EXHIBIT 10.44
MERGER AGREEMENT
DATED JUNE 14, 2004
AMONG
ONESOURCE TECHNOLOGIES, INC.,
FIRST FINANCIAL COMPUTER SERVICES, INC.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
AND
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Table of Contents
Page
SECTION 1 MERGER OF THE COMPANY AND ONESOURCE.................................1
1.1 MERGER................................................................1
1.2 EFFECT OF THE MERGER..................................................1
1.3 NAME OF ONESOURCE.....................................................1
1.4 ARTICLES OF INCORPORATION AND BYLAWS..................................1
1.5 STATUS AND CONVERSION OF SECURITIES...................................1
1.6 FURTHER DOCUMENTS.....................................................2
1.7 EFFECTIVE DATE........................................................2
1.8 THE CLOSING...........................................................2
SECTION 2 REPRESENTATIONS AND WARRANTIES.....................................3
2.1 REPRESENTATIONS AND WARRANTIES OF COMPANY.............................3
2.2 FURTHER REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS...............10
2.3 REPRESENTATIONS AND WARRANTIES OF ONESOURCE..........................12
2.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................16
SECTION 3 PRE-CLOSING COVENANTS.............................................17
3.1 COVENANTS OF SHAREHOLDERS AND THE COMPANY............................17
3.2 COVENANTS OF ONESOURCE...............................................19
SECTION 4 CONDITIONS PRECEDENT TO OBLIGATIONS...............................21
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ONESOURCE.................21
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY
AND SHAREHOLDERS.....................................................22
SECTION 5 POST-CLOSING COVENANTS............................................26
5.1 SECTION 338(H)(10) ELECTION..........................................26
5.2 COVENANTS OF SHAREHOLDERS............................................26
5.3 NON-COMPETITION, NON-DISCLOSURE, AND NON-SOLICITATION................26
5.4 EMPLOYMENT AGREEMENTS................................................28
5.5 FURTHER ASSURANCES...................................................29
SECTION 6 WAIVER, MODIFICATION, ABANDONMENT.................................29
6.1 WAIVERS..............................................................29
6.2 MODIFICATION.........................................................29
6.3 ABANDONMENT PRIOR TO CLOSING DATE....................................30
6.4 NOTICE OF TERMINATION................................................30
6.5 AUTOMATIC TERMINATION................................................30
6.6 EFFECT OF ABANDONMENT................................................30
SECTION 7 INDEMNIFICATION...................................................31
7.1 INDEMNIFICATION BY SHAREHOLDERS......................................31
7.2 INDEMNIFICATION BY ONESOURCE.........................................31
7.3 NOTICE AND RIGHT TO DEFEND THIRD-PARTY CLAIMS........................31
7.4 INDEMNIFICATION NOT TO BE SOLE REMEDY................................32
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SECTION 8 GENERAL...........................................................32
8.1 BROKERS AND FINDERS..................................................32
8.2 NOTICES..............................................................33
8.3 BINDING NATURE OF AGREEMENT; NO ASSIGNMENT...........................34
8.4 NO THIRD-PARTY BENEFICIARIES.........................................34
8.5 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS..............................34
8.6 SCHEDULES AND EXHIBITS; ENTIRE AGREEMENT.............................34
8.7 CONTROLLING LAW......................................................34
8.8 INDULGENCES, NOT WAIVERS.............................................34
8.8 COSTS AND EXPENSES; ATTORNEYS' FEES..................................35
8.10 SECTION HEADINGS....................................................35
8.11 EXECUTION IN COUNTERPARTS...........................................35
8.12 PROVISIONS SEVERABLE................................................35
8.13 CONSTRUCTION........................................................35
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MERGER AGREEMENT
THIS MERGER AGREEMENT ("Agreement") is made this 14th day of June, 2004, by
and among OneSource Technologies, Inc., a Delaware corporation ("OneSource"),
First Financial Computer Services, Inc., an Arkansas corporation (the
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and ▇▇▇
▇. ▇▇▇▇▇▇▇▇ (each a "Shareholder" and, collectively, the "Shareholders").
Shareholders own all of the issued and outstanding capital stock of the
Company. The parties hereto desire that the Company be merged with and into
OneSource on the terms and conditions set forth in this Agreement (the
"Merger").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth herein, the parties agree as follows:
SECTION 1
MERGER OF THE COMPANY AND ONESOURCE
1.1 Merger. On the Effective Date (as defined in Section 1.7), the Company shall
be merged with and into OneSource, which shall be the surviving corporation,
pursuant to the Agreement and Plan of Merger attached as Exhibit A hereto (the
"Agreement and Plan of Merger"). At the time of Closing (as defined below),
OneSource shall cause a Certificate of Merger to be filed with the Secretary of
State of the State of Delaware and Shareholders shall cause Articles of Merger
to be filed with the Secretary of State of Arkansas.
1.2 Effect of the Merger. Upon the Merger becoming effective, the separate
existence of the Company shall cease, and OneSource shall succeed to and possess
all the properties, rights, privileges, powers, franchises, and immunities, of a
public as well as of a private nature, and be subject to all the debts,
liabilities, obligations, restrictions, disabilities, and duties of the Company,
all without further act or deed, as provided in Section 259 of the Delaware
General Corporation Law Act.
1.3 Name of OneSource. The name of OneSource shall be changed to a name to be
mutually reasonably agreed upon prior to Closing.
1.4 Articles of Incorporation and Bylaws. The Articles of Incorporation and the
Bylaws of OneSource as in effect on the Effective Date shall be, from and after
the Effective Date, the Articles of Incorporation and Bylaws of OneSource until
they are amended.
1.5 Status and Conversion of Securities.
(a) Conversion of Company Stock. Upon the Merger becoming effective, the shares
of common stock, no par value per share, of the Company issued and outstanding
on the Effective Date (the "Shares"), by reason of the Merger and upon surrender
to OneSource by the holders thereof, shall be converted into the following:
(i) Cash in the aggregate amount of $1,500,000 (the "Cash") in a cashier's
or certified check or by wire transfer of funds to an account specified by
Shareholders; and
(ii) An aggregate of 9,500,000 shares of One Source's common stock, par
value $.001 per share (the "OneSource Common Stock"); and
(iii) Four promissory notes in the aggregate principal amount of
$1,000,000, in the form attached as Exhibit B hereto (the "OneSource Promissory
Notes").
(b) Exchange of Certificates. On and after the Effective Date, each holder
(other than OneSource) of an outstanding certificate or certificates
representing the Shares, upon surrender thereof to OneSource, shall be entitled
to receive in exchange therefor (i) an amount of Cash, (ii) a certificate or
certificates representing the number of shares of OneSource Common Stock, and
(iii) a OneSource Promissory Note in the principal amount into which the Shares
theretofore represented by such surrendered certificate or certificates shall
have been converted as illustrated and provided for on Schedule 1.5(b) hereto.
Until so surrendered, each outstanding certificate representing Shares shall be
deemed for all purposes to represent the amount of cash, the number of shares of
OneSource Common Stock, and the principal amount of OneSource Promissory Note
into which the Shares theretofore represented thereby shall have been converted.
At the Closing, OneSource shall make available, for the benefit of Shareholders,
the amount of Cash, the number of shares of OneSource Common Stock, and the
OneSource Promissory Note required for conversion in accordance with this
Agreement.
1.6 Further Documents. From time to time, on and after the Effective Date,
as and when requested by OneSource or its successors or assigns, the appropriate
officers and directors of the Company as of the Effective Date shall, at the
expense of OneSource, for and on behalf and in the name of the Company or
otherwise, execute and deliver all such deeds, bills of sale, assignments, and
other instruments and shall take or cause to be taken such further or other
actions as OneSource or its successors or assigns may deem necessary or
desirable in order to confirm of record or otherwise to OneSource title to and
possession of all of the properties, rights, privileges, powers, franchises, and
immunities of the Company and otherwise to carry out fully the provisions and
purposes of this Agreement.
1.7 Effective Date. The Merger shall become effective on the later to occur
of (a) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, and (b) the filing of Articles of Merger with the
Secretary of State of the State of Arkansas (the "Effective Date").
1.8 The Closing. Subject to the terms and conditions of this Agreement, the
consummation of the Merger and the other transactions contemplated by this
Agreement (the "Closing") shall take place as promptly as practicable (and in
any event within three business days after the satisfaction or waiver of the
conditions set forth in Section 4 of this Agreement), at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or
such other time and place as the parties may otherwise agree. The date of the
Closing is sometimes referred to herein as the "Closing Date." The parties agree
that the following shall occur at the Closing:
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(a) The Company and Shareholders shall have satisfied each of the
conditions set forth in Section 4.1 and shall deliver to OneSource the
documents, certificates, opinions, consents, and letters required by Section
4.1.
(b) OneSource shall have satisfied each of the conditions set forth in
Section 4.2 and shall deliver to the Company and Shareholders the documents,
certificates, opinions, consents, and letters required by Section 4.2.
(c) The parties shall cause the Merger to be consummated by filing the
Certificate of Merger and Articles of Merger as set forth in Section 1.1.
(d) At the Closing, OneSource shall issue and deliver the Cash, the
certificates representing the Common Stock, and the OneSource Promissory Notes,
as set forth in Section 1.5.
SECTION 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Company. Except as otherwise set forth in
the Company's and Shareholders' Disclosure Schedule which shall be delivered no
later than seven (7) days after conclusion of the audit described in Section
4.1(h) below (the "Audit"), relate back to the representation and warranties of
the Company and Shareholder's as if made as of the date of this Agreement and
will be attached hereto and which will be acknowledged as received by OneSource,
the Company and each Shareholder, jointly and severally, represents and warrants
to OneSource as follows:
(a) Due Incorporation, Good Standing, and Qualification. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of Arkansas, with all requisite corporate power and authority to own,
operate, and lease its assets and properties and to carry on its business as now
being conducted. To the knowledge of the Company, the Company is not subject to
any material disability by reason of the failure to be duly qualified as a
foreign corporation for the transaction of business or to be in good standing
under the laws of any jurisdiction. The Company's and Shareholders' Disclosure
Schedule will include a list setting forth, as of the date of this Agreement,
each jurisdiction in which the Company is qualified to do business.
(b) Power to Execute Agreement; Enforceability. The Company has the
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder, and to consummate the transactions contemplated
hereby. The Shareholders and the Board of Directors of Company have taken all
action necessary to authorize and approve the execution and delivery of this
Agreement, the performance of their respective obligations hereunder, and the
consummation of the transactions contemplated hereby. No other corporate
proceedings on the part of the Company, including a meeting of shareholders, are
necessary to authorize the execution and delivery by the Company of this
Agreement or the consummation by the Company of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by, and constitutes
the legal, valid, and binding obligation of, the Company, enforceable against it
in accordance with its terms, except that (i) such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other similar
laws now or hereafter in effect relating to creditors' rights, and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought.
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(c) Capital Stock. As of the date hereof, the Company has an authorized
capital stock consisting of 300 shares of common stock, no par value, of which
300 shares of common stock are issued and outstanding. All of the issued and
outstanding shares of capital stock of the Company have been validly authorized
and issued and are fully paid and nonassessable.
(d) Options, Warrants, and Rights. The Company does not have outstanding
any options, warrants, or other rights to purchase, or securities or other
obligations convertible into or exchangeable for, or contracts, commitments,
agreements, arrangements, or understandings to issue, any shares of its capital
stock or other securities.
(e) Subsidiaries. The Company has no subsidiaries. The Company does not
own, directly or indirectly, any capital stock or other equity securities of any
corporation, partnership, joint venture, or limited liability company or have
any direct or indirect equity or ownership interest in any other corporation,
partnership, joint venture, limited liability company, or other business.
(f) Financial Statements. The Balance Sheets of the Company as of December
31, 2002, December 31, 2003, and March 31, 2004, and the Statements of
Operations for the two years ended December 31, 2003, and the three months ended
March 31, 2004 and all related schedules and notes to the foregoing, have been
prepared by the Company without audit. The foregoing financial statements have
not been prepared in accordance with generally accepted accounting principles.
To the knowledge of the Company, the foregoing financial statements are correct
and complete, and present fairly, in all material respects, the financial
position, results of operations, and changes of financial position of the
Company as of their respective dates and for the periods indicated. To the
knowledge of the Company, the Company does not have any material liabilities or
obligations of a type that would be included in a balance sheet prepared in
accordance with generally accepted accounting principles, whether related to tax
or non-tax matters, accrued or contingent, due or not yet due, liquidated or
unliquidated or otherwise, except as and to the extent disclosed or reflected in
the balance sheet (the "Company Base Balance Sheet") as of March 31, 2004, (the
"Base Balance Sheet Date"), or incurred since the Base Balance Sheet Date in the
ordinary course of business or as contemplated by this Agreement.
(g) Books and Records. To the knowledge of the Company, the books of
account and other corporate records of the Company are complete and accurate,
have been maintained in accordance with reasonable business practices, and the
matters contained therein are appropriately reflected in the Company's financial
statements.
(h) No Material Change. To the knowledge of the Company, since the Base
Balance Sheet Date, there has not been and there is not threatened (i) any
material adverse change in the business, assets, properties, financial
condition, or operating results of the Company, (ii) any loss or damage (whether
or not covered by insurance) to any of the assets or properties of the Company,
which materially affects or impairs its ability to conduct its business, or
(iii) any mortgage or pledge of any assets or properties of the Company, or any
indebtedness incurred by the Company other than indebtedness, not material in
the aggregate, incurred in the ordinary course of business.
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(i) Actions in the Ordinary Course of Business. To the knowledge of the
Company, since the Base Balance Sheet Date, the Company has not (i) taken any
action outside of the ordinary and usual course of business; (ii) borrowed any
money or become contingently liable for any obligation or liability of another;
(iii) failed to pay all of its debts and obligations as they became due; (iv)
incurred any debt, liability, or obligation of any nature to any party except
for obligations arising from the purchase of goods or the rendition of services
in the ordinary course of business, none of which aggregate more than $100,000
with respect to the same supplier or customer; (v) knowingly waived any right of
substantial value; (vi) failed to use its reasonable efforts to preserve its
business organization intact, to keep available the services of its employees,
or to preserve its relationships with its customers, suppliers, and others with
which it deals; or (vii) increased or committed to increase the salary, fee, or
compensation of any officer, employee, independent contractor, agent, firm, or
person performing services for it.
(j) Title to Assets and Properties. The Company has good and marketable
title to all of its personal assets and properties, including all assets and
properties reflected in the Company Base Balance Sheet or acquired subsequent to
the Base Balance Sheet Date, except assets or properties disposed of subsequent
to that date in the ordinary course of business. Such assets and properties are
subject to no mortgage, indenture, pledge, lien, claim, encumbrance, charge,
security interest, or title retention or other security arrangement, except for
liens for the payment of federal, state, and other taxes, the payment of which
is neither delinquent nor subject to penalties, and except for other liens and
encumbrances incidental to the conduct of the business of the Company or the
ownership of its assets or properties, which were not incurred in connection
with the borrowing of money or the obtaining of advances and which do not in the
aggregate materially detract from the value of the assets or properties of the
Company or materially impair the use thereof in the operation of its business,
except in each case as disclosed in the Company Base Balance Sheet. All leases
pursuant to which the Company leases any substantial amount of real or personal
property are valid and effective in accordance with their respective terms. The
Company owns or has the right to use all assets, rights, and properties
necessary to conduct its business as currently conducted.
(k) Litigation. There are no actions, suits, proceedings, or other
litigation pending or, to the knowledge of Shareholders, threatened against the
Company, at law or in equity, or before or by any federal, state, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality that, if determined adversely to the Company, would individually
or in the aggregate have an adverse effect on the business, assets, properties,
operating results, prospects, or condition, financial or otherwise, of the
Company.
(l) Rights and Licenses. To the knowledge of the Company, the Company is
not subject to any material disability or liability by reason of its failure to
possess any license, permit, franchise, certificate, registration, consent,
approval, or authorization. To the knowledge of the Company, the Company has all
licenses, permits, franchises, certificates, registrations, consents, approvals,
and authorizations of whatever kind and type, governmental or private, necessary
for the business conducted by it and the ownership or use of all assets and
properties and the premises occupied by it. To the knowledge of the Company, the
Company's and Shareholders' Disclosure Schedule will contain a true, correct,
and complete list of licenses, permits, franchises, certificates, registrations,
consents, approvals, and authorizations of whatever kind and type held by the
Company for the conduct of the Company's business.
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(m) Intellectual Property. To the knowledge of the Company, the Company
owns or holds all of the rights to use all logos, trademarks, trade names,
Internet domain names, trade secrets, fictitious names, service marks,
proprietary processes, patents, and copyrights that are used in or necessary to
the operation of its business (collectively, "Intellectual Property"). To the
knowledge of the Company, the Company's and Shareholders' Disclosure Schedule
will set forth a true, complete, and correct list of all of the Intellectual
Property owned or used by the Company, including but not limited to all Internet
"domain names" used by the Company that are registered with a U.S. or foreign
domain name registrar, the names of all software programs used by the Company,
copies of the software user licenses, and a list of all trademark and copyright
registrations applied for and/or issued with respect to the Intellectual
Property, including any foreign copyright registrations or interests under any
international copyright conventions or treaties. Shareholders are not aware of
any facts, claims, or circumstances that would enable any person or entity to
challenge the Company's ownership of or right to use any of the Intellectual
Property, including the Company's copyrights or trademarks, its rights to
register such copyrights or trademarks, and the right to seek all available
protections and remedies against any party that infringes such copyrights or
trademarks. To the knowledge of the Company, none of the matters covered by the
Intellectual Property, nor any of the products or services sold or provided by
the Company, nor any of the processes used or the business practices followed by
the Company, infringes or has infringed upon any logo, trademark, trade name,
trade secret, fictitious name, service ▇▇▇▇, proprietary process, patent, or
copyright owned by any person or entity (or any application with respect
thereto), or constitutes unfair competition. The Company is not and, following
the transaction contemplated by this Agreement, will not be obligated to pay any
royalty or other payment with respect to any of the Intellectual Property, other
than license, maintenance and other payments provided for in agreements for the
Intellectual Property. The Company has taken all actions reasonably necessary
under applicable law to protect all trade secrets and confidential information
used or contained in the Intellectual Property including, but not limited to,
limitation of access to such information, confidentiality agreements with
employees, and advising its employees with access to such trade secrets or
confidential information regarding the status of such trade secrets or
confidential information.
(n) No Violation. To the knowledge of the Company, the execution and
delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not violate or result in a breach by the
Company of, or constitute a default under, or conflict with, or cause any
acceleration of any obligation with respect to, (i) any provision or restriction
of any charter, bylaw, loan, indenture, or mortgage of the Company, or (ii) any
provision or restriction of any lien, lease agreement, contract, instrument,
order, judgment, award, decree, ordinance, or regulation or any other
restriction of any kind or character to which any assets or properties of the
Company is subject or by which the Company is bound.
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(o) Taxes. To the knowledge of the Company, the Company has duly filed in
correct form all Tax Returns (as defined below) relating to the activities of
the Company required or due to be filed (with regard to applicable extensions)
on or prior to the date of this Agreement. To the knowledge of the Company, all
such Tax Returns are accurate and complete in all material respects, and the
Company has paid or made provision for the payment of all Taxes (as defined
below) that have been incurred or are due or claimed to be due from it by
federal, state, or local taxing authorities for all periods ending on or before
the date of this Agreement, other than Taxes or other charges that are not
delinquent or are being contested in good faith and have not been finally
determined and have been disclosed to OneSource. To the knowledge of the
Company, the amounts set up as reserves for Taxes on the books of the Company
are sufficient in the aggregate for the payment of all unpaid Taxes (including
any interest or penalties thereon), whether or not disputed, accrued, or
applicable. No claims for taxes or assessments are being asserted or, to the
knowledge of the Company, threatened against the Company. For purposes of this
Agreement, the term "Taxes" shall mean all taxes, charges, fees, levies, or
other assessments, including, without limitation, income, gross receipts,
excise, property, sales, transfer, license, payroll, and franchise taxes,
imposed by the United States, or any state, local, or foreign government or
subdivision or agency thereof and any interest, penalties, or additions
attributable thereto, and the term "Tax Return" shall mean any report, return,
or other information required to be supplied to a taxing authority or required
by a taxing authority to be supplied to any other person. The Company has duly
and validly filed elections for C corporation status under the Internal Revenue
Code; none of such elections have been revoked or terminated; and neither the
Company nor any shareholder of the Company has taken any action that would cause
a termination of such election.
(p) Accounts Receivable. To the knowledge of the Company, the accounts
receivable of the Company have been acquired in the ordinary course of business,
are valid and enforceable, and are fully collectible, subject to no known
defenses, set-offs, or counterclaims, except to the extent of the reserve
reflected in the books of the Company or in such other amount that is not
material in the aggregate.
(q) Contracts. The Company is not a party to (i) any plan or contract
providing for bonuses, pensions, options, stock purchases, deferred
compensation, retirement payments, or profit sharing, (ii) any collective
bargaining or other contract or agreement with any labor union, (iii) any lease,
installment purchase agreement, or other contract with respect to any real or
personal property used or proposed to be used in its operations, excepting, in
each case, items included within aggregate amounts disclosed or reflected in the
Company Base Balance Sheet, (iv) any employment agreement or other similar
arrangement not terminable by it upon 30 days or less notice without penalty to
it, (v) any contract or agreement for the purchase of any commodity, material,
fixed asset, or equipment in excess of $10,000, (vi) any contract or agreement
creating an obligation of $10,000 or more, (vii) any contract or agreement that
by its terms does not terminate or is not terminable by it upon 30 days or less
notice without penalty to it, (viii) any loan agreement, indenture, promissory
note, conditional sales agreement, or other similar type of arrangement, (ix)
any material license agreement, or (x) any contract that may result in a
material loss or obligation to it. To the knowledge of the Company, all material
contracts, agreements, and other arrangements to which the Company is a party
are valid and enforceable in accordance with their terms; the Company and all
other parties to each of the foregoing have performed all obligations required
to be performed to date; neither the Company nor any such other party is in
default or in arrears under the terms of any of the foregoing; and no condition
exists or event has occurred that, with the giving of notice or lapse of time or
both, would constitute a default under any of them.
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(r) Compliance with Law and Other Regulations. The Company is not subject
to and, to the knowledge of the Company, has not been threatened with any
material fine, penalty, liability, or disability as the result of its failure to
comply with any requirement of federal, state, local, or foreign law or
regulation or any requirement of any governmental body or agency having
jurisdiction over it, the conduct of its business, the use of its assets and
properties, or any premises occupied by it.
(s) Environmental Matters.
(i) To the knowledge of the Company, the Company is, and at all times
has been, in full compliance with, and has not been and is not in violation
of or liable under, any federal, state, or local environmental laws. There
are no actual or, to the knowledge of Shareholders, threatened orders,
notices, or other communications of or with respect to any actual or
potential violation or failure to comply with any federal, state, or local
environmental laws, or of any actual or threatened obligation to undertake
or bear the cost of any environmental, health, and safety liabilities with
respect to any of the facilities, properties or assets (whether real,
personal, or mixed) in which the Company has had an interest, or with
respect to any property or facility at or to which Hazardous Materials (as
defined in Section 2.1(s)(vii)) were generated, manufactured, refined,
transferred, imported, used, or processed by Shareholders, the Company, or
any other person for whose conduct they are or may be held responsible, or
from which Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.
(ii) There are no pending or, to the knowledge of Shareholders,
threatened claims, encumbrances, or other restrictions of any nature,
resulting from any environmental, health, and safety liabilities or arising
under or pursuant to any federal, state, or local environmental laws, with
respect to or affecting any of the Company's facilities or any other
properties and assets (whether real, personal, or mixed) in which
Shareholders or the Company have or had an interest.
(iii) To the knowledge of the Company, none of the Shareholders, the
Company, or any other person for whose conduct they are or may be held
responsible has any environmental, health, and safety liabilities with
respect to the Company's facilities or with respect to any other properties
and assets (whether real, personal, or mixed) in which Shareholders or the
Company (or any predecessor) have or had an interest, or at any property
geologically or hydrologically adjoining such facilities or any such other
property or assets.
(iv) To the knowledge of the Company, there are no Hazardous Materials
present on or in the environment at the Company's facilities or at any
geologically or hydrologically adjoining property, including any Hazardous
Materials contained in barrels, above or underground storage tanks,
landfills, land deposits, dumps, equipment (whether moveable or fixed) or
other containers, either temporary or permanent, and deposited or located
in land, water, sumps, or any other part of the Company's facilities or
such adjoining property, or incorporated into any structure therein or
thereon. To the knowledge of the Company, none of the Shareholders, the
Company, any other person for whose conduct they are or may be held
responsible, or any other person has permitted or conducted, or is aware
of, any Hazardous Activity (as defined in Section 2.1(s)(vii)) conducted at
or with respect to the Company's facilities or any other properties or
assets (whether real, personal, or mixed) in which Shareholders or the
Company have or had an interest.
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(v) There has been no Release (as defined in Section 2.1(s)(vii)) or,
to the knowledge of Shareholders, any threat of Release, of any Hazardous
Materials at or from the Company's facilities or at any other locations
where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by such
facilities, or from or by any other properties and assets (whether real,
personal, or mixed) in which Shareholders or the Company have or had an
interest, or any geologically or hydrologically adjoining property, whether
by Shareholders, the Company, or any other person.
(vi) For purposes of this Section 2.1(s), the following terms shall
have the following definitions:
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Company's facilities or any part thereof into the
environment, and any other act, business, operation, or thing that increases the
danger, or risk of danger, or poses an unreasonable risk of harm to persons or
property on or off the Company's facilities, or that may affect the value of the
Company's facilities or the Company.
"Hazardous Materials" means any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
federal, state, or local environmental law, including any admixture or solution
thereof, and specifically including petroleum and all derivatives thereof or
synthetic substitutes therefor and asbestos or asbestos-containing materials.
"Release" means any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the environment, whether
intentional or unintentional.
(t) Insurance. The Company maintains in full force and effect insurance
coverage on its assets, properties, premises, operations, and personnel in such
amounts as the Company deems appropriate, all as will be set forth on the
Company's and Shareholders' Disclosure Schedule.
(u) Articles, Bylaws, and Minute Books. Shareholders have delivered to
OneSource true and complete copies of the Articles of Incorporation, Bylaws, and
minute books of the Company as currently in effect. The Shareholders have no
knowledge of any material omissions or inaccurate records of meetings and other
corporate actions held or taken by the Boards of Directors (or committees of the
Boards of Directors) and shareholders of the Company since its incorporation
that would adversely affect the transactions contemplated by this Agreement.
9
(v) Employees. The Company has never maintained or contributed to any
"employee benefit plan," as such term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including, without
limitation, any stock option plan, stock purchase plan, deferred compensation
plan, or other similar employee benefit plan. The Company has never contributed
to any "multi-employer pension plan," as such term is defined in Section
3(37)(A) of ERISA.
(w) No Dividends or Other Payments to Directors, Officers, Shareholders, or
Others. Since the Base Balance Sheet Date, there has not been any purchase or
redemption of any shares of capital stock of the Company or any transfer,
distribution or payment by the Company, directly or indirectly, of any money or
other assets or properties to any director, officer, shareholder, or any of
their affiliates or other person other than the payment of compensation for
services actually rendered at rates not in excess of the rates prevailing on the
Company Base Balance Sheet or payments in the ordinary course of business or for
goods or services in other than arm's length transactions.
(x) Accuracy of Statements. If the Company becomes aware of any material
inaccuracy, in any representation or warranty of OneSource prior to Closing, the
Company will notify OneSource of such material inaccuracy.
(y) WARRANTY DISCLAIMER. THE PARTIES HERETO AGREE THAT EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, INCLUDING THE SCHEDULES AND EXHIBITS HERETO, THE
COMPANY MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS
OR IMPLIED.
(z) Definition of Knowledge. "Knowledge of the Company" (or words of
similar import) shall mean the actual knowledge of any of the Shareholders.
2.2 Further Representations and Warranties of Shareholders. Except as will
be set forth on the Company's and Shareholders' Disclosure Schedule which shall
be delivered no later than seven (7) days after conclusion of the Audit, relate
back to the representation and warranties of the Company and Shareholders as if
made as of the date of this Agreement and will be attached hereto, each
Shareholder makes the following further representations and warranties as to
himself or herself:
(a) Ownership of Capital Stock of the Company. Such Shareholder owns the
number of Shares of the Company's common stock set forth beside such
Shareholder's name on Schedule 1.5(b) attached to this Agreement. Such
Shareholder has good, marketable, and unencumbered title to such Shares and
there are no restrictions on his or her right to transfer such Shares to
OneSource pursuant to this Agreement.
(b) Rights to Acquire Shares. Such Shareholder does not have any
outstanding options, warrants, or other rights to purchase or subscribe for or
contracts or commitments to sell, or any interests, instruments, evidences of
indebtedness, or other securities convertible in any manner into, shares of
Company's capital stock.
10
(c) Power to Execute Agreement. Such Shareholder has full power and
authority to execute, deliver, and perform this Agreement, and this Agreement is
the legal and binding obligation of such Shareholder. No other proceedings on
the part of the Shareholders, including a meeting of shareholders, are necessary
to authorize the execution and delivery by the Shareholders of this Agreement or
the consummation by the Shareholders of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by, and constitutes a legal,
valid, and binding agreement of, such Shareholder, enforceable against such
Shareholder in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium, or other
similar laws now or hereafter in effect relating to creditors' rights, and (ii)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought.
(d) Agreement Not in Breach of Other Instruments. To the knowledge of the
Shareholders, the execution and delivery of this Agreement by such Shareholder,
the consummation of the transactions contemplated hereby, and the fulfillment of
the terms hereof, will not result in the breach of any term or provision of, or
constitute a default under, or conflict with, or cause the acceleration of any
obligation under, any agreement or other instrument of any description to which
such Shareholder is a party or by which such Shareholder is bound, or any
judgment, decree, order, or award of any court, governmental body or arbitrator,
or any law, rule, or regulation applicable to such Shareholder.
(e) Reliance Upon Shareholder's Advisors. Such Shareholder acknowledges
that he or she has been encouraged to rely upon the advice of his or her legal
counsel and accountants or other financial advisers with respect to the
financial, tax, and other considerations relating to the acquisition of
OneSource's Common Stock and OneSource's Promissory Note. Such Shareholder
represents and warrants that he or she has reviewed with his or her own tax
advisors the federal, state, local, and foreign tax consequences of the
investment in OneSource's Common Stock and OneSource's Promissory Note. Such
Shareholder is relying solely on such advisors and not on any statements or
representations of OneSource or any of its officers, directors, employees, or
agents and understands that such Shareholder (and not OneSource) shall be
responsible for his or her own tax liability, if any, that may arise as a result
of the acquisition of OneSource's Common Stock and OneSource's Promissory Note
or the transactions contemplated by this Agreement.
(f) Intent and Access. Such Shareholder is acquiring the shares of
OneSource's Common Stock and OneSource's Promissory Note without a view to the
public distribution or resale in violation of any applicable federal or state
securities laws. Such Shareholder acknowledges that the shares of OneSource's
Common Stock and OneSource's Promissory Note are not registered under the
Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws and cannot be sold publicly without registration thereunder or
an exemption from such registration. Such Shareholder understands that
certificates for such shares and such note will contain a legend with respect to
the restrictions on transfer under federal and applicable state securities laws
as well as the fact that the shares and such note are "restricted securities"
under such federal and state laws. Such Shareholder has been furnished with such
information, both financial and non-financial, with respect to the operations,
business, capital structure, and financial position of OneSource and its
subsidiaries as he or she, or it believes necessary and has been given the
opportunity to ask questions of and receive answers from OneSource and its
subsidiaries and their officers concerning One Source and its subsidiaries.
Without limiting the foregoing, such Shareholder specifically acknowledges the
receipt of OneSource's Form 10-KSB Report for the fiscal year ended December 31,
2003. If a Shareholder becomes aware of any material inaccuracy in any
representation or warranty of OneSource prior to Closing, the Shareholder will
notify OneSource of such material inaccuracy.
11
(g) Accuracy of Statements. To the knowledge of the Shareholders, neither
this Agreement nor any statement, list, certificate, or other information
furnished by the Company or such Shareholder to OneSource in connection with
this Agreement or any of the transactions contemplated hereby contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein, in light of circumstances in which
they are made, not misleading.
(h) WARRANTY DISCLAIMER. THE PARTIES HERETO AGREE THAT EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, INCLUDING THE SCHEDULES AND EXHIBITS HERETO, THE
SHAREHOLDERS MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED.
(i) Definition of Knowledge. "Knowledge of the Shareholders" (or words of
similar import) shall mean the actual knowledge of any of the Shareholders.
2.3 Representations and Warranties of OneSource. Except as otherwise set
forth in OneSource's Disclosure Schedule which shall be delivered within seven
(7) days after conclusion of the Audit, relate back to the representation and
warranties of OneSource as if made as of the date of this Agreement and will be
attached hereto and which will be acknowledged as received by Shareholders,
OneSource represents and warrants to Shareholders as follows:
(a) Due Incorporation, Good Standing, and Qualification. OneSource and each
of its subsidiaries are corporations duly organized, validly existing, and in
good standing under the laws of their jurisdictions of incorporation with all
requisite corporate power and authority to own, operate, and lease their assets
and properties and to carry on their business as now being conducted. To the
knowledge of OneSource, neither OneSource nor any of its subsidiaries is subject
to any material disability by reason of the failure to be duly qualified as a
foreign corporation for the transaction of business or to be in good standing
under the laws of any jurisdiction. As used in this Agreement with reference to
OneSource, the term "subsidiaries" shall include all direct or indirect
subsidiaries of OneSource other than the Company. No representation or warranty
relating to OneSource, OneSource's consolidated financial position, or OneSource
and its subsidiaries taken as a whole shall be deemed to be breached as a result
of any circumstances that would constitute a breach of a representation or
warranty by the Company.
(b) Corporate Authority. OneSource has the corporate power and authority to
enter into this Agreement and carry out the transactions contemplated hereby.
The Board of Directors of OneSource has duly authorized the execution, delivery,
and performance of this Agreement. No other corporate proceedings on the part of
OneSource, including a meeting of OneSource's shareholders, are necessary to
authorize the execution and delivery by OneSource of this Agreement or the
consummation by OneSource of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by, and constitutes a legal,
valid, and binding agreement of, OneSource, enforceable against OneSource in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or
hereafter in effect relating to creditors' rights, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefore may be brought.
12
(c) Capital Stock. As of the date hereof, OneSource has authorized capital
stock consisting of 50,000,000 shares of common stock, $.001 par value (the
"Common Stock"), of which 40,292,623 shares are issued and outstanding, and
1,000,000 shares of Preferred Stock, $.001 par value, of which no shares are
issued and outstanding. As of such date, 2,315,000 shares of OneSource's Common
Stock were reserved for issuance upon the exercise of outstanding stock options.
All of the issued and outstanding shares of capital stock of OneSource and each
of its subsidiaries have been validly authorized and issued and are fully paid
and nonassessable.
(d) Options, Warrants, and Rights. Neither OneSource nor any of its
subsidiaries has outstanding any options, warrants, or other rights to purchase,
or securities or other obligations convertible into or exchangeable for, or
contracts, commitments, agreements, arrangements, or understandings to issue,
any shares of their capital stock or other securities, other than those referred
to in Section 2.3(c).
(e) Subsidiaries. The outstanding shares of capital stock of the
subsidiaries of OneSource owned by OneSource or any of its subsidiaries are
owned free and clear of all claims, liens, charges, and encumbrances. OneSource
does not own, directly or indirectly, any capital stock or other equity
securities of any corporation, partnership, joint venture, or limited liability
company or have any direct or indirect equity or ownership interest in any other
corporation, partnership, joint venture, limited liability company, or other
business.
(f) Financial Statements. The Consolidated Balance Sheets of OneSource and
its subsidiaries as of December 31, 2002 and December 31, 2003 and the
Consolidated Statements of Operations, the Consolidated Statements of
Shareholders' Equity, and the Consolidated Statements of Cash Flows of OneSource
and its subsidiaries for the two years ended December 31, 2003, and all related
schedules and notes to the foregoing, have been reported on by ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇▇, P.L.C., independent public accountants. To the knowledge of OneSource,
all of the foregoing financial statements have been prepared in accordance with
generally accepted accounting principles, which were applied on a consistent
basis (except as described therein), are correct and complete, and present
fairly, in all material respects, the financial position, results of operations,
and changes of financial position of OneSource and its subsidiaries as of their
respective dates and for the periods indicated. To the knowledge of OneSource,
neither OneSource nor any of its subsidiaries has any material liabilities or
obligations of a type that would be included in a balance sheet prepared in
accordance with generally accepted accounting principles, whether related to tax
or non-tax matters, accrued or contingent, due or not yet due, liquidated or
unliquidated or otherwise, except as and to the extent disclosed or reflected in
the Consolidated Balance Sheet of OneSource and its subsidiaries as of December
31, 2003 ("OneSource's Base Balance Sheet"), or incurred since the date of
OneSource's Base Balance Sheet, in the ordinary course of business or as
contemplated by this Agreement.
13
(g) No Material Change. To the knowledge of OneSource, since the date of
OneSource's Base Balance Sheet, there has not been and there is not threatened
(i) any material adverse change in the business, assets, properties, financial
condition, or operating results of OneSource or its subsidiaries taken as a
whole, (ii) any loss or damage (whether or not covered by insurance) to any of
the assets or properties of OneSource or its subsidiaries, which materially
affects or impairs their ability to conduct their business, or (iii) any
mortgage or pledge of any material amount of the assets or properties of
OneSource or any of its subsidiaries, or any leases, obligations or indebtedness
incurred by OneSource or any of its subsidiaries, other than indebtedness, not
material in the aggregate, incurred in the ordinary course of business.
(h) Title to Assets and Properties. OneSource and its subsidiaries have
good and marketable title to all of their respective real and personal assets
and properties, including all assets and properties reflected in OneSource's
Base Balance Sheet, or acquired subsequent to the date of OneSource's Base
Balance Sheet, except assets or properties disposed of subsequent to that date
in the ordinary course of business. Such assets and properties are subject to no
mortgage, indenture, pledge, lien, claim, encumbrance, charge, security
interest, or title retention or other security arrangement, except for liens for
the payment of federal, state, and other taxes, the payment of which is neither
delinquent nor subject to penalties, and except for other liens and encumbrances
incidental to the conduct of the business of OneSource and its subsidiaries or
the ownership of their assets or properties, which were not incurred in
connection with the borrowing of money or the obtaining of advances, and which
do not in the aggregate materially detract from the value of the assets or
properties of OneSource and its subsidiaries taken as a whole or materially
impair the use thereof in the operation of their respective businesses, except
in each case as disclosed in OneSource's Base Balance Sheet. All leases pursuant
to which OneSource or any of its subsidiaries lease any substantial amount of
real or personal property are valid and effective in accordance with their
respective terms. OneSource and each of its subsidiaries own or have the right
to use all assets, rights, and properties necessary to conduct their business as
currently conducted.
(i) Litigation. There are no actions, suits, proceedings, or other
litigation pending or, to the knowledge of OneSource, threatened against
OneSource or any of its subsidiaries, at law or in equity, or before or by any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality that, if determined adversely to OneSource or
its subsidiaries, would individually or in the aggregate have an adverse effect
on the business, assets, properties, operating results, prospects, or condition,
financial or otherwise, of OneSource and its subsidiaries taken as a whole.
(j) No Violation. To the knowledge of OneSource, the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
will not violate or result in a breach by OneSource or any of its subsidiaries
of, or constitute a default under, or conflict with, or cause any acceleration
of any obligation with respect to, (i) any provision or restriction of any
charter, bylaw, loan, indenture, or mortgage of OneSource or any of its
subsidiaries, or (ii) any provision or restriction of any lien, lease agreement,
contract, instrument, order, judgment, award, decree, ordinance, or regulation
or any other restriction of any kind or character to which any assets or
properties of OneSource or any of its subsidiaries is subject or by which
OneSource or any of its subsidiaries is bound.
14
(k) Taxes. To the knowledge of OneSource, OneSource has duly filed in
correct form all Tax Returns relating to the activities of OneSource and its
subsidiaries required or due to be filed (with regard to applicable extensions)
on or prior to the date of this Agreement. To the knowledge of OneSource, all
such Tax Returns are accurate and complete in all material respects, and
OneSource has paid or made provision for the payment of all Taxes that have been
incurred or are due or claimed to be due from it by federal, state, or local
taxing authorities for all periods ending on or before the date of this
Agreement, other than Taxes or other charges that are not delinquent or are
being contested in good faith and have not been finally determined and have been
disclosed to Shareholders. To the knowledge of OneSource, the amounts set up as
reserves for Taxes on the books of OneSource and its subsidiaries are sufficient
in the aggregate for the payment of all unpaid Taxes (including any interest or
penalties thereon), whether or not disputed, accrued, or applicable. No claims
for taxes or assessments are being asserted or, to the knowledge of OneSource,
threatened against OneSource or any of its subsidiaries.
(l) Compliance with Law and Other Regulations. OneSource nor any of its
subsidiaries is subject to, and to the knowledge of OneSource, has not been
threatened with any material fine, penalty, liability, or disability as the
result of its failure to comply with any requirement of federal, state, local,
or foreign law or regulation or any requirement of any governmental body or
agency having jurisdiction over it, the conduct of its business, the use of its
assets and properties, or any premises occupied by it.
(m) Status of OneSource Common Stock Being Issued. The shares of OneSource
Common Stock issued in partial payment for the Shares will be at the Effective
Date validly authorized and issued, fully paid, nonassessable, and free of
preemptive or other similar rights. The shares of OneSource Common Stock will
not be registered under the Securities Act, are being issued to the Shareholders
pursuant to a valid exemption from registration under the Securities Act, and
will be subject to the resale restrictions required by Rule 144 promulgated
pursuant to the Securities Act.
(n) Accuracy of Statements. Neither this Agreement nor any statement, list,
certificate, or other information furnished by OneSource to Shareholder in
connection with this Agreement or any of the transactions contemplated hereby
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made, not misleading.
(o) OneSource Financing Related to this Agreement. The Shareholders and the
Company acknowledge that OneSource may obtain additional outside financing in
connection with the funds required to close the transactions related to this
Agreement (the "Acquisition Financing"). The representations and warranties of
OneSource are qualified in their entirety to the extent necessary to reflect the
impact of such financing, including the possibility that OneSource will incur
debt, issue additional equity securities, or grant other rights to acquire
securities in connection with such financing. Nothing contained in this
provision is intended to negate the covenants of OneSource after the Effective
Date set forth in Section 4.2(g) without the consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, which
will not be unreasonably withheld or delayed.
15
(p) Access. OneSource has been furnished with such information, both
financial and non-financial, with respect to the operations, business, capital
structure, and financial position of the Company as it believes necessary and
has been given the opportunity to ask questions of and receive answers from the
Company and the Shareholders concerning the Company. Notwithstanding the
foregoing sentence, OneSource shall be entitled to rely on the representations
and warranties of the Company and Shareholders herein regardless of any other
documents or statements of the Company or Shareholders. If OneSource becomes
aware of any material inaccuracy in any representation or warranty of the
Company or Shareholders prior to Closing, OneSource will notify the Company of
such material inaccuracy.
(q) WARRANTY DISCLAIMER. THE PARTIES HERETO AGREE THAT EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, INCLUDING THE SCHEDULES AND EXHIBITS HERETO,
ONESOURCE MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND OR CHARACTER, EXPRESS
OR IMPLIED.
(r) Definition of Knowledge. "Knowledge of OneSource" (or words of similar
import) shall mean the actual knowledge of ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
2.4 Survival of Representations and Warranties. Each of the representations
and warranties contained in this Agreement shall survive the consummation of the
transactions contemplated by this Agreement for a period of two (2) years from
the Effective Date (the "Expiration Date"), irrespective of any investigations
or inquiries made by any party or any knowledge that any party may possess, and
each party shall be entitled to rely upon such representations and warranties
irrespective of any investigations, inquiries, or knowledge. No claim for
recovery pursuant to Section 7 of this Agreement that alleges a breach of
representation or warranty may be asserted after the Expiration Date; provided
however, that claims first asserted pursuant to Section 7 of this Agreement
prior to the Expiration Date shall not thereafter be barred.
SECTION 3
PRE-CLOSING COVENANTS
3.1 Covenants of Shareholders and the Company. Shareholders and the Company
agree that, unless OneSource otherwise agrees in writing and, except as set
forth in the Company's and Shareholders' Disclosure Schedule, between the date
of this Agreement and the Effective Date:
(a) Preservation of Business. Shareholders shall use their best efforts,
and shall use their best efforts to cause the Company to, (i) preserve intact
the present business organization of the Company, (ii) preserve the present
goodwill and advantageous relationships of the Company with all persons having
business dealings with the Company, (iii) preserve and maintain in force all
licenses, registrations, franchises, patents, trade secrets, trademarks,
proprietary processes, copyrights, bonds, and other similar rights of the
Company that are material to its business, and (iv) keep intact its
relationships with its employees, representatives, and agents that are material
to its business. Except as contemplated by this Agreement, the Company shall
not, and Shareholders shall not permit or cause the Company to, enter into any
employment agreements with any of its officers or management personnel that may
not be cancelled without penalty upon notice not exceeding 30 days. Shareholders
shall, and shall cause the Company to, maintain in force all property, casualty,
fiduciary, directors' and officers', and other forms of insurance that it is
presently carrying.
16
(b) Ordinary Course. Shareholders shall, and shall cause the Company to,
operate its business only in the usual, regular, and ordinary course and manner.
Without limiting the foregoing, the Company shall not, nor shall Shareholders
permit the Company to, (i) encumber or mortgage any property or assets, (ii)
refinance the Bank of Ozark's debt without OneSource's consent, (iii) incur any
obligation (contingent or otherwise) to purchase or acquire, or transfer or
convey, any material assets or properties or enter into any transaction or make
or enter into any contract or commitment except in the ordinary course of
business, (iv) acquire any stock or other equity interest in any corporation,
trust or other entity, (v) waive any material rights, or (vi) pay any consulting
or management fees in any material amount.
(c) Books and Records. Shareholders and the Company shall maintain the
Company's books, accounts, and records in the usual, regular, and ordinary
manner, and on a basis consistent with prior years, and shall comply with all
laws applicable to them or to the conduct of its business.
(d) No Organic Change. The Company shall not, and Shareholders shall not
cause the Company to, (i) amend the Company's Articles of Incorporation or
Bylaws, (ii) make any change in the Company's capital stock by reclassification,
subdivision, reorganization, or otherwise, or (iii) merge or consolidate with
any other corporation, trust or entity, or change the character of the Company's
business.
(e) No Issuance of Shares, Options, or Other Securities. The Company shall
not, and Shareholders shall not cause the Company to, (i) issue any shares of
the Company's capital stock, or (ii) grant any option, warrant, or other right
to purchase or to convert any obligation into shares of the Company's capital
stock.
(f) Compensation. Neither Shareholders nor the Company shall (i) increase
the compensation payable to any elected officer or to other management personnel
from the amount payable as of the date of the Company's Base Balance Sheet,
except in accordance with normal and customary practice, or (ii) introduce or
change any pension or profit sharing plan, or any other employee benefit
arrangement.
(g) Non-Solicitation. From the date of this Agreement through and including
September 30, 2004, the Company shall not, nor shall Shareholders authorize or
permit any officer, director, employee, partner, or any investment banker,
attorney, or other advisor or representative or affiliate of the Company,
directly or indirectly, to (i) solicit, initiate, or encourage the submission of
proposals or offers from any other person or entity relating to any Acquisition
Proposal (as hereinafter defined); (ii) cooperate with, or furnish or cause to
be furnished any non-public information concerning the Company's business,
properties, or assets to any other person or entity in connection with any
Acquisition Proposal; (iii) participate in any discussions or negotiations
regarding, or take any other action to facilitate any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; or (iv) enter into any agreement or understanding with any
other person or entity with the intent to effect any Acquisition Proposal. As
used in this Section 3.1(g), the term "Acquisition Proposal" shall mean any of
the following transactions involving the Company, other than the transactions
contemplated by this Agreement: (i) any merger, consolidation, share exchange,
reorganization, recapitalization, business combination, or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer, or
other disposition (whether in a single transaction or series of transactions),
of assets either constituting 10% or more of the assets of the Company, or which
generate 10% or more of consolidated revenue of the Company; (iii) any tender
offer or exchange offer for 10% or more of the outstanding equity interests of
the Company, or the filing of a registration statement under the Securities Act
of 1933 in connection therewith; (iv) any person having acquired beneficial
ownership or the right to acquire beneficial ownership of, or any "group" (as
such term is defined under Section 13(d) of the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder) having been formed, which
beneficially owns or has the right to acquire beneficial ownership of, 10% or
more of the then-outstanding shares of capital stock of the Company (other than
persons or "groups" that beneficially own or have the right to acquire
beneficial ownership of 10% of more of the outstanding shares of capital stock
of the Company as of the date hereof); or (v) any public announcement of a
proposal, plan, or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
17
(h) Dividends. The Company shall not, and Shareholders shall not cause the
Company to, declare, make, or pay any dividend or other distribution with
respect to its capital stock or otherwise or purchase, redeem, or otherwise
acquire any shares of its capital stock.
(i) Confidentiality. Until the Effective Date, the Company and Shareholders
shall maintain as confidential the discussions with OneSource and the terms and
conditions of this Agreement and the other agreements to be executed in
connection herewith and, except as required by law, will not make any trade,
press, or other announcement or disclosure in relation to such discussions,
whether before or after the Effective Date, without the prior written consent of
OneSource.
(j) Obligation to Update Information. The Company and Shareholders shall
promptly give OneSource written notice of the existence or occurrence of any
condition that would make any representation or warranty of Shareholders untrue
or result in the breach of any agreement or covenant by the Company or any
Shareholder, or that might reasonably be expected to prevent the consummation of
the transactions herein contemplated.
(k) Consents and Approvals. The Company and Shareholders shall use their
best efforts to obtain all necessary consents and approvals of the Board of
Directors and Shareholders of the Company and any other persons and governmental
authorities to the performance by the Company of the transactions contemplated
by this Agreement. The Company and Shareholders shall make all filings,
applications, statements, and reports to all federal and state government
agencies or entities that are required to be made prior to the Effective Date by
or on behalf of the Company pursuant to any statute, rule, or regulation in
connection with the transactions contemplated by this Agreement.
18
(l) Access to Properties, Information, and Personnel. Until the Effective
Date, the Company and Shareholders shall make available to OneSource and its
representatives for inspection during regular business hours and upon reasonable
request all of the assets, properties, facilities, and agreements related to the
Company and its business and the books, records, accounts, and financial
statements related to the Company and its business as OneSource or its
representatives shall reasonably request and allow OneSource and its
representatives the right to make whatever copies of such materials they
require. OneSource and its representatives shall have the right, during regular
business hours and upon reasonable request, to interview those of the Company's
employees whose employment with the Company is material to the Company's
business.
(m) NCR Litigation. From the date of this Agreement through the Closing
Date, the Company shall update OneSource on all material developments related to
the NCR Litigation and shall consult with OneSource concerning any settlement
proposals and shall obtain the consent of One Source to enter into any
settlement or stipulation, which consent shall not be unreasonably withheld.
3.2 Covenants of OneSource. OneSource agrees that, unless Shareholders
otherwise agree in writing and except as set forth in OneSource's Disclosure
Schedule, between the date of this Agreement and the Closing Date:
(a) Preservation of Business. OneSource shall use its best efforts to (i)
preserve intact the present business organization of OneSource and its
subsidiaries, (ii) preserve the present goodwill and advantageous relationships
of OneSource and its subsidiaries with investors and all other persons having
business dealings with OneSource and its subsidiaries, (iii) preserve and
maintain in force all licenses, registrations, franchises, patents, trademarks,
copyrights, bonds, and other similar rights of OneSource and its subsidiaries
that are material to its business, and (iv) keep intact its relationships with
its employees, representatives, and agents that are material to its business.
(b) Ordinary Course. OneSource and its subsidiaries shall operate their
businesses only in the usual, regular, and ordinary course and manner.
(c) Obligation to Update Information. OneSource shall promptly give the
Company and Shareholders written notice of the existence or occurrence of any
condition that would make any representation or warranty of OneSource untrue or
result in the breach of any agreement or covenant by OneSource, or that might
reasonably be expected to prevent the consummation of the transactions herein
contemplated.
(d) Consents and Approvals. OneSource shall use its best efforts to obtain
all necessary consents and approvals of other persons and governmental
authorities to the performance by OneSource of the transactions contemplated by
this Agreement. OneSource shall make all filings, applications, statements, and
reports to all federal and state government agencies and entities that are
required to be made prior to the Closing by or on behalf of OneSource or its
subsidiaries pursuant to any statute, rule, or regulation in connection with the
transactions contemplated by this Agreement.
19
(e) No Organic Change. Except in connection with the transactions
contemplated, by this Agreement, OneSource shall not (i) amend the its Articles
of Incorporation or Bylaws, (ii) make any change in its capital stock by
reclassification, subdivision, reorganization, or otherwise, or (iii) merge or
consolidate with any other corporation, trust or entity, or change the character
of its business.
(f) No Issuance of Shares, Options, or Other Securities. OneSource shall
not (i) issue any shares of its capital stock, or (ii) grant any option,
warrant, or other right to purchase or to convert any obligation into shares of
its capital stock.
(g) Compensation. OneSource shall not (i) increase the compensation payable
to any elected officer or to other management personnel from the amount payable
as of the date of the OneSource's Base Balance Sheet, except in accordance with
normal and customary practice, or (ii) introduce or change any pension or profit
sharing plan, or any other employee benefit arrangement.
(h) Dividends. OneSource shall not declare, make, or pay any dividend or
other distribution with respect to its capital stock or otherwise or purchase,
redeem, or otherwise acquire any shares of its capital stock.
(i) Confidentiality. Until the Effective Date, OneSource shall maintain as
confidential the discussions with the Company and the Shareholders and the terms
and conditions of this Agreement and the other agreements to be executed in
connection herewith and, except as required by law, will not make any trade,
press, or other announcement or disclosure in relation to such discussions,
whether before or after the Effective Date, without the prior written consent of
the Company and the Shareholders.
(j) OneSource Financing Related to this Agreement. The covenants of
OneSource in this Section 3 are qualified in their entirety to the extent
necessary to reflect the impact of the Acquisition Financing, including the
possibility that OneSource will incur debt, issue additional equity securities,
or grant other rights to acquire securities in connection with such financing.
Nothing contained in this provision is intended to negate the covenants of
OneSource after the Effective Date set forth in Section 4.2(g) without the
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, which will not be unreasonably withheld or delayed.
SECTION 4
CONDITIONS PRECEDENT TO OBLIGATIONS
4.1 Conditions Precedent to the Obligations of OneSource. The obligations
of OneSource under this Agreement are, at the option of OneSource, subject to
the satisfaction of the following conditions on or before the Closing Date:
(a) Accuracy of Representations and Warranties. The representations and
warranties of the Company and Shareholders herein contained shall have been true
and correct in all material respects when made, and, in addition, shall be true
and correct in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date, except as
affected by the transactions contemplated hereby.
20
(b) Performance of Agreements. The Company and Shareholders shall have in
all material respects performed all obligations and agreements and complied with
all covenants and conditions contained in this Agreement to be performed and
complied with them on or prior to the Closing Date.
(c) Corporate Approvals. All necessary corporate action on the part of the
directors and shareholders of the Company adopting this Agreement and approving
the transactions contemplated hereby shall have been taken by the Closing Date.
(d) No Material Adverse Change. There shall be no material adverse change
in the business, properties, or financial condition of the Company.
(e) Litigation. No action or proceeding by any governmental agency shall
have been instituted or threatened that would enjoin, restrain, or prohibit, or
might result in substantial damages in respect of this Agreement or the
consummation of the transactions contemplated by this Agreement, and would in
the reasonable judgment of OneSource make it inadvisable to consummate such
transactions, and no court order shall have been entered in any action or
proceeding instituted by any other party that enjoins, restrains, or prohibits
this Agreement or consummation of the transactions contemplated by this
Agreement.
(f) Due Diligence Review. OneSource shall have completed to its reasonable
satisfaction a due diligence investigation of the Company, including but not
limited to review of the Company's books, business operations, and records of
the business. Such review may be made by any person, agent, company, or entity
so designated by OneSource.
(g) Shareholder Releases. At the Closing, each Shareholder shall execute
and deliver to OneSource a release in the form attached as Exhibit C to this
Agreement (the "Releases").
(h) Delivery of Audited Financial Statements. At or prior to the Closing,
Shareholders shall have delivered to OneSource the Company's Balance Sheets as
of December 31, 2002 and December 31, 2003, and the Company's Statements of
Operations, Statements of Shareholders' Equity, and Statements of Cash Flows for
the two years ended December 31, 2003, and all related schedules and notes to
the foregoing, as audited and reported on by independent public accountants
selected by OneSource in its sole discretion; provided that OneSource shall pay
all fees and expenses of such accountants in connection with such audit. Such
audited financial statements shall be satisfactory in form and substance to
OneSource, in its sole discretion.
(i) Other Deliveries by Shareholders. At the Closing, Shareholders shall
deliver (i) the certificate of Shareholders that all representations and
warranties of the Company and Shareholders contained in this Agreement have been
true and correct at all times between the date of this Agreement and the Closing
Date; (ii) the certificate of the Secretary of the Company certifying to the
resolutions constituting all necessary corporate action by the Board of
Directors and shareholders of the Company to authorize the consummation of the
transactions provided for herein; (iii) the stock books and records, corporate
minute books, and corporate seal of the Company; and (iv) the written consents
to assignment of all parties whose consent is necessary to the continued
effectiveness and validity, after assignment as provided herein, of all
contracts, agreements, mortgages, or leases to which Company is a party.
21
(j) Proceedings Satisfactory to Counsel. All proceedings taken by the
Company and Shareholders and all instruments executed and delivered by the
Company or Shareholders on or prior to the Closing Date in connection with the
transactions herein contemplated shall be satisfactory in form and substance to
counsel for OneSource.
4.2 Conditions Precedent to the Obligations of the Company and
Shareholders. The obligations of the Company and Shareholders under this
Agreement are, at the option of the Company and Shareholders, subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) Accuracy of Representations and Warranties. The representations and
warranties of OneSource herein contained shall have been true and correct in all
material respects when made and, in addition, shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date, except as affected by the
transactions contemplated hereby.
(b) Performance of Agreements. OneSource shall have in all material
respects performed all obligations and agreements and complied with all
covenants and conditions contained in this Agreement to be performed and
complied with by OneSource on or prior to the Closing Date.
(c) Corporate Approval. All necessary corporation action on the part of the
directors and shareholders of OneSource approving and adopting this Agreement
and approving the transactions contemplated hereby shall have been taken by the
Closing Date.
(d) No Material Adverse Change. There shall be no material adverse change
in the business, properties, or financial condition of OneSource, except to the
extent such change relates to the Acquisition Financing.
(e) Litigation. No action or proceeding by any governmental agency shall
have been instituted or threatened that would enjoin, restrain, or prohibit, or
might result in substantial damages in respect of this Agreement or the
consummation of the transactions contemplated by this Agreement, and would in
the reasonable judgment of the Company or Shareholders make it inadvisable to
consummate such transactions, and no court order shall have been entered in any
action or proceeding instituted by any other party which enjoins, restrains, or
prohibits this Agreement or consummation of the transactions contemplated by
this Agreement.
(f) Other Deliveries by OneSource. At the Closing, OneSource shall deliver
(i) the certificate of an executive officer of OneSource that all
representations and warranties of OneSource contained in this Agreement have
been true and correct at all times between the date of this Agreement and the
Closing Date, and (ii) the certificate of the Secretary of OneSource certifying
to the resolutions constituting all necessary corporate action by the Board of
Directors of OneSource to authorize the consummation of the transactions
provided for herein.
22
(g) Protective Provisions. At the Closing, OneSource shall deliver
documents which provide, to the satisfaction of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, that as of
the Effective Date until such time as the Promissory Notes are fully paid,
OneSource will be bound by the following covenants:
(1) OneSource covenants and agrees that, so long as any of the OneSource
Promissory Notes are outstanding, it will:
(i) Insurance. Keep adequately insured, by financially sound and
reputable insurers acceptable to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), which
acceptance shall not be unreasonably withheld by ▇▇▇▇▇▇▇▇, all property of
OneSource of the character usually insured by corporations engaged in the
same or similar businesses similarly situated, against loss or damage of
the kind customarily insured against by such corporations, and carry
adequate liability insurance and other insurance of a kind generally
carried by corporations engaged in the same or similar businesses similarly
situated. OneSource further covenants that as of the date hereof, it
presently maintains such insurance coverage with the insurance carriers and
in the amounts listed on the OneSource Schedule attached hereto, which
coverage, amounts and carriers are presently acceptable to ▇▇▇▇▇▇▇▇.
(ii) Payment of Taxes. Duly file all Federal, State and local income
tax returns and all other tax returns and reports of OneSource which are
required to be filed and pay when due all taxes and governmental charges
assessed against or upon OneSource, its property, assets, income or
franchises, except to the extent and so long as contested in good faith and
for which liabilities adequate reserves are provided.
(iii) Financial Data. Deliver to ▇▇▇▇▇▇▇▇:
(a) As soon as practicable and in any event within thirty (30)
days after the end of each month an unaudited consolidated and
consolidating statement of earnings of OneSource and all subsidiaries
of OneSource for the period from the beginning of the current fiscal
year to the end of such month, and an unaudited consolidated and
consolidating balance sheet of OneSource and all subsidiaries of
OneSource as at the end of such month, setting forth in each case in
comparative form figures for the corresponding period in the preceding
fiscal year, all in reasonable detail and certified by the principal
financial officers of OneSource, subject to changes resulting from
year-end adjustments;
(b) As soon as practicable and in any event within forty-five
(45) days after the end of each fiscal quarter, an unaudited
consolidated and consolidating statement of earnings and a statement
of cash flow of OneSource and all subsidiaries of OneSource for the
period from the beginning of the current fiscal year to the end of
such fiscal quarter, and an unaudited consolidated and consolidating
balance sheet of OneSource and all subsidiaries of OneSource as at the
end of such fiscal quarter, setting forth in each case in comparative
form figures for the corresponding period in the preceding fiscal year
, all in reasonable detail and certified by the principal financial
officers of OneSource, subject to changes resulting from year-end
adjustments;
23
(c) As soon as practicable and in any event within ninety (90)
days after the end of each fiscal year, an audited, consolidated and
consolidating statement of earnings and retained earnings and
statement of cash flow of OneSource and all subsidiaries of OneSource
for such year, an audited, consolidated and consolidating statement of
changes in the financial condition of OneSource and all subsidiaries
of OneSource for such year, and an audited, consolidated and
consolidating balance sheet of OneSource and all subsidiaries of
OneSource as at the end of such year, setting forth in each case in
comparative form corresponding figures from the preceding annual
audit, all in reasonable detail and satisfactory in scope to
▇▇▇▇▇▇▇▇.; and
(d) With reasonable promptness, such other financial data as
▇▇▇▇▇▇▇▇ may reasonably request.
(iv) Notice of default or event of default. Forthwith upon a default or an
event of default by OneSource on an obligation of OneSource, OneSource will
deliver to ▇▇▇▇▇▇▇▇ a written certificate signed by an officer specifying the
nature thereof, the period of existence thereof and what action OneSource has
taken or proposes to take with respect thereto.
(2) OneSource covenants and agrees that, so long as any of the OneSource
Promissory Notes are outstanding, it will not, without the prior written consent
of ▇▇▇▇▇▇▇▇ (which consent shall not be unreasonably withheld):
(i) Indebtedness. Create or incur any indebtedness except to trade
creditors in the ordinary course of business.
(ii) Merger or Consolidation. Merge into, consolidate with or acquire
by any method any other entity, or permit any change in the identity of the
OneSource's officers, directors or managers (except for changes
necessitated by death, incapacity, natural retirement or similar causes).
(iii) Sale of Property. Sell, lease, transfer or otherwise dispose of
any property or assets except in the ordinary course of business.
(iv) Distributions. Declare or incur any liability to make any
distribution in respect of the capital stock of any of OneSource.
(v) Issuance of Stock. Issue any capital stock or options to capital
stock of OneSource or authorize any new types, varieties or classes of
capital stock, either preferred or common, voting or nonvoting, or any
bonds or debentures, subordinated or otherwise, or any stock warrants, or
declare any stock splits.
(vi) Capital Expenditures. Make any capital expenditures, or enter
into any capitalized leases in an amount that exceeds $5,000.
(vii) Default. Allow to occur, or to continue unremedied, any act,
event or condition which constitutes a material event of default, or which,
with the passage of time or giving of notice, or both, would constitute a
material event of default under any agreement to which any of OneSource is
a party or by which OneSource may be bound.
24
(viii) Investments. OneSource will not make any advances or loans or
extensions of credit to, or purchase any stock, bonds, notes, debentures or
other securities of, make any expenditures on behalf of, or in any manner
assume liability (direct, contingent or otherwise) for the indebtedness of
any person or entity.
(ix) Liens. Permit the imposition of or allow the continuance of any
lien or encumbrance of any kind whatsoever on the property of OneSource.
(x) Loans. Make any loan to any person or entity other than Employee
Allowances in an amount of less than $1,000.
(xi) Subsidiaries and Related Companies. (i) transfer any property to
any affiliated, related, subsidiary or parent company ("Related Entity"),
(ii) purchase or sign any agreement to purchase any securities of any
Related Entity (whether debt, equity or otherwise), underwrite or guarantee
the same, or otherwise become obligated with respect thereto, or (iii) take
any other action or permit any action to be taken with respect to any
Related Entity which would jeopardize OneSource's ability to repay the
OneSource Promissory Notes, or any portion thereof, as the same becomes due
and payable.
(xii) Nature of Business. Conduct or engage in any business if, as a
result thereof, the general nature of the business which would thereafter
be engaged in by OneSource would be substantially changed from the general
nature of the business engaged in on the date of this Agreement by
OneSource.
Nothing contained herein shall be construed to require the approval or consent
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to the term of any OneSource financing to consummate the
transactions related to in this Agreement or Acquisition Financing, nor shall
the terms of any such Acquisition Financing constitute a default under any of
the covenants.
(h) Agreement of Key Shareholders of OneSource. At the Closing, OneSource
shall cause the key shareholders of OneSource described on Exhibit D to deliver
a shareholders agreement restricting the sale or transfer of shares of OneSource
until the earlier to occur of the payment of the OneSource Promissory Notes or
the period of time equal to the period of time ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is restricted
from selling or transferring his shares of OneSource as a result of the shares
delivered to him being "restricted securities" under the federal securities
laws.
(i) Employment Agreements. At the Closing, OneSource shall deliver the
Employment Agreements.
(j) Proceedings Satisfactory to Counsel. All proceedings taken by OneSource
and all instruments executed and delivered by and on or prior to the Closing
Date in connection with the transactions herein contemplated shall be
satisfactory in form and substance to counsel for Shareholders.
25
(k) Guarantees and Shareholder Debt. The personal guarantee of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ of the Bank of the Ozark's debt of the Company shall have been released
and all loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ from the Company (in the estimated amount of
$300,000) shall be paid on or prior to Closing.
SECTION 5
POST-CLOSING COVENANTS
5.1 Section 338(h)(10) Election. At OneSource's request, OneSource and
Shareholders shall join in the filing of an election under Section 338(h)(10) of
the Internal Revenue Code of 1986, as amended, with respect to the purchase and
sale of the Shares hereunder. At OneSource's request, Shareholders shall join
OneSource in making corresponding elections under any state, local, or foreign
tax law. OneSource shall prepare all such elections, including forms required to
be filed in order to make such elections.
5.2 Covenants of Shareholders. Shareholders shall, at OneSource's cost and
expense, provide all information or other assistance that may be reasonably
requested by OneSource to enable One Source to prepare or cause to be prepared
all federal, state, and local Tax Returns with respect to the Company for all
periods prior to the Effective Date that have not as yet been filed.
5.3 Non-competition, Non-disclosure, and Non-solicitation. OneSource is
unwilling to enter into and perform this Agreement unless each Shareholder
enters into the non-competition, non-disclosure, and non-solicitation agreements
contained in this Section 5.3. To induce OneSource to enter into this Agreement,
each Shareholder agrees as follows:
(a) Non-competition. Neither such Shareholder nor any person or entity,
directly or indirectly, in control of or controlled by such Shareholder (each, a
"Shareholder's Affiliate") shall for a period of three years after the Effective
Date (or such lesser period to the maximum extent provided by applicable law),
directly or indirectly, for such Shareholder, such Shareholder's Affiliates, or
on behalf of any other person, firm, partnership, corporation, or other entity,
anywhere in the continental United States, engage in any business relating to
financial institution item processing equipment maintenance services, financial
institution item processing equipment installation and integration services,
financial institution item processing equipment support products and services,
value added equipment supply sales, and related product sales and services which
competes with OneSource. The three-year period referred to in this Section
5.3(a) shall be stayed during any violation or breach of the terms of this
Section 5.3(a).
(b) Confidential Information. Such Shareholder recognizes that the Company
and OneSource are engaged in highly competitive businesses, the success of which
is dependent upon confidential and proprietary information. Such Shareholder
agrees that such Shareholder and each of such Shareholder's Affiliates will
maintain in strict secrecy and confidence all confidential, proprietary or other
information relating to the Company's and OneSource's business, which
information is obtained by or comes into the knowledge or possession of such
Shareholder or such Shareholder's Affiliates. Furthermore, neither such
Shareholder nor any of such Shareholder's Affiliates will, unless first
authorized in writing by OneSource, disclose to any person, firm, or other
entity, or use for the benefit of such Shareholder, such Shareholder's
Affiliates or for the benefit of any person, firm, or other entity, at any time,
after the date of this Agreement, any confidential information, relating to the
Company's or OneSource's business. For purposes of this Agreement, confidential
information will include, without limitation, any trade secrets, knowledge, or
information with respect to processes, techniques, procedures, or know-how
unique to the Company or OneSource, or to which the Company or OneSource has
been given access in confidence by a third party pursuant to any agreement with
that third party; the names of any of the Company's or OneSource's customers or
vendors; the prices at which the Company or the OneSource obtains or has
obtained or at which the Company or OneSource sells or has sold the Company's or
OneSource's products or at which the Company or OneSource has bought materials
or other supplies; or any other information of, about or concerning the business
of the Company ("Confidential Information"). Such Shareholder understands and
agrees that all Confidential Information is a valuable and special asset of the
Company and OneSource and is important, material, and confidential, that such
Confidential Information gravely affects the effective and successful conduct of
the business of the Company and OneSource and the Company's and OneSource's
goodwill, and that any breach of the terms of this Section 5.3(b) is a material
breach of this Agreement.
26
(c) Nonsolicitation. Neither such Shareholder nor any of such Shareholder's
Affiliates shall, for a period of three years after the Effective Date (or such
lesser period to the maximum extent provided by applicable law), directly or
indirectly, for such Shareholder, such Shareholder's Affiliates, or on behalf
of, or in connection with any person, firm, or other entity other than
OneSource, request any past, present, or future suppliers or customers of the
Company or OneSource to curtail or cancel their business with OneSource;
solicit, canvas, accept, encourage, or authorize any other person to solicit,
canvas, accept, authorize, or encourage, from any past or present supplier or
customer of the Company or OneSource, any business for any other person, firm,
or corporation engaged in a business the same as, similar to or in general
competition with the business of the Company or OneSource; or induce or attempt
to influence any employee, independent contractor, or agent of the Company or
OneSource to terminate that person's employment with or engagement by Company or
OneSource. The three-year period referred to in this Section 5.3(c) shall be
stayed during any violation or breach of the terms of this Section 5.3(c).
(d) Reasonableness and Remedies. Such Shareholder specifically acknowledges
that the Company and OneSource currently operate their businesses throughout the
United States, and the geographic and time restrictions in this Section 5.3 are
necessary and reasonable. Such Shareholder hereby acknowledges and agrees that
the restrictions set forth in this Section 5.3 are reasonable and necessary,
that any violation thereof would result in substantial and irreparable injury to
OneSource, and that OneSource may not have an adequate remedy at law with
respect to any such violation. Accordingly, such Shareholder agrees that, in the
event of any actual or threatened violation of this Section 5.3, OneSource shall
have the right and privilege to obtain, in addition to any other remedies that
may be available, equitable relief, including temporary and permanent injunctive
relief, to cease or prevent any actual or threatened violation of any provision
hereof.
(e) Severability; Reformation. Each and every provision set forth in this
Section 5.3 is independent and severable from the others, and no restriction
will be rendered unenforceable by virtue of the fact that, for any reason, any
other or others of them may be unenforceable in whole or in part. If any
provision of this Section 5.3 is unenforceable for any reason whatsoever, that
provision will be appropriately limited and reformed to the maximum extent
provided by applicable law. If the scope of any restriction contained herein is
too broad to permit enforcement to its full extent, then such restriction shall
be enforced to the maximum extent permitted by law so as to be judged reasonable
and enforceable, and each Shareholder agrees that such scope may be modified by
an arbitrator or judge in any proceeding to enforce this Section 5.3. This
includes, without limitation, altering or enforcing only portions of the limits
on activity restrictions, the geographic scope, and the duration of this Section
5.3 unless to do so would be contrary to law or public policy.
27
(f) Termination. The provisions of Section 5.3 shall automatically
terminate (i) if the OneSource Promissory Notes are not paid in full when due or
(ii) as to any individual Shareholder, if his or her Employment Agreement
provided for in Section 5.4 is terminated by OneSource without cause or
terminated by the Shareholder for cause before the end of the initial term of
such Employment Agreement.
5.4 Employment Agreements. As of the Closing Date, OneSource and each of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
will execute and deliver employment or independent contractor agreements, as
applicable, in the forms attached hereto as Exhibit E providing for the
following:
(a) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ will serve as an independent contractor at a
compensation rate of $157,000 per year for a period of one (1) year after the
Effective Date or terminable upon payment of the OneSource Promissory Note to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇;
(b) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ will serve as OneSource's Executive Assistant at a
salary of $36,000 per year for a period of one (1) year after the Effective Date
or terminable upon payment of the One Source Promissory Note to ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇;
(c) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ will serve as OneSource's President at a salary of
$157,000 per year for a period of three (3) years after the Effective Date; and
(d) ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ will serve as OneSource's Executive Vice President of
Field Services at a salary of $157,000 per year for a period of three (3) years
after the Effective Date.
5.5 Registration Rights. On and after the Effective Date, the Shareholders
shall be entitled to unlimited "piggyback" registration rights on registrations
by OneSource for any new stock of OneSource being sold to the public, subject to
customary cutbacks in the underwriter's discretion. OneSource and its
underwriters shall have the right to terminate or withdraw any registration
initiated by OneSource and to reduce (pro rata among the requesting Shareholders
based upon the number of shares owned by such Shareholders) or eliminate the
number of shares proposed to be registered on behalf of the Shareholders. These
registration rights shall terminate immediately when the Shareholders can
transfer the OneSource Common Stock pursuant to Rule 144 promulgated under the
Securities Act of 1933.
28
5.6 Further Assurances. On and after the Closing Date, Shareholders and
OneSource shall execute and deliver all such deeds, bills of sale, assignments,
and other instruments and shall take or cause to be taken such further or other
actions as any party may reasonably request from time to time in order to
effectuate the transactions provided for herein. The parties shall cooperate
with each other and with their respective counsel and accountants in connection
with any steps to be taken as a part of their respective obligations under this
Agreement.
SECTION 6
WAIVER, MODIFICATION, ABANDONMENT
6.1 Waivers. The failure of the Company or Shareholders to comply with any
of their obligations, agreements, or conditions as set forth herein may be
waived expressly in writing by OneSource, without the requirement for a vote of
shareholders. The failure of OneSource to comply with any of its obligations,
agreements, or conditions as set forth herein may be waived expressly in writing
by the Company and Shareholders, without a vote of Shareholders.
6.2 Modification. This Agreement may be modified at any time in any respect
by the mutual consent of OneSource, the Company, and Shareholders, without
further shareholder approval, except that the number of shares of OneSource
Common Stock to be issued in exchange for the Shares may not be decreased
without the consent of the Company's shareholders given by the same vote as is
required under applicable state law for approval of this Agreement.
6.3 Abandonment Prior to Closing Date. The Merger contemplated by this
Agreement may be abandoned on or before the Closing Date:
(a) By the mutual agreement of OneSource, the Company and Shareholders;
(b) By OneSource, if any of the conditions provided in Section 4.1 shall
not have been satisfied, complied with, or performed in any material respect,
and OneSource shall not have waived such failure of satisfaction, noncompliance,
or nonperformance;
(c) By the Company or Shareholders, if any of the conditions provided in
Section 4.2 shall not have been satisfied, complied with, or performed in any
material respect, and the Company and Shareholders shall not have waived such
failure of satisfaction, noncompliance, or nonperformance; or
(d) At the option of OneSource, the Company or Shareholders, if there shall
have been instituted and be pending or threatened any legal proceeding before
any court or governmental agency seeking to restrain or prohibit or to obtain
damages in respect of this Agreement or the consummation of the Merger
contemplated by this Agreement, or if any order restraining or prohibiting the
Merger shall have been issued by any court or governmental agency and shall be
in effect.
6.4 Notice of Termination. In the event of any termination pursuant to
Section 6.3 (other than pursuant to Section 6.3(a)), written notice setting
forth the reasons thereof shall forthwith be given by the Company and
Shareholders if they are the terminating party to OneSource, or by OneSource, if
it is the terminating party, to the Company and Shareholders.
29
6.5 Automatic Termination. This Agreement shall terminate automatically if
the Effective Date shall not have occurred on or before September 30, 2004, or
such later date as shall have been agreed to by OneSource, the Company and
Shareholders under Section 6.2.
6.6 Effect of Abandonment. If Merger is abandoned prior to the Effective
Date, (a) this Agreement shall forthwith become wholly void and of no effect
without liability to any party to this Agreement or to the directors, officers,
representatives, and agents of any such party, and (b) OneSource on the one hand
and the Company and Shareholders on the other hand shall each pay their own fees
and expenses incident to the negotiation, preparation, and execution of this
Agreement and the obtaining of the necessary approvals thereof, including fees
and expenses of their counsel, accountants, investment bankers, and other
experts. If this transaction does not take place as a result of the fault of any
party, that party shall reimburse all fees, costs, expenses, and damages
incurred or suffered by the other parties.
SECTION 7
INDEMNIFICATION
7.1 Indemnification by Shareholders. Shareholders, jointly and severally,
covenant and agree to defend, indemnify, and hold OneSource and its officers,
directors, stockholders, employees, agents, representatives, and all other
persons or entities charged or chargeable with responsibility or liability
therefor (each a "OneSource Indemnitee") harmless for, from, and against any and
all damages, losses, liabilities (absolute and contingent), fines, penalties,
costs, and expenses (including, without limitation, reasonable counsel fees,
costs, and expenses) incurred in the investigation, defense, or settlement with
respect to or arising out of any demand, claim, inquiry, investigation,
proceeding, action, or cause of action that any OneSource Indemnitee may suffer
or incur by reason of (a) the inaccuracy of any of the representations or
warranties of any Shareholder contained in this Agreement or any of the
agreements, certificates, documents, exhibits, or schedules delivered in
connection with this Agreement; and (b) the failure of the Company or any
Shareholder to comply with, or the breach or the default by, the Company or any
Shareholder of any of the covenants, warranties, or agreements made by the
Company or any Shareholder contained in this Agreement, or any of the
agreements, certificates, documents, exhibits, or schedules delivered in
connection with this Agreement.
7.2 Indemnification By OneSource. OneSource covenants and agrees to defend,
indemnify, and hold each of the Shareholders and their respective officers,
directors, stockholders, employees, agents, representatives, and all other
persons or entities charged or chargeable with responsibility or liability
therefor (each a "Shareholder Indemnitee") harmless for, from, and against any
and all damages, losses, liabilities (absolute and contingent), fines,
penalties, costs, and expenses (including, without limitation, reasonable
counsel fees, costs, and expenses) incurred in the investigation, defense or
settlement with respect to or arising out of any demand, claim, inquiry,
investigation, proceeding, action, or cause of action that any Shareholder
Indemnitee may suffer or incur by reason of (a) the inaccuracy of any of the
representations or warranties of OneSource contained in this Agreement or any of
the agreements, certificates, documents, exhibits, or schedules delivered in
connection with this Agreement; (b) the failure to comply with, or the breach or
the default by, OneSource of any of the covenants, warranties, or agreements
made by OneSource in this Agreement or any of the agreements, certificates,
documents, exhibits, or schedules delivered in connection with this Agreement;
or (c) the operation of OneSource's business subsequent to the Effective Date to
the extent permissible by applicable law.
30
7.3 Notice and Right to Defend Third-Party Claims. Promptly upon receipt of
notice of any claim, demand, or assessment or the commencement of any suit,
action, or proceeding with respect to which indemnity may be sought pursuant to
this Agreement (a "Third Party Claim"), OneSource or the Company and
Shareholders, as the case may be, (the "Indemnitee") shall notify in writing, if
possible, within sufficient time to respond to such Third Party Claim or to
answer or otherwise plead in such action (but in any event within 30 days), the
party from whom indemnification is sought (the "Indemnitor"). In case any Third
Party Claim shall be asserted, or any suit, action, or proceeding commenced
against the Indemnitee, the Indemnitor shall be entitled, at the Indemnitor's
expense, to participate therein, and, to the extent that the Indemnitor may
wish, to assume the defense, conduct, compromise, or settlement thereof, at the
Indemnitor's own expense, with counsel satisfactory to the Indemnitee, whose
consent to the selection of counsel shall not be unreasonably withheld or
delayed, provided that the Indemnitor confirms to the Indemnitee that it is a
claim to which its rights of indemnification apply. The assumption of the
defense, compromise, and settlement of such Third Party Claim by the Indemnitor
shall be an acknowledgement of the obligation of the Indemnitor to indemnify the
Indemnitee with respect to such claim hereunder. The Indemnitor shall have the
right to compromise or settle monetary claims. As to any compromise or
settlement of any other claim, however, the Indemnitor shall first obtain the
prior written consent from the Indemnitee, which consent shall be exercised in
the sole discretion of the Indemnitee. After notice from the Indemnitor to the
Indemnitee of the Indemnitor's intent so to assume the defense, conduct,
compromise, or settlement of such action, the Indemnitor shall not be liable to
the Indemnitee for any legal or other expenses (including, without limitation,
settlement costs) subsequently incurred by the Indemnitee in connection with the
defense, conduct, compromise, or settlement of such action while the Indemnitor
is diligently defending, conducting, compromising, or settling such action. The
Indemnitor shall keep the Indemnitee apprised of the status of the suit, action,
or proceeding and shall make the Indemnitor's counsel available to the
Indemnitee, at the Indemnitor's expense, upon the request of the Indemnitee. The
Indemnitee shall cooperate with the Indemnitor in connection with any such Third
Party Claim and shall make personnel, books and records, and other information
relevant to the Third Party Claim available to the Indemnitor to the extent that
such personnel, books and records, and other information are in the possession
and/or control of the Indemnitee. If the Indemnitor decides not to participate,
the Indemnitee shall be entitled, at the Indemnitor's expense, to defend,
conduct, compromise, or settle such matter with counsel satisfactory to the
Indemnitor, whose consent to the selection of counsel shall not be unreasonably
withheld or delayed. Notwithstanding the above, if, in the reasonable opinion of
the Indemnitee, any Third Party Claim or the litigation or resolution thereof
involves an issue or matter that could have a material adverse effect on the
business, operations, assets, properties, or prospects of the Indemnitee
(including, without limitation, the administration of the tax returns and
responsibilities of the Indemnitee under applicable tax laws), the Indemnitee
shall have the right to control the defense, compromise, and settlement of such
Third Party Claim undertaken by the Indemnitor, and the costs and expenses of
the Indemnitee in connection therewith shall be included as part of the
indemnification obligation of the Indemnitor hereunder. If the Indemnitee shall
elect to exercise such right, the Indemnitor shall have the right to participate
in, but not to control, the defense, compromise, and settlement of such Third
Party Claim at its sole cost and expense.
31
7.4 Indemnification Not to be Sole Remedy. The rights of indemnification
provided for in this Section 7 shall not be the sole and exclusive remedy of any
party hereto for any breach of any representation, warranty, or any other matter
governed by this Agreement.
SECTION 8
GENERAL
8.1 Brokers and Finders. Each of the parties hereto represents and warrants
to the others that he or she has not employed or retained any broker or finder
in connection with the transactions contemplated by this Agreement nor has he or
she had any dealings with any other person that may entitle such other person to
a fee or commission from any other party hereto. Each of the parties shall
indemnify and hold the others harmless for, from, and against any claim, demand,
or damages whatsoever by virtue of any arrangement or commitment made by it with
or to any person that may entitle such person to any fee or commission from the
other parties to this Agreement.
8.2 Notices. All notices, requests, demands, and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made, and received (i) if personally delivered,
on the date of delivery, (ii) if by facsimile transmission, upon receipt, (iii)
if mailed, three days after deposit in the United States mail, registered or
certified, return receipt requested, postage prepaid or (iv) if by a courier
delivery service providing overnight or "next-day" delivery, on the next
business day after deposit with such service, in each case addressed as follows:
---------------------------------------------------- ----------------------------------------------
If to OneSource: with a copy given in the manner prescribed to:
---------------------------------------------------- ----------------------------------------------
One Source Technologies, Inc. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ e-mail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-------------------------
---------------------------------------------------- ----------------------------------------------
If to Shareholders: with a copy given in the manner prescribed, to
---------------------------------------------------- ----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, PA
18122 ▇▇▇▇▇▇▇▇ Road ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
32
---------------------------------------------------- ----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------- ----------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------- ----------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------- ----------------------------------------------
Any party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section 8.2 for the giving of notice.
8.3 Binding Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors, and assigns, except that no party
may assign or transfer his, her, or its rights or obligations under this
Agreement without the prior written consent of the other parties hereto.
8.4 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
8.5 Press Releases and Public Announcements. No party to this Agreement
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement prior to the Closing without the prior written
approval of other parties hereto; provided, however, that any party may make any
public disclosure it believes in good faith is required by applicable law or the
rules and regulations of the Securities and Exchange Commission, provided, that
the disclosing party shall use its reasonable best efforts to advise the other
parties prior to making the disclosure.
8.6 Schedules and Exhibits; Entire Agreement. All Schedules and Exhibits
attached to this Agreement as of the date of this Agreement or subsequently
delivered no later than seven (7) days after the conclusion of the Audit are
hereby incorporated by reference into, and made a part of, this Agreement. This
Agreement, together with the Schedules and Exhibits attached hereto as of the
date of this Agreement or subsequently delivered no later than seven (7) days
after the conclusion of the Audit, contains the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements, understandings,
inducements, and conditions, express or implied, oral or written, of any nature
whatsoever, with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing signed by the party or parties to
be bound.
33
8.7 Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance, and enforcement shall be governed by and
construed, interpreted, and enforced in accordance with the laws of the State of
Arizona notwithstanding any Arizona or other conflict-of-law provisions to the
contrary.
8.8 Indulgences, Not Waivers. Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power, or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power, or privilege preclude any other or further
exercise of the same or of any other right, remedy, power, or privilege, nor
shall any waiver of any right, remedy, power, or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power, or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
8.9 Costs and Expenses; Attorneys' Fees. Except as set forth in Section
4.1(h) and in the following sentence, each party hereto shall bear its or his
own costs and expenses (including the fees and disbursements of counsel and
accountants) incurred in connection with the negotiation and preparation of and
the closing under this Agreement, and all matters incident thereto. In the event
of any claim, controversy, or dispute arising out of or relating to this
Agreement, or the breach thereof, the prevailing party shall be entitled to
recover reasonable attorneys' fees incurred in connection with any court
proceedings.
8.10 Section Headings. The titles of sections and subsections contained in
this Agreement are for convenience only. They form no part of this Agreement and
they are not to be used in the construction or interpretation of this Agreement.
8.11 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories. Any photographic or xerographic copy of this Agreement, with all
signatures reproduced on one or more sets of signature pages, shall be
considered for all purposes as if it were an executed counterpart of this
Agreement. Signatures may be given by facsimile or other electronic
transmission, and such signatures shall be fully binding on the party sending
the same.
8.12 Provisions Severable. The provisions of this Agreement are independent
of and severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part. Further, if
a court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable as written, such court may interpret,
construe, rewrite, or revise such provision, to the fullest extent allowed by
law, so as to make it valid and enforceable consistent with the intent of the
parties.
8.13 Construction. Each party hereto acknowledges that it was represented
by legal counsel (or had the opportunity to be represented by legal counsel) in
connection with this Agreement and that such party and his, her, or its counsel
have reviewed and revised this Agreement, or have had an opportunity to do so,
and that any rule of construction to the effect that ambiguities are to be
34
resolved against the drafting party shall not be employed in the interpretation
of this Agreement or any amendments or any Exhibits or Schedules hereto or
thereto.
[SIGNATUR PAGE TO FOLLOW.]
35
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ONESOURCE TECHNOLOGIES, INC.:
By
--------------------------------------------
Name
------------------------------------------
Title
-----------------------------------------
FIRST FINANCIAL COMPUTER SERVICES, INC.:
By
--------------------------------------------
Name
------------------------------------------
Title
-----------------------------------------
SHAREHOLDERS:
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SCHEDULE 1.5(b)
---------------
Principal
Number of Shares Amount of
Number of Shares of the of OneSource
Name of Shareholder Company OneSource Promissory
to be Transferred Cash Common Stock Note
--------------------- ------------------------- ---------- ------------------- ----------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 76.5 $382,500 2,422,500 $255,000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 76.5 $382,500 2,422,500 $255,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 73.5 $367,500 2,327,500 $245,000
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 73.5 $367,500 2,327,500 $245,000
COMPANY'S AND SHAREHOLDERS' DISCLOSURE SCHEDULE
Any item or matter required to be disclosed with respect to a particular
section of the Agreement shall be deemed to have been disclosed if the
information for such item or matter complying with such disclosure requirements
is set forth in any particular references in the Schedule if to the Company's
knowledge, appropriate references are made to such other sections applicable.
ONESOURCE'S DISCLOSURE SCHEDULE
Any item or matter required to be disclosed with respect to a particular
section of the Agreement shall be deemed to have been disclosed if the
information for such item or matter complying with such disclosure requirements
is set forth in any particular references in the Schedule if to OneSource's
knowledge, appropriate references are made to such other sections applicable.
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
EXHIBIT B-1
-----------
FORM OF PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ("ACT") AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION
OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO MAKER, AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE FOR SUCH OFFER, SALE,
OR TRANSFER, PLEDGE OR HYPOTHECATION. SEE ALSO SECTION 3.7 OF THIS NOTE FOR
FURTHER RESTRICTIONS ON TRANSFER.
NONNEGOTIABLE
PROMISSORY NOTE
$255,000 __________ __, 2004
FOR VALUE RECEIVED, OneSource Technologies, Inc., a Delaware corporation
("Maker"), promises to pay to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("Payee"), in lawful money of
the United States of America, the principal sum of $255,000, together with
interest in arrears on the unpaid principal balance from (and including) the
date hereof until (but not including) the date of payment, at the interest rate
specified below, in accordance with the following terms and conditions:
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the Merger Agreement, dated June 14, 2004, by
and between Maker and First Financial Computer Services, Inc., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the
"Agreement") and is subject to the terms and conditions of the Agreement, which
are, by this reference, incorporated herein and made a part hereof. Capitalized
terms used in this Note without definition shall have the respective meanings
set forth in the Agreement.
1. INTEREST AND RATES AND PAYMENTS
1.1 Stated Interest Rate. Except as provided in Section 1.2 below, the principal
balance outstanding hereunder shall bear interest, until fully paid, at 6.0% per
annum (the "Stated Interest Rate") based on the number of days elapsed in a
365-day year.
1.2 Default Interest Rate. The "Default Interest Rate" shall be the greater
of (a) 10.0% per annum, or (b) the prime rate as published in the Wall Street
Journal, plus 1.0%.
1.3 Manner of Payment. All payments of principal and interest on this Note
shall be made to the address designated by Payee. If any payment of principal or
interest on this Note is due on a day that is not a Business Day, such payment
shall be due on the next succeeding Business Day. "Business Day" means any day
other than a Saturday, Sunday or legal holiday in the State of Arizona.
1.4 Prepayment. Maker may, without premium or penalty, at any time and from
time to time, prepay all or any portion of the outstanding principal balance due
under this Note, provided that each such prepayment is accompanied by accrued
interest on the amount of principal prepaid calculated to the date of such
prepayment. Any partial prepayments shall be applied to installments of
principal in inverse order of their maturity.
1.5 Subordination. The indebtedness evidenced by this Note, including the
principal hereof and interest hereon, is expressly subordinate and subject in
right of payment to the prior payment in full of all "Senior Indebtedness,"
whether now outstanding or hereafter incurred. The term "Senior Indebtedness"
shall mean the principal of and premium, if any, and interest on (a)
indebtedness (other than this Note) of Maker for money borrowed from or
guaranteed to individuals or other persons, firms, or corporations that engage
in lending money, including, but without limitation, banks, trust companies,
insurance companies, and other financing institutions and charitable trusts,
pension trusts, and other investing organizations, evidenced by notes or similar
obligations; (b) indebtedness of Maker evidenced by notes or debentures (other
than this Note) issued under the provisions of an indenture or similar
instrument between Maker and a bank or trust company; and (c) indebtedness
incurred, assumed, or guaranteed by Maker in connection with the acquisition by
it or a subsidiary of any property or asset intended to be leased or sold to
others in the ordinary course of the business of Maker or such subsidiary;
unless, in each case, by the terms of the instrument creating or evidencing the
indebtedness it is expressly provided that such indebtedness is not superior in
right of payment to this Note.
2. DEFAULTS
2.1 Events of Default. The occurrence of any one or more of the following
events with respect to Maker shall constitute an event of default hereunder
("Event of Default"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for 15 days after Payee
notifies Maker thereof in writing.
(b) If, pursuant to or within the meaning of the United States Bankruptcy
Code or any other federal or state law relating to insolvency or relief of
debtors (a "Bankruptcy Law"), Maker shall (i) commence a voluntary case or
proceeding; (ii) consent to the entry of an order for relief against it in an
involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator, or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its debts
as they become due.
(c) If a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (i) is for relief against Maker in an involuntary case;
(ii) appoints a trustee, receiver, assignee, liquidator, or similar official for
Maker or substantially all of Maker's properties; or (iii) orders the
liquidation of Maker, and in each case the order or decree is not dismissed
within 60 days.
(d) If Maker fails to comply with any provision contained in the document
delivered by Maker pursuant to Section 4.2(g) of the Agreement and such failure
continues for 15 days after Payee notifies Maker thereof in writing.
2
2.2 Effect of Event of Default. The principal balance outstanding hereunder
from time to time shall bear interest at the Default Interest Rate from the date
of the occurrence of an "Event of Default" hereunder until the earlier of (a)
the date on which the principal balance outstanding hereunder, together with all
accrued interest and other amounts payable hereunder, is paid in full; or (b)
the date on which such Event of Default is timely cured.
2.3 Remedies. Upon the occurrence of an Event of Default hereunder (unless
all Events of Default have been cured or waived by Payee), Payee may, at its
option (a) by written notice to Maker, declare the entire unpaid principal
balance of this Note, together with all accrued interest thereon, immediately
due and payable regardless of any prior forbearance and (b) exercise any and all
rights and remedies available to it under applicable law, including, without
limitation, the right to collect from Maker all sums due under this Note. Maker
shall pay all reasonable costs and expenses incurred by or on behalf of Payee in
connection with Payee's exercise of any or all of its rights and remedies under
this Note, including, without limitation, reasonable attorneys' fees.
3. MISCELLANEOUS
3.1 Waiver. The rights and remedies of Payee under this Note shall be
cumulative and not alternative. No waiver by Payee of any right or remedy under
this Note shall be effective unless in a writing signed by Payee. Neither the
failure nor any delay in exercising any right, power, or privilege under this
Note will operate as a waiver of such right, power, or privilege, and no single
or partial exercise of any such right, power, or privilege by Payee will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right of Payee arising out of this
Note can be discharged by Payee, in whole or in part, by a waiver or
renunciation of the claim or right unless in a writing signed by Payee; (b) no
waiver that may be given by Payee will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on Maker will be
deemed to be a waiver of any obligation of Maker or of the right of Payee to
take further action without notice or demand as provided in this Note.
3.2 Time of the Essence. Time is of the essence of this Note and each and
every provision hereof.
3.3 Amendments. No amendment, modification, change, waiver, release, or
discharge hereof and hereunder shall be effective unless evidenced by an
instrument in writing and signed by the party against whom enforcement is
sought.
3.4 Notices. Any notice required or permitted to be given hereunder shall
be given in accordance with the notice provisions set forth in the Agreement.
3.5 Severability. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
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3.6 Governing Law. This Note will be governed by and construed under the
laws of the State of Arizona without regard to conflicts-of-laws principles that
would require the application of any other law.
3.7 Restrictions on Transfer. This Note shall not be assigned or
transferred by Payee without the express prior written consent of Maker. Subject
to the preceding sentence, this Note will be binding in all respects upon Maker
and inure to the benefit of Payee.
3.8 Section Headings; Construction. The headings of Sections in this Note
are provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Note unless otherwise specified. All
words used in this Note will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the words "hereof'
and "hereunder" and similar references refer to this Note in its entirety and
not to any specific section or subsection hereof, the words "including" or
"includes" do limit the preceding words or terms and the word "or" is used in
the inclusive sense. Maker and Payee participated in the drafting of this Note,
and Maker and Payee each had the opportunity to have this document reviewed by
their respective legal counsel. The normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
applied to the interpretation of this Note.
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.
ONESOURCE TECHNOLOGIES, INC.
By:
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Name:
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Title:
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EXHIBIT C
FORM OF RELEASE
EXHIBIT D
FORM OF SHAREHOLDERS AGREEMENT
EXHIBIT E
FORM OF EMPLOYMENT AGREEMENT