AGREEMENT AND PLAN OF MERGER BY AND AMONG OSMOTICS PHARMA, INC., ONSOURCE CORPORATION AND ONSOURCE ACQUISITION CORP. DATED AS OF APRIL 8, 2005Agreement and Plan of Merger |
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AGREEMENT AND PLAN OF MERGER BY AND AMONG OSMOTICS PHARMA, INC., ONSOURCE CORPORATION AND ONSOURCE ACQUISITION CORP. DATED AS OF APRIL 8, 2005
SECTION 1: GENERAL DEFINITIONS * SECTION 3: APPROVALS AND REGULATORY MATTERS * SECTION 4. ADDITIONAL AGREEMENTS * SECTION 5: MERGER CONSIDERATION * SECTION 6: CERTAIN EFFECTS OF MERGER * SECTION 7: POST-MERGER GOVERNANCE AND COVENANTS * SECTION 8: COVENANTS AND CONDITIONS OF CLOSING * SECTION 9: REPRESENTATIONS AND WARRANTIES OF OPI * SECTION 10: COVENANTS OF OPI * SECTION 11: REPRESENTATIONS AND WARRANTIES OF ONSOURCE AND Acquisition * SECTION 12: COVENANTS OF THE ACQUIRING COMPANIES * SECTION 15: NONDISCLOSURE OF CONFIDENTIAL INFORMATION * Exhibit List Exhibit 4.1 OPI Financial Statements and OPI Pro Forma Financial
Statements THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered into this ___ day of March, 2005, by and among OSMOTICS PHARMA, INC. , a Colorado corporation ("OPI"); ONSOURCE CORPORATION , a Delaware corporation ("ONSOURCE"); and ONSOURCE ACQUISITION CORP. , a Colorado corporation which is a wholly-owned subsidiary of ONSOURCE ("Acquisition"). OPI, ONSOURCE and Acquisition are hereinafter sometimes individually referred to as a "party" and collectively as the "parties". WITNESETH: WHEREAS , OPI is engaged in the development of pharmaceutical technologies and products; and WHEREAS , ONSOURCE is or will be at Closing, as hereinafter defined, the owner in the aggregate of ten (10) shares of the issued and outstanding Acquisition Common Stock, $.001 par value per share, representing all the issued and outstanding shares of the capital stock of Acquisition; and WHEREAS, ONSOURCE desires to acquire OPI by the merger of Acquisition with and into OPI, with OPI to be the surviving corporation; and WHEREAS , for federal income tax purposes, the merger of Acquisition and OPI is intended to qualify as a tax-free reorganization pursuant to Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"); and WHEREAS , the parties hereto desire to set forth certain representations, warranties and covenants under which a merger of Acquisition and OPI will occur. NOW, THEREFORE , for and in consideration of the premises, the mutual representations, warranties and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows: SECTION 1: GENERAL DEFINITIONS For purposes of this Agreement, the following terms shall have the respective meanings set forth below: 1.1 Affiliate . "Affiliate" of any Person shall mean any Person Controlling, Controlled by or under common Control with such Person. 1.2 Agreement . "Agreement" shall include this Agreement and any and all documents and instruments executed in connection with the Merger (as hereinafter defined). 1.3 Best Knowledge . "Best Knowledge" shall mean both what a Person knew as well as what the Person should have known had the Person exercised reasonable diligence. When used with respect to a Person other than a natural person, the term "Best Knowledge" shall include matters that are known to the directors and officers of the Person. 1.4 Control . "Control" and all derivations thereof shall mean the ability to either (i) vote (or direct the vote of) 50% or more of the voting interests in any Person or (ii) direct the affairs of another, whether through voting power, contract or otherwise. 1.5 Exchange Act . "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 1.6 Fiscal Year . "Fiscal Year" shall mean a twelve-month period beginning January 1. 1.7 Governmental Authority . "Governmental Authority" shall mean any and all applicable foreign, federal, state or local governments, governmental institutions, public authorities and governmental entities of any nature whatsoever, and any subdivisions or instrumentalities thereof, including, but not limited to, departments, boards, bureaus, commissions, agencies, courts, administrations and panels, and any division or instrumentalities thereof, whether permanent or ad hoc and whether now or hereafter constituted or existing. 1.8 Governmental Requirement . "Governmental Requirement" shall mean any and all applicable laws (including, but not limited to, applicable common law principles), statutes, ordinances, codes, rules regulations, interpretations, guidelines, directions, orders, judgments, writs, injunctions, decrees, decisions or similar items or pronouncements, promulgated, issued, passed or set forth by any Governmental Authority. 1.9 Legal Requirements . "Legal Requirements" means applicable common law and any applicable statute, ordinance, code or other laws, rule, regulation, order, technical or other standard, requirement, judgment, or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority, including, without limitation, any order, decree, award, verdict, findings of fact, conclusions of law, decision or judgment, whether or not final or appealable, of any court, arbitrator, arbitration board or administrative agency. 1.10 Net Worth . "Net Worth" shall mean the assets of a Person minus the liabilities of the Person, as of a given date as determined in accordance with generally accepted accounting principles, consistently applied with prior periods. 1.11 Person . "Person" shall mean any natural person, any Governmental Authority and any entity the separate existence of which is recognized by any Governmental Authority or Governmental Requirement, including, but not limited to, corporations, partnerships, joint ventures, joint stock companies, trusts, estates, limited liability companies and associations, whether organized for profit or otherwise. 1.12 Exhibit . Unless otherwise stated herein, the term "Exhibit" when used in this Agreement shall refer to the Exhibits to this Agreement. The Exhibits to this Agreement may be attached to this Agreement or may be set forth in a separate document denoted as the Exhibits to this Agreement, or both, and such Exhibits are incorporated herein by reference for all purposes. 1.13 Section . Unless otherwise stated herein, the term "Section" when used in this Agreement shall refer to the Sections of this Agreement. 1.14 Securities Act . "Securities Act" shall mean the Securities Act of 1933, as amended.
1.15 Taxes . "Tax" and "Taxes" shall
mean any and all income, excise, franchise or other taxes and all
other charges or fees imposed or collected by any Governmental
Authority or pursuant to any Governmental Requirement, and shall
also include any and all penalties, interest, deficiencies,
assessments and other charges with respect thereto. 2.1 The Merger . Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 2.3 herein). Acquisition shall be merged with and into OPI upon the terms and conditions set forth herein (the "Merger") as permitted by and in accordance with the Colorado Business Corporation Act (the "CBCA"). Thereupon, the separate existence of Acquisition shall cease, and OPI, as the surviving corporation in the Merger (the "Surviving Corporation"), shall continue to exist under and be governed by the CBCA, with all its purposes, objects, rights, privileges, immunities, powers and franchises continuing unaffected and unimpaired by the Merger. The name of the Surviving Corporation shall be "Osmotics Pharma, Inc." 2.2 Filing . As soon as practicable following fulfillment or waiver of the conditions specified in Sections 8.2 and 8.3 hereof, and provided that this Agreement has not been terminated pursuant to Section 13 hereof, Acquisition and OPI will cause a Statement of Merger to be executed, acknowledged and filed with the Secretary of State of Colorado as provided in applicable provisions of the CBCA and obtain a copy of the Statement of Merger, as filed with and certified by the Secretary of State of the State of Colorado. 2.3 Effective Time of the Merger . The Merger shall become effective immediately upon the filing of the Statement of Merger with the Secretary of State of the State of Colorado in accordance with the CBCA. The date and time of the completion of such filings is herein sometimes referred to as the "Effective Time." Notwithstanding the foregoing, the parties agree that the effective date of the Merger for all tax and accounting purposes (the "Effective Date") shall be April 1, 2005.
2.4 Closing; Closing Date . Subject
to the terms and conditions set forth in the Agreement, the
consummation of the transactions referenced above shall take place
(the "Closing") within five (5) business days following the
satisfaction, or waiver, of all conditions to Closing, but in no
event later than April 30, 2005, at 10:00 a.m. Mountain Time at the
offices of Bathgate Capital Partners, 5350 South Roslyn Street,
Denver, Colorado, or at such other time, date and place as OPI and
Acquisition shall designate (the "Closing Date"). 3.1 OPI Shareholder Approval . As promptly as practicable after the date hereof, OPI shall obtain the approval of the Merger and the other transactions and agreements provided for or contemplated by this Agreement by the OPI shareholders (the "OPI Shareholders") in conformity with the requirements of the CBCA and the OPI Articles of Incorporation. 3.2 Disclosure Document . This Agreement shall be duly submitted to the OPI Shareholders for the purpose of considering and acting upon this Agreement in the manner required by law at a meeting of the OPI Shareholders on a date selected by OPI. In connection with the OPI shareholder meeting, OPI will furnish the OPI Shareholders with a proxy statement in respect of the OPI shareholder meeting (the "Proxy Statement"). Further, in order to complete the Merger in conformity with the requirements of Rule 506 of Regulation D and/or Section 4(2) of the Securities Act and the information requirements thereunder, the Acquiring Companies will be required to provide the OPI Shareholders with certain information and disclosures (the "Exemption Disclosures"). The parties agree that they will cooperate with each other in connection with the preparation of the Proxy Statement and Exemption Disclosures and, to the extent practicable, prepare one integrated disclosure document that satisfies the legal requirements applicable to both the Proxy Statement and Exemption Disclosure (hereafter the "Disclosure Document"). In connection with the preparation of the Disclosure Document, the Acquiring Companies and OPI will each furnish to the other party the information relating to that party required by the applicable securities laws to be included in the Disclosure Document. The Acquiring Companies and OPI each represent and warrant to the other that at the time of the OPI Shareholders' meeting, the Disclosure Document, insofar only as it relates to the disclosing party and containing information furnished by the disclosing party specifically for use in such Disclosure Document, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 3.3 Income Tax Considerations . It is the intention of the parties hereto that the Merger provided for in this Agreement will qualify for treatment as a tax-free reorganization under Section 368(a)(2)(E) of the Code and the parties will agree to undertake all commercially reasonable appropriate actions necessary both before and after the Effective Date of the Merger to effect such treatment. Notwithstanding the foregoing, neither ONSOURCE nor any of its affiliates shall have any liability whatsoever to OPI or the OPI Shareholders for the treatment ultimately accorded the Merger by federal or state taxing and regulatory authorities; and OPI shall bear all responsibility for any tax or other assessment levied, imposed or assessed by any regulatory or governmental authority on OPI by virtue of the consummation of the Merger and the other transactions provided for in this Agreement. The OPI Shareholders shall bear all responsibility for any tax or other assessment levied, imposed or assessed by any regulatory or governmental authority on the OPI Shareholders by virtue of the consummation of the Merger or other transactions provided for in this Agreement. 3.4 Compliance with Securities Laws . The Merger provided for in this Agreement shall be undertaken in reliance upon an exemption from the registration requirements contained in Section 5 of the Securities Act and set forth in Section 4(2) of the Securities Act and Regulation D thereunder. All shares issued to the OPI Shareholders in connection with the Merger shall be "restricted securities" within the meaning of Rule 144 under the Securities Act. 3.5 Restrictive Legend . Certificates representing the shares of ONSOURCE common stock issued in connection with the Merger shall be "restricted securities" under the Securities Act and shall bear the following restrictive legend: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act") and are "restricted securities" as that term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company.
3.6 Dissenter Rights . At all times,
and as applicable, ONSOURCE and OPI shall comply with applicable
Legal Requirements including, without limitation, the payment of
cash for dissenting shares of OPI related to the Merger. In the
event that there are OPI dissenting shares related to the Merger,
ONSOURCE shall make the cash payment contemplated hereby. 4.2 OPI Financial Condition . At Closing, OPI shall have no liabilities or obligations of any nature, whether liquidated, unliquidated, accrued, absolute, contingent or otherwise, whether due or to become due except for (i) the obligations and liabilities set forth herein and in Exhibit 4.1 hereof, (ii) ongoing contractual commitments under licenses from the Regents of the University of California and Brigham Young University (the "OPI Contracts"), and (iii) obligations incurred in the ordinary course of business. OPI agrees to indemnify, defend and hold harmless ONSOURCE from any debt, damage, liability or obligation incurred prior to the Closing Date not specifically approved in writing by ONSOURCE or otherwise disclosed in this Agreement (an "OPI Undisclosed Liability"). If indemnity is not promptly paid for any OPI Undisclosed Liability, then the shares to be distributed to the OPI Shareholders from the Closing Escrow shall be reduced by the value of any OPI Undisclosed Liability as set forth in the Closing Escrow. The provisions of this Section 4.2 shall terminate upon OPI delivering the OPI Financial Statements showing the absence of any OPI Undisclosed Liabilities. 4.3 OPI Pre-Closing Actions . Prior to Closing, OPI shall enter into an agreement with Osmotics (the "Technology Transfer Agreement"), attached hereto as Exhibit 4.3(i), to transfer and assign to OPI all right, title and interest of Osmotics in and to any and all intellectual property rights related to prescription applications of the barrier repair technology (the "Barrier Repair Technology") licensed from the Regents of the University of California (the "UCSF Agreement") as well as to remove itself as a co-licensee under the license agreement with Brigham Young University (the "BYU Agreement") for the rights to certain cationic steroid molecules (the "CSMs)". The patents underlying the UCSF Agreement and the BYU Agreement are herein collectively referred to as the "IP." Osmotics shall convey the IP to OPI free and clear of all claims, debts, obligations or liabilities, liens or encumbrances; provided, however, that OPI shall assume and agree to pay any and all royalties, fees and other sums due and owing to third parties under the licenses covering the IP. Osmotics shall obtain the consents of all third parties necessary to assign the IP to OPI. Until such time that Osmotics can obtain all necessary third party consents, Osmotics shall enter into a sublicense agreement with OPI whereby Osmotics will provide OPI with exclusive worldwide rights to all prescription applications of the Barrier Repair Technology and will covenant not to compete in such applications in any manner that may materially adversely affect the market for such prescription products (the "Sublicense Agreement"), the Sublicense Agreement is attached hereto as Exhibit 4.3(ii). Additionally, Osmotics will also enter into a non compete agreement related to all applications of the CSM technology underlying the BYU Agreement (the "Non Compete Agreement"), the Non Compete Agreement is attached hereto as Exhibit 4.3(iii). The execution of the Sublicense Agreement and Non Compete Agreement shall be a condition precedent to closing the Merger in the event that all assignment consents have not been obtained. 4.4 Notification of Certain Matters . OPI shall give prompt notice to the Acquiring Company and the Acquiring Companies shall give prompt notice to OPI of (a) the occurrence or non-occurrence of any event which would cause any representation or warranty made by the respective parties in this Agreement to be materially untrue or inaccurate when made and (b) any failure of Acquiring Companies or OPI, as the case may be, to materially comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this section shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice and, provided further, that the failure to give such notice shall not be treated as a breach of covenant for the purposes of this Agreement unless the failure to give such notice results in material prejudice to the other party. 4.5 Further Action . Upon the terms and subject to the conditions hereof, each of the parties hereto shall use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, to obtain in a timely manner all necessary waivers, consents and approvals and to effect all necessary registrations and filings, and to otherwise satisfy or cause to be satisfied all conditions precedent to its obligations under this Agreement. 4.6 Public Announcements . OPI and the Acquiring Companies shall consult with each other before issuing any press release or other public statement with respect to the Merger or this Agreement and shall not issue any such press release or make any such public statement without the prior consent of the other party, which consent shall not be unreasonably withheld, delayed or conditioned; provided, however, that a party may, without the prior consent of the other party, issue such press release or make such public statement as may, upon the advice of counsel, be required by law if it has used reasonable efforts to first consult with the other party. 4.7 Cooperation in Securities Filings . OPI shall provide such written information regarding OPI, its business, its officers, directors and affiliates, as is reasonably required by ONSOURCE for purposes of preparing any notices, reports and other filings with the Securities and Exchange Commission (the "SEC"). Moreover, following the Closing, the current officers and directors of OPI shall provide such information as the post-closing management of ONSOURCE shall reasonably request for the purpose of preparing any notices, reports and other filings by ONSOURCE with the SEC, including but not limited to, in connection with the preparation of any financial statements required to be filed under the Exchange Act or Securities Act by ONSOURCE. 4.8 Additional Documents . The parties shall deliver or cause to be delivered such documents or certificates as may be necessary, in the reasonable opinion of counsel for either of the parties, to effectuate the transactions provided for in this Agreement. If at any time the parties or any of their respective successors or assigns shall determine that any further conveyance, assignment or other document or any further action is necessary desirable to further effectuate the transactions set forth herein or contemplated hereby, the parties and their officers, directors and agents shall execute and deliver, or cause to be executed and delivered, all such documents as may be reasonably required to effectuate such transactions. 4.9 ONSOURCE Private Offering . ONSOURCE is currently undertaking a best efforts private placement of its securities up to the maximum amount of $2,000,000 (the "Debenture Private Placement"). The Debenture Private Placement shall consist of units comprised of (a) a 6% convertible debenture (the "Debenture"), payable in one year, and, for every $2.00 in principal amount of Debenture, (b) one warrant exercisable for three years to purchase one share of common stock at an exercise price of $2.00 per share and (c) one warrant exercisable for three years to purchase one additional share of common stock at an exercise price of $4.00 per share. The principal and accrued interest amount of the Debentures shall be convertible into shares of ONSOURCE common stock at a conversion price of $1.00 per share, subject to customary adjustments under certain circumstances. The Debenture will be subject to mandatory conversion in the event (i) the Debenture Registration Statement, defined below, is declared effective, and (ii) the public trading price for the ONSOURCE common stock has equaled or exceeded $2.00 per share for at least ten (10) consecutive trading days. Investors in the Debenture Private Placement shall have an immediate one-time demand registration right pursuant to which ONSOURCE shall exercise best efforts to prepare and file with the SEC a Registration Statement registering for resale under the Securities Act, the shares of common stock issuable upon conversion of the Debenture and issuable upon exercise of the warrants (the "Debenture Registration Statement"). The warrants issued as part of the Debenture Private Placement shall be subject to redemption by ONSOURCE in the event (i) the Debenture Registration Statement has been declared effective by the Commission and (ii) the public trading price for the ONSOURCE common stock has equaled or exceeded 137.5% of the applicable exercise price of the warrant for at least ten (10) consecutive trading days. ONSOURCE shall agree that for a period of 30 days following the effective date of the Debenture Registration Statement, ONSOURCE shall not register for sale under the Securities Act any additional shares of common stock and shall not sell any securities consisting of shares of common stock or common stock equivalents at a price of less than $2.00 per share.
4.10 Investment Banking Warrants .
At the Closing, ONSOURCE shall grant and issue to Bathgate Capital
Partners, LLC, as an investment banking fee, warrants exercisable
for five years to purchase 300,000 shares of ONSOURCE Common Stock
at an exercise price of $1.00 per share substantially in the form
attached hereto as Exhibit 4.10 (the "IB Warrants"). 5.1 Securities to be issued on Effective Date of Merger. On the Effective Date of the Merger: (a) all issued and outstanding shares of common stock of OPI (the "OPI Common Stock") shall be converted into 11,428,894 shares of ONSOURCE Common Stock (the "ONSOURCE Common Stock") and Warrants exercisable for two years to purchase 1,079,560 shares of ONSOURCE common stock at an exercise price of $2.18 per share (the ONSOURCE Warrants"). The conversion rates of the OPI Common Stock into the ONSOURCE Common Stock and ONSOURCE Warrants shall be as set forth in Exhibit 5.1(a), attached hereto. (Note: The calculation of the ONSOURCE Common Stock assumes that there are 948,158 shares of ONSOURCE common stock and stock options to purchase 22,500 shares of ONSOURCE common stock outstanding as of the Effective Date. Any changes in the number of issued and outstanding shares of ONSOURCE common stock and stock options to purchase ONSOURCE common stock will change the number of shares of ONSOURCE Common Stock to be issued hereunder). (b) all issued and outstanding shares of Series A Convertible Preferred Stock of OPI (the "OPI Preferred Stock") shall be converted into an equal number of shares of ONSOURCE Series A Convertible Preferred Stock (the "ONSOURCE Preferred Stock"). The ONSOURCE Preferred Stock shall consist of one million (1,000,000) shares of Series A Convertible Preferred Stock having a stated value of $4.00 per share. The Certificate of Designation of Rights and Preferences of the ONSOURCE Preferred Stock, attached hereto as Exhibit 5.1(b)(i), shall be identical to those of the currently outstanding OPI Series A Convertible Preferred Stock, attached hereto as Exhibit 5.1(b)(ii). The ONSOURCE Preferred Stock shall have the following rights and preferences: Voting Rights : None, except as provided by law. Dividend : The ONSOURCE
Preferred Stock shall accrue a dividend at the rate of six percent
(6%) per annum on the stated value thereof, payable annually. The
first annual payment will be due on April 30, 2005 in cash as a
prepayment. Accrued interest on all subsequent dividend dates shall
be payable either in cash or in shares of ONSOURCE common stock,
valued at current market price, at the option of ONSOURCE. Conversion: Each share of ONSOURCE Preferred Stock is convertible into one share of ONSOURCE common stock, subject to adjustment under certain circumstances. Liquidation Preference . $4.00 per share of ONSOURCE Preferred Stock. (c) all outstanding stock options to purchase common stock of OPI (the "OPI Stock Options") shall be converted into stock options to purchase 2,714,750 shares of ONSOURCE common stock at an exercise price of $1.00 per share and subject to the same terms and conditions as set forth in the outstanding OPI stock options (the "ONSOURCE Stock Options"). The conversion rate of the OPI Stock Options into the ONSOURCE Stock Options shall be as set forth in Exhibit 5.1(c), attached hereto. (d) The ONSOURCE Common Stock, ONSOURCE Warrants, ONSOURCE Preferred Stock and the ONSOURCE Stock Options (the "Merger Securities" or "Merger Consideration") shall equal to 94% of the post-Merger fully diluted shares of ONSOURCE, exclusive of (i) shares issuable under a convertible debenture issued to ONSOURCE legal counsel for past services in the principal amount of $50,000, a copy of which is attached hereto as Exhibit 5.1(d)(i), (ii) shares issuable under the Debenture and Warrants sold by ONSOURCE in the Debenture Private Placement defined and discussed in Section 4.9 hereof, (iii) warrants issued to Bathgate Capital Partners as fees paid in connection with the Merger, copies of which are attached hereto as Exhibit 5.1(d)(iii) (hereafter collectively referred to as the "Excluded Shares"). (e) ONSOURCE shall assume the promissory note in favor of Osmotics in the original principal amount of $1,200,000 (the "Note"), a copy of the Note is attached hereto as Exhibit 5.1(e)(i). ONSOURCE shall execute the attached Assignment and Assumption Agreement substantially in the form attached hereto as Exhibit 5.1(e)(ii) (the "Assignment and Assumption Agreement"). The Note is payable in monthly installments of principal only of not less than $120,000 and not more than $150,000 per month. The Note shall mature and become due and payable in full in 12 months from the Effective Date. The issuance of the Note shall satisfy the outstanding advance balance of approximately $779,000 owed by OPI to Osmotics. Provided that if ONSOURCE receives gross proceeds of at least $2 million in equity investment in the Debenture Private Placement no later than March 31, 2005, it is agreed that ONSOURCE will pay $100,000 in repayment of a bridge loan made by Joseph Salamon to Osmotics Corporation, whereupon the total outstanding principal balance due to Osmotics under the Note, and ONSOURCE's liability to Osmotics pursuant to its assumption of the Note, shall be reduced by the principal amount of $100,000. 5.2 Voting Agreement. At the Closing, Osmotics and ONSOURCE shall enter into a Voting Agreement substantially in the form of Exhibit 5.2 hereto, which shall provide that, until such time as the ONSOURCE Common Stock to be issued to Osmotics pursuant to Section 5.1(a) is distributed, pro rata, to the Osmotics shareholders in conformity with applicable legal requirements, all voting rights with respect to the ONSOURCE Common Stock to be issued to Osmotics pursuant to Section 5.1(a) shall be exercised by Steven Porter, acting on behalf of the Osmotics' Board of Directors. 5.3 Conversion or Cancellation of Shares . At the Effective Time, the issued and outstanding (a) shares of OPI Common Stock, (b) shares of OPI Preferred Stock and (c) OPI Options shall, by virtue of the Merger, be cancelled and converted into the right to receive the Merger Securities as set forth in this Agreement. 5.4 Restricted Securities . All of the Merger Securities issued under Section 5.1 above shall be restricted securities pursuant to Rule 144 promulgated under the Securities Act. 5.5 Cancellation of OPI Treasury Stock . Each share of OPI Common Stock, if any, held in OPI's treasury immediately prior to the Effective Time shall be canceled and retired and no payment shall be made in respect thereof. 5.6 Cancellation of Acquisition Treasury Stock . At the Effective Time, all outstanding shares of Acquisition shall be converted into an aggregate of 10 shares of Common Stock of OPI. Each share of Acquisition Common Stock, if any, held in Acquisition's treasury immediately prior to the Effective Time shall be canceled and retired and no payment shall be made in respect thereof. 5.7 Surrender and Exchange of OPI Common Stock Stock Certificates . Subject to the provisions of this Agreement, upon the Effective Time, the OPI Shareholders shall be entitled, upon surrender of such OPI Common Stock stock certificate along with a fully executed Common Stock Subscription Agreement in the form of Exhibit 5.7 attached hereto, to ONSOURCE, to receive the ONSOURCE Common Stock and ONSOURCE Warrants pursuant to Section 5.1(a). Until so surrendered, each certificate which immediately prior to the Effective Time represented an issued and outstanding share of OPI Common Stock shall, upon and after the Effective Time, be deemed for all purposes to represent and evidence only the right to receive ONSOURCE Common Stock and ONSOURCE Warrants as set forth in Section 5.1(a). Prior to the ONSOURCE Common Stock and ONSOURCE Warrants being issued, the OPI Shareholders shall have delivered a fully executed Common Stock Subscription Agreement substantially in the form of Exhibit 5.7. 5.8 Surrender and Exchange of Option Agreements . Subject to the provisions of this Agreement, upon the Effective Time, each holder of an OPI option agreement (each an "OPI Option Holder") representing options in OPI (an "OPI Option Agreement") shall be entitled, upon surrender of such OPI Option Agreement to ONSOURCE, to receive an equivalent ONSOURCE option agreement substantially in the form of Exhibit 5.8 attached hereto (the "ONSOURCE Option Agreement"), pursuant to Section 5.1(c). Until so surrendered, each OPI Option Agreement which immediately prior to the Effective Time represented options in OPI Common Stock shall, upon and after the Effective Time, be deemed for all purposes to represent and evidence only the right to receive an ONSOURCE Option Agreement pursuant to Section 5.1(c). The OPI Option Holder receiving an ONSOURCE Option Agreement pursuant to the terms hereof shall be required to execute any and all documents reasonably requested by ONSOURCE relating to such ONSOURCE Option Agreement. 5.9 Surrender and Exchange of OPI Preferred Stock Stock Certificates . Subject to the provisions of this Agreement, upon the Effective Time, Osmotics shall be entitled, upon surrender of such OPI Preferred Stock stock certificate along with a fully executed Preferred Stock Subscription Agreement in the form of Exhibit 5.9 attached hereto, to ONSOURCE, to receive the ONSOURCE Preferred Stock pursuant to Section 5.1(b) hereof. Until so surrendered, each certificate which immediately prior to the Effective Time represented an issued and outstanding share of OPI Preferred Stock shall, upon and after the Effective Time, be deemed for all purposes to represent and evidence only the right to receive ONSOURCE Preferred Stock as set forth in Section 5.1(b) hereof. Prior to the ONSOURCE Preferred Stock being issued, Osmotics shall have delivered a fully executed Preferred Stock Subscription Agreement substantially in the form of Exhibit 5.9. 5.10 Closing Escrow . All Merger Securities shall be delivered to and deposited into escrow (the "Closing Escrow") with the ONSOURCE acting corporate secretary, as escrow agent, pursuant to the terms of a Closing Escrow Agreement, substantially in the form of Exhibit 5.10, attached hereto (the "Closing Escrow Agreement"). Under the terms of the Closing Escrow Agreement, the Merger Securities shall be held in escrow until (a) OPI shall have delivered to ONSOURCE the OPI Financial Statements and Pro Forma Financial Information required pursuant to Section 4.1 hereof and Form 8-K under the Exchange Act, (b) there has been filed with the SEC a Form 8-K containing the OPI Financial Statements and Pro Forma Financial Information in accordance with Form 8-K under the Exchange Act and other applicable Legal Requirements, and (c) Osmotics has completed the assignment of the IP to OPI in accordance with the Technology Transfer Agreement and has obtained all third party consents required to complete such transfer required pursuant to Section 4.3 hereof; provided, however, that in the event that any OPI Undisclosed Liability arises in connection with the OPI Financial Statements, an amount of shares of ONSOURCE Common Stock shall be held in the Closing Escrow contemplated hereby until such OPI Undisclosed Liability is disposed to the satisfaction of the auditors who prepared the OPI Financial Statements. If such OPI Undisclosed Liability can not be satisfied within 75 days after delivery of the OPI Financial Statements to ONSOURCE, then the number of shares of ONSOURCE Common Stock to be distributed to the OPI Shareholders from the Closing Escrow shall be reduced by the value of the liability based upon an ONSOURCE Common Stock value of $1.00 per share. 5.11 No Further Transfers . On and after the Effective Time, no transfer of the shares of OPI Common Stock and OPI Preferred Stock issued and outstanding immediately prior to the Effective Time shall be made on the stock transfer books of OPI. SECTION 6: CERTAIN EFFECTS OF MERGER 6.1 Effect of Merger . On and after the Effective Time, the separate existence of Acquisition shall cease and Acquisition shall be merged with and into OPI, which as the Surviving Corporation shall, consistently with its Articles of Incorporation succeed to, and without other transfer, possess all the rights, privileges, immunities, powers and franchises of public as well as private nature, and be subject to all restrictions, disabilities and duties of Acquisition; and all rights, privileges, immunities, powers and franchises of Acquisition, and all property, real, personal and mixed, causes of action and every other asset of, and all debts due to Acquisition on whatever account as well as stock subscriptions and all other things in action or belonging to Acquisition shall vest in the Surviving Corporation; and all property, rights, privileges, immunities, powers and franchises, and all and every other interest shall be thereafter as effectually the property of the Surviving Corporation as they were of Acquisition, and the title to any real estate vested by deed or otherwise in Acquisition, and the title to any real estate vested by deed or otherwise in Acquisition shall not revert or be in any way impaired but all rights of creditors and all liens upon any property of Acquisition shall be preserved unimpaired, and all debts, liabilities and duties of Acquisition shall thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent as if such debts, liabilities and duties had been incurred or contracted by it. Any action or proceeding pending by or against Acquisition may be prosecuted to judgment, which shall bind the Surviving Corporation, or the Surviving Corporation may be proceeded against or substituted in its place. 6.2 Further Assurances . If at any time after the Effective Time the Surviving Corporation shall consider any further deeds, assignments or assurances in law or any other action necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation the title to any property or rights of Acquisition acquired or to be acquired by reason of, or as a result of, the Merger, or (b) otherwise to carry out the intents and purposes of this Agreement, Acquisition and ONSOURCE agree that it and its proper officers and directors shall and will execute and deliver, or cause to be executed and delivered, all such property, deeds, assignments and assurances in law and take all other action necessary, desirable or proper to vest, perfect or confirm title to such property or right in the Surviving Corporation and otherwise to carry out the purposes of this Agreement. SECTION 7: POST-MERGER GOVERNANCE AND COVENANTS 7.1 Articles of Incorporation and Bylaws . At the Effective Time, the Articles of Incorporation and By-Laws of OPI as in effect immediately prior to the Effective Time, shall be and continue to be the Articles of Incorporation and By-Laws of OPI, as the Surviving Corporation, until duly amended in accordance with applicable law. 7.2 Directors, Officers and Employees . (a) Directors of ONSOURCE . Concurrently with the Closing, the Board of Directors of ONSOURCE shall, in accordance with the Delaware General Corporation Law (the "DGCL") and the Articles of Incorporation and By-Laws of ONSOURCE be increased to six (6) members, and Steven S. Porter, Jeff Sperber and Vicki Barone shall be elected to serve as directors. (b) Executive Officers of ONSOURCE . Concurrently with the Closing, the Board of Directors of ONSOURCE shall appoint the following persons to serve as Executive Officers of ONSOURCE in the capacities set forth below until the next regular Annual Meeting of the ONSOURCE Board of Directors or until their successors have been duly elected and qualified in accordance with the DGCL, the Articles of Incorporation and Bylaws of ONSOURCE, or until they have resigned:
All Executive Officers of ONSOURCE immediately prior to the Effective Time shall tender their resignations in accordance with applicable Legal Requirements. Such resignations are attached hereto as Exhibit 7.2(b)(i). The current employment agreements of Steven S. Porter, Jeff Sperber, Peter Elias and Carl Genberg with OPI shall be assumed by ONSOURCE upon completion of the Merger. Such employment agreements are attached hereto as Exhibit 7.2(b)(ii). (c) Directors of OPI . Immediately after the Effective Time, the Board of Directors of OPI shall consist of two (2) persons: Steven S. Porter and Jeff Sperber. (d) Executive Officers of OPI . Immediately after the Effective Time, the following persons shall serve as Executive Officers of OPI in the capacities set forth below until the next regular Annual Meeting of the Board of Directors of OPI and until their successors have been duly elected and qualified:
(e) Directors and Executive Officers of Global Alaska Industries, Inc. and Alaska Bingo Supply, Inc. Immediately after the Effective Time, the directors and executive officers of Global Alaska Industries, Inc. and Alaska Bingo Supply, Inc. shall continue to hold their respective positions.
7.3 Future Financings. For a period
of 180 days following the Effective Date of the Merger, any and all
debt or equity financings undertaken by ONSOURCE or OPI shall be
undertaken through Bathgate Capital Partners, as placement agent,
on a non-exclusive basis. 8.1 Covenants Regarding the Closing . The parties hereto hereby covenant and agree that they shall (i) use all commercially reasonable efforts to cause all of their respective representations and warranties set forth in this Agreement to be true on and as of the Closing Date, (ii) use all commercially reasonable efforts to cause all of their respective obligations that are to be fulfilled on or prior to the Closing Date to be so fulfilled, (iii) use all commercially reasonable efforts to cause all conditions to the Closing set forth in this Agreement to be satisfied on or prior to the Closing Date, and (iv) deliver to each other at the Closing the certificates, updated lists, opinion of counsel, notices, consents, authorizations, approvals, agreements, transfer documents, receipts and amendments contemplated by Sections 8, 9 and 11 hereof (with such additions or exceptions to such items as are necessary to make the statements set forth in such items, accurate in all material respects, provided that if any such additions or exceptions cause any of the conditions to the parties' obligations hereunder as set forth in Sections 8, 9 and 11 hereof not to be fulfilled, such additions and exceptions shall in no way limit the rights of the parties to terminate this Agreement or refuse to consummate the transactions contemplated hereby.) All indemnifications, guarantees, covenants, agreements, representations and warranties made by the parties hereunder or pursuant hereto or in connection with the transactions contemplated hereby shall survive the Closing for two years regardless of any investigation at any time made by or on behalf of the parties. 8.2 Conditions to Obligation of the Acquiring Companies . The obligation of the Acquiring Companies to complete the Merger on the Closing date on the terms set forth in this Agreement is, at the option of the Acquiring Companies, subject to the satisfaction of OPI or waiver by the Acquiring Companies of each of the following conditions: (a) Accuracy of Representations and Warranties . The representations and warranties made by OPI in this Agreement shall be correct in all material respects on and as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date. (b) Compliance with Covenants . All covenants which OPI is required to perform or comply with on or before the Closing date shall have been fully complied with or performed in all material respects. (c) INTENTIONALLY DELETED. (d) Consents and Approvals . To the extent that any material lease, mortgage, deed of trust, contract or agreement to which OPI is a party shall require the consent of any person to the Merger or any other transaction provided for herein, such consent shall have been obtained; provided, however, that OPI shall not make, as a condition for the obtaining of any such consent, any agreements or undertakings not approved in writing by the Acquiring Companies to the extent that such condition otherwise has an adverse effect on the Acquiring Companies. (e) Review and Due Diligence . At the earlier of the Closing or thirty (30) days from the date hereof, the Acquiring Companies, its investment bankers, legal counsel and/or auditors shall have had the opportunity to complete a satisfactory due diligence investigation of OPI together with a satisfactory review of OPI's corporate status and the title to OPI's property. (f) No Governmental Actions . No action or proceeding before any governmental authority shall have been instituted or threatened to restrain or prohibit the transactions contemplated by this Agreement, and OPI shall have delivered to each other certificates dated as of the Closing Date and executed by OPI, stating that to its Best Knowledge, no such items exist. No governmental authority shall have taken any other action as a result of which the management of the Acquiring Companies, in their sole discretion, reasonably deems it inadvisable to proceed with the transactions contemplated by this Agreement. (g) No Material Adverse Change . No material adverse change in the business, property or assets of OPI shall have occurred, and no loss or damage to any of the assets, whether or not covered by insurance, with respect to OPI has occurred, and OPI shall have delivered to the Acquiring Companies certificates dated as of the Closing Date and executed by OPI to all such effects. (h) Update of Contracts . OPI shall have delivered to the Acquiring Companies an accurate list, as of the Closing Date, showing (i) all agreements, contracts and commitments of the type listed on Exhibit 9.17 and Exhibit 11.17 entered into since the date of this Agreement; and (ii) all other agreements, contracts and commitments related to the businesses or the assets of OPI entered into since the date of this Agreement, together with true, complete and accurate copies of all such documents (the "New Contracts"), attached hereto as Exhibit 8.2(h). The Acquiring Companies shall have had the opportunity to review and approve OPI's New Contracts, and the Acquiring Companies shall have the right to delay the Closing for up to ten (10) days if it in their sole discretion deems such delay necessary to enable them to adequately review the OPI New Contracts. (i) Approval of Counsel . All actions, proceedings, instruments and documents required or incidental to carry out this Agreement, including all schedules and exhibits thereto, and all other related legal matters shall have been approved by counsel to the Acquiring Companies. (j) No Adverse Information . The investigations with respect to OPI, its the assets and the businesses performed the Acquiring Companies' professional advisors and other representatives shall not have revealed any information concerning OPI, its assets or business that has not been made known to the Acquiring Companies, in writing prior to the date of this Agreement and that, in the reasonable opinion of the Acquiring Companies and its advisors, materially and adversely affects the business or assets of OPI or the viability of the transaction contemplated by this Agreement. (k) Ordinary Course of Business . During the period from the date of this Agreement until the Closing Date, OPI shall have carried on its business in the ordinary and usual course, and shall have delivered to the Acquiring Companies a certificate to that effect. (l) Liens . OPI shall have delivered to ONSOURCE a reasonably current lien and judgment search (both state and county levels in each jurisdiction where the Acquiring Companies are qualified to or are doing business or own material assets) confirming the absence of any judicial liens, security interests, tax liens and similar such liens affecting any of OPI's business or assets. Each and every lien or encumbrance of any nature, if any, relating to the assets, business or the shares of common stock of OPI shall have been terminated and released, and proof thereof delivered to ONSOURCE. (m) Other Documents . OPI shall have delivered or caused to be delivered all other documents, agreements, resolutions, certificates or declarations as OPI or its attorneys may have reasonably requested. (n) Governmental and Regulatory Approvals . The Acquiring Companies shall have obtained evidence, in form and substance satisfactory to each of them, that there have been obtained all consents, approvals and authorizations required by this Agreement, including, without limitation, all regulatory approvals necessary for OPI to conduct business in the ordinary course in each jurisdiction where such approval may be required and the failure to obtain such approval would cause a material adverse affect to the financial condition, business or operations of OPI (o) Compliance with Securities Laws . OPI shall have undertaken all actions necessary or advisable to consummate the Merger in conformity with all Governmental and Legal Requirements including, without limitation, applicable federal and state securities laws. (p) Appraisal Rights and/or Dissenters' Rights . At or prior to Closing, beneficial record owners holding no more than 2%, of the issued and outstanding shares of OPI Common Stock and no beneficial record owners of the OPI Preferred Stock shall have exercised or shall have given notice to ONSOURCE or OPI of their intent to exercise any rights under applicable state law, if any, to dissent from the Merger or obtain the payment of the fair market value of such shares of OPI Common Stock in lieu of participating in the Merger in accordance with the terms and subject to the conditions set forth herein. (q) Financial Advisory Fees . At or prior to Closing, all obligations or commitments of OPI to its financial advisors and investment bankers shall have been paid or otherwise satisfied upon terms satisfactory to the Acquiring Companies, and the Acquiring Companies shall each have received such written consents, approvals, estoppel certificates or other instruments or undertakings from its advisors or other third parties as each may deem commercially reasonable, necessary or advisable. (r) Compliance with Sections 5 and 17 of the Securities Act . The Boards of Directors of the Acquiring Companies shall be satisfied that consummation of the Merger is in compliance with the provisions of Sections 5 and 17 of the Securities Act. (s) Closing Escrow Agreement . At Closing, OPI shall have executed and delivered the Closing Escrow Agreement substantially in the form of Exhibit 5.10 hereto.
(t)
Voting Agreement . At Closing, Osmotics shall have executed
and delivered the Voting Agreement substantially in the form of
Exhibit 5.2 hereto. (a) Accuracy of Representations and Warranties . The representations and warranties made by the Acquiring Companies in this Agreement shall be correct in all material respects on and as of the Closing date with the same force and effect as though such representations and warranties had been made on the Closing date. (b) Compliance with Covenants . All covenants which the Acquiring Companies are required to perform or comply with on or before the Closing date shall have been fully complied with or performed in all material respects. (c) INTENTIONALLY DELETED. (d) Consents and Approvals . To the extent that any material lease, mortgage, deed of trust, contract or agreement to which the Acquiring Companies are a party shall require the consent of any person to the Merger or any other transaction provided for herein, such consent shall have been obtained; provided, however, that the Acquiring Companies shall not make, as a condition for the obtaining of any such consent, any agreements or undertakings not approved in writing by OPI to the extent that such condition otherwise has an effect on OPI or the Acquiring Companies. (e) Review and Due Diligence . OPI and its legal counsel and/or auditors shall have had the opportunity to complete a satisfactory due diligence investigation of the Acquiring Companies, together with a satisfactory review of the Acquiring Companies' corporate status, the marketability of title to the Acquiring Companies' property, and compliance with all reporting requirements imposed by or on account of any federal or state securities laws or regulations. (f) No Governmental Actions . No action or proceeding before any governmental authority shall have been instituted or threatened to restrain or prohibit the transactions contemplated by this Agreement, and the Acquiring Companies shall have delivered to OPI certificates dated as of the Closing Date and executed by the Acquiring Companies, stating that to the Acquiring Companies' Best Knowledge, no such items exist. No governmental authority shall have taken any other action as a result of which the management of OPI, in its sole discretion, reasonably deems it inadvisable to proceed with the transactions contemplated by this Agreement. (g) No Material Adverse Change . No material adverse change in the business, property or assets of the Acquiring Companies shall have occurred, and no loss or damage to any of the assets, whether or not covered by insurance, with respect to the Acquiring Companies has occurred, and the Acquiring Companies shall have delivered to OPI certificates dated as of the Closing Date and executed by the Acquiring Parties to all such effects. (h) Update of Contracts . The Acquiring Companies shall have delivered to OPI an accurate list, as of the Closing Date, showing (i) all agreements, contracts and commitments of the type listed on Exhibit 9.17 and Exhibit 11.17 entered into since the date of this Agreement; and (ii) all other agreements, contracts and commitments related to the businesses or the assets of the Acquiring Companies entered into since the date of this Agreement, together with true, complete and accurate copies of all such documents (the "New Contracts"), attached hereto as Exhibit 8.3(h). OPI shall have had the opportunity to review the Acquiring Companies New Contracts, and OPI shall have the right to delay the Closing for up to ten (10) days if it in its sole discretion deems such delay necessary to enable it to adequately review the Acquiring Companies New Contracts. (i) Approval of Counsel . All actions, proceedings, instruments and documents required or incidental to carry out this Agreement, including all schedules and exhibits thereto, and all other related legal matters shall have been approved as to substance and form by legal counsel and tax advisors to OPI. (j) No Adverse Information . The investigations with respect to the Acquiring Companies, the assets and their respective businesses performed by OPI's professional advisors and other representatives shall not have revealed any information concerning OPI, its assets or business that has not been made known to the Acquiring Companies, in writing prior to the date of this Agreement and that, in the opinion of the Acquiring Companies and their advisors, materially and adversely affects the business or assets of OPI or the viability of the transaction contemplated by this Agreement. (k) Ordinary Course of Business . During the period from the date of this Agreement until the Closing Date, the Acquiring Companies shall have carried on their business in the ordinary and usual course, and shall have delivered to OPI a certificate to that effect (l) Liens . The Acquiring Companies shall have delivered to OPI a reasonably current lien and judgment search (both state and county levels in each jurisdiction where the party is qualified to or is doing business or owns material assets) confirming the absence of any judicial liens, security interests, tax liens and similar such liens affecting any of the Acquiring Companies' business or assets. Each and every lien or encumbrance of any nature, if any, relating to the assets, business, or the shares of common stock of the Acquiring Companies shall have been terminated and released, and proof thereof delivered to OPI (m) Other Documents . The Acquiring Companies shall have delivered or caused to be delivered all other documents, agreements, resolutions, certificates or declarations as OPI or its attorneys may have reasonably requested. (n) Governmental and Regulatory Approvals . OPI shall have obtained evidence, in form and substance satisfactory to OPI, that there have been obtained all consents, approvals and authorizations required by this Agreement, including, without limitation, all regulatory approvals necessary for the Acquiring Companies to conduct business in the ordinary course in each jurisdiction where such approval may be required. (o) Compliance with Securities Laws . The Acquiring Companies shall have undertaken all actions necessary or advisable to consummate the Merger in conformity with all Governmental and Legal Requirements including, without limitation, applicable federal and state securities laws. (p) INTENTIONALLY DELETED. (q) Financial Advisory Fees . At or prior to Closing, all obligations or commitments of the Acquisition Companies to their respective financial advisors and investment bankers shall have been paid or otherwise satisfied upon terms satisfactory to OPI, and OPI shall have been delivered and received such written consents, approvals, estoppel certificates or other instruments or undertakings from its advisors or other third parties as OPI may deem reasonable, necessary or advisable. (r) Compliance with Sections 5 and 17 of the Securities Act . The Board of Directors of OPI shall be satisfied that consummation of the Merger and the issuance of the Merger Securities is compliance with the provisions of Sections 5 and 17 of the Securities Act. (s) Closing Escrow Agreements . At Closing the Acquiring Parties shall have executed and delivered the Closing Escrow Agreement substantially in the form of Exhibit 5.10 hereto, and shall have delivered the Merger Securities to be held in escrow in accordance with the terms and conditions thereof. (t) Voting Agreement . At Closing, ONSOURCE shall have executed and delivered the Voting Agreement substantially in the form of Exhibit 5.2 hereto. 8.4 Specific Items to be Delivered at the Closing . The parties shall deliver the following items to the appropriate party(ies) at the Closing. (a) To be delivered by OPI (in duplicate original, except where stated): (i) Copy of corporate resolutions authorizing the execution of this Agreement, and the consummation by OPI of the transactions contemplated by this Agreement; (ii) A certificate of the Chief Executive Officer of OPI, in the form attached hereto as Exhibit 8.4(a)(ii), stating that the representations and warranties of OPI set forth in this Agreement are true and correct. Said certificate shall further verify and affirm that all consents or waivers, if any, which may be necessary to execute and deliver this Agreement have been obtained and are in full force and effect; (iii) A certificate dated the Closing Date, signed by both the Chief Executive Officer and the Chief Financial Officer of OPI, in the form attached hereto as Exhibit 8.4(a)(iii), certifying that all conditions precedent set forth in this Agreement to the obligations of OPI to close, have been fulfilled, and that no event of default hereunder and no event which, with the giving of notice or passage of time, or both, would be an event of default, has occurred as of such date; (iv) A certificate(s) dated the Closing Date, signed by the Secretary of OPI, in the form attached hereto as Exhibit 8.4(a)(iv), certifying (A) resolutions duly adopted by the Board of Directors and Shareholders of OPI, authorizing the execution of this Agreement and all of the other transactions to be consummated pursuant thereto; (B) the names and incumbency of the officers of OPI who are empowered to execute the foregoing documents for and on behalf of such company; (C) the authenticity of copies of the Articles of Incorporation and Bylaws of OPI; and (D) the authenticity of a reasonably current Certificate of Good Standing of OPI, from all jurisdictions in which OPI is qualified to conduct business; (v) The Closing Escrow Agreement substantially in the form of Exhibit 5.10 hereto, executed by OPI; (vi) Statement of Merger in proper form as attached hereto as Exhibit 8.4(a)(vi), to be filed with the Secretary of State of Colorado in such form as may be required to consummate the Merger as of the Effective Time; (vii) Certificates representing not less than 98% of the issued and outstanding OPI Common Stock and 100% of the issued and outstanding OPI Preferred Stock which stock certificates shall be endorsed in favor of ONSOURCE (single originals only); (viii) Fully executed Subscription Agreements executed by the OPI Shareholders substantially in the form of Exhibit 5.7 and Exhibit 5.9 hereto (single original only); and (ix) The Voting Agreement substantially in the form of Exhibit 5.2 hereto, executed by Osmotics. (b) To be delivered by the Acquiring Companies (in duplicate original, except where stated): (i) Certificates representing the ONSOURCE Common Stock, ONSOURCE Warrants, which certificates shall be issued in the names of the OPI Shareholders, in proportion of their ownership of OPI Common Stock in accordance with the conversion ratios set forth on Exhibit 5.1(a) hereto; and certificates representing the ONSOURCE Preferred Stock to the owners of the OPI Preferred Stock, pro rata, and delivered in escrow under the Closing Escrow Agreement; (ii) Option Agreements representing the ONSOURCE Stock Options, which Option Agreements shall be issued in the names of each OPI Option Holder and in the amounts as provided for in Section 5.1(c), such Option Agreements shall be in the form attached hereto as Exhibit 8.4(b)(ii); (iii) A certificate of the President of each of the Acquiring Companies, in the form attached hereto as Exhibit 8.4(b)(iii), stating that the representations and warranties of the Acquiring Companies set forth in this Agreement are true and correct. Said certificates shall further verify and affirm that all consents or waivers, if any, which may be necessary to execute and deliver this Agreement have been obtained and are in full force and effect; (iv) Copy of corporate resolutions authorizing the execution of this Agreement and the consummation by the Acquiring Companies of the transactions contemplated by this Agreement, including, but not limited to, the issuance of the Merger Securities in the amounts and manner set forth in Section 5.1 above; (v) A certificate dated the Closing Date, signed by the Chief Executive Officers and the Chief Financial Officers of both the Acquisition Companies, in the form attached hereto as Exhibit 8.4(b)(v), certifying that all conditions precedent set forth in this Agreement to the obligations of the Acquiring Companies to close, have been fulfilled, and that no event of default hereunder and no event which, with the giving of notice or passage of time, or both, would be an event of default, has occurred as of such date; (vi) Certificates dated the Closing Date, in the form attached hereto as Exhibit 8.4(b)(vi), signed by the Secretaries of the Acquiring Companies, (A) certifying resolutions duly adopted by the Board of Directors of the Acquiring Companies, authorizing the execution of this Agreement and all of the other transactions to be consummated pursuant thereto; (B) certifying the names and incumbency of the officers of the Acquiring Companies who are empowered to execute the foregoing documents for and on behalf of such company; (C) certifying the authenticity of copies of the Articles of Incorporation and Bylaws of the Acquiring Companies; and (iv) certifying the authenticity of a reasonably current Certificate of Good Standing, from all jurisdictions in which the Acquiring Companies are qualified to conduct business; (vii) The Closing Escrow Agreement substantially in the form of Exhibit 5.10 hereto, executed by ONSOURCE; (viii) A Statement of Merger in the form of Exhibit 8.4(a)(vi), to be filed with the Secretary of State of Colorado in such form as may be required to consummate the Merger as of the Effective Time; (ix) The Voting Agreement substantially in the form of Exhibit 5.2 hereto, executed by ONSOURCE; and (x) A certificate representing the IB Warrants registered in the name of Bathgate Capital Partners, LLC. (xi) An Assignment and Assumption Agreement substantially in the form of Exhibit 5.1(e)(ii). SECTION 9: REPRESENTATIONS AND WARRANTIES OF OPI As a material inducement to the Acquiring Companies to enter into this Agreement and with the understanding and expectations that the Acquiring Companies will be relying thereon in consummating the Merger contemplated hereunder, OPI hereby represents and warrants as follows: 9.1 Organization and Standing . OPI is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and has all requisite corporate power and authority to own its assets and properties and to carry on its business as it is now being conducted. 9.2 Subsidiaries, Etc. OPI does not have any direct or indirect ownership interest in any corporation, partnership, joint venture, association or other business enterprise. 9.3 Qualification . OPI is not qualified to engage in business as a foreign corporation in any state, and there is no other jurisdiction wherein the character of the properties presently owned by OPI or the nature of the activities presently conducted by OPI makes necessary the qualification, licensing or domestication of OPI as a foreign corporation. 9.4 Corporate Authority . Except as set forth on Exhibit 9.4 hereto, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by OPI with any on the provisions hereof will: (a) Conflict with or result in a breach of any provision of OPI's Articles of Incorporation or By-Laws or similar documents of OPI; (b) Result in a default (or give rise to any right of termination, cancellation, or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which OPI is a party, or by which any of its properties or assets may be bound except for such default (or right of termination, cancellation, or acceleration) as to which requisite waivers or consents shall either have been obtained by OPI prior to the Closing Date or the obtaining of which shall have been waived by the Acquiring Companies; or (c) Violate any order, writ, injunction, decree or, to OPI 's Best Knowledge, any statute, rule or regulation applicable to OPI or any of its properties or assets. No consent or approval by any Governmental Authority is required in connection with the execution and delivery by OPI of this Agreement or the consummation by OPI of the transactions contemplated hereby, except for possible notice under plant closing laws. 9.5 Financial Information . In connection with the investigations performed by and audit to be undertaken by the Acquiring Companies, OPI furnished certain financial information and data including, without limitation, tax and accounting records, financial records, statements, worksheets and other information requested by the Acquiring Companies and their auditors necessary to undertake the completion of the audited financial examinations. OPI represents and warrants that any and all such information furnished in connection with the conduct of such investigations and audits shall be true, accurate and complete in all material respects and shall not contain any material misstatements nor any material omissions of fact or information respecting the financial condition or results of operation of the business for the respective periods covered by the audits. 9.6 Capitalization of OPI . The authorized capital stock of OPI consists of 50,000,000 shares of OPI common stock, no par value, of which 12,254,250 shares are issued and outstanding and 20,000,000 shares of OPI preferred stock, of which 1,000,000 shares of Series A Preferred Stock, with a stated value of $4.00 per share are issued and outstanding. As of the Closing, Osmotics will own not less than 98% of the OPI Common Stock and 100% of the OPI Preferred Stock. All issued and outstanding shares of OPI Common Stock and OPI Preferred Stock have been duly authorized and validly issued and are f |
AGREEMENTS / CONTRACTS
CLAUSES
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