STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of the
20th day of April, 2005 by and between Innovative Software Technologies, Inc.
("IST") and Xxxxxxx Xxxxx Xxxxxxx ("Xxxxxxx").
WHEREAS, the parties hereto have agreed to the sale by IST to DSH of all
of the issued and outstanding stock of Triad Media, Inc., a wholly-owned
subsidiary of IST ("Triad"), which entity conducts all of the IST operations in
Kansas City.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements set forth below, the adequacy and sufficiency of which
is hereby acknowledged, the parties hereto do hereby agree as follows:
1. Consideration Delivered by DSH.
Subject to the conditions and upon the terms set forth in this
Agreement, DSH hereby assigns and returns to IST 4,935,015 shares of
common stock of IST (the "Principal's Stock") and agrees to: (i) forfeit
all unissued shares of common stock of IST that may be owed to DSH for
board service; and (ii) all unpaid preferred B dividends that may be owed
to DSH.
2. Consideration Delivered by IST.
Subject to the conditions and upon the terms set forth in this
Agreement, IST transfers, assigns, sells, and conveys to DSH all of the
issued and outstanding stock of Triad (the "Triad Stock"). The Triad
Stock, upon transfer to DSH, will be free and clear of all liens, claims,
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and encumbrances. DSH hereby represents and warrants to IST that he does
not have any knowledge of any liens, claims, and encumbrances on the Triad
Stock as of the date hereof.
3. Deliveries at Closing.
The closing of the transactions described below (the "Closing") (including
assignments, transfers, deliveries and related events) has been held on the date
hereof and shall be deemed to be effective as of the close of business on such
date, at the offices of Xxxxxxxxx Xxxxxxx in Kansas City, Missouri. Any
prorations or allocations among the parties hereto that are prescribed by this
Agreement shall be made as of such date. At the Closing:
(a) DSH shall deliver to IST certificates representing all of the
shares of the Principals' Stock, duly endorsed in favor of IST or accompanied by
one or more properly endorsed stock powers. DSH represents and warrants that he
owns the Principals' Stock free and clear of all liens, claims, and
encumbrances, and that no other person or entity has any interest in the
Principals' Stock. DSH also hereby represents and warrants to IST that, other
than the Principals' Stock, the XXX Shares (as defined below), and the Harlaxton
Shares (as defined below), DSH does not have any type of beneficial or ownership
interest whatsoever in any stock or other securities of IST. For this purpose, a
"beneficial or ownership interest" in a security means a direct or indirect
(including through relatives or family members), sole or shared right to vote
such security, control the disposition of such security, or receive any of the
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pecuniary benefits arising from or relating to said security. DSH represents and
warrants that he does not have any outstanding options or other rights to
receive any stock or other securities of IST.
(b) IST shall deliver to DSH certificates representing all of the
shares of the Triad Stock, duly endorsed in favor of DSH or accompanied by one
or more properly endorsed stock powers.
(c) IST hereby releases and waives any rights it or its affiliates
may have that restrict the ability of DSH to compete with IST or that in any way
restrict the solicitation of customers of IST by DSH.
(d) IST shall deliver to DSH all of the books and records of Triad,
including the stock ledger, stock book, and minute book of; checking account and
other banking information for; and originals of all other agreements binding on,
Triad and all other books and records necessary to permit DSH to operate Triad
and conduct its business and affairs in an orderly and business like fashion.
Notwithstanding, IST shall be permitted to make and retain a full and complete
copy of the books and records of Triad, and upon the written request of IST and
during reasonable business hours at Triad's place of business, IST shall have
the right (at its expense) to inspect and make copies of any books, records,
documents, or other information relating to the business, assets, or operations
of Triad prior to the date of this Agreement.
(e) The parties agree that the shares of IST capital stock held by
DSH through any XXX or similar account (the "XXX Shares") will not be
transferred to IST on the date of this Agreement. However, the parties agree and
acknowledge that the economic benefit of such XXX Shares is intended to be
transferred back to IST pursuant to this Agreement as of the date hereof, and
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the parties will work together in good faith to identify and pursue a plan for
providing for the transfer of the XXX Shares back to IST that will not result in
an adverse tax liability to DSH (a "Transfer Plan"). In the event that the
transfer would result in an adverse tax liability to DSH, then IST shall have
the right to reimburse DSH for such tax liability, in which case DSH will be
deemed not to have an adverse tax liability pursuant to the immediately
preceding sentence. On such date that a Transfer Plan is presented to DSH, DSH
will immediately take whatever action is necessary for the transfer of the XXX
Shares back to IST, including without limitation signing any necessary
assignment documents. Until the date of any such transfer, DSH will not take any
action, nor cause the subject XXX or other similar account custodian to take any
action, to dispose of the XXX Shares or obtain any economic benefit relating to
the shares, and all such economic benefit will be paid immediately to IST.
4. Representations of IST.
(a) Except for the Triad Stock, there are no outstanding shares of
capital stock of Triad, and there are no outstanding options, warrants, rights
to subscribe to, calls, or commitments of any character whatsoever relating to,
or securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of Triad. All of the Triad Stock is validly issued,
fully paid, and non assessable.
(b) Triad is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Florida and has all requisite
corporate power and authority to own, or lease and operate, its assets and carry
on its business as presently being conducted.
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(c) IST has furnished DSH with a balance sheet, attached hereto as
Exhibit A, reflecting all of the assets, all of the liabilities, and the
resulting stockholders equity of Triad as of the date of this Agreement. Such
balance sheet excludes all intercompany obligations and otherwise accurately
presents, in all respects, the financial position of Triad as of the date of
this Agreement. As of the date of this Agreement, IST and its Affiliates, on the
one hand, do not have any liabilities owing to Triad, and Triad does not have
any liabilities owing to IST or IST's Affiliates. The assets reflected on the
balance sheet include all of the assets set forth on Exhibit B attached hereto.
Aside from the liabilities reflected on Exhibit A, Triad does not as of the date
of this Agreement have any liabilities of a type that would be required to be
reflected on Triad's balance sheet in accordance with GAAP, and IST is not aware
of any other liabilities of Triad, known or unknown, accrued or unaccrued,
contingent or otherwise.
(d) The assets of Triad shall include, in addition to those assets
reflected on Exhibit B, : (i) the non-competition agreements entered into by
employees of IST currently working in the Kansas City office, and as to which
agreements Triad shall, after the date hereof, be the sole party having the
right to enforce the non-competition provisions of the individuals obligated
thereby; and (ii) all accounts, set forth on Exhibit C and the reserves relating
thereto described on Exhibit C; and (iii) any and all rights related to the
Monterrey Plan 31. In addition, Triad will have the right to collect all
receivables reflected on Exhibit A, including any such receivables relating to
the "Monterrey Plan 31."
5. Miscellaneous.
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(a) Each party hereby represents to the other that it has taken all
steps necessary to authorize its execution of this Agreement and the
consummation of the transactions contemplated hereby. Each Party further
represents that the execution, delivery, and performance by such party pursuant
to this Agreement does not require the approval or consent of any third party or
group that has not already been obtained.
(b) DSH hereby agrees to provide to IST a letter stating his
irrevocable relinquishment of any beneficial or ownership interest (as defined
in Section 3(a) above) over any shares held by Harlaxton FLP (the "Harlaxton
Shares") and authorizing the other trustee of such entity to have full
responsibility and control over the disposition of the IST shares held by that
entity.
(c) IST hereby agrees that, included in the minute book to be
provided to DSH as reflected in Section 3 above, will be the resignations of all
individuals serving as officers or directors of Triad immediately prior to the
closing of the transactions contemplated hereby. IST hereby agrees to make the
payroll payment due on April 20, 2005 to the employees working in the KC office.
(d) Each party agrees to indemnify and be fully responsible for the
fees, costs, or other expenses associated with any investment banker, broker,
finder, financial advisor, or other person that has been retained by it or him
or is authorized to act on behalf of it or him and who might be entitled to a
fee or commission, or reimbursement of any expense, in connection with the
transactions contemplated by this Agreement.
(e) DSH hereby agrees that, following the date of this Agreement, he
will not make, and he will use reasonable efforts to cause any affiliate or any
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employee or other person under his control not to make, any representation of
any type which might suggest that he continues to be affiliated with IST.
(f) DSH agrees that DSH will affirmatively provide such assistance
and cooperation as is reasonably requested by IST in connection with IST's
defense of the "KC Explorers" lawsuit and the "DW Ventures" lawsuit.
(g) Each party acknowledges that the other party shall have a cause
of action for any breach of any representation, warranty, or covenant of this
Agreement, including any breach of IST's representation in Section 4(c) above.
(h) DSH hereby represents and warrants that he does not have
knowledge of any liabilities of Triad that are not reflected on the Balance
Sheet set forth as Exhibit A. In addition, DSH represents and warrants that the
reserves of Triad's Vantage Merchant Account #8788210000649 and Triad's Card
Services Merchant Account Number 267115524881 are held by those merchant banks
in accordance with the merchant agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day, month, and year first set forth above.
Xxxxxxx Xxxxx Xxxxxxx
INNOVATIVE SOFTWARE TECHNOLOGIES, INC.
By:
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Name:
-----------------------------
Title:
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EXHIBIT A
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ADJUSTED
Apr 15, 05
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ASSETS
CURRENT ASSETS
CHECKING/SAVINGS
1000 O CASH
1000.10 O BOA OPERATIONS X3005 5,376.59
1000.15 O BOA PAYROLL X8616 3,537.62
1000.20 O PARK BANK X1520 2,149.89
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TOTAL 1000 O CASH 11,064.10
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TOTAL CHECKING/SAVINGS 11,064.10
OTHER CURRENT ASSETS
1120 O INVENTORY ASSET 5,470.74
1160 O ADVANCES - PAYROLL 3,012.50
1250 O N/R - FINANCED SALES 371,510.83
1261 O ALLOWANCE FOR DOUBTFUL ACCOUNTS (33,832.41)
1400 O CARD SERVICE RESERVE 6,877.74
1650 O MERCHANT CARD RESERVE 2,747.50
1680 O PREPAID EXPENSE 7,073.10
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TOTAL OTHER CURRENT ASSETS 362,860.00
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TOTAL CURRENT ASSETS 373,924.10
FIXED ASSETS
1700 O FURNITURE AND EQUIPMENT
1700.01 O COMPUTER EQUIPMENT 149,127.09
1700.02 O COMPUTER SOFTWARE 77,502.66
1700.03 O DECORATIVE ART 3,921.38
1700.04 O OFFICE FURNITURE 50,951.82
1700.05 O PHONE SYSTEM 74,649.13
1700.06 O WEB DESIGN 7,600.00
1700.07 O WEB SITE AND HOSTING 2,486.66
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TOTAL 1700 O FURNITURE AND EQUIPMENT 366,238.74
1700.08 O OFFICE EQUIPMENT 861.09
1730 O LEASEHOLD IMPROVEMENTS 5,452.29
1750 O MACHINERY & EQUIPMENT 18,397.53
1800 O ACCUMULATED AMORTIZATION (55,896.81)
1830 O ACCUMULATED DEPRECIATION (125,965.76)
1850 O MACHINERY & EQ - ACCUM DEPR. (18,163.00)
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TOTAL FIXED ASSETS 190,924.08
OTHER ASSETS
1300 O INTER-COMPANY TO/FROM
1300.10 O INTERCO - IST 0.00
1300.20 O INTERCO - PMG 0.00
1300.30 O INTERCO - SOFTSALE 0.00
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TOTAL 1300 O INTER-COMPANY TO/FROM 0.00
1900 O SECURITY DEPOSIT 4,056.75
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TOTAL OTHER ASSETS 4,056.75
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TOTAL ASSETS 568,904.93
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Page 8.1
LIABILITIES & EQUITY
LIABILITIES
CURRENT LIABILITIES
ACCOUNTS PAYABLE
2000 O ACCOUNTS PAYABLE 72,408.15
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TOTAL ACCOUNTS PAYABLE 72,408.15
OTHER CURRENT LIABILITIES
2010 O EMPLOYEE RESERVE-SLUSH REFUND 4,865.62
2110 O FLEX SPENDING ACCOUNT 834.70
2130 O COMMISSION RESERVE 2,777.06
2140 O HEADSET PAYABLE 1,800.00
2180 O ACCRUED WAGES 27,200.00
2192 O DEFERRED REVENUE 105,216.06
2194 O RESERVE FOR RETURNS 30,098.03
2196 O CURRENT MATURITES OF LTD 8,744.25
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TOTAL OTHER CURRENT LIABILITIES 181,535.72
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TOTAL CURRENT LIABILITIES 253,943.87
LONG TERM LIABILITIES
2400 O FIRST COMMUNITY BANK LOANS
2400.10 O LOAN #213262 1,668.00
2400.20 O LOAN #213595 4,032.64
2400.30 O LOAN #213625 (662.84)
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TOTAL 2400 O FIRST COMMUNITY BANK LOANS 5,037.80
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TOTAL LONG TERM LIABILITIES 5,037.80
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TOTAL LIABILITIES 258,981.67
EQUITY
3000 O CAPITAL STOCK
3000.01 O ADDITIONAL PAID IN CAPITAL 2,171,962.30
3000.02 O COMMON STOCK 1.00
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TOTAL 3000 O CAPITAL STOCK 2,171,963.30
3900 O RETAINED EARNINGS (1,710,197.69)
NET INCOME (151,842.35)
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TOTAL EQUITY 309,923.26
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TOTAL LIABILITIES & EQUITY 568,904.93
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EXHIBIT B
Type Description Quantity
---- ----------- --------
PC Equipment HP Pavailion zd8000 Laptop 1
PC Equipment eMachines Pentium II 733mhz - Workstation 4
PC Equipment Avertec 3510 AMD 1.5 Portable Laptop 2
PC Equipment Compaq SR 1115CL - AMD 2800 Workstation 3
PC Equipment Cybertech P4 2.4 Rackmount Server - Mail Server 1
PC Equipment IBM Think Pad T20 Refurbished - P3 900MHZ 4
PC Equipment Compaq Presario C700 - P3 Laptop 1
PC Equipment AMD 2600 Xxxxx Workstation 1
PC Equipment HP Laserjet 2100 Printer 1
PC Equipment AMD Xxxxx - Chaintech - CIC Customer Database Server 1
PC Equipment AMD Semipron Domain Server 1
PC Equipment Proview 17" Flat Panel Monitor 2
PC Equipment HP Office Jet 600 Printer Fax 2
PC Equipment Asus P2 600MHZ - File Server 1
PC Equipment HP Jet Direct 500X Print Server 1
PC Equipment Dlink C310 Wireless Print Server 1
PC Equipment Dlink DWL200 Wireless Access Point 1
PC Equipment Epson R200 Printer 1
PC Equipment Xxxxxx PC 1061L Copier, Printer Combo 2
PC Equipment HP Laserjet 4 1
Telephone Equipment Telrad COL ULD Cabinet - T1 Card w/Software 2
Telephone Equipment Telrad PII Voice Mail Server w/Software 1
Telephone Equipment Telrad Avanti 3015 Digital Phone 40
Telephone Equipment Telrad Avanti 3020Digital Phone 1
Telephone Equipment Viking 24Q - Monitoring Xxxx 0
Telephone Equipment Plantronics Vista wired Headset/ Base 20
Telephone Equipment Plantronics Vista wireless Headset/ Base 3
Audio Visual Daewoo 20" TV 3
Audio Visual Sylvania DVD - VCR Combo Unit 2
Audio Visual Sony C600 Digital Camer/Camcorder 1
Audio Visual Bright Media Marquee 2
Audio Visual Flat screen Monitor/TV 2
Office Equipment Xxxxxx copiers 2
xxxxxxxxxxxxx.xxx, xxxxxxxxxxxxxx.xxx, xxxxxxxx.xxx,
xxxxxxxxxxxxx.xxx, xxxxxxx0.xxx, xxxxxxxxx.xxx, all
marketing and landing sites. xxxxxxxxxxxx.xxx,
Domains and Websites xxxxxxxxxx.xxx, xxxxxxxxxxxxxxx0.xxx
All software & licenses Product and software on servers and computers
Misc Invetory All product in warehouse and in kc office
Cellular Phones All cell phones at kc office 4
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EXHIBIT C
1. Vantage Merchant #8788210000649 with associated reserve.
2. Card Services Merchant Account Number 267115524881 with associated
reserve.
3. Discover Merchant Account Number 6011-0130-1286
4. American Express Merchant Account Number 0000000000
5. Card Service Merchant Account Number 267115521887
6. Xxxxxxx Media Bank Account at Park Bank 21520
7. Bank of America Bank Account 0034 7904 8616
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