EXHIBIT 10.23
Amendment No. 1 to Stock Purchase Agreement
Amendment No. 1 dated as of December 29, 1998 to the Stock Purchase
Agreement dated as of October 30, 1998 (the "Stock Purchase Agreement"), by and
among Synaptix Systems Corporation, a Colorado corporation, d.b.a. Affiliated
Resources Corporation ("Buyer"), Xxxxx Systems, Inc., a Texas corporation
("ESI"), and Way Energy, Inc., a Delaware corporation ("Seller").
W I T N E S S E T H :
WHEREAS, the above parties have entered into the Stock Purchase
Agreement, pursuant to which Buyer will buy and Seller will sell all of the
issued and outstanding shares (the "Shares") of common stock, par value $1.00
per share, of ChemWay Systems, Inc., a Texas corporation (the "Company"); and
WHEREAS, the parties desire, upon the terms and conditions hereinafter set
forth, to amend the Stock Purchase Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
1. Section 1.3(a) is hereby amended in its entirety to read as follows:
"MAKE WHOLE ADJUSTMENT. In the event that the Anniversary Date Average
Price (as defined below) is less than the Closing Date Price, Buyer shall issue
a number of additional shares of Buyer Common Stock (the "Make Whole Shares") to
Seller . The number of Make Whole Shares to be issued to Seller shall be equal
to the greater of (i) zero or (ii) the Payment Shares subtracted from the
quotient of the Purchase Price divided by Anniversary Date Market Price. The
Anniversary Date Market Price shall mean the greater of (x) $2.40 and (y) the
average closing price of a share of Buyer Common Stock on the Buyer's then
principal trading market, during the 20 consecutive trading day period ending
two trading days prior to the one year anniversary of the Closing Date. The Make
Whole Shares, if any, shall be delivered to Seller ten days after the one year
anniversary of the Closing Date. The maximum number of Make Whole Shares to be
delivered shall be 1,000,000."
2. Section 1.3(d) (A) is hereby amended in its entirety to read as
follows:
"(A) If (i) Buyer agrees to merge or consolidate with another
entity and Buyer is not the surviving entity upon consummation of
the merger or consolidation (the date of such consummation being the
"Transaction Date"), (ii) the Transaction Date occurs on or before
the last day upon which the Make Whole Shares could be delivered
under Section 1.3(a) hereof and the Make Whole Shares
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have not been issued and delivered to Seller and (iii) the value two
trading days before the Transaction Date of the consideration per
share of Buyer Common Stock to be received by shareholders of Buyer,
determined by the Buyer's board of directors acting in good faith
(the "Consideration Value") in such merger or consolidation is not
equal to or greater than the Closing Date Price, then on the
Transaction Date immediately prior to the consummation of the merger
or consolidation, Buyer shall deliver to each Seller for each share
of Buyer Common Stock originally issued at the closing hereunder and
held by such Seller on the Transaction Date (before the consummation
of the merger or consolidation) shares of Buyer Common Stock having
a value equal to the difference between the Closing Date Price and
the Consideration Value, with such value determined based upon the
average closing price of a share of Buyer Common Stock during the 20
trading days ending two trading days prior to the Transaction Date."
3. Section 1.3(d)(B) is hereby amended in its entirety to read as follows:
"(B) If (i) on or before the last date upon which the Make
Whole Shares could be delivered under Section 1.3(a) hereof
(provided that no Make Whole Shares have been issued and delivered
to Seller), Buyer concludes a transaction required to be reported
under Section 13(e) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations
promulgated thereunder (the "13(e) Transaction") and (ii) the
average closing price of a share of Buyer Common Stock on the 20
trading days ending two trading days prior to the last day upon
which shareholders of Buyer could tender shares of Buyer Common
Stock in the 13(e) Transaction (the "13(e) Transaction Date Average
Price") is less than the Closing Date Price, on the date Buyer
distributes the consideration for the shares of Buyer Common Stock
tendered and accepted in the 13(e) Transaction, Buyer shall pay to
Seller an amount of cash per share tendered and accepted equal to
the difference between the Closing Date Price and the 13(e)
Transaction Date Average Price (as if Buyer had issued shares of
Buyer Common Stock having a value equal to the difference between
the Closing Date Price and the Transaction Date Average Price, and
such shares were tendered and accepted), provided that Buyer shall
also pay to Seller the consideration per share tendered and accepted
of Buyer Common Stock paid in the 13(e) Transaction to tendering
shareholders for shares of Buyer Common Stock accepted by the
Buyer."
4. Article I is hereby supplemented to include an additional provision,
Section 1.4, that shall read as follows:
"Section 1.4 PUT RIGHT. At any time after April 1, 1999 (the
"Put Date"), Seller shall have the right to sell (i.e. to "put") the
Payment Shares to the Buyer for $4.00 per Payment Share as described
below (the "Put"). Notwithstanding
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anything to the contrary herein, the Put shall immediately terminate
and be of no further force and effect upon the satisfaction and full
performance by Buyer of those covenants set forth in Sections 4.12
and 4.13 of the Stock Purchase Agreement, provided that there is no
inaccuracy or breach of the representations of the Buyer contained
in Section 3.17.
(a) At any time on or after the Put Date, Seller may
notify the Buyer of its irrevocable election to
exercise the Put by delivering to the Company a
duly completed notice of such election.
(b) No later than 10 business days after Seller's
delivery of the notice of election, the Buyer
shall effect the purchase of the Shares, at the
closing (the "Closing") to occur at a mutually
convenient time, date and location.
(c) At the Closing, (i) the Buyer shall pay to Seller
$4.00 per Share, and (ii) Seller shall convey any
Payment Shares subject to the Put to the Buyer
free and clear of all liens, claims or
encumbrances and deliver to the Buyer appropriate
stock powers in blank duly executed by Seller.
(d) As security for the Buyer's satisfaction of its
obligations under this Section 1.4, the Buyer
shall enter into a Security Agreement in favor of
Seller substantially in the form of Exhibit B
hereto.
5. Article III is hereby supplemented to include an additional provision,
Section 3.17, that shall read as follows:
"Section 3.17. COMPANY FUNDING. Since October 30, 1998 the Buyer has
issued or agreed to issue an aggregate of 920,000 shares for aggregate cash
proceeds of $800,000 and a note payable in an amount of $1,500,000. The Buyer
has received additional subscriptions for 80,000 shares which is expected to
yield aggregate net proceeds of $200,000 (the "Subscriptions"). The Buyer has
entered into a letter agreement dated December 18, 1998 with ICI Americas, Inc.
("ICI"), a copy of which is attached hereto as Exhibit 3.17 (the "ICI
Agreement"), regarding repayment of approximately $1,000,000 of the indebtedness
of the Company to ICI. At the Closing, the Buyer shall contribute $500,000 of
the previously described net proceeds to enable the Company to make the $500,000
payment required at Closing. The Buyer has no reason to believe that it will be
unable to satisfy other trade creditors of the Company and or to fund the
commencement of the Company's operations on or prior to February 1, 1999."
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6. Article IV is hereby amended by deleting Section 4.12 and inserting in
its place the following:
"Section 4.12. ADDITIONAL FINANCINGS; COMMENCEMENT OF OPERATIONS, ETC..
On of before February 1, 1999, the Buyer will (i) receive full payment of the
principal amount of the note described in Section 3.17 above, (ii) receive
payment of the Subscriptions or other equity financing resulting in at least
$200,000 in additional net proceeds, (iii) contribute at least $1,500,000 of the
proceeds from the financings described in Section 3.17 and this Section 4.12 to
satisfy creditors of the Company and to fund the operations of the Company, (iv)
satisfy all existing liabilities to the creditors that are set forth on Schedule
4.12 and (v) commence full operations of the Company. The Buyer further agrees
to continue to provide the Seller Representatives with full access to the
properties, contracts and records of the Buyer and its subsidiaries until
fulfillment of Sections 4.12 and 4.13 and the Buyer shall furnish promptly to
the Seller or Seller Representatives such other information concerning the
business of the Buyer and the Company as the Seller shall reasonably request."
7. Article IV is hereby supplemented to include an additional provision,
Section 4.13, that shall read as follows:
"Section 4.13 REPAYMENT OF WAREHOUSE NOTE, ETC.. Following the Closing
Date, Buyer covenants and agrees to satisfy all obligations of ESI under the
note dated November 29,1996 (the "Warehouse Note") in favor of Texas Commerce
Bank National Association currently having a principal balance of approximately
$240,000 and to pay all payments of principal and interest under such Warehouse
Note as such payments become due and payable. In addition, as soon as
practicable following the Closing Date and not later than March 31, 1999, the
Buyer hereby covenants and agrees to (i) repay the entire unpaid balance of the
Warehouse Note, together with all accrued but unpaid interest thereon, (ii)
fully perform, or cause the Company to fully perform, the ICI Agreement, and
(iii) repay all of the indebtedness of the Company to Dot Chemical, Inc. ("Dot")
or obtain a full release of Seller and affiliate from all indebtedness of the
Company to Dot."
8. Article IV is hereby supplemented to include an additional provision,
Section 4.14, that shall read as follows:
"Section 4.14 RESTRICTION ON BUYER'S ACTIONS. Buyer covenants and
agrees that, except (i) as contemplated by this Agreement, or (ii)
as agreed in writing by Seller, after the date hereof, and prior to
the time that all covenants of the Buyer in set forth in Sections
4.12 and 4.13 of this Agreement have been satisfied:
i. the Buyer will not, directly or indirectly, (a) sell, transfer
or pledge or agree to sell any capital stock of the Company or
(b) split, combine or reclassify Buyer's outstanding Common
Stock;
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ii. (a) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect
to its capital stock; (b) sell, transfer, lease, license,
sell, mortgage, pledge, dispose of, or encumber any assets of
the Company that are subject to the terms of the Security
Agreement; or (c) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock;
iii. the Buyer will not modify, amend or terminate any of the
Company's Material Agreements or waive, release or assign any
material rights or claims of the Company;
iv. neither Buyer nor the Company will adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of
Buyer or the Company;
v. Except for payments required to satisfy existing liabilities
to creditors of the Company and ESI pursuant to Sections 4.12
and 4.13, the Company will not make or agree to make any
capital expenditure or capital expenditures greater than
$50,000 in the aggregate;
vi. neither Buyer nor any of its Subsidiaries will increase the
compensation of any director, executive officer or other key
employee of Buyer or pay any benefit or amount not required by
a plan, agreement, understanding or arrangement as in effect
on the date of the Agreement to any such person;
vii. neither Buyer nor any of its Subsidiaries will take, or agree
to commit to take, any action that would make any
representation or warranty of the Buyer contained herein
inaccurate in any material respect; or
viii. neither Buyer nor any of its Subsidiaries will authorize or
enter into an agreement to do any of the foregoing."
9. Section 5.3(d) is hereby amended in its entirety to read as follows:
"(d) The Payment Shares, registered in the name of the
Seller."
10. Section 6.2(f) is hereby amended in its entirety to read as follows:
"(f) TAX FREE STATUS. The Seller shall have received advice of
its tax counsel that it will not be taxed upon receipt of the
Payment Shares and the Make Whole Shares, other than amounts, if
any, treated as interest pursuant to Section 483 of the Internal
Revenue Code of 1986, as amended and Treasury Regulations
promulgated thereunder."
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11. Section 6.2(g) is hereby deleted in its entirety.
12. The Registration Rights Agreement is hereby amended in its entirety
and replaced with the Registration Rights Agreement attached hereto as Exhibit
B.
13. The Disclosure Schedules are hereby amended and replaced in their
entirety with the amended Disclosure Schedules attached hereto as Exhibit C.
14. Except as modified above, and in the letter agreement dated as of
October 30, 1998 the terms and conditions of the Stock Purchase Agreement are
hereby confirmed and shall remain in full force and effect.
15. This Amendment may be executed simultaneously in two or more
counterparts which may be by facsimile, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have duly executed this Amendment
No. 1 as of the date first above written.
BUYER:
SYNAPTIX SYSTEMS CORPORATION
By: /S/ XXXXXXXX X. XXXXX
Name: Xxxxxxxx X. Xxxxx
Title: Executive Vice President & Secretary
SELLER:
WAY ENERGY, INC.
By: /S/ X.X. XXXXX, XX.
Name: X.X. Xxxxx, Xx.
Title: President
XXXXX SYSTEMS, INC.
By: /S/ X.X. EVAN, SR.
Name: X.X. Xxxxx, Xx.
Title: President
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