EXHIBIT 10.3
AMENDMENT NUMBER ONE
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TO AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
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THIS AMENDMENT NUMBER ONE TO AMENDED AND RESTATED SECURITIES PURCHASE
AGREEMENT (this "Amendment") dated as of August 11, 1999, is entered into
between SYSTEM SOFTWARE ASSOCIATES, INC., a Delaware corporation ("Issuer"), and
H&Q SSA INVESTORS, L.P. ("Investor"), in light of the following
RECITALS
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A. Issuer and Investor are parties to that certain Amended and
Restated Securities Purchase Agreement, dated as of September 8, 1997 (as
amended from time to time, the "SPA").
B. Issuer has requested that Investor amend the SPA to, among other
things, permit Issuer to enter into a revolving and term loan credit facility in
an amount equal to $41,000,000, all as set forth in this Amendment.
C. Investor is willing to amend the SPA under the terms and
conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall have
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the meaning ascribed thereto in the SPA.
2. Amendments to the SPA. Upon the effectiveness of this Amendment, the
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parties agree to amend the SPA as follows:
(a) The following defined terms hereby are added to Section 1.1
in the proper alphanumerical order:
"Accounts" means all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to the
Company arising out of the sale or lease of goods or software or the
rendition of services by the Company, irrespective of whether earned by
performance, and any and all credit insurance, guaranties, or security
therefor.
"EBITDA" means, with respect to any fiscal period, the Company's
consolidated earnings (excluding extraordinary gains) before all interest
expense, taxes, and depreciation and amortization expense for such period,
determined in accordance with GAAP; provided, however, for purposes of
determining compliance
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with Section 7.4.1, for the fiscal quarter ending October 31, 1999, EBITDA
shall not include any charges resulting from any conversion option granted
in the Credit Agreement.
"Foothill Credit Agreement" means that certain Loan and Security
Agreement, dated on or about the date hereof, among the Company, certain
subsidiaries of the Company, the financial institutions identified therein
as "Lenders," and Foothill Capital Corporation, as agent for the Lenders.
"Recurring Service and Maintenance Revenues" means, with respect to
any period, the total revenues of the Company, determined on a consolidated
basis, for such period that are derived from services and on-going support
as reflected in the Company's financial statements in accordance with
historical practices.
"Redemption Price" shall mean the Company Redemption Price or the
Holder Redemption Price, as the context requires.
(b) The following defined terms contained in Section 1.1 of the SPA
hereby are amended and restated in its entirety as follows:
"Credit Agreement" means one or more agreements for one or more credit
facilities to be entered into by the Company in an aggregate amount not in
excess of $45,000,000 (including any refinancings, refundings, renewals, or
extensions of such facilities); the Foothill Credit Agreement shall be
deemed a Credit Agreement for purposes of this Agreement.
"Senior Credit Documents" means, collectively, the Credit Agreement
and the related security agreements, guarantees, pledge agreements, notes
and the other documents executed in connection therewith, as they may be
modified or amended from time to time.
(c) Section 7.1 of the SPA hereby is amended and restated in its
entirety to read as follows:
7.1 Payment of Dividends. Subject to Section 10A hereof, and
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subject to the restrictions in the Credit Agreement, the Company will duly
and punctually pay the dividends and redemption amount, if any, on the
Preferred Stock in accordance with the terms thereof and of this Agreement,
in each case when due under the terms of this Agreement and the other
Preferred Stock Documents.
(d) The last sentence of Section 7.3.4 of the SPA hereby is amended
and restated in its entirety to read as follows:
"Without the prior written consent of the Required Preferred Holders,
no material Contractual Obligation, excluding the Senior Credit Documents,
but including the Public Securities, shall be amended, modified, waived or
terminated in any manner that would have in any material respect an adverse
effect on the rights of the Preferred Holders under
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the Preferred Stock Documents, as holders of securities that are junior in
right of payment to the Public Securities."
(e) Section 7.4.1 of the SPA hereby is amended and restated in its
entirety to read as follows:
7.4.1. EBITDA. The Company shall maintain EBITDA for each of the
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following periods of not less than the amount shown below for the period
corresponding thereto:
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Quarterly Period EBITDA
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fiscal quarter $ 3,150,000
ended 10/31/1999
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fiscal quarter $ 8,280,000
ended 1/31/2000
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fiscal quarter $ 8,280,000
ended 4/30/2000
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fiscal quarter $ 8,280,000
ended 7/31/2000
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fiscal quarter $ 8,280,000
ended 10/31/2000
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fiscal quarter $10,350,000
ended 1/31/2001
and each fiscal
quarter thereafter
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(f) Section 7.4.2 of the SPA hereby is amended and restated in its
entirety to read as follows:
7.4.2 Minimum Revenues. The Company shall maintain minimum
Recurring Service and Maintenance Revenues for each fiscal quarter ending
on or after October 31, 1999 of not less than $40,500,000.
(g) Section 7.5.1 of the SPA hereby is amended and restated in its
entirety to read as follows:
7.5.1 Indebtedness in respect of (i) the Series A Preferred, (ii)
the Public Securities, and (iii) the Credit Agreement.
(h) Section 7.5.8 of the SPA hereby is amended and restated in its
entirety to read as follows:
7.5.8 To the extent permitted by Section 7.7.6, Indebtedness in
respect of Capitalized Lease Obligations or secured by purchase money
security interests; provided, however, that the aggregate principal amount
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of Indebtedness permitted by this Section 7.5.8 shall not exceed $5,300,000
outstanding at any time;
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(i) Section 7.6 of the SPA hereby is amended and restated in its
entirety to read as follows:
7.6 Guarantees; Letters of Credit. Except as provided for under the
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Senior Credit Documents, neither the Company nor any of its Subsidiaries
shall become or remain liable with respect to any Guarantee, including
reimbursement obligations, whether contingent or matured, under letters of
credit or other financial guarantees by third parties (or become
contractually committed to do so).
(j) Section 7.7 of the SPA hereby is amended and restated in its
entirety to read as follows:
7.7 Liens. Except as provided for under the Senior Credit Documents,
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neither the Company nor any of its Subsidiaries shall create, incur, or
enter into, or suffer to be created or incurred or to exist, any Lien (or
become contractually committed to do so), except the following:
(k) Section 7.8.2 of the SPA hereby is amended and restated in its
entirety to read as follows:
7.8.2 Investments of the Company in Wholly Owned Subsidiaries;
provided, however, that (i) no such Investment shall involve the transfer
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by the Company of any material assets other than cash or Common Stock, and
(ii) Investments by the Company in those Wholly Owned Subsidiaries
organized or incorporated outside the United States (excluding those Wholly
Owned Subsidiaries organized or incorporated in the United Kingdom or
Canada) made pursuant to this Section 7.8.2 shall not exceed $1,100,000 per
month.
(l) Section 7.8.6 of the SPA hereby is amended and restated in its
entirety to read as follows:
7.8.6 [Intentionally Omitted]
(m) The SPA hereby is amended to add a new Section 7.8.7 to the SPA
in the proper alphanumerical order:
7.8.7 Investments permitted under the Senior Credit Documents.
(n) Clause (b) of Section 7.10.1 of the SPA hereby is amended and
restated in its entirety to read as follows:
(b) tangible assets in the ordinary course of the Company's
business;
(o) Section 7.11 of the SPA hereby is amended and restated in its
entirety to read as follows:
7.11 Voluntary Prepayments of Other Indebtedness. Neither the
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Company nor any of its Subsidiaries shall make any voluntary prepayment of
principal of or interest on
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any Indebtedness (other than as permitted or required pursuant to the
Senior Credit Documents and the Public Securities) or make any voluntary
redemptions or repurchases of Indebtedness (other than pursuant to the
Senior Credit Documents and the Public Securities).
(p) Section 9.4 of the SPA hereby is amended by deleting the
parenthetical in the first clause of the first sentence "(other than that
contained in Section 7.19)".
(q) The SPA hereby is amended to add a new Section 9A in the proper
alphanumerical order:
9A REMEDIES.
9A.1. Upon the occurrence and during the continuation of an
Event of Default, and at all times subject to Section 10A, the Purchaser
may, at its option, either exercise (i) its rights pursuant to Section 4A
of the Certificate of Designations, or (ii) any right, power, or remedy
permitted by law or in equity. No remedy conferred in this Agreement upon
Purchaser or any other holder of any Preferred Stock is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein
or now or hereafter existing at law or in equity or by statute or
otherwise.
(r) Section 10A.2 of the SPA hereby is amended and restated in its
entirety to read as follows:
10A.2. During the period referred to in Section 10A.8, the
Company shall not make or agree to make, and the Purchaser, and any
successor holder of the Preferred Stock, will not, demand, xxx for, take,
or retain, any direct or indirect payment (in cash, property, securities,
by set-off or otherwise) on account of any indebtedness, liabilities, and
other obligations of the Company to the Purchaser in respect of or arising
under this Agreement or the Preferred Stock; provided, however, that the
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Company may pay and the Purchaser may demand, xxx for, take and retain any
payments of dividends and the Redemption Price, including, without
limitation, under the terms and conditions of the Preferred Stock made or
due prior to the date on which the Purchaser shall have received written
notice (by registered mail, overnight courier or confirmed facsimile) of
any Subordination Event (as hereinafter defined). Nothing in this Article
10A shall be deemed to prevent the accrual of dividends on outstanding
shares of Preferred Stock, contemplated by the provisions of this Agreement
or the Certificate of Designations. Nothing in this Article 10A shall be
deemed to prevent the Purchaser from demanding or suing for any payments on
account of the Preferred Stock after the earlier of (i) the date on which
the Senior Indebtedness has been paid in full in cash or (ii) either (y) in
the case of a Payment Default (as hereinafter defined), the date on which
the payment blockage under clause (i) below is terminated, or (z) in the
case of a Non-Payment Default (as hereinafter defined), the date on which
the payment blockage under clause (ii) below is terminated.
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The preceding paragraph notwithstanding, (i) upon the occurrence and
during the continuation of an event of default resulting from a payment
default under the Credit Agreement (a "Payment Default"), and until either
(y) such event of default is cured or waived or (z) all Obligations (as
such term is defined in the Credit Agreement) have been paid in full in
cash and the Credit Agreement has been irrevocably terminated, the Company
shall not make, and Purchaser, and any successor holder of the Preferred
Stock, shall not accept or receive any payments or distributions by or on
behalf of the Company, directly or indirectly, of assets of the Company of
any kind or character, whether in cash, property, or securities, including
on account of the purchase, redemption, or other acquisition of the
Preferred Stock, as a result of any collection, sale or other disposition
of collateral, or by setoff, exchange, or in any other manner for or on
account any indebtedness, liabilities, and other obligations of the Company
to the Purchaser in respect of or arising under this Agreement or the
Preferred Stock,
(ii) upon the occurrence and during the continuation of an event of
default under the Credit Agreement other than a payment default described
in the immediately preceding clause (i) (a "Non-Payment Default"), and
until the earliest of (x) the date such event of default is cured or
waived, (y) the date all Obligations (as such term is defined in the Credit
Agreement) have been paid in full in cash and the Credit Agreement
irrevocably terminated, or (z) the date that is 270 days after the date on
which Purchaser received notice of such event of default, the Company shall
not make, and Purchaser, and any successor holder of Preferred Stock, shall
not accept or receive any payments or distributions by or on behalf of the
Company on account of the Preferred Stock, and
(iii) if at the time of receipt by the Purchaser of any payment on
account of the Preferred Stock (w) any Senior Indebtedness incurred in
respect of the Credit Agreement shall have reached final maturity (whether
by acceleration or otherwise), (x) the holders of such Senior Indebtedness
shall have previously commenced proceedings to enforce payment of such
Senior Indebtedness, (y) such proceedings shall be continuing and (z) prior
to the Purchaser's receipt of such payment, the holders of such Senior
Indebtedness shall have notified the Purchaser of the commencement of such
proceedings, then no such payment shall be made on account of the Preferred
Stock until the Senior Indebtedness described in clause (w) is paid in full
in cash. In the event that any payment or distribution is received by the
Purchaser despite the application of clauses (i), (ii), and (iii) of this
Section 10A.2, it shall pay over to the applicable holder of the Senior
Indebtedness an amount equal to the lesser of (A) the outstanding amount of
such Senior Indebtedness and (B) the amount of such payment.
(s) Section 10A.3 of the SPA hereby is amended and restated in its
entirety to read as follows:
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10A.3. In the event of the occurrence of an event of default under
any agreement that includes the Company's obligation to pay Senior
Indebtedness of the Company, the failure to repay any Senior Indebtedness
upon the final maturity thereof, the failure to pay any Senior Indebtedness
incurred in respect of the Credit Agreement on the stated due date thereof
including upon the final maturity thereof (whether by its terms, by
prepayment, by acceleration or by mutual agreement), or otherwise upon any
payment or distribution, whether of cash, securities, or other property, to
creditors of the Company in a total or partial liquidation, reorganization
or dissolution of the Company, whether voluntary or involuntary, or in a
bankruptcy, reorganization, insolvency, receivership, assignment for the
benefit of creditors, marshaling of assets, or similar proceeding relating
to the Company or its property (in each case the existence of such an event
being referred to herein as a "Subordination Event"), then except as set
forth in the proviso set forth in the first sentence of Section 10A.2, all
Senior Indebtedness (including any interest thereon accruing after the
occurrence of any such event irrespective of whether or not allowed as a
claim) shall first be paid in full in cash before any payment or
distribution, whether in cash, securities or other property, shall be made
to the Purchaser on account of the Preferred Stock. Any payment or
distribution, whether in cash, securities, or other property, which would
otherwise (but for these subordination provisions) be payable or
deliverable in respect of the Preferred Stock shall be paid or delivered
directly to the holder of the Senior Indebtedness until all Senior
Indebtedness (including any interest thereon accruing after the occurrence
of any such event) shall have been paid in full.
(t) Section 10A.4 of the SPA hereby is amended and restated in its
entirety to read as follows:
10A.4. Upon the occurrence and during the continuation of an Event of
Default other than any of the Events of Default specified in Section 9.6 or
9.7, the Purchaser will not declare any redemption on the Preferred Stock
until the earliest of (x) the final maturity of any Senior Indebtedness,
(y) the acceleration of the maturity of any Senior Indebtedness or (z)
either (A) 180 days after the occurrence of an Event of Default (other than
an Event of Default under Section 9.4) shall have occurred and provided
that the representative of the Senior Indebtedness has received notice of
such Event of Default, or (B) 270 days after an Event of Default under
Section 9.4 or Section 9.2 shall have occurred and provided that the
representative of the Senior Indebtedness has received notice of such Event
of Default; provided, however, that in all cases in which more than one
Event of Default is outstanding at one time, the applicable period for
purposes of this clause (z) shall be the shortest period possible. The
foregoing sentence notwithstanding, upon the occurrence and during the
continuation of an event of default resulting from a Payment Default under
the Credit Agreement and until either (A) such event of default is cured or
waived or (B) all Obligations (as such term is defined in the Credit
Agreement) have been paid in full in cash and the Credit Agreement has been
irrevocably terminated, the Purchaser will not declare any redemption on
the Preferred Stock.
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(u) Section 10A.8 of the SPA hereby is amended and restated in its
entirety to read as follows:
10A.8. As long as any Senior Indebtedness is outstanding, the
Purchaser shall not commence, or join with any creditor other than the
holder of Senior Indebtedness in commencing, any proceeding referred to in
Section 10A.2 (which shall be deemed to include an involuntary bankruptcy
proceeding against the Company) until the date on which the Senior
Indebtedness has been paid in full in cash.
(v) Section 10A.10 of the SPA hereby is amended and restated in its
entirety to read as follows:
10A.10. [Intentionally Omitted]
3. Representations and Warranties. The Company hereby represents and
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warrants to Investor that (a) the execution, delivery, and performance of this
Amendment is within the Company's corporate powers, have been duly authorized by
all necessary corporate action, and are not in contravention of any law, rule,
or regulation, or any order, judgment, decree, writ, injunction, or award of any
arbitrator, court, or governmental authority, or of the terms of its charter or
bylaws, or of any contract or undertaking to which it is a party or by which any
of its properties may be bound or affected, and (b) this Amendment and the SPA,
constitute the Company's legal, valid, and binding obligation, enforceable
against the Company in accordance with its terms, (c) this Amendment has been
duly executed and delivered by the Company.
4. Choice of Law. The validity of this Amendment, its construction,
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interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the laws of the
State of Delaware.
5. Counterparts; Telefacsimile Execution. This Amendment may be executed
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in any number of counterparts and by different parties and separate
counterparts, each of which when so executed and delivered, shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
Amendment by telefacsimile shall be effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.
6. Effect on SPA. The SPA, as amended hereby, shall be and remain in full
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force and effect in accordance with its respective terms and hereby is ratified
and confirmed in all respects. The execution, delivery, and performance of this
Amendment shall not operate as a waiver of or, except as expressly set forth
herein, as an amendment of, any right, power, or remedy of Investor under the
SPA, as in effect prior to the date hereof.
7. Miscellaneous.
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(a) Upon and after the effectiveness of this Amendment, each
reference in the SPA to "this Agreement", "hereunder", "herein", "hereof" or
words of like import referring to the SPA shall mean and be a reference to the
SPA as modified and amended hereby.
(b) The SPA is and shall continue to be in full force and effect and
is hereby in all respects ratified and confirmed and shall constitute the legal,
valid, binding and enforceable obligations of the Company to Investor.
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IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first above written.
SYSTEM SOFTWARE ASSOCIATES, INC.,
By /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Vice President, Finance and Controller
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H&Q SSA INVESTORS, L.P.,
By /s/ Xxxxxxx X. Xxxxx
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Name: /s/ Xxxxxxx X. Xxxxx
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Title: MANAGING DIRECTOR
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