EXHIBIT 10.8(a)
SECURED COMMERCIAL PROMISSORY NOTE (the "Note")
$242,216; the "Initial Loan Amount". August 23, 2004, Fort Lauderdale, Florida
FOR VALUE RECEIVED, the undersigned borrower, On Alert Systems, Inc, (the
"Borrower") hereby promises to pay to the order of 9145-6442 Quebec, Inc., a
Province of Quebec, Canadian corporation (the "LENDER"), or to any holder hereof
(the "Holder") the principal sum of those amounts advanced during any period and
outstanding at the time of repayment plus interest on the unpaid principal
balance thereof at the Rate of Interest as defined herein, accrued monthly on
the basis of a 360-day year based on the number of actual days elapsed, computed
from the date hereof (the "Closing Date") until paid, except for the prepaid
interest of nine thousand three hundred sixteen dollars ($9,316) which shall
have been prepaid to the Lender at the time of the first amounts advanced
hereunder. All amounts payable hereunder shall be paid in lawful money of the
United States of America. As further inducement for the Lender to create this
Note and lend the Borrower the amounts advanced herein, the Borrower shall grant
to the Lender certain interests in equipment and securities (collectively, the
"Collateral"), evidenced by the attached Exhibit A to this Note. Such Principal
and interest payments are secured by the Collateral and any applicable liens
filed by the Lender, and duly executed by the Borrower, as described herein.
1. Repayment of Principal and Payment of Interest. The principal amount of this
Note shall be Two Hundred Forty-two Thousand Two Hundred Sixteen dollars
($242,216), plus any accrued interest, if applicable, which shall be payable by
the Borrower to the Holder as set forth below:
Coincident with the date of the receipt by the Borrower of the Equity or loan
funds advanced by the Laurus Fund, or any other source utilized by the Borrower
for the provision of funds for their incident transaction(s) of which this loan
is a part, the Borrower shall cause to be paid, in the manner described herein
as designated by the Lender, the full amount of the Principal due on such date,
which is anticipated to be ($242,216), plus accrued interest on the unpaid
balance at the Interest Rate. If the payment to the lender of $242,216 occurs
within 61 days of the date of this note, no accrued interest shall be due since
the Borrower had advanced to the Lender, on the funding of this Note, nine
thousand three hundred sixteen dollars ($9,316) of prepaid interest to the
Lender representing the first 61 days interest on this loan. After 61 days, any
payment so made shall include accrued interest calculated from the 62nd day of
the date of this Note.
In the Event that the Company is funded, from any source, at least three hundred
thousand dollars ($300,000), prior to the funding of the Laurus fund, or any
other fund utilized by the Company for such purpose, the Company shall repay the
principal, and interest due and payable, if any, within two (2) business days of
the receipt of such cleared funds by the Company.
In the event that the Equity or loan funds are not advanced by the Laurus Fund,
or any other source utilized by the Borrower for the provision of funds for
their incident transaction(s) of which this loan is a part, the Borrower shall
cause to be paid, in the manner described herein as designated by the Lender,
the full Principal and accrued interest on this Note from the proceeds of its
first funding event. The Borrower shall immediately notify the Lender in the
event that the Laurus Fund fails to provide funding to the Borrower, and shall
provide the Lender with the identity, timing and other applicable information
pertaining to the source of funding for its first funding event that is
subsequent to the date of this Note.
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In the event that the Equity or loan funds of a first funding event are
insufficient to pay the Principal and accrued interest in full, the Borrower
shall cause to be paid, in the manner described herein as designated by the
Lender, the remaining Principal and accrued interest on this Note from the net
proceeds of its general revenues. Such payments shall continue until February
18, 2005, at which time the remaining unpaid balance plus accrued interest
thereon shall be paid in full by the Borrower.
2. Interest Rate. The term "Interest Rate" shall mean two percent (2%) per
month.
3. Late Payment of Principal or Interest. In the event that any amount of the
outstanding principal or interest payable hereunder is not paid within ten (10)
days of the date it is due, whether by the terms hereof, by acceleration or
otherwise, such unpaid amount shall bear interest at the Interest Rate plus nine
tenths of one percent (0.9%) per annum, from the due date until such overdue
principal amount, interest or other amount is paid in full (both before or after
judgment). Such amount of any payment is made to cover the Holder's expenses of
handling such late payment, but not as consideration for such late payment. The
payment of any additional charges provided for in this Section 3 of the Note
shall not extend the date when any payment is due. The existence of the
foregoing ten (10) day period shall not be construed as a grace period within
which such payments may be timely made.
4. Place of Payment. All payments and prepayments to be made in respect of
principal, interest, late charges or other amounts due from the Borrower
hereunder shall be payable on or before close of business of Holder on the date
when due without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, and an action therefore shall immediately
accrue. Such payments shall be made to Holder at any of Holder's offices or at
such other location as may be specified in writing by Holder to the Borrower,
without setoff, recoupment, counterclaims or any other deduction of any nature.
5. Time of Payment. If any payment of principal or interest on this Note shall
become due on a Saturday, Sunday or legal holiday under the laws of the State of
Florida, such payment shall be made on the next succeeding day that is not a
Saturday, Sunday or legal holiday under the laws of the State of Florida, and
such extension of time shall in such case be included in computing interest in
connection with such payment.
6. Prepayment. The Borrower may prepay this Note in whole or in part from time
to time without premium or penalty. Any prepayment shall be applied first to the
payment of all costs due in accordance herewith, second to all interest accrued
and unpaid as of the date of prepayment, and third to the outstanding principal
balance of the Note.
7. Costs and Expenses. The Borrower promises to pay all costs and expenses
(including, without limitation, attorneys' fees and disbursements) incurred in
connection with the collection, protection, defense, preservation or enforcement
of all or any part of this Note or any guaranty or endorsement of this Note, in
the foreclosure of any mortgage or security interest which may secure either the
debt hereunder or any guaranty thereof, in the taking of any action to protect
or sustain the lien of any such mortgage or security agreement, in any
litigation or controversy arising from or connected with this Note or any
mortgage or security agreement which may secure this Note, or with respect to
any act to protect, enforce or release any of its rights or remedies with regard
to any collateral which may now or in the future secure this Note, or with
respect to any action taken with regard to or against the Borrower or any
endorser, guarantor or surety of this Note.
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8. Security Interest. The Borrowers grant to the Lender security interests in
certain property, listed herein as Exhibit A ( the "Collateral" ), to secure
either the debt hereunder or any guaranty thereof, and any and all applicable
liens to sustain such security agreements, filed in respect to such Collateral.
The Borrower shall execute, on the Closing Date, UCC-1 and any ancillary
documents necessary to provide the Lender with acceptable methods to file first
liens on the Collateral in the amount of $242,216 plus accrued interest on the
unpaid balance thereof. Any liens securing the Collateral to the benefit of the
Lender may be removed in parts, by the Lender, to accommodate any resale of the
Collateral in part by the Purchaser, or the partial payment of this Note,
without affecting the validity or availability of the residual lien(s) so
remaining. The Borrower shall provide the Lender with any Inter-creditor
agreements required to perfect the interests of the Lender during the term of
this Note and the Lender shall agree to use its best good faith efforts to
cooperate in the execution thereof to perfect the Lenders security interests and
the security interests of other creditors. During the term of this Note, the
interests of other creditors with security interests in the Collateral shall be
subordinated to the Lender, but shall remain in place, so subordinated, during
the term of this Note. The Borrowers shall execute to the benefit of the Lender
any and all documents required to provide for the direct payment of Principal
and accrued interest, if applicable, due to the Lender in this Note, from the
proceeds of the funds advanced by the Laurus Fund, or any other source utilized
by the Borrower for the provision of funds for their incident transaction(s) of
which this loan is a part, so that the payment to the Lender shall be coincident
with the availability of such funds to the Borrower, and shall represent a
closing item payable at the time of the closing and availability of such funds
to the Borrower.
9. Events of Default; Default. "Event(s) of Default," or "Default", whenever
used herein, means one of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the entry by a court having jurisdiction in the premises of (A) a decree or
order for relief in respect of Borrower in an involuntary case or
proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging
Borrower a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of Borrower under any applicable Federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of Borrower or of any substantial
part of his property, or ordering the winding up or liquidation of his
affairs, and the continuance of any such decree or order for relief or any
other such decree or order unstayed and in effect for a period of 60
consecutive days; or
(2) the commencement by Borrower of a voluntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt
as insolvent, or the consent by Borrower to the entry of a decree or order
for relief in respect of Borrower in any involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against him, or the filing by
Xxxxxxxx of a petition or answer or consent seeking reorganization or
relief under any applicable Federal or state law, or the consent by
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Borrower to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of Borrower or of any substantial part of
his property, or the making by Borrower of an assignment for the benefit of
creditors, or the admission by Xxxxxxxx in writing of his inability to pay
his debts generally as they become due.
(3) an Event of Default specified in Section 9 (1)(a) or
(4) default in the payment of any interest on this Note when it becomes due and
payable, and continuance of such default for a period of ten (10) days;
(5) default in the payment of principal of this Note when it becomes due and
payable, and continuance of such default for a period of ten (10) days;
(6) failure of the Borrower to perform, keep or observe any term, provision,
condition, covenant, warranty or representation contained in this Note.
For as long as the Borrower is in compliance with its obligations pursuant to
Section 1 of this Note, inclusive of its obligation to notify the Lender of the
change in funding source to be used in the repayment of this Note, or change in
the date of closing of any funding source, then during such period Borrower
shall not be deemed to be in default pursuant to sub-paragraphs (4) and (5) of
this Section 9 of this Note.
10. Acceleration of Maturity. (a) Upon the occurrence of any Default or Event of
Default or upon the occurrence of certain other events specified in this Note,
Holder may declare the entire principal and interest immediately due and
payable. No failure to exercise or delay in exercising such rights and remedies
shall constitute a waiver of such option or such rights or remedies or of the
right to exercise any of the same in the event of any subsequent Default or
Event of Default hereunder. (b) Failure by the Borrower to repay the remaining
principal due and any accrued or default interest due thereon, as well as any
other costs associated with the collection of the amounts due from the Borrower
by the Lender, pursuant to the provisions herein stated, within ninety days of
the Default Event or Default Date, as applicable, shall result in the
enforcement by the Lender of its security interests in the Collateral. (c)
Xxxxxx agrees that by the terms of the Inter-creditor Agreement(s) with the
other holders of security interests in the Equipment that is part of the
Collateral (the "Equipment Collateral"), the Lender shall undertake enforcement
action pursuant to the terms and conditions agreed to in such Inter-creditor
Agreement(s), and shall take no enforcement actions in respect to such Equipment
Collateral except as agreed to in such Agreement.
11. Capitalized Terms. Whenever used herein, the words "Borrower" and "Holder"
shall be deemed to include their respective heirs, legal representatives,
successors and assigns. All words used herein shall be deemed to refer to the
singular, plural, masculine, feminine or neuter form of the person or entity as
the context may require.
12 Governing Law. This Note shall be deemed entered into in the State of
Florida, and shall be governed by and construed in accordance with the laws of
the State of Florida, without regard to the conflicts of law provisions thereof,
and no defense given or allowed by the laws of any state or country shall be
interposed in any action or proceeding hereof unless such defense is also given
or allowed by the laws of the State of Florida.
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13. Parties in Interest. Provisions of this Note shall be binding upon and inure
to the benefit of and be enforceable by Xxxxxxxx and the Lender, their heirs,
executors, administrators, other permitted successors and assigns, if any.
Nothing contained in this Note, whether express or implied, is intended to
confer any rights or remedies under or by reason of this Note on any persons
other than the parties to it and their respective successors and assigns, nor is
anything in this Note intended to relieve or discharge the obligation or
liability of any third persons to any party to this Note, nor shall any
provision give any third persons any right of subrogation over, or action
against, any party to this Note.
14. Disputes. Any controversy arising out of or relating to this Agreement may
be submitted to and settled by arbitration pursuant to the By-Laws and rules of
the American Arbitration Association. The Borrower and the Lender shall be
conclusively bound by such arbitration.
15. Entirety. This instrument embodies the entire agreement between the Borrower
and Lender and no other evidence of such agreement has been or will be executed
without the prior written consent of the parties.
16. Miscellaneous Provisions.
A. Gender. Wherever the context shall require, all words herein in the
masculine gender shall be deemed to include the feminine or neuter
gender, all singular words shall include the plural, and all plural
shall include the singular.
B. Severability. If any provision hereof is deemed unenforceable by a
court of competent jurisdiction, or a panel of the American
Arbitration Association, the remainder of this Note, and the
application of such provision in other circumstances shall not be
affected thereby.
C. Further Cooperation. From and after the date of this Note, Xxxxxxxx
and Xxxxxx agree to execute whatever additional reasonable
documentation or instruments as are necessary to carry out the intent
and purposes of this Note or to comply with any law.
X. Xxxxxx. No waiver of any provision of this Note shall be valid unless
in writing and signed by the waiving party. The failure of any party
at any time to insist upon strict performance of any condition,
promise, Note or understanding set forth herein, shall not be
construed as a waiver or relinquishment of any other condition,
promise, contract or understanding set forth herein or of the right to
insist upon strict performance of such waived condition, promise,
contract or understanding at any other time.
E. Expenses. Except as otherwise provided herein, each party hereto shall
bear all expenses incurred by each such party in connection with this
Note, and in the preparation thereof.
F. Amendment. This Note may only be amended or modified at any time, and
from time to time, in writing, executed by the parties hereto, except
in the event of a default event, in which case, any such penalties so
provided shall be applied to this Note without execution of consent by
the Borrower.
G. Notices. Any notice, communication, request, reply or advice
(hereinafter severally and collectively called "Notice") in this Note
provided or permitted to be given, shall be made or be served by
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delivering same by overnight mail, fax or by delivering the same by a
hand-delivery service, to the party to the address/fax number set
forth herein, and such Notice shall be deemed given when so delivered.
H. Captions. Captions herein are for the convenience of the parties and
shall not affect the interpretation of this Note.
I. Counterpart Execution. This Note 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.
J. Assignment. This Note is assignable, in whole or part, by the Lender,
without further notice or consent of the Borrower. If assignment is
effected, Xxxxxx shall notify Borrower of the name, address and
telephone number(s) of the assignee(s).
K. Construction. This Note shall be governed by the laws of the State of
Florida without reference to conflict of laws and the venue for any
action, claim or dispute in respect of this Note shall be located in
Fort Lauderdale, Florida. The parties agree and acknowledge that each
has reviewed this Note and the normal rule of construction that Notes
are to be construed against the drafting party shall not apply in
respect of this Note given the parties have mutually negotiated and
drafted this Note.
L. Independent Legal Counsel. The parties hereto agree that (i) each has
retained independent legal counsel in connection with the preparation
and of this Note, (ii) each has been advised of the importance of
retaining legal counsel, and (iii) by the execution of this Note, each
party who has not retained independent legal counsel acknowledges
having waived such right.
M. No Conflict with Other Instruments. The Borrower is not in violation
or default of any provisions of the respective Articles of
Incorporation, Bylaws or other charter documents or amendments
(collectively, the "Charter Documents") or of any instrument,
judgment, order, writ, decree or contract to which the Borrower is a
party or by which Borrower is bound or of any provision of any
statute, rule or regulation applicable to Borrower. The execution,
delivery and performance of this Notre will not result in any
violation of, be in conflict with, or constitute a default under, with
or without the passage of time or the giving of notice: (i) any
provision of the Charter Documents; or (ii) any material contract,
obligation or commitment to which Borrower is a party or by which
Borrower is bound; or any statute, rule or regulation applicable to
Borrower.
N. No Broker. No broker, lender, financial advisor or other intermediary
has acted on behalf of Lender in connection with the offering or sale
of the Collateral Shares or the negotiation or consummation of this
Note or any of the transactions contemplated hereby.
O. Limited Power of Attorney. Xxxxxxxx has granted to Xxx Xxxxxxx, Esq.,
a limited power of attorney to act on its behalf in the event that the
presence of an authorized signatory of the Borrower is unable to be
physically present to execute documents that must be executed in
persona, so that Xxxxxxx shall be so empowered by the Borrower to so
act on its behalf.
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X. Xxxxxx Cooperation with Laurus Fund, SearchPro Corporation, et. alia .
Lender agrees to use its best good faith efforts to cooperate with the
Laurus Fund (the repayment funding source, or any other repayment
funding source) and SearchPro Corporation (the Borrower's Closing
Agent and the Equipment Seller's Agent for the Equipment Collateral),
for the purpose of executing documents relevant to the repayment of
this Note simultaneously with the availability of funds to the
Borrower for such purpose.
THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
(Borrower) On Alert Systems, Inc.
Witness:
/s/ Xxxxxxx Xxxxxxxx
----------------------------------------- ---------------------------------
By: Xxxxxxx Xxxxxxxx, its President
(Lender) 9145-6442 Quebec, Inc. Witness:
/s/ Xxxx X. Xxxxxxxxxx, Esq.
----------------------------------------- ---------------------------------
By: Xxxx X. Xxxxxxxxxx, Esq.,
as power of attorney for the Corporation
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EXHIBIT A
COLLATERAL LIST
1) 1,700,000 SHARES OF THE FULLY PAID AND NON-ASSESSABLE COMMON STOCK OF ULTRA
PURE WATER TECHNOLOGIES, INC., SUCH SHARES HAVING BEEN ISSUED BY THE ISSUER
IN EXCESS OF TWO YEARS PRIOR TO THE DATE OF THIS NOTE (the "Collateral
Shares").
2) EQUIPMENT REPRESENTED BY THE EQUIPMENT PURCHASE AGREEMENTS, ATTACHED HERETO
AS SCHEDULE 1 OF THIS EXHIBIT A.
3) ASSIGNMENT OF AMOUNTS DUE AT CLOSING OF 1ST EQUITY FUNDING EVENT.
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SCHEDULE 1 OF EXHIBIT A TO NOTE DATED August 23, 2004
EQUIPMENT PURCHASE AGREEMENT
This Equipment Purchase Agreement (this "Agreement") is dated as of May 31,
2004, by and between PSC Equipment, Inc., a Florida corporation (the "Seller")
and On Alert Systems, Inc., a Nevada Corporation. (the "Purchaser", or "OAS").
RECITALS
WHEREAS, the Seller is engaged in the business of marketing and selling a
variety of previously owned commercial and industrial mechanical and processing
equipment to customers; and
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller processing equipment (the "Equipment") for
the consideration set forth herein.
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
Equipment, an itemized list of the Equipment is attached as Exhibit A to this
Agreement.
1.02. Purchase Price. The Purchaser shall pay to the Seller an amount equal
to one million six hundred twenty-eight thousand dollars ($1,628,000) in the
following manner:
A. The number of common shares of the Purchaser, convertible into
common shares of a reporting corporation in a current status with its SEC
filing requirements and currently quoted on the OTCBB (the "mergee"),
issued by Purchaser shall be five hundred ninety-one thousand (591,000)
shares (the "mergee shares), subject to adjustment based upon a pari pasu
conversion into the mergee's shares. All Shares issued to Seller shall be
duly and validly issued by Purchaser and shall be fully paid and
non-assessable.
1.) One Hundred Eighty (180) days from this stock issuance, if the market
price of the issuers common stock, as quoted on the OTCBB, or other
regional or national stock exchange, other than the Pink Sheets, is
not $2.50 per share, a sufficient number of additional shares shall be
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delivered to the Seller so as to constitute a dollar value in the
aggregate of the total number of Shares that is equal to the value of
the 591,000 shares at $2.50 per share. Such additional Shares issued
will bear registration rights pursuant to the Registration Rights
Agreement ("RRA") dated of even date hereof, attached as an exhibit to
this EPA, or be eligible for exemption from Registration, as if such
Shares were issued coincident with the Closing Date of the EPA.
2.) In the event that the common stock of the issuer is quoted on the Pink
Sheets, and is not quoted on the OTCBB, or any other regional or
national stock exchange, on the date of the effectiveness of the first
registration of any of the mergee shares, or on the date that an
exemption from registration for such shares is available to the
Shareholders pursuant to the Registration Rights Agreement ("RRA"),
dated of even date hereof, attached as an exhibit to this EPA, at any
time subsequent to the execution of this EPA, and prior to the 180th
day subsequent to the execution of this EPA, then one hundred thousand
(100,000) additional shares of common stock shall issued and delivered
by Purchaser or the issuer, as applicable, to the Seller immediately
following such occurrence. Such additional Shares issued will bear
registration rights pursuant to the RRA, or be eligible for exemption
from Registration, as if such Shares were issued coincident with the
Closing Date of the EPA. Other penalties or sanctions described in the
RRA may also apply.
B. The Purchaser shall cause sixty thousand (60,000) common
shares of the mergee (the "mergee closing shares") that are free of
any restrictions as to their transferability or marketability in the
open market to be paid to the Seller within five (5) days of the
Closing Date. The Purchaser may substitute one hundred fifty thousand
dollars ($150,000) in market value, as of the date of the closing, of
any registered shares, or shares exempt from registration, of another
corporation acceptable to the Seller in lieu of the mergee's closing
shares.
C. In the event that the Purchaser, for any reason, shall fail,
within seventy-two (72) days subsequent to the Closing Date, to
arrange for the shares described in 1.02 (B) above, that are free of
any restrictions as to their transferability or marketability in the
open market, to be paid to the Seller by the fifth (5th ) day
subsequent to the Closing Date, 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 immediately
registered. 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 issuer
of such shares not qualify to file an S-8 registration for such
shares, then an additional $175,000 shall be paid to the Seller in a
manner identical to, and in addition to, the terms and conditions
described in Sections 1.02 (F), (G) and (H) below.
D. The Purchaser shall issue cash payment for penalties, default
provisions or expenses related to them, in increments under terms and
conditions as described in the Money Purchase Contract ("MPC"),
attached herein as Exhibit B of this Agreement.
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E. In the event that the payment to the Seller cannot be made,
for any reason, under the terms and conditions set forth in
sub-paragraph 1.02 (D), then any amounts of payments so due to the
Seller shall emanate from the next subsequent sale of manufactured
equipment by the Purchaser to its contract purchaser(s), at its next
delivery of such equipment, and a penalty of twenty-five thousand
($25,000) dollars shall be added to the MPC, attached herein as
Exhibit B of this Agreement, at the time of the first deliveries of
contract equipment purchased by the contract purchaser that did not
include the piece(s) titled to the Seller.
F. In the event that the payment to the Seller cannot be made,
for any reason, under the terms and conditions set forth in
sub-paragraph 1.02 (E), of any payments so due to the Seller, 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 payments, plus a penalty of fifty
thousand ($50,000) dollars, is paid to the Seller.
G. In the event that the Equipment sold by the Seller to the
Purchaser on the Closing Date has an appraised fair market value of
less than $2,600,000, then the Purchaser, at its sole discretion, may
choose to effect the closing on a lesser amount of Equipment and pay a
pro-rata amount, in cash and stock, on the Equipment so purchased, or
demand that the Seller include additional Equipment to equal the
$2,600,000 appraised fair market value. This Agreement may be amended
to include a greater amount of Equipment, up to $20,000,000 in
appraised fair market value, for terms and conditions identical to
those represented herein, for a total price equal to the pro-rata
number of additional shares based on the number of shares in the
original purchase price instead of 651,000 shares, and a pro-rata
additional amount of cash based on the value of the original MPC, as
well as the other payment provisions contained in sub-Paragraphs A, B,
C, D, E, and F, above.
H. All of the terms and conditions, rights and entitlements of
the Seller shall be applicable to the mergee, or any other reporting
parent or holding company exercising voting or shareholder control
over OAS (hereafter, the "Parent"), upon the execution and
effectiveness of OAS's merger with the mergee, or such Parent.
I. All obligations of the Purchaser shall accede to the mergee,
or any such parent of OAS, as if the original transactions
contemplated herein had occurred with the mergee, or such Parent , as
applicable, as of the date of this Agreement.
J. The Seller, at its sole option and discretion, may require the
Purchaser to re-execute this EPA, and any and all Exhibit documents,
amendments or addendums, as applicable, and any and all ancillary
documents pertinent to these transactions described herein, in the
name of the mergee reporting corporation, as if that document were the
original document upon which the transactions described herein were
based.
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 C. 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.
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1.04. Closing.
(a) The closing of the transactions contemplated hereby (the "Closing")
shall take place on the date or dates 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"). The Closing may take place in two or
more parts, as necessary, to complete share or cash transfers, or to accommodate
Equipment Bills of Sale availability, or other pre-closing or post-closing items
as required by the Seller or the Purchaser, and each closing shall be valid and
binding to the parties.
(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
restricted common shares of the Purchaser shall be payable to the Seller at the
Closing, and as otherwise described herein, 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 registered shares, or shares exempt from
registration, shall be represented by (1) a Money Purchase Contract, herein
attached as Exhibit B, delivered by the Purchaser to the Seller's agent at the
address set forth in Section 6.02 hereof; and, (2) the contract(s) and other
documents referenced in sections 1.02 (D, E & F) 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 Bill(s) of Sale evidencing
ownership of Equipment as listed in Exhibit A of this Agreement.
1.05 Physical Location of Equipment and Lease Terms
(a) The Equipment identified in Exhibit A, Part 1, of this Agreement
is located in facilities owned by (to be provided on Closing Date) with the
physical addresses as follows:
[[TO BE PROVIDED on closing Date]]
(b) All Equipment purchased identified in Exhibit A, Part 1 and Part
2, of this Agreement shall be removed from the current locations by the
Purchaser, at its expense, by the dates provided for in Exhibit A, Part 1
and Part 2.
(c) Security of equipment at locations. Security measures to be
effected by the owner of the facilities wherein the Equipment is stored and
warehoused, as well as measures to be monitored by the Seller, shall be
attached as a post-closing Addendum to this Agreement, within the first 30
days subsequent to Closing. In the event that security measures acceptable
to the Purchaser are not in place within the thirty-day period following
the Closing Date, Purchaser, at its sole option, may extend the period
within which such measures may be affected, and Seller agrees to any
reasonable extension up to an additional sixty (60) days. Seller agrees to
replace such Equipment, by value replacement of equipment similar in age
and condition to that lost by any breech of security, through theft or
damage caused by the Seller, the owner, or third parties, during the
unmonitored period. Such replacement shall occur within a commercially
reasonable time from the date of the loss event(s).
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Seller cannot warrant or make representations regarding Security
measures in effect by the owner of the facilities wherein the Equipment is
stored and warehoused, and which will continue to be in effect during the
anticipated term of the Equipment's storage in each location. Generally,
standard security practices at these facilities, are as follows:
o The warehouses and facilities are physically located within the
perimeter security fencing or perimeter property of the overall
facilities of each owner of the respective facility.
o Each facility owner of each warehouse requires specific identification
of each person entering the facilities with an appointment or Bill of
Lading or Delivery notice to obtain entrance to the facility.
o the warehouses and the facilities are guarded by 24 hour per day, 7
days per week security guards. All warehouses are electronically
monitored, with activated electronic security systems.
o Each warehouse within each facility requires a pre-scheduled delivery
or pick-up notification in writing to release or deliver any goods
from or to each warehouse or facility.
o The Purchaser, itself, or through a local agent, shall monitor such
security measures as described above.
o Seller shall give the names of the Purchaser's authorized personnel
who are permitted to enter each warehouse for any purpose to the
warehouse management. Purchaser shall provide such names to Seller as
a post-closing Addendum to this Agreement, within the first 30 days
subsequent to Closing. o Any person seeking entry to each facility and
warehouse must have "picture identification" (e.g., a valid driver's
license) in order to enter any warehouse.
(d) Insurance on equipment. No insurance covering the Equipment shall
be attached to the sale of the Equipment. Purchaser shall place its own
insurance at its own discretion.
(e) Mechanisms for delivery/pickup by new purchasers . The operational
methods for pickup, release, and delivery of equipment removed from their
respective warehouse locations or resold by Purchaser to third parties
shall be described in a post-closing Addendum to this Agreement, within the
first 30 days subsequent to Closing, and prior to the release by Seller of
any Equipment purchased by the Purchaser herein. All transportation and
warehouse costs incident to the removal of the purchased Equipment by the
Purchaser shall be at the Purchaser's expense.
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.
(b) Certified Appraisal--independent verification. A certified
appraisal shall be conducted prior to closing, at the Purchaser'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, and whether the appraisal costs more or less than the good faith
estimate. 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.
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(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 Equipment, with appraised fair market value sufficient to
correct such deficiency.
(d) Legal Costs--The Purchaser shall pay for legal expenses relating
to the Purchase of the Equipment as a pre-closing expense.
(e) Agent expenses--The Purchaser shall pay $15,000 to the Seller's
agent at the time of the execution of this agreement as a pre-closing
expense. 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 the $15,000 in lieu of a portion of the 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 use such funds to first pay
any legal, appraisal or desktop 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, and then return any unpaid remaining balance to
the Purchaser 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
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as follows:
2.01. Organization; Good Standing. The Seller is a company duly organized,
validly existing and in good standing under the laws of the State of Florida,
and the Seller has all requisite corporate power and authority under such laws
to carry on its business as now conducted.
2.02. Power and Authority; Effect of Agreement. The sale of the Equipment,
the execution, delivery and performance by the Seller of this Agreement and the
consummation by the Seller of the transactions contemplated herein have been
duly authorized by all necessary action on the part of the Seller. This
Agreement has been duly and validly executed and delivered by the Seller and
constitutes a valid and binding obligation of the Seller, enforceable against
the Seller, in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and is
subject to general principles of equity.
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2.03. No Conflict. The execution, delivery and performance by the Seller of
this Agreement and the consummation by the Seller of the transactions
contemplated herein will not, with or without the giving of notice or the lapse
of time, or both, violate, conflict with or constitute a default under (a) any
provision of law, rule or regulation to which the Seller is subject, (b) any
order, judgment or decree applicable to the Seller, (c) any indenture, agreement
or other instrument by which the Seller is bound.
2.04. Title to Equipment.
(a) The Seller owns and has good and marketable title to, and legal
ownership of the Equipment, free and clear of any and all liens, security
interests, pledges, mortgages, charges, limitations, claims, restrictions,
rights of first refusal, rights of first offer, rights of first negotiation
or other encumbrances of any kind or nature whatsoever (collectively,
"Encumbrances").
(b) Upon consummation of the Closing, without exception, the Purchaser
will acquire from the Seller legal and beneficial ownership of, good and
marketable title to, and all rights to the Equipment to be sold to the
Purchaser by the Seller, free and clear of all Encumbrances. 2.05.
Equipment Condition. Seller makes no warranties regarding the Equipment
outlined in Exhibit A hereto, including without limitation warranties as to
merchantability and fitness for a particular purpose, either expressed or
implied.
2.06 Investment Intent. In connection with the receipt of the restricted
Shares by the Seller:
(i) Seller is acquiring the shares in a private transaction, for
Seller's own account and for investment purposes and not with a view to the
immediate public resale or distribution.
(ii) Seller will not sell, transfer or otherwise dispose of the shares
except in compliance with the Act. Seller acknowledges that Purchaser is
issuing and delivering the Shares in reliance on exemptions, including, but
not limited to Section 4(2) of the Act.
(iii) Seller acknowledges that it has been furnished with disclosure
documents that Seller feels are necessary to make an economic decision to
acquire the shares.
(iv) Seller further acknowledges that it has had an opportunity to ask
questions of and receive answers from duly designated representatives of
Purchaser concerning the financial status of the Purchaser and the
securities.
(v) By reason of Seller's knowledge and experience in financial and
business matters in general, and investments in particular, Seller is
capable of evaluating the merits and bearing the economic risks of an
investment in the securities and fully understands the speculative nature
of the securities and the possibility of loss.
(vi) The present financial condition of Seller is such that it is
under no present or contemplated need to sell any portion of the securities
to satisfy an existing or contemplated undertaking, need or indebtedness.
15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
3.01. Organization; Good Standing. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, and has all requisite power and authority under such laws to carry on
its business.
3.02. Power and Authority; Effect of Agreement. The purchase of the
Equipment, the payment and delivery of the Purchase Price, the execution,
delivery and performance by the Purchaser of this Agreement and the consummation
by the Purchaser of the transactions contemplated herein have been duly
authorized by all necessary action on the part of the Purchaser. This Agreement
has been duly and validly executed and delivered by the Purchaser and
constitutes a valid and binding obligation of the Purchaser, enforceable against
the Purchaser, in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and is
subject to general principles of equity.
3.03. No Conflict. The execution, delivery and performance by the Purchaser
of this Agreement and the consummation by the Purchaser of the transactions
contemplated herein will not, with or without the giving of notice or the lapse
of time, or both, violate, conflict with or constitute a default under (a) any
provision of law, rule or regulation to which the Purchaser is subject, (b) any
order, judgment or decree applicable to the Purchaser, (c) any provision of the
charter documents of the Purchaser or (d) any indenture, agreement or other
instrument by which the Purchaser is bound.
3.04. Investigation and Economic Risk. The Purchaser has performed its own
due diligence review of the Equipment itemized in Exhibit A and has had access
to information concerning the Seller and the Equipment it has deemed necessary
in connection with its decision to purchase the Equipment.
3.05 Changes in Common Stock. Purchaser agrees to take any and all action
necessary so that if, and as often as, there is any change in the Common Stock
by way of a stock split, stock dividend, combination or reclassification, or
through a merger, consolidation, reorganization or recapitalization, or by any
other means, then appropriate adjustment shall be made in the provisions hereof
so that the rights and privileges of the Seller shall continue with respect to
the Common Stock as so changed to the fullest extent to the advantage of the
Seller.
3.06 As of the date of the merger with the mergee, the mergee shall be
current in its reporting requirements with the SEC, shall be eligible to file
S-8 registration statements on behalf of the Shareholders pursuant to the RRA,
if required to effect the same pursuant to this EPA, and/or the RRA, as
applicable, and the Purchaser, subsequent to such merger, shall maintain a
current status in its filings with the SEC throughout the Registration period,
as defined in the RRA.
ARTICLE Iv
conditions TO CLOSING
4.01. Conditions to the Obligations of the Seller. The Seller's obligation
to sell the Equipment shall be subject to the satisfaction or waiver of the
following conditions on or prior to the Closing Date:
16
(a) Compliance with this Agreement. The Purchaser shall have performed
and complied with all agreements and conditions contained herein that are
required to be performed or complied with on or prior to the Closing Date.
(b) Payment of Purchase Price. The Purchaser shall have delivered to
the Seller the Purchase Price in accordance with Article I and Exhibit B
hereof.
(c) Completion of Merger. The Purchaser shall have executed and
delivered to the Seller the completed and final merger documents by which
Purchaser shall merge with the mergee, prior to the fifteenth (15th) day
subsequent to the execution of this Agreement (the "execution date").
Within ten (10) business days of the last closing date, if the merger so
represented has not been executed and completed, the Seller, at its sole
discretion, will not release its first lien, nor subordinate same, to any
other party as otherwise provided for herein, and in the MPC or RRA,
attached hereto.
4.02. Conditions to Obligation of Purchaser. The obligation of the
Purchaser to purchase the Equipment shall be subject to the satisfaction or
waiver of the following conditions on or prior to the Closing Date:
(a) Compliance with this Agreement. The Seller shall have performed
and complied with all agreements, covenants and conditions contained herein
that are required to be performed or complied with on or prior to the
Closing Date.
(b) Consents; Permits. The Seller shall have received all consents,
permits, approvals and other authorizations that may be required from, and
any declarations that may be required with, any person in connection with
the transaction contemplated by this Agreement.
ARTICLE V
TERMINATION PRIOR TO CLOSING
5.01. Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) By the mutual written consent of the Seller and the Purchaser; or
(b) Within thirty days from the Closing date by either the Seller or
the Purchaser by written notice, without liability to the terminating party
on account of such termination (provided the terminating party is not
otherwise in default or in breach of this Agreement), if there shall have
been a breach by the other party of any of its representations, warranties,
covenants or agreements contained herein, which breach results in a failure
to satisfy the terminating party's expectations as to the transaction. Such
termination shall not result in the waiver of any pre-closing expenses due
by the Purchaser or the Seller at the time of the termination.
5.02. Effect on Obligations. Termination of this Agreement pursuant to this
Article V shall terminate all obligations of the parties hereunder, except for
their obligations under Sections 1.06, 6.01 and 6.10 hereof; provided, however,
that termination pursuant to clause (b) of Section 5.01 hereof shall not relieve
the defaulting or breaching party from any liability to the other party hereto.
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ARTICLE vi
MISCELLANEOUS
6.01. Expenses. Except as otherwise provided herein, the Purchaser shall
pay all costs and expenses incurred by or on behalf of the Purchaser, and the
Seller shall pay all costs and expenses incurred by or on behalf of the Seller,
in connection with the negotiation of this Agreement and the performance of the
transactions contemplated hereby, including, without limiting the generality of
the foregoing, fees and expenses of its and their financial consultants,
accountants and legal counsel, except as provided for in applicable sections of
this Agreement.
6.02. Notices. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing and
shall be given (and will be deemed to have been duly given upon receipt) by
delivery in person, by electronic facsimile transmission, cable, telegram, telex
or other standard forms of written telecommunications, by overnight courier or
by registered or certified mail, postage prepaid, as follows:
If to the Seller, to:
SearchPro Corporation, as agents for
PSC Equipment, Inc.
0000 Xxxxx Xx.
Suite 213 D
Margate, Fl. 33063 Facsimile: 000-000-0000
If to the Purchaser, to:
Xxxxxxx Xxxxxxxx, President
with a copy to:
, Esq.
or at such other address for a party as shall be specified by like notice.
6.03. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
6.04. Entire Agreement. This Agreement constitutes the sole and entire
agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior or contemporaneous agreements, discussions,
representations, warranties or other communications.
6.05. Counterparts. This Agreement 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.
6.06. Amendments. This Agreement 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 a writing executed on behalf of such
party.
6.07. Severability. If any provision of this Agreement shall be declared
void or unenforceable by any judicial or administrative authority, the validity
of any other provision and of the entire Agreement shall not be affected
thereby.
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6.08. Titles and Subtitles. The titles and subtitles used in this Agreement
are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
6.09. Successors and Assigns. This Agreement may not be assigned by any
party hereto without the prior written consent of the other party hereto. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors, executors, beneficiaries and permitted
assigns of the parties hereto.
6.10. 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 Agreement, (b) any discussions or
negotiations relating to this Agreement and (c) the identity of the parties to
this Agreement, 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 Agreement or the
transactions contemplated hereby, unless the parties otherwise agree in writing.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Equipment
Purchase Agreement to be executed and delivered by the undersigned as of the day
and year first above written.
SELLER: PSC EQUIPMENT, Inc.
/s/ Xxxxxxx Xxxxxxx
-------------------------------------------------
By: Xxxxxxx Xxxxxxx, President
PURCHASER: ON ALERT SYSTEMS, INC.
/s/ Xxxxxxx Xxxxxxxx
-------------------------------------------------
By: Xxxxxxx Xxxxxxxx, CEO
19
EXHIBIT A
INVENTORY LISTS
PART 1
To be provided at Closing Date
20
EXHIBIT A
INVENTORY LISTS
PART 2
To be provided at Closing Date
21
EXHIBIT B
Money Purchase Contract
22
MONEY PURCHASE CONTRACT
THIS CONTRACT ("Contract") is made 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").
RECITALS
X. Xxxxxx is engaged in the business of marketing and selling industrial
processing equipment to clients; and,
B. Seller wishes to sell approximately $2,600,000 of certified appraised fair
market value processing equipment for $1,628,000; and,
C. Purchaser and Seller have entered into agreements whereby the Purchaser has
purchased such Equipment from the Seller (the "EPA"), and the Purchaser intends
to utilize a portion of the Equipment and contract a third party to remarket a
portion of such Equipment; and,
X. Xxxxxxxxx has agreed to accept payment of One Hundred Fifty Thousand dollars
($150,000) of the Purchaser's purchase price for such equipment, pursuant to
terms and conditions set forth herein; and,
E. Seller and Purchaser wish to accomplish their financing through a private
transaction not involving a public offering, as that term is used in Section
4(2) of the Securities Act of 1933, as amended (the "Act"), as to both the sale
and transfer of shares in Purchaser that make up the majority of the purchase
price paid by the Purchaser of such equipment, and any remaining balance due to
the Seller as a deferred, penalty, adjustment or default portion of the purchase
price paid by the Purchaser; and
F. Seller and Purchaser wish to enter into a Money Purchase Contract ("MPC") to
state the terms and conditions under which the payment of the $150,000
registered or exempt stock portion of the purchase price is to be paid by the
Purchaser;
NOW, THEREFORE, in consideration of the premises, terms, mutual promises and
covenants contained herein, and intending to be legally bound hereby, the
parties hereby agree as follows:
1. Purchase of Equipment. On the "Closing" (as hereinafter defined) of the EPA,
and any other ancillary documents which require execution to constitute a valid
Closing under the EPA terms and conditions, this MPC shall be executed and dated
by the parties, notarized by a Notary Public, which execution shall bind the
parties to the terms herein.
2. Purchase Price and Payments. The purchase price of the equipment purchased by
the Purchaser under the EPA, up to $1,628,000, shall be partially ($150,000)
paid for by the issuance of registered or exempt common stock of the Issuer or
the Purchaser, as applicable. In the event that the Purchaser is unable to cause
such shares to be issued within five (5) days of the last Closing Date at which
any equipment is transferred or sold to the Purchaser by the Seller, then the
funds emanating from the resale of the equipment, or, as provided for herein,
from qualified loan or equity proceeds, as applicable, for the benefit of the
Purchaser, by the Purchaser, to the future customers of the Purchaser and/or
Seller, in cash installments (the "Installments") to Seller, and the Purchaser
herein agrees to pay to the Seller, pursuant to the terms and conditions set
forth herein, such installments until the $150,000 is paid in full. Purchaser
23
shall have no responsibility to pay any part of the $150,000 except from the
proceeds of resale of Equipment purchased pursuant to the EPA, or from qualified
loan or equity proceeds, or upon the event of a lien of senior right to this MPC
being held by any party other than the Seller against the Equipment, or, in the
event of default of the terms of the Registration Rights Agreement ("RRA") under
the terms and conditions herein.
3. Installment Payments
(a) Each Installment shall be equal to twenty percent (20%) of the gross
proceeds in cash from the resale of the any of the Equipment purchased
under the EPA, paid to the Seller simultaneously with the receipt of
the funds by the Purchaser from the respective resale purchasers, to
the extent there is any cash generated from such sale. In the event
that there is only restricted or registered stock generated from the
resale of any of the Equipment purchased under the EPA, such stock
shall not be included in any installment payments while this Contract
is in force, and is not in Default by either party. There is no
minimum amount in dollars of any Installment to be paid. The maximum
amount of any Installment to be paid will be the remaining balance due
to the Purchaser under this MPC on the date of the resale or loan or
equity or default event that generated the Installment Payment. There
are no requirements that the seller make any Installment Payments
during the Term of this MPC unless there is a resale of equipment, or
loan or equity proceeds, from which cash is realized to pay such
Installment(s), except in the instance of a default in the RRA.
(b) Should the Purchaser obtain a loan or equity by collateralizing the
Equipment, or any part thereof, acquired under the EPA, in order to
secure the loan or equity, then the $150,000 cash payment, or any
remaining balance thereof, shall be deducted from the loan or equity
proceeds, but only where such net loan or equity proceeds to the
Purchaser equal or exceed $750,000; otherwise, only a pro-rata amount
of the $150,000 shall be due from net loan or equity proceeds, except
that the Equipment may not be collateralized by the Purchaser unless
the Seller receives at least $100,000 at the time loan or equity
proceeds are available to make such installment payment to the Seller.
(c) The Seller will maintain a UCC-1 collateral interest for $150,000, or
an amount in excess of $150,000 under the terms and conditions as set
forth herein, on the Equipment until the earlier of the payment of
$150,000, or the amount in excess of $150,000 under the terms and
conditions as set forth herein, to the Seller in installments
described above, or the end of three years from the date of this
Agreement, whichever occurs first.
(d) The Purchaser is initially borrowing or receiving equity in an amount
of approximately five million ($5,000,000) dollars, or a larger amount
as applicable, from a third party, unrelated to the Seller or the
Purchaser, as part of the purchase price of certain vehicle(s) to be
resold by the Purchaser pursuant to its contracts with other third
party contract purchasers of its manufactured equipment. The Purchaser
intends to secure the loan or equity with the Equipment purchased
pursuant to the EPA of even date herewith, which security interest
shall constitute a first and senior lien on the Equipment. As such,
the UCC-1 filed by the Seller shall constitute a first security
interest in the Equipment, and shall be paid from the proceeds of such
loan or equity at such loan's or equity's closing prior to the
initiation of the lien securing the interests of the $5,000,000 (or
24
applicable amount) lender's or equity holder's lien held by the
lender(s) or equity holder(s). Any loan or equity replacing such loan
or equity arranged by the Purchaser secured by the Equipment shall be
of sufficient amount to comply with the terms of sub-Paragraph 3 (b)
above, and to the extent any portion of the $150,000 remains unpaid to
the Seller, the UCC-1 shall remain in force pursuant to the terms
specified herein. The Seller will use it best good faith efforts to
execute any inter-creditor agreements required by the lender or equity
holder(s) extending such loan or equity secured by the Equipment so as
to reasonably facilitate the placement of such loan or equity in a
commercially feasible manner and timeframe, except in the event that
the Purchaser has not completed its merger pursuant to the terms and
conditions described in the EPA of even date hereof.
(e) This Contract may be increased by the Seller by:
(1) an increase in the amount of Equipment purchased by the Purchaser,
above the initial $2,600,000 in certified appraised fair market value
and the $1,628,000 purchase price contemplated by this Contract, by an
addendum to the EPA, this MPC and the RRA, wherein the purchase price
in this contract shall be increased pro-rata to the increase in the
additional amount of Equipment purchased;
(2) a change in the type of equipment purchased, in whole or part, by
the Purchaser;
(3) an event of default pursuant to the RRA, in which case this
Contract would be increased subject to penalties pursuant to the
terms of the RRA. Any such increase as the result of the
application of a penalty will require the Seller to so notify the
Purchaser that the Seller has executed such actions on its behalf
to incorporate such additional amounts due under the UCC-1
filings in place at the time of the default.
4. Currency of Installment Payments All Installments will be paid in cleared US
funds, upon the receipt of cleared US funds by the Purchaser. In the event that
funds other than US funds are paid to the Purchaser of the resold equipment, it
shall be the obligation of the Purchaser to exchange the non-US funds for US
Funds through the Purchaser's bank, the Seller's bank, or the bank of any
attorney in trust or Closing resale purchaser, where applicable, so as to
realize the receipt of the resale price of the equipment in US Funds to the
Seller, after deducting any costs or expenses of exchange.
5. Number of Installments Installment payments will continue to be paid by the
Purchaser to the Seller as long as any of the $150,000 due to the Seller, under
the terms and conditions set forth herein, is remaining due to the Seller. Each
installment shall be paid upon the occurrence of any cash resale of the
equipment purchased by the Purchaser under the EPA, or loan or equity proceeds,
or an event of default if the RRA, pursuant to Section 3 above. There shall be
no set number of Installments due to the Seller other than as those paid as
specified in this Section 4. No Installment shall be due and payable to the
Seller unless there are cash proceeds from a resale, in whole or in part,
available at the resale and re-titling to the purchaser of the resold equipment,
or loan or equity proceeds sufficient to pay the Seller at least $100,000, or an
event of default under the RRA
6. Term of Contract The term of this MPC shall be three (3) years from the date
of this Contract ("Termination Date").
7. Termination of Contract
(a) This Contract will terminate earlier than the Termination Date on the date
of the event of the final Installment Payment paid in cash to the Seller,
whereby the Seller, by receipt of such final payment, shall have been paid,
in the aggregate, $150,000 over the Term of this Contract.
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(b) This Contract will terminate if after 36 months from the date of this MPC,
no resale or loan had occurred that resulted in any cash proceeds to be
paid to the Seller. In such event, the remaining inventory of equipment
shall be placed at auction, and any cash proceeds realized from such resale
at auction will be evenly divided between the Purchaser and the Seller
until the Seller has received, in aggregate, $150,000.
(1) In the event that the proceeds of such auction are insufficient to pay
the Seller $150,000, in aggregate, then any stock or other assets
(except where the asset is a promissory note as described in Section 7
(c) below) received by the Purchaser from any prior sales, to the
extent that they are available and had not previously been liquidated,
shall be sold at the earliest legal date when such asset can be sold
by the Purchaser, using its best good faith efforts, and the cash
proceeds will be evenly divided between the Purchaser and the Seller
until the Seller has received, in aggregate, $150,000.
(2) In the event that the proceeds of such sales of assets or stock are
insufficient to pay the Seller $150,000, in aggregate, then this MPC
shall be cancelled, no further amount will be due to the Seller over
and above what the Seller had received from the resale of the
equipment, the liquidation at auction, and any asset or stock sales
proceeds already paid by the Purchaser to the Seller.
(c) In the event that the Purchaser has been paid, in part or in whole, for any
equipment acquired under the EPA, and resold, by a promissory note, whose
terms call for payment of principal to the Purchaser subsequent to the date
of termination pursuant to Section 7 (b), then any such proceeds received
by the Purchaser shall be payable as if this MPC had been in full force,
and according to the provisions set forth in Sections 4, 5, and 7, as
applicable.
(d) If, prior to the expiration of the Term of this MPC, and prior to the
Termination of this MPC pursuant to 7(a) above, the Purchaser is insolvent,
incapacitated, files for protection under the Federal Bankruptcy statutes,
or has failed to make any applicable payments due hereunder to the Seller,
thus defaulting on the Purchaser's agreements with the Seller, the Seller
may take whatever actions required to maintain title to the equipment
purchased by the Purchaser, and to continue the payments agreed to by the
Purchaser, at its sole choice and discretion, or to deliver the title, in
lieu of foreclosure, to the parties so due such payments.
(e) If at the expiration of the Term of this MPC, any portion of the $150,000
has not been paid to the Seller, then that portion not paid shall be
cancelled, and shall no longer be due to the Seller, except as described
herein this Section 7.
8. Liens The Purchaser shall execute, on the Closing Date, UCC-1 and any
ancillary documents necessary to provide the Seller with acceptable methods to
file first liens on the Equipment in the amount of $150,000. Any liens securing
the Equipment to the benefit of the Seller may be removed in parts, by the
Seller, to accommodate any resale of the Equipment in part by the Purchaser, or
the partial payment of the this MPC, without affecting the validity or
availability of the residual lien(s) so remaining. Such liens shall be subject
to increase pursuant to the terms of this MPC, the EPA, and the RRA, inclusive
of any and all amendments executed by the parties subsequent of the date of this
MPC.
9. Closing. The closing of the EPA and this MPC shall occur contemporaneously,
as of the date of this Contract and the date of the EPA, with the exchange and
delivery by the parties to each other such documents and instruments as required
herein, and as Purchaser or Seller may reasonably require, including a notarized
original signature page for each of the parties to this Contract.
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10. ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations and Warranties of Seller. Seller hereby represents and warrants
to Purchaser as follows:
(a) Organization and Good Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and Seller has all requisite power and authority to enter into
this Contract and carry on its business as now conducted and as proposed to be
conducted
(b).Articles of Incorporation and Bylaws. Nothing contained in the Articles
of Incorporation or Bylaws of Seller or any amendments to those documents in any
way limits or effects this Contract or is in contradiction to the terms hereof.
(c) Authorization. All corporate action on the part of Seller, its
officers, directors and shareholders, necessary for the authorization, execution
and delivery of the EPA or this MPC, and the transactions contemplated thereby,
the performance of all obligations of Seller under the EPA and this MPC, and the
authorization pursuant to this Contract has been taken. Each of the EPA and this
MPC constitutes the valid and legally binding obligation of Seller, enforceable
in accordance with their respective terms.
(d) Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of Seller is
required in connection with the authorization, execution, delivery of the EPA
and this MPC and performance of all obligations of Seller under these
agreements.
(e) Litigation. There are no actions, suits, claims, investigations or
legal or administrative proceedings pending or, to the best of Seller's
knowledge and belief, threatened, against any Seller and there are no judgments,
decrees or orders of any court, or government department, commission or agency
entered or existing against any Seller or any of its assets or properties, to
effect the validity or ability of the Seller to enter into the Agreements
contemplated herein.
(f) No Conflict with Other Instruments. The Seller is not in violation or
default of any provisions of the respective Articles of Incorporation, Bylaws or
other charter documents or amendments (collectively, the "Charter Documents") or
of any instrument, judgment, order, writ, decree or contract to which the Seller
is a party or by which Seller is bound or of any provision of any statute, rule
or regulation applicable to Seller. The execution, delivery and performance of
this Contract will not result in any violation of, be in conflict with, or
constitute a default under, with or without the passage of time or the giving of
notice: (i) any provision of the Charter Documents; or (ii) any material
contract, obligation or commitment to which Seller is a party or by which Seller
is bound; or any statute, rule or regulation applicable to Seller.
(g) Related Party Transactions. There are no Contracts, understandings or
proposed transactions between Seller and any of its officers, directors or other
"affiliates" impacting on the Transaction Documents.
(h) No Broker. No broker, Purchaser, financial advisor or other
intermediary has acted on behalf of Seller in connection with the offering or
sale of the Shares or the negotiation or consummation of this Contract or any of
the transactions contemplated hereby.
(i) Full Disclosure. None of the EPA or this MPC, Seller governmental
filings, or any other disclosures, documents or certificates made or delivered
in connection therewith, as of the date hereof or thereof, contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
27
(j) Security Compliance. Seller hereby represents to Purchaser that:
(i) Seller is acquiring the Shares in a private transaction, for
Seller's own account and for investment purposes and not with a
view to the immediate public resale or distribution.
(ii) Seller will not sell, transfer or otherwise dispose of the Shares
except in compliance with Act. Seller acknowledges that Purchaser
is issuing and delivering the Shares in reliance on exemptions,
including but not limited to Section 4(2) of the Securities Act.
(iii)Seller acknowledges that it has been furnished with disclosure
documents that Seller feels are necessary to make an economic
decision to acquire the Shares.
(iv) Seller further acknowledges that it has had an opportunity to ask
questions of and receive answers from duly designated
representatives of Purchaser concerning the financial status of
the issuer and the securities.
(v) By reason of Seller's knowledge and experience in financial and
business matters in general, and investments in particular,
Seller is capable of evaluating the merits and bearing the
economic risks of an investment in the securities and fully
understands the speculative nature of the securities and the
possibility of loss.
(vi) The present financial condition of Seller is such that it is
under no present or contemplated need to dispose of any portion
of the securities to satisfy an existing or contemplated
undertaking, need or indebtedness.
11. ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations and Warranties of Purchaser. Purchaser hereby represents and
warrants to Seller as follows:
(A). Authority. Xxxxxxxxx has duly executed this Contract. The execution
and performance of this Contract will not violate, or result in a breach of, or
constitute a default in any Contract, instrument, judgment, order or decree to
which Purchaser is a party or to which Purchaser is subject nor will such
execution and performance constitute a violation of or conflict with any
fiduciary duty to which Purchaser is subject.
(B). Organization. Purchaser is a corporation duly organized, validity
existing and in good standing under the laws of the state of its incorporation,
and it has all the power necessary to engage in the business in which it
presently engages.
(C). Articles of Incorporation and Bylaws. Nothing contained in the
Articles of Incorporation or Bylaws of Purchaser or any amendments to those
documents in any way limits or effects this Contract or is in contradiction to
the terms hereof.
(D) Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of Purchaser is
required in connection with the authorization, execution, delivery of the EPA
and this MPC and performance of all obligations of Purchaser under these
agreements.
28
(E) Litigation. There are no actions, suits, claims, investigations or
legal or administrative proceedings pending or, to the best of Purchaser's
knowledge and belief, threatened, against Purchaser, and there are no judgments,
decrees or orders of any court, or government department, commission or agency
entered or existing against Purchaser or any of its assets or properties, to
effect the validity or ability of the Purchaser to enter into the Agreements
contemplated herein.
(F) No Conflict with Other Instruments. The Purchaser is not in violation
or default of any provisions of the respective Articles of Incorporation, Bylaws
or other charter documents or amendments (collectively, the "Charter Documents")
or of any instrument, judgment, order, writ, decree or contract to which the
Purchaser is a party or by which Purchaser is bound or of any provision of any
statute, rule or regulation applicable to Purchaser. The execution, delivery and
performance of this Contract will not result in any violation of, be in conflict
with, or constitute a default under, with or without the passage of time or the
giving of notice: (i) any provision of the Charter Documents; or (ii) any
material contract, obligation or commitment to which Purchaser is a party or by
which Purchaser is bound; or any statute, rule or regulation applicable to
Purchaser.
(G) Related Party Transactions. There are no Contracts, understandings or
proposed transactions between Purchaser and any of its officers, directors or
other "affiliates" impacting on the Transaction Documents.
(H) Full Disclosure. None of the EPA or this MPC, Purchaser governmental
filings, or any other disclosures, documents or certificates made or delivered
in connection therewith, as of the date hereof or thereof, contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
12. Additional Covenants of Purchaser. Purchaser covenants to Seller that, for a
period of three years from this Contract:
A. Corporate Existence. Purchaser shall maintain its corporate existence and
qualification and the Purchaser shall not amend its Articles of
Incorporation if such amendment would adversely affect the rights of Seller
as a stockholder of Purchaser.
B. Public Information. Purchaser agrees that the Purchaser shall : (i) make
and keep public information available as a current reporting corporation
under Section 12(g) of the Exchange Act, following the merger of the
Purchaser with the mergee, and at all times subsequent to the registration
of Purchaser's Common Stock under said act; and (ii) file with the SEC in a
timely manner all reports and other documents required under the Act and
the Exchange Act. Failure to file timely reports shall result in less
liquidity and, potentially, less value, realized by the Seller in the
Common Stock of the Purchaser, and as such, shall result in penalties to
the Purchaser, described in the RRA. Such penalties shall be added to the
value of this Contract, and be due and payable as described herein.
C. Listing. Purchaser will use its best good faith efforts to list its Common
Stock, which includes the Seller's Shares, on a national or regional stock
exchange within 180 days of the execution of this Contract. Failure to
apply for such listing, or refusal to accept a proposal of listing from a
national or regional exchange, shall result in less liquidity and,
potentially, less value, realized by the Seller in the Common Stock of the
Purchaser, and as such, shall result in penalties to the Purchaser,
described in the RRA. Such penalties shall be added to the value of this
Contract, and be due and payable as described herein.
29
13. Misc. Rights of Seller.
a. Indemnification. Purchaser will indemnify and hold harmless Seller, and
each other person, if any, who controls Seller within the meaning of the
Act, and also each employee, officer, attorney, and trustee of or relating
to the Seller, and Seller's Agent, against any losses, claims, damages or
liabilities, joint or several, to which Seller, or each such person, may
become subject under or relating to Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any of the Transaction
Documents or due to a breach of any representation, warranty, covenant, or
promise of Purchaser herein.
b. Changes in Common Stock. Purchaser agrees to take any and all action
necessary so that if, and as often as, there is any change in the Common
Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, then appropriate adjustment shall
be made in the provisions hereof so that the rights and privileges of the
Seller shall continue with respect to the Common Stock as so changed to the
fullest extent to the advantage of the Seller.
14. Additional Provisions.
A. Gender. Wherever the context shall require, all words herein in the
masculine gender shall be deemed to include the feminine or neuter gender,
all singular words shall include the plural, and all plural shall include
the singular.
B. Severability. If any provision hereof is deemed unenforceable by a court of
competent jurisdiction, the remainder of this Contract, and the application
of such provision in other circumstances shall not be affected thereby.
C. Further Cooperation. From and after the date of this Contract, the Seller
and Purchaser agree to execute whatever additional reasonable documentation
or instruments as are necessary to carry out the intent and purposes of
this Contract or to comply with any law.
X. Xxxxxx. No waiver of any provision of this Contract shall be valid unless
in writing and signed by the waiving party. The failure of any party at any
time to insist upon strict performance of any condition, promise, Contract
or understanding set forth herein, shall not be construed as a waiver or
relinquishment of any other condition, promise, Contract or understanding
set forth herein or of the right to insist upon strict performance of such
waived condition, promise, Contract or understanding at any other time.
E. Expenses. Except as otherwise provided herein, each party hereto shall bear
all expenses incurred by each such party in connection with this Contract,
and in the preparation thereof.
F. Amendment. This Contract may only be amended or modified at any time, and
from time to time, in writing, executed by the parties hereto, except in
the event of a default event pursuant to the RRA, in which case, any such
penalties so provided shall be applied to this Contract without execution
of consent by the Purchaser.
G. Notices. Any notice, communication, request, reply or advice (hereinafter
severally and collectively called "Notice") in this Contract provided or
permitted to be given, shall be made or be served by delivering same by
overnight mail, fax or by delivering the same by a hand-delivery service,
to the party to the address/fax number set forth herein, and such Notice
shall be deemed given when so delivered.
30
H. Captions. Captions herein are for the convenience of the parties and shall
not affect the interpretation of this Contract.
I. Counterpart Execution. This Contract 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.
J. Assignment. This Contract is assignable, in whole or part, by the Seller,
without further notice or consent of the Purchaser. If assignment is
effected, Seller shall notify Purchaser of the name, address and telephone
number(s) of the assignee(s).
K. Parties in Interest. Provisions of this Contract shall be binding upon and
inure to the benefit of and be enforceable by Xxxxxxxxx and Seller, their
heirs, executors, administrators, other permitted successors and assigns,
if any. Nothing contained in this Contract, whether express or implied, is
intended to confer any rights or remedies under or by reason of this
Contract on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Contract intended to
relieve or discharge the obligation or liability of any third persons to
any party to this Contract, nor shall any provision give any third persons
any right of subrogation over, or action against, any party to this
Contract.
L. Entire Contract. This Contract and the Exhibits attached hereto constitute
the entire Contract and understanding of the parties on the subject matter
hereof and supersede all prior Contracts and understandings.
M. Construction. This Contract shall be governed by the laws of the State of
Florida without reference to conflict of laws and the venue for any action,
claim or dispute in respect of this Contract shall be such court of
competent jurisdiction as is located in Broward County, Florida. The
parties agree and acknowledge that each has reviewed this Contract and the
normal rule of construction that Contracts are to be construed against the
drafting party shall not apply in respect of this Contract given the
parties have mutually negotiated and drafted this Contract.
N. Independent Legal Counsel. The parties hereto agree that (i) each has
retained independent legal counsel in connection with the preparation and
of this Contract, (ii) each has been advised of the importance of retaining
legal counsel, and (iii) by the execution of this Contract, each party who
has not retained independent legal counsel acknowledges having waived such
right.
The parties hereto have executed this Contract as of the date first written
above.
SELLER
/s/ Xxxxxxx Xxxxxxx
-------------------------------------------------
By: Xxxxxxx Xxxxxxx, President
PURCHASER
/s/ Xxxxxxx Xxxxxxxx
-------------------------------------------------
By: Xxxxxxx Xxxxxxxx, CEO
31
AMENDMENT #1 DATED JULY 28, 2004
TO THE MPC DATED MAY 31, 2004
This First Addendum To Money Purchase Contract ("First Addendum") is
entered into by and between Paving Stone Corporation, Inc., a Nevada
corporation, and PSC Equipment, Inc., a Florida corporation (collectively,
"Seller") and On Alert Systems, a Nevada corporation ("Purchaser") as follows:
R E C I T A L S
WHEREAS, Seller and Purchaser entered into a Money Purchase Contract
("MPC") dated as of May 31, 2004, which provided the terms under which Seller
will be paid the sum of $150,000 by Purchaser as a portion of the consideration
Purchaser agreed to pay to Seller for equipment Seller agreed to sell to
Purchaser and Purchaser agreed to Purchase pursuant to the terms of an Equipment
Purchase Agreement ("EPA") entered into between the parties of even date with
the MPC; and,
WHEREAS, the Purchaser agreed to execute to the benefit of the Seller any
and all documents required by the Seller to perfect a first lien on the
Equipment so purchased by the Purchaser; and,
WHEREAS, Purchaser and a Lender have entered into a Promissory Note, from
which proceeds of the loan emanating from the Note shall be utilized in part to
pay the funds due to the Seller's Agent for the payment and reimbursement of
Pre-Closing and Closing costs and deposits of $242,216; and,
WHEREAS, the parties desire to modify certain provisions and reaffirm all
other provisions of the Money Purchase Contract, as applicable to the terms of
the EPA;
Now Therefore, in consideration of the mutual covenants, representations
and agreements heretofore entered into between the parties and hereinafter set
forth below, the parties agree that the following provisions should become a
part of the MPC just as if the provisions had been included in the MPC at the
time the Agreement was entered into between the parties. Accordingly, the
parties agree as follows:
1. Subordination Agreement. The Seller irrevocably agrees that the liens
and any and all security interests granted by the Purchaser under this MPC or
the EPA of even date thereto, with respect to the Equipment that is the
collateral for such liens and security interests, which was Purchased by the
Purchaser pursuant to such EPA, or the payment of principal and interest or
penalties related to the MPC or EPA, shall be and are subordinate in right of
payment and subject to the prior payment or provision for payment in full of
$242,216, plus any accrued interest due subsequent to the 62nd day after the
Date of that certain Promissory Note between the Purchaser and LENDER ("Payment
Obligation"), which claim pursuant to Lender's Note with the Purchaser, shall be
paid prior to the claim of the Seller. Seller's claims pursuant to its MPC is
superior to all other present and future creditors of the Purchaser arising out
of any matter occurring prior to the date on which the related Payment
Obligation is paid to LENDER consistent with the provisions of all applicable
state and Federal law, except for claims which are the subject of subordination
agreements which rank on the same priority as the claim of the Seller under such
subordination agreements.
2. Additional Consideration for the Subordination Agreement .
(a) The Seller has agreed to accommodate the Purchaser's request to
subordinate its security interests in the Equipment pursuant to the
MPC, EPA, and this Amendment #1 so as to satisfy the Purchaser's
purposes and intents as it relates to the ownership of the Equipment
32
and the Note executed to the benefit of LENDER, or the Substitute
Equipment, as applicable. The Seller has incurred extraordinary costs
and expenses in such endeavors on behalf of the Purchaser, and is due
consideration for such accommodation, and the Purchaser hereby agrees
to pay, at the closing of the first equity funding event of the Laurus
Fund, or any alternate source utilized by the Purchaser, Seventy-five
thousand dollars ($75,000) to the Seller, and at the closing of the
second tranche of the first equity funding event of the Laurus Fund,
or any alternate source utilized by the Purchaser, twenty-five
thousand dollars ($25,000), in the form of cash, or registered
securities of the Purchaser or its successors or any other securities
acceptable to the Seller, or securities exempt from registration under
the Securities Act(s). Such payment shall be subject to the terms of
this MPC, and payable pursuant to those terms and conditions.
(b) The Purchaser shall direct Lender to pay Two hundred thirty-two
thousand nine hundred dollars ($232,900) to the Seller's Agent, on its
behalf, coincident with the availability of funds received from the
LENDER Note, for the payment and reimbursement of Pre-Closing and
Closing cost and deposits, as is due pursuant to the EPA and MPC of
May 31, 2004. The payment of such funds shall be coincident to the
subordination of the security interests of the Seller. If such funds
are not paid in full to the Seller's Agent in such manner, no
subordination shall be executed by the Seller and this Subordination
Agreement shall be null and void.
(c) The Seller, as a result of the subordination agreement, shall be
entitled to reapportion any of the shares it received as a result of
the initial sale of Equipment on May 31, 2004, to other third parties
as well as original recipients. Any new parties not originally a party
to the EPA and RRA of May 31st, 2004, will execute exact duplicate
original copies of the RRA and Investment Intent section of the EPA as
a condition of the reapportionment.
(d) In the event that S-8 shares are issued to the providers of services
related to the transactions contemplated herein, on the date the stock
is registered pursuant to the S-8, if the value of the shares so
issued is less than $100,000 on the previous trading date, the number
of shares shall be adjusted to each recipient so that the number of
shares granted in addition to the original grant would equal the
differential in dollar value between $100,000 and the value of the
shares on the date immediately preceding the effective date.
3. Conflict and Ratification. Since the intent of this Addendum #1 to the
MPC 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
MPC, in the event the terms and provisions of this Addendum #1 conflict with the
terms and conditions of the MPC, EPA, RRA, or any other agreements executed by
the parties concerning the MPC, the terms of this Addendum #1 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 May
31, 2004; otherwise, the terms and conditions of such Agreements are hereby
ratified and confirmed.
4. Limitations of this Agreement. Limited by its additions, deletions, or
modifications to the specific terms and conditions of the MPC, this Addendum #1
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 MPC, and supersedes any and all prior or contemporaneous agreements,
discussions, representations, warranties or other communications regarding such
33
specific additions, deletions, or modifications to the terms and conditions of
the MPC. Furthermore, the Seller is under no obligation, pursuant to the terms
of the EPA, to provide this Subordination Agreement other than as an
accommodation to the Purchaser, and the provision of such Subordination
Agreement shall not be deemed nor construed as a breach, remedy, or settlement
of any provision of the EPA, MPC, RRA, Bill of Sale, Desktop Valuation, or any
other documents executed or delivered on May 31st , 2004, by the parties.
5. Counterparts. This Addendum #1 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.
6. Amendments. This Addendum #1 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.
7. Severability. If any provision of this Addendum #1 shall be declared
void or unenforceable by any judicial or administrative authority, the validity
of any other provision and of the entire Addendum #1 shall not be affected
thereby.
8. Titles and Subtitles. The titles and subtitles used in this Addendum #1
are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Addendum #1.
9. Successors and Assigns. This Addendum #1 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 #1shall inure to the benefit of and are
binding upon the parties, their respective successors, executors, beneficiaries
and permitted assigns of the parties hereto.
10. 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 #1, (b) any discussions or
negotiations relating to this Addendum #1 and (c) the identity of the parties to
this Addendum #1 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 #1 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 Addendum
#1 to be executed and delivered by the undersigned as of the 28th day of July,
2004.
SELLER: PSC Equipment, Inc. and on behalf of all affiliated Sellers.
/s/ Xxxxxxx Xxxxxxx
-------------------------------------------------
By: Xxxxxxx Xxxxxxx, President
PURCHASER: On Alert Systems, Inc.
/s/ Xxxxxxx Xxxxxxxx
-------------------------------------------------
By: Xxxxxxx Xxxxxxxx, CEO
34
