FIRST AMENDMENT TO PURCHASE AGREEMENT
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This FIRST AMENDMENT TO PURCHASE AGREEMENT ("First Amendment") is made and
entered into as of the 10th day of January, 2000, by and among DSG, INC., a
California corporation ("Seller"), COINLESS SYSTEMS, INC., a Nevada corporation
("CSI"), and AUTOMATIC DATA CAPTURE TECHNOLOGIES, INC., a California corporation
("Buyer")
In consideration of the mutual promises set forth in this First Amendment,
the parties agree as follows:
I. Facts
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This First Amendment is entered into based on the following facts:
A. The parties have entered into a Purchase Agreement dated December 15th,
1999 ("Purchase Agreement"). Capitalized terms used in this First Amendment
shall have the same meanings set forth in the Purchase Agreement unless
otherwise specifically defined herein.
B. Xxxxxx X. Xxxxxxxx and Xxxxxx Xxxxxxxx are shareholders of CSI,
holding, among others, certificates 15551 and 15552 for 250,000 shares apiece
which they are prepared to pledge in connection with the guaranty of certain
obligations, as more fully set forth herein.
C. As contemplated in the Purchase Agreement, diligence has been
conducted, exhibits have been prepared and/or provided and other matters have
occurred
D. The parties desire to amend the Purchase Agreement as set forth herein,
all other terms of the Purchase Agreement to remain in full force and effect.
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II. Paragraph 13 of the Purchase Agreement is amended to provide that the
Closing shall be on January 10, 2000, at the offices of Baker, Olson, XxXxxx &
Xxxxxxxxx. In addition to the matters set forth in Paragraph 12.A. of the
Purchase Agreement, Seller and CSI shall provide Buyer on or before the Closing.
A. A demand ("Demand") of Winston Financial Group, Inc. ("Winston") for
an amount to be paid to Winston whereby Winston will provide a Termination
Statement as to Winston's Financing Statement no. 97 10060746 and any other
security interest claimed by it in the Assets along with arrangements
satisfactory to Buyer by which such Termination Statement can be delivered at or
before the Closing to Buyer in exchange for a check for the amount of the
Demand. The Demand through January 11, 2000 is $36,638.01
B. The Guaranty Agreement and the Stock Pledge Agreement in the form of
that Guaranty Agreement and that Stock Pledge Agreement attached hereto as
Exhibits 22.A. and 22.B. respectively, together with the Stock Certificates
referred to in the Stock Pledge Agreement and Assignments thereof with
signatures guaranteed, all acceptable to Buyer and all executed by "Guarantor"
(as defined in the Guaranty Agreement).
III. Paragraph 5.A. of the Purchase Agreement is amended to read as
follows:
A. One Hundred Fifty Thousand Dollars ($150,000) to be paid at the
Closing as follows:
(1) an amount equal to the Demand shall be payable to Winston
pursuant to Paragraph II.A. to be used only upon delivery by Winston of the
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Termination Statement described in such Paragraph II.A. If the Closing is on or
before January 11, 2000, the amount will be $36,638.01.
(2) An amount of $3,435.93 payable to Print-O-Tape to be used
(together with such of Seller's own funds as may be necessary) to satisfy in
full the Judgment lien of Print-O-Tape against Seller in exchange for the full
Satisfaction of Judgment from that entity.
(3) Seller shall give Buyer a credit in the amount of the Deposits,
as set forth in Exhibit 2.A.i. of $14,938.10 in satisfaction of that portion of
the $150,000 payment.
(4) An amount equal to the balance of the $150,000 after the
reduction for Paragraphs III.A.(1), (2), and (3). If the Closing is on or before
January 11, 2000, such amount will be $94,987.96.
IV. Paragraph 5.B. of the Purchase Agreement is amended to
substitute in place of the last sentence thereof the following: In the event the
Escrow Agreement has terminated prior to the final payment of the calendar
quarter installments, subsequent calendar quarter installments shall be paid
directly to Seller unless there remains outstanding and uncured claims of Buyer
pursuant to Paragraph 5.C. of this Purchase Agreement, in which event any such
future amounts shall be subject to such uncured claim.
V. Paragraph 5.C. of the Purchase Agreement is amended to read: "In
the event Buyer asserts a claim for indemnity and hold harmless against Seller
and/or CSI under this Agreement, Buyer shall so notify Escrow Agent and Seller
of such claim
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and shall give reasonable details of the claim. Seller shall have thirty (30)
days to cure any basis for the claim and/or to dispute the claim by notice to
Buyer and Escrow Agent. In the absence of notice to Escrow Agent and Buyer of
such cure or dispute of claim, Buyer may have the right to (i) offset the amount
of such claim against any installment otherwise then due and payable or due and
payable in the future under paragraph 5.B. or 5.D. of this Agreement, (ii)
direct the Escrow Agent to take any steps relative to the collateral permitted
pursuant to the Stock Pledge Agreement; and/or (iii) direct the Escrow Holder to
distribute the Escrow Funds to Buyer or as Buyer may otherwise direct. Such
offset or direction shall not be a limit on the amount of indemnity and hold
harmless obligation of Seller and/or CSI or of Buyer's rights and remedies
incident to such claim. Any such offset or direction may be had in any order at
Buyer's sole discretion so as to maximize its recovery. The Escrow Agent shall
proceed to follow such direction."
VI. The following paragraphs are added to paragraph 5:
D. In addition to the $125,000 to be paid to the Escrow Account as set
forth in paragraph 5.B. above, Seller shall pay into the Escrow Account an
additional Fifty Thousand Dollars ($50,000) at the Closing.
E. The following conditions shall be fulfilled by Seller and CSI before
release of any portion of the Escrow Fund from the Escrow Account to Seller or
to the Guarantor under the Guaranty Agreement:
(1) Seller shall provide a Certificate from the State Board of
Equalization or other evidence satisfactory to Buyer, showing that the lien
listed in Exhibit 6 as well
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as all other claims for Sales and Use Taxes through the date of Closing and in
connection with this transaction have been paid in full.
(2) Seller shall provide certificates or other evidence satisfactory
to Buyer that all amounts of payroll withholdings and deposits required to have
been made under applicable law with respect to employments of Seller through the
date of Closing have been made and have been paid over to the appropriate
authorities, including but not limited to, the Employment Development
Department, the Franchise Tax Board, the Internal Revenue Service, and the
Social Security Administration, and furthermore that all of Seller's tax returns
have been filed for the years 1997, 1998 and 1999 and the amounts payable have
been paid.
(3) That no other purported liens or alleged transferee liability to
Buyer by reason of this transaction have been asserted.
(4) That Seller shall have provided to Buyer a copy of its audited
Balance Sheet as at December 31, 1999. It is recognized Seller and CSI were to
have provided the Balance Sheet at the Closing in order for Buyer to approve of
such. Buyer is closing the transaction on the condition Buyer receives an
unqualified audited Balance Sheet of Seller as at December 31, 1999. Such
balance sheet shall be subject to all of the representations and warranties set
forth in the Purchase Agreement as if such were attached at the Closing.
(5) That Seller has provided to Buyer the opinion of its Counsel in
form and content satisfactory to Buyer's counsel that this transaction is not
subject to the California Bulk Transfer Law (Commercial Code (S)(S) 6101 et
seq).
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(6) That no claim has been made by Buyer that it is entitled to any
remedy on account of any breach of any of the obligations of Seller and/or CSI
under the Purchase Agreement.
(7) That Seller provides Buyer a full Satisfaction of Judgment for
the judgment liens against Seller in favor of Print-O-Tape and San Diego
Wholesale Credit Association.
VII. The First Amended Escrow Agreement shall be substituted for Escrow
Agreement as Exhibit 5B.
VIII. A. The following Exhibits have been approved by the parties and
affixed to this First Amendment:
Exhibit 2.A.i. Exhibit 9.F.
Exhibit 2.A.ii. Exhibit 9.G.
Exhibit 2.B. Exhibit 9.H.
Exhibit 2.C. Exhibit 9.I.
Exhibit 3.A.ii. Exhibit 9.K.
Exhibit 4.B. Exhibit 9.L.
Exhibit 5.B. Exhibit 12.A.b.
Exhibit 9.A. (except for the Balance
Sheet)
B. The following Exhibits remain to be provided and approved: Exhibit
9.A; the audited Balance Sheet of Seller as at December 31, 1999.
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C. Reference to the following Exhibit shall be deleted: 9.E.
IX. The last sentence of the last paragraph of Paragraph 15.C. of the
Purchase Agreement is amended to provide that the $5,000 amount will not effect
or offset claims of Buyer by reason of any breach related to the Balance Sheet
or any Permitted Lien.
X. Paragraph 16 of the Purchase Agreement is amended to substitute the
following attorney to receive a carbon copy of notices to Seller or CSI.
XXX XXXXXXX, ESQ.
000 Xx. Xxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
Service Party: XXX XXXXXXX, ESQ.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
"SELLER": "BUYER":
DSG, INC. AUTOMATIC DATA CAPTURE
TECHNOLOGIES, INC
a California corporation a California corporation
By:_________________________ By:_________________________
Its ___________________ Its ___________________
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