EXHIBIT 10.9
STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement (the "Agreement") is made and entered into
effective as of this 15th day of April, 1998 by and between OneSource
Technologies, Inc. , a Delaware corporation (hereinafter "Buyer"), Ahlawyss
Fulton and Pamela Fulton, husband and wife, (hereinafter "Sellers" or "Fulton".
Buyer and Sellers are sometimes collectively referred to herein as "the
Parties".
RECITALS
A. Sellers own one hundred (100%) percent of the issued and outstanding shares
(the "Shares") of the stock of Net Express, Inc. ("Net Express"), an
Arizona corporation, which stock consists of one thousand (1,000) Shares of
$1.00 par value common stock, represented by Certificate number 1
registered in the name of Ahlawyss Fulton and Pamela Fulton.
B. Sellers desire to sell to Buyer and Buyer desires to purchase from Sellers
the Shares on the terms and conditions set forth herein and enter into
certain other agreements in respect thereof, as set forth herein, or in the
Employment Agreement and Redemption Agreement attached hereto.
Now, Therefore, for and in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Sellers and Buyer agree as follows:
AGREEMENTS
ARTICLE I
Purchase ans Sale
Section 1.1 Index of Definitions. As used in this Agreement, the following terms
shall have the meanings given to them by the sections of this Agreement
specified below:
1.1.1 "Agreement" is defined in the first paragraph.
1.1.2 "Buyer" are defined in the first paragraph.
1.1.3 "Closing" is defined in Section 2.1.
1.1.4 "Closing Date" is defined in Section 2.1.
1.1.5 "Employment agreement" is defined in Section 2.2.3.
1.1.6 "Fulton" is defined in the first paragraph.
1.1.7 "GAAP" is defined in 2.2.5
1.1.8 "Net Express" is defined in Recital A.
1.1.9 "Price" is defined in Section 1.3.
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1.1.10. "Seller" is defined in the first paragraph.
1.1.11 "Shares" is defined in Recital A.
Section 1.2 Agreement to Exchange Stock. On the Closing Date, Sellers shall
sell, assign, convey, and transfer to Buyer, and Buyer shall purchase and accept
from Sellers the one thousand (1,000) Shares of Net Express $1.00 par value
common stock constituting all of the issued and outstanding stock of Net
Express, sellers shall receive at Closing 727,946 shares of Buyer, OneSource
Technologies, Inc. common ($.001 par value) voting stock. Sellers agree to
accept the OneSource shares in legend form, bearing the Company's standard
legend restricting the transfer of unregistered securities.
Section 1.3 Assumption of Liabilities. The Price shall be payable as follows:
1..3.1 Assumption of Liabilities. The equity interest in Net Express
at close shall after deducting liabilities, be in excess of $10,000.00 There
shall be no outstanding liability at Closing of Net Express to the existing or
any past shareholders of Net Express. Net Express shall have total liabilities
on any account of all lines of credit, trade payables, factoring and loans of
not more than $24,000.00 prior to Closing. Liabilities in excess of that amount
shall be assumed and paid by Sellers. The factoring agreement with Alliance
Capital Corporation Shall be terminated prior to Closing.
1.3.2 Additional Agreements at closing. The parties agree to execute
and deliver at Closing, a Stock Redemption Agreement and an Employment Agreement
for Ahlawyss Fulton together with a Subscription Agreement for OneSource
Technologies' stock. Copies of these Agreements are attached as Exhibits "A",
"B" and "C" respectively. The Redemption Agreement shall permit Fulton and
OneSource to redeem the Shares received as consideration in this Agreement on
prior to December 30, 1999, by tendering the stock exchanged for the Shares
which they paid in consideration of the transaction.
Section 2.1 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") shall occur on April 15, 1999 or at such other date as
may be agreed upon by the parties "the "Closing Date"). In the event the closing
does not occur on or before May 1, 1999, either party may terminate this
Agreement after such date by five (5) days written notice to the other,. The
Closing shall occur starting at 9:00A.M. on the Closing Date at the office of
OneSource Technologies, Inc. 2329 West Mescal, Suite 304, Phoenix, Arizona
85029, or at such other time and location as may be agreed upon by the parties.
Section 2.2 Seller's Deliveries at Closing. At the closing, Seller shall deliver
to Buyer in executed form:
2.2.1 Certificate Number 1 (or lost certificate affidavit in lieu thereof)
evidencing one thousand Shares of Net Express $1.00 par value common stock
duly endorsed to Buyer or accompanied by such stock powers, assignments
separate from certificate, or other instruments of assignment as shall be
necessary to transfer title to the Shares to Buyer.
2.2.2 A Redemption Agreement (the "Redemption Agreement"), in the form
attached hereto as Exhibit "A" executed by the Sellers.
2.2.3 An Employment Agreement between Buyer and Sellers (the "Employment
Agreement", in the form attached hereto as Exhibit "B", executed by
Sellers.
2.2.4 The Subscription Agreement for OneSource stock in form as attached
hereto as Exhibit "C", executed by Sellers.
2.2.5 A Balance Sheet of Net Express prepared as of December 31,1998 and an
Income Statement of Net
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Express covering the period from January 1, 1998 through December 31,1998,
which fully, accurately and fairly present the financial position of Net
Express as of the date and for the period indicated and are free of nay
material misstatements. Copies of the Balance Sheet and Income Statement
are attached as Exhibit "D", The financials presented are on the basis of
GAAP (general accepted accounting principals).
2.2.6 The corporate books and records of Net Express including but not
limited to the Articles and Bylaws of the corporation, the stock books and
registers, and all other files, documents and licenses related to the
business of Net Express. Sellers represent that By-Laws and stock books and
registers were never prepared for Net Express.
2.2.7 Delivery of UCC-2's and a release of all liability of Net Express to
Alliance Capital Corp.
2.2.8 Execute and deliver such other and further documents as are
reasonably required to effectuate the transfer of the Shares by Sellers.
All documents delivered by Sellers shall be in form satisfactory to Buyer and
their counsel.
Section 2.3 Buyers Deliveries at Closing. At the Closing, Buyer shall:
2.3.1 Pay the portion of the Price specified in Section 1.2 to Sellers by
delivery of its stock certificate evidencing the purchase price as provided
in paragraph 1.2.
2.3.2 The Employment Agreement an d documents required herein to be
executed and delivered by Buyer.
2.3.3 The Redemption Agreement required herein to be executed and delivered
by Buyer.
2.3.4 An audited Balance Sheet of OoneSource Technologies, Inc. as of
December 31, 19998 and an audited Income Statement of OneSource
Technologies covering the period from January 1, 1998 through December 31,
1998 which fully, accurately and fairly present the financial position of
OneSource Technologies as of the d/ate and for the period indicated and are
free of any material misstatements. Copies of the Balance Sheet and Income
Statement at OneSource are attached as Exhibit "E". The financial presented
shall be on the basis of GAAP accounting.
2.3.5 An offering memorandum of OneSource Technologies dated April 15,
1999.
All documents delivered by Buyers shall be in form satisfactory to Sellers and
their Counsel.
Representations and Warranties
Section 3.1 Sellers Representations and Warranties. Seller represent and warrant
to Buyers as follows:
3.1.1 The number of shares issued to Sellers is 1,000 shares issued on
certificate number 1.
3.1.2 The Shares as set forth in for paragraph 3.1.1 constitute all of the
issued and outstanding capital stock of Net Express and there is no other
security or subscription or agreement to buy, or sell any security of Net
Express issued and outstanding or enforceable against Net Express.
3.1.3 The Shares are duly authorized, validly issued, fully paid and
no-assessable and are owned by Sellers and will be transferred to Buyers
free and clear of all liens, claims, or other encumbrances.
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3.1.4 This Agreement constitutes, and other instruments and documents
Sellers are required to deliver under this Agreement will constitute, when
executed and delivered, the legally valid and binding obligations of
Sellers, enforceable against Sellers in accordance with their respective
terms.
3.1.5 Net Express is a corporation duly formed and validly existing under
the laws of the State of Arizona and has full power and authority to
execute and deliver all instruments and documents contemplated by this
Agreement to be executed and delivered by Net Express to consummate the
transactions contemplated by this Agreement, and to perform its obligations
set forth in this Agreement and in such other instruments and documents.
3.1.6 To Seller's actual knowledge the execution, delivery and performance
of this Agreement by Sellers and the consummation by Sellers of the
transactions contemplated herein will not conflict with or constitute a
breach of or default under any contract, agreement, indenture, instrument,
order, judgment, decree, law, restriction or regulation by which Sellers or
Net Express is bound.
3.1.7 To Seller's actual knowledge neither Sellers nor Net Express are
subject to or bound by any agreement or any judgment, order, writ,
injunction, or decree of any court or governmental body which could prevent
the operation, after the Closing, of the business of Net Express is
substantially the same manner as such business is presently being operated
on the date hereof. A list of the current licenses of Net Express is
attached as Exhibit "F". All licenses held by Net Express are valid and
existing and no license has been suspended or revoked by any jurisdiction
in which Net Express does business.
3.1.8 To Seller's actual knowledge there is no action, suit or proceeding
pending or threatened against Sellers or Net Express before any court or
administrative agency, which could prevent the carrying out of this
Agreement by Sellers.
3.1.9 Sellers represent that there are no outstanding leases either real or
personal of Net Express as of the Closing.
3.1.10 Except for the agreements listed as Exhibit "G" Net Express is not a
party to any other material agreements or contracts, written or verbal.
3.1.11 Attached hereto as Exhibit "H" is a true , correct and complete list
of all furniture, fixtures, and equipment owned by Net Express.
3.1.12 All of the furniture, fixtures and equipment owned or leased by Net
express are in good working order and condition, reasonable wear and tear
excepted. Net Express owns good and marketable title to all of its assets,
including its vehicles, office equipment, and properties free and clear of
any liens or encumbrances.
3.1.13 The financial statements provided Buyer on behalf of Net Express
fully, accurately, and fairly present the financial position of Net Express
as of the dates and for the periods indicated and are free of any material
misstatements.
3.1.14 Attached hereto as Exhibit "I" is a true, correct and complete list
as of the date of theis Agreement of all unpaid invoices, and/or accounts
receivable, with an invoice amount which is due from its customers to Net
express. All of the accounts receivable which are listed are valid
obligations of Net Express.
3.1.15 All of the invoices identified in Exhibit "J" are due and owing, or
with the passage of time indicated on such invoices will be due and owing,
and are not subject to any offset or deduction and evidence valid
obligations of the customers identified therein to make payment to Net
Express. Buyer agrees that accounts receivable shall have the reasonable
level of uncollectability in accordance with past experience by Net
Express.
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3.1.16 Attached hereto as Exhibit "J"is a true, correct and complete list
ad of the date of this Agreement of all accounts payable, owing from Net
Express to creditors. All of the accounts payable which are listed are
valid obligations of Net Express.
3.1.17 As of the Close of this transaction the excess of assets over
liabilites will exceed $10,000 as determined by GAAP accounting. An
adjustment to the purchase price shall be made in the event that the excess
of assets over liabilities id less than $10,000. Any liabilities discovered
after the sale that reduce the excess of assets over liabilities below
$10,000 as of the Closing Date will be an adjustment to the purchase price.
3.1.18 Attached hereto as Exhibit "K" is a true, correct and complete list
as of the date of this Agreement of all officers, directors and employees
of Net Express. All employees of Net express, are correctly classified and
there are no contingent liabilities for employee trust fund or employee
taxes. Net Express has employed independent contractors as set forth in
Exhibit "I". All payroll, taxes, withholding, and trust fund taxes, and
workers' compensation insurance related to periods prior to December 31,
1998 have been paid on a timely basis by Net Express and the first quarter
payment of such amounts due March 31, 1999, has been paid when due.
3.1.19 Net Express has filed all required tax returned in every
jurisdiction in which it has conducted business, and has paid all taxes and
other assessments thereon when due. All income, sales, excise, payroll,
personal property, license and transaction priviledge taxes due and payable
in connection with the operation of Net Express prior to Closing have been
paid prior to delinquency and all returns due in connection therewith have
been filed. The financial statements presented reflect proper accounting
for all taxes not yet paid as of December 31, 1998.
31.1.20 Sellers' have taken reasonable steps to ensure that the equipment,
computer systems, accounting and other software include or shall include
design and performance capabilities so that prior to, during, and after the
calendar year 2000, they will not malfunction, produce invalid or incorrect
results or abnormally cease to function due solely to the year 2000 date
change. Such design and performance capabilities shall include without
limitation the ability to recognize the century and to manage and
manipulate data involving dates, including single century and multiple
century formulas and date values, without resulting in the generation of
incorrect values involving such dates or causing an abnormal ending.
3.1.21 To Sellers' actual knowledge Net Express has not improperly used
stored, or disposed of any chemicals or materials in violation of federal,
state or local law.
3.1.22 Sellers are responsible for all of the tax aspects of the
transaction as they affect their exchange of Shares and Sellers represent
that they have not relied on Buyer for tax advice.
3.1.23 Sellers acknowledge that the transfer of the Shares of Net Express
to Buyer may cause a change in the federal tax status of Net Express from
an S Corporation to a C Corporation.
3.1.24 Seller, Ahlawyss Fulton, acknowledges that he served as the founder,
President and Director of Net Express at all times prior to its acquisition
pursuant to this Agreement and that he will, purduant to the Employment
Agreement of the date herewith, continue in that position as its President
and Director and that by reason of his executive position in a subsidiary
of OneSource he is an accredited investor ad that term is used in
Regulation D promulgated by the Securities and Exchange Commission by this
Agreement.
3.1.25 Seller has not engaged the services of a Broker in connection with
the transactions completed by this Agreement.
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Section 3.2 Buyer's Representation and Warranties. Buyer represents and warrants
to Seller as follows:
3.2.1 This Agreement constitutes, and such other instruments and documents
when executed and delivered will constitute, legally valid and binding
obligations of Buyer enforceable against Buyer in accordacne with their
respective terms.
3.2.2 The execution, delivery, and performance of this Agreement by Buyer
and the consummation by Buyer of the transactions contemplated herein will
not conflict with or constitute a breach of or a default of under any
contract, agreement, indenture, instrument, order, judgment, decree, law,
restriction, or regulation by which Buyer is bound. Buyer is not subject to
or bound by any agreement or any judgment, order, writ, injunction or
decree of any court or governmental body, which could prevent the carrying
out by Buyer of this Agreement or the transactions, contemplated by this
Agreement.
3.2.3 Buyer has not engaged the services of a broker in connection with the
transactions contemplated by this Agreement.
3.2.4 Buyer acknowledges and agrees that neither Sellers nor Net Express is
guaranteeing that any of Net Express accounts will be collected, or are
collectible.
3.2.5 To Buyer's actual knowledge there is no action, suit or proceeding
pending or threatened against Buyer before any court or administrative
agency which could prevent the carrying out of this Agreement by Sellers.
Suits listed in Exhibit "I" represent the current litigation in which
OneSource is engaged.
3.2.6 Buyer has furnished financial statements to Seller for review prior
to Closing and hereby represents and warrants that the aforesaid financials
fully, accurately, and fairly present the financial position of Buyer as of
the dates and for the period indicated and are free from any material
misstatements.
Section 3.3 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement , whether made by Buyer or Sellers, shall
be deemed to be made again at Closing and all of the representations,
warranties, covenants and obligations of either Party under this Agreement shall
survive the Closing for a period of one (1) year during which any claim for
breach thereof shall be made. The knowledge of either party of any event,
circumstance, or fact shall not vitiate or otherwise impair any of the
representations and warranties made herein, or any of the rights and remedies
available to either party with respect to such representations or warranties.
ARTICLE IV
Covenants of Sellers
Section 4.1 Operation of Business. From December 31,1998 through the Closing
Date hereof, Sellers agree to operate Net Express in accordance with their past
practice and to carry on its operations in the ordinary course of business.
ARTICLE V
Closing Conditions
Section 5.1 Conditions Precedent to Sellers' Obligation to Close. The obligation
of Sellers to close the transaction contemplated by this Agreement is subject ti
the satisfaction of the following conditions precedent on or before the Closing
Date:
5.1.1 Buyer has performed all of its obligations to be performed hereunder
on or before the Closing Date.
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5.1.2 The representations and warranties made by Buyer in this Agreement
are true on the date hereof and on the Closing Date.
Section 5.2 Conditions Precedent to Buyer's Obligation to Close. The obligation
of Buyer to close the transaction contemplated by this Agreement is subject to
the satisfaction of the following conditions precedent on or before the Closing
Date:
5.2.1 Sellers have performed all of their obligations to be performed
hereunder on or before the Closing Date.
5.2.2 The representations and warranties made by Sellers in this Agreement
are true on the date thereof and on the Closing Date.
Section 5.3 Waiver of Conditions. Either Sellers or Buyer may waive any of the
conditions set forth in Section 5.1 and close this Agreement without such
conditions having been satisfied. Any such waiver must be in writing, signed by
both parties to this Agreement.
ARTICLE VI
Indemnification
6.1 Obligation to sellers. Sellers agree to indemnify, hold harmless, and to
reimburse Buyer and Net Express and their respective directors, officers,
employees, affiliates agents and assigns (the "Indemnified Parties" from and
against any and all claims, demands, obligations, liabilities, actions, suits,
damages, losses, costs of investigation and any amounts paid in settlement,
asserted against, resulting to, imposed upon or arising from any material
inaccuracy in, breach or non- fulfillment of any of the representations,
warranties, covenants or agreements made by Sellers in or pursuant to this
Agreement.
6.2 Obligations of Buyer. Buyer agrees to indemnify, hold harmless and to
reimburse Sellers from and against any and all claims, demands, obligations,
liabilities, actions, suits, damages, losses, costs, or expenses including
without limitation, interest and penalties, attorney's fees, costs of
investigation and any amounts paid in settlement, asserted against, resulting
to, imposed upon or arising from any material inaccuracy in , breach or
non-fulfillment of any of the representations, warranties, covenants or
agreements made by Buyer in or pursuant to this Agreement and further except to
the extent that damages are caused by the acts of Sellers as an executive
officer of Net Express to indemnify Sellers from any acts related to the future
operation of Net Express, specifically including but not limited to non-payment
of the assumed obligations after the Closing Date.
6.3 Notice. Any party seeking indemnification with respect to a claim shall give
notice to the party required to provide indemnification within ten (10) days
after the injured party has received actual notice of a claim which involves
matters as to which the party would be entitled to assert a claim under the
indemnification provisions herein. A party receiving notice of a claim subject
to indemnification shall promptly assume the defense of the claim with
experienced counsel satisfactory to the indemnified party. If the indemnifying
party fails within fifteen (15) days after receipt of a notice of an
indemnifiable claim to assume the defense of the indemnified party, the
indemnified party shall have the right to undertake the defense of the claim on
behalf of and for the account and risk of the indemnifying party.
ARTICLE VII
Miscellaneous
Section 7.1 Risk of Loss. All risk of loss to the assets and operations of Net
Express shall be on Sellers prior to the completion of the Closing on the
Closing Date and on Buyer after the completion of Closing on the Closing Date,
In the event any material portion of the assets of Net Express is destroyed or
damaged by casualty or other cause prior to the Closing and not replaced or
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repaired by Sellers prior to the Closing Date, Buyers may terminate this
Agreement by written notice to Sellers.
Section 7.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona.
Section 7.3 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes and
all prior or contemporaneous agreements or understandings with respect to the
subject matter hereof, except as set forth in the other agreements attached as
Exhibits hereto or referred to herein.
Section 7.4 Amendment. This Agreement may not be amended except by an instrument
in writing signed by all parties.
Section 7.5 Severability. To the full extent possible each provision of this
Agreement shall be interpreted in such fashion as to be effective and valid
under applicable law. If any provision of this Agreement is declared void or
unenforceable with respect to any particular circumstances, such provision shall
remain in full force and effect in all other circumstances. If any provision of
this Agreement is declared void or unenforceable, such provisions shall be
deemed severed from this Agreement and this Agreement shall otherwise remain in
full force and effect.
Section 7.6 No Third Party Beneficiary. Nothing contained in this Agreement is
intended to benefit or confer any rights on any person or entity not a party to
this Agreement, and no such other person or entity shall have the right or cause
of action hereunder.
Section 7.7 Time. Time is of the Essence of this Agreement.
Section 7.8 Further Instruments and Acts. Each party shall execute and deliver
such further instruments and shall perform such further acts as reasonably may
be necessary or appropriate to effectuate the intents of this Agreement.
Section 7.9 Litigation If a dispute arises out of, concerns or relates to this
Agreement, or the breach thereof, and if the dispute cannot be settled through
negotiation, the parties agree first to try in good faith to settle the dispute
by mediation administered by the American Arbitration Association under its
Commercial Mediation Rules. If the dispute cannot be settled through negotiation
or mediation, the Parties agree to submit the dispute to binding arbitration
administered by the American Arbitration Association under its Commercial
Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction thereof.
Section 7.10 Notices. Any notices that may be required under this Agreement
shall be in writing and shall be given by personal delivery, delivery by an
overnight courier, or by certified or registered United States mail, return
receipt requested, to the addresses set forth below, or to such other addresses
as may be specified from time ti time in writing and shall be effective on the
earlier of the date or personal or courier delivery or five days following
deposit in the United States mail:
If to Buyer: Jerry Washburn
President
OneSource Technologies, Inc.
2329 West Mescal
Suite 1
Phoenix, Arizona 85029
With a copy to: James A. Deer, Esq.
16060 North 81st Street
Scottsdale, Arizona 85260
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If to Sellers: Ahlawyss H. Fulton
Pamela R. Fulton
9201 North 29th Avenue
Suite 302
Phoenix, Arizona 85051
Section 7.11 Binding Effect. Subject to the terms and provisions of this
Agreement, this Agreement shall be binding upon, and inure to the benefit of,
the parties hereto, and to any successors to or assigns of Buyer and Seller's
heirs and the personal representatives of Seller's estate.
Section 7.12 Waiver. The failure of any party to exercise any right or remedy
arising out of a breach of the Agreement by the other party shall not be deemed
a waiver of any right or remedy with respect to any subsequent or different
breach, or the continuance of any existing breach.
Section 7.13 Nonassignability. This agreement may not be assigned by either
party without the prior written consent of the other party and any assignment
made without such consent shall be void and unenforceable.
Section 7.14 Construction. This Agreement is intended to express the mutual
intent of the parties and, irrespective of the identity of the party preparing
this agreement or any document or instrument referred to herein, no rule of
strict construction against the party preparing any document shall be applied.
Section 7.15 Incorporation of Recitals and Exhibits. The recitals set forth
above and all exhibits attached hereto are incorporated into this Agreement by
reference and made a part hereof.
Section 7.16 Expense and Broker's Fees. The parties shall each bear their own
costs, including attorneys' fees and accounting fees, incurred in connection
with the negotiation, due diligence and preparation of this Agreement, the
Closing of this transaction, and all matters incident thereto. Buyer and Sellers
each represent and warrant that they have not employed any broker in connection
with this transaction and that the payment of any commission(s) due brokers or
finders in connection this transaction shall be the sole responsibility of the
party who engaged the Broker.
Section 7.17 Publicity. The parties agree to cooperate as to the timing and
content of any announcement of this transaction to the public or to the
employees or customers.
Section 7.18 No Joint Venture. The relationship between the Parties is that of
the Buyer and Seller. Except as expressly set forth in the Employment agreement,
executed as of the joint venture, or partner relationship between the Parties
IN WITNESS WHEREOF the parties have executed this Agreement as of the date first
written above.
"SELLERS" "BUYERS"
/s/ Ahlawyss Fulton ONESOURCE TECHNOLOGIES, INC.
------------------------
Ahlawyss Fulton
/s/ Pamela Fulton /s/ Donald Gause
------------------------ ------------------------
Pamela Fulton Donald Gause,
Secretary/Treasurer
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