Exhibit 10.20
OPTION AGREEMENT
THIS AGREEMENT, made as of this 1st day of June 2000, by and between OneSource
Technologies, Inc., a Delaware Corporation with offices located at 7419 East
Helm Drive, Scottsdale, AZ 785260 ("Company") and XCEL ASSOCIATES, Inc., a New
Jersey Corporation with the office's located at 224 Middle Road, Hazlet, New
Jersey 07730 and 2517 Durango Drive, Colorado Springs, Colorado 80910, a
consultant to the Company (the "Optionee").
WITNESSETH
WHEREAS, the Board of Directors of the Company believes that the
interests of the Company will be advanced by granting an incentive to the
Optionee by providing him with the opportunity to purchase shares of the
Comapny's Common Stock, par value $0.001 per share ("Common Stock"), on terms
which will give him a more direct and continuing interest in the future success
of the Company's business:
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties agree as follows:
1. Grant of Options. Subject to all terms and conditions of this Agreement,
the Company hereby grants to the Optionee the right and option (the "Option") to
purchase all or any part of an aggregate of two million (2,000,000) freely
tradable shares of OSTK pursuant to and S-3 Registration or an acceptable
exemption at a price of Fifty Cents ($0.50) per share.
2. Expiration. The Option may not be exercised after June 1, 2001 (the
"Expiration Date"). Unless XAI introduces or arranges for an acceptable
secondary offering approved by OSTK at which time the remaining option shall
automatically extend for an additional two years and expire on June 1, 2003.
3. Exercise of Option. The Option may be exercised, in whole or part, at
any time prior to the Expiration Date or the earlier termination of the Option.
If the Option id not exercised to the maximum extent permissible, it shall be
exercisable, in whole or part, with respect to all Shares not so purchased at
any time prior to the Expiration Date or the earlier termination of the Option.
4. Payment of Purchase Price Upon Exercise. The Option granted under this
Agreement may be exercised in whole or part by the Optionee's delivering or
mailing to the Company at its principal office, or at such other place as the
Company may designate, written notice of exercise duly signed bu the Optionee.
Such exercise shall be effective upon (a) receipt of such written notice by the
Company and (b) payment to the Company of the full purchase price in cash.
5. Issuance and Delivery. The Optionee's written notice to the company
shall state the number of Shares with respect to which the Option is being
exercised and specify a date, not less than five (5) or more than fifteen (15)
days after the date of the mailing of such notice, on which the
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Shares will be taken and payment made therefor. On the date specified in the
notice of exercise, the Company shall deliver, or cause to be delivered, to the
Optionee (or his personal representative, as the case may be) stock certificates
for the number of Shares with respect to which the Option is being exercised,
against receipt of payment therefor. Certificates evidencing the Shares issued
upon exercise of the Option may contain such legends reflecting any restrictions
upon transfer of the Shares evidenced thereby as in the opinion of counsel to
the Company may be necessary for the lawful and proper issuance of such
certificates. Delivery of the Shares may be made at the office of the Company or
at the office of a transfer agent appointed for the transfer of shares of Common
Stock.
6. Transferability. The Option shall not be transferable otherwise than by
will or by the laws of descent and distribution. The Option shall not be
subject, in whole or in part, to attachment, execution or levy any kind.
7. No Rights as a Shareholder. Neither the Optionee nor his legal
representative shall be, nor have any of the rights or privileges of, a
shareholder of the Company in respect to any of the Shares, unless and until
certificates representing such Shares shall have been issued and delivered to
the Optionee (or his legal representative).
8. Adjustment. (a) In case, prior ti the expiration of the Option by
exercise or by its terms, the Company shall issue any shares of its Common Stock
as a stock dividend or subdivide the number of outstanding shares of Common
Stock into a greater number of shares, then, in either of such cases, the
purchase price per share of the Shares issuable upon exercise of the Option in
effect at the time of such action shall be proportionately reduced and the
number of Shares st the time purchasable pursuant to the Option shall be
proportionately increased; and conversely, in the event the Company shall
contract the number of shares, then, in such case, the purchase price per share
of the shares issuable upon exercise of the Option in effect at the time of such
action shall be shall be proportionately increased and the number of Shares at
the time purchasable pursuant to Option shall be proportionately decreased. Any
dividend paid or distributed upon the Common Stock shall be treated as a
dividend paid in Common Stock to the extent that shares of Common Stock are
issuable upon the conversion thereof.
(b) In case, prior to the expiration of this Option by exercise or
by its terms, there shall be a recapitalization, whether by reorganization,
reclassification or otherwise of the capital of the Company, or the Company or a
successor corporation shall be consolidated or merge with or convey all
substantially all of its or of any successor corporation's property and assets
to any other corporation or corporations (any such corporation being included
within the meaning of the term "successor corporation" in the event of any
consolidation or merger of any such corporation with, or the sale of all or
substantially all of the property of any such corporation with, or the sale of
all or substantially all of the property of any such corporation to, another
corporation, the Optionee shall thereafter have the right to purchase upon the
terms and conditions and during the time specified in this Option, in lieu of
the Shares theretofore purchasable upon the exercise of this Option, the kind
and amount of shares of stock and other securities receivable upon such
recapitalization or consolidation, merger or conveyance by a holder of the
number of shares of Common Stock which the Optionee might have purchased
immediately prior to such recapitalization or consolidation, merger or
conveyance.
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9. Sale of the Company. (a) Notwithstanding any provision in this Agreement
to the contrary, in the event of a Sale of the Company (as defined in paragraph
(b) below), the Option, at the election of the Company, shall be terminated and
the Optionee shall receive an amount in cash equal to the differences between
the purchase price in effect at the time of such Sale of the Company and the
Fair Market Value (as defined in paragraph (b) below) of the Shares subject to
the then remaining unexercised portion of the Option.
(b) For the purposes of this Section 9 the following terms shall
have the indicated meanings:
(i) "Sale of the Company" means a Change of Control of the
Company (as defined in clause (ii) below) or a sale of all of the assets of the
Company in a single transaction or a series of related transactions.
(ii) "Fair Market Value" per share on any given date means
the average of the closing prices of the sales of the Common Stock on all
securities exchanges on which such stock may at the time be listed, or, if there
have been no sales on any such exchanges at the end of such day, or, if on any
day the Common stock is not so listed, the average of the representative bid and
asked prices quoted on the Nasdaq Stock Market as of 4:00 P.M., New York time,
or , if on any day the Common Stock is not quoted on the Nasdaq Stock Market,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization. If at any time the Common
Stock is not listed or quoted, the Fair Market Value per share shall be
determined by the Board of Directors of the Company in good faith based on such
factors as the members thereof, in the exercise of their business judgment,
consider relevant.
10. Compliance with Law and Regulations. The Option and the obligation of
the Company to sell and deliver Shares hereunder shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any governmental or regulatory agency as may be required. The Company shall
not be required to issue or deliver any certificates for shares prior to (i) the
listing of such Shares on any stock exchange on which the Common Stock may then
be listed and (ii) the completion of any registration or qualification of such
Shares under any federal or state law, or any rule or regulation of any
government body which the Board of Directors of the Company shall, in its sole
discretion, determine to be necessary or advisable. Moreover, the Option may not
be exercised if its exercise or the receipt of Shares pursuant thereto, would be
contrary to applicable law.
11. Investment Representation. The Board of Directors of the Company may
require the Optionee to furnish to the Company, prior to the issuance of any
Shares upon the exercise of any Option, an agreement (in such form as the Board
of Directors may specify) in which the Optionee represents that the Shares
acquired by the Optionee upon exercise are being acquired for investment and not
with a view to the sale or distribution thereof.
12. Continued Services. Neither this Agreement nor any Option granted
hereunder shall confer upon the Optionee any right to continue to render
services to the Company or any subsidiary of the Company, or limit in any
respect the right of the Company, the board of Directors of the Company, or any
subsidiary of the Company to terminate the services of the Optionee at any time.
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13. Notices. Any notice hereunder to the Company shall be addressed to it
at its offices, 7419 East Helm Drive, Scottsdale, AZ 85260 and any notice
hereunder to Optionee shall be addressed to Edward T. Whelan, President, at 224
Middle Road, 2nd floor, Hazlet, New Jersey 07730, subject to the right of either
party to designate at any time hereafter in writing some other address.
14. Governing Law. This Agreement shall be interpreted, and the rights and
liabilities of the parties hereto determined , in accordance with the internal
laws of the State of neutral jurisdiction of Arizona, without regard to the
conflicts of law principles thereof.
15. Counterparts. This Agreement may be executed in two counterparts each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have signed this Agreement as of the
date and year first above written.
ONESOURCE TECHNOLOGIES, INC.
By: /s/ Jerry Wshburn
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Mr. Jerry Washburn, President
XCEL ASSOCIATES, INC.
By: /s/ E. T. Whelan
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Edward T. Whelan, President
