Exhibit 10(n)
Amendment No. 1 to Purchase and Contribution Agreement made this 30th day of
June 2004, (the "Amendment"), by and among American Business Corporation f/k/a
Logistics Management Resources, Inc., a publicly owned Colorado corporation with
offices at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 ("AMBC"), Y2
Ultra-Filter, Inc., a Wyoming corporation with offices at 0000 Xxxxxxxx Xxx,
Xxxxx 000, Xxxx, Xxxxxxx 00000 ("Y2"), Midwest Merger Management, LLC, a
Kentucky limited liability company with offices at 00000 Xxxxxxxxxx Xxxxxx, #0,
Xxxxxxxxxx, Xxxxxxxx 00000 ("MMM"), and The Xxxx Grandchildren Trust, a trust
organized under the laws of the State of Kentucky with offices at 00000
Xxxxxxxxxx Xxxxxx, #0, Xxxxxxxxxx, Xxxxxxxx 00000 (the "Trust"). AMBC, MMM, the
Trust and Y2 are sometimes hereinafter individually referred to as a "Party" and
collectively as the "Parties".
W I T N E S S E T H:
WHEREAS, AMBC and Y2 are the parties to a Purchase and Contribution Agreement
dated as if April 28, 2004 (the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement to include the terms and
conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing recitals, and the other good
and valuable consideration hereinafter set forth, the receipt and adequacy of
which are hereby acknowledged and accepted, the Parties agree as follows:
1. Amendment to Title and Whereas Clauses. The title of the Agreement
is hereby changed from Purchase and Contribution Agreement to License and Joint
Venture Agreement. The Whereas clauses are hereby amended to read in their
entirety as follows:
"WHEREAS, Y2 is the owner of the entire right, title, and interest
in patented filtration system technology known as U2-Ultra Filter
(the "Technology") including all trademarks, trade names, trade
secrets, copyrights and all other rights appurtenant or relating
thereto (the "Intellectual Property"); and
WHEREAS, AMBC desires to secure the exclusive worldwide licensing
rights to market and sell all of Y2's filters employing and
embodying the Technology when utilized in the gaming industry (the
"Licensed Products"); and thereafter establish a Delaware limited
liability company (the "LLC") as a joint venture with Y2 to
commercialize the Licensed Products on the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, Y2 is willing to exclusively license the Licensed Products
to AMBC and participate as a 50% member of the LLC on the terms and
subject to the conditions hereinafter set forth; and
WHEREAS, MMM is willing to grant a preferred stock call option to Y2
on the terms and subject to the conditions hereinafter set forth;
and
WHEREAS, the Trust is willing to indemnify Y2 on the term and
subject to the conditions hereinafter set forth."
2. Amendment to Article I of the Agreement. Article I of the Agreement
is hereby amended to read in its entirety as follows:
"ARTICLE I
TERMS OF THE TRANSACTION
1.1 Transfer of Rights. During the term of this Agreement, Y2
hereby grants to AMBC and AMBC hereby accepts the exclusive and non-
transferable worldwide right and license (the "Rights") to market,
distribute and sell the Licensed Products to licensed gaming facilities
(the "Market") under any and all circumstances or through any means
whatsoever. It is agreed and understood that the transfer of the Rights to
AMBC is exclusive, and Y2 will not, during the term of this Agreement,
authorize any other person, firm or entity to market, distribute or sell
the Licensed Product into the Market. The Rights to the Licensed Products
are covered in Y2 patent numbers 5,368,635 as filed with the United States
Patent and Trademark Office ("USPTO"), and issued by the USPTO November 29,
1994; patent 5,540,761 issued by the USPTO July 30, 1996; patent 5,647,890
issued by the USPTO July 15,1997; and patent 5,855,653 issued by the USPTO
January 5, 1999. The foregoing are hereinafter collectively referred to as
the "Patents".
1.2 Term and Termination. This Agreement shall be deemed to be
effective as of the date of its execution and shall continue in full force
and effect for the life of the Technology, unless sooner terminated as
hereinafter set forth. Either Party may terminate this Agreement if the
other Party shall default in the performance of any of its duties or
obligations hereunder, and if, after written notice of the specific default
is given to the defaulting Party, such default is not remedied within
thirty (30) days after receipt of the notice by the defaulting Party.
1.3 Consideration for the Rights. At the closing of the
transfer of the Rights (the "Closing"), and in consideration therefore,
AMBC shall:
A. Shares. Cause its transfer agent to originally issue and
delivery to X0 Xxxxxx-Xxxxx Million (27,000,000) shares of AMBC's
common stock, $.001 par value per share (the "Initial Share
Consideration");
B. First Option. Cause the original issuance and delivery to Y2 of
a certificate representing a 66 month option (the "First Option") to
purchase Nineteen Million and eight (19,000,008) shares of AMBC's
common stock, $.001 par value per share (the "First Option Shares")
at an exercise price of $.10 per First Option Share (the "First
Option Exercise Price"). The First Option Exercise Price has been
arbitrarily determined as approximately the average closing price of
AMBC's common stock in the OTC Bulletin Board Market during the
period of negotiations between the Parties, which price the Parties
hereby deem fair and reasonable. The First Option shall be
exercisable at the rate of 791,667 First Option Shares for each
$1,000,000 in annualized sales of the Licensed Product generated by
the LLC. The First Option Shares will vest upon the completion of
each 12 month period commencing July 1, 2004 through June 30, 2009,
based on the annual sales of the LLC during that prior 12 month
period. Vesting is determined at the rate of 791,667 First Option
shares for each million in revenue up to a maximum of 19,000,008
First Option shares.
C. Second Option. Cause the issuance and delivery to Y2 of a
certificate representing a 66 month option (the "Second Option") to
purchase an additional Twenty Million (20,000,000) shares of AMBC's
common stock, $.001 par value per share (the "Second Option
Shares"). The exercise price will be equal to the average closing
price of AMBC's common stock in the OTC Bulletin Board Market for
the last three trading days of the applicable calendar quarter (the
"Second Option Exercise Price") prior to issuance. The Second
Option shall be vested and exercisable at the rate of 1,000,000
Second Option Shares for each $1,000,000 in annualized net sales of
the Licensed Product in excess of $24,000,000 generated by the LLC.
The Second Option will be issued once the LLC annualized sales have
reached $24,000,000 in annualized sales. The Second Option Shares
shall also vest upon the completion of each 12 month period ending
June 30th through 2009 based on the annual sales of the LLC (at the
rate of 1,000,000 Second Option Shares for each $1,000,000 in
annualized sales of LLC) in excess of $24,000,000;
X. Xxxxx of Call Option. By virtue of its execution of this
Agreement, as an inducement to Y2 to enter into this Agreement and
only in the event the annualized net sales of the LLC shall equal or
exceed $100,000,000 during any calendar quarter prior to the fifth
anniversary of the Closing, MMM hereby grants to Y2 exclusive right,
on written notice to MMM, to call a number of shares of AMBC's
common stock equal to fifty percent (50%) of the number of issued
and outstanding common stock equivalents of AMBC's preferred stock,
$.001 par value per share, held by MMM, the Trust or any affiliate
of either, at a price to be determined by an appraiser located
within the State of Kentucky within sixty (60) days of the notice of
Y2's call; and
E. Indemnification. The Trust hereby agrees to indemnify and hold
Y2 harmless from any and all liabilities of AMBC as exist or the
date of Closing.
1.4 Creation of the LLC. As soon as possible, AMBC and Y2 shall
cause the formation of the LLC under the name A.I.R. Filters, LLC. AMBC
and Y2 covenant and agree to co-operate with each other to prepare and
execute an operating agreement for the LLC as soon as practicable. In the
interim, the Parties agree that: (i) AMBC and Y2 shall be the LLC's only
two members; (ii) Y2 shall be the sole operating manager; (iii) AMBC shall
be the sole executive and administrative manager; (iii) Y2 shall be
entitled to receive fifty percent (50%) of all profit before taxes (gross
revenues less cost of goods sold and all ordinary and necessary expenses of
marketing, distribution and administration) generated by the LLC, thirty
(30) days after the end of each calendar quarter; (iv) AMBC shall be
entitled to the remaining 50%, and (v) Y2 will initially maintain exclusive
operating responsibilities, and if removed from such, AMBC and Y2 will
mutually agree on minimal licensed product sales, or AMBC will release Y2
from the exclusive agreement pertaining to the licensed product for this
target market."
3. Amendment to Article III of the Agreement. Article III, Section 3.3
b. of the Agreement is hereby amended to correct two typographical errors so
that the Section, as of April 28, 2004, read in its entirety as follows:
"b. Logistics has not issued any additional options or warrants to
purchase shares of the Logistics' Common Stock, hereof, (i) there are
currently 1,454,250 shares of Logistics preferred stock outstanding which are
convertible into or exercisable or exchangeable for 81,331,425 shares of
Logistics common stock, and (ii) there are no outstanding options, rights,
Contracts, warrants, subscriptions, conversion rights or other agreements or
commitments pursuant to which Logistics agreed to purchase, redeem, issue or
sell any shares of capital stock or other securities of Logistics
(collectively, "Convertibles").
4. Confirmation of the Agreement. Except as herein modified, the
Parties hereby reconfirm the validity and enforceability of the Agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first above written.
Y2 Ultra-Filter, Inc.
By: /s/ Xxx Xxxxxx
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Xxx Xxxxxx, President
American Business Corporation
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
The Xxxx Grandchildren Trust
By: /s/ W. Xxxxxxx Xxxx
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W. Xxxxxxx Xxxx, Trustee
Midwest Merger Management, LLC
By:/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, Manager
