Exhibit 10.2
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT ("Agreement") dated as of
February 23, 2004, by and between TOTAL IDENTITY CORP., a Florida corporation
(the "Buyer") and ▇▇▇▇▇▇ ▇▇▇▇▇, an individual resident of the State of New York
(the "Seller").
W I T N E S S E T H:
WHEREAS, the parties are all of the parties to a Stock Purchase
Agreement dated October 13, 2003 (the "Original Agreement"); and
WHEREAS, in connection with the Original Agreement, the parties thereto
also entered into a pledge agreement (the "Pledge Agreement") and a promissory
note (the "Promissory Note") of even date therewith; and
WHEREAS, the Buyer, ▇▇▇▇▇ and Total Identity Systems Corp., a New York
corporation ("Total New York") are parties to a Stock Purchase Agreement dated
October 13, 2003 (the "Corporate Stock Purchase Agreement"), as amended by
Amendment No. 1 to the Corporate Stock Purchase Agreement of even date herewith,
pursuant to which the Buyer acquired 60% of the issued and outstanding shares of
Total New York (the Corporate Stock Purchase Agreement, as amended, being
hereinafter referred to as the "Amended Corporate Stock Purchase Agreement");
and
WHEREAS, a dispute has arisen between the parties to the Original
Agreement as to alleged breaches, non-performance, interpretation and
indemnification obligations thereunder (the "Disputed Items"); and
WHEREAS, the parties desire to settle the Disputed Items and amend the
Original Agreement upon the terms and conditions set forth herein
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Defined terms not otherwise defined herein shall have the respective
meanings accorded to them in the Original Agreement.
2. Section 2 of the Original Agreement is hereby deleted in its
entirety and the following shall be inserted in its place and stead:
"2. Purchase Price.
(a) Amount. The purchase price for the Shares (the "Purchase
Price") shall be the sum of $500,000.00, payable upon execution of this
Agreement, as follows:
(i) $400,000 shall be paid by delivery to the Seller
of the Buyer's amended and restated promissory note in the amount of
$400,000.00, in the form attached hereto as Exhibit A (the " Restated
Note"); and
(ii) $100,000 shall be paid by the issuance and
delivery to the Seller, upon execution of this Agreement, of a
certificate evidencing 100,000 shares of the Buyer's common stock,
registered in the name of the Seller (the "Purchase Price Shares").
(b) Provisions Relating to the Purchase Price.
(i) The Restated Note shall amend and restate the
Promissory Note delivered by the Buyer in connection with the
Original Agreement. Simultaneous with the execution of this
Agreement and delivery of the Restated Note, (A) the Seller
shall deliver the original Promissory Note to the Buyer and
(B) the Promissory Note shall cease to be of any further force
or effect.
(ii) Neither the Purchase Price Shares nor the
Additional Shares (as hereinafter defined) have been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and such securities may not be sold,
assigned, transferred, pledged or otherwise disposed of
("Transfer") absent registration under the Securities Act or
the availability of an applicable exemption therefrom. In the
event that the Company files a registration statement under
the Securities Act (other than on Form ▇-▇, ▇-▇ or successor
forms) seeking to register shares of its common stock for its
account or for the account of its shareholders, the Company
agrees to register those Purchase Price Shares and Additional
Shares that have not theretofore been disposed of by ▇▇▇▇▇ ▇▇
as to permit ▇▇▇▇▇ to publicly resell such shares.
(iii) Notwithstanding registration pursuant to the
preceding subparagraph, the Seller agrees not to Transfer the
Purchase Price Shares or the Additional Shares prior to the
expiration of one year from the date hereof (the "Lock Up
Period").
(iv) The certificates evidencing the Purchase Price
Shares and the Additional Shares will contain the following or
substantially similar legends:
"The shares evidenced by this Certificate have not been
registered under the Securities Act of 1933, as amended, or
the securities laws of any state ("Securities Laws"), and such
shares may be not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of absent registration
under applicable Securities Laws or an opinion of counsel
reasonably satisfactory to the issuer that such registration
is not required.
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The shares evidenced by this Certificate are subject to the
terms and conditions of an Amended and Restated Pledge
Agreement dated February 23, 2004, and certain agreements
executed in connection therewith (the "Agreements"). The
disposition of these shares is subject to the terms and
conditions of the Agreements, copies of which are on file at
the offices of the issuer."
(vi) In the event, upon expiration of the term of
Consulting Agreement of even date herewith between the Buyer and the
Seller, the closing bid price for the common stock of the Buyer is less
than $1.00 per share, then the Buyer shall pay to the Seller for each
of the Purchase Price Shares, an amount equal to the difference between
$1.00 and the closing bid price per share on such date. However, in the
event that, following expiration of the Lock Up Period but prior to
expiration of the term of the Consulting Agreement, the Buyer's common
stock trades at a bid price of $1.00 per share or higher for five
consecutive trading days, then the Buyer's obligations under this
subparagraph shall terminate and cease to be of further force or
effect.
(c) Additional Consideration. As additional consideration to
the Seller for entering into this Agreement, upon execution of this
Agreement, the Buyer shall issue and deliver to the Seller, a
certificate evidencing an additional 100,000 shares of the Buyer's
common stock, registered in the name of the Seller (the "Additional
Shares").
(d) Representations and Warranties.
(i) The Buyer represents and warrants to the Seller
that the Purchase Price Shares and the Additional Shares (collectively,
the "TIC Stock") have been duly authorized, and when issued and
delivered, subject to execution and delivery of this Agreement, the TIC
Stock will be validly issued, fully paid and non-assessable.
(ii) The Seller represents and warrants to the Buyer
that (A) he is acquiring the TIC Stock for his own account, for
investment purposes and without a view towards distribution or resale
except in accordance with applicable law, (B) he is an accredited
investor within the meaning of Rule 501 of Regulation D under the
Securities Act, (C) he has had access to information concerning the
Company, including filings made by the Company under the Securities
Exchange Act of 1934, which are available at the web site of the United
States Securities and Exchange Commission at ▇▇▇.▇▇▇.▇▇▇, (D) he has
such experience in financial and business matters that he is able to
evaluate the risks and merits of an investment in the Buyer, (E) he
understands that the TIC Stock has not been registered under the
Securities Act and that its Transfer is prohibited for a period of one
year from the date hereof, and (F) he understands that the TIC Stock is
a speculative investment and, except as otherwise provided in this
Agreement, there is no assurance that the TIC Stock can be sold at a
profit or at all."
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3. Section 3 of the Original Agreement is hereby deleted in its
entirety and the following shall be inserted in its place and stead:
"3. Security. In order to secure payment of the Buyer's
obligations under the Original Agreement, as amended hereby, the
Amended Corporate Stock Purchase Agreement, the Restated Note, Buyer
agrees that the Shares, as well as the shares of common stock of Total
New York acquired by the Buyer pursuant to the Corporate Stock Purchase
Agreement (the "Corporate Shares" and, together with the Shares, the
"Pledged Shares") shall be pledged to the Buyer pursuant to the terms
of an amended and restated pledge agreement in the form of Exhibit B
hereto (the "Restated Pledge Agreement")."
4. The representations and warranties contained in Section 5 of the
Original Agreement are hereby qualified to the extent disclosed on the Schedule
of Exceptions attached hereto as Schedule A hereto ("Schedule of Exceptions").
5. Section 5(f) of the Original Agreement is hereby modified by adding
the following to the end thereof: "after giving effect to the information
disclosed on the Schedule of Exceptions attached to the Amended Corporate Stock
Purchase Agreement."
6. Section 10(d) of the Original Agreement is hereby deleted in its
entirety and the following shall be inserted in its place and stead:
"(d) Limitations. The obligations of the parties to provide
indemnification under this Agreement shall be subject to the following
limitations:
(a) No claim for indemnification shall be asserted by
a party unless the amount of the claim for which indemnification is
being sought exceeds $10,000; and
(b) No claim for indemnification may be sought by a
party after six months from the date hereof."
7. Section 11(c) of the Original Agreement is hereby deleted in its
entirety and the following shall be inserted in its place and stead:
"(c) Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of
this Agreement must be in writing, must be delivered by courier, mail
or hand delivery, and will be deemed to have been delivered upon
receipt. The addresses for such communications shall be:
If to the Seller: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: Shapiro, Rosenbaum, Liebschutz & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to the Buyer: Total Identity Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Att: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Each party shall provide three days prior written notice to the other
party of any change in address, telephone number or facsimile number.
Written confirmation of receipt (i) given by the recipient of such
notice, consent, waiver or other communication, or (ii) provided by a
nationally recognized overnight delivery service, shall be rebuttable
evidence of personal service or receipt from a nationally recognized
overnight delivery service."
8. Section 11(e) of the Original Agreement is hereby deleted in its
entirety and the following shall be inserted in its place and stead:
"(e) Governing Law; Arbitration. This agreement shall be
governed by and interpreted in accordance with the laws of the state of
Florida without regard to the principles of conflict of laws. Each of
the parties irrevocably and unconditionally agrees that any suit,
action or legal proceeding arising out of or relating to this Agreement
shall be settled by binding arbitration conducted in accordance with
the Commercial Rules of Arbitration of the American Arbitration
Association ("AAA"). The arbitration shall take place at such location
as the AAA determines, and shall be heard by three arbitrators selected
in accordance with AAA Rules of Commercial Arbitration. The Arbitrators
shall render a reasoned award and such award shall be signed and dated.
Any witness residing outside of the state in which the arbitration is
heard may testify by affidavit, and such affidavit shall be admissible
at any arbitration hearing. The decision of the arbitrators shall be
final and binding upon the parties, and the arbitration award may be
entered in any court of competent jurisdiction. Initially, each of the
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parties shall pay one-half of the fees of the AAA (other than filing
fees), including without limitation hearing and arbitrators' fees, and
the parties' obligation to pay such fees shall be enforceable in any
court of competent jurisdiction. The parties to any arbitration
hereunder agree to submit for determination by the arbitrators, the
amount of fees and expenses, including reasonable attorney's fees, to
be borne by each party."
9. Contemporaneously herewith (a) the parties to the Corporate Stock
Purchase Agreement are entering into the Amended Corporate Stock Purchase
Agreement, (b) the parties to the Pledge Agreement are entering into the
Restated Pledge Agreement referred to in Section 3 of this Agreement, (c) the
Restated Promissory Note is being delivered by the Buyer in the place and stead
of the Promissory Note (the agreements and transactions referred to in
subsections (a) through (c) of this Section being collectively referred to as
the "Other Agreements"), and (d) the parties hereto are entering into mutual
general releases, releasing each other from all claims and obligations,
including the Disputed Items, except as otherwise provided in this Agreement and
the Other Agreements. The Original Agreement shall be construed so as to give
effect to the Other Agreements.
10. Each of the parties hereby agrees that its covenants and agreements
under this Agreement shall be within the scope of the indemnification provisions
of Sections 10(a) and 10(b) of the Original Agreement, as the case may be.
11. Except as modified hereby, the Original Agreement shall remain in
full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed as of the date and year first above written.
TOTAL IDENTITY CORP., a Florida
corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
TOTAL IDENTITY SYSTEMS CORP., a
New York corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairm and Chief
Executive Officer
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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