EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (herein, together with the Schedules and
Exhibits attached hereto, referred to as the "Agreement") as of June 30, 2003 by
and among Xxxxxx Family Limited Partnership, a California limited partnership
(the "Buyer"), Canned Interactive, Inc., a Delaware corporation (the "Company"),
Xxxxxxx Xxxxxx, as guarantor of the obligations of Buyer ("Xxxxxx"), and Change
Technology Partners, Inc., a Delaware corporation (the "Seller").
WITNESSETH:
WHEREAS, Seller is the beneficial and record holder of all of the
issued and outstanding shares of capital stock of the Company (collectively, the
"Shares");
WHEREAS, Xxxxxx is currently employed as a managing director but is not
a director of the Company and is the general partner of the Buyer; and
WHEREAS, Seller wishes to sell and Buyer wishes to purchase the Shares
upon the terms of this Agreement;
NOW, THEREFORE, in reliance upon the representations and warranties
made herein and in consideration of the mutual agreements herein contained, the
parties agree as follows:
ARTICLE 1 SALE AND PURCHASE OF THE SHARES
1.1 SALE OF THE SHARES.
Effective as of 11:59 p.m. on the date hereof (the "Effective Time"),
Seller hereby sells the Shares to Buyer, and Buyer hereby purchases the Shares,
free of Encumbrances, as defined herein (other than Encumbrances under the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and regulations promulgated each thereunder (collectively, the
"Securities Laws"), for the purchase price and consideration provided in Section
1.2. Unless otherwise specifically provided in this Agreement, all transactions
contemplated hereunder shall be deemed to have occurred as of the Effective
Time.
1.2 PURCHASE PRICE AND CONSIDERATION FOR THE SHARES.
In consideration of, and in exchange for, Seller's sale of the Shares
to Buyer, Buyer shall deliver to Seller 4,500,000 shares of common stock of
Seller owned by Buyer (the "Merger Shares") free of Encumbrances (other than
Encumbrances under the Securities Laws). On the date hereof, Buyer shall deliver
to Seller share certificate nos. ZQ 006754 and ZQ 006756 representing a total of
4,648,621 shares of common stock of
Seller owned by Buyer; and as soon as reasonably practicable after the date
hereof, Buyer shall deliver to Seller an Assignment Separate from Certificate,
Medallion signature-guaranteed, assigning 4,500,000 of such shares, representing
the Merger Shares, to Seller. Seller shall immediately thereafter take whatever
action is required to cause Seller's transfer agent to return to Buyer the
148,621 shares of common stock of Seller in excess of the Merger Shares.
1.3 TRANSACTIONS ON CLOSING.
(a) On the date hereof, Seller will deliver to Buyer the
following:
(i) stock certificate(s), in form suitable for transfer,
registered in the name of Seller, evidencing the transfer of all right, title
and interest to the Shares endorsed in blank or with an executed blank stock
transfer power attached;
(ii) all stock certificates, stock books, stock transfer
ledgers, minute books and the corporate seals of the Company;
(iii) an executed Mutual Release (the "Mutual Release") in
form same as or substantially similar to that Mutual Release attached hereto as
Exhibit A whereby Xxxxxxx Xxxxxx ("Xxxxxx") and Buyer, on the one hand, and
Seller on the other, shall mutually release one another and each other's
respective representatives, successors and assigns from any and all claims,
rights, demands and/or causes of action, of whatever kind or nature, whether
known or unknown, suspected or unsuspected, at both law and in equity ("Claims")
which either of them now has, have ever had or may hereafter have against any
other, arising contemporaneously with or prior to the date hereof, or on account
of or arising out of any matter, cause or event occurring contemporaneously with
or prior to the date hereof; PROVIDED HOWEVER, that nothing contained in the
Mutual Release shall operate to release any obligations of any of the parties
hereto arising under this Agreement; and
(iv) resignations from each of the Company's directors and
officers effective as of the date hereof.
(b) On the date hereof, Buyer will deliver to Seller facsimile
copies of the following, and as soon as reasonably practicable after the date
hereof, Buyer will deliver to Seller originals of the following:
(i) two stock certificates, in form suitable for
transfer, registered in the name of Seller, evidencing the transfer of all
right, title and interest to the Merger Shares, endorsed in blank or with an
executed blank stock transfer power attached; and
(ii) an executed Mutual Release.
(c) On the date hereof, the Company shall pay the Seller $300,000
as payment in full of the outstanding amount of the Inter-Company Loans (as
defined herein).
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1.4 LIABILITIES OF THE COMPANY.
To the extent that the Seller has guaranteed any of the obligations of
the Company, Buyer shall indemnify Seller for all of such liabilities arising on
or after such date, subject to Articles 2 and 5 herein.
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER
Except to the extent of Xxxxxx'x actual knowledge to the contrary,
Seller represents and warrants to Buyer as of the date hereof that:
2.1 CORPORATE ORGANIZATION AND AUTHORITY OF SELLER.
Seller is a corporation duly organized, validly existing and in good
standing under the laws of Delaware and has all corporate power and authority to
carry on its business as now being conducted and to own its properties. Seller
has full corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance by Seller of this Agreement have been duly authorized by all
requisite corporate action. This Agreement has been duly executed and delivered
by Seller, and (assuming due execution and delivery by Buyer) this Agreement
constitutes a valid and binding obligation of Seller, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
or by general equitable principles.
2.2 CORPORATE ORGANIZATION AND AUTHORITY OF COMPANY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
corporate power and authority to carry on its business as now being conducted
and to own its properties and is duly licensed or qualified and in good standing
as a foreign corporation in each jurisdiction in which it is required to be so
licensed or so qualified, except where the failure to be so licensed or so
qualified would not have a material adverse effect on the financial condition,
assets, liabilities (contingent or otherwise), results of operations, business
or business prospects (a "Material Adverse Effect") of the Company. Copies of
the certificate of incorporation, by-laws and minute books of the Company have
been delivered to Buyer on or before the date hereof, and are complete and
correct copies of such instruments as in effect on the date of this Agreement.
2.3 OWNERSHIP OF SHARES.
Seller is the lawful record and beneficial owner of the Shares. The
Seller owns the Shares free and clear of all pledges, liens, charges,
encumbrances, defects, security interests, claims, options and restrictions of
every kind (each an "Encumbrance" and collectively "Encumbrances") except for
restrictions on transfer under federal and state securities laws. Upon the
delivery of the Shares in the manner contemplated under
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Section 1.3(a), Buyer will acquire the beneficial and legal, valid, and
indefeasible title to such Shares, free and clear of all Encumbrances except for
restrictions on transfer under federal and state securities laws.
2.4 CAPITALIZATION.
The authorized capital of the Company consists of one hundred (100)
shares of common stock, par value $.01 per share (the Common Stock), of which
one hundred (100) shares are issued and outstanding and no shares are reflected
on the books and records of the Company as treasury shares. All such issued and
outstanding shares of Common Stock capital stock have been validly issued and
are fully paid and non-assessable, and all issued and outstanding shares are
owned beneficially and of record by the Seller, also referred to herein as the
Shares. There are no outstanding options, warrants, calls, commitments,
agreements or other rights of any kind to which Seller and/or Company is party
or by which any of them are bound obligating them to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the Common Stock or
any series, class of, or other equity interests in the Company, or obligating
the Company to grant, extend or enter into any such option, warrant, call,
commitment, agreement or right. There are no outstanding contractual obligations
of the Company or any affiliate of the Company to repurchase, redeem or
otherwise acquire any shares of Common Stock of the Company or any affiliate of
the Company on or after the date of this Agreement. There are no outstanding
bonds, debentures, notes or other securities or instruments of the Company,
other than the Shares, having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter on which
the stockholders of the Company may vote.
2.5 NO VIOLATION BY SELLER.
Except as set forth in Schedule 2.5, Seller is not subject to or bound
by any provision of:
(a) any law, statute, rule, regulation or judicial or
administrative decision;
(b) any articles or certificate of incorporation or bylaws;
(c) any mortgage, deed of trust, lease, note, shareholders'
agreement, bond, indenture, other instrument or agreement, license, permit,
trust, custodianship, other restriction; or
(d) any judgment, order, writ, injunction or decree of any court,
governmental body, administrative agency or arbitrator, that would prevent or be
violated by or that would result in the creation of any Encumbrance as a result
of, or under which there would be a default or right of termination as a result
of, the execution, delivery and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby. Except as set forth in
Schedule 2.5, no consent, approval or authorization of or declaration or filing
with any individual, corporation, partnership,
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trust or unincorporated organization or any government or any agency or
political subdivision thereof is required for the valid execution, delivery and
performance by Seller of this Agreement and the consummation of the transactions
contemplated hereby.
2.6 NO VIOLATION BY COMPANY.
Except as otherwise set forth in Schedule 2.6, the Company is not
subject to or bound by any provision of:
(a) any law, statute, rule, regulation or judicial or
administrative decision;
(b) any articles or certificate of incorporation or bylaws;
(c) any mortgage, deed of trust, lease, note, shareholders'
agreement, bond, indenture, other instrument or agreement, license, permit,
trust, custodianship, other restriction; or
(d) any judgment, order, writ, injunction or decree of any court,
governmental body, administrative agency or arbitrator, that would prevent or be
violated by or that would result in the creation of any Encumbrance as a result
of, or under which there would be a default or right of termination as a result
of, the execution, delivery and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby.
2.7 ASSETS.
(a) The tangible physical assets of the Company including, but not
limited to, machinery, tools, equipment, inventory and other tangible physical
assets are sold in "AS IS" condition.
(b) The assets of the Company, whether tangible or intangible,
received or accrued (the "Assets"), reflected in the most recent Financial
Statements or notes thereto, have not been sold transferred, assigned, licensed,
encumbered or otherwise disposed of other than in the ordinary course of
business or with the consent of Xxxxxx.
(c) There are no Encumbrances on or relating to any of the Assets,
other than those identified in this Agreement, Schedule 2.7(c) hereto, the
Financial Statements or notes thereto, aside from those Encumbrances granted by
Xxxxxx or incurred in the ordinary course of business.
(d) There are no agreements, contracts, licenses, sublicenses or
other documents which obligate or require the Company and/or the Buyer to sell,
license, assign, transfer, encumber, mortgage or otherwise impinge upon or
affect the full right and title of the Company's interest in any Asset, aside
from those documents executed by Xxxxxx, those documents explicitly described in
this Agreement, or those documents entered into in the ordinary course of
business.
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2.8 INTELLECTUAL PROPERTY.
(a) To Seller's Best Knowledge, Schedule 2.8(a) sets forth:
(i) all trademarks including common law marks, trademark
registrations and applications therefor, trade names, brand names and other
names, and cautionary notices therefor, all service marks and brand marks
including common law marks, service xxxx registrations and applications
therefor, all trade dress rights and registrations and applications therefor
(which list shall include but not be limited to a statement of and evidence
supporting the date of first use and length of use of each trade, brand and
service xxxx for each product or service in connection with which each trade,
brand and service xxxx is used, and registration and application numbers,
registration and renewal dates, affidavit of use filings), trade secrets,
know-how, patents and patent applications, copyrights, whether common-law or
statutory, and all registrations and applications for any of the foregoing
(including information as to expiration dates of all the foregoing where
applicable) presently owned or used, in whole or in part, by the Company or for
which the Company, are licensed or otherwise equitably entitled;
(ii) any written communications from the Company to third
parties, or from third parties to the Company alleging infringement by third
parties, or any of its affiliates of any of the foregoing or alleging related
acts of unfair competition or activities or actions of any anti-competitive
nature together with all responses to such communications and a description of
the status of each such alleged infringement;
(iii) to the extent that any of the following have been
reduced to writing, all other trade secrets, formulae, proprietary processes and
inventions for which no patent applications are pending and all other industrial
property rights presently owned, in whole or in part, or used by the Company;
and
(iv) all trademark licenses, service xxxx licenses,
copyright licenses, royalty agreements, patent licenses, trade secret licenses,
know-how licenses, assignments, grants, consultant and development agreements,
and contracts with employees or others relating in whole or in part to
disclosure, assignment, registering or patenting, as the case may be, of any
trademarks, service marks, copyrights, inventions, discoveries, improvements,
processes, formulae, trade secrets or other know-how to which the Company is a
party or a third-party beneficiary (all portions of this Section 2.8(a)
collectively referred to as the "Intellectual Property").
(b) To Seller's Best Knowledge, except as otherwise set forth in
Schedule 2.8(b):
(i) the Company owns the Intellectual Property set forth
in Schedule 2.8(a) (including, without limitation, exclusive rights to use and
license the same) free and clear of any Encumbrances;
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(ii) the Company has not granted any other party rights
with respect to the Intellectual Property;
(iii) the patents, trademarks, service marks and copyrights
set forth in Schedule 2.8(a) are valid;
(iv) the trademark registrations, service xxxx
registrations, copyright registrations and patents set forth in Schedule 2.8(a)
have been duly issued and have not been canceled, abandoned or otherwise
terminated;
(v) the trademark applications, service xxxx
applications, copyright applications and patent applications set forth in
Schedule 2.8(a) have been duly filed;
(vi) all licenses, assignments, grants, agreements and
contracts set forth in Schedule 2.8(a) were entered into in the ordinary course
of business, are valid and binding in accordance with their terms and are in
full force and effect and free of any Encumbrances;
(vii) the Company is not in default under any of the
foregoing licenses, assignments, grants, agreements and contracts, and, to
Seller's Best Knowledge, no other party is in default thereunder;
(viii) to the Seller's Best Knowledge, there are no
infringements of or conflicts with the rights of others with respect to the use
of any Intellectual Property by the Company or any affiliate thereto that
individually or in the aggregate with each other or with any failure of any
other representation or warranty in this Article 2 would have a Material Adverse
Effect on the Company; and
(ix) to the Seller's Best Knowledge, no person or entity
is challenging or, infringing on a continuing basis or otherwise violating any
right of the Company with respect to such Intellectual Property.
2.9 FINANCIAL STATEMENTS.
Seller has furnished Buyer with copies of the following financial
statements of the Company: (i) an audited consolidated balance sheet for the
fiscal year ended December 31, 2002; (ii) an audited consolidated statements of
income and cash flow for the fiscal year ended December 31, 2002; (iii) an
unaudited consolidated balance sheet for the 5-month period ended May 31, 2003;
and (iv) unaudited consolidated statements of income and cash flow for the
5-month period ended May 31, 2003 (collectively, the "Financial Statements").
The Financial Statements were prepared in accordance with United States
generally accepted accounting principles ("GAAP") consistently applied
throughout the periods indicated and, to Seller's Best Knowledge, present fairly
the consolidated financial position of the Company at such dates and the
consolidated results of its operations and its consolidated cash flows for the
periods then ended. Except for the conversion of all Inter-Company Loans in
excess of $300,000 prior to the date hereof, to
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Seller's Best Knowledge, there are no (a) liabilities or obligations, whether
known or contingent, liquidated or unliquidated, due or to become due, (b)
transfers of any Assets, Shares or other item which may reasonably be deemed the
subject of this Agreement, and/or (c) material contracts or other agreements
including but not limited to employment, severance, stock option, joint venture
and/or strategic alliance agreements which has not or have not been set forth in
the Financial Statements or notes thereto, or specifically identified in this
Agreement, other than those which have been or may be incurred in the ordinary
course of business.
2.10 TAX MATTERS.
To Seller's Best Knowledge and except as otherwise set forth in
Schedule 2.10, all Federal, state, local and foreign tax returns, declarations
or estimated tax returns and tax reports ("Tax Returns") required to be filed on
or before the date hereof (without benefit of an extension of time in which to
file such Tax Return) in respect of the Company or any of its income, properties
or operations have been duly filed. To Seller's Best Knowledge and except as
otherwise set forth in Schedule 2.10, all Federal, state, local and foreign
income, gross receipts, windfall profits, severance, property, production,
sales, use, license, excise, franchise, employment, withholding or similar
taxes, together with any interest, additions or penalties with respect thereto
("Taxes") shown to be due on such Tax Returns and on assessment notices received
with respect to the Company have been duly paid and that no deficiencies for any
Taxes have been proposed, asserted or assessed.
2.11 LEGAL PROCEEDINGS.
Except as disclosed in Schedule 2.11 herein, there are no claims,
actions, suits, proceedings, arbitrations, mediations, labor disputes,
investigations or inquiries of any nature that are pending or, to Seller's Best
Knowledge, have been threatened, before any mediation, arbitration or other
tribunal, or any federal or state court or other governmental, regulatory or
self-regulatory organization, by or against the Company or any affiliate thereto
or any of their respective Assets or that challenge the validity or propriety of
the transactions contemplated by this Agreement, other than legal proceedings
which are (a) conducted in the ordinary course of business and (b) which
individually and in the aggregate do not constitute or create a Material Adverse
Effect to the Company or any affiliate thereto.
2.12 DISCLOSURE.
To Seller's Best Knowledge, no representations or warranties by Seller
in this Agreement contains or will contain any untrue statement of material fact
or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading. To Seller's Best Knowledge, there is no fact known to
Seller which has or could have a Material Adverse Effect on the Company, which
has not been set forth in this Agreement.
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2.13 SELLER'S BEST KNOWLEDGE.
The term "Seller's Best Knowledge" shall mean the best actual and/or
constructive knowledge of Seller and its employees, other than the Buyer and
Xxxxxx, after due inquiry.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of
the Closing Date that:
3.1 DUE AUTHORIZATION.
This Agreement has been duly executed and delivered by Buyer and
(assuming due execution and delivery by Seller) constitutes a valid and binding
obligation of Buyer, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally or by general equitable
principles.
3.2 OWNERSHIP OF THE MERGER SHARES.
Buyer is the lawful record and beneficial owner of the Merger Shares.
The Buyer owns the Merger Shares free and clear of all Encumbrances except for
restrictions on transfer under federal and state securities laws. Upon the
delivery of the Merger Shares in the manner contemplated under Section 1.3(b),
Seller will acquire the beneficial and legal, valid, and indefeasible title to
such Merger Shares, free and clear of all Encumbrances except for restrictions
on transfer under federal and state securities laws.
3.3 NO VIOLATION.
Buyer is not subject to or bound by any provision of
(a) any law, statute, rule, regulation or judicial or
administrative decision;
(b) any articles or certificate of incorporation or bylaws;
(c) any mortgage, deed of trust, lease, note, shareholders'
agreement, bond, indenture, other instrument or agreement, license, permit,
trust, custodianship, other restriction; or
(d) any judgment, order, writ, injunction or decree of any court,
governmental body, administrative agency or arbitrator, that would prevent or be
violated by, or under which there would be a default as a result of, the
execution, delivery and performance by Buyer of this Agreement and the
consummation of the transactions contemplated hereby. No consent, approval or
authorization of or declaration or filing with any Person is
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required for the valid execution, delivery and performance by Buyer of this
Agreement and the consummation of the transactions contemplated hereby.
3.4 DISCLOSURE.
No representations or warranties by Buyer in this Agreement contains or
will contain any untrue statement of material fact or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
3.5 INVESTMENT INTENT.
Buyer has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the
transactions consummated hereby and Shares being acquired by him hereunder.
Buyer understands and is able to bear any economic risks associated with said
transactions. Buyer acknowledges that it has had the opportunity ask questions
of, and request information from, the Seller concerning the business and
financial condition of the Company, that Buyer has requested all information
necessary for him to make investment and other decisions with respect to the
transactions consummated hereby and that Buyer has been provided with all such
information. The shares being acquired by Buyer hereunder are being acquired by
Buyer in good faith solely for its own account, for investment and not with a
view toward resale or other distribution within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"). Buyer understands that the
Shares have not been registered under the Securities Act or qualified under any
state securities laws in reliance on exemptions from registration provided
thereunder, and further understands that such Buyer is acquiring the Shares
without being furnished any literature or prospectus.
ARTICLE 4 CERTAIN COVENANTS AND AGREEMENTS OF SELLER AND BUYER
4.1 INTER-COMPANY LOAN.
Notwithstanding any other provision hereof, Seller represents, warrants
and agrees that: (a) on or prior to the date of this Agreement, all
inter-company loans, debts, notes, amounts, liabilities, advances and
obligations of any kind whatsoever (collectively the "Inter-Company Loans") owed
by the Company to the Seller in excess of $300,000 have been converted by Seller
into equity of the Company without the issuance to Seller of any additional
capital stock or the granting of any right to receive any additional equity in
the Company, and (b) upon Seller's receipt of the payment of $300,000 from the
Company as described in Section 1.3(c) herein, all Inter-Company Loans shall
have been paid in full and the Company shall have no further obligations to the
Seller for Inter-Company Loans or otherwise except as set forth in this
Agreement.
4.2 OBLIGATIONS OF COMPANY IN RESPECT OF CERTAIN EMPLOYMENT SEPARATION
BENEFITS.
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Buyer hereby acknowledges Seller has informed Buyer that on or before
the date of this Agreement, Seller's employment of Xxxxxxx X. Xxxxx ("Xxxxx")
and Xxxx Xxxxxxxx ("Xxxxxxxx") shall be terminated. Buyer agrees that the
Company shall provide extended coverage to Xxxxx and Bradford in respect of
benefits available to them under the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA") for so long as each shall be eligible for such benefits,
and the Company shall administer such benefit plan in accordance with the plan
agreement for so long as Xxxxx and Xxxxxxxx remain eligible for such plan;
PROVIDED THAT the Company shall have no obligations to pay any premiums in
connection therewith except as set forth in this paragraph. The Company shall
advance monthly premium payments for coverage for (a) Xxxxx from the date of
this Agreement until and including December 31, 2004, and (b) Bradford from the
date of this Agreement until and including December 31, 2003; PROVIDED THAT
Seller shall reimburse each such advance in full no later than the close of
business on the 30th day following Seller's receipt of the Company's invoice
regarding such advance. If such reimbursement is not received by the
aforementioned time, the Company shall provide Xxxxx and Xxxxxxxx with written
notice of the Seller's failure to make the premium payment reimbursement
required hereunder. Each individual shall then have 15 days to reimburse the
Company for their portion of the premium payment made by the Company. In the
event that Xxxxx or Bradford fails to reimburse the Company for the premium
payment within such 15 day period, then the Company shall have no further
obligation or liability to advance the payment of such premiums for the
individual(s) who fail(s) to make such payment. In any event, the Company shall
have no obligation to advance premiums for coverage for Xxxxx after December 31,
2004 or for coverage for Bradford after December 31, 2003.
4.3 ASSISTANCE AND COOPERATION IN RESPECT OF AUDIT OF COMPANY.
The parties agree that Buyer, Seller and Company shall each make
available to one another all information, records and documents requested by
each and any of the parties or an auditing firm selected by Seller in its sole
discretion and at its sole cost and expense (the "Auditor"), as requested by the
Auditor to prepare and complete an independent audit of the Company (the
"Audit"), and to otherwise cooperate fully in the Auditor's preparation and
completion of the Audit. In no event shall the performance and completion of the
Audit effect the transactions contemplated under this Agreement.
4.4 ATTORNEYS FEES, FINDER'S FEES AND OTHER EXPENSES.
Buyer and Seller agree that Seller will pay an amount not to exceed Ten
Thousand Dollars ($10,000.00) in attorneys' fees, including costs and expenses,
actually incurred by the Buyer in connection with the transactions contemplated
by this Agreement upon presentation of bills itemizing such fees in a form
reasonably acceptable to the Seller, but in any event no later than ten (10)
days after presentation. Except as otherwise expressly provided herein, Buyer
and Seller will bear their own expenses in connection with this Agreement and
its performance. In addition, Seller, on the one hand, and Buyer, on the other
hand, each represent and warrant to the other that the negotiations relative to
this
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Agreement and the transactions contemplated hereby have been carried on in such
a manner as not to give rise to any valid claims against the other party, the
Company for a brokerage commission, finder's fee or other like payment.
4.5 PRESS RELEASES.
Except as required by law or stock exchange regulation, any public
announcements regarding the transactions contemplated hereby shall be made only
with the mutual consent of Seller and Buyer.
4.6 TAXES.
(a) Seller shall be responsible for the preparation and filing of
all Tax Returns for the Company for all periods (including the consolidated,
unitary, and combined Tax Returns for Seller which include the operations of the
Company for any period ending on or before the date hereof) for all taxable
periods that end on or before the Effective Time, and the payment of all Taxes
due thereunder. The Company shall be responsible for the preparation and filing
of all Tax Returns for the Company for all periods commencing after the
Effective Time, and the payment of all Taxes due thereunder. Any Tax Return to
be prepared and filed for taxable periods beginning before the Effective Time
and ending after the Effective Time shall be prepared on a basis consistent with
the last previous similar Tax Return.
(b) If the parties are permitted but not required under applicable
federal, state or local Tax laws to treat the date hereof as the last day of a
taxable period, the parties shall treat such day as the last day of a taxable
period. The parties also agree that they will treat the Company as if it ceased
to be part of the affiliated group of corporations of which Seller is a member
within the meaning of Section 1504 of the Code, and any comparable or similar
provision of state, local or foreign laws or regulations, as of the close of
business on the date hereof.
(c) Any Taxes for a taxable period beginning before the date
hereof and ending after the date hereof shall be allocated between the portion
of the period ending on the date hereof and the portion of the period commencing
on the day immediately following the date hereof based on the actual operations
of the Company during such portions of the period determined by closing the
books of the Company as of the end of the date hereof, and each such portion of
such period shall be deemed to be a taxable period (whether or not it is in fact
a taxable period.
(d) Seller shall be entitled to any refunds (including any
interest paid thereon) or credits of Taxes for which it is responsible
hereunder. The Company shall be entitled to any refunds (including any interest
paid thereon) or credits of Taxes for which it is responsible hereunder. The
Company shall promptly forward to or reimburse Seller for any refunds (including
any interest paid thereon) or credits due Seller after receipt thereof, and
Seller shall promptly forward to the Company or reimburse the Company for
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any refunds (including any interest paid thereon) or credits due the Company
after receipt thereof.
(e) Seller and the Company shall cooperate in the preparation of
all Tax Returns for any Tax periods for which one party could reasonably require
the assistance of the other party in obtaining any necessary information. Such
cooperation shall include, but not be limited to, furnishing prior years' Tax
Returns or return preparation packages to the extent related to the Company
illustrating previous reporting practices or containing historical information
relevant to the preparation of such Tax Returns, and furnishing such other
information within such party's possession requested by the party filing such
Tax Returns as is relevant to their preparation. Such cooperation and
information also shall include without limitation provision of powers of
attorney for the purpose of signing Tax Returns and defending audits and
promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any applicable governmental authority
responsible for the imposition of Taxes (the "TAXING AUTHORITY") which relate to
the Company or its business, and providing copies of all relevant Tax Returns to
the extent related to the Company or its business, together with accompanying
schedules and related work papers, documents relating to rulings or other
determinations by any Taxing Authority and records concerning the ownership and
Tax basis of property, which the requested Party may possess. Seller and the
Company shall make their respective employees and facilities available on a
mutually convenient basis to explain any documents or information provided
hereunder.
(f) Seller shall have the right, at their own expense, to control
any audit or examination by any Taxing Authority ("TAX AUDIT"), initiate any
claim for refund, contest, resolve and defend against any assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to any and all
Taxes for which it is responsible hereunder. The Company shall have the right,
at its own expense, to control any other Tax Audit, initiate any other claim for
refund, and contest, resolve and defend against any other assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to any and all
Taxes for which it is responsible hereunder.
(g) All Tax sharing agreements or similar arrangements with
respect to or involving the Company or its business shall be terminated on or
prior to the date hereof and, after the date hereof, Buyer and the Company shall
not be bound thereby or have any liability thereunder for amounts due in respect
of periods ending on or before the date hereof.
ARTICLE 5 INDEMNIFICATION
5.1 INDEMNIFICATION BY SELLER.
Seller, hereby agrees to defend, indemnify and hold harmless Buyer, the
Company, Xxxxxx and their respective successors, assigns and affiliates
(collectively, the "Buyer Indemnitees") from and against any and all losses,
deficiencies, liabilities, damages, assessments, judgments, costs and expenses,
including attorneys' fees (both
13
those incurred in connection with the defense or prosecution of the
indemnifiable claim and those incurred in connection with the enforcement of
this provision) (collectively, "Buyer Losses"), caused by, resulting from or
arising out of:
(a) (i) breaches of representation or warranty hereunder on the
part of Seller; and (ii) failures by Seller to perform or otherwise fulfill any
covenant, undertaking or other agreement or obligation hereunder;
(b) claims arising in connection with breach of contract, death,
personal injury, other injury to any individual, partnership, corporation,
association, joint stock company, trust, joint venture, unincorporated
organization, entity, governmental entity or any subdivision thereof
(collectively, "Persons"), property damage, losses or deprivation of rights
(whether based on statute, negligence, breach of warranty, strict liability or
any other theory) caused by or resulting from, directly or indirectly, the
manufacture or sale of any product, or the provision of any services, by the
Company on or before the date hereof, or any other claims asserted against the
Company arising from any action or inaction of Seller or the Company on or
before the date hereof;
(c) any and all (i) Taxes imposed on Seller (including, without
limitation, the Company and each Subsidiary) for, or relating to, all periods
ending on or before the date of this Agreement, including, but not limited to,
(A) any liability of the Company or any subsidiary, parent and/or affiliate
under any Tax sharing agreement, whether or not written, and (B) any Tax
liability resulting from the termination, as of the date hereof, of the Company
or any subsidiary, parent and/or affiliate as a member of any consolidated,
affiliated, combined, unitary or other similar Tax group, (ii) liabilities of
Seller or any subsidiary, parent and/or affiliate of Seller (including, without
limitation, the Company and each Subsidiary) for Taxes imposed under Treasury
Regulation Section 1.1502-6 or any analogous state, local or foreign tax
provision, as a result of being a member of a consolidated, affiliated,
combined, unitary or other similar group for any taxable period commencing on or
before the date hereof;
(d) any and all damages arising out of the issuance by the Company
of a replacement certificate in exchange for the lost, stolen or destroyed stock
certificate representing the Shares; and
(e) any and all actions, suits, proceedings, claims, demands,
incident to any of the foregoing or such indemnification;
PROVIDED, HOWEVER, that if any claim, liability, demand, assessment, action,
suit or proceeding shall be asserted in respect of which a Buyer Indemnitee
proposes to demand indemnification ("Buyer Indemnified Claims"), Buyer or such
other Buyer Indemnitee shall notify Seller thereof, PROVIDED FURTHER, HOWEVER,
that the failure to so notify Seller shall not reduce or affect Seller's
obligations with respect thereto except to the extent that Seller is materially
prejudiced thereby. Subject to rights of or duties to any insurer or other third
Person having liability therefor, Seller shall have the right promptly upon
receipt of such notice to assume the control of the defense, compromise or
14
settlement of any such Buyer Indemnified Claims (provided that any compromise or
settlement must be reasonably approved by Buyer), including, at its own expense,
employment of counsel reasonably satisfactory to Buyer; PROVIDED, HOWEVER, that
if Seller shall have exercised its right to assume such control, Buyer may, in
its sole discretion and at its expense, employ counsel to represent it (in
addition to counsel employed by Seller) in any such matter, and in such event
counsel selected by Seller shall be required to cooperate with such counsel of
Buyer in such defense, compromise or settlement.
5.2 INDEMNIFICATION BY BUYER.
Buyer hereby agrees to defend, indemnify and hold harmless Seller and
its officers, directors, employees, agents, successors, assigns and affiliates
(collectively, "Seller Indemnitees") from and against any and all losses,
deficiencies, liabilities, damages, assessments, judgments, costs and expenses,
including attorneys' fees (both those incurred in connection with the defense or
prosecution of the indemnifiable claim and those incurred in connection with the
enforcement of this provision) (collectively, "Seller Losses"), resulting from
or arising out of:
(a) (i) breaches of representation and warranty hereunder on the
part of Buyer; and (ii) failures by Buyer to perform or otherwise fulfill any
undertaking or agreement or obligation hereunder;
(b) claims arising in connection with breach of contract, death,
personal injury, other injury to Persons, property damage, losses or deprivation
of rights (whether based on statute, negligence, breach of warranty, strict
liability or any other theory) caused by or resulting from, directly or
indirectly, the manufacture or sale of any product, or the provision of any
services, by the Company after the date hereof, PROVIDED THAT Buyer shall not be
required to indemnify Seller and/or Seller Indemnitees for any such claim or
action arising from or resulting from any action, claim, circumstance, event or
other occurrence or lack thereof which occurred on or before the date hereof
other than those claims asserted against the Seller which specifically and
directly arise from any action or inaction of Buyer or the Company after the
date hereof; and
(c) any and all actions, suits, proceedings, claims and demands
incident to any of the foregoing or such indemnification;
PROVIDED, HOWEVER, that if any claim, liability, demand, assessment, action,
suit or proceeding shall be asserted in respect of which a Seller Indemnitee
proposes to demand indemnification ("Seller Indemnified Claims"), Seller or such
other Seller Indemnitee shall notify Buyer thereof; PROVIDED FURTHER, HOWEVER,
that the failure to so notify Buyer shall not reduce or affect Buyer's
obligations with respect thereto except to the extent that Buyer is materially
prejudiced thereby. Subject to rights of or duties to any insurer or other third
Person having liability therefor, Buyer shall have the right promptly upon
receipt of such notice to assume the control of the defense, compromise or
settlement of any such Seller Indemnified Claims (provided that any compromise
or
15
settlement must be reasonably approved by Seller) including, at its own expense,
employment of counsel reasonably satisfactory to Seller; PROVIDED, HOWEVER, that
if Buyer shall have exercised its right to assume such control, Seller may, in
its sole discretion and at its expense, employ counsel to represent it (in
addition to counsel employed by Buyer) in any such matter, and in such event
counsel selected by Buyer shall be required to cooperate with such counsel of
Seller in such defense, compromise or settlement.
ARTICLE 6 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
The covenants and obligations contained in this Agreement shall survive
the date of this Agreement without limitation. The representations and
warranties contained herein shall survive the date of this Agreement for a
period of one (1) year. Buyer's claim for indemnification under Section
5.1(a)(i) for a breach of any representation or warranty shall be made on or
prior to the date, if any, on which the survival period for such representation
or warranty expires, it being understood that claims made on or prior to such
expiration date shall survive such expiration date.
ARTICLE 7 MISCELLANEOUS
7.1 WAIVER.
Any failure of Seller to comply with any of its obligations or
agreements herein contained may be waived only in writing by Buyer. Any failure
of Buyer to comply with any of its obligations or agreements herein contained
may be waived only in writing by Seller.
7.2 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given upon receipt of: hand delivery;
certified or registered mail; return receipt requested; or telecopy transmission
with confirmation of receipt:
(i) If to Seller, to:
Change Technology Partners, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Attention: Mr. Xxxxxxx Xxxxxxx
16
(with a copy to)
Xxxxxx, Xxxxx & Xxxxxxx, LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
(ii) If to Buyer or the Company, to:
Xxxxxxx Xxxxxx
Canned Interactive, Inc.
0000 Xxxxxxxxx Xxxx.
Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
(with a copy to)
Richman, Mann, Chizever, Xxxxxxxx & Xxxxxx, PC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Such names and addresses may be changed by written notice to each person listed
above.
7.3 GOVERNING LAW AND CONSENT TO JURISDICTION (DISPUTE RESOLUTION).
(a) This Agreement shall be governed by and construed in
accordance with the internal substantial laws and not the choice of law rules of
the State of California.
(b) Any judicial proceeding brought with respect to this Agreement
must be brought in any court of competent jurisdiction in the State of
California, and, by execution and delivery of this Agreement, each party (i)
accepts, generally and unconditionally, the exclusive jurisdiction of such
courts and any related appellate court, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement and (ii)
irrevocably waives any objection it may now or hereafter have as to the venue of
any such suit, action or proceeding brought in such a court or that such court
is an inconvenient forum. THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING TO WHICH THEY ARE BOTH PARTIES
17
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH THIS AGREEMENT.
7.4 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
7.5 HEADINGS.
The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
7.6 ENTIRE AGREEMENT.
This Agreement, including the Exhibits and Schedules hereto and the
documents referred to herein, embodies the entire agreement and understanding of
the parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
7.7 AMENDMENT AND MODIFICATION.
This Agreement may be amended or modified only by written agreement of
the parties hereto.
7.8 BINDING EFFECT; BENEFITS.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns; nothing in this
Agreement, express or implied, is intended to confer on any Person other than
the parties hereto and their respective successors and assigns (and, to the
extent provided in Sections 5.1 and 5.2, the other Buyer Indemnitees and Seller
Indemnitees) any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
CHANGE TECHNOLOGY PARTNERS, INC.
A DELAWARE CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
---------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
CANNED INTERACTIVE, INC.
A DELAWARE CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
---------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
XXXXXX FAMILY LIMITED PARTNERSHIP
A CALIFORNIA LIMITED PARTNERSHIP
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxx Xxxxxx
Title: General Partner
/s/ Xxxxxxx Xxxxxx
---------------------------------
Xxxxxxx Xxxxxx, Individually
19
EXHIBIT A
MUTUAL RELEASE
--------------
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SCHEDULE 2.5 - VIOLATIONS BY SELLER & REQUIRED CONSENTS, APPROVALS AND
AUTHORIZATIONS
None.
SCHEDULE 2.6 - VIOLATIONS BY THE COMPANY
None.
SCHEDULE 2.7(C) - ENCUMBRANCES ON THE COMPANY'S ASSETS
UCC-1 Financing Statement filed with the California Secretary of the
State on April 21, 2000 and continued pursuant to UCC-3 Amendment filed on May
16, 2002 covering the Assets with respect to an equipment lease with Xxxxx Fargo
Bank Minnesota, N.A.
SCHEDULE 2.8(A) - COMPANY'S INTELLECTUAL PROPERTY
None.
SCHEDULE 2.8(B) - ENCUMBRANCES ON THE COMPANY'S INTELLECTUAL PROPERTY
None.
SCHEDULE 2.10 - TAX MATTERS
The Company has received an extension of time for filing its Federal
Tax Return for its fiscal year 2002, which extension ends on September 15, 2003.
Any Taxes owed by the Company in respect of its 2002 Federal Tax Return have not
been paid by the Company or the Seller.
SCHEDULE 2.11 - LEGAL PROCEEDINGS
None.
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