EXHIBIT 10.6(a)(1)
ADDENDUM DATED JUNE 30th, 2004
This Addendum to the Equipment Purchase Agreement ("EPA") dated as of May 31,
2004, by and between Equipment Depot, Inc., a Florida corporation (the "Seller")
and On Alert Systems, Inc., a Nevada Corporation (the "Purchaser") is dated June
30th, 2004, and is for the purpose of providing for the terms and conditions
under which the type of Equipment being Purchased by the Purchaser is hereby
modified from the EPA dated May 31st, 2004, and providing for additional cash
deposit money for Equipment being Purchased by the Purchaser.
RECITALS
WHEREAS, the Purchaser desires to Purchase machine tool equipment ( the
"MTE") as a portion of the Equipment representing the May 31st, 2004, EPA,
wherein none of the Equipment so Purchased of such date represented the MTE ;
and,
WHEREAS, the original cash payment to the Seller by the Purchaser for the
purposes of securing the Equipment for Purchase by the Purchaser was to be
$60,000; and
WHEREAS, the Seller desires to sell to the Purchaser the MTE for the
consideration set forth herein; and,
WHEREAS, the Parties desire to amend the EPA to accommodate such
modifications.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms and subject to the conditions
hereinafter set forth, the parties hereby agree as follows:
Article I
TERMS OF PURCHASE AND SALE
1.01. Sale of the Equipment. At the Closing (as defined in Section 1.04
hereof), subject to the terms and conditions set forth herein, the Seller shall
sell to the Purchaser, and the Purchaser shall purchase from the Seller, the
MTE, an itemized list of the MTE is attached as Exhibit A-1 to this Addendum.
1.02. Purchase Price. Of the Purchase price payable by the Purchaser for
the Equipment Purchased pursuant to the EPA of May 31st, 2004, The Purchaser
shall pay that portion to the Seller of the amount of the three million two
hundred sixty thousand dollars ($3,260,000) of the original Purchase price that
represents the cost of the MTE in the following manner:
A. The Purchaser shall pay the cash portion of the Purchase Price of the
MTE in cash, by wire transfer, in whole or in increments, plus 30% of such
cash Purchase Price, on the earlier of ; (i) the Closing Date to the User;
or, (ii) coincident with the closing of any loan or equity financing event
of sufficient amount arranged by the User or the original Purchaser for
this purpose. In the event that the Purchaser arranges for, or provides,
directly or indirectly, for such payment to the Seller, the Purchaser shall
bear sole responsibility for Purchaser's repayment from the User.
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B. The cash portion of the Purchase Price of the MTE shall be determined at
the time of the selection of the individual pieces of Equipment to be
Purchased by the Purchaser on behalf of the end-User, at the discretion of
the end-User, subject to changes in model numbers, manufacturer's, or
location of Equipment. Thirty percent of the cash portion of the price
shall then be added to the cash portion of this price. Deposit funds shall
be applied first to such amounts, and any amounts still due shall be
payable according to the terms provided for in 1.02 (A), (C), (D), (E), &
(F).
C. In the event that the User or the Purchaser, for any reason, shall fail
to arrange for cash payment described in 1.02 (A), then the User shall pay
by the first receipt by the User of cleared funds from the sale of the
User's manufactured products that would pay, in part or in whole, in full
or in increments as received by the User, the required cash payment(s).
D. In the event that the User or the Purchaser, for any reason, shall fail
to arrange for cash payment described in 1.02 (C), then the Purchaser shall
immediately file an S-8 registration statement registering such shares for
the services of the principals and agents of the Seller, as designated
solely by the Seller, so as to allow such shares to be registered pursuant
to the rules and regulations governing S-8 registration statements. The
shares so registered will be in compliance with all applicable rules of the
SEC regarding S-8 filings, and all of the shares so registered shall be for
the payment of services provided to Purchaser. Should Purchaser qualify for
an S-3 registration filing, such filing may be substituted for the S-8
filing. Should the Purchaser, or the issuer of the shares, as applicable,
fail to qualify for the registration of such shares pursuant to an S-8
registration statement, then the provisions of the EPA governing such
failure shall apply.
E. Seller shall have no liability whatsoever for any of the terms pursuant
to the Purchaser's contract with the User.
F. In the event that the cash payment to the Seller cannot be made, for any
reason, under the terms and conditions set forth herein, and the S-8
registration cannot be effected, for any reason, then the Seller shall be
entitled to a UCC-1 lien on the general and total revenue receipts of the
Purchaser, as received in cleared Federal Funds, until such time as the
payment of the amount due, plus a penalty of thirty thousand ($30,000)
dollars, is paid to the Seller.
1.03 Registration Rights Restricted common shares issued to Seller in
connection with this agreement shall be subject to a Registration Rights
Agreement ("RRA"), the terms and conditions of which are contained herein as
Exhibit B-1. This RRA shall govern the registration of the securities issued
hereto with the Securities and Exchange Commission, and any other regulatory or
governmental authority within whose jurisdiction or control such registration is
required.
1.04. Closing.
(a) The closing of the transactions contemplated hereby (the "Closing")
shall take place on the date(s) and time(s) as agreed by the Purchaser and
Seller, by the Purchaser and the Seller each delivering, by electronic
facsimile transmission (followed by two duplicate signed copies by
overnight courier), a signed copy of this Agreement to the Seller's agent
at the address set forth in Section 6.02 hereof (the "Closing Date").
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(b) At the Closing, subject to the terms and conditions set forth herein,
the Purchaser shall pay and deliver to the Seller the Purchase Price in
accordance with its terms. The portion of the Purchase Price represented by
the common shares of the Purchaser shall be payable to the Seller at the
Closing by delivering the Shares to the Seller's agent at the address set
forth in Section 6.02 hereof. The portion of the Purchase Price represented
by the cash payments shall be represented by (1) a Purchase Money Contract,
herein attached as Exhibit C-1, delivered by the Purchaser to the Seller's
agent at the address set forth in Section 6.02 hereof; or, (2) the wire of
funds pursuant to section 1.02 (B) (i) or (ii) or (iii), above.
(c) At the Closing, subject to the terms and conditions set forth herein
and following receipt by the Seller of the Purchase Price, the Seller shall
deliver or cause to be delivered to the Purchaser title evidencing
ownership of MTE as listed in Exhibit A-1 of this Addendum.
1.05 Physical Location of Equipment and Lease Terms
(a) (1)The Equipment identified in Exhibit A-1, of this Addendum is located
in ________ warehouse(s) with the physical addresses as follows:
[[TO BE INCLUDED AT CLOSING]]
1.06 Appraisal and Pre-Closing Expenses
(a) Desktop Appraisal. A Desktop appraisal of the initial Equipment
contemplated to be sold to the Purchaser by the Seller is attached herein
as part of Exhibit A-1. The Purchaser or the User shall pay to the Seller's
agent at the time of the Closing as a closing expense any nominal costs
associated with the Desktop Appraisal of the MTE not included in the
original Equipment Desktop Appraisal, such as travel costs to the site(s)
of origin of the MTE, if more than 100 miles from the site(s) of the
original Equipment.
(b) Certified Appraisal--independent verification. A certified appraisal
shall be conducted prior to closing, at the Purchaser's or User's expense,
by an appraiser experienced in the appraisal of the type of equipment being
purchased by the Purchaser, whose credentials shall be acceptable to both
the Purchaser and the Seller. The expenses of the certified appraisal are
pre-closing expenses payable in full by the Purchaser prior to the Closing
date, whether or not the certified appraisal has been completed at that
time. Agent for the Seller shall withhold a portion of the appraisal fee
until the certified copy of the appraisal is delivered to the Purchaser and
the Seller. The certified appraisal of the additional MTE is expected to
cost $7,000, inclusive of travel expenses of the appraiser, based on a bona
fide good faith estimate of the Seller, but the Seller cannot warrant third
party prices for such services.
(c) In the event that a certified appraisal cannot be completed prior to
the Closing Date, through no fault or cause by either the Purchaser or the
Seller, then prior to the 30th day subsequent to closing, a certified
appraisal as described in 1.06 (b) above, shall be provided to the
Purchaser and the Seller, or, at the Seller's sole option, may extend the
period within which such appraisal may be concluded, and Purchaser agrees
to any reasonable extension up to an additional sixty (60) days. In the
event that the certified appraisal reports a dollar fair market value less
than the amount purchased by the Purchaser at the Closing, then the Seller
shall deliver to the Purchaser, within a commercially reasonable time,
additional MTE, with appraised fair market value sufficient to correct such
deficiency.
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(d) Legal and Contract Costs--The Purchaser shall pay $2,000 to the
Seller's agent upon the execution of this Addendum for disbursement for
legal expenses and contract costs relating to the Purchase of the MTE as a
pre-closing expense. Legal expenses in excess of $2,000 shall be payable by
the Seller.
(e) Agent expenses-- In the event that the transactions contemplated herein
do not close on the Closing Date, or another date agreed upon in writing by
the Seller, the Purchaser, and the Seller's agent, then the Seller's agent
shall be deemed to have earned $10,000 in lieu of fees payable to them had
the transactions closed as contemplated. In the event that the transactions
contemplated herein close on the Closing Date, or another date agreed upon
in writing by the Seller, the Purchaser, and the Seller's agent, then the
Seller's agent shall be reimbursed any funds advanced by agent to pay any
legal or appraisal costs emanating from the Purchase transactions remaining
due from the Purchaser, then any ancillary closing costs incurred by the
Purchaser prior to the closing date that remain unpaid on the Closing Date.
(f) Purchaser and Seller acknowledge herein that the nature of the
pre-closing expenses and the timing of their payments to the recipients
prior to the Closing Date precludes the refund of such expenses once
expended, except for the receipt of services the extent to which, or the
provision of which, are deemed to be in dispute at the time of the Closing
Date, wherein each of the Seller and the Purchaser shall not herein be
waiving any rights, civil or otherwise, to use all legal methods to settle
and resolve such disputes.
ARTICLE II
MISCELLANEOUS
2.01 Conflict. Since the intent of this Addendum to the EPA is to modify
certain terms and conditions where the addition, deletion, or modification of
terms and conditions, as contained herein, become a part of the EPA, in the
event the terms and provisions of this Addendum conflict with the terms and
conditions of the EPA, RRA, or any other agreements executed by the parties
concerning the EPA, the terms of this Addendum shall prevail only to the extent
that this Addendum has modified such applicable terms, and shall not be deemed
nor construed to add, delete, waive, or modify any other terms or conditions, or
subject any existing terms and conditions to any interpretation other than what
was agreed and executed by the parties in the Agreements of March 31, 2004;
otherwise, the terms and conditions of such Agreements are hereby ratified and
confirmed.
2.02 Limitations of this Agreement. Limited by its additions, deletions, or
modifications to the specific terms and conditions of the EPA, this Addendum
constitutes the sole and entire agreement of the parties with respect to such
additions, deletions, or modifications to the specific terms and conditions of
the EPA, and supersedes any and all prior or contemporaneous agreements,
discussions, representations, warranties or other communications regarding such
specific additions, deletions, or modifications to the terms and conditions of
the EPA. Furthermore, the Seller is under no obligation, pursuant to the terms
of the EPA, to provide MTE other than as an accommodation to the Purchaser, and
the provision of such MTE shall not be deemed nor construed as a breach, remedy,
or settlement of any provision of the EPA, MPC, RRA, Xxxx of Sale, Desktop
Valuation, or any other documents executed or delivered on May 31, 2004, by the
parties.
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2.03 Counterparts. This Addendum may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
2.04 Amendments. This Addendum may not be amended or modified without the
written consent of the Seller and the Purchaser, nor shall any waiver be
effective against any party unless in writing executed on behalf of such party.
2.05 Severability. If any provision of this Addendum shall be declared void
or unenforceable by any judicial or administrative authority, the validity of
any other provision and of the entire Addendum shall not be affected thereby.
2.06 Titles and Subtitles. The titles and subtitles used in this Addendum
are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Addendum.
2.07 Successors and Assigns. This Addendum may not be assigned by any party
hereto without the prior written consent of the other party hereto. The terms
and conditions of this Addendum shall inure to the benefit of and be binding
upon the parties, their respective successors, executors, beneficiaries and
permitted assigns of the parties hereto.
2.08 Confidentiality. Each party hereto agrees that, except with the prior
permission of the other party, it shall at all times keep confidential and not
divulge, furnish or make accessible to anyone any information or knowledge
relating to (a) any provisions of this Addendum, (b) any discussions or
negotiations relating to this Addendum and (c) the identity of the parties to
this Addendum except as required by law or any regulatory agencies. The parties
hereto further agree that there shall be no press release or other public
statement issued by either party relating to this Addendum or the transactions
contemplated hereby, unless the parties otherwise agree in writing, or as
required by applicable regulation or law. IN WITNESS WHEREOF, the Seller and the
Purchaser have caused this First Addendum to be executed and delivered by the
undersigned as of the 30th day of June, 2004.
SELLER: Equipment Depot, Inc.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, Vice-President
PURCHASER: On Alert Systems, Inc., a Nevada Corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, CEO
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