EXHIBIT 99.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as
of November 8, 2001 (the "Closing Date") by and among XXXX X. XXXXXXX, an
individual ("Xxxxxxx") with an address of 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxxxx 00000, and CHANGE TECHNOLOGY PARTNERS, INC., a Delaware corporation with
a principal place of business located at 000 Xxxxxxxxx Xxxx, 0xx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000 ("CTPI", with CTPI being known as the "Member").
WHEREAS, CTPI is currently the sole Member of INSYS TECHNOLOGY
LLC, a Delaware limited liability company (the "Company") with a principal place
of business located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, and
desires to sell, transfer, and deliver that portion of its Membership Interest
(as defined in the Operating Agreement) in the Company entitling it to 51% of
the Percentage Interests (as defined in the Operating Agreement) and an initial
capital account of $50,000 (the "Purchased Interest") to Xxxxxxx and Xxxxxxx
desires to purchase such Purchased Interest from CTPI pursuant to the terms and
conditions as provided herein.
NOW, THEREFORE, in consideration of the premises of mutual
covenants stated herein, the parties hereto, intend to be legally bound hereby,
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 PURCHASE AND SALE. Upon the terms and subject to the
conditions of this Agreement, CTPI shall sell, transfer and deliver to Xxxxxxx,
and Xxxxxxx shall purchase from CTPI, the Purchased Interest. Simultaneous with
the execution of this Agreement, CTPI shall execute and deliver to Xxxxxxx an
Assignment in the form attached as EXHIBIT 1.1 dated of even date herewith
thereby conveying the Purchased Interest to Xxxxxxx. After consummation of the
transactions contemplated by this Agreement, Xxxxxxx shall own of record and
beneficially fifty-one percent (51%) of the total Membership Interests and CTPI
shall own of record and beneficially forty-nine percent (49%) of the total
Membership Interests.
1.2 PURCHASE PRICE. In consideration of the sale, transfer and
delivery of the Purchased Interest, Xxxxxxx shall pay to CTPI an amount (the
"Purchase Price") equal to Fifty Thousand Dollars ($50,000) in cash on the
Closing Date.
1.3 EFFECTIVE DATE. The purchase and sale of the Purchased
Interest shall be effective as of the date hereof (the "Effective Date").
1.4 OPERATING AGREEMENT. Simultaneously with the execution of this
Agreement, CTPI and Xxxxxxx shall enter into an Operating Agreement (the
"Operating Agreement") of even date herewith to set forth their respective
rights and obligations as Members with respect to their Membership Interests in
the Company.
1.5 SUBLEASE LETTER AND SOFTWARE ASSIGNMENT AGREEMENT.
Simultaneous with the execution of this Agreement, Xxxxxxx shall execute and
deliver to CTPI, and CTPI shall approve and acknowledge, that certain letter of
even date relating to that certain Sublease dated May 10, 2001 by and between
Eurotainer U.S., Inc., as sublandlord and CTPI, trading as InSys, as subtenant
(the "Sublease Letter") in the form attached hereto as EXHIBIT 1.5(A). Further,
simultaneous with the execution of this Agreement, the parties shall execute and
deliver to the other that certain Software Assignment Agreement of even date
herewith (the "Software Assignment Agreement") in the form attached hereto as
EXHIBIT 1.5(B) whereby CTPI assigns, transfers and conveys to the Company
certain software as described in the Software Assignment Agreement.
1.6 CTPI'S OBLIGATIONS. Simultaneous with the execution of this
Agreement, CTPI shall deliver or cause to be delivered to Xxxxxxx:
1.6.1 an Assignment;
1.6.2 evidence that CTPI has converted $389,000 of
intercompany debt to paid-in capital as is disclosed on the closing balance
sheet of InSys Technology Inc. (the "Balance Sheet") attached hereto as EXHIBIT
1.6.2; and
1.6.3 such other duly executed documents and certificates
as may be reasonably required by Xxxxxxx to be delivered by CTPI pursuant to the
terms of this Agreement.
1.7 XXXXXXX'X OBLIGATIONS. Simultaneous with the execution of this
Agreement, Xxxxxxx shall deliver or cause to be delivered to CTPI:
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1.7.1 the Purchase Price payable by wire transfer of
immediately available funds to such account or
accounts as CTPI shall designate prior to the date
hereof;
1.7.2 proof, in the form and manner satisfactory to CTPI
that the Employment Agreement, dated October 5, 2000,
by and between CTPI and Xxxxxxx (the "Employment
Agreement"); shall have been terminated;
1.7.3 an acknowledgment and waiver, in a form and manner
satisfactory to CTPI, that any stock options, common
stock, preferred stock or other equity securities of
the Company or CTPI (as successor-in interest to
eHotHouse Inc.) (collectively, the "Securities"), to
be granted or issued to Xxxxxxx pursuant to Sections
5 and 6 of the Employment Agreement have not been
granted or issued to him and that Xxxxxxx waives the
obligation that the Securities be granted or issued
and that Xxxxxxx does not, as of the Closing Date,
either personally or beneficially, own any Securities
of CTPI; and
1.7.4 such other duly executed documents and certificates
as may be reasonably required by CTPI to be delivered
by Xxxxxxx pursuant to the terms of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 BY CTPI. CTPI hereby represents and warrants to Xxxxxxx as of
the Closing Date as follows:
2.1.1 ORGANIZATION AND GOOD STANDING. The Company is a
limited liability company duly formed on November 7, 2001 and is validly
existing and in good standing under the laws of the State of Delaware. The
Company has all requisite company power and authority to own, operate, develop,
lease and encumber it assets and properties and to carry on its business as now
being conducted.
2.1.2 CAPITALIZATION. CTPI owns of record and beneficially
all of the Membership Interests in the Company; the Membership Interests owned
by CTPI comprise all of the outstanding Membership Interests or other equity
interests of the Company; and there are no
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options, warrants, rights or agreements obligating the Company to issue or sell
any Membership Interests or other equity interests of the Company, or any
security convertible into or exchangeable for any such Membership Interest or
other equity interests of the Company. CTPI has a capital account in the Company
of not less than $389,000 consisting solely of cash contributions, including
such contributions effected by converting of debt to equity.
2.1.3 NO UNDISCLOSED LIABILITIES. CTPI has not caused the
Company to incur any liabilities, debts, obligations or claims of any nature
(whether absolute, accrued, contingent or otherwise) that are not shown or
provided for on the Balance Sheet.
2.1.4 ABSENCE OF CHANGES. CTPI has not caused any material
adverse change in the financial position of the Company taken as a whole, or any
material adverse effect on the condition, prospects or operations of the
business of the Company taken as a whole or any damage, destruction or loss from
fire, water, accident or other such casualty (whether or not covered by
insurance) with respect to the properties and assets of the Company.
2.1.5 TITLE TO PROPERTY, LIENS AND ENCUMBRANCES. To the
knowledge of CTPI, the Company has good and marketable title to its assets and
properties, free from all liens, charges, pledges, security interests, claims,
and encumbrances of every kind or character whatsoever. The term "knowledge of
CTPI" means the actual knowledge, without the independent investigation of
Xxxxxxx Xxxxx.
2.1.6 TAXES AND OTHER ASSESSMENTS. The Company is on a
calendar year for federal income tax purposes and has filed all income tax
returns required to be filed on or prior to the Closing Date under foreign,
federal, state and local laws applicable to the Company. To the knowledge of
CTPI, the Company has paid all other taxes owed by the Company, except such
other taxes or assessments, if any, as are being contested in good faith and as
to which adequate reserves have been provided and except where the failure to
make such payments would not have a material and adverse effect of the financial
position of the Company. To the knowledge of CTPI, there is no action, suit,
proceeding, investigation, audit or claim pending against, or with respect to,
the Company in respect of any tax or assessment which would have a material and
adverse effect on the financial position of the Company. CTPI shall cause the
Company to close its books as of the Effective Date. All items of income, gain,
loss and deductions for periods ending on or prior to such date shall be
allocated entirely to CTPI. CTPI shall prepare its respective tax returns in a
manner which is consistent with this paragraph.
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2.1.7 AUTHORITY. CTPI has all necessary power and authority
to execute and deliver this Agreement, to perform his respective obligations
under this Agreement and to consummate the transactions contemplated by this
Agreement.
2.1.8 BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by CTPI and constitutes a legal, valid and
binding obligation of CTPI, enforceable against CTPI in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors rights in general, or by general principles of equity.
2.1.9 OWNERSHIP. CTPI owns, beneficially and of record,
free and clear of any and all encumbrances, the Purchased Interest. CTPI
acquired the Purchased Interest upon formation of the Company and CTPI has not,
at any time prior to the date hereof, transferred, pledged, assigned,
encumbered, hypothecated, sold or otherwise transferred all or any part of his
Purchased Interest. CTPI is not a party to any option agreement or other
agreement with any other Person pursuant to which such other Person has or may
have the right to acquire any Membership Interest held of record by CTPI. CTPI
has the right, power and authority to sell, transfer and deliver the Purchased
Interest as provided in this Agreement.
2.2 BY XXXXXXX. Xxxxxxx hereby represents and warrants to CTPI as
of the Closing Date as follows:
2.2.1 INSPECTION/EVALUATION. Xxxxxxx acknowledges that he
has had an opportunity to inspect and evaluate the Company's assets and
liabilities, that he possesses sufficient experience and knowledge in requesting
information and evaluating and purchasing assets of companies similar to the
Company, so that he is capable of evaluating the merits and risks of this
transaction and of protecting his own interests. Xxxxxxx is represented by
independent legal counsel and has requested all information, made all inquiries,
made sufficient inspection and done all things that Xxxxxxx and Xxxxxxx'x
counsel deems sufficient in evaluating this transaction.
2.2.2 RESTRICTED SECURITIES. Xxxxxxx understands that the
Purchased Interest will not be registered at the time of its issuance under the
Securities Act of 1933 (the "Securities Act"), for the reason that the sale
provided for in this Agreement is exempt pursuant to Section 4(2) of the
Securities Act and that the reliance of the CTPI on such exemption is predicated
in part on Xxxxxxx'x representations set forth herein.
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2.2.3 "AS IS SALE". Xxxxxxx understands that CTPI makes no
representations and warranties, either expressed or implied, as the Company's
business or the Company's assets, which are to be conveyed hereunder "As Is,
Where Is" on the Closing Date, and in their then present condition other than
those set forth in this Agreement.
2.2.4 AUTHORITY. Xxxxxxx has all necessary power and
authority to execute and deliver this Agreement, to perform his respective
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement.
2.2.5 BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by Xxxxxxx and constitutes a legal, valid and
binding obligation of Xxxxxxx, enforceable against Xxxxxxx in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors rights in general, or by general principles of equity.
ARTICLE III
COVENANTS
3.1 CERTAIN TAX MATTERS.
3.1.1 CTPI and Xxxxxxx shall cooperate in the timely making
of all filings, returns, reports and forms as may be required in connection
therewith.
3.1.2 If, at any time on or after the Effective Date, the
Company receives any tax refund, rebate, return or other similar payment from
the taxing authority of any jurisdiction relating to or arising out of taxable
periods ending on or prior to the Effective Date, such payment shall be retained
by the Company.
3.2 CONFIDENTIALITY. CTPI and Xxxxxxx agree that they, and their
respective representatives (or, in the case of CTPI, any officers, or directors)
will hold in strict confidence the negotiations relating to the transactions
contemplated by this Agreement, and all information exchanged pursuant thereto.
3.2 EQUITY. CTPI shall cancel all indebtedness owed by the Company
to CTPI other than the indebtedness evidenced by that certain Note in the
principal amount of $100,000 dated as of the date hereof.
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ARTICLE IV
SURVIVAL AND INDEMNIFICATION
4.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the parties made in this Agreement or provided
for herein shall survive the Closing Date, except to the extent expressly
provided herein, notwithstanding any investigation at any time made by or on
behalf of the other party; PROVIDED, HOWEVER, that if prior to the date hereof
any party has actual knowledge of the breach of any representation, warranty or
covenant contained herein by another party hereto, and such party nonetheless
consummates the transactions contemplated by this Agreement, such party shall be
deemed to have waived its or his rights (including the right to seek damages)
with respect to the breach of such representation, warranty or covenant.
4.2 INDEMNIFICATION BY CTPI. CTPI hereby agrees to defend,
indemnify and hold Xxxxxxx and any of his permitted transferees (collectively,
the "Xxxxxxx Indemnitees") harmless from and against any and all claims,
liabilities, losses or damages, together with reasonable costs and expenses,
including reasonable legal fees ("Losses"), as a result of or arising out of:
(i) any breach in any material respect by CTPI of the representations and
warranties contained in Article 2 of this Agreement, or in any agreement,
certificate or other document delivered pursuant thereto; and (ii) any breach in
any material respect by CTPI, unless expressly waived by Xxxxxxx, of any
covenant or agreement of CTPI contained in this Agreement, or in any agreement,
certificate or other document delivered pursuant thereto.
4.3 INDEMNIFICATION BY THE COMPANY. Xxxxxxx hereby agrees to cause
the Company to defend, indemnify and hold CTPI (but no transferee of CTPI)
harmless from and against any and all claims, liabilities, losses or damages,
together with reasonable costs and expenses, including reasonable legal fees
("Losses"), as a result of or arising out of: (i) any breach in any material
respect by Xxxxxxx of the representations and warranties contained in Article 2
of this Agreement, or in any agreement, certificate or other document delivered
pursuant thereto; and (ii) any breach in any material respect by Xxxxxxx, unless
expressly waived by CTPI, of any covenant or agreement of Xxxxxxx contained in
or arising out of this Agreement, or in any agreement, certificate or other
document delivered pursuant thereto.
4.4 THIRD PARTY CLAIMS. Promptly after the receipt by the Xxxxxxx
Indemnitees or CTPI of a notice of any claim, action, suit or proceeding of any
third party which is subject to indemnification hereunder, such party (the
"Indemnified Party") shall give written notice of such
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claim to the party obligated to provide indemnification hereunder (the
"Indemnifying Party"), stating the nature and basis of such claim and the amount
thereof, to the extent known. Failure of the Indemnified Party to give such
notice shall not relieve the Indemnifying Party from any liability which it may
have on account of this indemnification or otherwise, except to the extent that
the Indemnifying Party is materially prejudiced thereby (except that the
Indemnifying Party shall not be liable for any expenses incurred during the
period in which the Indemnified Party failed to give such notice). The
Indemnifying Party shall be entitled to participate in the defense of and, if it
so chooses, to assume the defense of, or otherwise contest, such claim, action,
suit or proceeding with counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party. Upon the election by the
Indemnifying Party to assume the defense of, or otherwise contest, such claim,
action, suit or proceeding, the Indemnifying Party shall not be liable for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof, although the Indemnified Party shall have
the right to participate in the defense thereof and to employ counsel, at its
own expense. Notwithstanding the foregoing, the Indemnifying Party shall be
liable for the reasonable fees and expenses of counsel employed by the
Indemnified Party, if and only to the extent that; (i) the Indemnifying Party
has not employed counsel or counsel reasonably acceptable to the Indemnified
Party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action; (ii) the employment of
counsel and the amount reimbursable therefor by the Indemnified Party has been
authorized in writing by the Indemnifying Party; or, (iii) representation of the
Indemnifying Party and the Indemnified Party by the same counsel would, in the
opinion of such counsel, constitute a conflict of interest (in which case the
Indemnifying Party will not have the right to direct the defense of such action
on behalf of the Indemnified Party). CTPI and the Xxxxxxx Indemnitees shall use
all reasonable efforts to minimize Losses from claims by third parties and to
resolve any claim or liability and shall act in good faith in responding to,
depending against, settling or otherwise dealing with such claims,
notwithstanding any dispute as to liability as between the CTPI and the Xxxxxxx
Indemnitees under this Article 4. CTPI and the Xxxxxxx Indemnitees shall also
cooperate in any such defense, give each other reasonable access to all
information relevant thereto and use all reasonable efforts to make employees
and other representatives available on a mutually convenient basis to provide
additional information and explanation of any material provided in connection
therewith.
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Whether or not the Indemnifying Party shall have assumed the defense, the
Indemnifying Party shall not be obligated to indemnify the other party hereunder
for any settlement entered into without the Indemnifying Party's prior written
consent, which consent shall not be unreasonably withheld or delayed.
4.5 INDEMNIFICATION PERIOD. To the extent not provided otherwise
in this Agreement, the indemnification obligations of the Sellers and Buyer set
forth in this Article 4 shall continue indefinitely.
4.6 EXCLUSIVE REMEDIES. The sole and exclusive remedy of CTPI and
Xxxxxxx for any claim arising under this Agreement shall be the indemnification
provided in this Article 4 and each party agrees that it will not pursue any
other remedy, except that any such party may seek specific performance or
injunctive relief, provided that nothing herein shall relieve any party from any
liability for fraud.
ARTICLE V
GENERAL
5.1 GOVERNING LAW. The laws of the State of Delaware shall govern
the validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
5.2 NOTICES. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this Agreement shall be in
writing and sent by overnight courier, or by telephone or facsimile, if such
telephone conversation or facsimile is followed by a hard copy of the telephone
conversation or facsimilied communication sent by overnight courier, charges
prepaid and addressed to the address of such Member indicated in the Preamble,
or to such other address as such Person may from time to time specify by written
notice to the Company. Any such written notice shall be deemed to be delivered,
given, and received for all purposes as of the date so delivered.
5.3 EXPENSES. Each party will pay all of its expenses in
connection with the negotiation of this Agreement, the performance of its
obligations hereunder, and the
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consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing, CTPI agrees to reimburse Xxxxxxx for the legal fees Xxxxxxx
incurs in connection with the drafting of the documents to be used in
consummating the transactions contemplated hereby, plus Five Thousand Dollars
($5,000).
5.4 COUNTERPART EXECUTION. This Agreement may be executed in any
number of counterparts with the same effect as if all of the parties had signed
the same document. All counterparts shall be construed together and shall
constitute one agreement.
5.5 ENTIRE AGREEMENT. This Agreement reflects the entire agreement
of the parties with respect to the subject matter hereof. This Agreement may not
be amended except in a written document executed by all of the parties hereto.
IN WITNESS WHEREOF, the Parties have entered into this Purchase and
Sale Agreement as of the day first above set forth.
/s/ Xxxx X. Xxxxxxx
--------------------------------------------
XXXX X. XXXXXXX, individually
CHANGE TECHNOLOGY PARTNERS, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
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EXHIBIT 1.1
ASSIGNMENT
FOR VALUE RECEIVED, Change Technology Partners, Inc., a Delaware
corporation (the "Assignor"), hereby assigns and delivers to Xxxx X. Xxxxxxx, an
individual ("Assignee"), pursuant to and subject to the terms and conditions of
that certain Purchase and Sale Agreement of even date herewith between Assignor
and Assignee (the "Purchase Agreement"), fifty-one percent (51%) of Assignor's
right, title and interest in INSYS TECHNOLOGY LLC, a Delaware limited liability
company (the "Company") and $50,000 of the balance in Assignor's Capital Account
balance in the Company which shall be transferred into Xxxxxxx'x Capital Account
in the Company (the "Purchased Interest"), free and clear of all liens and other
encumbrances, to have and to hold the Purchased Interest unto Assignee, its
successors and assigns, and Assignee hereby accepts such assignment. The
Purchased Interest hereby assigned is fifty percent (51%) of the total
membership interests in the Company. Capitalized terms used herein shall have
the meaning ascribed to them in the Purchase Agreement unless otherwise defined
herein.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
Agreement as of November 8, 2001.
ASSIGNOR:
CHANGE TECHNOLOGY PARTNERS, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
ASSIGNEE:
/s/ Xxxx X. Xxxxxxx
--------------------------------------------
XXXX X. XXXXXXX
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EXHIBIT 1.5(a)
SUBLEASE LETTER
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EXHIBIT 1.5(b)
SOFTWARE ASSIGNMENT AGREEMENT
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EXHIBIT 1.6.2
BALANCE SHEET
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