EXHIBIT 10.6(b)(1)
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 Equipment Depot, Inc., a Florida corporation
("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.
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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 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_____________, 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
_________ 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.
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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
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, Xxxx 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 be
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: Equipment Depot, Inc. and on behalf of all affiliated Sellers.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, Vice-President
PURCHASER: On Alert Systems, Inc.,
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, CEO
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