Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement"), is entered into
effective as of April 30, 2007, by and among OCIS Corp., a Nevada corporation
("OCIS"), OCIS-EC, INC., a Nevada corporation and a wholly-owned subsidiary of
OCIS (the "OCIS Subsidiary"), Xxxx X. Xxxxxx, R. Xxxx Xxxxxx and Xxxxx X.
Xxxxxxxxxxx (the "OCIS Principal Shareholders") and ECOLOGY COATINGS, INC., a
California corporation (the "Company"), and the shareholders listed in Exhibit
A, who are the holders of at least a majority in interest of the issued and
outstanding capital stock of the Company (the "Shareholders").
WHEREAS, OCIS, through the OCIS Subsidiary, desires to acquire all of
the shares of the capital stock of the Company (the "Company Shares") owned by
the Shareholders on the terms and conditions set forth in this Agreement;
WHEREAS, the parties intend to effectuate the aforementioned
acquisition of Company Shares by merging the OCIS Subsidiary with and into the
Company (the "Merger") pursuant to the terms and conditions set forth in this
Agreement with the Company being the surviving corporation (the "Surviving
Corporation") in the Merger; and
WHEREAS, the Company and the Shareholders each deem it advisable and in
their best interests to effect the Merger contemplated by this Agreement.
In consideration of the mutual covenants contained herein, OCIS, OCIS
Subsidiary, the Company and the Shareholders hereby agree as follows:
ARTICLE 1
TERMS OF THE MERGER
1.1 Merger. At the Effective Time (as hereinafter defined), upon the
terms and subject to the conditions of this Agreement, the OCIS Subsidiary shall
merge with and into the Company (the "Merger") in accordance with the Nevada
Statutes (the "Nevada Act") and the California Corporations Code ("California
Act"). At the Effective Time, the separate existence of the OCIS Subsidiary
shall cease and the Company shall be the surviving corporation in the Merger
(the "Surviving Corporation"). The parties shall execute Articles of Merger
("Articles of Merger") and such other documents necessary to comply in all
respects with the requirements of the Nevada Act, the California Act and with
the provisions of this Agreement.
1.2 Effective Time. Subject to the terms and conditions of this
Agreement, the Merger shall become effective at the time of the filing of the
Articles of Merger with the Secretary of State of Nevada and the Secretary of
State of California in accordance with the applicable provisions of the Nevada
Act, the California Act or at such later time as may be specified in the
Articles of Merger. The time when the Merger shall become effective is herein
referred to as the "Effective Time," and the date on which the Effective Time
occurs is herein referred to as the "Closing Date." The closing of the Merger
(the "Closing") and the filing of the Articles of Merger shall occur as soon as
practicable after:
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1.2.1 Execution of this Agreement;
1.2.2 Satisfactory completion by each party hereto of
the due diligence investigation of each such other party to this Agreement;
1.2.3 Satisfaction of all conditions to closing set forth in
Article 4, "Conditions Precedent to Obligations of OCIS and OCIS Subsidiary,"
and Article 5, "Conditions Precedent to the Obligations of the Company and the
Shareholders"; and
1.2.4 Receipt by OCIS of any required approvals under the
Nevada Act, the California Act and any other applicable corporate law and any
other required regulatory approvals.
1.3 Closing. The Closing Date shall be no later than June 15, 2007. Any
extension of the Closing Date may be made only with the written consent of OCIS,
the Company and the Shareholders. The Company has a standstill deposit of
$100,000 with OCIS as of the date of this Agreement. If the Closing has not
occurred by June 15, 2007, unless extended as provided in this Section 1.3, this
Agreement shall terminate and OCIS shall keep all standstill deposits.
1.4 Merger Consideration; Conversion of Shares. The total consideration
to be paid to the Shareholders in connection with the Merger (the "Total Merger
Consideration") shall be issuance of up to 31,800,000 restricted shares on a
one-for-one basis of OCIS Common Stock, par value $.001 per share (the "OCIS
Shares"), to the Shareholders on the Closing Date. Subject to the provisions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of the Shareholders, the Company, OCIS or the OCIS
Subsidiary, each outstanding share of Common Stock of the Company shall be
converted into the right to receive one OCIS Share.
1.5 Exchange of Convertible Securities. Prior to the Closing, each
outstanding option, warrant or other security convertible into or exercisable
for Company Shares ("Company Convertible Securities") shall be exchanged for or
converted into convertible securities of OCIS ("OCIS Convertible Securities"),
which OCIS Convertible Securities shall have substantially the same terms as the
Company Convertible Securities.
1.6 Shareholder's Rights upon Merger. Upon consummation of the Merger,
the Shareholders shall cease to have any rights with respect to the certificates
which theretofore represented shares of Company Shares (the "Certificates"),
and, subject to applicable law and this Agreement, shall only have the right to
receive their pro rata share of the Total Merger Consideration, including their
pro rata share of the number of OCIS Shares into which the Company Shares has
been converted pursuant to this Agreement and the Merger.
1.7 Surrender and Exchange of Shares; Payment of Merger Consideration.
In connection with the Closing, upon receipt of notice from the Company and OCIS
of the Effective Time, the Shareholders shall surrender and deliver the
Certificates to OCIS duly endorsed in blank. As soon as reasonably practicable
following the later to occur of the Effective Time or such surrender and
delivery, OCIS will deliver to the Shareholders certificates representing their
OCIS Shares. Until so surrendered and exchanged, each outstanding
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Certificate after the Effective Time shall be deemed for all purposes to
evidence only the right to receive the Total Merger Consideration set forth
herein. On the Closing Date the principal shareholders of OCIS will execute the
Lock-Up Agreement attached as Exhibit B and the principal shareholders of OCIS
and OCIS shall execute the Registration Rights Agreement set forth as Exhibit C.
1.8 Articles of Incorporation. At and after the Effective Time, the
Articles of Incorporation of the Company shall be the Articles of Incorporation
of the Surviving Corporation.
1.9 Bylaws. At and after the Effective Time, the Bylaws of the Company
shall be the Bylaws of the Surviving Corporation (subject to any amendment
specified in the Plan of Merger and any subsequent amendment).
1.10 Name. At and after the Effective Time, the name of OCIS shall be
changed to the name of the Surviving Corporation.
1.11 Board of Directors. Effective as of and after the Effective Time,
the Board of Directors of OCIS shall consist of persons selected by the Company
whom are listed on Exhibit D of the Agreement. The Board of Directors of the
Surviving Corporation shall be the current Board of Directors of the Company or
such other persons as the Company may select.
1.12 Other Effects of Merger. The Merger shall have all further effects
as specified in the applicable provisions of the Nevada Act and the California
Act.
1.13 Split of OCIS Shares. Immediately prior to the Closing Date, OCIS
will split the issued and outstanding OCIS Shares such that the OCIS Shares
issued and outstanding immediately prior to the Effective Time shall equal 4.7%
of the total amount of issued and outstanding shares immediately after the
Effective Time, calculated on a Fully Diluted Basis or 1,600,000 shares,
whichever is greater. For the purposes of this Agreement, the term "Fully
Diluted Basis" shall include all issued and outstanding shares of capital stock
of OCIS and all shares of capital stock issuable upon conversion of all OCIS
Convertible Securities, but shall exclude all options to purchase any class of
capital stock of OCIS that have not yet vested as of the Closing Date.
Immediately prior to the Effective Time there shall be 1,600,000 OCIS Shares
issued and outstanding, subject to adjustment as provided above. The calculation
of the split of the OCIS Shares and the OCIS Shares to be issued as Total Merger
Consideration is set forth in Exhibit E.
1.14 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or otherwise to carry out this Agreement,
the officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of Company, all such deeds, bills
of sale, assignments and assurances and to take and do, in the name and on
behalf of the Company, all such other actions and things as may be
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necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement and the transactions
contemplated hereby.
1.15 Tax-Free Reorganization. The parties intend that the Merger
qualify as a tax- free reorganization pursuant to Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder (the
"Code").
1.16 Financial Statements and Income Tax Returns. The parties
contemplate that the Surviving Corporation, as a subsidiary of OCIS's
consolidated group, will include its financial results in OCIS's consolidated
financial statements covering the periods after joining OCIS's consolidated
group.
1.17 Return of Standstill Deposits. If the Closing of the Merger occurs
by June 15, 2007, or in the case that the Company pays the additional $25,000
deposit to extend the Closing Date by thirty (30) days on or before June 15,
2007 (the "Additional Standstill Deposit"), then OCIS shall return the original
$100,000 standstill deposit and the Additional Standstill Deposit, if paid,
promptly to the Surviving Corporation.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SHAREHOLDERS
Except as disclosed on the schedules to be delivered by the Company and
the Shareholders to OCIS and the OCIS Subsidiary on the Closing Date (the
"Company Disclosure Schedule"), which Company Disclosure Schedule is
incorporated into and should be considered an integral part of this Agreement,
the Company represents and warrants to OCIS and the OCIS Subsidiary as follows
to all Sections, except for Sections 2.1, "Validity of Agreement," 2.3, "Title,"
and 2.31 "Investment Intent," which Sections are representations and warranties
of the Shareholders and/or the Company, as the case may be::
2.1 Validity of Agreement. This Agreement is valid and binding upon the
Shareholders and the Company and neither the execution nor delivery of this
Agreement by such parties nor the performance by such parties of any of their
covenants or obligations hereunder will constitute a material default under any
contract, agreement or obligation to which any of them is a party or by which
they or any of their respective properties are bound. This Agreement is
enforceable severally against the Company and the Shareholders in accordance
with its terms, subject to bankruptcy, reorganization, insolvency, fraudulent
conveyance, moratorium, receivership or other similar laws relating to or
affecting creditors' rights generally.
2.2 Organization and Good Standing. The Company is a corporation duly
organized and existing in good standing under the laws of the State of
California. The Company has full corporate power and authority to carry on its
business as now conducted and to own or lease and operate the properties and
assets now owned or leased and operated by it. The
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Company is duly qualified to transact business in the State of California and in
all states and jurisdictions in which the business or ownership of its property
makes it necessary so to qualify, except for jurisdictions in which the nature
of the property owned or business conducted, when considered in relation to the
absence of serious penalties, renders qualification as a foreign corporation
unnecessary as a practical matter.
2.3 Title. The Shareholders have full right and title to the Company
Shares to be exchanged free and clear of all liens, encumbrances, restrictions
and claims of every kind and such Company Shares constitute all the Company
Shares which the Shareholders, directly or indirectly, own or have any right to
acquire. The Shareholders have the legal right, power and authority to enter
into this Agreement and will have the right to sell, assign, transfer and convey
the Company Shares so owned by them pursuant to this Agreement and deliver to
OCIS valid title to the Company shares pursuant to the provisions of this
Agreement, free and clear of all liens, encumbrances, restrictions and claims of
every kind. There are no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements of
any character providing for the purchase or sale of any Company Shares owned by
the Shareholders.
2.4 Exclusive Dealing. The Shareholders are not engaged in any
discussions or negotiations for the purchase or sale of any Company Shares,
except those discussions with OCIS which are embodied in this Agreement.
2.5 Capitalization. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, no par value per share,
28,200,000 shares of which are issued and outstanding, and 10,000,000 shares of
Preferred Stock, no par value, of which none has been issued. The Company Shares
constitute the only outstanding shares of the capital stock of the Company of
any nature whatsoever, voting and non-voting. The Company Shares are validly
issued, fully paid and non-assessable and are subject to no restrictions on
transfer, except those imposed by the applicable federal and state securities
laws. All Company Shares are certificated, and the Company has not executed and
delivered certificates for Company Shares in excess of the number of Company
Shares set forth in this Section 2.5. Except as set forth in the Company
Disclosure Schedule, there are no outstanding options, warrants, rights, calls,
commitments, conversion rights, plans or other agreements of any character
providing for the purchase, issuance or sale of, or any securities convertible
into, capital stock of the Company, whether issued, unissued or held in its
treasury. There are no treasury shares.
2.6 Subsidiaries. The Company has no subsidiaries. The Company does not
own five percent (5%) or more of the securities having voting power of any
corporation (or would own such securities in such amount upon the closing of any
existing purchase obligations for securities).
2.7 Ownership and Authority. The execution, delivery and performance of
this Agreement by the Company has been duly authorized by its Board of Directors
of the Company and all other required corporate approvals have been obtained.
This Agreement is valid and binding upon the Company, and is enforceable against
the Company in accordance with its terms, subject to bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium,
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receivership or other similar laws relating to or affecting creditors' rights
generally. The execution, delivery and performance of this Agreement by the
Company will not result in the violation or breach of any term or provision of
charter instruments applicable to the Company or constitute a material default
under any material indenture, mortgage, deed of trust or other contract or
agreement to which the Company is a party or by which the Company or any of its
properties is bound and will not cause the creation of a lien or encumbrance on
any properties owned by or leased to or by the Company.
2.8 Liabilities and Obligations. Except to the extent set forth in the
Company Financial Statements or disclosed in the Company Disclosure Schedule,
the Company has no liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) secured by a pledge or a lien on any of its
assets.
2.9 Financial Statements. The financial statements for the Company for
the years ending September 30, 2005 and 2006 (the "Audited Financial
Statements") have been prepared from the books and records of the Company by its
independent public accountants. The financial statements of the Company for the
period from October 1, 2006 through December 31, 2006 (the "Unaudited Financial
Statements" and, together with the Auditied Financial Statements, the "Company
Financial Statements") have been prepared from the books and records of the
Company by its management, but are in auditable condition. The Company Financial
Statements (i) are true, complete, and correct, and fairly present the financial
condition and assets and liabilities or the results of operations of the Company
as of the dates thereof and for the periods indicated in conformity with
generally accepted accounting principles consistently applied, and (ii) contain
and reflect all necessary adjustments for fair and accurate presentation of the
financial condition as of such dates. There has not been any change between the
date of the Company Financial Statements and the date of this Agreement which
has had an adverse effect on the financial position or results of operations of
the Company. Except as and to the extent reflected or reserved against in such
Company Financial Statements, or otherwise expressly disclosed therein, the
Company has no liabilities or obligations, contingent or otherwise, of a nature
required to be reflected in the Company Financial Statements in accordance with
generally accepted accounting principles consistently applied.
2.10 Absence of Certain Changes. During the period from the date of
this Agreement through and including the Closing Date, the Company has not:
2.10.1 Suffered any adverse change affecting its assets,
liabilities, financial condition or business except in the ordinary course of
business;
2.10.2 Made any change in the compensation payable or to
become payable to any of its employees or agents, or made any bonus payments or
compensation arrangements to or with any of its employees or agents, whether
direct or indirect, except in the ordinary course of business consistent with
past practices;
2.10.3 Paid or declared any dividends, distributions or other
payments due or owing to the Selling Shareholders or redeemed or repurchased (or
agreed to redeem or repurchase) any of its capital stock;
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2.10.4 Issued any stock, or granted any stock options or
warrants to purchase stock or issued any securities convertible into common
stock of the Company, except as set forth on Schedule 2.10.4;
2.10.5 Sold or transferred any of its assets or canceled any
indebtedness or claims owing to it, except in the ordinary course of business
and consistent with its past practices;
2.10.6 Sold, assigned or transferred any formulas, inventions,
patents, patent applications, trademarks, trade names, copyrights, licenses,
computer programs or software, know-how or other intangible assets;
2.10.7 Amended or terminated any contract, agreement or
license to which it is a party otherwise than in the ordinary course of business
or as may be necessary or appropriate for the consummation of the transactions
described herein;
2.10.8 Borrowed any money or incurred, directly or indirectly
(as a guarantor or otherwise), any indebtedness in excess of $10,000, except in
the ordinary course of business and consistent with its past practices;
2.10.9 Discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent), other than current
liabilities shown in the Financial Statements or current liabilities incurred
since such date in the ordinary course of business, consistent with its past
practices;
2.10.10 Mortgaged, pledged or subjected to lien, charge or
other encumbrance any of its assets, except in the ordinary course of business
and consistent with its past practices; or
2.10.11 Entered into or committed to any other transaction
other than in the ordinary course of business, consistent with past practices.
2.11 Taxes. The Company has filed all federal, state, local or foreign
tax returns, tax reports or forms that the Company required to be since its
inception. Copies of all such tax returns filed since its fiscal year ended
September 30, 2006. No taxes are due to any federal, state, local or foreign tax
authority. The Company is not obligated to make any payments, and is not a party
to any agreement that under any circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code. The Company
has disclosed on its federal income tax returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code. The Company is not a party to any Tax
allocation or sharing agreement. The Company (i) has not been a member of an
affiliated group filing a consolidated federal income tax return, (ii) is not
and has not ever been a partner in a partnership or an owner of an interest in
an entity treated as a partnership for federal income tax purposes, and (iii)
has no liability for the Taxes of any person (other than the Company) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract or otherwise.
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2.12 Title to Properties and Assets. The Company presently owns or
leases real property from which it conducts its business and owns or leases
certain personal property. The Company has good and marketable title to all real
and personal property reflected on its books and records as owned by it or
otherwise required or used in the operation of its business, free and clear of
all security interests, liens, encumbrances, mortgages or charges of any nature,
except as set forth in Section 2.12 of the Company Disclosure Schedule. Also set
forth in Section 2.12 of the Company Disclosure Schedule is a list of property
leased by the Company. Any security interests, liens, encumbrances, mortgages or
charges not set forth in the Company's Financial Statements or disclosed in the
Company Disclosure Schedule shall be discharged in full on or before the Closing
Date and evidenced by UCC Releases delivered by the Company on the Closing Date.
Such improved real property or tangible personal property is in good operating
condition and repair, and suitable for the purpose for which it is being used,
subject in each case to consumption in the ordinary course, ordinary wear and
tear and ordinary repair, maintenance and periodic replacement.
2.13 Accounts Receivable/Payable. Except as set forth in Section 2.13
of the Company Disclosure Schedule, since December 31, 2006 the Company has no
accounts receivable, unbilled invoices and other debts. There have been no
material adverse changes since September 30, 2006 in any accounts receivable or
other debts due the Company or the allowances with respect thereto or accounts
payable of the Company from that reflected in the Financial Statements.
2.14 Material Documents. Set forth in Section 2.14 of the Company
Disclosure Schedule is a complete list of all material documents to which the
Company is a party. All such documents listed in Section 2.14 of the Company
Disclosure Schedule are valid and enforceable and copies of such material
documents (or, with the consent of OCIS, forms thereof) as have been requested
by OCIS have been provided to OCIS. Except as disclosed in Section 2.14 of the
Company Disclosure Schedule, neither the Company nor any of the other parties
thereto, is or will be, merely with the passage of time, in default under any
such material document nor is there any requirement for any of such material
documents to be novated or to have the consent of the other contracting party in
order for such material documents to be valid, effective and enforceable by the
Company after the Closing Date as it was immediately prior thereto.
2.15 Intellectual Properties. Except as set forth in Section 2.15 of
the Company Disclosure Schedule, the Company has no interest in and owns no
domestic and foreign letters patent, patents, patent applications, patent
licenses, software licenses and know-how licenses, trade names, trademarks,
copyrights, unpatented inventions, service xxxx registrations and applications
and copyright registrations and applications owned or used by the Company in the
operation of its business (collectively, the "Intellectual Property"). No
Intellectual Property, other than as set forth on Section 2.15 of the Company
Disclosure Schedule, is required or used in the operation of the business of the
Company. There are no pending or, to the knowledge of the Company and the
Shareholders, threatened claims of infringement upon the rights to the
Intellectual Property or any intellectual property rights of others.
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2.16 No Default. Neither the Company nor the Shareholders are in
material default under any provision of any contract, commitment, or agreement
respecting the Company or its assets to which the Company or the Shareholders is
or are parties or by which they are bound.
2.17 Litigation. There are no lawsuits, arbitration actions or other
proceedings (equitable, legal, administrative or otherwise) pending or,
threatened, and there are no investigations pending or threatened against the
Company which relate to and could have a material adverse effect on the
properties, business, assets or financial condition of the Company or which
could adversely affect the validity or enforceability of this Agreement or the
obligation or ability of the Shareholders or the Company to perform their
respective obligations under this Agreement or to carry out the transactions
contemplated by this Agreement or otherwise affecting the Shares.
2.18 Finders. Neither the Company nor the Shareholders owe any fees or
commissions, or other compensation or payments to any broker, finder, financial
consultant, or similar person claiming to have been employed or retained by or
on behalf of the Company or the Shareholders in connection with this Agreement
or the transactions contemplated hereby.
2.19 Employees. Section 2.19 of the Company Disclosure Schedule sets
forth the name and current monthly salary and any accrued benefit for each
employee of the Company. Except as set forth in Section 2.19 of the Company
Disclosure Schedule, the Company has no written employment agreements with any
of its employees and it does not currently use the services of nor has it at any
time engaged any independent contractor.
2.20 Absence of Pension Liability. The Company has no liability of any
nature to any person or entity for pension or retirement obligations, vested or
unvested, to or for the benefit of any of its existing or former employees. The
consummation of the transactions contemplated by this Agreement will not entitle
any employee of the Company to severance pay, unemployment compensation or any
other payment, except as expressly provided in this Agreement, including the
Exhibits, or accelerate the time of payment or increase the amount of
compensation due to any such employee. Except as described in Section 2.20 of
the Company Disclosure Schedule, the Company does not presently have nor has it
ever had any employee benefit plans and has no announced plan or legally binding
commitment to create any employee benefit plans.
2.21 Compliance With Laws. The Company has conducted and is continuing
to conduct its business in compliance with, and is in compliance with, all
applicable statutes, orders, rules and regulations promulgated by governmental
authorities relating in any respect to its operations, conduct of business or
use of properties, except where noncompliance with any such statutes, orders,
rules or regulations would not have an adverse effect on the Company or its
results of operations. Such statutes, orders, rules or regulations include, but
are not limited to, any applicable statute, order, rule or regulation relating
to (i) wages, hours, hiring, nondiscrimination, retirement, benefits, pensions,
working conditions, and worker safety and health; (ii) air, water, toxic
substances, noise, or solid, gaseous or liquid waste generation, handling,
storage, disposal or transportation; (iii) zoning and building codes; (iv) the
production, storage, processing, advertising, sale, distribution,
transportation, disposal, use and warranty of
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products; or (v) trade and antitrust regulations. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated by this Agreement will not, separately or
jointly, violate, contravene or constitute a default under any applicable
statutes, orders, rules and regulations promulgated by governmental authorities
or cause a lien on any property used, owned or leased by the Company to be
created thereunder. To the knowledge of the Company, there are no proposed
changes in any applicable statutes, orders, rules and regulations promulgated by
governmental authorities that would cause any representation or warranty
contained in this Section 2.21 to be untrue or have an adverse effect on its
operations, conduct of business or use of properties.
2.22 Filings. The Company has made all filings and reports required
under all local, state and federal laws with respect to its business and of any
predecessor entity or partnership, except filings and reports in those
jurisdictions in which the nature of the property owned or business conducted,
when considered in relation to the absence of serious penalties, renders the
required filings or reports unnecessary as a practical matter.
2.23 Certain Activities. The Company has not, directly or indirectly,
engaged in or been a party to any of the following activities:
2.23.1 Bribes, kickbacks or gratuities to any person or
entity, including domestic or foreign government officials or any other payments
to any such persons or entity, whether legal or not legal, to obtain or retain
business or to receive favorable treatment of any nature with regard to business
(excluding commissions or gratuities paid or given in full compliance with
applicable law and constituting ordinary and necessary expenses incurred in
carrying on its business in the ordinary course);
2.23.2 Contributions (including gifts), whether legal or not
legal, made to any domestic or foreign political party, political candidate or
holder of political office;
2.23.3 Holding of or participation in bank accounts, funds or
pools of funds created or maintained in the United States or any foreign
country, without being reflected on the corporate books of account, or as to
which receipts or disbursements therefrom have not been reflected on such books,
the purpose of which is to obtain or retain business or to receive favorable
treatment with regard to business;
2.23.4 Receiving or disbursing monies, the actual nature of
which has been improperly disguised or intentionally misrecorded on or
improperly omitted from the corporate books of account;
2.23.5 Paying fees to domestic or foreign consultants or
commercial agents which exceed the reasonable value of the ordinary and
customary consulting and agency services purported to have been rendered;
2.23.6 Paying or reimbursing (including gifts) personnel of
the Company for the purpose of enabling them to expend time or to make
contributions or payments of the kind or for the purposes referred to in
Subparagraphs 2.23.1 through 2.23.5 above;
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2.23.7 Participating in any manner in any activity which is
illegal under the international boycott provisions of the Export Administration
Act, as amended, or the international boycott provisions of the Internal Revenue
Code, or guidelines or regulations thereunder; and
2.23.8 Making or permitting unlawful charges, mischarges or
defective or fraudulent pricing under any contract or subcontract under a
contract with any department, agency or subdivision thereof, of the United
States government, state or municipal government or foreign government.
2.24 Employment Relations. The Company is in compliance with all
federal, state or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and has not and is not engaged in any unfair labor practice; no
unfair labor practice complaint against the Company is pending before the
National Labor Relations Board; there is no labor strike, dispute, slow down or
stoppage actually pending or threatened against or involving the Company; no
labor representation question exists respecting the employees of the Company; no
grievance which might have an adverse effect upon the Company or the conduct of
its business exists; no arbitration proceeding arising out of or under any
collective bargaining agreement is currently being negotiated by the Company;
and the Company has not experienced any material labor difficulty during the
last three (3) years.
2.25 Insurance Coverage. The Company has heretofore delivered copies of
the policies of fire, liability, workers' compensation or other forms of
insurance of the Company. The Company has complied with the terms and provisions
of such policies including, without limitation, all riders and amendments
thereto. The Company has met required collateral and premium for coverages in
force. In the reasonable judgment of the Company and the Shareholders, such
insurance is adequate and the Company will keep all current insurance policies
in effect through the Closing.
2.26 Articles of Incorporation and Bylaws. The Company has heretofore
delivered to OCIS true, accurate and complete copies of the Articles of
Incorporation and Bylaws of the Company, together with all amendments to each of
the same as of the date hereof.
2.27 Corporate Minutes. The minute books of the Company provided to
OCIS at the Closing are the correct and only such minute books and do and will
contain, in all material respects, complete and accurate records of any and all
proceedings and actions at all meetings, including written consents executed in
lieu of meetings of its shareholders, Board of Directors and committees thereof
through the Closing Date. The stock records of the Company delivered to OCIS at
the Closing are the correct and only such stock records and accurately reflects
all issues and transfers of record of the capital stock of the Company. The
Company does not have any of its records or information recorded, stored,
maintained or held off the premises of the Company.
2.28 Default on Indebtedness. The Company is not in default under any
evidence of indebtedness for borrowed money.
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2.29 Indebtedness. Neither the Shareholders nor any corporation or
entity with which they are affiliated are indebted to the Company, and the
Company has no indebtedness or liability to any Shareholder or any corporation
or entity with which they are affiliated.
2.30 Governmental Approvals. Except as set forth in Section 2.30 of the
Company Disclosure Schedule, no consent, approval or authorization of, or
notification to or registration with, any governmental authority, either
federal, state or local, is required in connection with the execution, delivery
and performance of this Agreement by the Shareholders or the Company.
2.31 Investment Intent. The Shareholders are taking the OCIS Shares for
their own account and for investment, with no present intention of dividing
their interest with others or of reselling or otherwise disposing of all or any
portion of the OCIS Shares other than pursuant to available exemptions under
applicable securities laws. The Shareholders do not intend to sell the OCIS
Shares, either currently or after the passage of a fixed or determinable period
of time or upon the occurrence or non-occurrence of any predetermined event or
circumstance. The Shareholders have no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for,
or which is likely to compel, a disposition of the OCIS Shares. The Shareholders
are not aware of any circumstances presently in existence which are likely in
the future to prompt a disposition of the OCIS Shares. The Shareholders possess
the experience in business in which OCIS is involved necessary to make an
informed decision to acquire the OCIS Shares and the Shareholders have the
financial means to bear the economic risk of the investment in the OCIS Shares
as of the Closing Date. The Shareholders have been represented by legal counsel
and have consulted with financial advisors to the extent they deemed necessary.
The Shareholders have received and read the Disclosure Statement of OCIS
including its financial statements, SEC Reports, as defined in Section 3.6,
"Securities Filings; Financial Statements," and any additional information they
have requested. The Shareholders have had the opportunity to ask questions of
the directors and officers of OCIS concerning OCIS.
2.32 Licenses, Permits and Required Consents. The Company has all
required franchises, tariffs, licenses, ordinances, certifications, approvals,
authorizations and permits ("Authorizations") necessary to the conduct of its
business as currently conducted or proposed to be conducted. A list of such
Authorizations is set forth in Section 2.32 of the Company Disclosure Schedule
attached hereto, true, correct and complete copies of which have previously been
delivered to OCIS. All Authorizations relating to the business of the Company
are in full force and effect, no violations have been made in respect thereof,
and no proceeding is pending or threatened which could have the effect of
revoking or limiting any such Authorizations and the same will not cease to
remain in full force and effect by reason of the transactions contemplated by
this Agreement.
2.33 Completeness of Representations and Schedules. The Disclosure
Schedule and Exhibits hereto completely and correctly present in all material
respects the information required by this Agreement. This Agreement, any
Schedules and Exhibits to be delivered under this Agreement and the
representations and warranties of this Article 2 and the documents and written
information pertaining to the Company and the Shareholders furnished to OCIS and
the OCIS Subsidiary or their respective agents by or on behalf of, do not
contain any untrue
QBPHX\2055363.9
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statement of a material fact or omit to state a material fact necessary in order
to make this Agreement, or such certificates, schedules, documents or written
information, not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF OCIS,
THE OCIS SUBSIDIARY AND THE PRINCIPAL OCIS SHAREHOLDERS
Except as disclosed in the schedules to be delivered by OCIS and the
OCIS Subsidiary on the Closing Date (the "OCIS Disclosure Schedule"), which OCIS
Disclosure Schedule is incorporated into and should be considered an integral
part of this Agreement, OCIS and the OCIS Subsidiary represent and warrant to
the Company and the Shareholders as follows to all Sections except for Section
3.29, "Transferability of OCIS Shares," which Section contains representations
and warranties of the OCIS Principal Shareholders:
3.1 Organization and Good Standing.
3.1.1 OCIS is a corporation duly organized and existing in
good standing under the laws of the State of Nevada. OCIS has full corporate
power and authority to carry on its business as now conducted. OCIS is duly
qualified to transact business in the State of Nevada and in all states and
jurisdictions in which the business or ownership of the OCIS Subsidiary's
properties or assets makes it necessary so to qualify (other than in
jurisdictions in which the nature of the property owned or business conducted,
when considered in relation to the absence of serious penalties, renders
qualification as a foreign corporation unnecessary as a practical matter).
3.1.2 The OCIS Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Nevada. The
OCIS Subsidiary has full corporate power and authority to carry on its business
as now conducted. OCIS Subsidiary is duly qualified to transact business in the
State of Nevada and in all states and jurisdictions in which the business or
ownership of the OCIS Subsidiary's properties or assets makes it necessary so to
qualify (other than in jurisdictions in which the nature of the property owned
or business conducted, when considered in relation to the absence of serious
penalties, renders qualification as a foreign corporation unnecessary as a
practical matter).
3.2 Finders. No agent, broker, person or firm acting on behalf of OCIS
or the OCIS Subsidiary is, or will be, entitled to any commission or broker's or
finder's fees from any of the parties to this Agreement, or from any person
controlling, controlled by or under common control with any of the parties to
this Agreement, in connection with any of the transactions contemplated in this
Agreement.
3.3 Authority and Consent. The execution, delivery and performance of
this Agreement by OCIS and the OCIS Subsidiary have been duly authorized by
their respective Board of Directors. This Agreement is valid and binding upon
OCIS and the OCIS Subsidiary, subject to shareholder approval, and is
enforceable against OCIS and the OCIS Subsidiary in
QBPHX\2055363.9
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accordance with its terms, subject to bankruptcy, reorganization, insolvency,
fraudulent conveyance, moratorium, receivership or other similar laws relating
to or affecting creditors' rights generally. OCIS and the OCIS Subsidiary have
read and understand this Agreement, have consulted legal and accounting
representatives to the extent deemed necessary and have the capacity to enter
into this Agreement and to carry out the transactions contemplated hereby
without the consent of any third party, except shareholder approval.
3.4 Validity of Agreement. Neither the execution nor the delivery of
this Agreement by OCIS and the OCIS Subsidiary, nor the performance by OCIS and
the OCIS Subsidiary of any of the covenants or obligations to be performed by
OCIS and the OCIS Subsidiary hereunder, will result in any violation of any
order, decree or judgment of any court or other governmental body, or statute or
law applicable to OCIS and the OCIS Subsidiary, or in any breach of any terms or
provisions of the Articles of Incorporation or the Bylaws of OCIS or the OCIS
Subsidiary, respectively, or constitute a default under any indenture, mortgage,
deed of trust or other contract to which OCIS and the OCIS Subsidiary is a party
or by which OCIS and the OCIS Subsidiary is bound.
3.5 Government Approvals. No consent, approval or authorization of, or
notification to or registration with, any governmental authority, either
federal, state or local, is required in connection with the execution, delivery
and performance of this Agreement by OCIS and the OCIS Subsidiary.
3.6 Securities Filings; Financial Statements. OCIS has made available
to the Company and the Shareholders a Disclosure Statement and true and complete
copies of all reports, statements and registration statements and amendments
thereto filed by OCIS with the Securities and Exchange Commission since December
31, 2001 (the "SEC Reports"). As of their respective dates, or as of the date of
the last amendment thereof, if amended after filing, none of the SEC Reports
(including all schedules thereto and disclosure documents incorporated by
reference therein), contains any untrue statement of a material fact or omitted
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the SEC Reports as of the time of filing or as of the
date of the last amendment thereof, if amended after filing, complied in all
material respects with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the Securities Act of 1933, as amended (the "Securities
Act"), as applicable. The consolidated financial statements of OCIS included in
the SEC Reports fairly present in conformity in all material respects with GAAP
applied on a consistent basis the consolidated financial position of OCIS as of
the dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended.
3.7 Capitalization.
3.7.1 The authorized capital stock of OCIS consists of
90,000,000 shares of Common Stock, $0.001 par value per share, 1,017,000 shares
of which are issued and outstanding and 1,600,000 shares of which will be
outstanding after the OCIS Stock Split ("Outstanding OCIS Shares"), subject to
adjustment as provided in Section 1.13, "Split of OCIS Shares," and 10,000,000
shares of preferred stock authorized, $0.001 per share, none of which is
QBPHX\2055363.9
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issued and outstanding. The Outstanding OCIS Shares constitute the only
outstanding shares of the capital stock of OCIS of any nature whatsoever, voting
and non-voting. The Outstanding OCIS Shares are validly issued, fully paid and
non-assessable and are subject to no restrictions on transfer. All Outstanding
OCIS Shares are certificated, and the Company has executed and delivered no
certificates for shares in excess of the number of Outstanding OCIS Shares set
forth in this Section 2.5. There are no outstanding options, warrants, rights,
calls, commitments, conversion rights, plans or other agreements of any
character providing for the purchase, issuance or sale of, or any securities
convertible into, capital stock of OCIS, whether issued, unissued or held in its
treasury. There are no treasury shares.
3.7.2 The authorized capital stock of the OCIS Subsidiary
consists of 1,000 shares of Common Stock, $0.001 par value per share, 100 of
which are issued and outstanding ("Outstanding OCIS Subsidiary Shares"). The
Outstanding OCIS Subsidiary Shares constitute the only outstanding shares of the
capital stock of the OCIS Subsidiary of any nature whatsoever, voting and
non-voting. The Outstanding OCIS Subsidiary Shares are validly issued, fully
paid and non-assessable and are subject to no restrictions on transfer. The
Company has executed and delivered no certificates for shares in excess of the
number of Outstanding OCIS Subsidiary Shares set forth in this Section 3.7.2.
There are no outstanding options, warrants, rights, calls, commitments,
conversion rights, plans or other agreements of any character providing for the
purchase, issuance or sale of, or any securities convertible into, capital stock
of the OCIS Subsidiary, whether issued, unissued or held in its treasury. There
are no treasury shares.
3.8 Subsidiaries. Except for the OCIS Subsidiary, neither OCIS nor the
OCIS Subsidiary has any subsidiaries. Neither OCIS nor the OCIS Subsidiary not
own five percent (5%) or more of the securities having voting power of any
corporation (or would own such securities in such amount upon the closing of any
existing purchase obligations for securities).
3.9 Absence of Certain Changes. During the period from the date of this
Agreement through and including the Closing Date, neither OCIS nor the OCIS
Subsidiary has:
3.9.1 Suffered any adverse change affecting its assets,
liabilities, financial condition or business except in the ordinary course of
business;
3.9.2 Made any change in the compensation payable or to become
payable to any of its employees or agents, or made any bonus payments or
compensation arrangements to or with any of its employees or agents, whether
direct or indirect, except in the ordinary course of business consistent with
past practices;
3.9.3 Paid or declared any dividends, distributions or other
payments due or owing to the Selling Shareholders or redeemed or repurchased (or
agreed to redeem or repurchase) any of its capital stock;
3.9.4 Issued any stock, or granted any stock options or
warrants to purchase stock or issued any securities convertible into common
stock of OCIS or the OCIS Subsidiary, except as set forth in Schedule 3.9.4;
QBPHX\2055363.9
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3.9.5 Sold or transferred any of its assets or canceled any
indebtedness or claims owing to it, except in the ordinary course of business
and consistent with its past practices;
3.9.6 Sold, assigned or transferred any formulas, inventions,
patents, patent applications, trademarks, trade names, copyrights, licenses,
computer programs or software, know-how or other intangible assets;
3.9.7 Amended or terminated any contract, agreement or license
to which it is a party otherwise than in the ordinary course of business or as
may be necessary or appropriate for the consummation of the transactions
described herein;
3.9.8 Borrowed any money or incurred, directly or indirectly
(as a guarantor or otherwise), any indebtedness in excess of $5,000, except in
the ordinary course of business and consistent with its past practices;
3.9.9 Discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent), other than current
liabilities shown in the Financial Statements or current liabilities incurred
since such date in the ordinary course of business, consistent with its past
practices;
3.9.10 Mortgaged, pledged or subjected to lien, charge or
other encumbrance any of its assets, except in the ordinary course of business
and consistent with its past practices; or
3.9.11 Entered into or committed to any other transaction
other than in the ordinary course of business, consistent with past practices.
QBPHX\2055363.9
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3.10 Taxes. OCIS has filed all federal, state, local or foreign tax
returns, tax reports or forms that it is required to file since its inception.
Copies of all such tax returns filed since its inception will be provided to the
Company upon request. No taxes are due to any federal, state, local or foreign
tax authority. OCIS is not obligated to make any payments, and is not a party to
any agreement that under any circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code. OCIS has
disclosed on its federal income tax returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code. OCIS is not a party to any Tax allocation
or sharing agreement. OCIS (i) has not been a member of an affiliated group
filing a consolidated federal income tax return, (ii) is not and has not ever
been a partner in a partnership or an owner of an interest in an entity treated
as a partnership for federal income tax purposes, and (iii) has no liability for
the Taxes of any person under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise.
3.11 Title to Properties and Assets. OCIS presently owns or leases real
property from which it conducts its business and owns or leases certain personal
property. OCIS has good and marketable title to all real and personal property
reflected on its books and records as owned by it or otherwise required or used
in the operation of its business, free and clear of all security interests,
liens, encumbrances, mortgages or charges of any nature. Set forth in Section
3.11 of the OCIS Disclosure Schedule is a list of property leased by OCIS. Such
improved real property or tangible personal property is in good operating
condition and repair, and suitable for the purpose for which it is being used,
subject in each case to consumption in the ordinary course, ordinary wear and
tear and ordinary repair, maintenance and periodic replacement.
3.12 Material Documents. Set forth in Section 3.12 of the OCIS
Disclosure Schedule is a complete list of all material documents to which OCIS
or the OCIS Subsidiary is a party. All such documents listed in Section 3.12 of
the OCIS Disclosure Schedule are valid and enforceable and copies of such
material documents (or, with the consent of the Company, forms thereof) have
been provided to the Company. Except as disclosed in Section 3.12 of the OCIS
Disclosure Schedule, neither OCIS, the OCIS Subsidiary nor any of the other
parties thereto, is or will be, merely with the passage of time, in default
under any such material document nor is there any requirement for any of such
material documents to be novated or to have the consent of the other contracting
party in order for such material documents to be valid, effective and
enforceable by OCIS or the OCIS Subsidiary, as the case may be, after the
Closing Date as it was immediately prior thereto.
3.13 Intellectual Properties. Except as set forth in Section 3.13 of
the OCIS Disclosure Schedule, neither OCIS nor the OCIS Subsidiary has no
interest in and owns no domestic and foreign letters patent, patents, patent
applications, patent licenses, software licenses and know-how licenses, trade
names, trademarks, copyrights, unpatented inventions, service xxxx registrations
and applications and copyright registrations and applications owned or used by
OCIS or the OCIS Subsidiary in the operation of its business (collectively, the
"Intellectual Property"). No OCIS Intellectual Property is required or used in
the operation of the business of OCIS or the OCIS Subsidiary. There are no
pending or threatened claims of infringement upon the OCIS Intellectual Property
or upon the rights to any intellectual property of others.
QBPHX\2055363.9
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3.14 No Default. Neither OCIS nor the OCIS Subsidiary is in default
under any provision of any contract, commitment, or agreement respecting OCIS,
the OCIS Subsidiary or any of their respective assets to which OCIS or the OCIS
Subsidiary is or are parties or by which they are bound.
3.15 Litigation. There are no lawsuits, arbitration actions or other
proceedings (equitable, legal, administrative or otherwise) pending or,
threatened, and there are no investigations pending or threatened against OCIS
or the OCIS Subsidiary which relate to and could have a material adverse effect
on the properties, business, assets or financial condition of OCIS or the OCIS
Subsidiary or which could adversely affect the validity or enforceability of
this Agreement or the obligation or ability of OCIS or the OCIS Subsidiary to
perform their respective obligations under this Agreement or to carry out the
transactions contemplated by this Agreement.
3.16 Absence of Pension Liability. Neither OCIS nor the OCIS Subsidiary
has any liability of any nature to any person or entity for pension or
retirement obligations, vested or unvested, to or for the benefit of any of its
existing or former employees. The consummation of the transactions contemplated
by this Agreement will not entitle any employee of OCIS or the OCIS Subsidiary
to severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, including the Exhibits, or accelerate the
time of payment or increase the amount of compensation due to any such employee.
Neither OCIS nor the OCIS Subsidiary have presently nor have they ever had any
employee benefit plans and have no announced plan or legally binding commitment
to create any employee benefit plans.
3.17 Compliance with Laws. OCIS and the OCIS Subsidiary have conducted
and are continuing to conduct their respective businesses in compliance with,
and are in compliance with, all applicable statutes, orders, rules and
regulations promulgated by governmental authorities relating in any respect to
its operations, conduct of business or use of properties, except where
noncompliance with any such statutes, orders, rules or regulations would not
have an adverse effect on either OCIS, the OCIS Subsidiary or their respective
results of operations. Such statutes, orders, rules or regulations include, but
are not limited to, any applicable statute, order, rule or regulation relating
to (i) wages, hours, hiring, nondiscrimination, retirement, benefits, pensions,
working conditions, and worker safety and health; (ii) air, water, toxic
substances, noise, or solid, gaseous or liquid waste generation, handling,
storage, disposal or transportation; (iii) zoning and building codes; (iv) the
production, storage, processing, advertising, sale, distribution,
transportation, disposal, use and warranty of products; or (v) trade and
antitrust regulations. The execution, delivery and performance of this Agreement
by OCIS and the OCIS Subsidiary and the consummation by OCIS and the OCIS
Subsidiary of the transactions contemplated by this Agreement will not,
separately or jointly, violate, contravene or constitute a default under any
applicable statutes, orders, rules and regulations promulgated by governmental
authorities or cause a lien on any property used, owned or leased by OCIS or the
OCIS Subsidiary to be created thereunder. There are no proposed changes in any
applicable statutes, orders, rules and regulations promulgated by governmental
authorities that would cause any representation or warranty contained in this
Section 3.17 to be untrue or have an adverse effect on its operations, conduct
of business or use of properties.
QBPHX\2055363.9
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3.18 Filings. OCIS and the OCIS Subsidiary have made all filings and
reports required under all local, state and federal laws with respect to its
business and of any predecessor entity or partnership, except filings and
reports in those jurisdictions in which the nature of the property owned or
business conducted, when considered in relation to the absence of serious
penalties, renders the required filings or reports unnecessary as a practical
matter.
3.19 Certain Activities. Neither OCIS nor the OCIS Subsidiary has,
directly or indirectly, engaged in or been a party to any of the following
activities:
3.19.1 Bribes, kickbacks or gratuities to any person or
entity, including domestic or foreign government officials or any other payments
to any such persons or entity, whether legal or not legal, to obtain or retain
business or to receive favorable treatment of any nature with regard to business
(excluding commissions or gratuities paid or given in full compliance with
applicable law and constituting ordinary and necessary expenses incurred in
carrying on its business in the ordinary course);
3.19.2 Contributions (including gifts), whether legal or not
legal, made to any domestic or foreign political party, political candidate or
holder of political office;
3.19.3 Holding of or participation in bank accounts, funds or
pools of funds created or maintained in the United States or any foreign
country, without being reflected on the corporate books of account, or as to
which receipts or disbursements therefrom have not been reflected on such books,
the purpose of which is to obtain or retain business or to receive favorable
treatment with regard to business;
3.19.4 Receiving or disbursing monies, the actual nature of
which has been improperly disguised or intentionally misrecorded on or
improperly omitted from the corporate books of account;
3.19.5 Paying fees to domestic or foreign consultants or
commercial agents which exceed the reasonable value of the ordinary and
customary consulting and agency services purported to have been rendered;
3.19.6 Paying or reimbursing (including gifts) personnel of
OCIS or the OCIS Subsidiary for the purpose of enabling them to expend time or
to make contributions or payments of the kind or for the purposes referred to in
Subparagraphs 2.23.1 through 2.23.5 above;
3.19.7 Participating in any manner in any activity which is
illegal under the international boycott provisions of the Export Administration
Act, as amended, or the international boycott provisions of the Internal Revenue
Code, or guidelines or regulations thereunder; and
3.19.8 Making or permitting unlawful charges, mischarges or
defective or fraudulent pricing under any contract or subcontract under a
contract with any department, agency or subdivision thereof, of the United
States government, state or municipal government or foreign government.
QBPHX\2055363.9
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3.20 Employment Relations. OCIS and the OCIS Subsidiary are in
compliance with all Federal, state or other applicable laws, domestic or
foreign, respecting employment and employment practices, terms and conditions of
employment and wages and hours, and has not and is not engaged in any unfair
labor practice; no unfair labor practice complaint against either OCIS or the
OCIS Subsidiary is pending before the National Labor Relations Board; there is
no labor strike, dispute, slow down or stoppage actually pending or threatened
against or involving either OCIS or the OCIS Subsidiary; no labor representation
question exists respecting the employees of either OCIS or the OCIS Subsidiary;
no grievance which might have an adverse effect upon either OCIS or the OCIS
Subsidiary or the conduct of its business exists; no arbitration proceeding
arising out of or under any collective bargaining agreement is currently being
negotiated by either OCIS or the OCIS Subsidiary; and either OCIS or the OCIS
Subsidiary has not experienced any material labor difficulty during the last
three (3) years.
3.21 Insurance Coverage. The policies of fire, liability, workers'
compensation or other forms of insurance of OCIS and the OCIS Subsidiary are
described in Section 3.23 of the OCIS Disclosure Schedule. Both OCIS and the
OCIS Subsidiary have complied with the terms and provisions of such policies
including, without limitation, all riders and amendments thereto. OCIS and the
OCIS Subsidiary have met required collateral and premium for coverages in force.
In the reasonable judgment of OCIS and the OCIS Subsidiary, such insurance is
adequate and OCIS will keep all current insurance policies in effect through the
Closing.
3.22 Articles of Incorporation and Bylaws. Each of OCIS and the OCIS
Subsidiary has heretofore delivered to the Company true, accurate and complete
copies of their respective Articles of Incorporation and Bylaws, together with
all amendments to each of the same as of the date hereof.
3.23 Corporate Minutes. The minute books of each of OCIS and the OCIS
Subsidiary provided to the Company at the Closing are the correct and only such
minute books and do and will contain, in all material respects, complete and
accurate records of any and all proceedings and actions at all meetings,
including written consents executed in lieu of meetings of their respective
shareholders, Board of Directors and committees thereof through the Closing
Date. The stock records of each of OCIS and the OCIS Subsidiary delivered to the
Company and the Shareholders at the Closing are the correct and only such stock
records and accurately reflects all issues and transfers of record of the
capital stock of each of OCIS and the OCIS Subsidiary. Neither OCIS nor the OCIS
Subsidiary has any of its records or information recorded, stored, maintained or
held off the premises of OCIS.
3.24 Default on Indebtedness. Neither OCIS nor the OCIS Subsidiary is
in default under any evidence of indebtedness for borrowed money.
3.25 Agreements, Judgment and Decrees. Neither OCIS nor the OCIS
Subsidiary is subject to any agreement, judgment or decree adversely affecting
its or their ability to enter into this Agreement, to consummate the
transactions contemplated herein.
3.26 Governmental Approvals. Except as set forth in Section 3.26 of the
OCIS Disclosure Schedule, no consent, approval or authorization of, or
notification to or registration
QBPHX\2055363.9
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with, any governmental authority, either federal, state or local, is required in
connection with the execution, delivery and performance of this Agreement by
OCIS or the OCIS Subsidiary.
3.27 Licenses, Permits and Required Consents. Each of OCIS and the OCIS
Subsidiary has all required franchises, tariffs, licenses, ordinances,
certifications, approvals, authorizations and permits ("Authorizations")
necessary to the conduct of its business as currently conducted or proposed to
be conducted. A list of such Authorizations is set forth in Section 3.27 of the
OCIS Disclosure Schedule attached hereto, true, correct and complete copies of
which have previously been delivered to the Company. All Authorizations relating
to the business of OCIS or the OCIS Subsidiary are in full force and effect, no
violations have been made in respect thereof, and no proceeding is pending or
threatened which could have the effect of revoking or limiting any such
Authorizations and the same will not cease to remain in full force and effect by
reason of the transactions contemplated by this Agreement.
3.28 Employment and Consulting Agreements. Neither OCIS nor the OCIS
Subsidiary has any outstanding employment or consulting agreement, written or
oral, with any employee or third party.
3.29 Transferability of OCIS Shares. The OCIS Shares are qualified for
trading on Nasdaq's OTC Bulletin Board under the symbol OCIC.OB. There are at
least two market makers for the OCIS Share and will be at least two market
makers after the Merger. The OCIS Shares owned by non-Affiliates were registered
with the SEC under an SB-2 Registration Statement and are freely tradable on the
OTC Bulletin Board and transferable without further action by OCIS. The OCIS
Shares owned by non-Affiliates will continue to be tradable on the OTC Bulletin
Board and transferable by non-Affiliates after the Merger, provided that OCIS
timely files a report on Form 8-K containing information about the Merger and
the Company as required by applicable SEC regulations. The term "Affiliate" in
this Agreement shall have the meaning as defined in Rule 415 under the
Securities Act of 1933, as amended. The foregoing representations and warranties
do not apply if non-Affiliates who hold OCIS Shares have pledged, hypothecated
or otherwise restricted the transferability of their OCIS Shares.
3.30 Completeness of Representations and Schedules. The Disclosure
Schedule and Exhibits hereto completely and correctly present in all material
respects the information required by this Agreement. This Agreement, any
Schedules and Exhibits to be delivered under this Agreement and the
representations and warranties of this Article 3, and the documents and written
information pertaining to OCIS and the OCIS Subsidiary furnished to the Company
or its agents and the Shareholders by or on behalf of OCIS, the OCIS Subsidiary
and the OCIS Principal Shareholders , do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make this
Agreement, or such certificates, schedules, documents or written information,
not misleading.
QBPHX\2055363.9
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ARTICLE 4
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF OCIS AND THE OCIS SUBSIDIARY
The obligations of OCIS and the OCIS Subsidiary pursuant to this
Agreement are, at the option of OCIS and the OCIS Subsidiary, subject to the
fulfillment to OCIS's and the OCIS Subsidiary's satisfaction on or before the
Closing Date of each of the following conditions:
4.1 Execution of this Agreement. The Company and the Shareholders have
duly executed and delivered this Agreement to OCIS, and all corporate action
required to consummate the Merger and the transactions contemplated hereby shall
have been duly and validly taken.
4.2 Representations and Warranties Accurate. All representations and
warranties of the Shareholder and the Company contained in this Agreement shall
have been true in all material respects as of the Closing Date.
4.3 Performance of the Company and Shareholders. The Company and the
Shareholders shall have performed and complied with all agreements, terms and
conditions required by this Agreement to be performed or complied with by them.
4.4 Tender of Company Shares. The Shareholders shall deliver to OCIS
all Company Shares and all options, warrants or other rights to acquire Company
Shares owned by such Shareholders free and clear of any liens, encumbrances and
other obligations.
4.5 Title. On or prior to the Closing Date, the Company shall deliver
to OCIS duly executed UCC-2 releases, as described in Section 2.12, "Title to
Properties and Assets," or evidence that no liens have been recorded against any
of the Company's properties or assets.
4.6 Intellectual Property. All trademarks, trade names, service marks,
licenses or other rights that the Company uses in connection with its business
shall be free and clear of any encumbrances, controversies, infringement or
other claims or obligations on the Closing Date.
4.7 Consent of Material Customers. Prior to Closing, the Company shall
have obtained all approvals in connection with the transfer of the Company
Shares by the Shareholders to OCIS as may be required by any material contracts
between the Company and any of its principal customers, and such approvals shall
have been issued in written form and substance satisfactory to OCIS and its
counsel or OCIS shall have waived such requirements.
4.8 Obligations to Third Parties. There shall be no loans or
obligations outstanding from the Company to any third party, except those
incurred in the ordinary course of business or as otherwise disclosed to OCIS.
4.9 Outstanding Obligations to Employees. There shall be no outstanding
claims, loans or obligations of the Company owed to any of their employees or
officers, provided that
QBPHX\2055363.9
-22-
OCIS shall give notice to the Shareholders and the Company of its approval or
withholding of approval of any claims, loans or obligations then known to OCIS
on or before the Closing Date.
4.10 Approval of Plan of Merger. The Merger and the Articles of Merger
shall have been duly approved by the Board of Directors of the Company and the
Shareholders pursuant to the Nevada Act and the California Act.
4.11 Financial and Other Conditions. The Company shall have no
contingent or other liabilities connected with its business, except as disclosed
in the Financial Statements or which otherwise have been incurred in the
ordinary course of business and have otherwise been disclosed to OCIS. The
review of the business, premises and operations of the Company and the Financial
Statements by OCIS at its expense shall be satisfactory to OCIS and shall not
have revealed any matter which, in the sole judgment of OCIS, makes the
acquisition on the terms herein set forth inadvisable for OCIS.
4.12 Legal Prohibition; Regulatory Consents. On the Closing Date, there
shall exist no injunction or final judgment, law or regulation prohibiting the
consummation of the transactions contemplated by this Agreement. Any required
governmental or regulatory consents shall have been obtained.
4.13 All Contracts Continued. Except as set forth in Schedule 4.13, all
lines of credit, debts, financing arrangements, leases and other contracts of
the Company shall be acceptable to OCIS and shall continue under their present
terms and conditions after the Closing Date and all approvals relating to the
transfer of Company Shares by the Shareholders in the Merger, and to effect the
transactions contemplated hereby, required by the foregoing instruments and
arrangements shall have been obtained by the Closing Date. OCIS shall have
received estoppel letters in form and substance reasonably acceptable to it from
other parties to any Contracts, if and as requested by OCIS.
4.14 Preferred Stock. The Company shall have no shares of Preferred
Stock outstanding.
4.15 No Adverse Change. There shall not have occurred any material
adverse change in the assets, business, condition or prospects of the Company.
4.16 Capital. The Company shall have raised a total of $4.0 million of
debt and/or equity capital in one or more private placements.
4.17 Registration Rights Agreement. The principal OCIS shareholders, as
designated by the Company and OCIS shall have entered into the Registration
Rights Agreement set forth as Exhibit C.
QBPHX\2055363.9
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ARTICLE 5
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and the Shareholders under this
Agreement are, at the option of the Company or the Shareholders, subject to the
fulfillment to the satisfaction of the Company and the Shareholders on or before
the Closing Date of each of the following conditions:
5.1 Execution and Approval of Agreement. OCIS and the OCIS Subsidiary
shall have duly executed and delivered this Agreement to the Company and the
Shareholders and all corporate action required to consummate the Merger and the
transactions contemplated hereby shall have been duly and validly taken.
5.2 OCIS Shares. The OCIS Shares received by the Shareholders shall be
free and clear of any liens, encumbrances or other obligations, except as may be
imposed pursuant to the Securities Act.
5.3 Employment or Consulting Agreements. As of the Closing Date, there
shall be no employment or consulting agreements, except as negotiated between
the parties, between the OCIS or the OCIS Subsidiary and any other party.
5.4 Representations and Warranties. The representations and warranties
made to the Company and the Shareholders in this Agreement or in any document,
statement, list or certificate furnished pursuant hereto shall be true and
correct as of the Closing Date.
5.5 Financial and Other Conditions. OCIS shall have no contingent or
other liabilities connected with its business, except as disclosed in the
Financial Statements or which otherwise have been incurred in the ordinary
course of business. The review of the business, premises and operations of OCIS
and the Financial Statements by the Company at its expense shall be satisfactory
to the Company and shall not have revealed any matter which, in the sole
judgment of the Company, makes the acquisition on the terms herein set forth
inadvisable for the Company.
5.6 Approval of Plan of Merger. The Plan of Merger shall have been duly
approved by OCIS as the sole shareholder of the OCIS Subsidiary and by the Board
of Directors and shareholders of OCIS pursuant to the Nevada Act.
5.7 OCIS Shareholder Approvals. OCIS shall have obtained shareholder
approval to (i) change the name of OCIS to Ecology Coatings, Inc.; (ii) adopt a
stock option plan on terms and conditions acceptable to the Company; and (iii)
amend the articles of incorporation of OCIS to authorize the issuance of up to
100,000,000 shares of Common Stock and to create blank check provisions to the
authorized preferred stock.
5.8 Lock-Up Agreements. The principal OCIS shareholders, as designated
by the Company, shall have executed the Lock-Up Agreements attached as Exhibit
B.
QBPHX\2055363.9
-24-
5.9 Securities Filings. OCIS shall have filed all required periodic
reports under the Securities Exchange Act of 1934 (the "Exchange Act") and shall
have made all other such filings with the Securities and Exchange Commission and
state securities regulators as may be required by applicable state and federal
law.
5.10 Governmental Proceedings. No action or proceeding before any court
or other governmental body shall be instituted which prohibits or invalidate the
transaction, or threatens to prohibit or invalidate the transaction, or which
may affect the right of the Shareholders to own the Company Shares or to operate
or control OCIS or the Surviving Company after the Closing Date.
ARTICLE 6
INDEMNIFICATION
6.1 Survival of Representations, Warranties and Certain Covenants. The
representations and warranties made by the parties in this Agreement and all of
the covenants of the parties in this Agreement shall survive the execution and
delivery of this Agreement and the Closing Date and shall expire on the twelve
month anniversary of the Closing Date. Any claim for indemnification shall be
effective only if notice of such claim is given by the party claiming
indemnification or other relief on or before June 15, 2008.
6.2 Indemnification by the OCIS Principal Shareholders. The OCIS
Principal Shareholders agree to indemnify and hold the Company and the
Shareholders harmless, from and after the Closing Date, against and in respect
of all matters in connection with any losses, liabilities or damages (including
reasonable attorneys' fees) incurred by the Company and the Shareholders
resulting from any misrepresentation or breach of the warranties made by OCIS,
the OCIS Subsidiary and the OCIS Principal Shareholders in Article 3,
"Representations and Warranties of OCIS, the OCIS Subsidiary and the Principal
OCIS Shareholders," or any breach or nonfulfillment of any agreement, covenant,
representation or warranty on the part of OCIS, the OCIS Subsidiary and the OCIS
Principal Shareholders contained in this Agreement or any liabilities,
obligations and commitments, and all suits, actions, proceedings, demands,
judgments, costs and expenses incident to the foregoing matters, including
reasonable attorneys' fees. No claim for indemnification may be made under this
Section 6.2 after June 15, 2008.
6.3 Arbitration. If the Company or the Shareholders believe that a
matter has occurred that entitles them to indemnification under Section 6.2,
"Indemnification by the OCIS Principal Shareholders," the Company or the
Shareholders, as the case may be (the "Indemnified Party"), shall give written
notice to the party or parties against whom indemnification is sought (each of
whom is referred to herein as an "Indemnifying Party") describing such matter in
reasonable detail. The Indemnified Party shall be entitled to give such notice
prior to the establishment of the amount of its losses, liabilities, costs or
damages, and to supplement its claim from time to time thereafter by further
notices as they are established. Each Indemnifying Party shall send a written
response to such claim for indemnification within thirty (30) days after receipt
of the claim stating its acceptance or objection to the indemnification claim,
and explaining its position in respect thereto in reasonable detail. If such
Indemnifying Party does
QBPHX\2055363.9
-25-
not timely so respond, it will be deemed to have accepted the Indemnified
Party's indemnification claim as specified in the notice given by the
Indemnified Party. If the Indemnifying Party gives a timely objection notice,
then the parties will negotiate in good faith to attempt to resolve the dispute,
and upon the expiration of an additional thirty (30) day period from the date of
the objection notice or such longer period as to which the Indemnified and
Indemnifying Parties may agree, any such dispute shall be submitted to
arbitration in Reno, Nevada, to a member of the American Arbitration Association
mutually appointed by the Indemnified Party and Indemnifying Party (or, in the
event the Indemnified Party and Indemnifying Party cannot agree on a single such
member, to a panel of three members of such Association selected in accordance
with the rules of such Association), who shall promptly arbitrate such dispute
in accordance with the rules of such Association and report to the parties upon
such disputed items, and such report shall be final, binding and conclusive on
the parties. Judgment upon the award by the arbitrator(s) may be entered in any
court having jurisdiction. The prevailing party in any such arbitration shall be
entitled to recover from, and have paid by, the other party hereto all fees and
disbursements of such arbitrator or arbitrators. For this purpose, a party shall
be deemed to be the prevailing party only if such party would be deemed to be a
prevailing party under Section 6.8, "Definition of Prevailing Parties."
6.4 No Finders. OCIS, the OCIS Subsidiary and the OCIS Principal
Shareholders represent and warrant to the Company and the Shareholders and the
Company and the Shareholders represent and warrant to OCIS, the OCIS Subsidiary
and the OCIS Principal Shareholders that there are no obligations to pay any fee
or commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement. The OCIS Principal Shareholders
agree to indemnify and hold the Company and the Shareholders harmless from any
breach of the representation of OCIS, the OCIS Subsidiary and the Principal
Shareholders in the previous sentence, and the Shareholders agree to indemnify
and hold OCIS, the OCIS Subsidiary and the OCIS Principal Shareholders harmless
from any breach of their representation in the previous sentence or from their
failure to pay such fees.
6.5 Third Person Claim Procedures. If any third person asserts a claim
against an Indemnified Party in connection with the matter involved in such
claim, the Indemnified Party shall promptly (but in no event later than ten (10)
days prior to the time at which an answer or other responsive pleading or notice
with respect to the claim is required) notify the Indemnifying Party of such
claim. The Indemnifying Party shall have the right, at its election, to take
over the defense or settlement of such claim by giving prompt notice to the
Indemnified Party that it will do so, such election to be made and notice given
in any event at least five (5) days prior to the time at which an answer or
other responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, the Indemnifying Party may conduct the
defense of such claim through counsel of its choosing (subject to the
Indemnified Party's approval, not to be unreasonably withheld), will be
responsible for the expenses of such defense, and shall be bound by the results
of its defense or settlement of the claim to the extent it produces damage or
loss to the Indemnified Party. The Indemnifying Party shall not settle such
claims without prior notice to and consultation with the Indemnified Party and
no such settlement involving any injunction or material and adverse effect on
the Indemnified Party may be agreed to without its consent. As long as the
Indemnifying Party is diligently contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim. If the Indemnifying
Party does not
QBPHX\2055363.9
-26-
make such election, or having made such election does not proceed diligently to
defend such claim prior to the time at which an answer or other responsive
pleading or notice with respect thereto is required, or does not continue
diligently to contest such claim, then the Indemnified Party may take over
defense and proceed to handle such claim in its exclusive discretion, and the
Indemnifying Party shall be bound by any defense or settlement that the
Indemnified Party may make in good faith with respect to such claim. The parties
agree to cooperate in defending such third party claims, and the defending party
shall have access to records, information and personnel in control of the other
part which are pertinent to the defense thereof.
6.6 Limitation of Remedies. No party to this Agreement shall be liable
to any other party or parties or have any remedies against any other party or
parties under this Agreement other than as provided in this Article 6. The
parties understand that this Agreement requires that all disputed claims shall
be submitted to arbitration in accordance with Section 6.3, "Arbitration."
6.7 Definition of Prevailing. Notwithstanding any of the other
provisions hereof, in the event of arbitration and/or litigation with respect to
the interpretation or enforcement of this Agreement or any provisions hereof,
the prevailing party in any such matter shall be entitled to recover from the
other party their or its reasonable costs and expense, including reasonable
attorneys' fees, incurred in such arbitration and/or litigation. For purposes of
this Agreement, a party shall be deemed to be the prevailing party only if such
party (A)(i) receives an award or judgment in such arbitration and/or litigation
for more than 50% of the disputed amount involved in such matter, or (ii) is
ordered to pay the other party less than 50% of the disputed amount involved in
such matter or (B)(i) succeeds in having imposed a material equitable remedy on
the other party (such as an injunction or order compelling specific
performance), or (ii) succeeds in defeating the other party's request for such
an equitable remedy.
ARTICLE 7
RISK OF LOSS
The risk of loss or destruction of all or any part of the Company's
properties or assets prior to the Closing Date from any cause (including,
without limitation, fire, theft, acts of God or public enemy) shall be upon the
Company and the Shareholders. Such risk shall be upon OCIS Subsidiary if such
loss occurs after the Closing Date.
CERTAIN COVENANTS OF THE PARTIES
7.1 Expenses and Fees. Each party shall be solely responsible for its
own costs and expenses (including legal expenses, accounting expenses and
brokers or finders fees and expenses), and the costs and expenses of its
affiliates, in connection with the preparation and negotiation of this Agreement
and the consummation of the transactions contemplated by this Agreement. No
party shall have any obligation for paying such expenses or costs of any other
party.
7.2 Public Announcements. The parties agree that no public release,
announcement or any other disclosure concerning any of the transactions
contemplated hereby shall be made or
QBPHX\2055363.9
-27-
issued by any party without the prior written consent of OCIS and the Company
(which consent shall not be unreasonably withheld or delayed), except to the
extent such release, announcement or disclosure may be required by applicable
laws, in which case the person required to make the release, announcement or
disclosure shall allow OCIS or the Company, as applicable, reasonable time to
comment on such release, announcement or disclosure in advance of such issuance
or disclosure; provided, however, that no notice is required if the disclosure
is determined by the OCIS's legal counsel to be required under federal or state
securities laws or exchange regulation applicable to OCIS.
7.3 Operations Pending Closing. Each of the Company, on one hand, and
OCIS and the OCIS Subsidiary, on the other hand, covenants that from the date
hereof through the Closing Date, except as otherwise provided in this Agreement;
or with the prior written consent of the other parties, which shall not be
unreasonably withheld or delayed, shall:
7.3.1 not undertake any transactions or enter into any
contracts, commitments or arrangements other than in the ordinary course of
business, use its good faith efforts to preserve the present Business and
organization of such party, and to preserve the goodwill of others having
business relationships with such party;
7.3.2 not enter into, renew, extend, modify, terminate, waive
or diminish any right under any material lease, contract or other instrument,
except in the ordinary course of business;
7.3.3 not allow any of such parties' assets or properties to
become subject to any Encumbrance that does not exist as of the date of this
Agreement, except in the ordinary course of business;
7.3.4 maintain such party's existing insurance coverages,
subject to variations in amounts in the ordinary course of business;
7.3.5 not declare or make any dividends or distributions; and
7.3.6 not amend the organizational documents of such party.
7.4 Due Diligence Investigation. Each party shall afford to the
officers, employees and authorized representatives of the other (including
independent public accountants and attorneys) complete access to the offices,
properties, books, records, tax returns, financial records (including computer
files, retrieval programs and similar documentation), employees and business of
such party subject to reasonable prior notice and shall furnish to such party
and its authorized representatives such additional information concerning the
assets, properties and operations as shall be reasonably requested, including
all such information as shall be necessary or appropriate to enable such party
or its representatives to verify the accuracy of the representations and
warranties contained in this Agreement, to verify that the covenants contained
in this Agreement have been complied with, and to determine whether the
conditions set forth in Article 4 or 5 have been satisfied. Each party shall
ensure that all third-party representatives of each, including without
limitation accountants and attorneys, fully cooperate and are available to the
other party in connection with such investigation, and each party shall
QBPHX\2055363.9
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bear its own costs and expenses in connection with the same. Any such
investigation shall be conducted in a manner that would not interfere
unreasonably with the operations of the other party.
7.5 Further Assurances. Each of the parties hereto shall, at any time,
and from time to time, either before or after the Closing Date, upon the request
of the appropriate party, do, execute, acknowledge and deliver, or will cause to
be done, executed, acknowledged and delivered, all such further acts,
assignments, transfers, conveyances and assurances as may be reasonably required
to complete the transactions contemplated in this Agreement. After the Closing
Date, each party shall use its good faith efforts to assure that any necessary
third party shall execute such documents and do such acts and things as the
other party may reasonably require for the purpose of giving each party the full
benefit of all the provisions of this Agreement and as may be reasonably
required to complete the transactions contemplated in this Agreement.
7.6 Actions of the Parties.
7.6.1 No Actions Constituting a Breach. From the date hereof
through the Closing Date, neither the Company will take or knowingly permit to
be done any action in the conduct of the business of the Company, nor will OCIS
or the OCIS Subsidiary take any action, which would be in breach of its
obligations herein, and each of the parties hereto shall cause the deliveries
for which such party is responsible at the Closing to be duly and timely made.
7.6.2 Notification of Breaches. From the date hereof through
the Closing Date, each party will promptly notify the other parties in writing
if any such Party becomes aware of any fact or condition that causes or
constitutes a breach of any of its representations and warranties as of the date
of this Agreement. During the same period, each party will promptly notify the
other parties of the occurrence of any breach of any covenant of such party in
this Article VIII.
7.7 Compliance With Conditions. Each party hereto agrees to cooperate
fully with each other party and shall use its good faith efforts to cause the
conditions precedent for which such Party is responsible to be fulfilled. Each
party hereto further agrees to use its good faith efforts to consummate this
Agreement and the transactions contemplated in this Agreement as promptly as
possible.
ARTICLE 8
MISCELLANEOUS
8.1 Termination.
8.1.1 General. This Agreement and the transactions
contemplated hereby may be terminated prior to the Closing: (i) by the mutual
written consent of the parties; (ii) by written notice from either party in the
event of a material breach of this Agreement by the other party; provided that
the party wishing to terminate this Agreement has notified the other parties in
writing of such breach and such breach has continued without cure for a period
of thirty (30)
QBPHX\2055363.9
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calendar days after the notice of breach; or (iii) by written notice from OCIS
if the Closing has not occurred by June 15, 2007, subject to the provisions of
Section 1.3, "Closing," of this Agreement.
8.1.2 Effect of Termination. If any party terminates this
Agreement pursuant to this Article 9, all rights and obligations of the parties
hereunder shall terminate without any liability of any party to the others
except for such damages arising out of, related to, or in connection with,
breaches of representations, warranties, covenants, or agreements which shall
have occurred prior to such termination. Except, as set forth in the immediately
preceding sentence, this Section shall not be deemed to release any party from
any liability for any breach by such party of the representations, warranties,
covenants or agreements which shall have occurred prior to such termination.
However, OCIS shall be entitled to all standstill deposits if the Closing has
not occurred as provided in this Agreement.
8.2 Binding Agreement. The parties covenant and agree that this
Agreement, when executed and delivered by the parties, will constitute a legal,
valid and binding agreement between the parties and will be enforceable in
accordance with its terms.
8.3 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto, their legal
representatives, successors. This Agreement cannot be assigned without the
consent of the Company.
8.4 Entire Agreement. This Agreement and its exhibits and schedules
constitute the entire contract among the parties hereto with respect to the
subject matter thereof, superseding all prior communications and discussions and
no party hereto shall be bound by any communication on the subject matter hereof
unless such is in writing signed by any necessary party thereto and bears a date
subsequent to the date hereof. The exhibits and schedules shall be construed
with and deemed as an integral part of this Agreement to the same extent as if
the same had been set forth verbatim herein. Information set forth in any
exhibit, schedule or provision of this Agreement shall be deemed to be set forth
in every other exhibit, schedule or provision of this Agreement and therefore
shall be deemed to be disclosed for all purposes of this Agreement.
8.5 Modification. This Agreement may be waived, changed, amended,
discharged or terminated only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, amendment, discharge or
termination is sought.
8.6 Notices. All notices, requests, demands and other communications
shall be deemed to have been duly given three (3) days after postmark of deposit
in the United States mail, if mailed, certified or registered mail, postage
prepaid:
If to the Company or the Shareholders:
Ecology Coatings, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
QBPHX\2055363.9
-30-
With copy to:
Xxxxxxxxx X. Xxxxxxxx, III, Esq.
Xxxxxxx & Xxxxx LLP
Renaissance Xxx
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
If to OCIS or the OCIS Subsidiary:
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn. President
With a copy to:
Xxxxxx Xxxxxxx, Esq.
4764 South 000 Xxxx
Xxxxx 0(X)
Xxxx Xxxx Xxxx, Xxxx 00000
or to such other address as any party shall designate to the other in writing.
The parties shall promptly advise each other of changes in addresses for such
notices.
8.7 Choice of Law and Jurisdiction. This Agreement shall be governed
by, construed, interpreted and enforced according to the laws of the State of
Nevada. Each party to this Agreement hereby irrevocably agrees that any legal
action or proceeding arising out of or relating to this Agreement or any
agreements or transactions contemplated hereby may be brought in the courts of
the State of Nevada or of the United States of America for the District of
Nevada and hereby expressly submits to the personal jurisdiction and venue of
such courts for the purposes thereof and expressly waives any claim of improper
venue and any claim that such courts are an inconvenient forum. Each party
hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth in Paragraph 9.6, "Notices," such service to become effective ten (10)
days after such mailing.
8.8 Severability. If any portion of this Agreement shall be finally
determined by any court or governmental agency of competent jurisdiction to
violate applicable law or otherwise not to conform to requirements of law and,
therefore, to be invalid, the parties will cooperate to remedy or avoid the
invalidity, but, in any event, will not upset the general balance of
relationships created or intended to be created between them as manifested by
this Agreement and the instruments referred to herein. Except insofar as it
would be an abuse of the foregoing principle, the remaining provisions hereof
shall remain in full force and effect.
QBPHX\2055363.9
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8.9 Other Documents. The parties shall upon reasonable request of the
other, execute such documents as may be necessary or appropriate to carry out
the intent of this Agreement.
8.10 Headings and the Use of Pronouns. The section headings hereof are
intended solely for convenience of reference and shall not be construed to
explain any of the provisions of this Agreement. All pronouns and any variations
thereof and other words, as applicable, shall be deemed to refer to the
masculine, feminine, neuter, singular or plural as the identity of the person or
matter may require.
8.11 Time is of the Essence. Time is of the essence of this Agreement.
8.12 No Waiver and Remedies. No failure or delay on a party's part to
exercise any right or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by a party of a right or remedy hereunder
preclude any other or further exercise. No remedy or election hereunder shall be
deemed exclusive but it shall, wherever possible, be cumulative with all other
remedies in law or equity.
8.13 Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties hereto on separate counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
8.14 Further Assurances. Each of the parties hereto shall use
commercially practicable efforts to fulfill all of the conditions set forth in
this Agreement over which it has control or influence (including obtaining any
consents necessary for the performance of such party's obligations hereunder)
and to consummate the transactions contemplated hereby, and shall execute and
deliver such further instruments and provide such documents as are necessary to
effect this Agreement.
8.15 Rules of Construction. The normal rules of construction which
require the terms of an agreement to be construed most strictly against the
drafter of such agreement are hereby waived since each party have been
represented by counsel in the drafting and negotiation of this Agreement.
8.16 Third Party Beneficiaries. Each party hereto intends this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
QBPHX\2055363.9
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY: OCIS:
ECOLOGY COATINGS, INC.,
a California corporation OCIS CORP.,
a Nevada corporation
By: /s/
-----------------
Xxxxxxx X. Xxxxxxxxx By: /s/
-----------------
Its: Chairman R. Xxxx Xxxxxx
Its: President
SHAREHOLDERS: OCIS SUBSIDIARY:
/s/
Xxxxxxx X. Xxxxxxxxx OCIS - EC, INC.,
a Nevada corporation
/s/ By: /s/
---------------------------- ----------------------------------------
Xxxxxxx Xxxxxxxxx R. Xxxx Xxxxxx
Its: President
OCIS Principal Shareholders:
/s/
Xxxxxx Xxxxxxxxx /s/
--------------------------------------------
Xxxx X. Xxxxxx
/s/
--------------------------------------------
R. Xxxx Xxxxxx
Xxxxx X. Xxxxxxxxxxx
QBPHX\2055363.9
-33-
EXHIBITS
Exhibit A - List of Shareholders
Exhibit B - Form of Lock-Up Agreement
Exhibit C - Registration Rights Agreement
Exhibit D - OCIS Board of Directors
Exhibit E - Merger Capitalization Table
QBPHX\2055363.9
AGREEMENT AND PLAN OF MERGER
BETWEEN
OCIS, INC.,
ECOLOGY COATINGS, INC.
AND
OCIS - EC, INC.
QBPHX\2082275.5
35
Exhibit A
List of Shareholders
Xxxxxxx X. Xxxxxxxxx
Xxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxxx
QBPHX\2082275.5
36
Exhibit B
LOCK-UP AGREEMENT
Ecology Coatings, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Re: Acquisition of Ecology Coatings, Inc. by Ocis Corp.
Ladies and Gentlemen:
The undersigned, a stockholder of Ocis Corp., a Nevada corporation
("OCIS"), understands that Ecology Coatings, Inc., a California corporation
("Ecology"), proposes to enter into an Agreement and Plan of Merger ("Merger
Agreement") by and among OCIS and OCIS- Ecology Acquisition, Inc., a Nevada
corporation and wholly owned subsidiary of OCIS ("Acquisition Subsidiary"),
whereby the Acquisition Subsidiary will merge with and into Ecology (the
"Merger"). As a result of this Merger the shareholders of Ecology will have
voting control of Ocis, which will change its name to Ecology Coatings, Inc.
In order to induce Ecology to enter into the Merger Agreement and to
proceed with the Merger, the undersigned agrees, for the benefit of Ecology,
that the undersigned will not, without Ecology's prior written consent (which
consent may be withheld at Ecology's sole discretion), directly or indirectly,
make any offer, sale, assignment, transfer, encumbrance, contract to sell, grant
of an option to purchase or other disposition or agreement to dispose
(collectively "Sell") Ecology Shares during the Lock-Up Period, unless the
transfer is a Permitted Transfer, as provided below.
"Lock-Up Period" means with respect to one hundred percent (100%) of
the undersigned's Ecology Shares the ninety-day (90) period from the Effective
Date of the Merger.
A "Permitted Transfer" means Ecology Shares (i) transferred as a gift
or gifts (provided, that any donee agrees in writing to be bound by the terms
hereof), (ii) transferred to immediate family members or a trust established for
the undersigned or for immediate family members, or upon death of the
undersigned by will or intestacy (provided, that any such transferee agrees in
writing to be bound by the terms hereof), or (iii) transferred to any
subsidiary, parent, partner, limited partner, retired partner, member or
stockholder of the undersigned (provided, that any such transferee agrees in
writing to be bound by the terms hereof).
The undersigned confirms that he, she or it understands that Ecology
will rely upon the covenants of the undersigned set forth in this agreement in
proceeding with the Merger. This agreement shall be binding on the undersigned
and his, her or its successors, heirs, personal representatives and assigns. The
undersigned agrees and consents to the entry of stop transfer instructions with
Ecology's transfer agent against the transfer of Ecology Shares held by the
undersigned except in compliance with this agreement.
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Sincerely yours,
Signature
Print Name and Title
Additional signature(s), if stock jointly held
------------------------------------------
Number of Ecology Shares Subject to this Agreement
QBPHX\2082275.5
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Exhibit C
Registration Rights Agreement
See attached.
QBPHX\2082275.5
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as
of April ___, 2007, by and among Ecology Coatings, Inc., a Nevada corporation
(the "Company"), and, as set forth on Exhibit A, the principal shareholders of
the Company (collectively referred to as the "Holders").
WHEREAS, the Company entered into that certain Agreement and Plan of
Merger, dated April __, 2007, with OCIS-EC, Inc., a Nevada corporation and a
wholly-owned subsidiary of the Company, Ecology Coatings, Inc., a California
corporation ("Ecology") and certain shareholders of Ecology ("Merger
Agreement");
WHEREAS, the Company issued to the Holders certain shares of its
restricted Common Stock (the "Restricted Stock");
WHEREAS, Ecology sold shares of its common stock (the "Shares") in a
private placement (the "Private Placement") and, pursuant to such Private
Placement, committed to file a resale registration statement under the
Securities Act of 1933 (the "Act") to register the Shares within one year of the
termination of the Private Placement;
WHEREAS, in connection with the merger of Ecology and the Company under
the Merger Agreement, the holders of the Shares exchanged their Shares for
shares of common stock of the Company (the "Company Shares") and have the right
to cause the Company to register the Company Shares for resale under the Act;
WHEREAS, in order to induce the Holders to approve the Merger
Agreement, the Company has entered into this Agreement to register the
Restricted Stock of the Holders in accordance with the provisions of this
Agreement; and
WHEREAS, the Restricted Stock is referred to in this Agreement as the
"Registrable Securities."
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
I. PIGGYBACK REGISTRATION.
1.1 Right To Piggyback. During the period beginning on the effective
date of the Merger Agreement through the second anniversary of the termination
of the Private Placement, whenever the Company proposes to register any of its
securities under the Act (other than a registration on Form S-4 or S-8 or any
similar successor form) and the registration form to be used may be used for the
registration of the Shares (a "Piggyback Registration"), the Company will give
prompt written notice to the Holders of its intention to effect such a
registration and will include in such registration all Registrable Securities
with respect to which the Company
QBPHX\2082275.5
40
has received written requests for inclusion therein within twenty (20) days
after the Holders' receipt of the Company's notice; provided, that (i) if, at
any time after giving written notice of its intention to register any securities
but prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason to
terminate or withdraw such registration, the Company shall give written notice
of such determination to the Holders and the Company shall not be relieved of
its obligation to register such Registrable Securities pursuant to this Section
1 and (ii) if such registration involves an underwritten offering, the Holders
must sell their Registrable Securities to the underwriters of such offering on
the same terms and conditions as apply to the Company or other holders of
Registrable Securities for whose account securities are to be sold, as the case
may be. If a registration requested pursuant to this Section involves an
underwritten public offering, the Holders may elect in writing, not later than
three (3) days prior to the effectiveness of the registration statement filed in
connection with such registration, not to sell the Registrable Securities in
connection with such registration. Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration. The
Company will keep the registration statement filed under this Agreement
continuously effective for one (1) year following the effective date of the
registration.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.
1.2 Piggyback Expenses. The Registration Expenses (as defined in
Section 2) of the Piggyback Registrations and all Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
this Agreement shall be paid by the Company.
1.3 Priority in Piggyback Registrations. If (i) a Piggyback
Registration pursuant to this Section 1 involves an underwritten offering of the
securities so being registered, whether or not for sale for the account of the
Company, to be distributed (on a firm commitment basis) by or through one or
more underwriters of recognized standing under underwriting terms appropriate
for such a transaction and (ii) the managing underwriter of such underwritten
offering informs the Company and the Holders of the Registrable Securities
requesting such registration by letter of opinion that the number of securities
requested to be included in such registration exceeds the number which can be
supported by market factors, the Company will include in such registration
securities in the following order of priority:
1.3.1 first, all the securities the Company proposes to sell for its
own account; and
1.3.2 second, to the extent that the number of securities which the
Company proposes to include is less than the number of securities which the
Company has been advised can be supported by market factors in such offering,
the number of such Registrable Securities requested to be included in such
Piggyback Registration by the Holders and any other
QBPHX\2082275.5
41
holders of Registrable Securities shall be allocated pro rata among all
such holders on the basis of the relative number of Registrable Securities each
such holder has requested to be included in such Piggyback Registration.
1.4. Company Obligations. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense, the Company will furnish such number of prospectuses
and other documents incident thereto as a Holder from time to time may
reasonably request.
2. REGISTRATION EXPENSES.
2.1 All expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, all registration,
qualification and filing fees, fees and expenses of compliance with securities
or blue sky laws, printing expenses, escrow fees, messenger and delivery
expenses, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons, as defined in Section 2(2) of the Act (a
"Person"), retained by the Company (all such expenses being herein called
"Registration Expenses"), will be borne as provided in this Agreement, except
that the Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities exchange or
quotation system on which similar securities issued by the Company are then
listed or quoted.
2.2 The Company will bear the Registration Expenses allocable to the
registration of the Registrable Securities. If the Holders choose to be
represented by separate counsel in connection with the registration of the
Registrable Securities, then the Holders will bear the cost of such separate
legal counsel.
3. INDEMNIFICATION.
3.1 The Company agrees to indemnify, to the extent permitted by law,
each Holder and such Holder's legal counsel and accountants, and each person
controlling such Holder within the meaning of the Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, against all losses, claims, damages, liabilities and expenses (or
actions in respect thereof), including any of the foregoing incurred in
settlement of litigation, commenced or threatened, arising out of or based on
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement, prospectus, offering circular, preliminary
prospectus or other document, or any amendment thereof or supplement thereto,
incident to any such registration, qualification or compliance, or based on any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to
QBPHX\2082275.5
42
make the statements therein, in light of the circumstances in which they were
made, not misleading, or any violation by the Company of any rule or regulation
promulgated under the Act or any state securities laws applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration, qualification or compliance, and will reimburse each
Holder and such Holder's legal counsel and accountants, and each person
controlling such Holder within the meaning of the Act, for any legal and any
other expenses reasonably incurred in connection with investigation, preparing
or defending any such claim, loss, damage, action or liability, except insofar
as the same arises out of or is based on any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by an instrument duly executed
by such Holder and stated to be specifically for use therein or by such Holder's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto at or prior to the written confirmation of the
sale of such securities to such person in any case where such delivery of the
prospectus or registration statement (as amended or supplemented) is required by
the Act after the Company has furnished the Holder with a sufficient number of
copies of the same. In connection with an underwritten offering, the Company
will indemnify such underwriters, their officers and directors and each Person
who controls such underwriters (within the meaning of the Act) to the same
extent as provided above with respect to the indemnification of the Holders
above.
3.2 In connection with any registration statement in which the Holders
are participating, the Holders will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will indemnify the Company, its directors and officers, its
legal counsel and independent accountants, and each Person who controls the
Company (within the meaning of the Act) with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement,
against all losses, claims, damages, liabilities and expenses (or actions in
respect thereof), including any of the foregoing incurred in settlement of
litigation, commenced or threatened, arising out of or based on any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement, prospectus, offering circular, preliminary prospectus or
other document, or any amendment thereof or supplement thereto, incident to any
such registration, qualification or compliance, or based on any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, and will reimburse the Company, its
directors and officers and controlling Persons, for any legal and any other
expenses reasonably incurred in connection with investigation, preparing or
defending any such claim, loss, damage, action or liability, except insofar as
the same arises out of or is based on any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by an instrument duly executed
by such Holder and stated to be specifically for use therein; provided that the
obligation to indemnify will be several, not joint and several, among the
Holders and the liability of each of the Holders will be in proportion to and
limited to the net amount received by such Holder from the sale the Restricted
Shares pursuant to such registration statement.
QBPHX\2082275.5
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3.3 Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party after such indemnified party has
actual knowledge of any claims as to which indemnity may be sought and (ii)
unless in such indemnified party's reasonable judgment and based on advice of
its legal counsel, a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, shall permit such
indemnifying party to assume the defense of such claim or litigation with
counsel reasonably satisfactory to the indemnified party and the indemnified
party may participate in such defense at such party's own expense, and provided
further that the failure of any indemnified party to give notice as provided
herein shall not relive the indemnifying party of its obligations under this
Agreement, except to the extent, but only to the extent, that the indemnifying
party's ability to defend against such claim or litigation is impaired as a
result of such failure to give notice. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement or
entry of any judgment made or consented to by the indemnified party without its
consent (but such consent will not be unreasonably withheld) and which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release of all liability in respect to such claim
or litigation. An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless in such indemnified party's reasonable
judgment and based on advice of its legal counsel, a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim.
3.4 The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer and registration of securities.
The Company also agrees to make such provisions as are reasonably requested by
any indemnified party for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
4. PARTICIPATION IN UNDERWRITTEN REGISTRATION. No Holder may
participate in any registration hereunder which is underwritten unless such
Holder (i) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the other Holders entitled
hereunder to approve such arrangements and (ii) together with the Company and
the other shareholders participating in the underwritten offering completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
5. RULE 144 AND 144A. In order to permit the Holders to sell the Registrable
Securities, if they so desire, pursuant to Rule 144 or Rule 144A promulgated by
the Securities and Exchange Commission (the "SEC") (or any successors to such
rules), the Company will use best efforts to comply with all rules and
regulations of the SEC applicable in connection with the use of each of Rule 144
and Rule 144A (or any successors thereto), including the timely filing of all
reports with the SEC and the provision of any information regarding the Company
in order to enable the Holders, if they so elect, to utilize Rule 144 or Rule
144A, and the Company will cause any restrictive legends to be removed and any
transfer restrictions to be rescinded with
QBPHX\2082275.5
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respect to any sale of the Registrable Securities that is exempt from
registration under the Act pursuant to Rule 144 or Rule 144A. Upon the request
of a Holder, the Company will deliver to such Holder a written statement
verifying that it has complied with such requirements.
6. TRANSFER OF REGISTRATION RIGHTS. Each Holder may transfer the right to
register the Shares under this Agreement to any ancestor, descendant or any
custodian or trustee for his or her own account to whom the Holder has
transferred any of the Shares, including, but not limited to, any transfer by
the Holder to any of the foregoing parties or other entities for estate planning
purposes.
7. LISTING OF SECURITIES TO BE REGISTERED. In connection with any registration
hereunder, the Company will use its best efforts to list all Registrable
Securities covered by such registration statement on any securities exchange or
quotation system on which any of the securities of the same class as the
Registrable Securities are then listed or quoted.
8. REPRESENTATIONS AND WARRANTIES OF COMPANY. The Company makes the following
representations and warranties in connection with the this Agreement:
8.1 The Company is a corporation duly organized and existing in good
standing under the laws of the State of California. The Company has full
corporate power and authority to carry on its business as now conducted and to
own or lease and operate the properties and assets now owned or leased and
operated by it. The Company is duly qualified to transact business in the State
of California and all states and jurisdictions in which the business or
ownership of its property makes it necessary to so qualify, except for
jurisdictions in which the nature of the property owned or business conducted,
when considered in relation to the absence of serious penalties, renders
qualification as a foreign corporation unnecessary as a practical matter.
8.2 The transactions contemplated by this Agreement have been duly
approved by the Board of Directors of the Company.
8.3 The Agreement is valid and binding upon the Company and neither the
execution nor delivery of the Agreement by the Company nor the performance by
the Company of any of its covenants or obligations under the Agreement will
constitute a default under any contract, agreement or obligation to which the
Company is bound. The Agreement is enforceable against the Company in accordance
with their respective terms, subject to bankruptcy, reorganization, insolvency,
fraudulent conveyance, moratorium, receivership or similar laws relating to or
affecting creditors' rights generally. The party executing the Agreement on
behalf of the Company has full power and authority to do so and to bind the
Company under the Agreement.
8.4 The Restricted Shares, when issued, shall be duly authorized,
validly issued, fully paid and non-assessable.
8.5 The Company has no obligations to pay any fees, commissions or
other compensation in connection with the transactions contemplated in the
Agreement.
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9. MISCELLANEOUS.
9.1 Cessation of Status as Registrable Securities. As to any particular
Registrable Securities, such securities will cease to be Registrable Securities
when they have (i) been effectively registered under the Act and disposed of in
accordance with the registration statement covering them, (ii) become eligible
for sale pursuant to, and have actually been sold to the public in compliance
with, Rule 144(k) (or any similar provision then in force) under the Act, or
(iii) been otherwise transferred and new certificates for them not bearing any
restrictive legends have been delivered by the Company.
9.2 No Inconsistent Agreements. The Company will not hereafter enter
into, or permit to exist, any agreement with respect to its securities which is
inconsistent with the rights granted to the Holders in this Agreement, without
their prior unanimous written consent.
9.3 Remedies. Any Holder having rights under any provision of this
Agreement will be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.
9.4 Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended and the Company may take any action
herein prohibited or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of all of the Holders.
9.5 Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.
9.6 Governing Law and Jurisdiction. This Agreement shall be governed
and construed in accordance with the laws of the State of Nevada. Each party to
this Agreement hereby irrevocably agrees that any legal action or proceeding
arising out of or relating to this Agreement or any agreements or transactions
contemplated hereby may be brought in the courts of the State of Nevada or of
the United States of America for the District of Nevada and hereby expressly
submits to the personal jurisdiction and venue of such courts for the purposes
thereof and expressly waives any claim of improper venue and any claim that such
courts are an inconvenient forum. Each party hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such suit, action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 9.10 "Notices," such
service to become effective ten (10) days after such mailing.
9.7 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
9.8 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Holders, upon any breach or default of the
Company under this Agreement, shall impair any such right, power or remedy of
the Holders nor shall it be construed
QBPHX\2082275.5
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to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereunder occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of the Holders of any breach or
default under this Agreement or any waiver on the part of the Holders of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, or by law or otherwise afforded to the
Holders, shall be cumulative and not alternative.
9.9 Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be enforceable against the parties actually
executing such counterparts and all of which together shall constitute one
instrument. Any telecopied signature of a party on this Agreement shall be
deemed an original signature of such party for all purposes.
9.10 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid or otherwise, delivered by hand or by messenger,
or by facsimile, addressed (i) if to a Holder, to such address as such Holder
shall have furnished to the Company in writing, or (ii) if to the Company, to
its principal executive offices and addressed to the attention of the Chief
Executive Officer, or to such other address as the Company shall have furnished
to such Holder in writing.
Each such notice or other communication for all purposes for this
Agreement shall be treated as effective, or having been given when delivered, if
delivered personally or by facsimile, or, if sent by mail, at the earlier of its
receipt or seventy-two (72) hours after the same has been deposited in a
regularly maintained receptacle for the deposit of the United States mail,
addressed and mailed as aforesaid.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
ECOLOGY COATINGS, INC., a Nevada
corporation
By
------
Xxxxxxx X. Xxxxxxxxx
Chairman of the Board
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EXHIBIT A
HOLDER SIGNATURE PAGE
------------------------------
Signature of Holder
-------------------------------
Number of Shares of
Restricted Stock
------------------------------
Name of Holder
------------------------------
Signature of Holder
-------------------------------
Number of Shares of
Restricted Stock
------------------------------
Name of Holder
------------------------------
Signature of Holder
-------------------------------
Number of Shares of
Restricted Stock
------------------------------
Name of Holder
QBPHX\2055363.9
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Exhibit D
OCIS Board of Directors
(Proposed Following Closing)
Xxxxxxx X. Xxxxxxxxx
F. Xxxxxx Xxxxxxx
Xxxxxx X. Xxxxxx
QBPHX\2055363.9
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Exhibit E
Merger Capitalization Table
QBPHX\2055363.9
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