1
TOTAL SWITCH, INC.
EIN ▇▇-▇▇▇▇▇▇▇
TAX YEAR ENDING DECEMBER 31, 1997
Exhibit 2.1
===============================================================================
STOCK EXCHANGE AGREEMENT
entered into by and among
SOS INTERNATIONAL, INC.
a Nevada corporation,
TOTAL SWITCH, INC.,
an Arizona corporation,
▇▇▇▇▇ ▇▇▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇
===============================================================================
Effective as of December 11, 1997
Phoenix, Arizona
2
STOCK EXCHANGE AGREEMENT
This STOCK EXCHANGE AGREEMENT (this "Agreement") is made and entered into
on the dates set forth below, to be effective as of December 11, 1997, by and
among SOS INTERNATIONAL, INC., a Nevada corporation ("SOSI"), TOTAL SWITCH,
INC., an Arizona corporation ("TSI"), and ▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing
in the State of Arizona ("▇▇▇▇▇▇"), and ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇, an individual
residing in the State of Arizona ("Van Zeeland"). References herein to ▇▇▇▇▇▇
and Van Zeeland are references to them in their individual capacities and also
are references to them as representatives of all of the shareholders of TSI, who
are referred to herein as the "Acquired Company's Shareholders." TSI is referred
to herein as the "Acquired Company." SOSI, the Acquired Company and the Acquired
Company's Shareholders are sometimes referred to collectively herein as the
"Parties" and sometimes individually as a "Party."
Recitals
A. On November 5, 1997, SOSI and the Acquired Company signed a letter of
intent (the "Letter of Intent").
B. The Letter of Intent provides for SOSI to (a) accomplish a 20:1 reverse
stock split (a "Reverse Stock Split") of all of its currently issued and
outstanding common stock, (b) complete any filings required to be made by SOSI
to the SEC, (c) change its name to Duraswitch Industries, Inc. and (d) issue
14,950,724 shares of common stock (the "Acquisition Stock"). The Acquisition
Stock shall be newly issued after the Reverse Stock Split to the Acquired
Company's Shareholders, who collectively own all of the issued and outstanding
stock of the Acquired Company (the "Acquired Company's Stock").
C. The Letter of Intent provides for the Acquired Company's Shareholders
to transfer to SOSI, in exchange for the Acquisition Stock, all of the Acquired
Company's Stock.
D. The Parties wish to enter into this Agreement to confirm and
definitively provide for transactions that are contemplated in the Letter of
Intent. When executed and delivered by the Parties as provided below, this
Agreement shall supersede and replace the Letter of Intent so far as the
transactions provided for in this Agreement are concerned. Other provisions of
the Letter of Intent, dealing with issuance of stock by SOSI to third parties,
shall remain in effect unless superseded by any other agreements.
Agreement
THEREFORE, in consideration of the mutual covenants and conditions herein
contained, and for other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the Parties, intending to be legally
bound, hereby agree as follows.
1
3
ARTICLE
1
SHARE EXCHANGES
1.1 Stock Exchanges. ▇▇▇▇ hereby agrees to sell, convey, assign and
transfer the Acquisition Stock to the Acquired Company's Shareholders in
exchange for sale, conveyance, assignment and transfer to SOSI of the Acquired
Company's Stock. The Acquired Company's Shareholders and the Acquired Company
hereby agree to sell, convey, assign and transfer the Acquired Company's Stock
to SOSI in exchange for sale, conveyance, assignment and transfer to the
Acquired Company's Shareholders of the Acquisition Stock. Unless the Acquired
Company's Shareholders otherwise direct, the Acquisition Stock shall be
transferred to them in the following proportions: [describe].
1.2 Closing. Consummation of the transactions described in this Agreement
(the "Closing") will occur at 9:00 a.m. on or before December 15, 1997 (the
"Closing Date") at the offices of Chase Investment, Inc. or at such other
location as is mutually agreeable to the Parties.
1.3 Stock Conveyed by SOSI. At the Closing, SOSI shall convey to the
Acquired Company's Shareholders good, valid and marketable title to the
Acquisition Stock, free and clear of encumbrances, claims, liens, security
interests, pledges or mortgages of any kind. Unless and until the Acquisition
Stock is registered under the Securities Exchange Act of 1934, no Acquired
Company's Shareholder shall be entitled to transfer all or any share of the
Acquisition Stock to any person or party unless the Acquired Company's
Shareholder first provides SOSI with an acceptable opinion of counsel that the
proposed transfer will not violate any applicable law, rule or regulation or
any provision of this Agreement. SOSI shall be entitled to place a restrictive
legend on all certificates evidencing ownership of the Acquisition Stock that
provides notice of the provisions of this paragraph and other applicable
provisions of this Agreement.
1.4 Stock Conveyed by the Acquired Company's Shareholders. At the Closing
the Acquired Company's Shareholders shall convey to SOSI good, valid and
marketable title to the Acquired Company's Stock, free and clear of
encumbrances, claims, liens, security interests, pledges or mortgages of any
kind. Following delivery to SOSI of the Acquired Company's Stock, the Acquired
Company shall deliver replacement certificates to SOSI in the same number of
shares in the Acquired Company's Stock as delivered above, in the name of SOSI.
ARTICLE
2
DELIVERIES BY ▇▇▇▇ AT THE CLOSING
2.1 Deliveries by SOSI. In addition to all other items required to be
delivered by SOSI at the Closing under this Agreement, SOSI shall deliver all
of the following items to the Acquired Company Shareholders, unless an item
described below is to be delivered to a single Party:
(a) the Acquisition Stock to the Acquired Company's Shareholders, by
delivery to the Acquired Company's Shareholders of one or more share
certificates
2
4
evidencing ownership of the Acquisition Stock, issued by SOSI in the name of
the Acquired Company's Shareholders;
(b) a certified copy of ▇▇▇▇'s articles of incorporation, amended as
necessary to authorize issuance of the Acquisition Stock, together with a
certificate of SOSI's Secretary, confirming that the Acquisition Stock has been
duly issued as required in this Agreement;
(c) a current Certificate of Good Standing of SOSI, issued by the
Secretary of State of the State of Nevada;
(d) corporate records of SOSI consisting of at least the following:
certified copies of ▇▇▇▇'s bylaws, complete minute books and a copy of ▇▇▇▇'s
stock transfer ledger;
(e) a balance sheet of SOSI dated as of October 31, 1997, prepared by
▇▇▇▇'s controller or accountant in accordance with generally accepted
accounting principles consistently applied;
(f) certificates of the Secretary and the Vice President or the
President of SOSI verifying the accuracy and authenticity of all corporate
records, other materials, disclosures or documents of SOSI delivered or
provided by SOSI at the Closing, and confirming the accuracy on the Closing
Date of all representations and warranties of SOSI contained herein;
(g) resignations of all officers and members of the board of
directors of SOSI, effective as of or prior to the Closing Date;
(h) certified copies of resolutions of the board of directors of SOSI
authorizing execution and delivery of this Agreement by ▇▇▇▇ and consummation
by SOSI of all the transactions that are contemplated herein;
(i) a legal opinion of ▇▇▇▇'s counsel addressed to the Acquired
Company in form mutually agreeable to the Parties; and
(j) copies of all contracts, loan agreements, memoranda and other
documents or instruments (in an amount of $5000 or more) to which SOSI is a
party or by which it is bound or to which it or any of its assets is subject.
2.2 Other Documents and Instruments. SOSI shall also deliver any and all
such other documents and instruments of conveyance, assignment and transfer,
and such other items, as may be reasonably requested or necessary in order to
vest good and marketable title to the Acquisition Stock in the Acquired
Company's Shareholders, on or prior to the date of the Closing. All instruments
and other documents or instruments exchanged by the Parties shall be in form as
needed to effectuate the transactions contemplated by this Agreement or to
evidence the same,
3
5
and shall include any third party consents to the transactions contemplated
herein that may be required by the provisions of any contracts, agreements or
obligations to which SOSI is a party or pursuant to which a change in the stock
ownership of SOSI is deemed to constitute an assignment or transfer requiring
such consent or approval. These additional conveyances and transfers shall be
made by SOSI with a view toward placing the Acquired Company's Shareholders,
on or prior to the date of the Closing in actual possession and ownership of
stock of SOSI as provided herein.
ARTICLE
3
DELIVERIES BY THE ACQUIRED COMPANIES' SHAREHOLDERS
AT THE CLOSING
3.1 Deliveries by the Acquired Company's Shareholders. In addition to all
other items required to be delivered by the Acquired Company's Shareholders at
the Closing under this Agreement, at the Closing the Acquired Company's
Shareholders shall deliver all of the following items to SOSI:
(a) the Acquired Company's Stock, by delivery to SOSI of one or more
share certificates evidencing ownership of the Acquired Company's Stock,
endorsed in blank by the Acquired Company's Shareholders in the name of SOSI;
(b) certified copies of the Acquired Company's articles of
incorporation, together with certificates of the Acquired Company's confirming
that the Acquired Company's Stock has been duly transferred on the books and
records, and in the stock transfer ledgers of the Acquired Company, as required
in this Agreement;
(c) a current Certificate of Good Standing of the Acquired Company,
issued by the Secretary of State of the State of Arizona;
(d) corporate records of the Acquired Company's Shareholders
consisting of at least the following: certified copies of the Acquired Company
Shareholders' bylaws, complete minute books and a copy of the Acquired Company's
Shareholders' stock transfer ledger;
(e) a balance sheet of the Acquired Company dated as of October 31,
1997, prepared by the controller or accountant of the Acquired Company in
accordance with generally accepted accounting principles consistently applied;
(f) certificates of the Secretary and the Vice President or the
President of the Acquired Company verifying the accuracy and authenticity of all
corporate records, other materials, disclosures or documents pertaining to the
Acquired Company delivered or provided by the Acquired Company's Shareholders at
the Closing, and confirming the accuracy on the Closing Date of all
representations
4
6
and warranties of the Acquired Company's Shareholders and the Acquired Company
as contained herein;
(g) certified copies of resolutions of the board of directors of the
Acquired Company authorizing execution and delivery of this Agreement by the
Acquired Company and consummation by the Acquired Company of all of the
transactions that are contemplated herein;
(h) a legal opinion of the Acquired Company's counsel addressed to ▇▇▇▇
in form mutually agreeable to the Parties; and
(i) copies of all contracts of $5,000 (U.S.) or more, loan agreements,
memoranda and other documents or instruments to which the Acquired Company is a
party or by which it is bound or to which it or any of its assets is subject.
3.2 Other Documents and Instruments. The Acquired Company shall also deliver
to SOSI any and all such other documents and instruments of conveyance,
assignment and transfer, and such other items, as may be reasonably requested
or necessary in order to vest good and marketable title to the Acquired
Company's Stock in SOSI on or prior to the date of the Closing. All instruments
and other documents or instruments exchanged by the Parties shall be in form as
needed to effectuate the transactions contemplated by this Agreement or to
evidence the same, and shall include any third party consents to the
transactions contemplated herein that may be required by the provisions of any
contracts, agreements or obligations to which the Acquired Company is a party
or pursuant to which a change in the stock ownership of the Acquired Company is
deemed to constitute an assignment or transfer requiring such consent or
approval. These additional conveyances and transfers shall be made by the
Acquired Company with a view toward placing SOSI on, or prior to, the date of
the Closing in actual possession and ownership of all of the stock of the
Acquired Company as provided herein.
ARTICLE
4
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇
▇▇▇▇ hereby represents and warrants to, and covenants with, the Acquired
Company Shareholders that the representations and warranties provided below are
true, correct, accurate and complete in any and all respects as of the
effective date of this Agreement, and that the same will be true, correct,
accurate and complete on and as of the date of the Closing (as though made then
and as though the Closing were substituted for the date of this Agreement
throughout the following), except as may be set forth in the Disclosure
Schedule attached hereto (the "SOSI Disclosure Schedule"). The SOSI Disclosure
Schedule will be arranged in paragraphs and subparagraphs that correspond to
the designation of subparagraphs below.
4.1 Organization of SOSI. SOSI is a corporation that is duly organized,
validly existing, and in good standing in all material respects under the laws
of the State of Nevada.
5
7
4.2 Authorization of Transaction. ▇▇▇▇ has full actual and legal corporate
power and corporate authority to execute and deliver this Agreement and to
perform its obligations hereunder.
4.3 Enforceable Obligation. This Agreement constitutes the valid and
legally binding obligation of SOSI, enforceable against SOSI in accordance with
this Agreement's terms.
4.4 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby by SOSI
will (i) to SOSI's knowledge, violate any statute, law, regulation, rule,
judgment, order, decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or state or federal court to which SOSI
or the Acquisition Stock are subject or any provision of the articles of
incorporation or bylaws or similar governing rules or documents of SOSI, (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any governmental rule, law or regulation
of any state or federal court or under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage or instrument
of indebtedness or under any other arrangement to which SOSI is a party or by
which it or the Acquisition Stock are bound or to which it or any of the
Acquisition Stock is subject, (iii) nor result in the imposition of any lien,
encumbrance, claim or security interest in, to or affecting any of the
Acquisition Stock. To its knowledge, SOSI does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
state or federal government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement, except those that
will be obtained or made prior to Closing or those which would fail to have a
material adverse effect on the ability of SOSI to consummate the transactions
contemplated by this Agreement.
4.5 The Acquisition Stock. As of the date of Closing, the Acquisition
Stock will constitute, in the aggregate, 85% percent of all of the issued and
outstanding common stock of SOSI, with the rights, privileges and preferences
that are described in SOSI's articles of incorporation. As of the date of
Closing the Acquisition Stock will have been duly and validly issued and is and
will be nonassessable. The Acquisition Stock will be restricted stock,
consistent with Section 1.3 of this Agreement. Title to the Acquisition Stock
will be in the name of the Acquired Company's Shareholders in the official
records of SOSI and in the records of ▇▇▇▇'s stock transfer agent, if any.
4.6 Litigation. To SOSI's knowledge, SOSI is not subject to any
unsatisfied judgment, order, decree, stipulation, injunction, or charge nor is
it a party or threatened to be made a party to any charge, complaint, action,
suit, proceeding, hearing, or investigation of or in any court or
quasi-judicial or administrative agency of any federal, state or local
jurisdiction or before any arbitrator that relates in any way, directly or
indirectly, to the transactions contemplated in this Agreement. ▇▇▇▇ has no
actual reason to believe that any charge, complaint, action, suit, proceeding,
hearing, or investigation will or may be brought or threatened against SOSI in
connection with the transactions contemplated in this Agreement.
6
8
4.7 Material Information. As of the Closing, no representation or warranty
by SOSI, nor any statement or certificate furnished or to be furnished to the
Acquired Company's Shareholders pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact necessary
to make the representation, warranty, statement or certificate not misleading.
At or prior to the Closing SOSI will deliver to the Acquired Company's
Shareholders a Disclosure Document ("Disclosure Document") that provides the
Acquired Company's Shareholders with all material information concerning SOSI
and the Acquisition Stock, as required by Rule 10b-5 of the Securities and
Exchange Commission, and SOSI and the Acquired Company's Shareholders will take
all actions and steps that are necessary to cause the Acquired Company's
Shareholders' acquisition of the Acquisition Stock to be qualified under
Regulation D of the Securities and Exchange Commission as a private placement of
securities and to be similarly qualified under applicable provisions of state
laws. The Parties will cooperate with each other in signing documents and forms
to be filed with federal and state regulatory agencies to accomplish the results
contemplated in this paragraph.
4.8 Documentation. Prior to the Closing SOSI will deliver to the Acquired
Company's Shareholders, materially correct, accurate and complete copies of all
of the contracts in an amount of $5000 or more, and agreements and documents
that comprise or relate to SOSI or the Acquisition Stock in any way. As to each
such contract, agreement, or document (collectively, each "Contract"):
(a) the Contract is the legal, valid, binding, and enforceable
obligation of the parties thereto as of the Closing Date, and is in full force
and effect as of the Closing Date;
(b) to the extent permitted by applicable law, after the Closing, to
the best of SOSI's knowledge, each Contract will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the Closing;
(c) to the knowledge of SOSI, no party to the Contract is in breach
or default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration of the Contract;
(d) to the knowledge of SOSI, no party to the Contract has
repudiated, breached or anticipatorily breached any provision thereof, nor is
there any reason to think that any such is likely to occur or may occur in the
future;
(e) to the knowledge of SOSI, there are no disputes, oral agreements,
or forbearance programs in effect as to the Contract; and
(f) to the knowledge of ▇▇▇▇, ▇▇▇▇ has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
Contract.
7
9
4.9 Legal Compliance.
(a) To its knowledge, ▇▇▇▇ has complied in all material respects with
all laws (including rules and regulations thereunder) of federal, state and
local governments (and all agencies thereof), and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or notice
has been filed or commenced against any of SOSI alleging any failure to
comply with any such law or regulation.
(b) ▇▇▇▇ has complied in all material respects with all applicable
laws (including rules and regulations thereunder) relating to the
employment of labor, employee civil rights, and equal employment
opportunities.
4.10 Receipt of Disclosure Schedule. Prior to Closing, SOSI received and
reviewed a copy of the Disclosure Schedule, if any, described in Section 5.10,
had discussions with representatives of the Acquired Company and the Acquired
Company's Shareholders, and received from such representatives such additional
documents and information as ▇▇▇▇ requested.
4.11 Restricted Stock. ▇▇▇▇ understands that the Acquired Company's Stock
will not be registered with the Securities and Exchange Commission, and that
transferability of the Acquired Company's Stock will be subject to the
provisions and restrictions of state and federal securities laws.
4.12 Registration Representations. ▇▇▇▇ is the sole party in interest
agreeing to purchase the Acquired Company's Stock by entering into this
Agreement. SOSI is acquiring the Acquired Company's Stock for SOSI's own
account, for investment purposes only and not with a view to the resale or other
distribution thereof, in whole or in part. As stated in the previous paragraph,
▇▇▇▇ is aware that as of the date of Closing the Acquired Company's Stock has
not been and will not be registered under the 1933 Act.
4.13 Third Party Consents. All third parties whose consent to the
transactions contemplated in this Agreement are listed in the Disclosure
Schedule. The Disclosure Schedule also indicates the contract, agreement, permit
or other relationship to the third party that gives rise to the need for the
third party's consent.
4.14 Due Diligence Period. During the time period from the effective date
of this Agreement until the Closing date (the "Due Diligence Period"), SOSI
shall be entitled to investigate the Acquired Company, review its files, visit
the Acquired Company's business premises and to talk with officers and employees
of the Acquired Company and to meet with any and all other third parties, public
and private, and to perform such other due diligence reviews and investigations
pertaining to the transactions contemplated in this Agreement as SOSI determines
is necessary or proper.
8
10
ARTICLE
5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE ACQUIRED COMPANY'S SHAREHOLDERS
The Acquired Company's Shareholders represent and warrant to, and covenant
with, SOSI that the representations and warranties provided below are true,
correct, accurate and complete in all respects as of the effective date of this
Agreement, and that the same will be true, correct, accurate and complete on and
as of the date of the Closing (as though made then and as though the Closing
were substituted for the date of this Agreement throughout the following),
except as may be set forth in the Disclosure Schedule attached hereto (the
"Acquired Company's Shareholders' Disclosure Schedule"). The Acquired Company's
Shareholders Disclosure Schedule will be arranged in paragraphs and
subparagraphs that correspond to the designation of subparagraphs below. All of
the representations and warranties of the Acquired Company's Shareholders
provided for in this Article 5 are to the best knowledge of the Acquired
Company's Shareholders.
5.1 Organization of the Acquired Company. The Acquired Company is a
corporation that is duly organized, validly existing, and in good standing in
all material respects under the laws of the State of Arizona.
5.2 Authorization of Transaction. The Acquired Company has full actual and
legal corporate power and corporate authority to execute and deliver this
Agreement and to perform its obligations hereunder.
5.3 Enforceable Obligation. This Agreement constitutes the valid and
legally binding obligation of the Acquired Company and the Acquired Company's
Shareholders, enforceable against each of them in accordance with this
Agreement's terms.
5.4 Noncontravention. Neither the execution and delivery of this Agreement
by the Acquired Company and the Acquired Company's Shareholders, nor the
consummation by any of them of the transactions contemplated hereby, will (i)
violate any statute, law, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which the Acquired Company or the Acquired
Company's Shareholders or the Acquired Company's Stock are subject, or any
provision of the articles of incorporation or bylaws or similar governing rules
or documents of the Acquired Company, (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under any governmental rule, law or regulation or under any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage or instrument of indebtedness or under any other arrangement to which
the Acquired Company or the Acquired Company's Shareholders is a party or by
which any of them is bound or to which any of them is subject, (iii) nor result
in the imposition of any lien, encumbrance, claim or security interest in, to or
affecting any assets of the Acquired Company or the Acquired Company's Stock. No
Acquired Company or Acquired Company Shareholder needs to give any notice to,
make any filing with, or obtain any
9
11
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement. The description of the Acquired Company's Stock that is contained in
Exhibit B attached is true, correct, complete and accurate in any and all
respects and constitutes 100% of all of the issued and outstanding stock of the
Acquired Company. There are no warrants, options, convertible securities or
other interests or rights to acquire the Acquired Company's Stock.
5.5 Documentation. Prior to the Closing, the Acquired Company and/or the
Acquired Company's Shareholders will deliver to SOSI true, correct, accurate and
complete copies of all of the contracts, agreements and documents that comprise
or relate to the Acquired Company or the Acquired Company's Stock in any way. As
to each such contract, agreement, or document (collectively, each "Contract"):
(a) the Contract is the legal, valid, binding, and enforceable
obligation of the parties thereto as of the Closing Date, and is in full
force and effect as of the Closing Date;
(b) to the extent permitted by applicable law, after the Closing,
each Contract will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the Closing;
(c) no party to the Contract is in breach or default, and no event
has occurred which, with notice or lapse of time, would constitute a breach
or default or permit termination, modification, or acceleration of the
Contract;
(d) no party to the Contract has repudiated, breached or
anticipatorily breached any provision thereof, nor is there any reason to
think that any such is likely to occur or may occur in the future;
(e) there are no disputes, oral agreements, or forbearance programs
in effect as to the Contract; and
(f) no Acquired Company nor Acquired Company's Shareholders have
assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered
any interest in the Contract.
5.6 Litigation. Neither the Acquired Company nor any of the Acquired
Company's Shareholders is subject to any unsatisfied judgment, order, decree,
stipulation, injunction, or charge nor is it a party or threatened to be made a
party to any charge, complaint, action, suit, proceeding, hearing, or
investigation of or in any court or quasi-judicial or administrative agency of
any federal, state or local jurisdiction or before any arbitrator that relates
in any way, directly or indirectly, to the transactions contemplated in this
Agreement. No Acquired Company or Acquired Company's Shareholder has any reason
to believe that any charge, complaint, action, suit, proceeding, hearing, or
investigation will or may be brought or threatened against any Acquired Company
in connection with the transactions contemplated in this Agreement.
10
12
5.7 Legal Compliance
(a) The Acquired Company has complied with all laws (including
rules and regulations thereunder) of federal, state and local governments
(and all agencies thereof), and no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, demand, or notice has been filed
or commenced against the Acquired Company alleging any failure to comply
with any such law or regulation.
(b) The Acquired Company has complied in all material respects
with all applicable laws (including rules and regulations thereunder)
relating to the employment of labor, employee civil rights, and equal
employment opportunities.
5.8 Material Information. As of the Closing, no representation or warranty
by the Acquired Company or the Acquired Company's Shareholders, nor any
statement or certificate furnished or to be furnished to any person or Party
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary to make the representation,
warranty, statement or certificate not misleading. At or prior to the Closing
The Acquired Company's Shareholders will deliver to SOSI a Disclosure Document
("Disclosure Document") that provides SOSI with all material information
concerning the Acquired Company, as required by Rule 10b-5 of the Securities and
Exchange Commission, and the Acquired Company's Shareholders and SOSI will take
all actions and steps that are necessary to cause the Acquired Company's
Shareholders' acquisition of the Acquisition Stock to be qualified under
Regulation D of the Securities and Exchange Commission as a private placement of
securities and to be similarly qualified under applicable provisions of state
laws. The Parties will cooperate with each other in signing documents and forms
to be filed with federal and state regulatory agencies to accomplish the results
contemplated in this paragraph.
5.9 Receipt of Disclosure Schedule. Prior to making the decision to
acquire the Acquisition Stock as provided herein, the Acquired Company and the
Acquired Company's Shareholders received and reviewed a copy of the Disclosure
Schedule described in Section 4.10, had discussions with representatives of SOSI
and received from such representatives such additional documents and information
as the Acquired Company's Shareholder requested. Each of the Acquired Company's
Shareholders acknowledges that he or she is sophisticated and experienced in
matters relating to SOSI and its planned business activities as described in the
Disclosure Schedule.
5.10 Restricted Stock. Each of the Acquired Company's Shareholders
understands that the Acquisition Stock will be restricted stock, not registered
with the Securities and Exchange Commission. Unless and until the Acquisition
Stock is registered under the Securities Exchange Act of 1934, no Acquired
Company's Shareholder shall be entitled to transfer all or any share of the
Acquisition Stock unless the Acquired Company's Shareholder first provides SOSI
with an acceptable opinion of counsel that the proposed transfer will not
violate any applicable law, rule or regulation or any provision of this
Agreement. SOSI shall be entitled to place a restrictive
11
13
legend on all certificates evidencing ownership of the Acquisition Stock that
provides notice of the provisions of this paragraph and other applicable
provisions of this Agreement. Unless otherwise provided in this Agreement, each
of the Acquired Company's Shareholders shall be prohibited from trading the
Acquisition Stock for a period of two years after the date of the Closing.
5.11 REGISTRATION REPRESENTATIONS. Each of the Acquired Company
Shareholders is the sole party in interest agreeing to purchase the Acquisition
Stock by entering into this Agreement. The Acquired Company's Shareholders are
acquiring the Acquisition Stock for the Acquired Company's Shareholders' own
account, for investment purposes only and not with a view to the resale or other
distribution thereof, in whole or in part. As stated above, the Acquired
Company's Shareholders is aware that as of the date of Closing the Acquisition
Stock has not been and will not be registered under the 1933 Act and that SOSI
provides no assurance that the Acquisition Stock will ever be registered under
such act. Each of the Acquired Company's Shareholders is willing and able and
agrees to bear the economic risk of investment in the Acquisition Stock for an
indefinite period of time, and each is capable of bearing that risk. Each of the
Acquired Company's Shareholders is knowledgeable with respect to the financial,
tax and business aspects of ownership of the Acquisition Stock and of the
business operations conducted by SOSI, or the Acquired Company has been
represented by a person with such knowledge and expertise in connection with
acquisition of the Acquisition Stock.
5.12 THIRD PARTY CONSENTS. All third parties, if any, whose consent to
the transactions contemplated in this Agreement are listed in the Disclosure
Schedule. The Disclosure Schedule also indicates the contract, agreement,
permit or other relationship to the third party that gives rise to the need for
the third party's consent.
5.13 DUE DILIGENCE PERIOD. During the time period from the effective date
of this Agreement until the Closing date (the "Due Diligence Period"), the
Acquired Company's Shareholders shall be entitled to investigate SOSI, review
its files, to visit SOSI's business premises and to talk with officers and
employees of SOSI and to meet with any and all other third parties, public and
private, and to perform such other due diligence reviews and investigations
pertaining to the transactions contemplated in this Agreement as any Acquired
Company's Shareholder determines is necessary or proper. The Acquired Company's
Shareholders have received the financial statements of SOSI dated through
October 31, 1997, and deems them sufficient for purposes of entering into this
transaction.
5.14 FINANCIAL STATEMENTS. Attached to this Agreement as Exhibit D are
balance sheets (the "Financial Statements") of the Acquired Company. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied, and are true and accurate. Since
the date of the Financial Statements, there has been no change in the financial
condition of the Acquired Company. The Acquired Company have no liabilities,
commitments or obligations, contingent or otherwise, not shown on the Financial
Statements.
12
14
ARTICLE
6
CONDITIONS PRECEDENT
6.1 Conditions Precedent to the Obligations of SOSI. The following are
conditions precedent to the obligation of SOSI to sell and convey the
Acquisition Stock to the Acquired Company's Shareholders and to receive an
assignment of the Acquired Company's Stock at the Closing. Any condition listed
below may be waived by SOSI at or prior to the Closing Date.
(a) Delivery to SOSI of all information and materials required to be
delivered under any provision of this Agreement;
(b) Receipt of all necessary third party consents;
(c) Performance by each Acquired Company Shareholder of all of his or
her or its obligations under this Agreement that are required to be
performed prior to Closing;
(d) True and correct representations and warranties by the Acquired
Company and the Acquired Company's Shareholders in connection with this
Agreement; and
(e) Discovery of no materially adverse information at or prior to
the Closing concerning the Acquired Company.
6.2 Conditions Precedent to the Obligations of the Acquired Company's
Shareholders. The following are conditions precedent to the obligations of
Acquired Company's Shareholders to sell and transfer the Acquired Company Stock
to SOSI, and to acquire the Acquisition Stock from SOSI, at the Closing. Any
condition listed below may be waived by the Acquired Company's Shareholders at
or prior to the Closing.
(a) Delivery to the Acquired Company's Shareholders of all
information and materials required to be delivered by SOSI under any
provision of this Agreement;
(b) Receipt of all necessary third party consents;
(c) Performance by SOSI of all of its obligations under this
Agreement that are required to be performed prior to Closing; and
(d) Discovery of no materially adverse information at or prior to
the Closing concerning SOSI.
6.3 Survival of Representations and Warranties. The representations and
warranties of the Parties contained in this Agreement shall survive the Closing
and shall continue to be the obligations of the Parties for a period of two
years after the date of the Closing.
13
15
ARTICLE
7
GENERAL PROVISIONS
7.1 Costs and Fees. If any Party breaches any term of this Agreement, the
breaching Party agrees to pay the non-breaching Party all reasonable attorneys'
fees, expert witness fees, investigation costs, costs of tests and analysis,
travel and accommodation expenses, deposition and trial transcript costs, court
costs and other costs and expenses incurred by the non-breaching Party in
enforcing this Agreement or preparing for legal or other proceedings, at the
trial or appellate level, whether or not such proceedings are instituted. If
any legal or other proceedings are instituted, the Party prevailing in any such
proceeding shall be paid all of the aforementioned costs, expenses and fees by
the other Party, and if any judgment is secured by such prevailing Party, all
such costs, expenses, and fees shall be included in such judgment, attorneys'
fees to be set by the court and not by the jury. References in this paragraph
to "legal proceedings" refer to litigation as well as arbitration proceedings
and any other similar or related proceedings.
7.2 Waiver. No delay by a Party in exercising any right or remedy shall
constitute a waiver of a Party's rights under this Agreement, and no waiver by
any Party of the breach of any covenant of this Agreement by the other shall be
construed as a waiver of any preceding or succeeding breach of the same or any
other covenant or condition of this Agreement.
7.3 Indemnification. Each Party (the "Indemnifying Party") shall protect,
indemnify and hold harmless the other Party and its directors, officers,
employees, agents, affiliates and representatives (each an "Indemnified Party")
against any and all costs, expenses, damages (whether such damages are general,
special, consequential, limited, direct or indirect or incidental), liabilities
or losses, including attorneys' fees, caused by, for or on account of the
Indemnifying Party's negligence, gross negligence or willful misconduct or
failure to perform its obligations under this Agreement or the negligence,
gross negligence or willful misconduct of the Indemnifying Party's directors,
officers, employees, agents affiliates or representatives.
(a) If an Indemnified Party intends to seek indemnification under
this paragraph from any Indemnifying Party with respect to any action or claim,
the Indemnified Party shall give the Indemnifying Party notice of such claim or
action upon the receipt of actual knowledge or information by the Indemnified
Party of any possible claim or of the commencement of such claim or
action, which period shall in no event be later than the earlier of (i) fifteen
business days prior to the last day of responding to such claim or action or
(ii) one half of the period allowed for responding to such claim or action or,
if no time period for responding exists, as soon as reasonably possible. The
Indemnifying Party shall have no liability under this paragraph for any claim
or action for which such notice is not provided, unless the failure to give
such notice does not prejudice the Indemnifying Party.
(b) The Indemnifying Party shall have the right to assume the
defense of any such claim or action, at its sole cost and expense, with counsel
designated
14
16
by the Indemnifying Party and reasonably satisfactory to the Indemnified
Party: provided, however, that if the defendants in any such action include
both the Indemnified Party and the Indemnifying Party, and the Indemnified
Party shall have reasonably concluded that there may be legal defenses
available to it which are different from or additional to those available
to the Indemnifying party, the Indemnified Party shall have the right to
select separate counsel, at the Indemnifying Party's expense, to assert
such legal defenses and to otherwise participate in the defense of such
action on behalf of such Indemnified Party.
(c) Should any Indemnified Party be entitled to indemnification under
this Section as a result of a claim by a third party, and should the
Indemnifying Party fail to assume the defense of such claim or action, the
Indemnified Party may, at the expense of the Indemnifying Party, contest
or, (with the prior consent of the Indemnifying Party, which consent shall
not be unreasonably withheld) settle such claim or action. Except to the
extent expressly provided herein, no Indemnified Party shall settle any
claim or action with respect to which it has sought or intends to seek
indemnification pursuant to this Section without the prior written consent
of the Indemnifying Party, which consent shall not be unreasonably withheld
or delayed.
(d) If an Indemnifying Party is obligated to indemnify and hold any
Indemnified Party harmless under this Agreement, the amount owing to the
Indemnified Party shall be the amount of such Indemnified Party's actual
out-of-pocket loss, net of any insurance or other recovery.
(e) The duty to indemnify under this Agreement will continue in full
force and effect for a period of two years with respect to any loss,
liability, damage or other expense based on facts or conditions which
occurred prior to such termination.
7.4 Notices. No notice, consent, approval or other communication provided
for herein or given in connection herewith shall be validly given, made,
delivered or served unless it is in writing and delivered personally, sent by
overnight courier, or sent by registered or certified United States mail,
postage prepaid, with return receipt requested, to the addresses for each Party
set forth below. Any Party hereto may from time to time change its address by
notice to the other Parties given in the manner provided herein. Notices,
consents, approvals, and communications by mail shall be deemed delivered upon
the earlier of forty-eight (48) hours after deposit in the United States mail
in the manner provided above or upon delivery to the respective addresses set
forth above if delivered personally or sent by overnight courier. Addresses of
the Parties are the following:
15
17
To SOSI: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ #▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇. #G
Las Vegas, Nevada 89121
To the Acquired Company: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
To the Acquired Company's Shareholders:
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
7.5 Interpretation and Time. The captions of the paragraphs of this
Agreement are for convenience only and shall not govern or influence the
interpretation hereof. This Agreement is the result of negotiations among the
Parties and, accordingly, shall not be construed for or against any Party
regardless of which Party drafted this Agreement or any portion thereof. Time
is of the essence under this Agreement.
7.6 Successors and Assigns. All of the provisions hereof shall inure to
the benefit of and be binding upon the successors and assigns of the Parties.
7.7 No Partnership. This Agreement is not intended to, and nothing
contained in this Agreement shall, create any partnership, joint venture or
other similar arrangement among the Parties.
7.8 Further Documents. Each of the Parties shall execute and deliver all
such other and additional documents and perform all such acts, in addition to
execution and delivery of this Agreement and performance of the Party's
obligations hereunder, as are reasonably required from time to time in order to
carry out the purposes, matters and transactions that are contemplated in this
Agreement.
16
18
7.9 Incorporation of Exhibits. All exhibits attached to this Agreement
are by this reference incorporated herein.
7.10 Governing Law. This Agreement shall be governed by the laws of the
State of Arizona, without giving effect to the conflict of law provisions or
principles of the State of Arizona.
7.11 Date of Performance. If the date of performance of any obligation or
the last day of any time period provided for herein should fall on a Saturday,
Sunday or legal holiday, then said obligation shall be due and owing, and said
time period shall expire, on the first day thereafter which is not a Saturday,
Sunday or legal holiday. Except as may otherwise be set forth herein, any
performance provided for herein shall be timely made if completed no later than
5:00 p.m., Phoenix, Arizona time, on the day of performance.
7.12 Counterparts. This Agreement may be executed in any number of
counterparts. This Agreement may be signed by original signatures or by fax
signatures. Any set of counterparts of this Agreement, whether faxed or
originals or both, showing signatures by all Parties, taken together, shall
constitute a single copy of this Agreement.
7.13 Resolution of Disputes. In the event of any dispute among the Parties
as to their rights and obligations under this Agreement, including, but not
limited to, any question as to whether or not a Party has performed its
obligations fully or remedied an alleged breach, and any and all other disputes
arising under this Agreement, shall be resolved as follows.
(a) The Parties shall submit their dispute to at least four (4) hours
of mediation in accordance with the mediation procedures of American
Arbitration Association ("AAA").
(b) In the event the dispute does not then settle within 15 calendar
days after the first mediation session, the Parties agree to submit the
dispute to binding arbitration in accordance with the arbitration
procedures of the AAA except as modified in this Agreement. The arbitration
hearing shall be conducted no later than 45 calendar days after the first
mediation session.
(c) The arbitrator or arbitrators conducting the arbitration hearing
shall render the arbitration decision in writing, which writing shall
explain the reasoning and bases for the decision.
(d) The Parties agree to share equally the costs of mediation.
However, if the dispute is settled through arbitration, the prevailing
Party shall be entitled to recover all costs incurred, including reasonable
attorneys' fees, to enforce its rights hereunder, in addition to any
damages recovered, as provided in "Costs and Fees" above.
17
19
7.14 Severability. If any term or provision of this Agreement shall, to
any extent, be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Agreement shall not be affected thereby,
and each term and provision of this Agreement shall be valid and be enforceable
to the fullest extent permitted by law.
7.15 Assignment. No Party shall assign this Agreement, nor any interest
arising herein, without the written consent of the other Parties.
7.16 Recitals. The recitals set forth above are a part of this Agreement.
7.17 Jurisdiction and Venue. Venue for and jurisdiction over any legal
proceedings available to the Parties hereunder shall lie in the appropriate
courts of the State of Arizona, located in Phoenix, Arizona.
IN WITNESS WHEREOF, the Parties hereto have hereunder affixed their
signatures on the dates set forth below to be effective as of the date first set
forth above.
SOS INTERNATIONAL, INC.,
a Nevada Corporation,
Date: Dec. 12, 1997 By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------- -----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Its: President
---------------------------
TOTAL SWITCH, INC., an Arizona corporation,
Date: Dec. 11, 1997 By: /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------- -----------------------------
Name: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Its: CEO
---------------------------
Date: Dec. 11, 1997 /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ "▇▇▇▇▇"
------------- --------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
18
20
Date: Dec. 11, 1997 /s/ ▇▇▇▇▇▇ ▇. ▇▇▇ Zeeland
------------- -------------------------
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇
19
21
ADDENDUM TO STOCK EXCHANGE AGREEMENT
entered into by and among
SOS INTERNATIONAL, INC., a Nevada corporation;
TOTAL SWITCH, INC., an Arizona corporation;
▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇
Effective as of December 11, 1997
-------------------------------------------------------------------------------
This Addendum is being executed by the parties to correct the Stock
Exchange Agreement dated December 11, 1997, to reflect the intention of the
parties at the time of signing said agreement.
I. The names of the following parties are hereby corrected: ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, instead of ▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇, instead
of ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇.
II. Article 1.1 on page 2 requires a description of the proportionate
transfer of the stock exchanges. The parties herein agree that said
description is incorporated by reference to the Letter of Intent dated
11/4/97 between SOS International and Total Switch, Inc.
III. Article 1, paragraph 1.2 Closing, is corrected to reflect the actual
closing date of December 31, 1997.
IV. The Stock Exchange Agreement is amended to reflect the agreement that
DuraSwitch Industries, Inc. agrees to transfer the trade name SOS
International, Inc. and all rights to said name to the individuals ▇.
▇▇▇▇▇▇▇ and ▇. ▇▇▇▇ to be used for continued manufacturing of
emergency devices. Further, any and all ownership of said emergency
devices will be transferred to ▇. ▇▇▇▇▇▇▇ and ▇. ▇▇▇▇. Further, stock
options held by ▇. ▇▇▇▇▇▇▇ and ▇. ▇▇▇▇ totaling 2,837,820 will be
exchanged for these assets plus 60,000 shares of DuraSwitch restricted
stock pursuant to the Share Exchange Agreement and Letter of Intent.
SOS INTERNATIONAL, INC., a Nevada
corporation,
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Its: PRESIDENT
-----------------------------
Page 1 of 2
Addendum to Stock Exchange Agreement
22
TOTAL SWITCH, INC., an Arizona
corporation,
By: /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Its: CEO
--------------------------------
/s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
R. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇
Page 2 of 2
Addendum to Stock Exchange Agreement
