Exhibit 2.1.2
SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT
This Second Amendment to Stock Purchase Agreement (the "Second Amendment")
is made and entered this 4th day of November, 1999, and amends the Stock
Purchase Agreement dated the 15th day of September, 1999, as amended by the
First Amendment to Stock Purchase Agreement, dated October 15, 1999 ( the
"Agreement"), by and between KEYSTONE TECHNOLOGIES, L.L.C., a Delaware limited
liability company, XXXXXXX X. XXXXX, XXXXXXX X. XXXXXXXXX, XXXXXXX XXXXXX, and
XXXXXXX XXXXX (individually referred to by last name and collectively as
"Sellers"), OPTICAL SECURITY GROUP, INC. a Colorado corporation ("Buyer"), and
concerning the stock of BRIDGESTONE TECHNOLOGIES, INC., a Delaware corporation
("Bridgestone"), the membership interests of LABEL SYSTEMS ACQUISITION LLC, a
Connecticut limited liability company ("Label Systems, LLC") and the membership
interests of KEYSTONE IMAGING TECHNOLOGIES, L.L.C., a Delaware limited liability
company ("Imaging, LLC"). Label Systems, LLC and Imaging, LLC are sometimes
referred to herein collectively as the "LLCs." Other Capitalized terms in this
First Amendment have the same meanings as in the Agreement.
The parties hereby amend the Agreement as follows:
1. Audit Period. Section 2.3 of the Agreement is deleted and replaced
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with the following:
Except with respect to Net Embossed Holography Revenues received from Intel
Corporation and its affiliates ("Intel"), "Audit Period" means the 13 month
period commencing on the Effective Date, as defined in Section 11.1 below.
In the case of Net Embossed Holography Revenues received from Intel, "Audit
Period" means the 13 month period commencing on the first anniversary of
the Effective Date.
2. Calculation of Net Embossed Holography Revenues. Section 2.4 of the
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Agreement is deleted and replaced with the following:
2.4 Calculation of Net Embossed Holography Revenues. "Net Embossed
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Holography Revenues" shall be equal to the sum of (a) Net Embossed
Holography revenues excluding Net Embossed Holography Revenues from Intel
derived from the sale of Pentium III - Slot 1 holograms for the 11 month
period commencing on the Effective Date, plus the arithmetic average of
such revenues for the 11th, 12th, and 13th months following the Effective
Date, and (b) Net Embossed Holography Revenues received from Intel derived
from the sale of Pentium III - Slot 1 holograms for the 11 month period
commencing on the first anniversary of the Effective Date, plus the
arithmetic average of such revenues for the 23rd, 24th, and 25th months
following the Effective Date.
3. Note. Section 3.2 of the Agreement is deleted and replaced with the
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following:
3.2 Note. Buyer shall execute and deliver to Sellers its promissory
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note (the "Note"), in the initial principal amount of $1.5 million dollars.
The Note shall be due and payable 30 days after the Adjustment Date, as
defined below. The Note shall bear no interest for the first 12 months,
shall accrue interest on the principal amount as adjusted pursuant to
Section 3.3, at the CitiBank, N.A. Base Rate thereafter, and shall be in
the form prescribed by Exhibit A, attached hereto and incorporated herein
by reference and shall be subject to adjustment, as provided in Section
3.3, on the date which is 90 days after the second anniversary of the
Effective Date (the "Adjustment Date"). Buyer shall also pay to Sellers an
amount equal to the difference, if any, between Seller's federal and state
income tax liability for imputed interest over the first 12 months of the
term of the Note, and Seller's federal and state tax liability if such
imputed interest had been taxed at capital gains rates.
4. OpSec Stock. Section 3.4 of the Agreement is deleted and replaced
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with the following:
3.4 OpSec Stock. Buyer shall deliver to a mutually acceptable
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escrow agent at Closing 333,333 shares of fully paid and non-assessable
restricted Buyer common stock (the "OpSec Stock"), to be disbursed to
Sellers on the later of (a) 15 months after Closing, or (b) the first to
occur of (i) the date upon which the XxXxxx Patent Claim described in
Section 15.4 is resolved by settlement acceptable to Buyer and Sellers,
(ii) the date a final non-appealable judgment or other Court order is
entered resolving the XxXxxx Patent Claim, or (iii) the second anniversary
of the date of the Escrow Agreement. Such disbursement is conditioned
expressly on the condition that Net Embossed Holography Revenues (including
for purposes of this Section revenues received from Intel) for the 13 month
period following the Effective Date exceed $1 million, which amount is to
be determined by the accounting firm of Xxxxxx Xxxxxxx & Co. If this
condition is not satisfied, the escrow agent shall return the OpSec Stock
to Buyer upon Buyer's written request to do so. The parties shall execute
an escrow agreement at Closing (the "Escrow Agreement") to effectuate the
purposes of this Section 3.4, substantially in the form of Exhibit B
attached hereto and incorporated herein by reference. The OpSec Stock
shall be entitled to certain piggyback registration rights and tag along
rights in the event of a sale of all or substantially all of the assets or
stock of Buyer to a third party, or a merger in which Buyer participates
but is not the surviving entity. The registration and tag along rights
are as specified in the Registration Rights Agreement attached hereto as
Exhibit C and incorporated herein by reference.
5. Sellers' Put Option. Paragraph 3.6.3(A) is deleted and replaced with
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the following:
(A) The percentage of membership interests of Imaging, LLC being
re-transferred to the Sellers multiplied by the sum of two times (i)
the Net Photo Polymer Revenues, as defined in the
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Imaging, LLC Option Agreement, less Imaging, LLC's existing debt
(excluding accounts payable incurred in the ordinary course of
business) on the Put Closing Date, and (ii) the Contingent Revenues,
as defined in the Imaging, LLC Option Agreement, if any. If Buyer does
not give the Preliminary Exercise Notice required under the Imaging,
LLC Option Agreement, in order to calculate the Contingent Revenues,
Sellers shall provide Buyer with a list of the Prospective Customers,
as defined in the Imaging, LLC Option Agreement, no later than the
Second Anniversary of the Effective Date.
6. Survival. Section 15.1 of the Agreement is deleted and replaced with
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the following:
15.1 Survival. The right to make a claim for indemnification under
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this Agreement, or any other claim for breach of Seller's obligations
hereunder through and including the Effective Date, shall survive the
Closing for a period of 18 months except that a claim for indemnification
under Section 13 shall continue to survive until the expiration date of the
statute of limitations applicable to any indemnified liability thereunder
and any claim for indemnification arising out of or related to the XxXxxx
Patent Claim shall survive for a period of six months following final
resolution of the XxXxxx Patent Claim whether by settlement or final non-
appealable judgment or other court order (the "Final Resolution"). The
time limitation set forth in this Section 15.1 shall not affect Buyer's
right to assert claims for fraud or misrepresentation.
7. Indemnification by Sellers. Section 15.2 of the Agreement is modified
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by adding the following language at the end of the section:
Notwithstanding the above, the Sellers shall not enter into any
settlement agreement in connection with the XxXxxx Patent Claim that would
obligate Bridgestone to pay a royalty or other fee on any of its products
manufactured after the Effective Date, or on the use after the Effective
Date of any equipment or assets of Bridgestone, without the Buyer's written
consent to such settlement agreement, which consent shall not be
unreasonably withheld.
8. Limitation on Damages. Section 15.4 of the Agreement is deleted and
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replaced with the following:
15.4 Limitation on Damages. Except as otherwise provided in this
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Agreement, and except for the XxXxxx Patent Claim described below, no
amount shall be payable in indemnification under this Section 15, or for
breach of this Agreement, unless the aggregate amount of Damages in respect
of which the Sellers would be liable under this Section 15 exceed $250,000
(the "Basket"). In the event that the Damages exceed the Basket, the
indemnified party shall be entitled to seek indemnification for only the
amount in excess of the Basket. The maximum amount of Damages for which
Felis, Zubretsky, Zucker, and Xxxxx would be liable under this Section
15, including any
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damages resulting from the XxXxxx Patent Claim, shall be an amount equal to
$2,000,000 to be shared severally in the proportions set forth in Schedule
15.4. The Basket shall not apply to Damages incurred by Buyer or
Bridgestone arising from litigation captioned Xxxxxxx X. XxXxxx v.
Bridgestone Graphic Technologies, Inc., Case No. CS-99-0245-WFN, now
pending in the United States District Court for the Eastern District of
Washington at Spokane, or any other similar case or claim arising from the
use of United States Patent Nos. 4,758,296 and 4,906,315 (the "XxXxxx
Patent Claim"); provided, however, that Sellers shall be liable for forward
looking royalty or similar payments related to the XxXxxx Patent Claim only
with respect to amounts payable during the one year period immediately
following the date of the Final Resolution.
9. No Other Modifications. In all other respects, the Agreement shall
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remain unmodified and in full force and effect.
10. Counterparts; Facsimile Signatures. This Amendment may be executed in
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counterparts, each of which shall be deemed an original and which together shall
constitute a single instrument. This Amendment may be executed and delivered by
telecopier or other facsimile transmission all with the same force and effect as
if the same was a fully executed and delivered original manual counterpart.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first above written.
SELLERS:
KEYSTONE TECHNOLOGIES, L.L.C.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Its: Managing Member
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/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
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/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
BUYER:
OPTICAL SECURITY GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, Chairman
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