or furnished to, the
Securities and Exchange Commission (the “SEC”) by
Ocean since September 30, 2004 except as set forth in Section 5.4 of the Ocean
Disclosure Schedule (all such documents, as amended or supplemented, are
referred to collectively as, the “Ocean SEC Documents”) and (ii) all
certifications and statements required by (x) Rule 13a-14 or 15d-14 under
the Exchange Act, or (y) 18 U.S.C. §1350 (Section 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002) with respect to any applicable Ocean SEC Document (collectively,
the “SOX
Certifications”). Ocean
has made available to the Company all SOX Certifications and comment letters
received by Ocean from the staff of the SEC since July 1, 2002 and all responses
to such comment letters by or on behalf of the Company. None of Ocean’s
Subsidiaries currently is, and no such Subsidiary has been, required to file or
otherwise furnish any reports, schedules, forms, statements, prospectuses or
other documents with or to the SEC. Since September 30, 2004, Ocean has
complied in all respects with its SEC filing obligations under the Exchange Act
and the Securities Act, except as set forth in Section 5.4 of the Ocean
Disclosure Schedule. Each of the audited financial statements and related
schedules and notes thereto and unaudited interim financial statements of Ocean
(collectively, the “Ocean Financial Statements”) contained in the Ocean SEC
Documents (or incorporated therein by reference) were prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis (“GAAP”)
(except in the case of interim unaudited financial statements) except as noted
therein, and fairly present in all respects the consolidated financial position
of Ocean and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations, cash flows and changes in
stockholders’ equity for the periods then ended, subject (in the case of interim
unaudited financial statements) to normal year-end audit adjustments (the effect
of which will not, individually or in the aggregate, be adverse) and, such
financial statements complied as to form as of their respective dates in all
respects with applicable rules and regulations of the SEC. The financial
statements referred to herein reflect the consistent application of such
accounting principles throughout the periods involved, except as disclosed in
the notes to such financial statements. No financial statements of any Person
not already included in such financial statements are required by GAAP to be
included in the consolidated financial statements of Ocean. As of their
respective dates, each Ocean SEC Document was prepared in accordance with and
complied with the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations thereunder, and the Ocean SEC
Documents (including all financial statements included therein and all exhibits
and schedules thereto and all documents incorporated by reference therein) did
not, as of the date of effectiveness in the case of a registration statement,
the date of mailing in the case of a proxy or information statement and the date
of filing in the case of other Ocean SEC Documents, contain any untrue statement
of a fact or omit to state a fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Neither Ocean nor, to Ocean’s knowledge, any of its
officers has received notice from the SEC or any other Governmental Entity
questioning or challenging the accuracy, completeness, content, form or manner
of filing or furnishing of the SOX Certifications.
-24-
5.5 NO
UNDISCLOSED LIABILITIES
Except as
set forth in Section 5.5 of the Ocean Disclosure Schedule, Ocean has no material
liabilities or obligations of any nature (whether absolute, accrued, contingent,
or otherwise) except for liabilities or obligations reflected or reserved
against in the Financial Statements and the Interim Financial Statements and
current liabilities incurred in the ordinary course of business since the date
of the Interim Financial Statements, which current liabilities are consistent
with the representations and warranties contained in this Agreement and will
not, individually or in the aggregate, have a Material Adverse Effect.
5.6 TAXES
Ocean has
properly and timely filed all federal, state and local Tax returns and has paid
all Taxes, assessments and penalties due and payable. All such Tax returns were
complete and correct in all respects as filed, and no claims have been assessed
with respect to such returns, except as set forth in Section 5.6 of the Ocean
Disclosure Schedule. The provisions made for Taxes on the balance sheets of
Ocean included in the Ocean Financial Statements and the Ocean Interim Financial
Statements are sufficient in all respects for the payment of all Taxes whether
disputed or not that are due or are hereafter found to have been due with
respect to the conduct of the business of Ocean and its Subsidiaries up to and
through the date of the Closing, as well as any Taxes due as a result of any
spin-off or other divesture of the stock of any Subsidiary or the sale of any
assets of Ocean or any Subsidiary by Ocean prior to the Closing as contemplated
in this Agreement or otherwise. There are no present, pending, or threatened
audit, investigations, assessments or disputes as to Taxes of any nature payable
by Ocean or any Subsidiary, nor any Tax liens whether existing or inchoate on
any of the assets of Ocean or any Subsidiary, except for current year Taxes not
presently due and payable. The federal income Tax returns of Ocean have never
been audited. No IRS or foreign, state, county or local Tax audit is currently
in progress. Neither Ocean nor any Subsidiary has waived the expiration of the
statute of limitations with respect to any Taxes. There are no outstanding
requests by Ocean or any Subsidiary for any extension of time within which to
file any Tax return or to pay Taxes shown to be due on any Tax return. Other
than with respect to the Company, neither Ocean nor any Subsidiary is liable for
Taxes of any other Person (including each other) or is currently under any
contractual obligation to indemnify any Person with respect to Taxes or is a
party to any Tax sharing agreement or any other agreement providing for payments
by Ocean or any Subsidiary with respect to Taxes. Ocean represents that to the
extent tax-loss carry-forwards have been accrued on account of the operation of
Ocean’s Subsidiaries, such carry-forward amounts will be retained on the books
of such Subsidiaries. Ocean has
complied in all material respects with all applicable laws relating to the
payment, collection or withholding of any Tax, and the remittance thereof,
including, but not limited to, Sections 1441, 1442, 1445 and 3402 of the
Code
-25-
5.7 ACCOUNTS
RECEIVABLE; ACCOUNTS PAYABLE
(a) All
accounts receivable of Ocean that are reflected on the Ocean Financial
Statements, the Ocean Interim Financial Statements or on the accounts receivable
ledgers of Ocean (collectively, the “OCEAN ACCOUNTS RECEIVABLE”) represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business. All of the Ocean Accounts Receivable are or
will be current and collectible at the full recorded amount thereof, less any
applicable reserves established in accordance with GAAP, in the ordinary course
of business without resort to litigation, except for such Accounts Receivable,
the failure of which to collect would not have a Material Adverse Effect.
(b) All
accounts payable of Ocean that are reflected on the Ocean Financial Statements,
the Ocean Interim Financial Statements or on the accounts payable ledgers of
Ocean arose in the ordinary course of business. All material items which are
required by GAAP to be reflected as payables on the Ocean Financial Statements
and on the Ocean Interim Financial Statements and in the books and records of
Ocean are so reflected and have been recorded in accordance with GAAP in a
manner consistent with past practice. There has been no adverse change since the
date of the Ocean Interim Financial Statements in the amount or delinquency of
accounts payable of Ocean (either individually or in the aggregate) which would
have a Material Adverse Effect.
5.8 NO
MATERIAL ADVERSE CHANGE
Since the
date of the Ocean Interim Financial Statements, there has not been any Material
Adverse Effect in the business, operations, properties, prospects, liabilities,
results of operations, assets or condition (financial or otherwise) of Ocean
taken as a whole and no event has occurred or circumstance exists that may
result in a Material Adverse Effect.
5.9 BOOKS
AND RECORDS
Except as
disclosed in Section 5.9 of the Ocean Disclosure Schedule, the books of account
and other records of Ocean are true, correct and complete. Except as disclosed
in Section 5.9 of the Ocean Disclosure Schedule, the minute books of Ocean
Company contain true, correct and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Boards of Directors, and
committees of the Boards of Directors of Ocean . The stock books of the Company
are true, correct and complete.
5.10 TITLE
TO PROPERTIES; ENCUMBRANCES
Section
5.10 of the Disclosure Schedule contains a complete and accurate list of all
real property leaseholds or other interests therein held by Ocean. Ocean owns,
or has owned, any real property. Ocean has delivered or made available to Ocean
true, correct and complete copies of the real property leases to which the
Company is a party or pursuant to which any of them uses or occupies any real
property. Section 5.10 of the Ocean Disclosure Schedule also contains a complete
and accurate list of all licensed vehicles owned or leased by Ocean and the
fixed assets used in the business of the Company and carried on their books for
tax purposes. Except as set forth in Section 5.10 of the Ocean Disclosure
Schedule, Ocean has good title to, or a valid leasehold, license or other
interest in, all of the real and personal properties and assets, tangible and
intangible, they own or purport to own, hold or use in their respective
businesses, including those reflected on their books and records and in the
Financial Statements and Interim Financial Statements (except for accounts
receivable collected and materials and supplies used or disposed of in the
ordinary course of business consistent with past practice after the date of the
Interim Financial Statements), free and clear of all Encumbrances, except
Permitted Encumbrances.
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5.11 CONDITION
AND SUFFICIENCY OF ASSETS
The
buildings, vehicles, furniture, fixtures and equipment and other personal
property owned, held or used by Ocean are structurally sound, are in good
operating condition and repair, and are adequate for the uses to which they are
being put, and none of such buildings, vehicles, furniture, fixtures or
equipment or other personal property is in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material in nature or
cost. The buildings, vehicles, furniture, fixtures and equipment or other
personal property of Ocean are sufficient for the continued conduct of their
respective businesses after the Closing in substantially the same manner as
conducted prior to the Closing.
5.12 EMPLOYEE
BENEFITS
(a) Neither
Ocean nor any ERISA Affiliate maintains any Employee Benefit Plans.
(b) Neither
Ocean nor any ERISA Affiliate has proposed or agreed to the creation of any new
Employee Benefit Plan.
5.13 COMPLIANCE
WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
(a) To the
best of Ocean’s knowledge, Ocean is in compliance with all federal, state and
local laws, authorizations, licenses and permits of any Governmental Authority
and all Governmental Orders affecting the business, operations, properties or
assets of Ocean , including, federal, state and local: (i) Occupational Safety
and Health Laws; (ii) private investigatory and other similar laws; (iii)
securities laws; (iv) the Fair Credit Reporting Act and similar state and local
laws; and (v) laws regarding or relating to trespass or violation of privacy
rights. Neither Ocean nor its Subsidiaries have been charged with violating, nor
to the knowledge of Ocean, threatened with a charge of violating, nor, to the
knowledge of Ocean, is Ocean or any of its Subsidiaries under investigation with
respect to a possible violation of, any provision of any federal, state or local
law relating to any of their respective businesses, operations, properties or
assets.
(b) Section
5.13 of the Ocean Disclosure Schedule contains a complete and accurate list of
each governmental authorization, license or permit that is held by Ocean or that
otherwise relates to the business of, or to any of the properties or assets
owned or used by, Ocean or any of its Subsidiaries. Each governmental
authorization, license or permit listed in Section 5.13 of the Ocean Disclosure
Schedule is valid and in full force and effect.
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5.14 LEGAL
PROCEEDINGS AGAINST OCEAN
Except as
set forth in Section 5.14 of the Ocean Disclosure Schedule, there is no pending
claim, action, investigation, arbitration, litigation, suit or other proceeding
(“PROCEEDING”):
(i) that has
been commenced by or against Ocean or any of its Subsidiaries or that otherwise
relates to or may affect the business of, or any of the properties or assets
owned, held or used by, Ocean; or
(ii) that
challenges, or that may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated hereby.
To the
knowledge of Ocean, (A) no such Proceeding has been threatened, and (B) no event
has occurred or circumstance exists that may give rise to or serve as a basis
for the commencement of any such Proceeding. Ocean has made available to Ocean
true, correct and complete copies of all pleadings, correspondence and other
documents relating to each Proceeding listed in Section 5.14 of the Disclosure
Schedule. The Proceedings listed in Section 5.14 of the Ocean Disclosure
Schedule, if decided adversely to Ocean or any Subsidiary, individually or in
the aggregate, would not have a Material Adverse Effect, except as described in
Section 5.14 of the Ocean Disclosure Schedule.
5.15 ABSENCE
OF CERTAIN CHANGES AND EVENTS
Except as
set forth in Section 5.15 of the Ocean Disclosure Schedule, since March 31,
2005, Ocean has conducted its business only in the ordinary course of business
consistent with past practice. Without limiting the generality of the
immediately preceding sentence, since March 31, 2005, there has not been any of
the following on the part of Ocean:
(a) declaration
or payment of any dividend or other distribution or redemption or repurchase or
other acquisition, directly or indirectly, in respect of shares of capital stock
or Convertible Securities;
(b) issuance
or sale or authorization for issuance or sale, or grant of any options or other
agreements with respect to, any shares of its capital stock or Convertible
Securities, or any change in its outstanding shares of capital stock or other
ownership interests or its capitalization, whether by reason of a
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, stock dividend or otherwise;
(c) payment
or increase of any bonuses, salaries or other compensation to any stockholder,
director, officer, consultant or employee except for increases in bonus
compensation to employees in the ordinary course of business or entry into any
employment, severance or similar Contract with any director, officer or
employee;
(d) adoption
of, or increase in the payments to or benefits under, any profit sharing, bonus,
deferred compensation, severance, savings, insurance, pension, retirement or
other employee benefit plan for or with any employees;
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(e) damage to
or destruction or loss of any property or asset, whether or not covered by
insurance, which may have a Material Adverse Effect;
(f) entry
into, termination of, or receipt of notice of termination of, any Contract or
transaction involving a total remaining commitment by or to Ocean of at least
$25,000, including the entry into (i) any document evidencing any indebtedness;
(ii) any capital or other lease; or (iii) any guaranty (including “take-or-pay”
or “keepwell” agreements);
(g) sale,
lease or other disposition (other than in the ordinary course of business
consistent with past practice) of any asset or property or mortgage, pledge, or
imposition of any Encumbrance (other than Permitted Encumbrances) on any
material property or asset;
(h) cancellation,
compromise or waiver of any claims or rights with a value to Ocean or any
Subsidiary in excess of $10,000;
(i) material
change in the method of accounting of the accounting principles or practices
used by Ocean in the preparation of the Financial Statements or the Interim
Financial Statements, except as required by GAAP;
(j) amendment
or other modification of its respective Organizational Documents;
(k) loss of
services of any Ocean employee or consultant or any loss of a material
client;
(l) loan or
advance to any Person other than travel and other similar routine advances to
employees in the ordinary course of business consistent with past practice; or
(m) agreement
or commitment, whether oral or written, by Ocean to do any of the
foregoing.
5.16 CONTRACTS
OF OCEAN; NO DEFAULTS
(a) Section
5.16(a) of the Ocean Disclosure Schedule contains a complete and accurate list,
and Ocean has delivered to the Company true, correct and complete copies, of:
(i) each
Contract that involves performance of services or delivery of goods or materials
by Ocean or any Subsidiary of Ocean of an amount or value in excess of $10,000;
(ii) each
Contract that involves performance of services or delivery of goods or materials
to Ocean of an amount or value in excess of $10,000;
(iii) each
lease, license and other Contract affecting any leasehold or other interest in,
any real or personal property;
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(iv) each
licensing Contract with respect to Ocean Patents, Ocean Trade Marks, Ocean
Copyrights, Ocean trade secrets or other Ocean Intellectual Property Assets,
including Contracts with current or former employees, consultants or contractors
regarding the appropriation or the non-disclosure of any Intellectual Property
Assets;
(v) each
collective bargaining Contract to or with any labor union or other employee
representative of a group of employees;
(vi) each
joint venture, partnership and other Contract involving a sharing of profits,
losses, costs or liabilities by Ocean with any other Person or requiring Ocean
to make a capital contribution;
(vii) each
Contract containing covenants that in any way purport to restrict the business
activity of Ocean or limit the freedom of Ocean to engage in any line of
business or to compete with any Person or hire any Person;
(viii) each
employment Contract providing for compensation, severance or a fixed term of
employment in respect of services performed by any employees of Ocean and each
consulting Contract with an independent contractor;
(ix) each
stock option, purchase or benefit plan for employees;
(x) each
power of attorney that is currently effective and outstanding;
(xi) each
Contract for capital expenditures in excess of $10,000;
(xii) each
Contract with an officer or director of Ocean or with any Affiliate of any of
the foregoing;
(xiii) each
Contract under which any money has been or may be borrowed or loaned or any
note, bond, factoring agreement, indenture or other evidence of indebtedness has
been issued or assumed (other than those under which there remain no ongoing
obligations of Ocean ), and each guaranty (including “take-or-pay” and
“keepwell” agreements) of any evidence of indebtedness or other obligation, or
of the net worth, of any Person (other than endorsements for the purpose of
collection in the ordinary course of business);
(xiv) each
Contract containing restrictions with respect to the payment of dividends or
other distributions in respect of Ocean’s capital stock;
(xv) each
Contract containing a change of control provision;
(xvi) each
other Contract having an indefinite term or a fixed term of more than one (1)
year (other than those that are terminable at will or upon not more than thirty
(30) days’ notice by Ocean without penalty) or requiring payments by Ocean of
more than $10,000 per year; and
(xvii) each
standard form of Contract pursuant to which Ocean provides services to
clients.
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(b) Except as
set forth in Section 5.16(b) of the Ocean Disclosure Schedule, each Contract
identified or required to be identified in Section 5.16(a) of the Ocean
Disclosure Schedule is in full force and effect and is valid and enforceable
against Ocean and, to the knowledge of Ocean, against the other parties thereto
in accordance with its terms.
(c) Except as
set forth in Section 5.16(c) of the Disclosure Schedule:
(i) Ocean is
in full compliance with all applicable terms and requirements of each Contract
under which Ocean has any obligation or liability or by which Ocean or any of
the properties or assets owned, held or used by Ocean is bound, except for such
noncompliance that would not have a Material Adverse Effect;
(ii) to the
knowledge of Ocean, each other Person that has or had any obligation or
liability under any Contract under which Ocean has any rights is in compliance
in all material respects with all applicable terms and requirements of such
Contract; and
(iii) no event
has occurred or, to the knowledge of Ocean, circumstance exists that (with or
without notice or lapse of time or both) may result in a violation or breach of
any Contract, which violation or breach would have a Material Adverse Effect.
5.17 INSURANCE
Section
5.17 of the Ocean Disclosure Schedule sets forth the premium payments and
describes all the insurance policies of Ocean, which policies are now in full
force and effect in accordance with their terms and expire on the dates shown on
Section 5.17 of the Ocean Disclosure Schedule. Such insurance policies comply in
all respects with the requirements of any leases to which Ocean is a party,
including, real property leases. There has been no default in the payment of
premiums on any of such policies, and, to the knowledge of Ocean, there is no
ground for cancellation or avoidance of any such policies, or any increase in
the premiums thereof, or for reduction of the coverage provided thereby. Such
policies insure Ocean in amounts and against losses and risks customary and
sufficient for businesses similar to that of Ocean, and, to the knowledge of the
Company, such policies shall continue in full force and effect until the
expiration dates shown in Section 5.17 of the Ocean Disclosure Schedule. There
are no pending claims with respect to Ocean or its properties or assets under
any such insurance policy. True, correct and complete copies of all insurance
policies listed in Section 5.17 have been previously furnished to Ocean.
5.18 ENVIRONMENTAL
MATTERS
Ocean has
at all times operated its businesses in material compliance with all
Environmental Laws and all permits, licenses and registrations required under
applicable Environmental Laws (“ENVIRONMENTAL PERMITS”) and, to Ocean’s
knowledge, no material expenditures are or will be required by Ocean in order to
comply with such Environmental Laws. Ocean has not received any written
communication from any Governmental Authority or other Person that alleges that
Ocean has violated or is, or may be, liable under any Environmental Law. There
are no material Environmental Claims pending or, to the knowledge of Ocean,
threatened (a) against Ocean, or (b) against any Person whose liability for any
Environmental Claim Ocean has retained or assumed, either contractually or by
operation of law. Neither Ocean nor any of its Subsidiaries has contractually
retained or assumed any liabilities or obligations that could reasonably be
expected to provide the basis for any material Environmental Claim.
-31-
5.19 EMPLOYEES
(a) Section
5.19 of the Ocean Disclosure Schedule contains a complete and accurate list of
the following information for each employee of Ocean: name; job title; current
compensation; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under any employee benefit plan of any nature.
(b) No
employee or director of Ocean is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, non-competition or
proprietary rights agreement, between such employee or director and any other
Person that in any way adversely affects or will affect (i) the performance of
his or her duties as an employee or officer of the Company, or (ii) the ability
of the Company to conduct its business. To the knowledge of Ocean, no officer or
other Ocean employee of Ocean intends to terminate his or her employment with
Ocean.
5.20 LABOR
RELATIONS
Except as
set forth in Section 5.20 of the Ocean Disclosure Schedule:
(a) Ocean has
satisfactory relationships with their respective employees.
(b) No
condition or state of facts or circumstances exists which could materially
adversely affect Ocean’s relations with its employees, including, to the best of
the Company’s knowledge, the consummation of the transactions contemplated by
this Agreement.
(c) Ocean is
in compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours and none of them is engaged in any unfair labor practice.
(d) No
collective bargaining agreement with respect to the business of Ocean is
currently in effect or being negotiated. Ocean has not encountered any labor
union or collective bargaining organizing activity with respect to its
employees. Ocean has no obligation to negotiate any such collective bargaining
agreement, and, to the knowledge of Ocean, there is no indication that the
employees of Ocean desire to be covered by a collective bargaining agreement.
(e) There are
no strikes, slowdowns, work stoppages or other labor trouble pending or, to the
knowledge of Ocean, threatened with respect to the employees of Ocean, nor has
any or the above occurred or, to the knowledge of Ocean, been threatened.
(f) There is
no representation claim or petition pending before the National Labor Relations
Board or any state or local labor agency and, to the knowledge of Ocean, no
question concerning representation has been raised or threatened respecting the
employees of Ocean.
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(g) There are
no complaints or charges against Ocean pending before the National Labor
Relations Board or any state or local labor agency and, to the knowledge of
Ocean, no complaints or charges have been filed or threatened to be filed
against Ocean with any such board or agency.
(h) To the
knowledge of Ocean, no charges with respect to or relating to the business of
Ocean or any of its Subsidiaries are pending before the Equal Employment
Opportunity Commission or any state or local agency responsible for the
prevention of unlawful employment practices.
(i) Section
5.20 of the Disclosure Schedule accurately sets forth all unpaid severance
which, as of the date hereof, is due or claimed, in writing, to be due from
Ocean to any Person whose employment with Ocean was terminated.
(j) Ocean has
not received notice of the intent of any Governmental Authority responsible for
the enforcement of labor or employment laws to conduct an investigation of Ocean
and no such investigation is in progress.
(k) Neither
Ocean, or to the knowledge of Ocean, any employee of Ocean, is in violation of
any term of any employment agreement, non-disclosure agreement, non-compete
agreement or any other Contract regarding an employee’s employment with Ocean.
(l) Ocean has
paid all wages which are due and payable to each employee and each independent
contractor.
5.21 INTELLECTUAL
PROPERTY
(a) INTELLECTUAL
PROPERTY ASSETS--The term “OCEANINTELLECTUAL PROPERTY ASSETS” includes: (i) the
name Ocean West Holding Corp., all fictional business names, trade names,
registered and unregistered trademarks, service marks and applications
(collectively, “OCEAN MARKS”); (ii) all patents, patent applications and
inventions and discoveries that may be patentable (collectively, “OCEAN
PATENTS”); (iii) all copyrights in both published works and unpublished works,
including software, training manuals and videos (collectively, “Copyrights”);
and (iv) all know-how, trade secrets, confidential information, client lists,
software, technical information, data, plans, drawings and blue prints
(collectively, “OCEAN TRADE SECRETS”) owned, used or licensed by Ocean as
licensee or licensor.
(b) AGREEMENTS--Section
5.21(b) of the Ocean Disclosure Schedule contains a true, correct and complete
list and summary description, including any royalties paid or received by Ocean,
of all Contracts relating to the Ocean Intellectual Property Assets to which
Ocean is a party or by which Ocean is bound.
(c) KNOW-HOW
NECESSARY FOR THE BUSINESS--The Ocean Intellectual Property Assets are all those
used in, or related to, the operation of the business of Ocean as it is
currently conducted and proposed to be conducted. Ocean is the owner of all
right, title and interest in and to the Ocean Intellectual Property Assets, free
and clear of all Encumbrances and have the right to use without payment to a
third party all of the Intellectual Property Assets. Ocean is the owner of all
right, title and interest in and to any (i) business application software and
(ii) proprietary management information systems used in, or related to, the
operation of the business of Ocean as it is currently conducted and proposed to
be conducted, free and clear of all Encumbrances, and have a right to use such
software and systems without payment to a third party.
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(d) TRADEMARKS--(i)
Section 5.21(d) of the Ocean Disclosure Schedule contains a true, correct and
complete list of all Ocean Trademarks; (ii) Ocean is the owner of all right,
title and interest in and to the Ocean Trademarks, free and clear of all
Encumbrances; (iii) all Ocean Trademarks that have been registered with the
United States Patent and Trademark Office are currently in compliance with all
formal legal requirements and are valid and enforceable; (iv) no Ocean Trademark
is infringed or, to the knowledge of the Company, has been challenged or
threatened in any way. None of the Ocean Trademarks used by Ocean infringes or
is alleged to infringe any trade name, trademark or service ▇▇▇▇ of any Person.
(e) COPYRIGHTS--(i)
Section 5.21(e) of the Ocean Disclosure Schedule contains a true, correct and
complete list of all Ocean Copyrights; (ii) Ocean is the owner of all right,
title and interest in and to the Copyrights, free and clear of all Encumbrances;
(iii) all the Ocean Copyrights have been registered and are currently in
compliance with formal legal requirements, and are valid and enforceable; (iv)
no Ocean Copyright is infringed or, to the knowledge of Ocean, has been
challenged or threatened in any way; (v) none of the subject matter of any of
the Ocean Copyrights infringes or is alleged to infringe any copyright of any
Person or is a derivative work based on the work of a third Person; and (vi) all
works encompassed by the Ocean Copyrights have been marked with the proper
copyright notice.
(f) TRADE
SECRETS--(i) Ocean has taken all reasonable precautions to protect the secrecy,
confidentiality and value of the Ocean Trade Secrets; and (ii) Ocean has good
title and an absolute right to use the Trade Secrets. The Ocean Trade Secrets,
to the knowledge of Ocean, have not been used, divulged or appropriated either
for the benefit of any Person (other than Ocean ) or to the detriment of Ocean.
No Ocean Trade Secret is subject to any adverse claim or has been challenged or
threatened in any way.
5.22 ABSENCE
OF CERTAIN PAYMENTS
Neither
Ocean nor any director, officer, agent or employee of Ocean or, to the knowledge
of Ocean, any other Person associated with or acting for or on behalf of Ocean
has directly or indirectly (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback or other payment to any Person, private or
public, regardless of form, whether in money, property, or services (i) to
obtain favorable treatment in securing business, (ii) to pay for favorable
treatment for business secured, (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of Ocean or any
Affiliate of Ocean, or (iv) in violation of any legal requirement, or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of Ocean.
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5.23 RELATIONSHIPS
WITH RELATED PERSONS
Except as
set forth in Section 5.23 of the Ocean Disclosure Schedule, no officer, director
or employee of Ocean, nor any spouse or child of any of them or any Affiliate
of, or any Person associated with, any of them (“RELATED PERSON”), has any
interest in any property or asset used in or pertaining to the business of
Ocean. Except as set forth in Section 5.23 of the Ocean Disclosure Schedule, no
Related Person has owned or presently owns an equity interest or any other
financial or profit interest in a Person that has (i) had business dealings with
Ocean, or (ii) engaged in competition with Ocean. Except as set forth in Section
5.23 of the Ocean Disclosure Schedule, no Related Person is a party to any
Contract with, or has any claim or right against, Ocean, except for employment
agreements listed in Section 5.16 of the Disclosure Schedule.
5.24 BROKERS
OR FINDERS
Neither
Ocean nor any Subsidiary nor any of their respective directors, officers or
agents on their behalf has incurred any obligation or liability, contingent or
otherwise, for brokerage or finders’ fees or agents’ commissions or financial
advisory services or other similar payment in connection with this Agreement,
except as listed in Section 5.24 of the Ocean Disclosure Schedule for the
consideration reflected thereon.
5.25 DEPOSIT
ACCOUNTS
Section
5.25 of the Ocean Disclosure Schedule contains a true, correct and complete list
of (a) the name of each financial institution in which Ocean has an account or
safe deposit box, (b) the names in which each account or box is held, (c) the
type of account, and (d) the name of each Person authorized to draw on or have
access to each account or box. No Person holds any power of attorney from the
Company or any Subsidiary, except as listed in Section 5.25 of the Ocean
Disclosure Schedule.
5.26 CONDUCT
OF BUSINESS; USE OF NAME
The
business carried on by Ocean has been conducted by Ocean directly and not
through any Affiliate or associate of any stockholder, officer, director or
employee of Ocean or through any other Person. To the best of the Ocean’s
knowledge, Ocean owns and has the exclusive right, title and interest in and to
the name Ocean Command Corp.” and no other Person has the right to use the same,
or any confusing derivative thereof, as its corporate name or otherwise in
connection with the operation of any business similar or related to the business
conducted by the Company.
5.27 RESTRICTIONS
ON BUSINESS ACTIVITIES
There is
no Contract or Governmental Order binding upon Ocean or, to the knowledge of
Ocean, threatened that has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Ocean or the
Company (either individually or in the aggregate), any acquisition of property
by Ocean or the Company (either individually or in the aggregate), providing of
any service by Ocean of Ocean or the hiring of employees or the conduct of
business by Ocean of Ocean(either individually or in the aggregate) as currently
conducted or proposed to be conducted.
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5.28 OUTSTANDING
INDEBTEDNESS
Section
5.28 of the Ocean Disclosure Schedule sets forth as of a date no earlier than
three (3) days prior to the date hereof (a) the amount of all indebtedness of
Ocean then outstanding and the interest rate applicable thereto, (b) any
Encumbrances which relate to such indebtedness, and (c) the name of the lender
or the other payee of each such indebtedness.
5.29 CLIENTS
AND CONTRACTORS
Section
5.29 of Ocean Disclosure Schedule contains a complete list of all the material
clients of Ocean which relate to the operations or business of Ocean and not to
the operations or business of Ocean’s subsidiaries. Section 5.29 of the
Disclosure Schedule contains a complete list of all material contractors and
subcontractors used by Ocean which relate to the operations or business of Ocean
and not to the operations or business of Ocean’s subsidiaries. To the knowledge
of Ocean, there are no facts or circumstances, including the consummation of the
transactions contemplated by this Agreement, that are likely to result in the
loss of any material client of the Company or a material change in the
relationship of Ocean with such a client.
5.30 VOTING
REQUIREMENTS
The
affirmative vote or consent of a majority of the outstanding shares of Ocean
West Common Stock is the only vote or consent of the holders of any class or
series of equity securities of the Company necessary to adopt this Agreement and
approve Exchange and the other transactions contemplated by this Agreement.
5.31 EMPLOYEE
STOCK PURCHASE PLAN
Ocean
does not have an Employee Stock Option Plan.
5.32 DISCLOSURE
No
representation or warranty by Ocean in this Agreement, nor in any certificate,
schedule or exhibit delivered or to be delivered pursuant to this Agreement, and
no statement in the Disclosure Schedule, contains or will contain any untrue
statement of material fact, or omits or will omit to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
6. COVENANTS
OF THE COMPANY
The
Company hereby covenants and agrees as follows:
6.1 NORMAL
COURSE
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From the
date hereof until the Closing, the Company will: (a) maintain its corporate
existence in good standing; (b) maintain the general character of its business;
(c) use all reasonable best efforts to maintain in effect all of its presently
existing insurance coverage (or substantially equivalent insurance coverage),
preserve its business organization substantially intact, keep the services of
its present principal employees and preserve its present business relationships
with its material suppliers and clients; (d) permit Ocean, its accountants, its
legal counsel and its other representatives full access to its management,
minute books and stock transfer records, other books and records, Contracts,
properties and operations at all reasonable times and upon reasonable notice;
and (e) in all respects conduct its business in the usual and ordinary manner
consistent with past practice and perform in all material respects all Contracts
with banks, clients, suppliers, employees and others.
6.2 CONDUCT
OF BUSINESS
Without
limiting the provisions of Section 6.1, from the date hereof until the Closing,
the Company will not, without the prior written consent of Ocean, which consent
shall not be unreasonably withheld:
(a) amend or
otherwise modify its Organizational Documents except to create necessary classes
of securities for the surviving corporation;
(b) issue or
sell or authorize for issuance or sale, or grant any options or make other
agreements of the type referred to in Section 4.3 with respect to, any shares of
its capital stock or Convertible Securities, or alter any term of any of its
outstanding securities or make any change in its outstanding shares of capital
stock, Convertible Securities or other ownership interests or its
capitalization, whether by reason of a reclassification, recapitalization, stock
split or combination, exchange or readjustment of shares, stock dividend or
otherwise;
(c) mortgage,
pledge or grant any security interest in any of its assets, except security
interests solely in tangible personal property granted pursuant to any purchase
money agreement, conditional sales contract or capital lease under which there
exists an aggregate future liability not in excess of $10,000 (which amount is
not more than the purchase price for such personal property and which security
interest does not extend to any other item or items of personal property);
(d) declare,
set aside, make or pay any dividend or other distribution to any
(e) stockholder
with respect to its capital stock;
(f) redeem,
purchase or otherwise acquire, directly or indirectly, any capital
stock;
(g) increase
the bonus, salary or other compensation of any of its employees who hold
management positions or any director or consultant except for increases in the
ordinary course of business, consistent with past practice;
(h) adopt or
(except as otherwise required by law) amend any employee benefit
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(i) plan or
severance plan or enter into any collective bargaining agreement;
(j) terminate
or modify any Contract, except for terminations of Contracts upon their
expiration during such period in accordance with their terms;
(k) incur or
assume any indebtedness for borrowed money or guarantee any obligation or the
net worth (either directly or through a “take-or-pay” or “keepwell” agreement)
of any Person in an aggregate amount in excess of $10,000, except for
endorsements of negotiable instruments for collection in the ordinary course of
business;
(l) discharge
or satisfy any Encumbrance other than those which are required to be discharged
or satisfied during such period in accordance with their original terms;
(m) pay any
material obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, except for any current liabilities, and the
current portion of any long term liabilities, shown on the Financial Statements
(or not required as of the date thereof to be shown thereon in accordance with
GAAP) or incurred in the ordinary course of business consistent with past
practice;
(n) sell,
transfer, lease to others or otherwise dispose of any of its properties or
assets having a fair market value in the aggregate in excess of $10,000, except
in the ordinary course of business consistent with past practice;
(o) cancel,
compromise or waive any material debt or claim;
(p) make any
loan or advance to any Person other than travel and other similar routine
advances in the ordinary course of business consistent with past practice, or
acquire any capital stock or other securities of any other corporation or any
ownership interest in any other business enterprise;
(q) make any
capital expenditure or capital addition or betterment in amounts which exceed
$10,000 in the aggregate, except as contemplated in capital budgets in effect on
the date of this Agreement;
(r) change
its method of accounting or the accounting principles or practices utilized in
the preparation of the Financial Statements, other than as required by GAAP;
(s) institute
or settle any litigation or any legal, administrative or arbitration action or
proceeding before any Governmental Authority relating to it or its property;
(t) except in
the ordinary course of business consistent with past practice, commit to provide
services for an indefinite period or a period of more than twelve months; or
(u) make any
tax election inconsistent with past practice or settle or compromise any
material Tax liability, except to discharge any Tax liabilities set forth in
Section 4.6 of the Disclosure Schedule.
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(v) enter
into any Contract that would have been required to be disclosed
(w) pursuant
to Section 4.16 if it had existed on the date hereof; or
(x) enter
into any commitment to do any of the foregoing.
6.3 FINANCIAL
COVENANTS
As a
condition to the obligations of Ocean hereunder:
The
Company shall deliver to Ocean true, correct and complete copies of the
following Company Financial Statements not later than two days prior to
Closing:
(a) Balance
sheets, statements of income, stockholders’ equity and cash flows of the
Company, audited by ▇▇▇▇ and Company, P.A. for the period ended December 31,
2004;
(b) Unaudited
balance sheets, statements of income, stockholders’ equity and cash flows of the
Company dated as of the most recent monthly end;
(c) Unaudited
pro-forma balance sheets reflecting the Surviving Corporation immediately
following the Closing of this Transaction; and
(d) Projected
monthly cash flow statements of the Surviving Company for a period of twelve
(12) months following the Closing.
The
Company Financial Statements shall show the following:
(i) As of
February 15, 2005 accounts payable not to exceed $150,000; and
(ii) Net sales
not less than $7,000 for the Company’s fiscal year ended December 31,
2004.
The
Company Financial Statements (i) shall have been prepared from the books and
records of the Company in accordance with GAAP, (ii) fully reflect all
liabilities and contingent liabilities of the Company required to be reflected
therein on such basis as at the date thereof, and (iii) fairly present in all
material respects the consolidated financial position of the Company as of the
dates of the balance sheets included in the Company Financial Statements and the
consolidated results of its operations and cash flows for the periods indicated
6.4 CERTAIN
FILINGS
The
Company agrees to cooperate with Ocean with respect to all filings with
regulatory authorities that are required to be made by the Ocean to carry out
the transactions contemplated by this Agreement, including the timely filing of
the Notice and FIRPTA certificate as set forth in Section 8.8, with the IRS
pursuant to Treasury Regulation section 1.897-2(h) (2) and the preparation and
filing of any proxy statement, information statement or other filings with the
SEC.
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6.5 CONSENTS
AND APPROVALS
The
Company shall use its reasonable best efforts to obtain as promptly as
practicable all consents, authorizations, approvals and waivers required in
connection with the consummation of the transactions contemplated by this
Agreement, including but not limited to the approval by its Board of Directors
and its shareholders to the Exchange.
6.6 BEST
EFFORTS TO SATISFY CONDITIONS
The
Company shall use its reasonable best efforts to cooperate with Ocean for
purposes of satisfying the conditions set forth in Sections 8 and 9 that are
within its control.
6.7 NOTIFICATION
OF CERTAIN MATTERS
From the
date hereof until the Closing, the Company shall promptly notify Ocean of (a)
the occurrence or non-occurrence of any fact or event of which the Company has
knowledge which would be reasonably likely (i) to cause any representation or
warranty of the Company contained in this Agreement to be untrue or inaccurate
in any material respect at any time from the date hereof to the Closing Date or
(ii) to cause any covenant, condition or agreement of the Company in this
Agreement not to be complied with or satisfied in any material respect and (b)
any failure of the Company to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; PROVIDED, HOWEVER, that no such notification shall affect the other
representations or warranties of the Company, or the right of Ocean to rely
thereon, or the conditions to the obligations of Ocean. The Company shall give
prompt notice to Ocean of any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement.
6.8 NO
SOLICITATION
The
Company, its Affiliates and their respective officers, directors, employees,
representatives and agents shall immediately terminate any discussions or
negotiations with any third party concerning an Acquisition Offer. The Company
and its Affiliates shall not, directly or indirectly, through any officer,
director, employee, stockholder, financial advisor, attorney, representative,
subsidiary or agent of such Person (i) take any action to solicit, initiate,
facilitate, continue or encourage any inquiries or proposals that constitute, or
could reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of shares
of capital stock or other securities (including by way of a tender offer) or
similar transaction involving the Company , (except with respect to the spin off
or sale thereof prior to the Closing) other than the transactions contemplated
by this Agreement (any of the foregoing inquiries or proposals being referred to
as an “ACQUISITION OFFER”), (ii) engage in discussions or negotiations (whether
such discussions or negotiations are initiated by the Company, such other Person
or otherwise) concerning, or provide any non-public information to any Person
relating to, any possible Acquisition offer, or (iii) agree to, enter into a
letter of intent or similar document or recommend any Acquisition
Offer.
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7. COVENANTS
OF OCEAN
Ocean,
hereby, covenants and agrees as follows:
7.1 CERTAIN
FILINGS
Ocean
agrees to make or cause to be made all filings with regulatory authorities that
are required to be made by Ocean or its Affiliates to carry out the transactions
contemplated by this Agreement, including but not limited to any proxy
statement, information statement or other filings with the SEC and the Notice
and FIRPTA certificate as set forth in Section 9.8 with the IRS pursuant to
Treasury Regulation section 1.897-2(h)(2).
7.2 NORMAL
COURSE
Except
with respect to the proposed spin off of its Subsidiaries, from the date hereof
until the Closing, Ocean will: (a) maintain its corporate existence in good
standing; (b) maintain the general character of its business; (c) use all
reasonable best efforts to maintain in effect all of its presently existing
insurance coverage (or substantially equivalent insurance coverage), preserve
its business organization substantially intact, keep the services of its present
principal employees and preserve its present business relationships with its
material suppliers and clients; (d) permit the Company, its accountants, its
legal counsel and its other representatives full access to its management,
minute books and stock transfer records, other books and records, Contracts,
properties and operations at all reasonable times and upon reasonable notice;
and (e) in all respects conduct its business in the usual and ordinary manner
consistent with past practice and perform in all material respects all Contracts
with banks, clients, suppliers, employees and others.
7.3 CONDUCT
OF BUSINESS
Without
limiting the provisions of Section 7.2, from the date hereof until the Closing,
Ocean will not, without the prior written consent of the Company, which consent
shall not be unreasonably withheld:
(a) amend or
otherwise modify its Organizational Documents except in accordance with the
terms of this agreement;
(b) issue or
sell or authorize for issuance or sale, or grant any options or make other
agreements with respect to, any shares of its capital stock or Convertible
Securities, or alter any term of any of its outstanding securities or make any
change in its outstanding shares of capital stock, Convertible Securities or
other ownership interests or its capitalization, whether by reason of a
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, stock dividend or otherwise;
-41-
(c) mortgage,
pledge or grant any security interest in any of its assets, except security
interests solely in tangible personal property granted pursuant to any purchase
money agreement, conditional sales contract or capital lease under which there
exists an aggregate future liability not in excess of $10,000 (which amount is
not more than the purchase price for such personal property and which security
interest does not extend to any other item or items of personal property);
(d) declare,
set aside, make or pay any dividend or other distribution to any
stockholder with respect to its capital stock;
(e) redeem,
purchase or otherwise acquire, directly or indirectly, any capital
stock;
(f) increase
the bonus, salary or other compensation of any of its employees who hold
management positions or any director or consultant, except for increases in the
ordinary course of business, consistent with past practice;
(g) adopt or
(except as otherwise required by law) amend any employee benefit
(h) plan or
severance plan or enter into any collective bargaining agreement;
(i) terminate
or modify any Contract, except for terminations of Contracts upon their
expiration during such period in accordance with their terms;
(j) incur or
assume any indebtedness for borrowed money or guarantee any obligation or the
net worth (either directly or through a “take-or-pay” or “keepwell” agreement)
of any Person in an aggregate amount in excess of $10,000, except for
endorsements of negotiable instruments for collection in the ordinary course of
business;
(k) discharge
or satisfy any Encumbrance other than those which are required to be discharged
or satisfied during such period in accordance with their original terms;
(l) pay any
material obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, except for any current liabilities, and the
current portion of any long term liabilities, shown on the Financial Statements
(or not required as of the date thereof to be shown thereon in accordance with
GAAP) or incurred in the ordinary course of business consistent with past
practice;
(m) cancel,
compromise or waive any material debt or claim;
(n) make any
loan or advance to any Person other than travel and other similar routine
advances in the ordinary course of business consistent with past practice, or
acquire any capital stock or other securities of any other corporation or any
ownership interest in any other business enterprise;
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(o) make any
capital expenditure or capital addition or betterment in amounts which exceed
$10,000 in the aggregate, except as contemplated in capital budgets in effect on
the date of this Agreement;
(p) change
its method of accounting or the accounting principles or practices utilized in
the preparation of the Financial Statements, other than as required by GAAP;
(q) institute
or settle any litigation or any legal, administrative or arbitration action or
proceeding before any Governmental Authority relating to it or its property;
(r) except in
the ordinary course of business consistent with past practice, commit to provide
services for an indefinite period or a period of more than twelve months;
(s) make any
tax election inconsistent with past practice or settle or compromise any
material Tax liability, except to discharge any Tax liabilities set forth in
Section 5.6 of the Disclosure Schedule;
(t) enter
into any Contract that would have been required to be disclosed pursuant to
Section 3.16 if it had existed on the date hereof; or
(u) enter
into any commitment to do any of the foregoing.
7.4 PREPARATION
OF THE INFORMATION STATEMENT
Within 7
days following the execution of this Agreement, Ocean shall prepare and file
with the SEC an Information Statement meeting the requirements of Regulation 14c
and Rule 14c-101 under the Exchange Act relating to (i) the adoption of this
Agreement and the approval of the Exchange and the other transactions
contemplated hereby; (ii) approval of the change of Ocean’s name to Info By
Phone, Inc.
(a) Ocean
shall use its best efforts to respond to all SEC comments with respect to the
Information Statement and to cause the Information Statement to be mailed to
Ocean’s stockholders at the earliest practicable date. Ocean shall promptly
notify Company of the receipt of any SEC comments or any request from the SEC
for amendments or supplements to the Information Statement and shall promptly
provide the Company with copies of all correspondence between it and its
representatives, on the one hand, and the SEC and its staff, on the other hand.
(b) Notwithstanding
the foregoing, prior to filing or mailing the Information Statement (or any
amendment or supplement thereto) or responding to any comments of the SEC with
respect thereto, Ocean (i) shall provide the Company with a reasonable
opportunity to review and comment on such document or response, (ii) shall
include in such document or response all comments reasonably proposed by
Company, and (iii) shall not file or mail such document or respond to the SEC
prior to receiving approval of Company, which approval shall not be unreasonably
withheld or delayed.
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(c) Ocean
shall ensure that the Information Statement does not contain an untrue statement
of material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statement made, under the circumstances under
which it is made, not misleading. If at any time prior to the Closing any event
or information should be discovered by the Company that should be set forth in
an amendment or a supplement to the Information Statement, the Company shall
promptly inform Ocean of such discovery.
(d) Ocean
shall use its reasonable best efforts to obtain the requisite approval of the
stockholders of Ocean, which approval shall be in accordance with the applicable
requirements of the NGCL and the Organizational Documents of the Ocean, to
enable the Exchange and the other transactions contemplated hereby to be
effective on the Closing Date (determined without regard to the condition to
closing in the first sentence of Section 9.8) by obtaining the written consent
of a majority of the stockholders of Ocean West Common Stock as promptly as
practicable after the date hereof, but in no event later than the Closing
Date.
7.5 INTENTIONALLY
DELETED
7.6 CONSENTS
AND APPROVALS
Ocean
shall use its reasonable best efforts to obtain as promptly as practicable all
consents, authorizations, approvals and waivers required in connection with the
consummation of the transactions contemplated by this Agreement, including but
not limited to the approval of its Board of Directors and its Stockholders to
the Exchange and to the Amendment of the Bylaws and to the amendment of the
Certificate of Incorporation of Ocean.
7.7 AMENDMENT
OF BY LAWS AND OF CERTIFICATE OF INCORPORATION
Prior to
the Closing, Ocean shall cause its By Laws and its Certificate of Incorporation
each to be amended as referenced in the Information Statement described in
Section 7.4 above, such documents to be appended to this Agreement prior to
Closing.
7.8 SPIN
OFF OR SALE OF SUBSIDIARIES
OR SALE OF ASSETS
Prior to
the Closing, Ocean shall spin off or sell all of the assets or stock of all
Subsidiaries or other holdings as well as all assets held by directly by the
Company on terms reasonably satisfactory to the Company, in transactions in
which the purchaser or transferee of such Subsidiaries shall indemnify and hold
harmless Ocean and the Surviving Corporation from any and all liabilities
arising out of the business or operations of such Subsidiaries and/or the
transaction transferring the ownership thereof to a third party including any
Taxes resulting from such transaction not covered by Ocean pursuant to Section
5.6.
7.9 BEST
EFFORTS TO SATISFY CONDITIONS
Ocean
shall use its reasonable best efforts to cooperate with the Company for purposes
of satisfying the conditions set forth in Sections 7 and 8 that are within its
control.
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7.10 INTERCOMPANY
PAYMENTS
All
outstanding liabilities of Ocean, including, but not limited to, loans, payables
and other amounts due to or from Ocean and its Affiliates as listed in Section
7.10 of the Ocean Disclosure Schedule, shall be paid in full, written off or
adjusted to zero balances at or prior to the Closing.
7.11 NOTIFICATION
OF CERTAIN MATTERS
From the
date hereof until the Closing, Ocean shall promptly notify the Company of (a)
the occurrence or non-occurrence of any fact or event of which Ocean has
knowledge which would be reasonably likely (i) to cause any representation or
warranty of Ocean contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Closing Date or (ii) to
cause any covenant, condition or agreement of Ocean in this Agreement not to be
complied with or satisfied in any material respect and (b) any failure of Ocean
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder in any material respect; PROVIDED, HOWEVER,
that no such notification shall affect the other representations or warranties
of the Company, or the right of Ocean to rely thereon, or the conditions to the
obligations of Ocean. The Company shall give prompt notice to Ocean of any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement.
7.12 NO
SOLICITATION
(a) Ocean,
its Affiliates and their respective officers, directors, employees,
representatives and agents shall immediately terminate any discussions or
negotiations with any third party concerning an Acquisition Offer. Ocean and its
Affiliates shall not, directly or indirectly, through any officer, director,
employee, stockholder, financial advisor, attorney, representative, subsidiary
or agent of such Person (i) take any action to solicit, initiate, facilitate,
continue or encourage any inquiries or proposals that constitute, or could
reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of shares
of capital stock or other securities (including by way of a tender offer) or
similar transaction involving Ocean , (except with respect to the spin off or
sale thereof prior to the Closing) other than the transactions contemplated by
this Agreement (any of the foregoing inquiries or proposals being referred to as
an “ACQUISITION OFFER”), (ii) engage in discussions or negotiations (whether
such discussions or negotiations are initiated by Ocean, such other Person or
otherwise) concerning, or provide any non-public information to any Person
relating to, any possible Acquisition Offer, or (iii) agree to, enter into a
letter of intent or similar document or recommend any Acquisition Offer;
PROVIDED, HOWEVER, that nothing contained in this Agreement shall prevent Ocean,
or its Board of Directors, to the extent such Board of Directors determines, in
good faith and on a reasonable basis by a majority vote (after consultation with
independent legal advisors), that such Board of Directors’ fiduciary duties
under applicable law require it to do so, from (A) furnishing non-public
information to, or entering into discussions or negotiations with, any Person in
connection with an unsolicited, bona fide, written Acquisition Offer by such
Person or recommending an unsolicited, bona fide, written Acquisition Offer by
such Person to the stockholders of Ocean, if and only to the extent that (1) the
Board of Directors of Ocean determines in good faith and on a reasonable basis
by majority vote (after consultation with independent financial and legal
advisors) that such Acquisition Offer is reasonably capable of being completed
on the terms proposed and would, if consummated, result in a transaction more
favorable to Ocean’s stockholders from a financial point of view than the
Exchange and the other transactions contemplated by this Agreement (any such
more favorable Acquisition Proposal being referred to in this Agreement as a
“SUPERIOR PROPOSAL”) and the Board of Directors of Ocean determines in good
faith and on a reasonable basis by majority vote (after consultation with
independent legal advisors) that such action is necessary for such Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law and (2) prior to furnishing such non-public information to, or entering into
discussions or negotiations with, such Person, (x) such Board of Directors
receives form such Person an executed confidentiality agreement, (y) such
non-public information has been previously delivered to Ocean, and (z) Ocean
advises the Company in writing of such disclosure or discussions or
negotiations, including the Person to whom disclosed or with whom discussions or
negotiations will occur; or (B) complying with Rules 14d-9 and 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Offer. Ocean shall use its
best efforts to ensure that the officers, directors, and Affiliates of Ocean and
its subsidiaries and any investment banker or other financial advisor or
representative retained by Ocean or any of its subsidiaries are aware of the
restrictions described in this Section 7.12 Without limiting the foregoing, it
is understood that any violations of the restrictions set forth in this Section
7.12 by any officer, director, employee, financial advisor, attorney,
representative, subsidiary, agent or Affiliate of the Company, when acting on
behalf of Ocean or any of its subsidiaries, shall be deemed to be a breach of
this Section 7.12 by Ocean.
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(b) Ocean
shall notify the Company immediately after receipt by Ocean (or its advisors) of
any Acquisition Offer or any request for non-public information in connection
with an Acquisition Offer or for access to the properties, books or records of
Ocean or any of its subsidiaries by any Person that informs such party that it
is considering making, or has made, an Acquisition Offer. Such notice shall be
made orally and in writing and shall indicate in reasonable detail the identity
of the Person and the terms and conditions of such proposal, inquiry or contact.
Ocean shall continue to keep the Company informed, on a current basis, of the
status of any such discussions or negotiations and the terms being discussed or
negotiated.
(c) In
addition to the foregoing, Ocean shall not accept or enter into any agreement,
letter of intent or similar document concerning an Acquisition Offer for a
period of not less than seventy-two (72) hours after Ocean’s receipt of a notice
of the material terms of such Acquisition Offer and the identity of the Person
making such Acquisition Offer, and during such seventy-two (72) hour period
Ocean shall negotiate with the Company in good faith any proposal submitted to
Ocean by the Company which addresses such Acquisition Offer.
7.13 TERMINATION
OF STOCK OPTIONS
Ocean
shall obtain the written consent or agreement of each holder of options to
purchase capital stock of Ocean. Each such holder shall agree that all such
stock options shall terminate as of the Closing Date at no cost or expense to
Ocean, and that Ocean shall thereafter have no further obligation or liability
whatsoever to such holder in respect of any such options.
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8. CONDITIONS
TO OBLIGATIONS OF OCEAN AND OF THE COMPANY
The
obligation of Ocean and the Company under this Agreement to consummate the
Exchange each shall be subject to the satisfaction on or before the Closing
Date, of each of the following conditions, any of which may be waived jointly by
the parties;
8.1 CLOSING
FUNDING.
In
conjunction with the Closing the Company shall prepare a Company Offered Private
Placement Memorandum for the sale of no less than 2,500,000 shares and no more
than 6,666,667 shares at a price of $0.30 per share (for a minimum raise of
$750,000 and a maximum raise of $2,000,000). At least $750,000, less applicable
offering expenses, shall be placed in escrow on or before the Closing with such
funds being released as a condition of Closing and the offering closed at such
time.
8.2 RETENTION
OF INVESTMENT ADVISORS AND INVESTOR RELATIONS
The
Surviving Corporation shall have entered into an agreement with Vertical Capital
Partners, Inc. (“VCP”) pursuant to which VCP will have a right of first refusal
to act as the exclusive Placement Agent to the Surviving Corporation for one
year on terms to be agreed by such bankers and the parties hereto.
8.3 COMPLETION
OF LEGAL DOCUMENTATION
The
parties shall be satisfied that all legal documentation necessary or advisable
for completion of the transactions contemplated by this Agreement have been
concluded.
8.4 CONVERTIBLE
SECURITIES
The
Surviving Corporation shall have no convertible debt or preferred stock
outstanding at closing.
9. CONDITIONS
TO OBLIGATIONS OF OCEAN
In
addition to the conditions set forth in Section 8 hereof, the obligations of
Ocean under this Agreement to consummate the Exchange shall be subject to the
satisfaction, on or before the Closing Date, of each of the following
conditions, any of which may be waived by Ocean in its sole discretion:
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9.1 REPRESENTATIONS
AND WARRANTIES
OF THE COMPANY
The
representations and warranties of the Company contained in this Agreement or in
the Company Disclosure Schedule or any certificate delivered pursuant hereto
which are not qualified as to materiality shall be complete and correct in all
material respects as of the date when made, shall be deemed repeated at and as
of the Closing Date as if made on the Closing Date and, shall then be complete
and correct in all material respects (except that representations made as of a
specific date shall be required to be true as of such date only). The
representations and warranties of the Company contained in this Agreement or in
the Company Disclosure Schedule or any certificate delivered pursuant hereto
which are qualified as to materiality shall be complete and correct as of the
date when made, shall be deemed repeated at and as of the Closing Date as if
made on the Closing Date and shall then be complete and correct in all respects
(except that representations made as of a specific date shall be required to be
true as of such date only).
9.2 PERFORMANCE
OF COVENANTS
The
Company shall have performed and complied in all material respects with each
covenant, agreement and condition required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
9.3 LACK
OF ADVERSE CHANGE
There
shall not have occurred any event or circumstance which, individually or in the
aggregate, has had or may result in a Material Adverse Effect, including the
loss of significant business from any of clients of the Company or the loss of
any significant clients of the Company.
9.4 UPDATE
CERTIFICATE
Ocean
shall have received favorable certificates, dated the Closing Date, signed by
the president and chief executive officer of the Company as to the matters set
forth in Sections 8.1, 8.2 and 8.3.
9.5 NO
PROCEEDING;
NO LITIGATION
No order
of any Governmental Authority shall be in effect that restrains or prohibits any
transaction contemplated hereby or that would limit or affect the Surviving
Corporation’s ownership or operation of the business of the Company; no
Proceeding by any Governmental Authority or any other Person shall be pending or
threatened against Ocean, or the Company that challenges the validity or
legality, or that seeks to restrain the consummation, of the transactions
contemplated hereby or that seeks to limit or otherwise affect Ocean, or the
Company’s right to own or operate the business of the Company; and no written
advice shall have been received by Ocean, or the Company or by any of their
respective counsel from any Governmental Authority, and remain in effect,
stating that a Proceeding will, if the Exchange is consummated or sought to be
consummated, be filed seeking to invalidate or restrain the Exchange or limit or
otherwise affect Ocean’s ownership or operation of the business of the Company.
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9.6 APPROVALS
AND CONSENTS
All
material consents, waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made, by the Company for the
authorization, execution and delivery of this Agreement, the consummation by it
of the transactions contemplated hereby and the continuation in full force and
effect of any and all material rights, documents, agreements or instruments of
the Company shall have been obtained and made by the Company, except where the
failure to receive such consents, waivers, approvals, authorizations or orders
would not reasonably be expected to have a Material Adverse Effect.
9.7 STOCKHOLDER
APPROVAL
This
Agreement shall have been duly executed at or prior to the Effective Time by the
holders of all issued and outstanding Common Stock of the Company.
9.8 FIRPTA
CERTIFICATE
Ocean
shall have received from the Company an executed copy of a certification and
notice, meeting the requirements of Sections 897 and 1445 of the Code and the
treasury regulations promulgated thereunder, substantially in the form attached
hereto as EXHIBIT 9.8, dated as of the Closing Date, that the Company has not
been a United States real property holding corporation at any time during the
five year period prior to the Closing Date, and the stock of the Company is not
a United States real property interest.
9.9 LEGAL
OPINION
Ocean
shall have received the legal opinion ▇▇▇▇ ▇▇▇▇▇▇ of the law firm
________________, counsel to the Company, as to matters reasonably specified by
legal counsel for Ocean.
9.10 COMPLETION
OF DUE DILIGENCE
Ocean and
its legal counsel shall be satisfied with the completion of due
diligence.
10. CONDITIONS
TO OBLIGATIONS OF THE COMPANY
In
addition to the conditions set forth in Section 8 hereof, the obligations of the
Company under this Agreement to consummate the Exchange shall be subject to the
satisfaction, on or before the Closing Date, of each of the following
conditions, any of which may be waived by the Company in its sole discretion:
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10.1 REPRESENTATIONS
AND WARRANTIES
OF OCEAN
The
representations and warranties of Ocean contained in this Agreement or in the
Ocean Disclosure Schedule or any certificate delivered pursuant hereto which are
not qualified as to materiality shall be complete and correct as of the date
when made in all material respects, shall be deemed repeated at and as of the
Closing Date as if made on the Closing Date and, shall then be complete and
correct in all material respects (except that representations made as of a
specific date shall be required to be true as of such date only). The
representations and warranties of Ocean contained in this Agreement or in the
Ocean Disclosure Schedule or any certificate delivered pursuant hereto which are
qualified as to materiality shall be complete and correct as of the date when
made, shall be deemed repeated at and as of the Closing Date as if made on the
Closing Date and shall then be complete and correct in all respects (except that
representations made as of a specific date shall be required to be true as of
such date only).
10.2 PERFORMANCE
OF COVENANTS
Ocean
shall have performed and complied in all material respects with each covenant,
agreement and condition required by this Agreement to be performed or complied
with by it prior to or on the Closing Date.
10.3 LACK
OF ADVERSE CHANGE
There
shall not have occurred any event or circumstance which, individually or in the
aggregate, has had or may result in a Material Adverse Effect, including the
loss of significant business from any of clients of Ocean or the loss of any
significant clients of Ocean .
10.4 UPDATE
CERTIFICATE
The
Company shall have received favorable certificates, dated the Closing Date,
signed by the president and chief executive officer of Ocean as to the matters
reasonably requested by the Company.
10.5 NO
PROCEEDING; NO LITIGATION
No order
of any Governmental Authority shall be in effect that restrains or prohibits any
transaction contemplated hereby or that would limit or affect the Surviving
Corporation’s ownership or operation of the business of Ocean; no Proceeding by
any Governmental Authority or any other Person shall be pending or threatened
against Ocean, that challenges the validity or legality, or that seeks to
restrain the consummation, of the transactions contemplated hereby or that seeks
to limit or otherwise affect Ocean’s right to own or operate the business of
Ocean; and no written advice shall have been received by Ocean or by its counsel
from any Governmental Authority, and remain in effect, stating that a Proceeding
will, if the Exchange is consummated or sought to be consummated, be filed
seeking to invalidate or restrain the Exchange or limit or otherwise affect the
Company’s ownership or operation of the business of Ocean. There shall exist no
litigation against Ocean and none shall have been threatened
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All
material consents, waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made, by Ocean for the authorization,
execution and delivery of this Agreement, the consummation by it of the
transactions contemplated hereby and the continuation in full force and effect
of any and all material rights, documents, agreements or instruments of Ocean
shall have been obtained and made by Ocean, except where the failure to receive
such consents, waivers, approvals, authorizations or orders would not reasonably
be expected to have a Material Adverse Effect.
10.7 BOARD
APPROVAL
This
Agreement shall have been duly adopted at or prior to the Effective Time by the
requisite vote of the Board of Directors of Ocean.
10.8 RESIGNATIONS
Company
shall have received form the Ocean the resignations of all officers and
directors of the Ocean from their positions with the Ocean
10.9 FIRPTA
CERTIFICATE
The
Company shall have received from Ocean an executed copy of a certification and
notice, meeting the requirements of Sections 897 and 1445 of the Code and the
treasury regulations promulgated thereunder, substantially in the form attached
hereto as EXHIBIT 9.8, dated as of the Closing Date, that Ocean has not been a
United States real property holding corporation at any time during the five year
period prior to the Closing Date, and the stock of the Company is not a United
States real property interest.
10.10 LIABILITIES
AND PREFERRED STOCK.
At the
Closing, Ocean shall have no liabilities and issued and outstanding Series A
Preferred shall have been converted into Common Stock in accordance with its
terms.
10.11 NO
PROCEEDING
No order
of any Governmental Authority shall be in effect that restrains or prohibits the
Exchange; and no written advice shall have been received by Ocean, or the
Company or by any of their respective counsel from any Governmental Authority,
and remain in effect, stating that a Proceeding will, if the Exchange is
consummated or sought to be consummated, be filed seeking to invalidate or
restrain the Exchange.
10.12 SPIN
OFF OR DIVESTITURE OF SUBSIDARIES.
Prior to
the Closing, Ocean shall spin off or sell, or enter agreements to Spin off or
sell, any Subsidiary (or its assets) or on terms reasonably satisfactory to the
Company, in a transaction in which the purchaser or transferee of such
Subsidiaries shall indemnify and hold harmless Ocean and the Surviving
Corporation from any and all liabilities arising out of the business or
operations of such Subsidiaries and/or the transaction transferring the
ownership thereof to a third party.
-51-
In
addition, Ocean shall provide Company with complete details of any such spin-off
or divestiture and shall represent that such spin off or divestiture results in
no Tax liability to Ocean or that if it does result in a Tax liability that a
provision for such liability shall be maintained by Ocean as set forth in
Section 5.6 of this Agreement.
10.13 CHANGE
OF NAME
Effective
at the Closing the name of Ocean shall be changed to AskMeNow, Inc. which should
be effective upon the effective date of the charter amendment referred to in the
Information Statement described in Section 7.4 above.
10.14 LEGAL
OPINION
The
Company shall have received the legal opinion of ▇▇▇▇ ▇▇▇▇▇▇, counsel to Ocean,
as to matters reasonably specified by legal counsel for the
Company.
10.15 completion
of due diligence
The
Company and its legal counsel shall be satisfied with the completion of due
diligence.
11. TERMINATION
11.1 TERMINATION
OF AGREEMENT
This
Agreement may be terminated:
(a) At any
time prior to the Effective Time, by mutual consent of Ocean and the
Company.
(b) By Ocean
or the Company if the Effective Time shall not have occurred by May 30, 2005,
unless such failure shall be due to a material breach of any representation or
warranty, or the nonfulfillment in a material respect, and failure to cure such
nonfulfillment within five (5) Business Days following receipt by such party of
notice of such breach or nonfulfillment, of any covenant or agreement contained
herein on the part of the party or parties seeking to terminate this Agreement.
(c) By Ocean
or the Company alone, by means of a written notice to the other, if there has
been a material misrepresentation on the part of the other, or a material breach
on the part of the other of any of its warranties, covenants or agreements set
forth herein, or a material failure on the part of the other to comply with any
of its other obligations hereunder. No such termination shall relieve any party
of the consequences of any such misrepresentation, breach or failure.
(d) By either
Ocean or the Company if a Governmental Authority shall have issued a
nonappealable final order, decree or ruling or taken any other nonappealable
final action, in any case, having the effect of permanently restraining,
enjoining or otherwise prohibiting the Exchange.
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(e) By either
Ocean or the Company if the requisite vote of the stockholders of the Company or
Ocean, in favor of the Exchange shall not have been obtained; PROVIDED, THAT,
the right to terminate this Agreement under this Section 10(e) shall not be
available to the Company or Ocean, as the case may be where the failure to
obtain such stockholder approval shall have been caused by the action or failure
to act of the Company or Ocean, as the case may be and such action or failure to
act constitutes a material breach by the Company or Ocean of this Agreement.
(f) By Ocean
if it proposes to accept a Superior Proposal; (as defined in Section 7.12
above)
(g) By Ocean
if the Board of Directors of Ocean shall have withdrawn or modified its approval
or recommendation of the Exchange or the adoption of this Agreement.
11.2 EFFECT
OF TERMINATION
In the
event of termination of this Agreement as provided in Section 11.1, this
Agreement shall forthwith become void, the Exchange shall be abandoned and there
shall be no liability or obligation on the part of Ocean or the Company or their
respective officers, directors, stockholders or Affiliates, except to the extent
that such termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or in the Disclosure Schedule (in which case the non-breaching party may seek
any and all remedies available to it under applicable law); PROVIDED, THAT, the
provision of Sections 13.1, 13.2, 13.3, 13.4 and 13.11 and this Section 11.2
shall remain in full force and effect and survive any termination of this
Agreement.
12. INDEMNIFICATION
OF DIRECTORS, OFFICERS AND STOCKHOLDERS
12.1 RIGHT
TO INDEMNIFICATION
The
Bylaws and Certificate of Incorporation of the Surviving Corporation shall
contain provisions with respect to indemnification of present and former
directors, officers and employees of the Company and Ocean to the maximum degree
permitted by the laws of the State of Delaware, which provisions shall not be
amended, repealed or otherwise modified for a period of three (3) years from the
Effective Time in any manner that would adversely affect the rights thereunder
as of the Effective Time of individuals who at the Effective Time are present or
former directors, officers or employees of the Company, unless such modification
is required after the Effective Time by applicable law.
12.2 INSURANCE
For a
period of three (3) years after the Effective Time, the Surviving Corporation
shall use commercially reasonable efforts to cause to be maintained in effect
directors and officers liability insurance covering those persons who are on the
date hereof covered by directors and officers liability insurance policies
maintained by the Company or by Ocean on terms substantially similar to those
applicable under such current policies with respect to claims arising from and
related to facts or events which occurred at or before the Effective Time.
Notwithstanding the foregoing, Ocean may substitute therefore policies of
substantially the same coverage containing terms and conditions which are no
less advantageous, in any material respect, to the Indemnified Parties.
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12.3 SUCCESSORS
In the
event Ocean, the Surviving Corporation or any successor to Ocean or the
Surviving Corporation (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all of its
properties or assets to any Person, then, and in each case, proper provision
shall be made so that the successors of the Ocean or the Surviving Corporation
honor the obligations of the Ocean and the Surviving Corporation set forth in
this Section 11.
12.4 SURVIVAL
The
provisions of this Section 12 shall survive the Closing and expressly are
intended to benefit each director, officer or employee of the Company
contemplated by this Section 12.
13. GENERAL
PROVISIONS
13.1 EXPENSES
Except as
otherwise expressly provided in this Agreement, each party to this Agreement
will bear its respective expenses incurred in connection with the preparation,
execution and performance of this Agreement, including all fees and expenses of
agents, representatives, counsel and accountants.
13.2 PUBLIC
ANNOUNCEMENTS
Any
public announcement or similar publicity with respect to this Agreement, the
Closing or the transactions contemplated hereby will be issued at such time and
in such manner as Ocean and the Company agree in writing and shall be made in
accordance with Regulation FD promulgated by the SEC. The Company and Ocean will
in good faith consult with each other concerning the means by which the
Company’s employees, clients and suppliers and others having dealings with the
Company will be informed of this Agreement, the Closing and the transactions
contemplated hereby, and representatives of Ocean may at its option be present
for any such communication.
13.3 NOTICES
All
notices, consents, waivers, and other communications under this Agreement must
be in writing and will be deemed to have been duly given when (a) delivered by
hand (with written confirmation of receipt), (b) sent by fax (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and fax numbers set forth below (or to such
other address, person’s attention or fax number as a party may designate by
notice to the other parties given in accordance with this Section
13.3):
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If to
Ocean:
Ocean
West Holding Corporation
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Director
▇▇▇▇▇
▇▇▇▇▇▇, CFO
With
copies to:
▇▇▇▇▇▇ ▇.
▇▇▇▇▇-▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Tel (▇▇▇)
▇▇▇-▇▇▇▇
Fax (▇▇▇)
▇▇▇-▇▇▇▇
If to the
Company:
Info By
Phone, Inc.
▇▇ ▇▇▇
▇▇-▇▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇, President
With a
copy to:
▇▇▇▇▇▇
& ▇▇▇▇ LLP
Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
13.4 JURISDICTION;
SERVICE OF PROCESS
Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the parties in the
courts of the State of New York, County of New York or the United States
District Court for the Southern District of New York, and each of the
parties consent to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Service of process or any other papers in any such action or
procedure may be made by registered or certified mail, return receipt requested,
pursuant to the provisions of Section 12.3.
13.5 FURTHER
ASSURANCES
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The
parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
13.6 WAIVER
Neither
the failure nor any delay by any party in exercising any right, power, or
privilege under this Agreement or the documents referred to in this Agreement
will operate as a waiver of such right, power or privilege.
13.7 ENTIRE
AGREEMENT AND MODIFICATION
This
Agreement supersedes all prior agreements between the parties with respect to
its subject matter (including any correspondence, written and oral among Ocean,
and the Company and constitutes (along with the documents referred to in this
Agreement) the entire agreement among the parties with respect to its subject
matter. This Agreement may not be amended, nor may any provision hereof or
default hereunder be waived, except by a written agreement executed by the party
to be charged with the amendment or waiver.
13.8 ASSIGNMENTS,
SUCCESSORS, AND NO THIRD-PARTY RIGHTS
No party
may assign any of its rights under this Agreement without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement and the Persons contemplated by Article 11 any legal or
equitable right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement.
13.9 SEVERABILITY
If any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part will remain in full force and effect to the extent
not held invalid or unenforceable.
13.10 SECTION
HEADINGS, CONSTRUCTION
The
headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. In this Agreement (i) words
denoting the singular include the plural and vice versa, (ii) “it” or “its” or
words denoting any gender include all genders, (iii) the word “including” shall
mean “including without limitation,” whether or not expressed, (iv) any
reference to a law shall mean the statute and any rules and regulations
thereunder in force as of the date of this Agreement or the Closing Date, as
applicable, unless otherwise expressly provided, (v) any reference herein to a
Section, Article, Schedule or Exhibit refers to a Section or Article of or a
Schedule or Exhibit to this Agreement, unless otherwise stated, and (vi) when
calculating the period of time within or following which any act is to be done
or steps taken, the date which is the reference day in calculating such period
shall be excluded and if the last day of such period is not a Business Day, then
the period shall end on the next day which is a Business Day. Each party
acknowledges that it has been advised and represented by counsel in the
negotiation, execution and delivery of this Agreement and accordingly agrees
that if an ambiguity exists with respect to any provision of this Agreement,
such provision shall not be construed against any party because such party or
its representatives drafted such provision.
-56-
13.11 GOVERNING
LAW
This
Agreement will be governed by the internal laws of the State of New York without
regard to principles of conflict of laws.
13.12 COUNTERPARTS
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-57-
IN
WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
Director
By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇▇▇▇▇▇
Title:
CFO
INFO BY
PHONE, INC.
By:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
Title:
Chief Executive Officer
[The
Following page is the Stockholder signature page]
-58-
STOCKHOLDER
SIGNATURE PAGE
IN
WITNESS WHEREOF, each Stockholder has executed and delivered this Agreement as
of the date first written above.
[The shareholders' signatures have been omitted from this
conformed copy and are on file with the Company.]
______________________________
Name:
-59-
TABLE OF
CONTENTS
|
Page | |||
| 1. |
DEFINITIONS |
2 | |
| 2. |
SECURITIES
EXCHANGE AND REORGANIZATION |
4 | |
|
2.1 |
EXCHANGE
AND CANCELLATION OF SECURITIES |
4 | |
|
2.2 |
INSTRUMENTS
OF TRANSFER |
5 | |
|
2.3 |
CLOSING |
5 | |
|
2.4 |
TAX
FREE REORGANIZATION |
5 | |
| 3. |
POST
CLOSING COVENANTS. |
5 | |
|
3.1 |
NO
REVERSE SPLIT FOR ONE YEAR |
.5 | |
|
3.2 |
RESTRICTION
ON FUTURE SHARE ISSUANCE |
.6 | |
|
3.3 |
OCEAN
AUDITS; REPORTS TO SECURITIES AND EXCHANGE COMMISSION |
.6 | |
|
3.4 |
STOCK
OPTION PLANS |
.6 | |
|
3.5 |
EMPLOYMENT
CONTRACTS AND STOCK GRANTS |
.6 | |
|
3.6 |
REGISTRATION
RIGHTS |
.7 | |
|
3.7 |
FLOOR
ON SHARE PRICE FOR FUTURE OFFERINGS |
.7 | |
| 4. |
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY…………………….. |
7 | |
|
4.1 |
ORGANIZATION
AND GOOD STANDING |
7 | |
|
4.2 |
AUTHORITY;
NO CONFLICT |
7 | |
|
4.3 |
CAPITALIZATION |
8 | |
|
4.4 |
FINANCIAL
STATEMENTS |
8 | |
|
4.5 |
NO
UNDISCLOSED LIABILITIES |
9 | |
|
4.6 |
TAXES |
9 | |
|
4.7 |
ACCOUNTS
RECEIVABLE; ACCOUNTS PAYABLE |
10 | |
|
4.8 |
NO
MATERIAL ADVERSE CHANGE |
11 | |
|
4.9 |
BOOKS
AND RECORDS |
11 | |
|
4.10 |
TITLE
TO PROPERTIES; ENCUMBRANCES |
11 | |
|
4.11 |
CONDITION
AND SUFFICIENCY OF ASSETS |
11 | |
|
4.12 |
EMPLOYEE
BENEFITS |
12 | |
|
4.13 |
COMPLIANCE
WITH LAWS; GOVERNMENTAL AUTHORIZATIONS |
12 | |
|
4.14 |
LEGAL
PROCEEDINGS |
12 | |
|
4.15 |
ABSENCE
OF CERTAIN CHANGES AND EVENTS |
13 | |
|
4.16 |
CONTRACTS;
NO DEFAULTS |
14 | |
|
4.17 |
INSURANCE |
16 | |
|
4.18 |
ENVIRONMENTAL
MATTERS |
16 | |
|
4.19 |
EMPLOYEES |
17 | |
|
4.20 |
LABOR
RELATIONS |
17 | |
|
4.21 |
INTELLECTUAL
PROPERTY |
19 | |
|
4.22 |
ABSENCE
OF CERTAIN PAYMENTS |
20 | |
|
4.23 |
RELATIONSHIPS
WITH RELATED PERSONS |
20 | |
|
4.24 |
BROKERS
OR FINDERS |
21 | |
|
4.25 |
DEPOSIT
ACCOUNTS |
21 | |
|
4.26 |
CONDUCT
OF BUSINESS |
21 | |
|
4.27 |
RESTRICTIONS
ON BUSINESS ACTIVITIES |
22 | |
|
4.28 |
OUTSTANDING
INDEBTEDNESS |
22 | |
|
4.29 |
VOTING
REQUIREMENTS |
22 | |
|
4.30 |
DISCLOSURE |
22 | |
-60-
| 5. |
REPRESENTATIONS
AND WARRANTIES OF OCEAN |
22 | |
|
5.1 |
ORGANIZATION
AND GOOD STANDING |
22 | |
|
5.2 |
AUTHORITY;
NO CONFLICT |
23 | |
|
5.3 |
CAPITALIZATION |
24 | |
|
5.3A
|
FINANCIAL
STATEMENTS |
24 | |
|
5.4 |
SEC
DOCUMENTS; FINANCIAL STATEMENTS |
25 | |
|
5.5 |
NO
UNDISCLOSED LIABILITIES |
25 | |
|
5.6 |
TAXES |
26 | |
|
5.7 |
ACCOUNTS
RECEIVABLE; ACCOUNTS PAYABLE |
26 | |
|
5.8 |
NO
MATERIAL ADVERSE CHANGE |
27 | |
|
5.9 |
BOOKS
AND RECORDS |
27 | |
|
5.10 |
TITLE
TO PROPERTIES; ENCUMBRANCES |
27 | |
|
5.11 |
CONDITION
AND SUFFICIENCY OF ASSETS |
28 | |
|
5.12 |
EMPLOYEE
BENEFITS |
28 | |
|
5.13 |
COMPLIANCE
WITH LAWS; GOVERNMENTAL AUTHORIZATIONS |
28 | |
|
5.14 |
LEGAL
PROCEEDINGS AGAINST OCEAN |
28 | |
|
5.15 |
ABSENCE
OF CERTAIN CHANGES AND EVENTS |
29 | |
|
5.16 |
CONTRACTS
OF OCEAN; NO DEFAULTS |
30 | |
|
5.17 |
INSURANCE |
32 | |
|
5.18 |
ENVIRONMENTAL
MATTERS |
32 | |
|
5.19 |
EMPLOYEES |
32 | |
|
5.20 |
LABOR
RELATIONS |
33 | |
|
5.21 |
INTELLECTUAL
PROPERTY |
34 | |
|
5.22 |
ABSENCE
OF CERTAIN PAYMENTS |
35 | |
|
5.23 |
RELATIONSHIPS
WITH RELATED PERSONS |
35 | |
|
5.24 |
BROKERS
OR FINDERS |
36 | |
|
5.25 |
DEPOSIT
ACCOUNTS |
36 | |
|
5.26 |
CONDUCT
OF BUSINESS; USE OF NAME |
36 | |
|
5.27 |
RESTRICTIONS
ON BUSINESS ACTIVITIES |
36 | |
|
5.28 |
OUTSTANDING
INDEBTEDNESS |
36 | |
|
5.29 |
CLIENTS
AND CONTRACTORS |
37 | |
|
5.30 |
VOTING
REQUIREMENTS |
37 | |
|
5.31 |
EMPLOYEE
STOCK PURCHASE PLAN |
37 | |
|
5.32 |
DISCLOSURE |
37 | |
| 6. |
COVENANTS
OF THE COMPANY |
37 | |
|
6.1 |
NORMAL
COURSE |
37 | |
|
6.2 |
CONDUCT
OF BUSINESS |
38 | |
|
6.3 |
FINANCIAL
COVENANTS |
40 | |
|
6.4 |
CERTAIN
FILINGS |
40 | |
|
6.5 |
CONSENTS
AND APPROVALS |
40 | |
|
6.6 |
BEST
EFFORTS TO SATISFY CONDITIONS |
41 | |
|
6.7 |
NOTIFICATION
OF CERTAIN MATTERS |
41 | |
|
6.8 |
NO
SOLICITATION |
41 | |
-61-
| 7. |
COVENANTS
OF OCEAN |
41 | |
|
7.1 |
CERTAIN
FILINGS |
41 | |
|
7.2 |
NORMAL
COURSE |
42 | |
|
7.3 |
CONDUCT
OF BUSINESS |
42 | |
|
7.4 |
PREPARATION
OF THE INFORMATION STATEMENT |
44 | |
|
7.5 |
INTENTIONALLY
DELETED |
45 | |
|
7.6 |
CONSENTS
AND APPROVALS |
45 | |
|
7.7 |
AMENDMENT
OF BY LAWS AND OF CERTIFICATE OF INCORPORATION |
45 | |
|
7.8 |
SPIN
OFF OR SALE OF SUBSIDIARIES OR SALE OF ASSETS |
45 | |
|
7.9 |
BEST
EFFORTS TO SATISFY CONDITIONS |
45 | |
|
7.10 |
INTERCOMPANY
PAYMENTS |
45 | |
|
7.11 |
NOTIFICATION
OF CERTAIN MATTERS |
45 | |
|
7.12 |
NO
SOLICITATION |
46 | |
|
7.13 |
TERMINATION
OF STOCK OPTIONS |
47 | |
| 8. |
CONDITIONS
TO OBLIGATIONS OF OCEAN AND OF THE COMPANY |
47 | |
|
8.1 |
CLOSING
FUNDING |
48 | |
|
8.2 |
RETENTION
OF INVESTMENT ADVISORS AND INVESTOR RELATIONS |
48 | |
|
8.3 |
COMPLETION
OF LEGAL DOCUMENTATION |
48 | |
|
8.4 |
CONVERTIBLE
SESCURITIES |
48 | |
| 9. |
CONDITIONS
TO OBLIGATIONS OF OCEAN |
48 | |
|
9.1 |
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY |
49 | |
|
9.2 |
PERFORMANCE
OF COVENANTS |
49 | |
|
9.3 |
LACK
OF ADVERSE CHANGE |
49 | |
|
9.4 |
UPDATE
CERTIFICATE |
49 | |
|
9.5 |
NO
PROCEEDING; NO LITIGATION |
49 | |
|
9.6 |
APPROVALS
AND CONSENTS |
50 | |
|
9.7 |
STOCKHOLDER
APPROVAL |
50 | |
|
9.8 |
FIRPTA
CERTIFICATE |
50 | |
|
9.9 |
LEGAL
OPINION |
50 | |
|
9.10 |
COMPLETION
OF DUE DILIGENCE |
50 | |
| 10. |
CONDITIONS
TO OBLIGATIONS OF THE COMPANY |
50 | |
|
10.1 |
REPRESENTATIONS
AND WARRANTIES OF OCEAN |
51 | |
|
10.2 |
PERFORMANCE
OF COVENANTS |
51 | |
|
10.3 |
LACK
OF ADVERSE CHANGE |
51 | |
|
10.4 |
UPDATE
CERTIFICATE |
51 | |
|
10.5 |
NO
PROCEEDING; NO LITIGATION |
51 | |
|
10.6 |
APPROVALS
AND CONSENTS |
51 | |
|
10.7 |
BOARD
APPROVAL |
52 | |
|
10.8 |
RESIGNATIONS |
52 | |
|
10.9 |
FIRPTA
CERTIFICATE |
52 | |
|
10.10
|
LIABILITIES
AND PREFERRED STOCK |
52 | |
|
10.11
|
NO
PROCEEDING |
52 | |
|
10.12
|
SPIN
OFF OR DIVESTITURE OF SUBSIDARIES |
52 | |
|
10.13
|
CHANGE
OF NAME |
53 | |
|
10.14
|
LEGAL
OPINION |
53 | |
|
10.15 |
COMPLETION
OF DUE DILIGENCE |
53 | |
-62-
| 11. |
TERMINATION |
53 | |
|
11.1 |
TERMINATION
OF AGREEMENT |
53 | |
|
11.2 |
EFFECT
OF TERMINATION |
54 | |
| 12. |
INDEMNIFICATION
OF DIRECTORS, OFFICERS AND STOCKHOLDERS |
54 | |
|
12.1 |
RIGHT
TO INDEMNIFICATION |
54 | |
|
12.2 |
INSURANCE |
54 | |
|
12.3 |
SUCCESSORS |
55 | |
|
12.4 |
SURVIVAL |
55 | |
| 13. |
GENERAL
PROVISIONS |
55 | |
|
13.1 |
EXPENSES |
55 | |
|
13.2 |
PUBLIC
ANNOUNCEMENTS |
55 | |
|
13.3 |
NOTICES |
55 | |
|
13.4 |
JURISDICTION;
SERVICE OF PROCESS |
56 | |
|
13.5 |
FURTHER
ASSURANCES |
56 | |
|
13.6 |
WAIVER |
57 | |
|
13.7 |
ENTIRE
AGREEMENT AND MODIFICATION |
57 | |
|
13.8 |
ASSIGNMENTS,
SUCCESSORS, AND NO THIRD-PARTY RIGHTS |
57 | |
|
13.9 |
SEVERABILITY |
57 | |
|
13.10 |
SECTION
HEADINGS,, CONSTRUCTION |
57 | |
|
13.11
|
GOVERNING
LAW |
58 | |
|
13.12 |
COUNTERPARTS |
57 | |
-63-