EXHIBIT 10.37
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SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release (the "Agreement") is entered
into this 19th day of May, 2003 by and between OneSource Technologies, Inc.
("OneSource") and Ahlawyss and Xxxxxx Xxxxxx, (the "Fultons")(OneSource and the
Fultons are collectively referred to as the "Parties").
WITNESSETH
Whereas, OneSource entered into a Stock Exchange Agreement on April 15,
1999 with the Fultons for the purchase of their entire interest in Net Express,
Inc. for the consideration of 727,946 shares of OneSource common voting stock
and an employment contract for the continued employment of Xx Xxxxxx by Net
Express; and
Whereas, pursuant to the Stock Exchange Agreement the stock of Net Express
was accepted by OneSource subject to certain liabilities including liabilities
to Sun Trust Credit (Textron) and to Transource, which liabilities were
personally guaranteed by Xxxxxx; and
Whereas, in the course of his employment with Net Express, Xxxxxx
personally guaranteed certain other credit lines and liabilities for Net
Express, including Bank One Arizona, Key Bank/Costco, Sun Trust/Textron,
Advanta, GE Capital, and Capital One, which liabilities have not been paid by
Net Express or Xxxxxx; and
Whereas, pursuant to the Stock Exchange Agreement Xxxxxx has made claims
against OneSource for indemnity for his personal guarantees and indebtednesses
incurred on behalf of Net Express, and OneSource has disputed the applicability
of the provisions of the Stock Exchange Agreement to provide the claimed
indemnity; and
Whereas, OneSource, Net Express, and Xxxxxx were sued by Bank One, Arizona
in a case entitled Bank One Arizona vs. OneSource Technologies, et al, Maricopa
County Superior Court Case No. CV2000-003676 (hereafter "the Litigation"), in
which case the Fultons filed crossclaims against OneSource seeking indemnity
from OneSource for all credit lines and liabilities which Xxxxxx'x had
personally guaranteed on behalf of OneSource or Net Express, and OneSource filed
its Answer and Counterclaim alleging damages against Xxxxxx due to mismanagement
of Net Express; and
Whereas, the Parties hereto desire to settle, compromise, release, and
forever discharge all matters in dispute between them in regard to the Stock
Exchange Agreement, the Employment Agreement, and any agreements related
thereto, the Litigation, and any other cause or causes of action which could
have been asserted therein, or which may have been asserted by either party
against the other, whether such matters have or have not been raised in the
pleadings, all upon the terms and conditions appearing in this Agreement;
Now, Therefore, and in consideration of the foregoing recitals and in
accordance with the following terms and conditions, the Parties hereto agree as
follows:
AGREEMENTS
1. Settlement Of Litigation And Consideration. The Parties agree for the
consideration stated herein to dismiss their counterclaims and
crossclaims in the Litigation with prejudice to their rights to refile.
As consideration for the settlement, release, and the covenants and
conditions herein on the part of Xxxxxx, OneSource agrees to pay to
Xxxxxx the sum of Sixty thousand ($60,000.00) dollars which shall be
payable as set forth below, and to deliver the other consideration as
stated herein:
a.) Within ten (10) days of the execution of this Agreement, OneSource
agrees to pay to Xxxxxx by company check the sum of Two thousand five
hundred ($2,500.00) dollars. On the fifteenth day of May, and on the
fifteenth day of each month thereafter, through the fifteenth day of
March, 2004 OneSource shall pay by company check the sum of Two
thousand five hundred ($2,500.00) dollars each and every month, such
that the total of all cash payments is Thirty thousand ($30,000.00)
dollars. Upon receipt of written notice by Xxxxxx directing OneSource
to pay the amounts provided in this paragraph by joint check to Xxxxxx
and bank One Arizona, OneSource agrees to make all further payments in
the name of the joint parties. OneSource shall not be deemed by the
terms of this Agreement to have undertaken liability to Bank One
Arizona or to any other creditor of Xxxxxx.
b.) Concurrently with the execution of this Agreement, OneSource shall
deliver to Xxxxxx an originally executed promissory note in the
principal amount of Thirty thousand ($30.000.00) dollars, payable in
one single sum on April 15, 2004 and convertible at the option of
Xxxxxx to shares of One Source Technologies, Inc. common voting stock
in accordance with its provisions. The form of this Promissory Note is
attached hereto as Exhibit "A".
c.) Within thirty (30) days of the execution of this Agreement, together
with the execution and delivery of the Subscription Agreement by
Xxxxxx, in form as set forth as Exhibit "B", OneSource agrees to
deliver to Xxxxxx a stock certificate for One million (1,000,000)
shares of OneSource common voting stock registered in the names of the
Fultons as provided in the Subscription Agreement.
d.) Within thirty (30) business days of the execution of this Agreement, a
Stipulation of Judgment in the amount of Sixty thousand ($60,000.00)
dollars and no cents in the form annexed hereto as Exhibit "C" signed
by counsel on behalf of OneSource and the Fultons shall be filed in
the Litigation. The parties simultaneously with the execution of the
Judgment, shall execute a Covenant Not to Execute or Record the
Judgment so long as OneSource performs in accordance with the
provisions of this Agreement. Within ten (10) days of the final
performance required by OneSource herein, the Fultons shall file a
2
Satisfaction of Judgment with the Court. In the event of a default,
which shall be deemed to occur thirty (30) days after notice of breach
of any provision of this Agreement has been given to OneSource in
writing by Xxxxxx and OneSource has failed within that time frame to
cure the default, Xxxxxx may record and seek execution on the
Judgment. OneSource agrees, in the event of its default, as defined
herein, to a Judgment Debtor Examination within thirty days of the
date of default.
e.) The parties each agree to pay their own attorney's fees. OneSource
agrees to pay to Xxxxxx, upon presentation of receipts therefore,
Xxxxxx'x filing fees, and any fees incurred by Xxxxxx in service of
process.
2. Mutual Release of Liability.
a.) Fultons hereby release and forever discharge, on their behalf, and on
behalf of their heirs, executors, administrators, and assigns
OneSource and any of its subsidiary corporations, and all of their
respective employees, officers, directors, agents, attorneys,
successors, assigns, and representatives from any and all rights,
claims, liabilities, demands or damages of any kind whatsoever,
whether known or unknown, resulting without limitation from the Stock
Exchange Agreement, the Employment Agreement, the employment of Xxxxxx
as President of Net Express, or any other dealings between the
Parties, arising at any time whatsoever prior to the date of this
Agreement.
b.) OneSource hereby releases and forever discharges, on behalf of itself,
and on behalf of its successors, administrators, and assigns, the
Fultons, their heirs, successors, and assigns from any and all rights,
claims, liabilities, demands or damages of any kind, known or unknown,
resulting from the Stock Exchange Agreement, the Employment Agreement,
the employment of Xxxxxx as President of Net Express, or any other
dealings between the Parties, arising at any time whatsoever prior to
the date of this Agreement, with the exception of the matters set
forth in the indemnity by Xxxxxx in paragraph 3 below.
3. Indemnity. Xxxxxx agrees to fully indemnify and hold OneSource harmless
from any and all claims, liabilities, demands, damages or causes of action
of any kind arising out of any claims by Key Bank/Costco, Sun
Trust/Textron, Advanta, GE Capital, Capital One, or any other creditor
relating to any loan or credit agreements which the Fultons have signed
with a personal guarantee on behalf of OneSource or Net Express with any of
those entities. Except for such matters as are set forth in the indemnity
of Xxxxxx, OneSource agrees to indemnify and defend Xxxxxx and to hold them
harmless from any and all claims, demands, or causes of action to the same
extent that OneSource currently indemnifies its officers and directors,
which may be brought, threatened, or pending against it by reason of any
actions by OneSource or any of its officers, directors or employees up to
the date of this Agreement.
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4. Securities Provisions. Xxxxxx agrees to accept the stock set forth in
paragraph 1(c) above in unregistered form with standard legends currently
used by OneSource for similar securities transactions in accordance with
the provisions set forth in the Subscription Agreement. The shares, when
issued, shall be fully paid and non-assessable. The Fultons agrees to
execute OneSource's standard Subscription Agreement as provided above, and
in form as attached hereto. OneSource agrees to register the shares set
forth in paragraph 1 (c ) above, together with any shares acquired by
Xxxxxx through the exercise of the conversion of the promissory note in the
first registration of any stock registered by OneSource with the Securities
and Exchange Commission following the acquisition of the stock by Xxxxxx.
OneSource shall, during the performance of any obligation set forth in this
Agreement, file quarterly financial statements with the Securities and
Exchange Commission. In the event that such statements are not filed,
OneSource will, during the performance of any obligation set forth in this
Agreement, supply to Xxxxxx a quarterly financial statement, which shall be
in audited or reviewed form if available. If audited or reviewed statements
are not available, such unaudited financial statements as are used by
management shall be supplied.
5. Warranties and Representations of the Parties:
a.) The Parties represent, warrant, and agree that they are the sole
owners of all right, title, and interest in and to every claim or
matter released herein, and have not assigned or transferred to any
person or entity any claim or other matter released herein.
b.) Each of the Parties represents, warrants, and agrees that the recitals
as set forth in the preamble to this Agreement are true and correct as
to themselves and that there are no undisclosed liabilities which,
based upon personal guarantees of Xxxxxx, could be asserted against
OneSource and each Party agrees that the recitals are incorporated
herein as if fully set forth in the text of this Agreement.
c.) Each of the Parties represents and warrants that the person signing
this Agreement on its behalf is duly authorized to execute this
Agreement on behalf of the Party and that this Agreement constitutes a
valid and binding obligation.
d.) Each Party acknowledges that this Agreement has been entered into for
the sole purpose of avoiding the expense, uncertainty, and
inconvenience associated with the Litigation. Each Party further
agrees that this Agreement shall not constitute an admission of
liability and may not be used by any other Party or person including
creditors of Xxxxxx, Net Express or OneSource as evidence of an
admission of liability by any Party or anyone claiming in the right of
any party in any subsequent dispute between the Parties or otherwise
other than in an action for breach of this Agreement or seeking
enforcement of this Agreement.
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6. Non Disparagement. The Parties agree that neither Party shall make
disparaging remarks against the other or any employee or ex-employee of the
other and that, to the best of their ability, they shall discourage all
employees and ex-employees from making any such remarks.
7. Construction. In preparing and executing this Agreement, each Party was
represented by counsel. The terms and provisions of this Agreement shall be
interpreted and construed in accordance with their usual and customary
meanings and each Party specifically waives any rule of law which would
cause this Agreement to be interpreted against any Party whose attorney
prepared the Agreement.
8. Entire Agreement. Except for such Exhibits as are attached hereto, this
Agreement represents the entire agreement between the parties with respect
to the subject matter hereof and supercedes any prior agreement,
understanding, negotiation, or representation regarding the transactions
contemplated by this Agreement.
9. Attorneys Fees. In the event of a breach of this Agreement, which results
in the commencement of any subsequent legal action or arbitration
proceeding, the prevailing party in such dispute shall be entitled to
reimbursement of reasonable attorney's fees and court costs and other
reasonable and necessary costs of the proceeding.
10. Counterparts. This Agreement maybe executed in two counterparts, each of
which when executed and delivered shall be deemed an original, and all such
counterparts shall constitute one and the same instrument. Transmittal by
facsimile of a signed counterpart shall be deemed to constitute the
delivery of a fully executed counterpart to the recipient.
11. Cooperation. Each of the Parties further agrees that it or they shall
execute and deliver to the other Party all instruments and do such further
acts and things as the other Party may reasonably request when such things
are necessary to effectuate the purpose of this Agreement.
Dated this ____ day of May, 2003.
OneSource Technologies, Inc. Ahlawyss Xxxxxx
By:
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Its: Xxxxxx Xxxxxx
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A
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THIS SECURITY AND THE SECURITY INTO WHICH IT MAY BE CONVERTIBLE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED OTHER THAN TO AFFILIATES
OF HOLDER HEREOF UNLESS AND UNTIL REGISTERED UNDER THE ACT OR IN AN OPINION OF
COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE FOR SUCH
OFFER, SALE, OR TRANSFER, PLEDGE OR HYPOTHECATION
Promissory Note
(Convertible to Common Stock)
Principal Amount: $30,000
Date of Note Agreement: April 15, 2003
Parties:
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The Maker is OneSource Technologies, Inc. The Holders are Ahlawyss and Xxxxxx
Xxxxxx (the "Fultons").
Loan Agreement:
----------------
In consideration for the settlement of litigation, and the promises as set forth
in the Settlement Agreement and Release executed concurrently herewith, Maker
promises to pay to the Fultons (Holders), or order, in lawful money of the
United States of America, the principal amount of Thirty thousand ($30,000)
dollars and no cents without interest on the payment date as set forth herein.
Payments:
---------
Maker will pay the principal of this Note in one single sum payment due April
15, 2004. All payments under this Note shall be made to Holder, as Ahlawyss and
Xxxxxx Xxxxxx, 0000 X.Xxx Xx Xxxxxx, Xxxxxxx, XX 00000 or to such other address
as Holder shall provide to Maker in writing.
Conversion Option:
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On or prior to the payment due date as set forth above, Holders may convert all
or any portion of the outstanding principal balance of this Note to shares of
common voting stock of OneSource Technologies, Inc. at a conversion price of
Five ($.05) per common share. This option may be exercised by written notice
specifying the amount of the principal to be converted addressed to the
President or Secretary of Maker and mailed or sent so that it is received at
Makers office on or before 5:00 p.m., Mountain Standard Time on April 15, 2004.
The Holders agree to execute a subscription agreement for the shares in the form
commonly used by the Maker for its securities sales. Holders agree to receive
the shares in unregistered form subject to the standard legend for unregistered
securities used by the Maker on similar sales of unregistered securities.
Adjustments:
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In the event of any capital adjustment resulting from a stock split, reverse
stock split, stock dividend, reorganization, merger, consolidation, or a
combination, reclassification, or exchange of shares of common stock or any
other increase or decrease in the number of issued shares of of common stock,
the number and kind of shares into which this Note may be converted and the
conversion price per share shall not be adjusted, provided that, should holders
of the common voting shares of the Maker be accorded any anti-dilution
protection, the Holders shall be entitled to the same protection for their
option to convert, the conversion price, and any shares into which the principal
of the Note is converted.
Default:
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Maker will be in default if:
a) Maker fails to make any payment due hereunder within ten (10) days of
written notice by Holder to Maker to make any late payment;
b) Maker fails to perform when due any other term, obligation, covenant
or condition contained in this Note;
c) Maker becomes insolvent, a receiver is appointed for any part of
Maker's property, Maker makes an assignment for the benefit of
creditors, or any proceeding is commenced by Maker or against Maker
under any bankruptcy or insolvency laws.
If any default, other than a default in payment is curable and Maker has not
been given notice of a breach of the same provision of this Note within the
proceeding twelve (12) months, it will be cured if Maker, after receiving
written notice from Holder demanding cure of the default:
a) Cures the default within thirty (30) days, or
b) If the cure requires more than thirty (30) days, immediately initiates
steps sufficient to cure the default and continues and completes the
cure as soon as reasonably practicable.
Holder's Rights:
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Upon default, Holder may declare the entire unpaid principal balance on this
Note and all accrued and unpaid interest immediately due and payable. Holder may
increase the interest rate to a default rate of seven percent (7%).. Holder may
exercise any remedy or remedies provided in this Note or under Arizona law in
any order.
Holder's Expenses:
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In the event Holder utilizes the services of an attorney in attempting to
collect the amounts due hereunder or to enforce the terms hereof or of any
agreements related to this indebtedness, Maker shall pay to Holder, on demand,
all costs and expenses so incurred, including reasonable attorney's fees,
including those costs, expenses and attorney's fees incurred after the entry of
judgement herein or the filing by or against Maker of any proceeding under any
chapter of the Bankruptcy Code, or similar federal or state statutes, and
whether incurred in connection with the involvement of any Holder hereof as
creditor in such proceedings or otherwise.
Law Applicable:
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This Note shall be construed under the laws of the State of Arizona.
A-2
General Provisions:
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Holder may delay or forgo enforcing any of its rights or remedies under this
Note without losing them. Maker, to the extent permitted by law, waives
presentment, demand for payment, protest, or notice of dishonor. Holder may
renew or extend this loan, release any party or collateral, or fail to realize
upon or perfect a Holder's security interest in any collateral, and to take any
action deemed necessary by Holder without consent or notice to anyone except as
provided herein.
Assignment.
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This Note shall be non-assignable.
IN WITNESS WHEREOF, the Maker has caused this Note to be signed in its name this
_____ day of April, 2003.
Maker
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OneSource Technologies, Inc.
By:
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Its:
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A-3
B
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OneSource Technologies, Inc.
0000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxx Xxxxxxxx
Re: Purchase of 1,000,000 Shares of One Source Technologies, inc. Common Stock
Gentlemen:
In connection with the issuance of the referenced stock as partial consideration
for the settlement of the claims as between OneSource Technologies, Inc. (the "
Company") and Ahlawyse Xxxxxx and Xxxxxx Xxxxxx (the "Purchasers" or the
Undersigned") in the litigation entitled Bank one Arizona v. Net Express, Inc.
et al, the Purchasers hereby represent and warrant to the Company and to each
officer, director, controlling person, and agent of the foregoing as follows:
A. REPRESENTATION OF THE INVESTOR
1. The undersigned understands the risks of, and other considerations relating
to the purchase of and holding of the Shares of the Company's Common Stock
(the "Shares").
2. The undersigned is purchasing the shares for the undersigned's own account,
with the intention of holding the Shares for investment, with no present
intention of dividing or allowing others to participate in this investment,
or of reselling or otherwise participating directly or indirectly, in a
distribution of the Shares. The undersigned agrees not to transfer any of
the Shares unless they are registered under the provisions of the
Securities Act of 1933 and any applicable securities laws of any state,
unless an exemption from registration is available under those laws.
3. The undersigned has knowledge of the business affairs of the Company and
has made an independent evaluation of the merits of the securities and
acknowledges the high risk of the securities.
4. The undersigned understands that the provisions of Rule 144 promulgated
under the Act are not available to permit the resale of the Shares, until
the prescribed waiting period has expired and routine sales made in
reliance on its provisions could be made only in limited amounts and in
accordance with the terms and conditions of the Rule. The undersigned
further understands that in connection with sales of Shares for which Rule
144 is not available, registration or compliance with some other
registration exemption will be required. Rights to registration of the
Shares are as provided in the Settlement Agreement and Mutual Release.
5. The undersigned understands and agrees that stop transfer instructions will
be given to the Company's transfer agent and agrees that a legend will be
placed on the certificates for the Shares or any substitutions therefore,
the legend stating as follows:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
LAWS OF ANY STATE, IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH LAWS. THESE SHARES MAY NOT BE TRANSFERRED
NOR WILL ANY ASSIGNEE OR ENDORSEE HEREOF BE RECOGNIZED AS AN OWNER HEREOF
BY THE ISSUER FOR ANY PURPOSES, EXCEPT IN TRANSACTIONS REGISTERED UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS UNLESS THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS WITH RESEPCT TO ANY PROPOSED TRANSFER OR DISPOSITION OF
SUCH SHARES SHALL BE ESTABLISHED TO THE SATISFACTION OF COUNSEL TO THE
ISSUER."
The undersigned understands and agrees that the Company may refuse to
permit the transfer of Shares out of the investors name and that the Shares
must be held indefinitely in the absence of compliance with the terms of
such legend.
6. The undersigned represents, if an individual, that the undersigned is at
least 21 years of age.
7. The undersigned is not subscribing to the Shares as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any
solicitation of a subscription by a person not previously known to the
undersigned in connection with investments in Shares generally.
B-2
B. INDEMNIFICATION
The undersigned agrees to indemnify and hold harmless the Company, its
officers, directors, agents and shareholders and any other person who may
be deemed to control the Company from any loss, liability, claim, damage or
expense, arising out of the inaccuracy of any of the above representations,
warranties or statements or the breach of the agreements contained herein.
C. GENERAL
This Investment Letter (i) shall be binding upon the undersigned and the
heirs, legal representatives, successors, and assigns of the undersigned,
(ii) shall be governed, construed and enforced in accordance with the laws
of the State of Arizona applicable to contracts entered into and wholly to
be performed in Arizona by Arizona residents (except insofar as affected by
the state securities or "blue sky" laws), and (iii) shall survive the sale
of the Shares.
Sincerely yours,
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--------------------------------
Please register my shares as follows:
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Name or Names of Purchasers
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EIN Number
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Xxxxxx Xxxxxxx
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Xxxx, Xxxxx and Zip Code
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C
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Xxxxx X. Deer
State Bar No. 4187
0000 Xxxx Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
(000) 000-0000 Fax: (000) 000-0000 Attorney for Defendant
OneSource Technologies, Inc.
IN THE SUPERIOR COURT OF THE STATE OF ARIZONA
IN AND FOR THE COUNTY OF MARICOPA
BANK ONE Arizona, N.A., a national ) CV2001-003676
Banking association, )
)
Plaintiff, ) STIPULATION REGARDING JUDGMENT
) AND EXECUTION UPON JUDGMENT
vs. )
)
NET EXPRESS, INC., an Arizona )
Corporation; ONESOURCE )
TECHNOLOGIES, INC., an Arizona )
corporation; AHLAWYSE X. XXXXXX and )
XXXXXX X. XXXXXX, as husband and )
Wife )
)
Defendants. )
------------------------------------)
Crossclaimants, Ahlawyse X. Xxxxxx and Xxxxxx Xxxxxx, and Crossdefendant
OneSource Technologies, Inc., by their respective attorneys undersigned, hereby
stipulate as follows: 1. Judgment in this matter shall be entered in favor of
the Crossclaimants and against the Crossdefendant in the amount of Sixty
Thousand Dollars ($60,000.00) plus costs in the amount of Eight hundred and
eight dollars and forty nine cents ($808.49), without interest if paid in
accordance with this Stipulation Regarding Judgment and Execution Upon Judgment
(the "Stipulation"), such Judgment (the "Judgment") to be in the form
concurrently lodged herewith, which shall be signed by the Court, but which
Crossclaimants agree not to record or execute upon, except in accordance with
this Stipulation.
2. Crossclaimants and Crossdefendant will make certain payments in
satisfaction of such Judgment, in exchange for which Crossclaimants
covenant that they will not record the Judgment or seek to execute upon the
Judgment as against Crossdefendant.
3. The Crossdefendant covenants and agrees that it shall make (or cause to be
made) the following payments on the following dates:
a. Within ten (10) days of the execution of the Stipulation,
Crossdefendant agrees to pay to Crossplaintiffs the sum of Two
Thousand Five Hundred Dollars ($2,500.00);
b. On the fifteenth (15th) day of May, 2003 and on the fifteenth (15th)
day of each month thereafter, with the final payment being due on
March 15, 2004, Crossdefendant agrees to pay to Crossplaintiffs the
sum of Two Thousand Five Hundred Dollars ($2,500.00)
c. On the 15th day of April, 2004, Crossdefendant agrees to pay to
Crossplaintiffs, the sum of Thirty Thousand Dollars ($30,000.00)
unless advised prior to that date in writing by Crossplaintiffs that
they wish to exercise a conversion option as set forth in the
Promissory Note which was executed by Crossdefendants as evidence of
this obligation.
4. Upon payment of all sums called for by paragraph 3 above, or alternate
performance as requested by Crossplaintiffs pursuant to the conversion
option in the Promissory Note, Crossplaintiffs will execute a full and
complete Satisfaction of Judgment showing the Judgment entered in this case
(and any judgment arising from or predicated upon the entry of such
Judgment) to have been satisfied and discharged in full, and will deliver
such Satisfaction of Judgment, together with the original of the Promissory
Note marked "paid in full" to Crossdefendant or to its designee.
C-2
5. So long as Crossdefendant makes payment in Satisfaction of
Judgment in accordance with the schedule set forth in paragraph
(3) above, Crossplaintiffs covenant that they will not seek to
exercise any right, remedy, entitlement or relief, including but
not limited to execution, attachment, or garnishment, arising by
virtue of the entry of Judgment or by virtue of any Judgment
arising from or predicated upon the entry of the Judgment. In the
event of any failure of the Crossdefendant to make any payment
provided for in paragraph 3, in full, and if such failure
continues for thirty (30) days after notice to Crossdefendant in
the manner provided in paragraph (7) below, Crossplaintiff may
proceed immediately and without notice or demand to execute upon
or otherwise enforce the Judgment (or any Judgment arising from or
predicated upon the entry of the Judgment) in such manner and at
such times as Crossplaintiff deems appropriate. In such event,
Crossdefendant shall be entitled only to a credit against the
Judgment for any amounts actually paid pursuant to paragraph (3)
above.
6. Any notice or demand or other communication required or appropriate to be
given pursuant to this Stipulation shall be in writing and shall be sent by
certified U.S. Mail, postage prepaid, addressed as follows:
To Crossplaintiff: Ahlawyse and Xxxxxx Xxxxxx
0000 X. Xxx Xx Xxxxxx
Xxxxxxx, XX 00000
With copy to: Xxxxx X. Leather
Xxxxxx & Leather & Assoc.
00000 X. 00xx Xxxxxx, Xxxxx 0
Xxxxxxx, XX 00000
To Crossdefendant: Xxx Xxxxxxxx
OneSource Technologies, Inc.
0000 X. Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
C-3
With copy to: Xxxxx X. Deer
0000 X. Xxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Or at such other address as the party desiring to change its address may direct
by written notice to the parties. 7. Each payment due from the Crossdefendant
shall be in the form of a company check made payable to the order of Ahlawyse
and Xxxxxx Xxxxxx and Bank One Arizona, and delivered to the office of Xxxxxx &
Leather & Associates at the address shown in the preceeding paragraph, unless
and until Crossplaintiffs in writing delivered pursuant to the notice provisions
shall direct.
8. This Stipulation shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, personal representatives
and assigns. This Stipulation, together with the Settlement Agreement and Mutual
Release, the Promissory Note, and the Subscription Agreement, set forth the
entire agreement of the parties with respect to the subject matter hereof and no
provision hereof may be changed, modified, discharged or terminated except by a
document in writing, signed by the parties.
Dated this ______ day of May, 2003.
Xxxxxx & Leather & Associates
By: /s/ Xxxxx X. Leather
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Xxxxx X. Leather
Attorney for Crossplaintiff
Xxxxx X. Deer Law Office
By: /s/ Xxxxx X. Deer
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Xxxxx X. Deer
Attorney for Crossdefendant
C-4
D
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STATEMENT OF REGISTRATION RIGHTS
THIS STATEMENT OF REGISTRATION RIGHTS (the "Statement"), is dated as of the
___ day of _______________, 2003.
WHEREAS, In connection with the provisions of a Settlement Agreement and
Mutual Release (the "Settlement Agreement"), Ahlawyss Xxxxxx and Xxxxxx Xxxxxx,
husband and wife (collectively the "Shareholders") have acquired One Million
(1,000,000) shares of the common stock, $0.001 par value (the "Common Stock") of
OneSource Technologies, Inc., a Delaware corporation (the "Company" or
"OneSource"), and have the right to acquire up to an additional Seven Hundred
Thousand (700,000) shares of Common Stock upon the conversion of a Convertible
Promissory Note (the "Note") of the Company delivered pursuant to the Settlement
Agreement.
WHEREAS, the Company desires to grant to the Shareholders the registration
rights set forth herein with respect to the Common Stock that the Shareholders
have acquired or may acquire upon conversion of the Note.
NOW, THEREFORE, the OneSource hereby grants to the Shareholders the
following registration rights:
Section 1. Registration Rights.
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(a) The Company shall be obligated to the Shareholders to file a
Registration Statement under the Securities Act of 1933, as amended
(the "Securities Act") covering the shares of Common Stock as amended
(the "Securities Act") covering the shares of Common Stock held by the
Shareholders only as follows:
(i) Registration rights shall apply only during the period commencing
upon the date of this Statement and continuing until the earlier
of (a) the disposition by the Shareholders of all the shares of
the Common Stock acquired pursuant to the Settlement Agreement,
or (b) June 30, 2006 (the "Rights Period").
(ii) Whenever, during the Rights Period, the Company proposes to file
with the Securities and Exchange Commission (the "Commission") a
Registration Statement (other than a Form S-4 or S-8, or an S-3
used in conjunction with an S-8 which S-3 is filed solely to
facilitate resales by affiliates of the Company of Shares issued
under employee stock incentive plans, or comparable registration
statements) of its Common Stock, it shall, at least 30 days prior
to such filing, give written notice of such proposed filing to
the Shareholders at their address appearing on the records of the
Company, and shall offer to include and shall include in such
filing all or a portion of the Shareholders' Common stock upon
receipt by the Company, not less than 10 days prior to the
proposed filing date, of a request therefore, subject to the
right of the managing underwriter, in any such offering that is
underwritten, to limit or eliminate entirely the number of
securities that may be included in such offering on a pro rata
basis with any other person on whose behalf securities are being
registered.
(b) The Company will maintain any Registration Statement or post-effective
amendment filed under this Section 1 hereof current under the
Securities Act until the earlier of (1) the sale of all of the Common
Stock subject to such Registration Statement, or (2) nine months from
the effective date thereof. If the Company fails to keep such
Registration Statement current for the period specified above, and the
selling Shareholders do not sell at least one-half of the shares of
Common Stock which are the subject of the offering, such registration
shall not be deemed an exercise of any of the rights provided under
this Section 1 hereof.
(c) All fees, disbursements and out-of-pocket expenses and costs incurred
by the Company in connection with the preparation and filing of any
Registration Statement under Section 1(a) and in complying with
applicable securities and Blue Sky laws (including, without
limitation, all attorneys' fees) shall be borne by the Company. The
selling Shareholders shall bear their proportionate cost of
underwriting discounts and commissions, if any, applicable to the
Common Stock being registered and the fees and expenses of their
counsel. The Company shall use its best efforts to qualify any of the
securities for sale in such states as the selling Shareholders
reasonably designate and shall furnish indemnification in the manner
provided in Section 2 hereof. However, the Company shall not be
required to qualify in any state which will require an escrow or other
restriction relating to the Company and/or any selling Shareholders.
The Company at its expense will supply the selling Shareholders with
copies of such Registration Statement and the prospectus or offering
circular included therein and other related documents in such
quantities as may be reasonably requested by them.
(d) The Company shall not be required by this Section 1 to file a
Registration Statement or include the Shareholders' Common Stock in
any Registration Statement which is to be filed if, in the opinion of
counsel for both the Shareholders and the Company (or, should they not
agree, in the opinion of another counsel experienced in securities law
matters acceptable to counsel for Shareholders and the Company) the
proposed offering or other transfer as to which such registration is
requested is exempt from applicable federal and state securities
registration laws and would result in all purchasers or transferees
obtaining securities which are not "restricted securities", as defined
in Rule 144 under the Securities Act.
(e) The Company agrees that, commencing on the date of this Statement and
until all Shares have been sold under a Registration Statement or
pursuant to Rule 144 under the Securities Act, it will keep current in
filing all materials required to be filed with the Commission in order
to permit the holders thereof to sell the Shares under such Rule 144.
(f) No provision contained herein shall preclude the Company from selling
other securities pursuant to any Registration Statement in which it is
required to include the Shareholders' Common Stock pursuant to this
Section 1.
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(g) For purposes of this Statement, the Company shall include OneSource
and any other entity which, directly or indirectly, owns, succeeds to
or is assignee of any substantial portion of the assets or business of
OneSource (or who is an affiliate of any such other entity) and Common
Stock shall include the comparable equity securities of such other
entity. OneSource shall, as a condition of any reorganization, sale or
other transaction in which another entity becomes owner, successor or
assignee of any substantial portion of the assets or business of
OneSource, require that such entity acknowledge and agree to be bound
by the terms of this Statement.
Section 2. Indemnification.
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(a) In the event of the filing of any Registration Statement with respect
to Shares pursuant to Section 1 hereof, the Company agrees to
indemnify and hold harmless each selling Shareholder against any
losses, claims, damages or liabilities, joint or several (which shall,
for all purposes of this Agreement, include, but not be limited to,
all costs of defense and investigation and all attorneys' fees), to
which such Shareholder may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in any such Registration Statement, or any related preliminary
prospectus, final prospectus, offering circular, notification or
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement, preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto in
reliance upon, and in conformity with, written information furnished
to the Company by a selling Shareholder, specifically for use in the
preparation thereof. This indemnity agreement will be in addition to
any liability that the Company may otherwise have.
(b) In the event of the filing of any Registration Statement with respect
to Common Stock pursuant to Section 1 hereof, each selling Shareholder
agrees to indemnify and hold harmless the Company, and each person, if
any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages or liabilities (which shall,
for all purposes of this Agreement, include, but not be limited to,
all costs of defense and investigation and all attorneys' fees) to
which the Company or any such controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in any such Registration Statement, or any
related preliminary prospectus, final prospectus, offering circular,
notification or amendment or supplement thereto, or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent
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that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such Registration Statement, preliminary
prospectus, final prospectus, offering circular, notification or
amendment or supplement thereto in reliance upon, and in conformity
with, written information furnished to the Company by such selling
Shareholder, specifically for use in the preparation thereof and,
provided further, that the indemnity agreement contained in Section
2(b) shall not inure to the benefit of the Company with respect to any
person asserting such loss, claim, damage or liability who purchased
the Common Stock which is the subject thereof if the Company failed to
send or give (in violation of the Securities Act or the rules and
regulations promulgated thereunder) a copy of the prospectus contained
in such Registration Statement to such person at or prior to the
written confirmation to such person of the sale of such Common Stock,
where the Company was obligated to do so under the Securities Act or
the rules or regulations promulgated thereunder. This indemnity
agreement will be in addition to any liability that a selling
Shareholder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 2 of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Section 2, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying
party will not relieve the indemnifying party from any liability which
it may have to any indemnified party otherwise than as to the
particular item as to which indemnification is then being sought
solely pursuant to this Section 2. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled
to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, assume the defense
thereof, subject to the provisions herein stated and after notice from
the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Section 2 for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation,
unless the indemnifying party shall not pursue the action to its final
conclusion. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has
assumed the defense of the action with counsel reasonably satisfactory
to the indemnified party; provided that, if the indemnified party is a
selling Shareholder, the fees and expenses of such counsel shall be at
the expense of the indemnifying party if (i) the employment of such
counsel has been specifically authorized in writing by the
indemnifying party, or (ii) the named parties to any such action
(including any impleaded parties) include both the selling Shareholder
and the indemnifying party and the selling Shareholder shall have been
advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with
any legal defenses which may be available to the selling Shareholder
(in which case the indemnifying party shall not have the right to
assume the defense of such action on behalf of the selling
Shareholder, it being understood, however, that the indemnifying party
shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be
liable only for the reasonable fees and expenses of one separate firm
of attorneys for the indemnified parties, which firm shall be
designated in writing by the indemnified parties. No settlement of any
action against an indemnified party shall be made without the prior
written consent of the indemnified party, which consent shall not be
unreasonably withheld.
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Section 3. Contribution.
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In order to provide for just and equitable contribution under the Securities Act
in any case in which (i) a selling Shareholder makes a claim for indemnification
pursuant to Section 2 hereof but is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of Section 2 hereof provide for indemnification in such
case, or (ii) contribution under the Securities Act may be required on the part
of a selling Shareholder, then the Company and each such selling Shareholder
shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees), in either such case after contribution from others on the
basis of relative fault as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or a selling Shareholder, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and each Shareholder agree that it would
not be just and equitable if contribution pursuant to this Section 3 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 3. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities or actions in respect thereof referred to
above in this Section 3 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the Securities Act
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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