EXHIBIT 2.1
REVISED
MERGER AGREEMENT
DATED NOVEMBER 9, 2004
AMONG
ONESOURCE TECHNOLOGIES, INC.,
FIRST FINANCIAL COMPUTER SERVICES, INC.,
ROBERT H. THOMASON,
MARY H. THOMASON,
RANDY H. THOMASON,
AND
JON M. THOMASON
<PAGE>
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.............................................16
3.1 COVENANTS OF SHAREHOLDERS AND THE
COMPANY............................16
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............................................23
5.1 SECTION 338(H)(10)
ELECTION..........................................23
5.2 COVENANTS OF
SHAREHOLDERS............................................23
5.3 NON-COMPETITION, NON-DISCLOSURE,
AND NON-SOLICITATION................24
5.4 EMPLOYMENT
AGREEMENTS................................................25
5.5 REGISTRATION
RIGHTS..................................................26
5.6 PROTECTIVE
PROVISIONS................................................26
5.7 FURTHER
ASSURANCES...................................................29
SECTION 6 WAIVER, MODIFICATION,
ABANDONMENT.................................29
6.1
WAIVERS..............................................................29
6.2
MODIFICATION.........................................................29
6.3 ABANDONMENT PRIOR TO CLOSING
DATE....................................29
6.4 NOTICE OF
TERMINATION................................................30
6.5 AUTOMATIC
TERMINATION................................................30
6.6 EFFECT OF
ABANDONMENT................................................30
SECTION 7
INDEMNIFICATION...................................................30
7.1 INDEMNIFICATION BY
SHAREHOLDERS......................................30
i
<PAGE>
TABLE OF CONTENTS
(continued)
Page
----
7.2 INDEMNIFICATION BY
ONESOURCE.........................................30
7.3 NOTICE AND RIGHT TO DEFEND
THIRD-PARTY CLAIMS........................31
7.4 INDEMNIFICATION NOT TO BE SOLE
REMEDY................................32
SECTION 8
GENERAL...........................................................32
8.1 BROKERS AND
FINDERS..................................................32
8.2
NOTICES..............................................................32
8.3 BINDING NATURE OF AGREEMENT; NO
ASSIGNMENT...........................33
8.4 NO THIRD-PARTY
BENEFICIARIES.........................................33
8.5 PRESS RELEASES AND PUBLIC
ANNOUNCEMENTS..............................33
8.6 SCHEDULES AND EXHIBITS; ENTIRE
AGREEMENT.............................33
8.7 CONTROLLING
LAW......................................................34
8.8 INDULGENCES, NOT
WAIVERS.............................................34
8.9 COSTS AND EXPENSES; ATTORNEYS'
FEES..................................34
8.10 SECTION
HEADINGS....................................................34
8.11 EXECUTION IN
COUNTERPARTS...........................................34
8.12 PROVISIONS
SEVERABLE................................................35
8.13
CONSTRUCTION........................................................35
ii
<PAGE>
REVISED MERGER AGREEMENT
THIS MERGER
AGREEMENT ("Agreement") is made this 9th day of November, 2004,
by and among OneSource Technologies, Inc.,
a Delaware corporation ("OneSource"),
First Financial Computer Services, Inc., an
Arkansas corporation (the
"Company"), and Robert H. Thomason, Mary H.
Thomason, Randy H. Thomason, and Jon
M. Thomason (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").
The Parties
executed a Merger Agreement dated June 14, 2004 (the "June
Agreement"). This Agreement replaces and
supersedes the June Agreement in its
entirety.
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
<PAGE>
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 Rogers &
Theobald LLP, 2425 East Camelback Road,
Suite 850, Phoenix, Arizona
2
<PAGE>
85016, 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:
(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
3
<PAGE>
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.
(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.
4
<PAGE>
(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.
(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.
5
<PAGE>
(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.
(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
mark, 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
6
<PAGE>
(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.
(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
7
<PAGE>
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.
(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.
8
<PAGE>
(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.
(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.
9
<PAGE>
(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.
(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
10
<PAGE>
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.
(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
11
<PAGE>
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.
(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,
12
<PAGE>
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.
(c) Capital
Stock. As of the date hereof, OneSource has authorized capital
stock consisting of 100,000,000 shares of
common stock, $.001 par value (the
"Common Stock"), of which 40,292,623 shares
are issued and outstanding, and
5,000,000 shares of Preferred Stock, $.001
par value, of which no shares are
issued and outstanding. As of such date,
2,065,000 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) Fi
