Exhibit 99.1
STOCK SALE AGREEMENT
AGREEMENT, dated this 22nd of March, 2005, by and between Security Intelligence
Technologies, Inc., a Florida corporation with offices at 000 Xxxxxxxx Xxxxxx,
Xxx. 000, Xxx Xxxxxxxx, XX 00000 ("Seller"), and Xxxxxxx Xxxxx, whose address is
Hatasia Street #3, X.X. Xxx 0000, Xx'xxxxx 00000 Xxxxxx ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller owns all of the issued and outstanding capital stock of
CCS International, Inc., a Delaware corporation (the "Company"); and
WHEREAS, Seller is a former officer and director of both the Company and
Seller and is familiar with the business and financial condition of the Company;
and
WHEREAS, Purchaser desires to purchase all of the outstanding capital
stock from Seller, and Seller desires to sell all of the outstanding capital
stock of the Company to Purchaser, on and subject to the terms of this
Agreement;
WHEREAS, the Company has five wholly-owned subsidiaries; Spy Shop, Ltd.
d/b/a Counter Spy Shop of Delaware, a Delaware corporation (formerly a retail
store closed on January 31, 2004); Security Design Group, Inc., a New York
corporation (formerly a manufacturing operation, currently inactive); Counter
Spy Shop of Mayfair London, Ltd., a District of Columbia corporation (formerly a
retail store closed on July 1, 2003); CCS Counter Spy Shop of Mayfair London,
Ltd., a California corporation (formerly a retail store closed on January 1,
2004); and Counter Spy Shop of Mayfair, Ltd., a Florida corporation (formerly a
sales office/retail store that ceased operations on March 31, 2004);
WHEREFORE, the parties do hereby agree as follows:
1. Seller hereby agrees to sell, convey, transfer and deliver to
Purchaser, and Purchaser agrees to purchase from such Seller, all of the
outstanding capital stock of the Company, which consists of eleven million nine
hundred thousand (11,900,000) shares of common stock (the "Stock").
2. The purchase price for the Stock shall consist of an initial payment of
one hundred dollars ($100), payable at the Closing, as hereinafter defined, plus
the Contingent Consideration, has hereinafter provided.
3. The sale of the Stock shall take place at a closing (the "Closing") to
be held at the offices of Seller contemporaneously with the execution of this
Agreement or at such other place and time as may be agreed upon by the parties.
The date on which the Closing occurs is referred to as the "Closing Date." At
the Closing, Seller shall deliver a certificate for the Shares against payment
of the initial payment provided in Section 2 of this Agreement.
4. (a) The Contingent Consideration shall consist of five percent (5%) of
the Company's and its wholly-owned subsidiaries net sales for the years 2005
through and including 2015. Payment of the Contingent Consideration shall be
made on a quarterly basis, with the Contingent Consideration for each calendar
quarter to be payable no later than the twentieth (20th) day of the month
following the end of the calendar quarter. Thus, the payment for the quarter
ending March 31, 2005 shall be payable no later than April 20, 2005. Each
payment shall be accompanied by a certificate from the Company's chief financial
officers setting forth the computation of net sales.
(b) Net sales shall mean consolidated sales, less returns and
allowances, of the Company and its subsidiaries, including subsidiaries,
divisions and businesses acquired after the date of this Agreement, determined
on an accrual basis in accordance with generally accepted accounting principles
consistently applied. Purchaser shall provide Seller with unaudited quarterly
financial statements, not later than forty five (45) days after the end of each
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calendar quarter, and audited year-end financial statements, not later than
ninety (90) days after the end of the year. The quarterly and annual financial
statements shall be prepared in accordance with generally accepted accounting
principles consistently applied, provided, however, that the unaudited quarterly
financials need not contain any material which would not be required in the
financial statements that are included in a Form 10-QSB quarterly report under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). To the
extent that the audited year-end financial statements reflect net sales which
are different from the net sales set forth on the certificates of the Company's
chief financial officer pursuant to Section 4(a) of this Agreement for the
applicable year, the next quarterly payment shall reflect any required
adjustment; provided, however, that with respect to the payment for the quarter
ended December 31, 2014, any adjustment shall be settled by a final payment from
Seller to Purchaser or from Purchaser to Seller, as the case may be.
(c) Seller shall have the right, on reasonable notice and during
normal business hours to audit, by its own personnel or by accountants engaged
by Seller, to review the Company's books and records to ascertain that the
Contingent Consideration is being computed and paid as provided in this
Agreement. Seller may exercise this right only one time in any calendar year.
The audit shall be at Seller's cost and expense, provided, however, that that if
the audit reveals that the Contingent Consideration due for any year is more
than ten percent (10%) greater than the amount set forth in Purchaser's reports
pursuant to Section 4(b) of this Agreement, the cost of audit shall be paid by
Purchaser. The Company agrees, by signing this Agreement, to provide the access
required by this Section 4(c).
5. Seller represents and warrants as follows:
(a) Seller is a corporation organized and existing under the laws of
the State of Florida. All corporate and other proceedings required to be taken
on the part of Seller to authorize Seller to enter into and carry out this
Agreement and to sell the Stock have been duly and properly taken. Seller has
full right, power and authority to enter into this Agreement and to perform
fully its obligations hereunder. This Agreement has been duly executed and
delivered by Seller and is the valid and binding obligation of Seller
enforceable against it in accordance with its terms, except as enforcement may
be limited by applicable bankruptcy, insolvency and other laws of general
application affecting the rights of creditors and equitable principles limiting
the right to obtain specific performance or other equitable remedies.
(b) The authorized common stock of the Company consists of fifty
million (50,000,000) shares of common stock, par value $.0001 per share, of
which eleven million nine hundred thousand (11,900,000) shares are issued and
outstanding, and 10,000,000 shares of preferred stock, par value $.0001 per
share, none of are issued or outstanding, all such formerly issued and
outstanding shares of preferred stock having been cancelled as of December 31,
2004.
(c) Seller is the sole legal, beneficial and record owner of the
Stock, and has title thereto, free and clear of any claim, lien, pledge, option,
charge, security interest or encumbrance of any nature and has the right to sell
the Stock to Purchaser pursuant to this Agreement.
(d) Since January 1, 2004, Seller has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Securities and Exchange Commission (the "Commission") under the Exchange Act
(all of the foregoing filed prior to the date hereof or amended after the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, being hereinafter
referred to as the "SEC Documents"). The SEC Documents are available on XXXXX
through the Commission's website at xxxx://xxx.xxx.xxx. As of their respective
dates, the financial statements of the Company incluced in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such Financial
Statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and, fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments); provided, however,
that the SEC Documents do not reflect the separate financial statements of the
Company and its subsidiaries.
(e) Seller has not retained any broker or finder in connection with
the transactions contemplated by this Agreement and is not obligated and has not
agreed to pay any brokerage or finder's commission, fee or similar compensation.
Seller shall indemnify Purchaser and hold Purchaser harmless from and against
all manner of loss, liability, damage or expense (including reasonable legal
fees and disbursements) which Seller may sustain as a result of a violation by
Seller of the representation contained in this Section 5(e). This representation
shall survive the Closing.
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6. Purchaser represents and warrants to Seller as follows:
(a) Purchaser is an accredited investor, as defined in Rule 501 of
the Commission pursuant to the Securities Act of 1933, as amended, and he has
been advised by counsel, to the extent he deems necessary as to the meaning of
the term "accredited investor."
(b) Purchaser has been actively involved in the activities of the
Company for more than the past ten years, in the capacity of a consultant,
officer and/or director and he is fully familiar with the business, financial
condition and prospects of the Company. Accordingly, he understands that:
(i) The Company has incurred continuing losses, has
significant obligations to Seller, has a substantial working capital deficit.
(ii) The Company has closed substantially all of its retail
business.
(iii) Seller plans to continue to engage in its present
business, and that some of the business activities presently conducted by Seller
may have been conducted by the Company and its subsidiaries in the past; and
(iv) The Company may never operate profitably, and if it does
not operate properly, without significant additional funding, it may not be able
to continue in operations.
(c) Purchaser confirms that Seller has made no representation and
warranties whatsoever concerning the Company, its financial condition or its
prospects, and his knowledge and understanding of the Company's business and
financial condition is reflected in the purchase price.
(d) Purchaser has not retained any broker or finder in connection
with the transactions contemplated by this Agreement and is not obligated and
has not agreed to pay any brokerage or finder's commission, fee or similar
compensation. Purchaser shall indemnify Seller and hold Seller harmless from and
against all manner of loss, liability, damage or expense (including reasonable
legal fees and disbursements) which Purchaser may sustain as a result of a
violation by Purchaser of the representation contained in this Section 6(d).
This representation shall survive the Closing.
7. This Agreement constitutes the entire agreement of the parties,
superseding and terminating any and all prior or contemporaneous oral and
written agreements, understandings or letters of intent between or among the
parties with respect to the subject matter of this Agreement. No part of this
Agreement may be modified or amended, nor may any right be waived, except by a
written instrument which expressly refers to this Agreement, states that it is a
modification or amendment of this Agreement and is signed by authorized officers
of the parties to this Agreement, or, in the case of waiver, by the party
granting the waiver. No course of conduct or dealing or trade usage or custom
and no course of performance shall be relied on or referred to by any party to
contradict, explain or supplement any provision of this Agreement, it being
acknowledged by the parties to this Agreement that this Agreement is intended to
be, and is, the complete and exclusive statement of the agreement with respect
to its subject matter.
8. Except as expressly provided in this Agreement, the representations and
warranties of the parties shall terminate at the Closing and shall not survive
the Closing.
9. All notices provided for in this Agreement shall be made in writing and
shall be sent by certified or registered mail, return receipt requested, or
delivered by hand or overnight courier service which provided evidence of
delivery against receipt or sent by telecopier or other similar means of
communication if receipt is confirmed or transmission is confirmed as provided
in this Section 9. Notice, other than by telecopier, shall be deemed given on
receipt or attempted delivery, and notice by telecopier shall be deemed given
when receipt is acknowledged. Notices shall be sent to the parties at the
addresses set forth in the introductory paragraph of this Agreement or, if by
telecopier, to the telecopier number set forth on the signature page of this
Agreement. Either party may, by like notice, change the address or telecopier
number to which notice shall thereafter be sent.
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10. This Agreement shall be governed and construed in accordance with the
laws of the State of New York applicable to agreements executed and to be
performed wholly within such state without regard to principals of conflicts of
law. Each of the parties hereby (a) irrevocably consent and agrees that any
legal or equitable action or proceeding arising under or in connection with this
Agreement shall be brought exclusively in any federal or state court in the
County of New York or Westchester, State of New York, (b) by execution and
delivery of this Agreement, irrevocably submits to and accepts, with respect to
its properties and assets, generally and unconditionally, the jurisdiction of
the aforesaid courts, and (c) agrees that service may be made against such party
either (i) in the manner set forth in Section 11 of this Agreement other than by
telecopier or (ii) in any manner permitted under applicable law.
11. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
12. Each of the parties hereto agrees, at its own cost and expense, to
execute and deliver, or to cause to be executed and delivered, all such
instruments (including all necessary endorsements) and to take all such action
as the other party may reasonably request in order to (a) effectuate the intent
and purposes of, and to carry out the terms of this Agreement, and (b) further
effect the transfer of legal, beneficial and record ownership of the Stock to
Purchaser.
13. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5 OR 6 OF THIS AGREEMENT, NO
PARTY IS MAKING ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO ANY
OTHER PARTY WITH RESPECT TO THE STOCK OR THE COMPANY.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first aforesaid.
Seller:
Security Intelligence Technologies, Inc.
By: /s/ Xxx Xxxxx
--------------------------
Name: Xxx Xxxxx
Title: Chief Executive Officer
Purchaser:
By: /s/ Xxxxxxx Xxxxx
--------------------------
Name: Xxxxxxx Xxxxx
The Company agrees to be bound by the provisions of Section 4(c) of this
Agreement.
CCS INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxx
----------------------
Name: Xxxxxxx Xxxxx
Title: Purchaser
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