PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (this "Agreement") made and entered into
this 6th day of April 2005 by and between College Oak Investments, Inc., a
Nevada corporation (hereinafter, "College Oak"), and Coastal Energy Services,
Inc., a Delaware corporation (hereinafter, "Coastal"). College Oak and Coastal
may be hereinafter referred to individually as a "Party" and collectively as the
"Parties".
RECITALS:
WHEREAS, College Oak is a corporation duly organized and existing under
the laws of the State of Nevada;
WHEREAS, Coastal is a corporation duly organized and existing under the
laws of the State of Delaware;
WHEREAS, on the date of this Agreement, College Oak has authority to issue
140,000,000 shares of common stock, $0.001 par value (the "College Oak Common
Stock"), of which 2,114,000 shares are issued and outstanding as of the date
hereof;
WHEREAS, on the date of this Agreement, Coastal has authority to issue
20,000,000 shares of common stock, $0.001 par value (the "Coastal Common
Stock"), of which 17,206,000 shares are issued and outstanding as of the date
hereof;
WHEREAS, the respective Boards of Directors of Coastal and College Oak
deem it advisable and in the best interests of the corporations' respective
shareholders that Coastal be acquired by College Oak through a merger ("Merger")
of College Oak and Coastal, whereby College Oak shall acquire all of the
business, assets and goodwill, and assume all of the obligations and liabilities
of Coastal and shares of Coastal Common Stock shall be converted to shares of
College Oak Common Stock on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual warranties and covenants
set forth herein, the parties hereto agree as follows:
AGREEMENT
1. Merger of Coastal into College Oak.
(a) Merger of Coastal with and into College Oak. Coastal and College
Oak hereby adopt the plan of reorganization encompassed by this Agreement and
hereby agree that Coastal shall merge with and into College Oak on the terms and
conditions set forth herein. Coastal will, upon the filing of the Certificate of
Merger contemplated by Section 252 of the General Corporation Law of the State
of Delaware and the Articles of Merger contemplated by Chapter 92A of the Nevada
Revised States (the "Effective Date"), merge with and into College Oak, and
thereafter the separate existence of Coastal will cease. A copy of each of the
Certificate of Merger and the Articles of Merger is attached hereto as Exhibit
A. As of the Effective Date, College Oak shall succeed to all of the rights,
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privileges, powers and property, including, without limitation, all rights,
privileges, franchises, patents, trademarks, licenses, registrations, bank
accounts, contracts, patents, copyrights and other assets of every kind and
description of Coastal and, by virtue of the merger, College Oak shall assume
all the obligations and liabilities of Coastal excepting and excluding, (i) the
minute books and stock records of Coastal insofar as they relate solely to its
organization and capitalization, and (ii) the rights of Coastal arising out of
this Agreement. The Merger will occur in accordance with the General Corporation
Law of the State of Delaware and Chapter 92A of the Nevada revised Statutes.
(b) Pending and Subsequent Actions. Coastal will cooperate, and will
cause its officers, directors, shareholders and other employees to cooperate,
with College Oak on and after the Effective Date (i) in effecting the collection
of all receivables and other items owing to Coastal, if any, and (ii) in
prosecuting claims and furnishing information, testimony and other assistance in
connection with all actions, proceedings, arrangements or disputes based upon
contracts, arrangements or acts of Coastal which were in effect or which
occurred on or prior to the Merger.
(c) Tax-Free Reorganization. College Oak and Coastal have prepared,
and intend to complete a merger pursuant to the provisions and requirements of
Internal Revenue Code Section 368(a), that is a "tax-free reorganization." The
Parties hereto represent that the purpose of their combination is to complete a
merger to combine their business interests, resources, and personnel in a
mutually beneficial and economic manner to achieve and execute a plan of
business to benefit the combined Company. There shall be a continuation of the
stock ownership of the Coastal shareholders as described in Section 2, below.
2. Delivery of College Oak Common Stock.
(a) Conversion of Stock. Effective as of the Effective Date, each
stock certificate representing shares of Coastal Common Stock, and pursuant to
the Coastal list of shareholders (the "Coastal Shareholders List") attached
hereto and made a part hereof as Exhibit B, along with any and all accrued and
unpaid dividend rights with respect thereto, shall be deemed to represent the
respective numbers of shares of College Oak Common Stock, and each right to
purchase shares of Coastal Common Stock shall be deemed to represent a right to
purchase the respective number of shares of College Oak Common Stock, in each
case as is determined by the formula set forth in Section 2 (b).
(b) Issuance and Delivery of College Oak Common Stock. Upon
surrender of certificates representing Coastal Common Stock by the shareholders
listed in the Coastal Shareholders List, or by tender of affidavits of lost
stock, College Oak will issue and deliver as provided in Section 2 (c)
hereunder, certificates representing one (1) share of College Oak Common Stock
in exchange for each one (1) share of Coastal Common Stock issued and
outstanding on the Effective Date. Shareholders of Coastal may request that
College Oak issue certificates to the said shareholder or the said shareholder's
assigns or designees. Fractional shares of College Oak Common Stock shall not be
issued, but their cash value, as determined in good faith by the Board of
Directors of College Oak shall be paid for the fractional shares. Coastal
shareholders shall, accordingly, be issued a total of 17,206,000 shares of
College Oak, causing the total issued and outstanding stock of College Oak at
the completion of the merger herein, to be 19,320,000 shares.
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(c) Surrender and Conversion of Coastal Share Certificates. All
persons holding shares of Coastal Common Stock, as detailed in the Coastal
Shareholders List, shall surrender the certificates representing the shares of
Coastal Common Stock, either by certified mail, return receipt requested, or in
person to: Matthew S. Cohen, Esq., Eaton & Van Winkle LLP, 3 Park Avenue, New
York, NY 10016, or such other location as College Oak or Coastal shall advise
such holders in writing. Upon receipt of the surrendered share certificate of
Coastal Common Stock, a replacement certificate reflecting shares of College Oak
Common Stock subject to the exchange rate set forth in Paragraph 2 (b) hereof
shall be issued and delivered in accordance with this Agreement. Notwithstanding
proposed exchanges of certificates, each certificate representing shares of
Coastal Common Stock not physically surrendered pursuant to this section shall
be deemed to represent shares of College Oak Common Stock and be subject to the
exchange rate set forth in Paragraphs 2 (b) and 2 (c) hereof.
(d) Agreements. As of the Effective Date, College Oak will assume
mutatis mutandis any and all agreements of Coastal, and agrees to be bound by
the terms and conditions of each such agreement.
(e) Fees. On the Effective Date, Coastal shall deliver to College
Oak (i) $45,000, as payment for prior legal services rendered to College Oak and
(ii) $90,000, for expenses incurred by College Oak in connection with the
transactions contemplated hereby.
3. Dissenters' Rights. Notwithstanding anything in this Agreement to the
contrary, shares of Coastal Common Stock that are issued and outstanding
immediately prior to the Effective Date and that are held by stockholders who
have not voted such shares in favor of the Merger and who have delivered a
written demand for appraisal of such shares in the manner provided in Section
262 of the Delaware Law shall have no right to receive any cash payment based
upon the applicable exchange rate unless and until such holder shall have failed
to perfect, or shall have effectively withdrawn or lost, such holder's right to
appraisal and payment under Delaware Law. If such holder shall have so failed to
perfect, or shall have effectively withdrawn or lost such right, such holder's
shares of Coastal Common Stock shall thereupon be deemed to have been cancelled
and converted as described in Section 2 at the Effective Date, and each such
share shall represent the right to receive the appropriate cash payment based
upon the applicable exchange rate. Coastal shall give College Oak prompt notice
of any demands received by Coastal for appraisal of its shares.
4. Representations and Warranties of Coastal. Coastal represents and
warrants to College Oak as follows:
(a) Corporate Organization. Coastal is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is duly qualified to do business as a foreign corporation in each other
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business as presently conducted and as proposed to be conducted.
(b) Validity of Transaction. Coastal has the full right, power and
authority to enter into this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by Coastal, and
constitutes the valid and legally binding obligation of Coastal.
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(c) Capitalization. Immediately prior to the Effective Date, the
authorized capital stock of Coastal shall consist solely of 20,000,000 shares of
Common Stock, $0.001 par value, of which 17,206,000 will be issued and
outstanding.
(d) Litigation. Coastal is not engaged in, nor has it been
threatened with, any material litigation (which for this purpose shall mean a
potential liability in excess of $10,000 or potential liabilities in the
aggregate in excess of $25,000), arbitration, investigation or other legal
proceeding relating to Coastal or its business, assets, property or employee
benefit plans or policies, nor, to the knowledge of Coastal, is there any valid
basis for any such proceeding.
(e) Approvals; No Violation. Except as may be required by the
Securities Act of 1933, as amended (the "Securities Act"), state securities
laws, and applicable corporate law, there is no requirement applicable to
Coastal to make any filing with, or to obtain any permit, authorization, consent
or approval of, any governmental or regulatory authority as a condition to the
lawful consummation by Coastal of the transactions contemplated by this
Agreement. Coastal does not know of any reason why any required permit,
authorization, consent or approval could not be obtained. Neither the execution
and delivery of this Agreement by Coastal nor the consummation by Coastal of the
transactions contemplated by this Agreement will (i) conflict with or result in
any breach of any provision of the Certificate of Incorporation or Bylaws of
Coastal, (ii) result in a material breach or default (or give rise to any right
of termination, cancellation or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license agreement, lease
or other material contract, instrument or obligation to which Coastal is a party
or by which Coastal or any of its assets may be bound, (iii) or violate in any
material respect any statute, rule, regulation, order, writ, injunction or
decree applicable to Coastal or any of its assets, or (iv) result in the
creation of any material (individually or in the aggregate) liens, charges or
encumbrances on any of the material assets of Coastal.
(f) Undisclosed Liabilities. Coastal does not have any material
liabilities, whether absolute, accrued, contingent or otherwise, and whether due
or to become due, except for those liabilities which are of a normally recurring
nature and were incurred after December 31, 2004, in the ordinary course of
business consistent with past practice.
(g) Absence of Changes. Since December 31, 2004, there has not been:
(i) any material adverse change in the business, assets,
liabilities, financial condition, results of operations or prospects of Coastal
taken as a whole;
(ii) any material damage, destruction or casualty loss,
whether or not covered by insurance, to any assets or properties of Coastal that
amounts to more than in the aggregate;
(iii) any increase in the compensation payable or to become
payable by Coastal to its employees (other than adjustments consistent with
prior practice) or any increase in any bonus, insurance, pension or other
employee benefit plan or program, payment or arrangement (other than adjustments
consistent with prior practice) made to, for or with any such directors,
officers or employees except as contemplated by this Agreement;
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(iv) any material change by Coastal in accounting methods,
principles or practices;
(v) any repurchase or retirement of any securities of Coastal,
or any declaration, payment or setting aside for payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the
capital stock of Coastal;
(vi) any act, omission or event which would be prohibited
after the date of this Agreement; or
(vii) any agreement, whether in writing or otherwise, to take
any action described in this Section 4 (g).
(h) Purchase, Sale and Other Agreements. (i) All of the following
(whether written or oral) are agreements to which Coastal is a party, or to
which Coastal is obligated:
(A) every contract or agreement for the purchase by
Coastal of inventory, supplies, equipment or other real or personal property, or
the procurement of services, except individual purchase orders, or aggregate
purchase orders to a single vendor, involving payments of less than $5,000;
(B) lease of equipment, machinery or other personal
property involving aggregate annual payments in excess of $2,500;
(C) contract or agreements for the sale or lease of
products or furnishing of services by Coastal, except individual purchase
orders, or aggregate purchase orders from a single customer, involving payments
of less than $2,500;
(D) joint venture, partnership or other contract or
arrangement involving the sharing of profits;
(E) contract or agreement, other than in the ordinary
course of business, relating to the purchase or acquisition, by merger or
otherwise, of a significant portion of the business, assets or securities of
Coastal by any other person or of any other person by Coastal;
(F) contract or agreement containing a covenant or
covenants which purport to limit to a material extent the ability or right of
Coastal to engage in any lawful business activity or compete with any person or
entity; or
(G) material contract or agreement not otherwise
described in this Section 4(h) which is not terminable by and without penalty to
Coastal within six months after the date of this Agreement.
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(ii) A complete and accurate copy of each written contract,
agreement and other document identified hereby will be made available to College
Oak prior to the Effective Date. Each contract, agreement or arrangement
identified hereby is, except to the extent fully performed at the date hereof,
in full force and effect and valid and binding in accordance with its terms in
all material respects; there is no material default under any such material
contract, agreement or arrangement; and no party to any such contract, agreement
or arrangement has notified Coastal that it intends to cancel, withdraw, modify
or amend such contract, agreement or arrangement. Coastal has performed all
material obligations required to be performed by it as of the date of this
Agreement under each contract, agreement, or arrangement referred to in this
Agreement, and to its knowledge no other party is in default under such material
agreements. The Merger and the actions contemplated thereby will not conflict
with or result in a breach of the terms, conditions or provisions of any such
agreement or cause any acceleration of maturity of any such agreements.
(i) Compliance with Laws. Coastal has substantially complied with
all laws, regulations, judgments, decrees or orders of any court or governmental
agency or entity applicable in any material respect to the conduct of its
business.
(j) Taxes. All United States, foreign, state and local tax returns
and reports (collectively "Returns") required to be filed to date with respect
to the operations of Coastal have been accurately prepared in all material
respects and duly filed, or an extension therefrom has been duly obtained, and,
except for Taxes contested in good faith, all Taxes payable have been paid when
due; there is no examination or audit known to Coastal or any claim, asserted
deficiency or assessment for additional Taxes in progress, pending, or
threatened, nor to the knowledge of Coastal is there any reasonable basis for
the assertion of any such claim, deficiency or assessment; no material special
charges, penalties, fines, liens, or similar encumbrances have been asserted
against Coastal with respect to payment of or failure to pay any Taxes which
have not been paid or resolved without further liability to Coastal. Coastal has
not executed or filed with any taxing authority any agreements extending the
period for assessment or collection of any Taxes. Proper amounts have been
withheld by Coastal from its employees' compensation payments for all periods in
compliance with the tax withholding provisions of applicable federal and state
laws. Coastal is not a party to any tax-sharing or tax-allocation agreement, nor
does Coastal owe any amounts under any tax-sharing or tax-allocation agreement.
As used in this Agreement, "Taxes" means all taxes, however denominated, imposed
by any federal, territorial, state, local or foreign government or any agency or
political subdivision of any such government, which taxes shall include, without
limiting the generality of the foregoing, all income or profits taxes (including
but not limited to, federal income taxes and state income taxes), payroll and
employee withholding taxes, unemployment insurance, social security taxes, sales
and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts
taxes, business license taxes, occupation taxes, real and personal property
taxes, stamp taxes, environmental taxes, transfer taxes, workers' compensation,
Pension Benefit Guaranty Corporation premiums and other governmental charges,
and other obligations of the same or of a similar nature to any of the
foregoing, which are required to be paid, withheld or collected.
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5. Representations and Warranties of College Oak. College Oak represents
and warrants to Coastal as follows:
(a) Corporate Organization. College Oak is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, and is duly qualified to do business as a foreign corporation in each
other jurisdiction in which the failure to so qualify would have a material
adverse effect on its business as presently conducted and as proposed to be
conducted.
(b) Validity of Transaction. College Oak has full right, power and
authority to enter into this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by College Oak
and constitutes the valid and legally binding obligation of IP Factory.
(c) Capitalization. Immediately prior to the Effective Date, the
authorized capital stock of College Oak shall consist of 140,000,000 shares of
Common Stock, of which 2,114,000 shares will be issued and outstanding.
(d) Litigation. College Oak is not engaged in, nor has it been
threatened with, any material litigation (which for this purpose shall mean a
potential liability in excess of $10,000 or potential liabilities in the
aggregate in excess of $25,000), arbitration, investigation or other legal
proceeding relating to College Oak or its business, assets, property or employee
benefit plans or policies, nor, to the knowledge of College Oak, is there any
valid basis for any such proceeding.
(e) Approvals; No Violation. Except as may be required by the
Securities Act of 1933, as amended (the "Securities Act"), state securities
laws, and applicable corporate law, there is no requirement applicable to
College Oak to make any filing with, or to obtain any permit, authorization,
consent or approval of, any governmental or regulatory authority as a condition
to the lawful consummation by College Oak of the transactions contemplated by
this Agreement. College Oak does not know of any reason why any required permit,
authorization, consent or approval could not be obtained. Neither the execution
and delivery of this Agreement by College Oak nor the consummation by College
Oak of the transactions contemplated by this Agreement will (i) conflict with or
result in any breach of any provision of the Certificate of Incorporation or
Bylaws of College Oak, (ii) result in a material breach or default (or give rise
to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license
agreement, lease or other material contract, instrument or obligation to which
College Oak is a party or by which College Oak or any of its assets may be
bound, (iii) or violate in any material respect any statute, rule, regulation,
order, writ, injunction or decree applicable to College Oak or any of its
assets, or (iv) result in the creation of any material (individually or in the
aggregate) liens, charges or encumbrances on any of the material assets of
College Oak.
(f) Undisclosed Liabilities and Revenues. (i) College Oak does not
have any material liabilities, whether absolute, accrued, contingent or
otherwise, and whether due or to become due, except for those liabilities which
(A) are accrued or fully reserved against in the unaudited balance sheet of
College Oak at January 31, 2005 or (B) are of a normally recurring nature and
were incurred after January 31, 2005 in the ordinary course of business
consistent with past practice and which do not exceed $10,000 in the aggregate.
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(ii) All revenues of College Oak, as presented in the
unaudited statement of operations for the three and nine months ending January
31, 2005, were derived in the ordinary course of business.
(h) Compliance with Laws. College Oak has substantially complied
with all laws, regulations, judgments, decrees or orders of any court or
governmental agency or entity applicable in any material respect to the conduct
of its business.
(i) Taxes. All United States, foreign, state and local tax returns
and reports (collectively "Returns") required to be filed to date with respect
to the operations of College Oak have been accurately prepared in all material
respects and duly filed, or an extension therefrom has been duly obtained, and,
except for Taxes contested in good faith, all Taxes payable have been paid when
due; there is no examination or audit known to College Oak or any claim,
asserted deficiency or assessment for additional Taxes in progress, pending, or
threatened, nor to the knowledge of College Oak is there any reasonable basis
for the assertion of any such claim, deficiency or assessment; no material
special charges, penalties, fines, liens, or similar encumbrances have been
asserted against College Oak with respect to payment of or failure to pay any
Taxes which have not been paid or resolved without further liability to College
Oak. College Oak has not executed or filed with any taxing authority any
agreements extending the period for assessment or collection of any Taxes.
Proper amounts have been withheld by College Oak from its employees'
compensation payments for all periods in compliance with the tax withholding
provisions of applicable federal and state laws. College Oak is not a party to
any tax-sharing or tax-allocation agreement, nor does College Oak owe any
amounts under any tax-sharing or tax-allocation agreement. As used in this
Agreement, "Taxes" means all taxes, however denominated, imposed by any federal,
territorial, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all income or profits taxes (including but not
limited to, federal income taxes and state income taxes), payroll and employee
withholding taxes, unemployment insurance, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, workers' compensation, Pension
Benefit Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
are required to be paid, withheld or collected.
(j) Agreements. Set forth on Schedule 5 is a list of all contracts,
agreements, arrangements and understandings that College Oak is a party to.
Except as set forth on Schedule 5, College Oak is not a party to any other
Contract.
6. Conditions Precedent to College Oak's Obligations to Close. College
Oak's obligation to consummate the Merger is subject to the satisfaction, on or
before the Effective Date, of the following conditions:
(a) Performance of Acts and Undertakings of Coastal. Each of the
acts and undertakings of Coastal to be performed on or before the Effective Date
pursuant to the terms of this Agreement shall have been duly performed.
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(b) Resolutions. Coastal shall have furnished College Oak with a
copy of (i) resolutions duly adopted by Coastal's board of directors authorizing
and approving this Agreement, attached hereto as Exhibit C, and made a part
hereof, and (ii) resolutions adopting this Agreement, duly approved by the
holders of at least a majority of the total number of outstanding shares of
common stock of Coastal, attached hereto as Exhibit D, and made a part hereof.
(c) Continued Accuracy of Coastal's Representations and Warranties.
All of the representations and warranties of Coastal contained in this Agreement
shall be true in every respect on and as of the Effective Date, with the same
effect as though such representations and warranties had been made on and as of
that date; and College Oak shall have received at the closing a certificate,
dated the Effective Date and executed by an officer of Coastal, containing a
representation and warranty to that effect.
(d) Approvals From Authorities. College Oak shall have received, or
shall have satisfied itself that it will receive, in form satisfactory to
College Oak, all necessary approvals of the transactions contemplated by this
Agreement from authorities having any jurisdiction over the business of Coastal,
so that Coastal may continue to carry on its business as presently conducted
after consummation of the Merger; and no such approval shall have been withdrawn
or suspended.
(g) Consents. All consents of other parties to the mortgages, notes,
leases, franchises, agreements, licenses, and permits of Coastal necessary to
permit consummation of the Merger shall have been obtained.
(h) Dissenting Shares. Not more than twenty percent (20%) of the
outstanding shares of Coastal Common Stock shall be "dissenting shares" within
the definition of Section 262 of the Delaware General Corporation Law.
(i) Filing of Certificate of Merger. A Certificate of Merger shall
be filed in the office of the Secretary of State or other office or each
jurisdiction in which such filings are required in order for the Merger to
become effective as soon as practically possible following the date hereof.
7. Condition Precedent to Coastal's Obligation to Close. Coastal's
obligation to consummate the Merger is subject to the satisfaction on or prior
to the Effective Date of the following conditions:
(a) Performance of Acts and Undertakings by College Oak. Each of
College Oak's acts and undertakings to be performed on or before the Effective
Date pursuant to this Agreement shall have been performed.
(b) Resolutions. College Oak shall have furnished Coastal with
copies of (i) resolutions duly adopted by the board of directors of College Oak
authorizing and approving the execution and delivery of this Agreement, attached
hereto as Exhibit E, and made a part hereof, and (ii) resolutions adopting this
Agreement, duly approved by the holders of at least a majority of the total
number of outstanding shares of common stock of College Oak, attached hereto as
Exhibit F, and made a part hereof.
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(c) Continued Accuracy of College Oak's Representations and
Warranties. The representations and warranties of College Oak contained in this
Agreement shall be true on and as of the Effective Date with the same effect as
though such representations and warranties had been made on and as of that date;
and Coastal shall have received at the closing a certificate, dated the
Effective Date and executed by officer of College Oak, containing a
representation and warranty to that effect.
(d) Shareholder Vote. At least a majority of the outstanding shares
of College Oak Common Stock shall have been voted for the adoption of this
Agreement.
8. Investigation by College Oak and Coastal. (a) Prior to the Effective
Date, either Party may directly or through its representatives make such
investigation of the assets and business of the other Party (including, without
limitation, confirmation of its cash, inventories, accounts, accounts receivable
and liabilities, and investigation of its titles to and the condition of its
property and equipment) as it deems necessary or advisable. The investigation
shall not affect (i) the representations and warranties contained or provided
for in this Agreement, (ii) either Party's right to rely on those
representations and warranties, or (iii) either Party's right to terminate this
Agreement as provided in this Section and in Section 12. Each of College Oak and
Coastal shall allow the other Party and its representatives full access, at
reasonable times after the date of execution of this Agreement, to its premises
and to all of its books, records, and assets, and each of the Party's officers
shall furnish to the other Party such financial and operating data and other
information with respect to its business and properties and as other Party shall
from time to time reasonably request. Each of College Oak and Coastal agree not
to disclose any confidential information obtained in the course of its
investigation or use it for any purposes other than evaluation with respect to
the contemplated merger.
(b) As soon as practicable, and in any event within ten (10) days
after the receipt of any supporting documentation requested by either College
Oak or Coastal, College Oak or Coastal may give the other Party notice if it has
decided that it wishes to terminate this Agreement based on any information
contained in any of the Exhibits or Schedules or obtained during the course of
its investigation. The notice shall specify the information obtained during the
investigation on which its decision to terminate is based. The Parties shall
have ten (10) days after receipt of the notice to review that information. If
its notice of termination is not withdrawn within this ten (10) day period, then
all further obligations of College Oak and of Coastal under this Agreement shall
terminate without further liability of Coastal to College Oak or of College Oak
to Coastal, except their respective obligations to return documents as provided
in Section 17. If either College Oak or Coastal does not advise the other Party
within the ten (10) day period specified in the first sentence above that it
wishes to terminate this Agreement, it shall be deemed to be satisfied with the
information relating to the other Party contained in the Exhibits or Schedules
and/or obtained during the course of its investigation, subject to their rights
concerning the continued accuracy of the other party's warranties and
representations set forth in this Agreement.
9. Survival of Representations, Warranties, and Indemnities. The
representations, warranties, and indemnities included or provided for in this
Agreement or in any Exhibit or Schedule or certificate or other document
delivered pursuant to this Agreement shall survive the Effective Date for a
period of one (1) year. No claim may be made under this paragraph unless written
notice of the claim is given within that one (1) year period.
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10. Indemnification. Coastal shall indemnify, defend, and hold College
Oak, and College Oak shall indemnify, defend and hold Coastal, harmless from and
against any and all losses, liabilities, costs, expenses, judgments,
assessments, penalties, damages, deficiencies, suits, actions, claims,
proceedings, demands, and causes of action, including but not limited to
reasonable attorney fees, court costs, and related expenses, that were caused
by, arose as a result of, or arose with respect to any of the following:
(a) Any inaccuracy in any representation or warranty or any breach
of any warranty of Coastal or College Oak, as the case may be, under this
Agreement or any Exhibit, certificate, instrument, or other document delivered
pursuant to this Agreement;
(b) Any failure of Coastal or College Oak, as the case may be, duly
to perform or observe any term, provision, covenant, or agreement to be
performed or observed by Coastal or College Oak, as the case may be, pursuant to
this Agreement, and any Exhibit, certificate, agreement, or other document
entered into or delivered pursuant to this Agreement; or
(c) Any inaccuracy whatsoever in the financial statements, whether
such losses were known or unknown;
provided, however, that either Party shall not be indemnified and held
harmless unless and until such damages, losses, and expenses exceed $20,000, in
which event, each Party shall be indemnified and held harmless in full. All
claims under this provision for indemnity shall be made within the time period
and in the manner provided for in Section 9.
11. Status-Quo Provision. For a period of twelve (12) months from the
Effective Date of the merger of Coastal with and into College Oak, as
contemplated herein, College Oak, and its shareholders agree that the College
Oak shall not engage in, complete, plan, prepare, or perform any reverse stock
split, or cancellation of the existing stock of College Oak nor shall it issue
additional shares of common stock (or securities convertible into common stock)
unless such transaction or shares (x) are issued for value and (y) will not
result in a market capitalization of less than $10 million immediately following
such transaction or issuance.
12. Further Assurances. Coastal and College Oak each agrees that from time
to time, as and when requested by the other, it will execute, acknowledge,
deliver and file all proper deeds, assurances, assignments, bills of sale,
assumptions and other documents, and do, or cause to be done, all other acts and
things necessary or proper in order to vest, perfect, assure or confirm in
College Oak title to and possession of all the property, rights, privileges,
powers, franchises, bank accounts, contracts, patents, copyrights, and stated
obligations and liabilities of Coastal, or otherwise necessary or proper to
carry out the intent and purposes of this Agreement.
13. Termination of this Agreement. This Agreement and the transactions
contemplated under this Agreement may be terminated at any time prior to the
Effective Date, either before or after the meeting of College Oak's
shareholders:
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(a) By mutual consent of Coastal and College Oak;
(b) By Coastal if there has been a material misrepresentation or a
material breach of warranty in College Oak's representations and warranties set
forth in this Agreement or in any Exhibit or certificate delivered pursuant to
this Agreement;
(c) By College Oak if there has been a material misrepresentation or
a material breach of warranty in Coastal's representations and warranties set
forth in this Agreement;
(d) By Coastal or College Oak if either party shall have determined
in its sole discretion that the transactions contemplated by this Agreement have
become inadvisable or impracticable by reason of the institution or threat of
institution, by governmental authorities (local, state, or federal) or by any
other person, of material litigation or proceedings against either or both of
the parties (or their respective officers, directors or affiliates), it being
understood and agreed that a written request by governmental authorities for
information with respect to the proposed transactions, which information could
be used in connection with such litigation or proceedings, may be deemed by
Coastal or College Oak to be a threat of material litigation or proceedings,
whether such request is received before or after the date of this Agreement;
(e) By Coastal if it has determined that the business, assets, or
financial condition of College Oak, taken as a whole, have been materially and
adversely affected, whether by reason of changes, developments, or operations in
the ordinary course of business or otherwise; and
(f) By College Oak or by Coastal if the Effective Date referred to
in Section 1 (a) has not occurred by April 15, 2005.
14. Right to Proceed. In the event that this Agreement is terminated
pursuant to Section 13, or because of the failure to satisfy any of the
conditions specified in Section 6 or Section 7, all further obligations of
Coastal and of College Oak under this Agreement shall terminate without further
liability of Coastal to College Oak or College Oak to Coastal, except for the
obligations of both parties under Section 12 and of College Oak under Section
15; provided, however, anything in this Agreement to the contrary
notwithstanding, that if College Oak fails satisfy any of the conditions
specified in Section 6, Coastal shall nonetheless have the right in its
discretion, to proceed with the transactions contemplated by this Agreement, and
if Coastal fails to satisfy any of the conditions specified in Section 7,
College Oak shall nonetheless have the right, in its discretion, to proceed with
the transactions contemplated by this Agreement.
15. Return of Documents in Event of Termination. In the event of the
termination of this Agreement for any reason, College Oak will return to Coastal
all documents, work papers, and other materials (including copies) relating to
the transactions contemplated by this Agreement, whether obtained before or
after execution of this Agreement. College Oak will not use any information so
obtained for any purpose, and will take all practicable steps to have such
information kept confidential.
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16. Rule 144 Opinions. The new directors and officers of the Company shall
and do hereby acknowledge that they will accept the opinion of David M. Loev,
Attorney at Law or any other legal counsel mutually agreed upon that the shares
retained by David Loev and Carey Birmingham were fully paid for on or prior to
Closing and that the Company and its officers and directors acknowledge that
they will not delay or hinder the processing of any Rule 144 opinion, provided
that such subsequent transfer complies with the rules and regulations set forth
in Rule 144.
17. Miscellaneous.
(a) Amendments. At any time before or after approval and adoption by
the shareholders of Coastal, this Agreement may be amended in any manner (except
that the provisions of Section 2 may not be amended without the approval of the
shareholders of Coastal) as may be determined in the judgment of the respective
Boards of Directors of Coastal and College Oak to be necessary, desirable or
expedient in order to clarify the intention of the parties hereto or to effect
or facilitate the purposes and intentions of this Agreement.
(b) Attorney Fees and Costs in Event of Termination. In the event of
the termination of this Agreement for any reason, each party shall bear its own
costs and expenses, including attorney fees.
(c) Public Announcement. Neither Coastal nor College Oak, without
the consent of the other, shall make any public announcement or issue any press
release with respect to this Agreement or the transactions contemplated by it,
which consent shall not be unreasonably withheld.
(d) Meeting of Coastal's Shareholders. Coastal shall take all
necessary steps to call a meeting of its shareholders or arrange for execution
of an action by written consent within three (3) days from the date of this
Agreement, which number of days includes adequate time for the preparation and
mailing of proxy statements if applicable. In all proxy statements or other
communications with the shareholders on this subject, Coastal's board of
directors shall recommend to the shareholders that they adopt the plan of merger
and approve the terms of this Agreement.
(e) Covenant to Operate in the Ordinary Course. Between the date of
this Agreement and the Effective Date, each of Coastal and College Oak shall
operate its business only in the ordinary course and in a normal manner
consistent with past practice. During this period, neither Coastal nor College
Oak shall not encumber any asset or enter into any transaction or make any
commitment relating to its assets or business otherwise than in the ordinary
course of its business (consistent with its prior practices), or take any action
that would render inaccurate any representation or warranty contained in this
Agreement or would cause a breach of any other covenant under this Agreement,
without first obtaining the written consent of College Oak or Coastal, as the
case may be.
(f) Governing Law; Successors and Assigns; Counterparts; Entire
Agreement. This Agreement (i) shall be construed under and in accordance with
the laws of the state of Delaware; (ii) shall be binding on and shall inure to
the benefit of the parties to the Agreement and their respective successors and
assigns; (iii) may be executed in one or more counterparts, by facsimile
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transmission, all of which shall be considered one and the same agreement and an
original, and shall become effective when one or more counterparts shall have
been signed by each of the parties and delivered to Coastal and College Oak,
either by facsimile transmission or by any other means; and (iv) embodies the
entire agreement and understanding, superseding all prior agreements and
understandings between College Oak and Coastal relating to the subject matter of
this Agreement.
(g) Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given, or on the fifth (5) day after mailing if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, and properly addressed as hereunder
provided; or (ii) four (4) days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid; or (iii) one day after
deposit with reputable overnight courier service and addressed to the party at
the address provided hereunder. The Parties addresses are as follows:
To Coastal at: 3 Park Avenue - 16th Floor
New York, NY 10016
Attn: Mr. Alan Gaines
To College Oak at: 20022 Creek Farm
San Antonio, Texas 78259
Attn: Mr. Carey G. Birmingham
Any party may change its address for purposes of this paragraph by giving
the other parties written notice of the new address in the manner set forth
above.
(h) Article and Section Titles. The headings herein are inserted as
a matter of convenience only and do not define, limit, or describe the scope of
this Agreement or the intent of the provisions hereof.
(i) Exclusive Jurisdiction and Venue. Any suit involving any dispute
or matter arising under this Agreement may only be brought in a United States
District Court located in the State of Delaware or any Delaware State Court
having jurisdiction over the subject matter of the dispute or matter. All
Parties hereby consent to the exercise of personal jurisdiction by any such
court with respect to any such proceeding.
(j) Terms. Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular, and plural, as the identity of the Person
may in the context require.
(k) Separability of Provisions. Each Provision of this Agreement
shall be considered separable; and if, for any reason, any provision or
provisions herein are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those
portions of this Agreement which are invalid.
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(l) Representation of Counsel.The parties represent herein that they
have been fully and adequately represented by counsel in this transaction.
(m) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.
(The remainder of this page is intentionally left blank)
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by their duly authorized officers and their corporate seals to be
hereto affixed effective as of the date first written above.
COASTAL ENERGY SERVICES, INC.
By: /s/ Alan Gaines
-------------------------
Name: Alan Gaines
Title: Vice Chairman
COLLEGE OAK INVESTMENTS, INC.
By: /s/ Carey G. Birmingham
-------------------------
Name: Carey Birmingham
Title: President
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