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EXHIBIT 10.47
AMENDMENT NO. 2
TO
STOCK PURCHASE AGREEMENT
AND
SENIOR PROMISSORY NOTES
THIS AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT AND SENIOR PROMISSORY
NOTES (the "Amendment") is dated as of October 3, 1996, between Xxxx X. Xxxxxxxx
("Xxxxxxxx"), Xxxxxxx X. Xxxxxx ("Xxxxxx") and the Xxxxxxx X. Xxxxxx Trust (the
"Trust," and collectively with Xxxxxxxx and Xxxxxx, "Sellers") and MTI
Technology Corporation, a Delaware corporation (the "Purchaser").
A. Sellers and Purchaser entered into that certain Stock Purchase Agreement
(as amended by Amendment No. 1 thereto, the "Agreement") dated as of April 2,
1995 relating to the sale of the capital stock of National Peripherals, Inc.;
that certain Senior Promissory Note by Purchaser in favor of Trust in the amount
of $715,000 dated as of April 2, 1995 (the "Xxxxxx Note"); and that certain
Senior Promissory Note by Purchaser in favor of Xxxxxxxx in the amount of
$1,285,000, dated as of April 2, 1995 (the "Xxxxxxxx Note").
B. Subsequent to the entering into of the Agreement, Xxxxxxxx and Xxxxxx
have agreed to accept broader management responsibilities for the Purchaser
beyond the original intended scope of Xxxxxxxx'x and Xxxxxx'x duties.
X. Xxxxxxx and Purchaser desire to amend the Agreement, the Xxxxxx Note and
the Xxxxxxxx Note as set forth herein. Capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Amendment hereby agree as follows:
1. Contingent Payments. Section 1.4 of the Agreement is amended in its
entirety as follows:
1.4 Contingent Payments.
(a) As part of the Purchase Price, Purchaser
shall make three (3) guaranteed annual payments to Sellers in the
manner and at the times provided in Section 1.4(b) and Section 1.5.
Each such annual payment shall be in the amount (the "Annual Payment
Amount") of One Million Dollars ($1,000,000) in the aggregate. Payment
of the three Annual Payments is unconditional and is not subject to the
attainment of any profit, revenue or other goal or condition. Only the
Final Payment described in subsection (d) below, shall be determined by
reference to a formula.
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(b) Except as provided in subparagraphs (e)
- (i) below or in the event of any dispute as to the calculation
thereof under Section 1.5 (in which event payment shall be made within
fifteen (15) days of the calculation of the Annual Payment Amount
becoming final), each payment of the Annual Payment Amount shall be
made by Purchaser to Sellers within sixty (60) days after the end of
each fiscal year following the Closing Date, beginning in April 1996,
net of any offset pursuant to Article X, below; provided that the first
period of calculation shall commence on the Effective Date hereof. Each
Seller shall be entitled to the percentage of the Annual Payment Amount
shown in Exhibit "A" hereto.
(c) Subject to any offset pursuant to
Article X, below, which for the purpose of this subparagraph (c) shall
be treated as if received by Sellers, to the extent that the aggregate
Annual Payment Amounts made pursuant to this Section 1.4 prior to or
concurrent with the Final Payment (as defined below), if any, are less
than Two Million Dollars ($2,000,000), the Final Payment shall be
increased in an amount equal to such shortfall (the "Shortfall").
(d) As part of the Purchase Price, Purchaser
shall make a final payment (the "Final Payment") in the manner provided
in Section 1.5, within sixty (60) days after the end of the fiscal year
ended April 1998, except as provided in subparagraphs (e) - (i), below,
or in the event of any bona fide dispute as to the calculation thereof
under Section 1.5 (in which event payment shall be made within fifteen
(15) days of the calculation of the Final Payment becoming final). The
Final Payment shall equal One Million Dollars ($1,000,000)in the event
that the total aggregate Open Systems Revenue (as defined below) for
the three fiscal years commencing fiscal 1996 shall meet or exceed
Eighty Four Million Dollars ($84,000,000), less any reduction required
by Section 1.3(g) above or offset pursuant to Article X, below. "Open
Systems Revenue" shall mean all revenue of Purchaser related to sales
of products that will perform in an open systems environment.
(e) Notwithstanding anything to the contrary
herein, Purchaser's obligations to make any Contingent Payments (as
defined below) to a Seller in the event that any Seller's employment
with Purchaser terminates shall be as set forth in this subsection (e):
(i) In the event any Seller's
employment is terminated by Purchaser for Cause (as defined in
such Seller's Employment agreement), Seller shall be entitled
to no Contingent Payments earned on or after his termination,
except for his portion of the Shortfall, if any.
(ii) In the event any Seller's
employment is terminated by reason of death or disability (as
defined in such Seller's Employment agreement), Seller or his
estate shall be entitled to all remaining Contingent Payments
earned, if any.
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(iii) In the event any Seller's
employment is terminated by such Seller voluntarily, Seller
shall be entitled to no Contingent Payments earned on or after
his termination.
(iv) In the event any Seller's
employment is terminated by Purchaser without Cause, Seller
shall be entitled to all remaining Contingent Payments earned,
if any.
For purposes of this Section 1.4, Contingent Payments shall be earned as of
the last day of the fiscal year on which the payment of such amount is based.
(f) The Annual Payments and the Final Payment as
determined under this Section 1.4 are hereafter referred to as the "Contingent
Payments."
(g) If an Event of Default (as defined in the Note)
occurs under any Note, such Seller shall be entitled to receive an amount equal
to his percentage (as shown in Exhibit "A" hereto) of the Shortfall less the
amount of aggregate Contingent Payments made to all Sellers as of the date of
such default, which amount will be paid to such Seller within fifteen (15)
business days.
(h) If Purchaser discontinues its non-DEC storage
business, Sellers shall be entitled to receive all Contingent Payments that
would otherwise have been paid after such discontinuation as if the percentage
in (d) above had been one hundred percent (100%), which amount will be paid
Sellers within fifteen (15) business days.
(i) If Purchaser sells its non-DEC storage business
to an unaffiliated third party and such third party shall fail to expressly
assume in writing Purchaser's obligations to make Contingent Payments hereunder,
Sellers shall be entitled to receive all Contingent Payments that would
otherwise have been paid after such discontinuation as if the percentage in (d)
above had been one hundred percent (100%), which amount will be paid Sellers
within fifteen (15) business days.
2. Senior Promissory Notes. Section 7.1(d) of each of the Xxxxxx Note
and the Xxxxxxxx Note is amended in its entirety as follows:
(d) Maker discontinues its non-DEC storage business or
sells substantially all the assets thereof to an unaffiliated
third party; and
3. Miscellaneous.
3.1 Except as specifically provided in Sections 1 and 2, the
Agreement, the Xxxxxx Note and the Xxxxxxxx Note have not been amended or
modified and are hereby confirmed.
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3.2 This Amendment may be executed in counterparts, each of
which shall constitute one and the same instrument.
3.3 The parties intend that this Amendment (and the Agreement,
Amendment No. 1 to the Agreement, the Xxxxxx Note and the Xxxxxxxx Note) shall
be the final expression of their agreement with respect to the subject matter
hereof and may not be contradicted by evidence of any prior or contemporaneous
agreement. The parties further intend that this Agreement (and the Agreement,
Amendment No. 1 to the Agreement, the Xxxxxx Note and the Xxxxxxxx Note)
constitute the complete and exclusive statement of the parties of their
agreement and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding involving this Amendment.
The parties have caused this Amendment to be duly executed as of the date
first written above.
PURCHASER:
MTI Technology Corporation,
a Delaware corporation
By: /s/ Xxxx X. Xxxx
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Title: Vice President & Chief Financial Officer
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SELLERS:
/s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx Trust
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx,
Sole Trustee and Settlor
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