AMENDMENT TO PURCHASE AGREEMENT & AGREEMENT MODIFICATION
AMENDMENT
TO PURCHASE AGREEMENT
&
AGREEMENT MODIFICATION
This
Amendment to Purchase Agreement & Agreement Modification (“Amendment”) is
dated as of May 16, 2010, by and between Xxxxx Capital Corporation, a Nevada
corporation (“Xxxxx”); GCC Capital Group, LLC, a Nevada limited liability
corporation (“GCC”), Innolog Holdings Corporation (“Purchaser”), Innovative
Logistics Techniques, Inc., a Virginia corporation (“Company”), the Company’s
Stockholders (“Stockholders”) and Xxxxx Xxxxxxx, an individual (“Xxxxxxx”)
(collectively, the “Parties”).
WHEREAS,
on March 31, 2009, the Parties entered into a Purchase Agreement (“Purchase
Agreement”) for the sale of the Company (the “Purchase”);
WHEREAS,
the Company has experienced and continues to experience significant cash flow
challenges that threaten its survival and the Company continues to need
additional capital to meet various obligations;
WHEREAS,
Xxxxx and GCC have contributed significant amounts of capital to the Company and
covered various debt obligations of the Company;
WHEREAS,
Xxxxx, GCC and the Company have stepped up and taken action to address various
significant liabilities of the Company and potential personal liabilities and
exposure of various Stockholders and Xxxxxxx;
WHEREAS,
additional capital may be contributed into the Company conditioned upon the
Purchase Agreement being modified as provided herein;
WHEREAS,
the Parties desire to optimize the likelihood of the continued viability and
success of the Company and its parent companies (in which the Stockholders own
equity interests), and towards that objective, the Parties desire to modify the
terms of the Purchase and the Purchase Agreement (including the Employment
Agreement entered into between the Company and Xxxxxxx pursuant
thereto).
NOW
THEREFORE, in consideration of the premises, $10.00, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties intending to be legally bound, hereby agree as follows:
1) Capitalized
terms not otherwise defined herein shall have the meanings provided in the
Purchase Agreement.
2) The
Purchase Agreement is hereby amended in accordance with Section 11.1 of the
Purchase Agreement.
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3) Section
2.3(a)(iii) Promissory
Note. is hereby deleted. The parties agree that the promissory
note executed in connection with the Purchase and the Purchase Agreement is
hereby retired. The Stockholders agree to deliver the original signed
Promissory Note to Purchaser immediately upon execution of this
Amendment. In exchange, the Shareholders shall receive a right to a
total of 1,000,000 total shares of Preferred Stock of Purchaser. GCC
and Purchaser represent that (i) there will be only one class of preferred stock
of Purchaser at such time and (ii) that the Preferred Stock that the
Stockholders receive pursuant hereto shall have the exact same terms, rights and
conditions as other shares of Preferred Stock that are being issued to other
persons that are likewise retiring debt of GCC, Purchaser and/or the
Company. Such Preferred Stock shall be issued or delivered to the
Stockholders upon the earlier of (i) the consummation of the pending merger of
the Company with a public company and (ii) December 31, 2010; provided, however,
that such shares of Preferred Stock shall not be issued and delivered to a
specific Stockholder until such Stockholder has executed and delivered such
shareholder agreement, underwriting agreement or similar agreements as may be
required of all holders of Preferred Stock of the Company, of Xxxxx or of the
merged company. The 1,000,000 total shares of Preferred Stock shall
be divided among the Stockholders in the respective amounts designated by the
Stockholders in writing to Purchaser prior to the date of issuance.
4) Section
2.3(a)(iv) Conditional
Note Payable. and Exhibit A, is herby
modified as follows: the calculation of Net Income for purposes of
the earn out for the $900,000 Conditional Note Payable and the Net Income Target
related thereto shall be calculated with the exclusion of the expense of any
management fee to a parent company of Purchaser and the last clause of the first
sentence is changed from “second anniversary (Year 2010)” to “third anniversary
(Year 2011)” and
the second clause in the last sentence is changed from “in years 2012 and 2011”
to “in years 2014 and 2015”.
5) Contemporaneously
herewith, Xxxxx Xxxxxxx and the Company are executing an amendment and
restatement of that certain Employment Agreement dated as of April 1, 2009,
between Xxxxx Xxxxxxx and the Company. The parties acknowledge and
agree that there are no outstanding liabilities of any kind by any of the
parties to such agreement to any other party thereunder. This
constitutes a mutual release of any claims of any kind or nature whatsoever
under or in connection with such employment agreement. In addition,
the Company shall and shall continue to indemnify and hold Xxxxxxx harmless for
actions and claims by creditors of the Company, known by and disclosed to the
Company by Xxxxxxx; provided, however, that this indemnification shall not apply
for any act or omission of Xxxxxxx (or relatives / affiliates of Xxxxxxx) which
is or are deemed to be fraudulent, intentional or gross misconduct, or criminal
(or if Xxxxxxx’x employment with the Company is terminated for Cause (as defined
in the First Amended and Restated Employment Agreement between Xxxxxxx and the
Company)).
6) In
addition, pursuant to a separate agreement, Xxxxx Xxxxxxx agrees to and shall
rescind and vacate, and if necessary forgive, cancel and forever discharge, that
certain obligation, loan and or promissory Note from the Company (or Xxxxx or
GCC or any of their affiliates) in the amount of approximately $57,332 from or
dated on or about November 2008, in exchange for 30,000 additional shares of
Preferred Stock in accordance with the terms of paragraph 3
above. The Company and GCC hereby rescinds and vacates, and if
necessary forgives, cancels and forever discharges, Xxxxx Xxxxxxx, Xxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx Xxxxxxxxx, Xxxxx Lessear, Xxx Xxxxxxx, and Xxx X’Xxxxxxxxxx and any of
their respective direct relatives from any existing obligations, loans or notes
that they may have to or in favor of the Company or GCC and such party similarly
forgive, cancel and forever discharge any obligations, loans or notes they have
with the Company and GCC.
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7) All
of the other terms and provisions of the Purchase Agreement shall remain in full
force and effect and all of the General Provisions of Article XI shall be
incorporated into and made a part of this Amendment.
IN WITNESS WHEREOF, Purchaser,
GCC and Xxxxx, the Company, intending to be legally bound have each: (i)
executed this Agreement, in the case of a natural person, or (ii) caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized, all as of the date first written above.
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XXXXX
CAPITAL CORPORATION
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By:
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Xxxxxxx
Xxxxxxxxxx,
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Chairman
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GCC
CAPITAL GROUP, LLC
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By:
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Xxxxxxx
Xxxxxxxxxx,
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Chairman
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INNOLOG
HOLDINGS CORPORATION
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By:
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Xxxxxxx
Xxxxxxxxxx,
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Chairman
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STOCKHOLDERS
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Xxxxx
Xxxxxxx
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Xxxxx
Xxxxxxx, individually under the
Employment
Agreement
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Xxxxxxx
Xxxxxxx
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Xxxxxxx
Xxxxxxx
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Xxxxxxx
Xxxxxxxx
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Xxxxxx
Xxxxxx
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Xxxxx
Xxxxxxxx
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Xxxx
Xxxx
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Xxx
Xxxxxxx
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Xxx
X'Xxxxxxxxxxx
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Xxxxxx
Xxxxxxxx
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Xxxxxxx
Xxxxxxxx
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