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EXHIBIT 10.5
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT ("FIRST AMENDMENT") is made
as of January 31, 1997 by and among ROCKWELL MEDICAL SUPPLIES, LLC, a Michigan
limited liability company d/b/a Rockwell Medical Supply (the "SUPPLY COMPANY"),
ROCKWELL TRANSPORTATION, LLC, a Michigan limited liability company (the
"TRANSPORTATION COMPANY" and, together with the Supply Company, the "SELLERS"),
T.K. INVESTMENT COMPANY, a Michigan partnership, which is owned equally by the
family partnerships, CHILAKAPTI FAMILY LIMITED PARTNERSHIP, XXXXXXXXXX FAMILY
LIMITED PARTNERSHIP (the "FAMILY PARTNERSHIPS"), the respective general
partners of which are XXXXX XXXXX CHILAKAPTI, M.D. and XXXXXXXXXXXXX
XXXXXXXXXX, M.D. and XXXXXX X. XXXXXXX, (T.K. INVESTMENT COMPANY, THE FAMILY
PARTNERSHIPS, XXXXX XXXXX CHILAKAPTI, M.D., XXXXXXXXXXXXX XXXXXXXXXX, M.D. and
XXXXXX X. XXXXXXX are hereinafter referred to individually as a "MEMBER" and
jointly and severally as the "MEMBERS"), and ACQUISITION PARTNERS, INC., a
Michigan corporation ("BUYER").
RECITALS
A. On November 1, 1996, the Sellers, the Members and Buyer entered into an
Asset Purchase Agreement (the "PURCHASE AGREEMENT") pursuant to which Buyer
agreed to purchase and the Sellers agreed to sell substantially all of the
Sellers' assets upon the terms and conditions set forth in the Purchase
Agreement.
B. The parties to the Purchase Agreement believe it is in their respective
best interests and desire to amend the terms and conditions of the Purchase
Agreement as set forth in this First Amendment.
THEREFORE, the parties agree as follows:
1. Amendment to Section 1.2.1. Section 1.2.1 of the Agreement is hereby
amended by the deletion of the defined term (the "CASH AMOUNT") in the second
line of Section 1.2.1(b) and replacement of such term with the defined term
(the "PAYMENT AMOUNT").
2. Amendment to Section 1.2.2. Section 1.2.2 of the Purchase Agreement is
hereby amended by the deletion of Section 1.2.2 in its entirety and by the
replacement of Section 1.2.2 with the following:
"1.2.2 Payment of the Purchase Price. At the Closing, the Purchase
Price for the Purchased Assets shall be paid as follows:
(a) Buyer shall pay to the Supply Company an aggregate of $150,000
in cash (the "CASH AMOUNT"),
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(b) Buyer shall pay to NBD Bank ("NBD") on behalf of the Supply
Company $376,976.56 in cash (the "NBD AMOUNT"), which represents that
amount which will be outstanding to NBD by the Supply Company under loan
#0037028 made by NBD to Supply Company, and
(c) Buyer shall pay the remainder of the Purchase Price by delivery
to the Supply Company of a 8.5% promissory note (the "NOTE") having a
principal face amount equal to the Remaining Balance (as defined below) and
providing for repayment in full of the principal amount plus all accrued
interest on July 31, 1997 (the "MATURITY DATE"), in the form attached as
Exhibit 1.2.2(c)I; provided, however, that the Note shall be subject to
prepayment in accordance with Section 6.2 below. The obligations of Buyer
under the Note shall be secured by a pledge of all of the shares of capital
stock of Buyer (the "PLEDGED STOCK") owned by Xxxx X. Xxxxx ("XX. XXXXX"),
Xxxxxxx X. Xxxxxxxxx ("XX. XXXXXXXXX") and Xxxxxx X. Xxxxxxx ("XX.
XXXXXXX"), pursuant to a share pledge and escrow agreement in the form
attached as Exhibit 1.2.2(c)II to this Agreement (the "PLEDGE AGREEMENT").
For purposes of this Agreement, the "REMAINING BALANCE" shall mean an
amount calculated as follows: the Payment Amount, less the Cash Amount and
less the NBD Amount."
3. Amendment to Section 1.2.3. Section 1.2.3 of the Agreement is hereby
amended by the deletion of "$150,000" in the third line of such Section and the
replacement of such deleted number with "$300,000" and by deletion of "Cash
Amount" in the seventh, eighth and eleventh lines of such Section and the
replacement of such deleted language with "Payment Amount". In addition, the
following sentence shall be inserted between the first and second sentences of
Section 1.2.3: "Any amount contributed to the Sellers pursuant to the preceding
sentence shall bear interest at the rate of 8.5% per annum from the date of
contribution through the Closing Date."
4. Amendment to Section 1.4. Section 1.4 of the Agreement is hereby amended
by the deletion of "December 16, 1996" in the third line of such Section and the
replacement of such deleted language with "February 4, 1997".
5. Amendment to Section 2.1.6. Section 2.1.6 of the Agreement is hereby
amended by the deletion of Section 2.1.6(a) of the Agreement in its entirety.
Section 2.1.6(b) of the Agreement is hereby amended by renumbering such Section
as "Section 2.1.6(a)", by the deletion of "September 30, 1996" in the second
line of such Section and the replacement of such deleted language with "October
31, 1996" and by the deletion of "nine" in the third and sixth lines of such
Section and the replacement of such deleted language with "ten".
6. Deletion of References to "Financial Statements". The Agreement is hereby
amended by the deletion of the following: the language "the Financial
Statements and" in the twelfth line of Section 2.1.15(a) and in the seventh and
eighth lines of Section 2.1.17(c); and the language "the Financial Statements,"
in the third line of Section 2.1.27
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7. Amendments to Change References. The Agreement is hereby amended by
changing all references in the Agreement to "September 30, 1996" to the date
"October 31, 1996".
8. Amendment to Section 3.1.9. Section 3.1.9 of the Agreement is hereby
amended by the addition of the following proviso to the end of the first
sentence of such Section: ";provided, however, that Buyer shall be responsible
for obtaining the consent of the landlord under the Lease to the assignment of
the Lease to Buyer at the Closing."
9. Amendment to Section 4.1.1. Section 4.1.1 of the Agreement is hereby
amended by the deletion of "Cash Amount" in the second line of such Section and
the replacement of such deleted language with "Payment Xxxxxx".
00. Amendment to Section 4.1.6. Section 4.1.6 of the Agreement is hereby
amended by the addition of the following exception to the end of such Section:
", except for the consent of the landlord under the Lease, which is the
responsibility of Buyer to obtain."
11. Amendment to Section 4.2. Section 4.2 of the Agreement is hereby amended
by the addition of the following sub-Sections to such Section:
"4.2.6 Consent to Assign Lease and Release of Guaranty. Buyer shall
have obtained the consent of the landlord under the Lease to the assignment
of the Lease from Supply Company to Buyer upon consummation of the
transactions contemplated by this Agreement. Buyer also shall have
obtained the termination and release by the landlord of the guaranty
pursuant to which certain of the members have guaranteed the obligations of
Supply Company under the Lease.
4.2.7 Pledge Agreement. The Pledge Agreement shall have been
executed and delivered by Xx. Xxxxx, Xx. Xxxxxxxxx and Xx. Xxxxxxx."
12. Amendment to Section 5.6(a). Section 5.6(a) of the Agreement is hereby
amended by the deletion of "Cash Amount" in the third line of Section 5.6(a)
and the replacement of such deleted language with "Payment Xxxxxx".
00. Amendment to Section 6. Section 6 of the Agreement is hereby amended by
the addition of the following sub-Sections to such Section:
"6.2 Prepayment of the Note. Buyer shall make mandatory prepayments of the
Note on a monthly basis from the Closing Date through the Maturity Date
determined as follows:
(a) Buyer shall pay 50% of the net cash proceeds (after deducting
all fees and expenses incurred in generating such cash proceeds) of all
issuances of capital stock of Buyer received by Buyer (the "SUBSCRIPTION
PAYMENTS") during the period from the Closing Date through the Maturity
Date (the "PREPAYMENT PERIOD").
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(b) Xx. Xxxxx shall provide to the legal counsel of the Sellers,
within five days of the beginning of each calendar month during the
Prepayment Period, a notarized affidavit certifying as to the amount of
Subscription Payments received by Buyer during the preceding calendar
month, or such portion of a calendar month in cases when only a portion of
the calendar month was within the Prepayment Period. If such affidavit
indicates that Subscription Payments were received by Buyer during the
preceding calendar month, Buyer shall make its required prepayment of the
Note pursuant to Section 6.2(a) above, by delivery of a check to the Escrow
Agent (as defined in the Pledge Agreement) concurrently with the delivery
of the affidavit. The Escrow Agent will remit such payment to the Supply
Company and release certain of the Pledge Stock to the pledgors thereof, in
accordance with the Escrow Agreement.
6.3 Post-Closing Employee Salaries. Upon consummation of the Closing and
during the Prepayment Period, Buyer shall not (a) increase the consulting
fee payable to Wall Street Partners, Inc., a Michigan corporation, in
excess of $25,000 per month, or (b) increase the compensation of any
current employee of Buyer in excess of such employee's compensation level
existing on the Closing Date, except that Buyer may increase the
compensation payable to Xxxxxx Xxxxxx and Xxxx Xxxxxxx by up to $5,000 per
year per such employee.
6.4 Access to Books and Records. Beginning July 1, 1997 and continuing
through the expiration of the Election Period (as defined in the Pledge
Agreement), the Supply Company and its representatives and agents, at
reasonable times and upon reasonable notice to Buyer and at no cost to
Buyer, shall have access to the books and records of Buyer for the purpose
of ascertaining Buyer's financial condition".
14. The Purchase Agreement. The term "Agreement" as used in the Purchase
Agreement shall hereafter mean the Purchase Agreement as amended by this First
Amendment and shall continue in full force and effect in accordance with the
terms thereof and hereof. The Exhibits referenced in this First Amendment
which were not a part of the Agreement when originally executed are attached to
this First Amendment and shall be deemed a part of the Agreement. In the event
of any inconsistency or conflict between this First Amendment and the Purchase
Agreement, the terms and provisions of this First Amendment shall govern.
15. Governing Law and Forum. This First Amendment shall be governed by the
laws of the State of Michigan (regardless of the laws that might otherwise
govern under applicable Michigan principles of conflicts of law) as to all
matters, including, but not limited to, matters of validity, construction,
effect, performance and remedies. Each of the parties consents to be subject
to personal jurisdiction of the courts of Michigan, including the federal
courts of Michigan, which shall be the sole and exclusive forum for the
resolution of all disputes under this First Amendment.
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16. Counterparts. This First Amendment 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. This First Amendment
xxx be executed by facsimile signatures.
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the date set forth in the introductory paragraph of this First Amendment.
BUYER: ROCKWELL MEDICAL TECHNOLOGIES, INC.
(f/k/a Acquisition Partners, Inc.)
By: /s/ Xxxx X. Xxxxx
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Its: President
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SELLERS: ROCKWELL MEDICAL SUPPLIES, LLC
By: /s/ Xxxxxx X. Xxxxxxx
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XXXXXX X. XXXXXXX, Member
By: T. K. INVESTMENT COMPANY, Member
By: CHILAKAPTI FAMILY LIMITED
PARTNERSHIP
By: /s/ Xxxxx Xxxxx Xxxxxxxxxxx
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Its: General Partner
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By: XXXXXXXXXX FAMILY LIMITED
PARTNERSHIP
By: /s/ Xxxxxxxxxxxxx Xxxxxxxxxx
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Its: General Partner
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(Signatures continued on next page.)
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(Signatures continued from previous page.)
ROCKWELL TRANSPORTATION, LLC
By: CHILAKAPTI FAMILY LIMITED
PARTNERSHIP, Member
By: /s/ Xxxxx Xxxxx Xxxxxxxxxxx
--------------------------------
Its: General Partner
----------------------
By: XXXXXXXXXX FAMILY LIMITED
PARTNERSHIP, Member
By: /s/ Xxxxxxxxxxxxx Xxxxxxxxxx
---------------------------------
Its: General Partner
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THE MEMBERS: /s/ Xxxxx Xxxxx Xxxxxxxxxxx,
---------------------------------
XXXXX XXXXX CHILAKAPTI, M.D.
/s/ Xxxxxxxxxxxxx Xxxxxxxxxx
---------------------------------
XXXXXXXXXXXXX XXXXXXXXXX, M.D.
/s/ Xxxxxx X. Xxxxxxx
---------------------------------
XXXXXX X. XXXXXXX
T. K. INVESTMENT COMPANY
By: CHILAKAPTI FAMILY LIMITED
PARTNERSHIP, Member
By: /s/ Xxxxx Xxxxx Xxxxxxxxxxx
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Its: General Partner
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By: XXXXXXXXXX FAMILY LIMITED
PARTNERSHIP, Member
By: /s/ Xxxxxxxxxxxxx Xxxxxxxxxx
----------------------------------
Its: General Partner
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