EXHIBIT 2.1
MUTUAL RESCISSION AGREEMENT AND RELEASE
THIS MUTUAL RESCISSION AGREEMENT AND RELEASE (the "Agreement"), is entered
into as of June 27, 2005, by and among, INNOVATIVE SOFTWARE TECHNOLOGIES, INC.,
a California corporation ("IST"), IST INTEGRATED SOLUTIONS, INC., a Florida
corporation and a wholly owned subsidiary of IST ("IST Integrated"), XXXXX
DEVELOPMENT, INC., a Florida corporation ("Xxxxx Development"), SAPPHIRE OF
TAMPA BAY, INC., a Florida corporation ("Sapphire," and together with Xxxxx
Development, referred to as "Data Tech"), XXXXXXXXXXX XXXXX, an individual
residing in the State of Florida ("X. Xxxxx"), and XXXX XXXXX, an individual
residing in the State of Florida ("X. Xxxxx," and together with X. Xxxxx,
referred to as the "Selling Stockholders").
BACKGROUND:
The parties entered into an Asset Purchase Agreement, dated May 6, 2005
(the "Asset Purchase Agreement"), pursuant to which IST Integrated acquired on
such date substantially all of the assets and operations of Data Tech (the
"Asset Purchase Transaction"). Subsequent to the closing of the Asset Purchase
Transaction, IST and IST Integrated identified and/or discovered certain facts
that constitute undisclosed liabilities or breaches of representation or
warranty by Data Tech and the Selling Stockholders under the Asset Purchase
Agreement. In addition, Data Tech and the Selling Stockholders have not
completed the assignment of the Leases and Contracts (as defined in the Asset
Purchase Agreement) in accordance with the Asset Purchase Agreement.
In view of the foregoing, the parties desire to rescind the Asset Purchase
Agreement and the Asset Purchase Transaction effective as of the date thereof,
and to release each other from any and all claims arising out of the Asset
Purchase Transaction. To date, no portion of the Purchase Price or Performance
Consideration (as defined in Section 1.4 of the Asset Purchase Agreement) have
been paid by IST Integrated in connection with the Asset Purchase Transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties agree as follows:
1. Recitals. The parties agree that the foregoing recitals are true and
correct.
2. Rescission of Asset Purchase Transaction. The parties hereby rescind
the Asset Purchase Agreement and Asset Purchase Transaction in their entirety,
and in connection therewith, the parties agree as follows:
(a) The Asset Purchase Agreement and Asset Purchase Transaction is
hereby deemed to be rescinded effective as of May 6, 2005, and such agreement
and transaction are hereby deemed by the parties to be void ab initio.
(b) Data Tech and the Selling Stockholders hereby irrevocably and
forever relinquish (i) their right to receive any portion of the Purchase Price
or Performance Consideration under Section 1.4 of the Asset Purchase Agreement
and (ii) their right to receive any other consideration, payment, or entitlement
under the Asset Purchase Agreement or otherwise in connection with the Asset
Purchase Transaction.
(c) The parties agree that the transfer of the Purchased Assets
pursuant to Section 1.1 of the Asset Purchase Agreement is hereby rescinded, and
to the extent that IST or IST Integrated possess title to any such Purchased
Assets as of the date hereof, IST and IST Integrated hereby assign, transfer,
and deliver to Xxxxx Development all of the IST's and IST Integrated's right,
title, and interest in and to such Purchased Assets. The parties agree that the
preceding sentence shall serve as a transfer document and/or xxxx of sale with
respect to the transfers contemplated thereby. The parties also agree that the
transfer and assignment of the Leases and Contracts (as contemplated by the
Asset Purchase Agreement) has never been effectuated.
(d) Xxxxx Development, Sapphire, X. Xxxxx, and X. Xxxxx (each, an
"Indemnifying Party") hereby jointly and severally agree to indemnify and hold
harmless each of IST, IST Integrated, and their respective officers,
stockholders, directors, employees, and affiliates (each, an "Indemnified
Party") from and against any and all costs, liabilities, expenses, damages, and
reasonable attorneys' fees arising from or relating to (i) any claim by a third
party that seeks to hold an Indemnified Party liable or responsible for any act,
omission, or liability relating to Data Tech or its business, including but not
limited to, any act, omission, or liability relating to such business arising
after May 6, 2005, or (ii) any other claim, contract, obligation, liability
related in any way to the business, actions, or omissions of any Indemnifying
Party occurring on, prior to, or after the date of this Agreement.
4. Mutual Releases. Data Tech and the Selling Stockholders, on the one
hand, and IST and IST Integrated, on the other hand, hereby knowingly and
voluntarily waive, release and forever discharge the other party from any and
all claims, demands, damages, lawsuits, obligations, promises, and causes of
action, both known and unknown, whether now existing or arising in the future,
at law or in equity, relating to or arising out of the Asset Purchase Agreement
or Asset Purchase Transaction, provided that this release shall not apply to any
claims, demands, damages, lawsuits, obligations, promises, and causes of action
arising under this Agreement (including without limitation the indemnity
obligations set forth in Section 3(d) above).
5. Records. Upon the execution and delivery of this Agreement, IST and IST
Integrated shall deliver to Xxxxx Development any books or records relating to
Data Tech or its business, provided that IST and IST Integrated shall be
permitted to maintain a copy of such books or records solely for archival
purposes. In the event that IST or IST Integrated shall reasonably need any
books, records, or information relating to Data Tech for accounting purposes or
for purposes of responding to any inquiry from any governmental authority or
agency, Data Tech shall provide copies of such books, records, or information
within five calendar days of any written request from IST or IST Integrated,
provided that IST shall bear the cost of copying any such books or records. In
addition, immediately upon execution of this agreement, Data Tech shall burn to
CD(s) all accounting data and other relevant data of IST and IST Integrated and
hand said CD(s) over to IST. Furthermore, Data Tech shall immediately provide
IST all passwords required to access the accounting records and to all IST and
IST Integrated domains. Data Tech shall then delete all copies of IST and IST
Integrated data and shall shred all documents relating to IST and IST
Integrated.
6. Entire Agreement. This Agreement constitutes and contains the entire
agreement and understanding between the parties concerning the subject matter of
this Agreement and supersedes all prior negotiations, agreements, or
understandings between the parties. If any portion of this Agreement is found to
be unenforceable, the parties desire that all other portions that can be
separated from it, or appropriately limited in scope, shall remain fully valid
and enforceable.
2
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
XXXXX DEVELOPMENT, INC.
By: /s/ Xxxxx Xxxxx
------------------------------
Name: Xxxxx Xxxxx
Its: President
SAPPHIRE OF TAMPA BAY, INC.
By: /s/ Xxxxx Xxxxx
------------------------------
Name: Xxxxx Xxxxx
Its: President
XXXXXXXXXXX XXXXX
By: /s/ Xxxxxxxxxxx Xxxxx
------------------------------
Xxxxxxxxxxx Xxxxx, individually
XXXX XXXXX
By: /s/ Xxxx Xxxxx
------------------------------
Xxxx Xxxxx, individually
INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Its: Chief Financial Officer
IST INTEGRATED SOLUTIONS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Its: Chief Financial Officer
3
