EXHIBIT 10.169
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement ("Amendment") is made as
of August 27, 2004, by and among Vernex, Inc. ("Company"), and Xxx Xxxx
("Shareholder") on the one hand, and Xxxx Security Products, Inc., on the other
hand. For purposes of this Agreement, Xxxx Security Products, Inc. is sometimes
referred to as the "Purchaser," and the Company and the Shareholder are
collectively referred to as the "Sellers."
RECITALS
The Purchaser and Sellers are parties to an Asset Purchase Agreement dated
September 26, 2003 ("Asset Purchase Agreement"). Purchaser and Sellers have
entered into this Amendment as the wish to agree to a modification of the
certain terms and provisions in the Asset Purchase Agreement.
Throughout this Amendment, certain terms are capitalized. The capitalized
terms shall have the meanings given to the terms in the Asset Purchase
Agreement, unless otherwise specifically defined in this Amendment.
Intending to be legally bound and in exchange for the mutual obligations
and benefits set forth in this Amendment, the parties hereto have entered into
this Amendment.
AGREEMENT
1. Second Payment. Section 1.3(c) of the Asset Purchase Agreement
provides as follows:
"(c) Purchaser shall pay the Company a Second Payment, as
hereinafter defined. The "Second Payment" shall equal one half of
(i) the Vernex Revenue, as hereafter defined, less (ii) the Vernex
Product Cost, as hereafter defined. For purposes of this Paragraph
1.3(c), the "Vernex Revenue" is the revenue received by Purchaser in
cash, not subject to return or refund, during the period beginning
on the Closing Date and ending one year from the Closing Date for
Products which are sold by Purchaser under the name and label of
Vernex and for the OEM sale of non-branded CRT and plasma screen
monitors where X.X. Xxxx was the procuring salesperson who obtained
the sale of the Products or OEM monitors ("Vernex Products"). For
purposes of this Paragraph 1.3(c) the "Vernex Product Cost" shall
equal the amount paid to the manufacturers of the Vernex Products
and the OEM CRT and plasma screen monitors which were sold to
generate the Vernex Revenue and Purchaser's shipping, custom
clearance and tax costs for those
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Vernex Products, CRT monitors and plasma monitors into Purchaser's
warehouse. The amount of the Second Payment shall be calculated by
Purchaser and given to Company for review, no latter then sixty days
after the one year anniversary date of the Closing Date. Once
Purchaser and Company agree on the amount of the Second Payment,
Purchaser shall pay the Second Payment to the Company in twelve
equal monthly installments. The first installment shall be paid on
the fifth business day of the month following the month that the
amount of the Second Payment was determined and the next eleven
installments shall be paid on the fifth business day of each of the
following eleven months. The Second Payment shall be made in cash.
The parties agree that for purposes of computing the Vernex Revenue,
Products sold by Purchaser under the Xxxx label and name shall not
be included in the Vernex Revenue. The parties further agree that
from the Closing Date to one year after the Closing Date, Purchaser
shall not sell any Products to the individuals and entities that
Company was selling Products to under the name and label of Vernex
prior to the Closing Date, except (i) for Products under the Vernex
name and label, (ii) non-branded OEM CRT and Plasma monitors, and
(iii) for Products under the Xxxx name and label sold to individuals
and entities which were sold Products by Purchaser under the Xxxx
name and label prior to the Closing Date."
Section 1.3(c) of the Asset Purchase Agreement is hereby deleted in it entirety.
As consideration for the Assets in the place of the Second Payment, as set forth
in the deleted Section 1.3(c) of the Asset Purchase Agreement, the parties
hereto agree that within four business days of the execution of this Amendment
Purchaser shall deliver to Sellers Forty Thousand (40,000) shares of Xxxx
Security International, Inc Common Stock ("MSI Stock"). The MSI Stock shall be
delivered in the name of the Shareholder. The Company agrees to file a plan of
liquidation within one year of the date hereof.
2. Common Stock. The MSI Stock to be issued pursuant to this Amendment
has been duly authorized and, when issued, will be validly issued, fully paid
and non-assessable. The MSI Stock delivered to the Sellers as payment, shall be
registered under a shelf registration statement on Form S-4 pursuant to the
Securities Act of 1933 (the "Act"). Purchaser has made available to Sellers all
historical filings made by MSI on Forms 8-K, 10-K, 10-Q and Proxy Statements
timely filed with the Securities and Exchange Commission ("SEC") for fiscal year
ending December 31, 2003, and the fiscal quarter ended March 30, 2004 (the
"Public Reports").
(a) Sellers acknowledge that they have received and have reviewed the
Public Reports, together with the prospectus prepared from the S-4 registration
statement under which the MSI Stock will be delivered. Sellers acknowledge that
the Public Reports are all available at xxx.xxx.xxx/xxxxx.
(b) Sellers acknowledge that Purchaser has advised the Sellers that the
MSI Stock when delivered shall have been registered under the Act pursuant to an
S-4 registration statement. The
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Sellers acknowledge that when selling the MSI Stock through a broker they will
have a prospectus delivery requirement. Purchaser will furnish to the Sellers
such number of prospectuses, if required, under the Act, prepared in conformity
with the requirements of the Act, and such other documents as the Sellers may
reasonably request in order to facilitate the public sale or other disposition
of the securities to be sold by the Sellers. A legend in substantially the
following form will be placed on the certificates evidencing the MSI Stock to be
issued to the Sellers:
"The securities represented by this certificate have been registered
under the Securities Act of 1933, pursuant to an S-4 registration
statement. The holder of the certificate is required to deliver a
prospectus prepared from the registration statement, when trading
the securities represented by this certificate"
(c) Notwithstanding anything else herein to the contrary, MSI's obligation
to keep the shelf registration statement continuously effective shall be
suspended during any period that there exists material, non-public information
relating to MSI. MSI shall keep such registration statement current and
effective, until such time as the shares may be sold by the Sellers at any time
pursuant to the provisions of Rule 144 or otherwise without any restrictions,
including restrictions relating to volume, manner of sale, and notice, or until
such earlier date as all of the shares registered pursuant to such registration
statement shall have been sold or otherwise transferred to a third party. MSI
shall also prepare and file with the SEC such amendments and supplements to such
registration statement (and the prospectus used in connection therewith) as may
be necessary to update and keep such registration statement current and
effective for such period and to comply with the provisions of the Act with
respect to the sale of all securities covered by such registration statement.
3. Entire Agreement. This Amendment is the final, complete and
exclusive statement and expression of the agreement among the parties hereto
with relation to the subject matter of this Amendment, it being understood that
there are no oral representations, understandings or agreements covering the
same subject matter as the Amendment. The Amendment supersedes, and cannot be
varied, contradicted or supplemented by evidence of any prior to contemporaneous
discussions, correspondence, or oral or written agreements of any kind. The
parties to this Amendment have relied on their own advisors for all legal,
accounting, tax or other advice whatsoever with respect to the Amendment and the
transactions contemplated hereby.
4. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
5. Notices. All notices or other communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, by overnight courier or
by delivering the same in person to such party.
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(a) If to Purchaser, addressed to them at:
Executive Vice President
Xxxx Security International, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxxx Xxxxx
Xx. Xxxxxx, XX 00000
(b) If to Sellers, addressed to them at:
X.X. Xxxx
00000 Xxxxxxx Xxx Xxxxx No 603
Coral Gables, Fl 33158
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier and five business days after the deposit
in the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received, if earlier. Any
party may change the address for notice by notifying the other parties of such
change in accordance with this Section 5.
6. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of Florida, without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.
7. Provisions of Agreement. All terms and provisions of the Agreement
not modified by this Amendment shall remain unmodified and in full force and
effect as set forth in the Agreement.
8. Construction. The parties have participated jointly in the
negotiation and drafting of this Amendment. In the event an ambiguity or
question of intent or interpretation arises, this Amendment shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Amendment.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
PURCHASER
XXXX SECURITY PRODUCTS, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Vice President
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COMPANY
VERNEX, INC.
By: /s/ X.X. Xxxx
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X.X. Xxxx, President
SHAREHOLDER
/s/ Xxx Xxxx
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Xxx Xxxx
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