EXHIBIT 10.12
STOCK PURCHASE AGREEMENT
Between
BLACKWATER CAPITAL PARTNERS II, L.P.
and
ONESOURCE TECHNOLOGIES, INC.
Dated as of May 26, 1999
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TABLE OF CONTENTS
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Page
SECTION 1 DEFINITIONS 1
SECTION 2 SALE AND TRANSFER OF SHARES; CLOSING 7
Section 2.1 Shares 7
Section 2.2 Purchase Price 7
Section 2.3 Closing 8
Section 2.4 Closing Obligations 8
Section 2.5 Use of Funds 8
Section 2.6 Investor's Rights 9
Section 2.7 Corporate Governance 9
Section 2.8 Corporate Governance 9
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 9
Section 3.1 Authority 9
Section 3.2 Shares 9
Section 3.3 Organization and Good Standing; Qualification. 9
Section 3.4 Capitalization; Agreements Regarding Capital Stock 10
Section 3.5 Subsidiaries 10
Section 3.6 Governmental Consents 10
Section 3.7 No Conflict 11
Section 3.8 Financial Statements 12
Section 3.9 Books and Records 12
Section 3.10 Title to Properties; Encumbrances 13
Section 3.11 Condition and Sufficiency of Assets 13
Section 3.12 No Undisclosed Liabilities 13
Section 3.13 Taxes 13
Section 3.14 No Material Adverse Change 14
Section 3.15 Compliance with Legal Requirements; Governmental
Authorizations 14
Section 3.16 Legal proceedings; Orders 15
Section 3.17 Absence of Certain Changes and Events 15
Section 3.18 Contracts; No Defaults 16
Section 3.19 Environmental Matters 17
Section 3.20 Employees 17
Section 3.21 Labor Relations; Compliance 18
Section 3.22 Intellectual Property 18
Section 3.23 Certain Payments 20
Section 3.24 Disclosure 20
Section 3.25 Relationships with Related Persons 21
Section 3.26 Offering 21
Section 3.27 Brokers or Finders 21
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR 21
Section 4.1 Organization and Good Standing 21
Section 4.2 Authority; No Conflict 21
Section 4.3 Investment Representations 22
Section 4.4 Certain Proceedings 23
Section 4.5 Brokers or Finders 23
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SECTION 5 CONDITIONS PRECEDENT TO THE INVESTOR'S OBLIGATION TO CLOSE 23
Section 5.1 Accuracy of Representations 23
Section 5.2 The Company's Performance 23
Section 5.3 Additional Documents 23
Section 5.4 No Proceedings 24
Section 5.5 No Claim Regarding Stock Ownership or Sale Proceeds 24
Section 5.6 No Prohibition 24
Section 5.7 No Material Adverse Change 24
SECTION 6 COVENANTS OF THE COMPANY PRIOR TO CLOSING DATE AND OTHER AGREEMENTS 25
Section 6.1 Access and Investigation 25
Section 6.2 Negative Covenant 25
Section 6.3 Required Approvals 25
Section 6.4 Notification 25
Section 6.5 No Negotiation 25
Section 6.6 Best Efforts 26
SECTION 7 COVENANTS OF THE INVESTOR PRIOR TO CLOSING DATE 26
Section 7.1 Approvals of Governmental Bodies 26
Section 7.2 Best Efforts 26
SECTION 8 CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE 26
Section 8.1 Accuracy of Representations 26
Section 8.2 The Investor's Performance 26
Section 8.3 Additional Documents 26
Section 8.4 No Injunction 27
SECTION 9 TERMINATION 27
Section 9.1 Termination Events 27
Section 9.2 Effect of Termination 27
SECTION 10 GENERAL PROVISIONS 28
Section 10.1 Expenses 28
Section 10.2 Public Announcements 28
Section 10.3 Confidentiality 28
Section 10.4 Notices 29
Section 10.5 Jurisdiction; Service of Process 29
Section 10.6 Further Assurances 29
Section 10.7 Waiver 29
Section 10.8 Entire Agreement and Modification 30
Section 10.9 Disclosure Schedules 30
Section 10.10 Assignments, Successors, and No Third-Party Rights 30
Section 10.11 Severability 30
Section 10.12 Section Headings, Construction 30
Section 10.13 Time of Essence 31
Section 10.14 Governing Law 31
Section 10.15 Counterparts 31
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of May 26,
1999 between Blackwater Capital Partners II, L.P. a Delaware limited partnership
(the "Investor"), and OneSource Technologies, Inc., a Delaware corporation (the
"Company").
RECITALS
The Company desires to sell, and the Investor desires to purchase,
2,905,828 shares of the authorized but unissued common stock, par value $.001
per share (the "Common Stock") of the Company (collectively, the "Shares"), for
the consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1SECTION DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
set forth below:
"Ancillary Agreements" shall have the meaning set forth in Section
3.1.
"Applicable Contract" shall mean any Contract (a) under which the
Company has or may acquire any rights, (b) under which the Company has or may
become subject to any obligation or liability, or (c) by which the Company or
any of the assets owned or used by it is or may become bound.
"Balance Sheet" shall have the meaning set forth in Section .
"Best Efforts" shall mean the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible.
"Breach" shall mean a "Breach" of a representation, warranty,
covenant, obligation, or other provision of this Agreement or any instrument
delivered pursuant to this Agreement, which will be deemed to have occurred if
there is or has been (a) any inaccuracy in or breach of, or any failure to
perform or comply with, such representation, warranty, covenant, obligation, or
other provision, or (b) any claim (by any Person) or other occurrence or
circumstance that is or was inconsistent with such representation, warranty,
covenant, obligation, or other provision, and the term "Breach" means any such
inaccuracy, breach, failure, claim, occurrence, or circumstance.
"Closing" shall have the meaning set forth in Section 2.3.
"Closing Date" shall mean the date and time as of which the Closing
actually takes place.
"Common Stock" shall have the meaning set forth in the Recitals of
this Agreement.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
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"Consent" shall mean any approval, consent, ratification, waiver, or
other authorization (including any Governmental Authorization).
"Contemplated Transactions" shall mean all of the transactions
contemplated by this Agreement, including:
(a) the sale of the Shares by the Company to the Investor;
(b) the execution, delivery, and performance of the Investor's
Rights Agreement;
(c) the execution and delivery of this Agreement;
(d) the performance by the Investor and the Company of their
respective covenants and obligations under this Agreement;
and
(e) the Investor's acquisition and ownership of the Shares.
"Contract" shall mean any agreement, contract, obligation, promise,
or undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Deposit" shall have the meaning set forth in Section .
"Disclosure Schedules" shall mean the disclosure schedules delivered
by the Company to the Investor concurrently with the execution and delivery of
this Agreement; provided, however, that the Company shall deliver to the
Investor any disclosure schedules not delivered by the Company concurrently with
the execution and delivery of this Agreement as soon as practicable, and in any
event prior to the Closing pursuant to this Agreement.
"Encumbrance" shall mean any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
"Environment" shall mean soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life, and any
other environmental medium or natural resource.
"Environmental Law" shall mean any Legal Requirement that requires or
relates to:
(a) advising appropriate authorities, employees, and the public
of intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or
other prohibitions and of the commencements of activities,
such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the
Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are
generated;
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(d) assuring that products are designed, formulated, packaged,
and used so that they do not present unreasonable risks to
human health or the Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or
other potentially harmful substances;
(g) cleaning up pollutants that have been released, preventing
the threat of release, or paying the costs of such clean up
or prevention; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment,
or permitting self-appointed representatives of the public
interest to recover for injuries done to public assets.
"Financial Statements" shall have the meaning set forth in Section
3.7.
"GAAP" shall mean generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the Balance
Sheet and the other financial statements referred to in Section were prepared.
"Governmental Authorization" shall mean any approval, consent,
franchise, license, permit, waiver, or other authorization issued, granted,
given, or otherwise made available by or under the authority of any Governmental
Body or pursuant to any Legal Requirement.
"Governmental Body" shall mean any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
"Intellectual Property Assets" shall have the meaning set forth in
Section 3.22.
"Interim Balance Sheet" shall have the meaning set forth in Section .
"Investor" shall have the meaning set forth in the first paragraph of
this Agreement; provided, however, that Blackwater Capital Partners II, L.P.
shall have the right to assign its rights and obligations under this Agreement.
In the event Blackwater Capital Partners II, L.P. so elects, then Investor shall
refer instead to such assignee.
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"IRC" shall mean the Internal Revenue Code of 1986 or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
"IRS" shall mean the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
"Knowledge" shall mean an individual will be deemed to have
"Knowledge" of a particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the
course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other
matter.
A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.
"Legal Requirement" shall mean any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"Monthly Payment Date" shall have the meaning set forth in Section
2.2(a).
"Order" shall mean any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" shall mean an action taken by a Person
will be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal
day-to-day operations of such Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of
Persons exercising similar authority); and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising
similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same
line of business as such Person.
"Organizational Documents" shall mean (a) the articles or certificate
of incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
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"Person" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.
"Proceeding" shall mean any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"Related Person" shall mean with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's
Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate)
a Material Interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a
director, officer, partner, executor, or trustee (or in a
similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a
similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar
capacity); and
(f) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and former spouses,
(iii) any other natural person who is related to the individual or the
individual's spouse within the second degree, and (iv) any other natural person
who resides with such individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least 10% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 10% of the
outstanding equity securities or equity interests in a Person.
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"Representative" shall mean with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"Shares" shall have the meaning set forth in the Recitals of this
Agreement.
"Tax Return" shall mean any return (including any information
return), report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"Threatened" shall mean a claim, Proceeding, dispute, action, or
other matter will be deemed to have been "Threatened" if any demand or statement
has been made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
1SECTION SALE AND TRANSFER OF SHARES; CLOSING
1.1 Section Shares. Subject to the terms and conditions of this Agreement, at
the Closing, the Company will sell and transfer the Shares to the Investor, and
the Investor will purchase the Shares from the Company.
1.1 Section Purchase Price. The Investor shall pay an aggregate purchase price
of $750,000.00, or approximately $0.2581 per share, (the "Purchase Price") for
the Shares to the Company by check as follows:
1.2
1.3 (a) $105,000 of the Purchase shall be paid at the Closing. The remaining
$645,000 shall be paid in (i) five equal monthly installments of $105,000,
without interest (each, a "Monthly Payment"), commencing on July 1, 1999, and
continuing on the first day of each of the four months thereafter (each, a
"Monthly Payment Date") and (ii) a final Monthly Payment of $120,000 payable on
the final Monthly Payment Date.
1.4
1.5 (b) The Investor's obligation to make a Monthly Payment on a Monthly Payment
Date is subject to the following conditions:
1.6
1.7 (i) Each representation and warranty set forth in Section 3 of this
Agreement shall be accurate in all material respects as of such Monthly Payment
Date as if made on such Monthly Payment Date (giving effect to any supplement to
the Disclosure Schedules provided by the Company).
1.8
1.9 (ii) There shall not have been any material adverse change in the financial
condition, property, business, operations, properties, prospects, assets, or
condition of the Company, since the date of the Agreement, nor shall any event
have occurred or circumstance exist that may result in such a material adverse
change.
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1.10
1.11 (c) For any unfunded balance of the Purchase Price, Investor shall remit
pro rata to the Company the number of Shares deriving from such unfunded
balance, which shares shall become treasury shares of the Company's Common
Stock.
1.12
1.13 Section Closing . The purchase and sale of the Shares (the "Closing")
provided for in this Agreement will take place at the offices of the Investor's
counsel at One East Camelback, Suite 400, Phoenix, Arizona on or before May 26,
1999 or at such other time and place as the parties may agree, either orally or
in writing. Subject to the provisions of Section , failure to consummate the
purchase and sale provided for in this Agreement on the date and at the place
determined pursuant to this Section 2.3 will not result in the termination of
this Agreement and will not relieve any party of any obligation under this
Agreement.
1.14
1.15 Section Closing Obligations. At the Closing:
1.16
(a) The Company will deliver to the Investor:
(b)
(i) certificates representing the Shares, issued in the name of the Investor;
(ii) (iii) an Investor's Rights Agreement in the form of Exhibit A executed by
the Company (the "Investor's Rights Agreement"); and (iv) (v) a Stockholders'
Agreement in the form of Exhibit B executed by certain stockholders of the
Company and by the Company (the "Stockholders' Agreement"); and (vi) (vii) If
the date of execution hereof and the Closing Date are different, a certificate
executed by the Company representing and warranting to the Investor that each of
the Company's representations and warranties in this Agreement was accurate in
all respects as of the date of this Agreement and is accurate in all respects as
of the Closing Date as if made on the Closing Date (giving full effect to any
supplements to the Disclosure Schedules that were delivered by the Company to
the Investor prior to the Closing Date in accordance with Section ).
(a) The Investor will deliver to the Company:
(b)
(i) a check in the amount of $105,000 made payable to the Company; (ii) (iii)
the Investor's Rights Agreement executed by the Investor; and (iv) (v) (iii) if
the date of execution hereof and the Closing Date are different, a certificate
executed by the Investor to the effect that, except as otherwise stated in such
certificate, each of the Investor's representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the Closing Date.
(vi)
1.2 Section Use of Funds . The Company must use the $750,000 it receives from
the Investor pursuant to this Agreement for fees associated with this
transaction, working capital, audit fees and capital expenditures.
1.3
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1.4 Section Investor's Rights . The Company grants to the Investor certain
registration and other rights that are more fully described in the Investor's
Rights Agreement between the Company and the Investor attached as Exhibit A
hereto.
1.5
1.6 Section Corporate Governance. The Company will cause Steven R. Green and
Norman E. Clarke to be appointed to its Board of Directors.
1.7
1.8 Section Corporate Governance . As a condition to the execution of this
Agreement by the Investor, the Company and certain stockholders of the Company
shall enter into the Stockholders' Agreement attached as Exhibit B hereto to
establish the composition of the Board of Directors of the Company.
1.9
2 SECTION REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor as follows:
1.1 Section Authority . All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, the Investor's Rights Agreement, the
Stockholders' Agreement and any other agreement to which the Company is a party
the execution and delivery of which is contemplated hereby (the "Ancillary
Agreements") has been taken. This Agreement, the Investor's Rights Agreement,
the Stockholders' Agreement and the Ancillary Agreements constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms. The Company has the absolute and unrestricted
right, power, authority and capacity to execute and deliver this Agreement, the
Investor's Rights Agreement, the Stockholders' Agreement and the Ancillary
Agreements and to perform its obligations under this Agreement, the Investor's
Rights Agreement, the Stockholders' Agreement and the Ancillary Agreements.
1.2
1.3 Section Shares . The Company has the absolute and unrestricted right, power,
authority and capacity to issue and sell the Shares. Except for the legend set
forth in the Investor's Rights Agreement will appear upon the certificates
representing the Shares, no legend or other reference to any purported
Encumbrance will appear upon any certificate representing any of the Shares. All
of the Shares, when issued, sold and delivered in accordance with the terms of
this Agreement for the consideration set forth herein, will be duly authorized
and validly issued, fully paid and non- assessable, and will be free of
restrictions on transfer other than any restrictions on transfer set forth in
this Agreement and the Investor's Rights Agreement and under applicable state
and federal securities laws. Except as set forth on Schedule 3.2 hereto and
except for this Agreement, there are no Contracts relating to the issuance,
sale, or transfer of any equity securities of the Company.
1.4
1.5 Section Organization and Good Standing; Qualification.
(a) The Company is a corporation duly organized, validly existing, and in good
standing under the laws of Delaware with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under Applicable Contracts. The Company is duly qualified to do business as a
foreign corporation in Arizona, California, Nevada, New Mexico and Utah and is
in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification.
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(b)
(c) Attached as Schedule are true and correct copies of the Organizational
Documents of the Company, as currently in effect.
(d)
1.2 Section Capitalization; Agreements Regarding Capital Stock .
1.3
(a) The authorized capital of the Company consists of:
(b)
(i) Common Stock. 20,000,000 shares of common stock, par value $.001 per
share, of which 11,623,311 shares are issued and outstanding, and 14,529,139
shares will be issued and outstanding immediately after the Closing.
(ii)
(iii) Preferred Stock. 1,000,000 shares of preferred stock, par value $.001 per
share, of which no shares have been designated and no shares are issued and
outstanding.
(iv)
(v) No legend or other reference to any purported Encumbrance appears upon any
certificate representing equity securities of the Company. None of the
outstanding equity securities or other securities of the Company were issued in
violation of the Securities Act or any other Legal Requirement.
(vi)
(c) Set forth on Schedule 3.4(b) is a true and correct description of all
agreements, rights or other Contracts pursuant to which any Person has the right
to: (i) acquire from the Company, by purchase, exercise, exchange, conversion or
otherwise, any equity or other security of the Company or the right to acquire
any such security; (ii) cause the Company to register, under the Securities Act
or otherwise, any securities of the Company; or (iii) vote or direct the voting
of any class of capital stock of the Company or appoint any member of the
Company's board of directors.
(d)
1.4 Section Subsidiaries . The Company does not own or control, directly or
indirectly, nor does it have any Contract to acquire, any equity securities or
other securities of any Person or any direct or indirect equity or ownership
interest in any other business. The Company is not a participant in any joint
venture partnership or similar agreement.
1.5
1.6 Section Governmental Consents . No consent, approval, qualification, order
or authorization of, or filing with, any local, state, or federal governmental
authority is required on the part of the Company in connection with the
Company's valid execution, delivery, or performance of this Agreement or the
offer, sale or issuance of the Shares by the Company except such filings as have
been made prior to the Closing, except any notices of sale required to be filed
with the Securities and Exchange Commission under Regulation D of the Securities
Act, or such post-closing filings as may be required under applicable state
securities laws, which will be timely filed within the applicable periods
therefor. The Company has not offered shares of its Common Stock or any
substantially similar securities of the Company for sale to, or solicited any
offers to buy from, or otherwise approached or negotiated in respect thereof
with, any person other than the Investors and the Company will not take any
action that will cause the issuance and delivery of the shares of its Stock as
contemplated hereby to constitute a violation of the Securities Act.
1.7
1.8 Section No Conflict .
1.9
(a) The Company is not in violation or default in any material respect of any
provision of the Organizational Documents of the Company or in any material
respect of any provision of any Contract to which it is a party or by which it
is bound or, of any Legal Requirement applicable to the Company.
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(b)
(c) Except as set forth on Schedule 3.7(b) , neither the execution and delivery
of this Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
(d)
(i) contravene, conflict with, or result in a violation of (A) any provision of
the Organizational Documents of the Company, or (B) any resolution adopted by
the Board of Directors or the stockholders of the Company;
(ii)
(iii) contravene, conflict with, or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which the Company, or any of the assets owned or
used by the Company, may be subject;
(iv)
(v) contravene, conflict with, or result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate, or modify, any Governmental Authorization that is
held by the Company or that otherwise relates to the business of, or any of the
assets owned or used by, the Company;
(vi)
(vii) cause the Investor or the Company to become subject to, or to become
liable for the payment of, any Tax;
(viii)
(ix) cause any of the assets owned by the Company to be reassessed or revalued
by any taxing authority or other Governmental Body;
(x)
(xi) contravene, conflict with, or result in a violation or breach of any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; or
(xii)
(xiii) (vii) result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by the Company.
(xiv)
(xv) The Company shall not or will not be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
(xvi)
1.10 Section Financial Statements . The Company has reviewed (a) the report of
the Company as at (the "Balance Sheet") and the related statements of operations
and cash flow for the year ended in the period ended December 31, 1998, (b) an
unaudited balance sheet of the Company (the "Interim Balance Sheet") as at March
31, 1999 (the "Interim Balance Sheet Date") and (c) the Company's unaudited
statements of operations and cash flows for the three months then ended,
including in each case the notes thereto (the "Financial Statements"). The
Balance Sheet has been audited by King, Weber & Associates, P.C. The Balance
Sheet (i) does not contain any items of special or nonrecurring income or any
other income not earned in the ordinary course of business except as expressly
specified therein and (ii) fairly presents the financial condition and the
results of operations, changes in stockholders' equity, and cash flow of the
Company as at the respective
<PAGE>
dates of and for the periods referred to in such financial statements, and the
Interim Balance Sheet includes all adjustments, which consist only of recurring
accruals, necessary for such fair presentation. Except as set forth in the
Financial Statements, the Company has no material liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, in both cases,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company. Except as disclosed in the Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm, or corporation. The Company maintains and will continue
to maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
1.11
1.12 Section Books and Records . The books of account, minute books, stock
record books, and other records of the Company, all of which have been made
available to the Investor, are complete and correct and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Securities Exchange Act of 1934, as amended (regardless of
whether or not the Company is subject to that Section), including the
maintenance of an adequate system of internal controls. The minute books of the
Company contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Boards of Directors, and
committees of the Boards of Directors of the Company, and no meeting of any such
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books.
1.13
1.14 Section Title to Properties; Encumbrances . The Company does not own,
directly or indirectly, any real property. The Company owns all the properties
and assets (whether real, personal, or mixed and whether tangible or intangible)
that it purports to own, including all of the properties and assets reflected in
the Balance Sheet and the Interim Balance Sheet (except for assets held under
capitalized leases and personal property sold since date of the Balance Sheet
and the Interim Balance Sheet, as the case may be, in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise acquired
by the Company since the date of the Balance Sheet (except for personal property
acquired and sold since the date of the Balance Sheet in the Ordinary Course of
Business and consistent with past practice). All material properties and assets
reflected in the Balance Sheet and the Interim Balance Sheet are free and clear
of all Encumbrances except (a) mortgages or security interests shown on the
Balance Sheet or the Interim Balance Sheet as securing specified liabilities or
obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets after the date of the Interim Balance Sheet (such mortgages and security
interests being limited to the property or assets so acquired), with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, and (c) liens for current taxes not yet due.
1.15
1.16 Section Condition and Sufficiency of Assets . All items of equipment owned
or leased by the Company are in good operating condition and repair, and are
adequate for the uses to which they are being put, and none of such items is in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost.
1.17
1.18 Section No Undisclosed Liabilities . The Company has no liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise)
<PAGE>
except for liabilities or obligations reflected or reserved against on the face
of the Balance Sheet or the Interim Balance Sheet (excluding the notes thereto)
and current liabilities incurred in the Ordinary Course of Business since the
date thereof.
1.19
1.20 Section Taxes .
1.21
(a) The Company has filed or caused to be filed on a timely basis all Tax
Returns that are or were required to be filed by or with respect to it, either
separately or as a member of a group of corporations, pursuant to applicable
Legal Requirements. The Company has paid, or made provision for the payment of,
all Taxes that have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received by the Company, except such
Taxes, if any, as are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided in the Balance
Sheet and the Interim Balance Sheet.
(b)
(c) No United States federal or state income Tax Return of the Company has been
audited by the IRS or relevant state tax authorities. The Company has never had
any tax deficiency proposed or assessed against it. The Company has not given or
been requested to give waivers or extensions (or is or would be subject to a
waiver or extension given by any other Person) of any statute of limitations
relating to the payment of Taxes of the Company or for which the Company may be
liable.
(d)
(e) The charges, accruals, and reserves with respect to Taxes on the respective
books of the Company are adequate (determined in accordance with GAAP) and are
at least equal to that the Company's liability for Taxes. There exists no
proposed tax assessment against the Company except as disclosed in the Balance
Sheet. All Taxes that the Company is or was required by Legal Requirements to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body or other Person.
(f)
(g) All Tax Returns filed by (or that include on a consolidated basis) the
Company are true, correct, and complete. There is no tax sharing agreement that
will require any payment by the Company after the date of this Agreement. The
Company is not, or within the five- year period preceding the Closing Date has
not been, an "S" corporation or a collapsible corporation pursuant to Section
1362(a) or Section 341(f) of the IRC.
(h)
1.22 Section No Material Adverse Change. Since the date of the Interim Balance
Sheet, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of the Company, and no
event has occurred or circumstance exists that may result in such a material
adverse change.
1.23
1.24 Section Compliance with Legal Requirements; Governmental Authorizations.
(i) The Company is, and at all times since its inception has been, in full
compliance with each Legal Requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership or use of any of its
assets;
(ii)
(iii) no event has occurred or circumstance exists that (with or without notice
or lapse of time) (A) may constitute or result in a violation by the Company of,
or a failure on the part of the Company to comply with, any Legal Requirement,
or (B) may give rise to any obligation on the part of the Company to undertake,
or to bear all or any portion of the cost of, any remedial action of any nature;
and
<PAGE>
(iv)
(v) The Company has not received any notice or other communication (whether oral
or written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of, or failure to comply with,
any Legal Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature.
(vi)
(b) Each Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or to any of the assets owned or used by,
the Company is valid and in full force and effect, and such Governmental
Authorizations collectively constitute all of the Governmental Authorizations
necessary to permit the Company to lawfully conduct and operate its businesses
in manner it currently conducts and operates such businesses and to permit the
Company to own and use its assets in the manner in which it currently owns and
uses such assets. The Company is not in default under any of such Governmental
Authorization.
(c)
(d) The Company is not aware of any proposed Legal Requirement which would be
applicable to the Company's business, operations or properties and which might
adversely affect the Company's prospects, operations or properties, either
before or after the Closing.
(e)
1.2 Section Legal proceedings; Orders.
1.3
(a) There is no pending Proceeding that has been commenced by or against the
Company or that otherwise relates to or may affect the business of, any of the
assets owned or used by, or the current equity ownership of the Company or that
challenges, or that may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the Contemplated Transactions. To the
Knowledge of the Company, except as set forth on Schedule , (1) no such
Proceeding has been Threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding. The Company has delivered to the Investor copies of all
pleadings, correspondence, and other documents relating to each Proceeding
listed on Schedule . The Proceedings listed on Schedule will not have a material
adverse effect on the business, operations, assets, condition, or prospects of
the Company. The foregoing includes, without limitation, any action, suit,
proceeding, or investigation pending or currently threatened involving the prior
employment of any of the Company's employees, their use in connection with the
Company's business of any information or techniques allegedly proprietary to any
of their former employers, their obligations under any agreements with prior
employers, or negotiations by the Company with potential backers of, or
Investor's in, the Company or its proposed business.
(b)
(c) There is no Order to which the Company, or any of the assets owned or used
by the Company, is subject and no officer, director, agent, or employee of the
Company is subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or practice
relating to the business of the Company.
(d)
1.4 Section Absence of Certain Changes and Events . Since the Interim Balance
Sheet Date, the Company has conducted its businesses only in the Ordinary Course
of Business and there has not been any:
1.5
(a) change in the Company's authorized or issued capital stock; grant of any
stock option or right to purchase shares of capital stock of the Company;
<PAGE>
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
the Company of any shares of any such capital stock; or declaration or payment
of any dividend or other distribution or payment in respect of shares of capital
stock;
(b)
(c) amendment to the Organizational Documents of the Company;
(d)
(e) adoption of, or increase in the payments to or benefits under, any profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other employee benefit plan for or with any employees of the Company;
(f)
(g) damage to or destruction or loss of any asset or property of the Company,
whether or not covered by insurance, materially and adversely affecting the
properties, assets, business, financial condition, or prospects of the Company,
taken as a whole;
(h)
(i) entry into, termination of, or receipt of notice of termination of any
license, distributorship, dealer, sales representative, joint venture, credit,
or similar agreement, or any Contract or transaction involving a total remaining
commitment by or to the Company of at least $50,000;
(j)
(k) sale (other than sales of inventory in the Ordinary Course of Business),
lease, or other disposition of any asset or property of the Company or mortgage,
pledge, or imposition of any lien or other encumbrance on any material asset or
property of the Company, including, without limitation, the sale, lease, or
other disposition of any of the Intellectual Property Assets;
(l)
(m) cancellation or waiver of any claims or rights with a value to the Company
in excess of $50,000;
(n)
(o) material change in the accounting methods used by the Company; or
(p)
(q) agreement, whether oral or written, by the Company to do any of the
foregoing.
(r)
1.6 Section Contracts; No Defaults .
1.7
(a) No officer, director, agent, employee, consultant, or contractor of the
Company is bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to (A) engage in
or continue any conduct, activity, or practice relating to the business of the
Company, or (B) assign to the Company or to any other Person any rights to any
invention, improvement, or discovery.
(a) Each Contract of the Company is in full force and effect and is valid and
enforceable in accordance with its terms.
(b)
(i) The Company is, and at all times since its inception has been, in full
compliance with all applicable terms and requirements of each Contract under
which the Company has or had any obligation or liability or by which the Company
or any of the assets owned or used by the Company is or was bound;
<PAGE>
(ii)
(iii) each other Person that has or had any obligation or liability under any
Contract under which the Company or had any rights is, and at all times since
its inception has been, in full compliance with all applicable terms and
requirements of such Contract;
(iv)
(v) no event has occurred or circumstance exists that (with or without notice or
lapse of time) may contravene, conflict with, or result in a violation or breach
of, or give the Company or other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract; and
(vi)
(vii) The Company has not given to or received from any other Person, at any
time since any notice or other communication (whether oral or written) regarding
any actual, alleged, possible, or potential violation or breach of, or default
under, any Contract.
(viii)
(c) The Company has not entered into any agreement, Contract or understanding,
written or oral, with any Person regarding the possible acquisition of all or
any portion of the business of such Person obligating the Company to proceed
with any acquisition or to take any other action. All discussions with such
Persons may be terminated by the Company without penalty or cost to the Company.
(d)
1.2 Section Environmental Matters . 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 Environmental Law.
1.3 Section Employees .
1.4
(a) No employee or director of the Company is a party to, or is otherwise bound
by, any agreement or arrangement, including any confidentiality, noncompetition,
or proprietary rights agreement ("Proprietary Rights Agreement"), between such
employee or director and any other Person that in any way adversely affects or
will affect (i) the performance of his duties as an employee or director of the
Company, or (ii) the ability of the Company to conduct its business, including
any Proprietary Rights Agreement with the Company or by any such employee or
director. To the Company's Knowledge, no officer or other key employee of the
Company intends to terminate his employment with the Company.
(b)
(c) To the best of the Company's knowledge, no employee of the Company is or
will be in violation of any judgment, decree, or order, or any term of any
employment contract, patent disclosure agreement, or other contract or agreement
relating to the relationship of any such employee with the Company, or any other
party because of the nature of the business conducted or presently proposed to
be conducted by the Company or to the use by the employee of his or her best
efforts with respect to such business. The Company is not aware that any officer
or key employee, or that any group of key employees, intends to terminate their
employment with he Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing. Subject to general principles
related to wrongful of employees, the employment of each officer and employee of
the Company is terminable at the will of the Company.
(d)
1.5 Section Labor Relations; Compliance . The Company has not been or is a party
to any collective bargaining or other labor Contract. There has not been, there
is not presently pending or existing, and there is not Threatened, (a) any
strike, slowdown, picketing, work stoppage, or employee grievance process, (b)
any Proceeding against or affecting the Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters,
<PAGE>
including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, or
any comparable Governmental Body, organizational activity, or other labor or
employment dispute against or affecting the Company or its premises, or (c) any
application for certification of a collective bargaining agent. No event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by the
Company, and no such action is contemplated by the Company. The Company has
complied in all respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing. The Company is liable
for the payment of any compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any of the foregoing
Legal Requirements.
1.6
1.7 Section Intellectual Property .
1.8
(a) Intellectual Property Assets. The term "Intellectual Property Assets"
includes the following to the extent owned, used or licensed by the Company as
licensee or licensor:
(i) the name "OneSource" and all fictional business names, trading names,
registered and unregistered trademarks, service marks, and applications
(collectively, "Marks");
(ii)
(iii) all patents, patent applications, and inventions and discoveries that may
be patentable (collectively, "Patents");
(iv)
(v) all copyrights in both published works and unpublished works
(collectively, "Copyrights");
(vi)
(vii) all know-how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans, drawings, and
blue prints (collectively, "Trade Secrets").
(viii)
(b) Know-How Necessary for the Business. The Intellectual Property Assets are
all those necessary for the operation of the Company's business as it is
currently conducted. The Company is the owner of all right, title, and interest
in and to each of the Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, equities, and other adverse claims,
and has the right to use without payment to a third party all of the
Intellectual Property Assets.
(c)
(d) Patents.
(e)
(i) The Company is the owner of all right, title, and interest in and to each of
the Patents, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(ii)
(iii) All Patents that have been registered with the United States Patent and
Trademark Office are currently in compliance with all formal legal requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling due within
ninety days after the Closing Date.
<PAGE>
(iv)
(v) No Patent has been or is now involved in any opposition, invalidation, or
cancellation and, to the Company's Knowledge, no such action is Threatened with
the respect to any of the Patents.
(vi)
(vii) To the Company's Knowledge, there is no potentially interfering trademark
or trademark application of any third party. (viii) (ix) No Patent is infringed
or, to the Company's Knowledge, has been challenged or threatened in any way.
None of the Patents used by the Company infringes or is alleged to infringe any
trade name, trademark, or service Patent of any third party. (x) (xi) All
products and materials containing a Patent bear the proper federal registration
notice where permitted by law.
(xii)
(f) Trademarks.
(g)
(i) The Company is the owner of all right, title, and interest in and to each of
its Marks, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(ii)
(iii) All Marks that have been registered with the United States Patent and
Trademark Office are currently in compliance with all formal legal requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling due within
ninety days after the Closing Date.
(iv)
(v) No Mark has been or is now involved in any opposition, invalidation, or
cancellation and, to the Company's Knowledge, no such action is Threatened with
the respect to any of the Marks.
(vi)
(vii) To the Company's Knowledge, there is no potentially interfering trademark
or trademark application of any third party. (viii) (ix) No Mark is infringed
or, to the Company's Knowledge, has been challenged or threatened in any way.
None of the Marks used by the Company infringes or is alleged to infringe any
trade name, trademark, or service mark of any third party. (x) (xi) All products
and materials containing a Mark bear the proper federal registration notice
where permitted by law.
(xii)
(h) Trade Secrets.
(i)
(i) With respect to each Trade Secret, the documentation relating to such Trade
Secret is current, accurate, and sufficient in detail and content to identify
and explain it and to allow its full and proper use without reliance on the
knowledge or memory of any individual.
(ii)
(iii) The Company has taken all reasonable precautions to protect the secrecy,
confidentiality, and value of its Trade Secrets.
<PAGE>
(iv)
(v) The Company has good title and an absolute (but not necessarily exclusive)
right to use the Trade Secrets. The Trade Secrets are not part of the public
knowledge or literature, and, to the Company's Knowledge, have not been used,
divulged, or appropriated either for the benefit of any Person or to the
detriment of the Company. No Trade Secret is subject to any adverse claim or has
been challenged or threatened in any way.
(vi)
1.2 Section Certain Payments . Neither the Company nor any director, officer,
agent, or employee of the Company, or to the Company's Knowledge any other
Person associated with or acting for or on behalf of the Company, has directly
or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Company or any Affiliate of the Company, or
(iv) in violation of any Legal Requirement, (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Company.
1.3
1.4 Section Disclosure.
(a) No representation or warranty of the Company in this Agreement omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
(b)
(c) No notice given pursuant to Section will contain any untrue statement or
omit to state a material fact necessary to make the statements therein or in
this Agreement, in light of the circumstances in which they were made, not
misleading.
(d)
1.5 Section Relationships with Related Persons . Neither the Company nor any
Related Person of the Company has, any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining to
the Company's businesses. Neither the Company nor any Related Person of the
Company is owns (of record or as a beneficial owner) an equity interest or any
other financial or profit interest in, a Person that has (i) had business
dealings or a material financial interest in any transaction with the Company or
(ii) engaged in competition with the Company with respect to any line of the
products or services of the Company (a "Competing Business") in any market
presently served by the Company except for less than one percent of the
outstanding capital stock of any Competing Business that is publicly traded on
any recognized exchange or in the over-the-counter market. Neither the Company
nor any Related Person of the Company or of the Company is a party to any
Contract with, or has any claim or right against, the Company.
1.6
1.7 Section Offering . The offer, sale and issuance of the Shares as
contemplated by this Agreement are exempt from the registration requirements of
the Securities Act, and neither the Company nor any authorized agent acting on
its behalf will take any action hereafter that would cause the loss of
exemption.
1.8
1.9 Section Brokers or Finders . Neither the Company nor its agents has incurred
any obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement or the Contemplated Transactions, that have not been disclosed by
Company to Investor.
1.10
<PAGE>
2SECTION REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company as follows:
1.1 Section Organization and Good Standing . The Investor is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Delaware.
1.2
1.3 Section Authority; No Conflict .
1.4
(a) This Agreement constitutes the legal, valid, and binding obligation of the
Investor, enforceable against the Investor in accordance with its terms. The
Investor has the absolute and unrestricted right, power, and authority to
execute and deliver this Agreement and to perform its obligations under this
Agreement.
(b)
(c) Neither the execution and delivery of this Agreement by the Investor nor the
consummation or performance of any of the Contemplated Transactions by the
Investor will give any Person the right to prevent, delay, or otherwise
interfere with any of the Contemplated Transactions. The Investor is not and
will not be required to obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or performance
of any of the Contemplated Transactions.
(d)
1.5 Section Investment Representations . Investor understands that the Shares
have not been registered under the Securities Act or any applicable state
securities laws. Investor also understands that the Shares are being offered and
sold pursuant to exemptions from registration contained in the Securities Act
and applicable state securities laws based in part upon Investor's
representations contained in this Agreement.
1.6
1.7 (a) Investor has substantial experience in evaluating and investing in
private placement transactions involving securities of companies similar to the
Company, is capable of evaluating the merits and risks of its investment in the
Company and has the analytical and financial capacity to protect its own
interests. Investor understands that it must bear the economic risk of this
investment indefinitely unless the Shares are registered pursuant to the
Securities Act and applicable state securities laws, or exemptions from such
registrations are available. Investor understands that the Company has no
present intention of registering the Shares. Investor also understands that
there is no assurance that exemptions from registration under the Securities Act
and applicable state securities laws will be available and that, even if
available, such exemptions may not allow Investor to transfer all or any portion
of the Shares under the circumstances, in the amounts or at the times Investor
might propose.
1.8
(b) Investor is acquiring the Shares and the Shares for Investor's
own accounts for investment only, and not with a view towards
their distribution.
(c) Investor represents that by reason of its, or of its
management's, business or financial experience, Investor has the
capacity to protect their own interests in connection with the
transactions contemplated in this Agreement. Further, Investor is
aware of no publication of any advertisement in connection with
the transactions contemplated in this Agreement.
<PAGE>
(d) Investor represents it is an "accredited investor" within the
meaning of Regulation D under the Securities Act.
(e) Investor has received and read the Company's Financial Statements
and has had an opportunity to discuss the Company's business,
management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review
the Company's operations and facilities. Investor also has been
given the opportunity to ask all desired questions of and
received adequate answers from, the Company and its management
regarding the terms and conditions of this investment.
1.1 Section Certain Proceedings . There is no pending Proceeding that has been
commenced against the Investor and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To the Investor's Knowledge, no such Proceeding has
been Threatened.
1.2
1.3 Section Brokers or Finders . The Investor and its officers and agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement and will indemnify and hold the Company harmless from any such
payment alleged to be due by or through the Investor as a result of the action
of the Investor or its officers or agents.
1.4
2 SECTION CONDITIONS PRECEDENT TO THE INVESTOR'S OBLIGATION TO CLOSE
The Investor's obligation to purchase the Shares and to take the other
actions required to be taken by the Investor at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Investor, in whole or in part):
1.1 Section Accuracy of Representations . Each representation and warranty set
forth in Section of this Agreement shall have been accurate in all material
respects as of the date of this Agreement, and shall be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the Disclosure Schedules.
1.2
1.3 Section The Company's Performance . Each of the covenants and obligations
that the Company is required to perform or to comply with pursuant to this
Agreement at or prior to the Closing shall have been duly performed and complied
with in all material respects.
1.4
1.5 Section Additional Documents . Each of the following documents shall have
been delivered to the Investor:
1.6
(a) such other documents as the Investor may
reasonably request for the purpose of
(i) evidencing the accuracy of any of the Company's representations and
warranties,
(ii) evidencing the performance by the Company of, or the compliance by the
Company with, any covenant or obligation required to be performed or complied
with by such Persons,
(iii) evidencing the satisfaction of any condition referred to in this Section
5, or
(iv) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
(b)
<PAGE>
1.7 Section No Proceedings . Since the date of this Agreement, there must not
have been commenced or Threatened against the Investor, or against any Person
affiliated with the Investor, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions.
1.8
1.9 Section No Claim Regarding Stock Ownership or Sale Proceeds . There must not
have been made or Threatened by any Person any claim asserting that such Person
(a) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock of, or any other voting, equity, or
ownership interest in, the Company or (b) is entitled to all or any portion of
the Purchase Price payable for the Shares.
1.10
1.11 Section No Prohibition . Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause the Investor or any Person
affiliated with the Investor to suffer any material adverse consequence under,
(a) any applicable Legal Requirement or Order, or (b) any Legal Requirement or
Order that has been published, introduced, or otherwise formally proposed by or
before any Governmental Body.
1.12
1.13 Section No Material Adverse Change . There shall not have been any material
adverse change in the financial condition, property, business, operations or
results of operations of the Company after the date of this Agreement.
1.14
2SECTION COVENANTS OF THE COMPANY PRIOR TO CLOSING DATE AND OTHER AGREEMENTS
1.1 Section Access and Investigation . Between the date of this Agreement and
the Closing Date, the Company will afford the Investor and its Representatives
full and complete access, during reasonable business hours and without
interference with the operations of the Company, to the Company's books,
records, financial statements, facilities, distributors (without prior approval
of the management of the Company), key personnel and other documents and
material relating to the Company's financial condition, assets, liabilities and
business.
1.2
1.3 Section Negative Covenant . Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, the Company
will not, without the prior written consent of the Investor, take any
affirmative action, or fail to take any reasonable action within its control, as
a result of which any of the changes or events listed in Section is likely to
occur.
1.4
1.5 Section Required Approvals . As promptly as practicable after the date of
this Agreement, the Company will, make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, the
Company will cooperate with the Investor with respect to all filings that the
Investor elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transactions and.
1.1 Section Notification . Between the date of this Agreement and the Closing
Date, the Company will promptly notify the Investor in writing if the Company
becomes aware of any fact or condition that causes or constitutes a Breach of
<PAGE>
any of the Company's representations and warranties as of the date of this
Agreement, or if such the Company becomes aware of the occurrence after the date
of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Disclosure Schedules if the
Disclosure Schedules were dated the date of the occurrence or discovery of any
such fact or condition, the Company will promptly deliver to the Investor a
supplement to the Disclosure Schedules specifying such change. During the same
period, the Company will promptly notify the Investor of the occurrence of any
Breach of any covenant of the Company in this Section or of the occurrence of
any event that may make the satisfaction of the conditions in Section impossible
or unlikely.
1.2
1.3 Section No Negotiation . Until such time, if any, as this Agreement is
terminated pursuant to Section , the Company will not, and will cause each of
its Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than the Investor) relating to
any transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of the Company, or any of the capital stock of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company.
1.4
1.5 Section Best Efforts . Between the date of this Agreement and the Closing
Date, the Company will use its Best Efforts to cause the conditions in Sections
7 and 8 to be satisfied.
1.6
2SECTION COVENANTS OF THE INVESTOR PRIOR TO CLOSING DATE
1.1 Section Approvals of Governmental Bodies . As promptly as practicable after
the date of this Agreement, the Investor will, and will cause each of its
Related Persons to, make all filings required by Legal Requirements to be made
by them to consummate the Contemplated Transactions. Between the date of this
Agreement and the Closing Date, the Investor will, and will cause each Related
Person to, cooperate with the Company with respect to all filings that the
Company is required by Legal Requirements to make in connection with the
Contemplated Transactions; provided that this Agreement will not require the
Investor to dispose of or make any change in any portion of its business or to
incur any other burden to obtain a Governmental Authorization.
1.2
1.3 Section Best Efforts . Except as set forth in the proviso to Section ,
between the date of this Agreement and the Closing Date, the Investor will use
its Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
1.4
1.5
2SECTION CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE
The Company's obligation to sell the Shares and to take the other actions
required to be taken by the Company at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Company, in whole or in part):
<PAGE>
1.1 Section Accuracy of Representations . Each of the Investor's representations
and warranties in this Agreement shall have been accurate in all material
respects as of the date of this Agreement and shall be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
1.2
1.3 Section The Investor's Performance . Each covenant and obligation that the
Investor is required to perform or to comply with pursuant to this Agreement at
or prior to the Closing shall have been performed and complied with in all
material respects.
1.4
1.5 Section Additional Documents . The Investor must have caused the following
documents to be delivered to the Company: 1.6 (a) such other documents as the
Company may reasonably request for the purpose of (i) evidencing the accuracy of
any representation or warranty of the Investor, (ii) evidencing the performance
by the Investor of, or the compliance by the Investor with, any covenant or
obligation required to be performed or complied with by the Investor, (iii)
evidencing the satisfaction of any condition referred to in this Section 8, or
(iv) otherwise facilitating the consummation of any of the Contemplated
Transactions.
(b)
1.7 Section No Injunction . There must not be in effect any Legal Requirement or
any injunction or other Order that (a) prohibits the sale of the Shares by the
Company to the Investor, and (b) has been adopted or issued, or has otherwise
become effective, since the date of this Agreement.
1.8
2SECTION TERMINATION
1.1 Section Termination Events . This Agreement may, by notice given prior to or
at the Closing, be terminated:
1.2
(a) by either the Investor or the Company if a material Breach of any provision
of this Agreement has been committed by the other party and such Breach has not
been waived;
(b)
(i) by the Investor if any of the conditions in Section 7 has not been satisfied
as of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of the Investor to comply with its
obligations under this Agreement) and the Investor has not waived such condition
on or before the Closing Date; or
(ii)
(iii) by the Company, if any of the conditions in Section 8 has not been
satisfied of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of the Company to comply with
its obligations under this Agreement) and the Company have not waived such
condition on or before the Closing Date;
(iv)
(c) by mutual consent of the Investor and the Company; or
(d)
(e) by either the Investor or the Company if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before May 26,
1999, or such later date as the parties may agree upon.
(f)
<PAGE>
1.3 Section Effect of Termination . Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9, all further
obligations of the parties under this Agreement will terminate, except that the
obligations in Sections 11.1 and 11.3 will survive; provided, however, that if
this Agreement is terminated by a party because of the Breach of the Agreement
by the other party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of the
other party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
1.4
2SECTION GENERAL PROVISIONS
1.1 Section Expenses . Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. The Company will not incur any
out-of-pocket expenses in connection with this Agreement. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party.
1.2
1.3 Section Public Announcements . Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as the Investor determines. Unless
consented to by the Investor in advance or required by Legal Requirements, prior
to the Closing The Company shall keep this Agreement strictly confidential and
may not make any disclosure of this Agreement to any Person. The Company and the
Investor will consult with each other concerning the means by which the
Company's employees, customers, and suppliers and others having dealings with
the Company will be informed of the Contemplated Transactions, and the Investor
will have the right to be present for any such communication.
1.4
1.5 Section Confidentiality . Between the date of this Agreement and the Closing
Date, the Investor and the Company will maintain in confidence, and will cause
the directors, officers, employees, agents, and advisors of the Investor and the
Company to maintain in confidence, and not use to the detriment of another party
or the Company any written, oral, or other information obtained in confidence
from another party or the Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
1.6
1.7 If the Contemplated Transactions are not consummated, each party will return
or destroy as much of such written information as the other party may reasonably
request. Whether or not the Closing takes place, the Company waives, and will
upon the Investor's request cause the Company to waive, any cause of action,
right, or claim arising out of the access of the Investor or its representatives
<PAGE>
to any trade secrets or other confidential information of the Company except for
the intentional competitive misuse by the Investor of such trade secrets or
confidential information.
1.8
1.9 Section Notices . All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
1.10
1.11 The Company: OneSource Technologies, Inc.
1.12 2329 West Mescal, Suite 304
1.13 Phoenix, Arizona 85029-4765
1.14 Attention: Jerry Washburn, President and Chief Executive Officer
1.15 Facsimile No.: 602-216-9611
1.16
1.17 The Investor: Blackwater Capital Partners II, L.P.
1.18 1800 Glenview Road
1.19 Glenview, Illinois 60025
1.20 Attention: Steven R. Green, Managing Member of General Partner
1.21 Facsimile No.: 847-729-2296
1.22
1.23 with a copy to: Quarles & Brady LLP
1.24 One East Camelback, Suite 400
1.25 Phoenix, Arizona 85012-1649
1.26 Attention: P. Robert Moya, Esq.
1.27 Facsimile No.: 602-230-5598
1.28
1.29 Section Jurisdiction; Service of Process . Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Arizona, County of Maricopa, or, if it has or can acquire jurisdiction, in
the United States District Court for the District of Arizona, and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
1.30
1.31 Section Further Assurances . The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
1.32
1.33 Section Waiver . The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
<PAGE>
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
1.34
1.35 Section Entire Agreement and Modification . This Agreement supersedes all
prior agreements between the parties with respect to its subject matter
(including the Term Letter between the Investor and the Company dated May 25,
1999) and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.
1.36
1.37 Section Disclosure Schedules . The disclosures in the Disclosure Schedules,
and those in any Supplement thereto, shall be deemed to relate only to the
representations and warranties in the Section of the Agreement to which they
expressly relate and not to any other representation or warranty in this
Agreement. In the event of any inconsistency between the statements in the body
of this Agreement and those in the Disclosure Schedules (other than an exception
expressly set forth as such in the Disclosure Schedules with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
1.38
1.39 Section Assignments, Successors, and No Third-Party Rights . The Investor
may assign its rights under this Agreement without the prior consent of the
Company. The Company may not assign any of its rights under this Agreement
without the prior consent of the Investor. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
1.40
1.41 Section Severability . If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
1.42
1.43 Section Section Headings, Construction . The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
<PAGE>
1.44
1.45 Section Time of Essence . With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
1.46
1.47 Section Governing Law . This Agreement will be governed by the laws of the
State of Arizona without regard to conflicts of laws principles.
1.48
1.49 Section Counterparts . This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
1.50
1.51
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
THE INVESTOR:
BLACKWATER CAPITAL PARTNERS II, L.P.
a Delaware limited partnership
By: Blackwater Capital Group II, L.L.C.
a Delaware limited liability company
Its: General Partner
By: /s/ Steven R. Green
------------------------
Steven R. Green
Managing Member
THE COMPANY:
ONESOURCE TECHNOLOGIES, INC.
a Delaware corporation
By: /s/ Jerry Washburn
------------------------
Jerry Washburn
President and Chief Executive Officer
<PAGE>
SCHEDULES
Schedule 3.2 Contracts for Issuance Sale or Transfer of Securities 34
Schedule 3.3(b) Organizational Documents 35
Schedule 3.4(b) Agreements Regarding Capital Stock 36
Schedule 3.7(b) Conflicts 37
Schedule 3.16(a) Legal Proceedings 38
<PAGE>
Schedule 3.2
Contracts for Issuance Sale or Transfer of Securities
None.
<PAGE>
Schedule 3.3(b)
Organizational Documents
(already provided)
<PAGE>
Schedule 3.4(b)
Agreements Regarding Capital Stock
None.
<PAGE>
Schedule 3.7(b)
Conflicts
None.
<PAGE>
Schedule 3.16(a)
Legal Proceedings
1. Complaint filed by a former employee of the Company for a claim of
allegedly unpaid sales commissions of $28,475.
