EXHIBIT 99.1.3
AMENDMENT TO SECURITIES PURCHASE
AND REDEMPTION AGREEMENT AND SUBORDINATED DEBENTURES
This Amendment (this "Amendment"), dated as of May 29, 2002, amends the
Securities Purchase and Redemption Agreement, dated as of March 30, 2001 (the
"Agreement"), by and among Sybari Software, Inc. (the "Company"), each of Xxxxxx
X. Xxxxxxx, Xxxxxx Xxxxxx, Xxxxxxx X. Xxxxxxxx and Xxxxxxx X. XxxxXxxxxxx (each
a "Principal Shareholder," and collectively the "Principal Shareholders") and
the purchasers named in Schedule 1.1 of the Agreement (the "Investors"), as
amended by that certain letter agreement (the "Letter Agreement"), dated as of
May 25, 2001, by and among the Company, the Principal Shareholders and the
Investors, and the Subordinated Debentures (the "Debentures") that were issued
in connection therewith to certain of the Investors. Capitalized terms used
herein but not otherwise defined herein shall have the meanings ascribed to them
in the Agreement.
BACKGROUND
WHEREAS:
A. The Company, the Principal Shareholders and the Investors desire to
amend the Agreement to clarify the Company's obligations in respect of certain
representations, warranties and covenants that are set forth in Articles I, II,
III and IV of the Agreement; and
B. The Company, the Principal Shareholders and the Investors desire that
the amendments to the Agreement and the Debentures that are set forth in and
contemplated by this Amendment shall be effective as of March 30, 2001.
Accordingly, in consideration of the promises and the mutual agreements
set forth herein, the parties hereto hereby agree to amend the Agreement and the
Debentures, with such amendments to the Agreement and the Debentures to be
deemed effective as of March 30, 2001, as follows:
FIRST: Section 1.6 of the Agreement is hereby amended to read in its entirety as
follows:
Options. Within three hundred sixty five (365) days of the Closing
Date, the Company shall establish an employee stock option plan (the
"Employee Stock Option Plan"), in a form reasonably acceptable to the
Purchasers, pursuant to which options for a total of up to ten (10) shares
of Common Stock (the "Non-Founder Options") may be granted by the
Principal Shareholders to members of senior management and Directors
specified by the Principal Shareholders, other than the other Principal
Shareholders, during the eighteen (18) month period immediately following
the Closing Date. The shares of Common Stock which are subject to the
Non-Founder Options shall be provided by the Principal Shareholders in
accordance with their respective contribution percentages set forth on
Schedule 1.6 attached hereto, and the proceeds from the exercise of such
Non-Founder Options shall be paid to the Principal Shareholders in
accordance therewith. Non-Founder Options shall be issued to such Persons
(other than the Principal Shareholders), upon such terms, including
vesting and exercise price, as shall be as set forth in the Employee
Option Plan. On or before the date eighteen (18) months following the
Closing Date, the Company shall establish an option plan upon such terms,
including vesting, as shall be determined by the compensation committee of
the Company's Board of Directors.
SECOND: The parties hereto hereby agree that the Company's adjustment under
Section 481 of the Code by reason of a change in accounting method, resulting
from the consummation of the transactions contemplated by the Agreement and the
Related Agreements (the "Section 481 Adjustment"), shall not be deemed to
constitute a breach of the representation and warranty of
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the Company contained in Section 2.10(xii) of the Agreement for purposes of the
Agreement or any of the Related Agreements, and the Investors hereby consent to
the waiver of, and do hereby waive, any and all rights they might otherwise have
under the Agreement or any of the Related Agreements which arise as a result of
or otherwise relate to the Section 481 Adjustment.
THIRD: Section 3.1(a) of the Agreement is hereby amended to read in its entirety
as follows:
For the fiscal year beginning with January 2001, within one hundred
eighty (180) days after the end of fiscal year 2001, a copy of the
consolidated and consolidating balance sheet for the Company and its
Subsidiaries as at the end of such year, together with consolidated and
consolidating statements of income, shareholders' equity and cash flow of
the Company and its Subsidiaries for such year, all in reasonable detail
and accompanied by the unqualified report of one of the five (5) largest
public accounting firms (measured by total revenues), which firm shall be
selected by the Board of Directors of the Company. For the fiscal year
beginning with January 2002 and each fiscal year thereafter, within ninety
(90) days after the end of each fiscal year, a copy of the consolidated
and consolidating balance sheet for the Company and its Subsidiaries as at
the end of such year, together with consolidated and consolidating
statements of income, shareholders' equity and cash flow of the Company
and its Subsidiaries for such year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year,
all in reasonable detail and accompanied by the unqualified report of one
of the
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five (5) largest public accounting firms (measured by total revenues),
which firm shall be selected by the Board of Directors of the Company.
FOURTH: Section 3.1(b) of the Agreement is hereby amended to read in its
entirety as follows:
(i) For the period beginning with April 2002 and ending with
December 2002, within thirty (30) days after each month, a preliminary
consolidated and consolidating accrual basis balance sheet for each of (A) the
Company and its United States Subsidiaries and (B) the Company's Non-United
States Subsidiaries, as of the end of such month and preliminary consolidated
and consolidating accrual basis statements of income, shareholders' equity and
cash flow for each of (A) the Company and its United States Subsidiaries and (B)
the Company's Non-United States Subsidiaries, for such month, (ii) For the
period beginning with January 2003, within thirty (30) days after each month, a
preliminary consolidated and consolidating accrual basis balance sheet of the
Company and its Subsidiaries as of the end of such month and preliminary
consolidated and consolidating accrual basis statements of income, shareholders'
equity and cash flow for such month and for the period commencing at the end of
the previous fiscal year and ending with the end of such month, setting forth in
each case in comparative form the corresponding figures for the corresponding
period of the preceding fiscal year, all in reasonable detail.
FIFTH: Section 3.1 (c) of the Agreement is hereby amended to read in its
entirety as follows:
For each fiscal quarter beginning with the quarter ended March 31,
2002, within forty-five (45) days after the end of each fiscal quarter an
unaudited consolidated and consolidating accrual basis balance sheet of
the Company as of
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the end of such quarter and accrual basis preliminary statements of
income, shareholders' equity and cash flows for such quarter and for the
period commencing with the end of the previous fiscal year and ending with
the end of such quarter, setting forth, beginning with the first
anniversary of the Closing Date, in each case in comparative form (1) the
corresponding figures for the corresponding period of the preceding fiscal
year and (2) the corresponding figures for the corresponding period set
forth in the operating plan and budget submitted to the Board of Directors
of the Company pursuant to paragraph (e) herein, all in reasonable detail.
SIXTH: Section 3.l (d) of the Agreement is hereby amended to read in its
entirety as follows:
Beginning June 30,2002, at the time of delivery of each monthly,
quarterly and annual statement, a certificate, executed by either the
president or chief financial officer of the Company stating that such
officer has caused the provisions of Articles III, IV and IX of this
Agreement to be reviewed and has no knowledge of any default by the
Company or any Subsidiary in the performance or observance of any of the
provisions thereof or, if such officer has such knowledge, specifying such
default.
SEVENTH: Section 4.12 of the Agreement is hereby amended to read in its entirety
as follows:
Net Cash from Operations. Commencing with the fiscal year beginning
on January 1, 2002, the Company's Net Cash from Operations shall not be
less than $3,600,000 for any fiscal year, and the Company's Net Cash from
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Operations shall not be less than $0.00 in any two (2) consecutive fiscal
quarters. For purposes of computing Net Cash from Operations, no software
development costs, pursuant to Financial Accounting Standards Board No. 86
"Accounting for the Costs of Computer Software to Be Sold, Leased or
Otherwise Marketed" ("FASB No. 86"), shall be capitalized.
EIGHTH: Section 4.13 of the Agreement is hereby amended to read in its entirety
as follows:
EBITDA. Commencing with the fiscal year beginning on January 1,
2002, the Company's EBITDA for any fiscal year shall not be less than
$0.00 and the Company's EBITDA shall not be less than $0.00 for any two
(2) consecutive fiscal quarters. For purposes of computing EBITDA, no
software development costs, pursuant to FASB No. 86, shall be capitalized.
NINTH: The definition of "EBITDA" in Article XI of the Agreement is hereby
amended to read in its entirety as follows:
"EBITDA" means, with respect to the Company and its Subsidiaries for
any fiscal period, an amount equal to Consolidated Net Income for such
period, plus, to the extent deducted in the calculation of Consolidated
Net Income and without duplication, (a) depreciation and amortization for
such period, (b) other noncash charges for such period, (c) income tax
expense for such period, (d) consolidated total interest expense for such
period, and minus, to the extend added in computing Consolidate Net Income
and without duplication, all noncash gains (including income tax benefits)
for such period, all as determined
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in accordance with GAAP applied consistently with past practices of the
Company.
TENTH: The definition of "Net Cash from Operations" in Article XI of the
Agreement is hereby amended to read in its entirety as follows:
"Net Cash from Operations" means, with respect to the Company and
its Subsidiaries for any given period, an amount equal to Consolidated Net
Income for such period plus (a) the amount of any interest expense of the
Company in respect of the unpaid principal balance of the Debentures that
is in excess of twelve percent (12%) of such unpaid principal balance, (b)
depreciation and amortization for such period and (c) other non-cash
charges (or minus non-cash gains) for such period, and less Net Working
Capital Changes.
ELEVENTH: Schedule 1.6 of the Agreement shall be deleted in its entirety and
Schedule 1.6 to this Amendment shall be substituted in lieu thereof.
TWELFTH: The parties hereto hereby agree that, beginning January 1, 2002, the
interest rate payable in respect of the unpaid principal balances of the
Debentures shall increase from twelve percent (12%) to fifteen percent (15%).
THIRTEENTH: The amendments to the Agreement and the Debentures that are set
forth in and contemplated by this Amendment shall be effective as of March 30,
2001.
FOURTEENTH: Except as amended by this Amendment, it is expressly acknowledged
and Understood that this Amendment shall not be construed to alter any other
provisions in the Agreement (as amended by the Letter Agreement) or the
Debentures: Except as amended by this
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Amendment, all of the provisions of the Agreement (as amended by the Letter
Agreement) and the Debenture shall remain in full force and effect.
FIFTEENTH: This Amendment may be executed in multiple counterparts, each of
which shall constitute an original but all of which shall constitute but one and
the same instrument. One or more copies of this Amendment may be delivered via
telecopier, with the intention that they shall have the same effect as an
original counterpart hereof.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Amendment on the 29 day
of May, 2002.
COMPANY:
SYBARI SOFTWARE, INC.
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Financial Officer
PRINCIPAL SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx Xxxxxx
--------------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. XxxxXxxxxxx
--------------------------------------------
Xxxxxxx X. XxxxXxxxxxx
INVESTORS:
Summit Ventures V, L.P.
By: Summit Partners V, L.P.
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxx Xxxxxxx
--------------------------------
Member
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Summit V Companion Fund, L.P.
By: Summit Partners V, L.P.
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxx Xxxxxxx
--------------------------------
Member
Summit V Advisors Fund, L.P.
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxx Xxxxxxx
--------------------------------
Member
Summit V Advisors Fund (QP), L.P.
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxx Xxxxxxx
--------------------------------
Member
Summit Subordinated Debt Fund II, L.P.
By: Summit Partners SD II, LLC
Its General Partner
By: /s/ Xxx Xxxxxxx
--------------------------------
Member
Summit Investors III, L.P.
By: /s/ Xxx Xxxxxxx
----------------------------------------
General Partner
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SCHEDULE 1.6 - CONTRIBUTION PERCENTAGES FOR NON-FOUNDER OPTION SALES
Principal Shareholder Contribution Percentage
--------------------- -----------------------
1. Xxxxxx Xxxxxx 100%
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