May 31, 2011 CONFIDENTIAL
Exhibit 99.17
May 31, 2011
CONFIDENTIAL
| To: | Ray Holding Corporation c/o Vector Capital Corporation One Market Street Xxxxxxx Tower, 23rd Floor San Francisco, California 94105 |
| To: | Xxx Xxxxxx Sub Corporation c/o Vector Capital Corporation One Market Street Xxxxxxx Tower, 23rd Floor San Francisco, California 94105 |
Ladies and Gentlemen:
Reference is made to that certain letter agreement (the “Letter Agreement”) dated January 18,
2011 from Vector Capital IV, L.P. (“VCIV”), Vector Capital III, L.P. (“VCIII”) and Vector
Entrepreneur Fund III, L.P. (“VEFIII,” and together with VCIV and VCIII, the “Vector Investors”) to
Ray Holding Corporation, a Delaware corporation (“Parent”) and Ray Merger Sub Corporation, a
Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”). Capitalized terms
used in this letter agreement (this “Amendment No. 1”) but not defined herein have the meanings
ascribed to them in the Letter Agreement.
On May 24, 2011, Parent, Merger Sub and RAE Systems Inc., a Delaware corporation (the
“Company”) entered into Amendment No. 4 to the Merger Agreement, and in connection therewith,
Parent entered into Amendment No. 2 to the Rollover Agreement with the Chen Revocable Trust DTD
5/8/2011. Concurrently herewith the Chen Revocable Trust DTD 5/8/2011 is entering into Amendment
No. 3 to its Rollover Agreement and the Hsi Family Trust is entering into Amendment No. 1 to its
Rollover Agreement. The Vector Investors, Parent and Merger Sub now desire to amend the Letter
Agreement as set forth herein.
Schedule A to the Letter Agreement is hereby amended and restated in its entirety and replaced
by Schedule A to this Amendment No. 1.
The parties hereto hereby agree that all references to the “letter agreement” set forth in the
Letter Agreement shall be deemed to be references to the Letter Agreement as amended by this
Amendment No. 1.
Except as expressly amended or modified hereby, the Letter Agreement and the agreements,
documents, instruments and certificates among the parties hereto as contemplated by, or referred
to, in the Letter Agreement shall remain in full force and effect without any amendment or other
modification thereto.
This Amendment No. 1 may be executed in several counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same instrument. The exchange of a fully
executed Amendment No. 1 (in counterparts or otherwise) by facsimile shall be sufficient to bind
the parties to the terms and conditions of this Amendment No. 1.
[REMAINDER OF XXXX LEFT BLANK INTENTIONALLY]
| Sincerely, | ||||||
| Vector Capital IV, L.P. | ||||||
| By: | Vector Capital Partners IV, L.P., | |||||
| its general partner | ||||||
| By: | Vector Capital, L.L.C., | |||||
| its general partner | ||||||
| By: | /s/ Xxxxxxxxx X. Xxxxxx | |||||
| Name: | ||||||
| Title: | Managing Member | |||||
| Vector Entrepreneur Fund III, L.P. | ||||||
| By: | Vector Capital Partners III, L.P., | |||||
| its general partner | ||||||
| By: | Vector Capital, L.L.C., | |||||
| its general partner | ||||||
| By: | /s/ Xxxxxxxxx X. Xxxxxx | |||||
| Name: | ||||||
| Title: | Managing Member | |||||
| Vector Capital III, L.P. | ||||||
| By: | Vector Capital Partners III, L.P., | |||||
| its general partner | ||||||
| By: | Vector Capital, L.L.C., | |||||
| its general partner | ||||||
| By: | /s/ Xxxxxxxxx X. Xxxxxx | |||||
| Name: | ||||||
| Title: | Managing Member | |||||
[Signature page to Amendment No. 1 to Equity Commitment Letter]
Accepted and Agreed to as of the date first above written.
| RAY HOLDING CORPORATION |
||||
By: |
/s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | President | |||
| RAY MERGER SUB CORPORATION |
||||
By: |
/s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | President | |||
[Signature page to Amendment No. 1 to Equity Commitment Letter]
Schedule A
Investors; Pro Rata Portion
Investor |
Pro Rata Portion | |||
Vector Capital IV, L.P.
|
TBD1 | |||
| TBD2 | ||||
Vector Capital Entrepreneur Fund III, L.P.
|
TBD3 | |||
Profit Spring Investments Limited
|
9.58 | % | ||
Chen Family Trust DTD 5/8/2001
|
TBD4 | |||
Hsi Family Trust
|
TBD5 | |||
The following illustrative example assumes the following sources and uses:
| Sources and Uses | ||||
| (in millions) | ||||
Purchase Price |
$ | 133.34 | ||
Plus: Company Debt At Close |
1.81 | |||
Less: Cash At Close |
(8.94 | ) | ||
Enterprise Value |
126.21 | |||
Plus: Cash on Company Balance Sheet |
$ | 5.00 | ||
Plus: Total Fees |
5.65 | |||
Less: Borrowed Debt |
(30.00 | ) | ||
Total Outstanding Closing Equity |
$ | 106.86 | ||
| 1 | To equal the percentage obtained by multiplying (a) the amount obtained by dividing (i) an amount equal to (A) the Total Outstanding Closing Equity plus (B) the product of (x) the Merger Consideration multiplied by (y) the number of Transferable Shares (the sum of (a)(i)(A) and (a)(i)(B) being the “Closing Equity”) minus (C) the product of (x) the aggregate number of Rollover Shares multiplied by (y) the Merger Consideration (the “Rollover Share Value”) minus (D) 9.58% of the Closing Equity (the “PSIL Share Value”), by (ii) the Closing Equity and (b) 49.4%. | |
| 2 | To equal the percentage obtained by multiplying (a) the amount obtained by dividing (i) an amount equal to (A) the Closing Equity minus (B) the Rollover Share Value minus (C) the PSIL Share Value, by (ii) the Closing Equity and (b) 49.4%. | |
| 3 | To equal the percentage obtained by multiplying (a) the amount obtained by dividing (i) an amount equal to (A) the Closing Equity minus (B) the Rollover Share Value minus (C) the PSIL Share Value, by (ii) the Closing Equity and (b) 1.2%. | |
| 4 | To equal the percentage obtained by dividing (a) an amount equal to the product of (i) the Merger Consideration multiplied by (ii) 10,701,525 shares of common stock, by (b) the Closing Equity. | |
| 5 | To equal the percentage obtained by dividing (a) an amount equal to the product of (i) the Merger Consideration multiplied by (ii) 2,691,332 shares of common stock, by (b) the Closing Equity. |
Illustrative example of Pro Rata Portion and Total Outstanding Closing Equity:
| Total Outstanding | ||||||||
| Closing Equity | ||||||||
| Pro Rata Portion | (in millions) | |||||||
Vector Capital IV, L.P. |
31.30 | % | $ | 32.93 | ||||
| 31.30 | % | $ | 32.93 | |||||
Vector Capital Entrepreneur Fund III, L.P. |
0.76 | % | $ | 0.80 | ||||
Profit Spring Investments Limited |
9.58 | % | $ | 10.08 | ||||
Chen Family Trust DTD 5/8/2001 |
21.64 | % | $ | 24.09 | ||||
Hsi Family Trust |
5.43 | % | $ | 6.04 | ||||
Total Outstanding Closing Equity Needed |
100.00 | % | $ | 106.86 | ||||
