SECURITIES EXCHANGE
AGREEMENT
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 15991
Redhill Avenue, Suite 110, Tustin California 92780
(“Ocean”), InfoByPhone, Inc., a Delaware corporation,
with offices located at PO Box 64-3569 Vero Beach, Fl 32963 (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:
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.
“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.
“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) workman’s, 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”.
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.
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 Adorno & Yoss, LLP, 350
East Las Olas Blvd., Suite 1700, Fort Lauderdale, FL 33301 (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.
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 De Joya & 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 De Joya & Company, if required, will
consent to the inclusion of its financial statements in the
Company’s reports.
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.
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):
(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.
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.
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.
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.
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.
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.
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.
(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.
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.
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;
(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;
(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
(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.
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.
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.
(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.
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.
(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 mark of any Person.
(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 Mark 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 mark 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.
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.
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.
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.
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.
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.
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
(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 fil
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