FIRST AMENDMENT TO THE SECURITIES PURCHASE AGREEMENT
FIRST
AMENDMENT TO THE
This
First Amendment to the Securities Purchase Agreement (the “First Amendment”),
dated as of February 24, 2009, by and among The Teachers’ Retirement System of
Alabama (“Teachers’
Retirement System”), and The Employees’ Retirement System of Alabama
(“Employees’
Retirement System”), (each, an “Investor” and
collectively, the “Investor”), and Xxxx
Microproducts Inc., a California corporation (the “Company”).
R E C I T A L
S
A. Company
and the Investors are parties to that certain Securities Purchase Agreement,
dated as of October 2, 2006 (the “Securities Purchase
Agreement”), pursuant to which the Investors purchased senior
subordinated notes in the aggregate original principal amount of $35,000,000
from the Company.
B. Investors
are willing to modify certain terms with respect to the Securities Purchase
Agreement in the manner requested by Company, subject, however, to the
terms, conditions and limitations set forth herein.
C. The
parties have had the opportunity to consult with, and obtain the representation
and advice of, their respective legal counsel with regard to the terms and
conditions of this Agreement, and each party has had the opportunity to
participate fully in the drafting of this Agreement.
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, the parties
hereto agree as follows:
1. Defined
Terms. All terms used in this First Amendment shall have the
same meaning as used in the Securities Purchase Agreement.
2. Deletion
of “Net Worth.” The definition of the term “Net Worth” set
forth in Section 1.1 of
the Securities Purchase Agreement is hereby deleted in its
entirety.
3. Additional
Defined Terms. The following defined terms shall be added to
Section 1.1 of
the Securities Purchase Agreement:
“‘Consolidated EBITDA’
shall mean, as to any Person, with respect to any period, an amount equal
to: (a) the Net Income of such Person and its Subsidiaries for such
period on a consolidated basis determined in accordance with GAAP, plus (b)
depreciation, amortization and other non-cash charges (including, but not
limited to, imputed interest and deferred compensation) of such Person and its
Subsidiaries for such period (to the extent deducted in the computation of Net
Income), all in accordance with GAAP, plus (c) Interest
Expense of such Person and its Subsidiaries for such period (to the extent
deducted in the computation of Net Income), plus (d) the
provision for Federal, State, local and foreign income taxes payable by such
Person or its Subsidiaries for such period (to the extent deducted in the
computation of Net Income), plus (e)
restructuring charges for the downsizing of the business of Company and its
Subsidiaries in an aggregate sum not to exceed (i) $3,000,000 for periods ending
on or before September 30, 2009, or (ii) for periods ending after September 30,
2009, the sum of $3,000,000 minus the amount of such restructuring charges
incurred after September 30, 2008, but prior to the beginning of such
period.
“‘Fixed Charge Coverage
Ratio’ shall mean, as to any Person for any period, the ratio of (a) the
Consolidated EBITDA of such Person during such period, divided by (b) the sum of
(i) taxes paid or required to be paid in cash by such Person or its Subsidiaries
during such period, (ii) Interest Expense paid or required to be paid in cash by
such Person or its Subsidiaries during such period, (iii) capital
expenditures made by such Person or its Subsidiaries during such period
(including obligations incurred during such period under Capital Leases), as
determined in accordance with GAAP, and (iv) principal payments made or
required to be made by such Person or its U.S.-based Subsidiaries during such
period on account of any Indebtedness.
“‘Interest Expense’
shall mean, for any period, as to any Person and its Subsidiaries, all of the
following as determined in accordance with GAAP, total interest expense, whether
paid or accrued (including the interest component of any obligations under
Capital Leases for such period), including, without limitation, all bank fees,
commissions, discounts and other fees and charges owed with respect to letters
of credit, banker’s acceptances or similar instruments.
“‘Net Income’ shall
mean, with respect to any Person, for any period, the aggregate of the net
income (loss) of such Person and its Subsidiaries, on a consolidated basis, for
such period (excluding to the extent included therein any extraordinary or
one-time gains or losses) after deducting all charges which should be deducted
before arriving at the net income (loss) for such period and after deducting
taxes for such period, all as determined in accordance with GAAP, provided,
that, (a) the net income of any Person that is not a wholly-owned Subsidiary or
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid or payable to
such Person or a wholly-owned Subsidiary of such Person; (b) the effect of any
change in accounting principles adopted by such Person or its Subsidiaries after
the date hereof shall be excluded; and (c) the net income (if positive) of any
wholly-owned Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such wholly-owned Subsidiary to such
Person or to any other wholly-owned Subsidiary of such Person is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule of government regulation applicable to
such wholly-owned Subsidiary shall be excluded.”
“New Senior Credit
Agreement” means that certain Amended and Restated Loan and Security
Agreement among the Company, Xxxx Microproducts – Future Tech, Inc., Xxxxx Data,
Inc., Xxxx Microproducts Canada – Tenex Data ULC, Total Tec Systems, Inc. and
Forefront Graphics US Inc., as borrowers, Xxxx Microproducts Canada Inc., and
Xxxx Microproducts Mexico Shareholder, LLC, as guarantors, Wachovia Capital
Finance Corporation (Western) (“Wachovia Capital
Finance”), as Administrative Agent, Bank of America, N.A., as Co-Agent
(together with Wachovia Capital Finance, the “Senior Bank Agents”),
and the other lenders named therein, dated as of September 29, 2008, as the same
may be amended from time to time.
4. Modification
of Affirmative Covenants. Section 6.1(a)(iii)
of the Securities Purchase Agreement is hereby amended to read, in its entirety,
as follows:
“(iii) Contemporaneously
with the quarterly and year-end financial statements required by the foregoing
clauses (i) and
(ii), a certificate of the president or chief financial officer of the
Company, in form and substance and in such detail as the Investor may reasonably
request which sets forth the calculations conducted to verify that the Company
is in compliance with the provisions of Section 6.2(g)
hereof, and stating that no Event of Default and no Default has occurred and is
continuing, or, if any such Event of Default or Default has occurred and is
continuing, a statement as to the nature thereof and what action the Company
proposes to take with respect thereto;”
5. Modification
of Negative Covenants. If and to the extent that the Company
violated Section
6.2(g) of the Securities Purchase Agreement, as in effect immediately
prior to the execution of this Amendment, for the quarter ended December 31,
2008, the Investors hereby waive such violation. Section 6.2(g) of the
Securities Purchase Agreement is hereby amended to read, in its entirety, as
follows:
“(g) Company
and its Subsidiaries, on a consolidated basis, shall achieve, when measured for
each fiscal period of Company set forth below, a Fixed Charge Coverage Ratio of
not less than the ratio set forth opposite such fiscal period:
|
Fiscal Period
|
Minimum
Fixed Charge Coverage
Ratio
|
|
For
the 3 month period ending March 31, 2009
|
0.35
to one
|
|
For
the 3 month period ending June 30, 2009
|
0.75
to one
|
|
For
the 3 month period ending September 30, 2009
|
1.10
to one
|
|
For
the 6 month period ending December 31, 2009
|
1.10
to one
|
|
For
the 9 month period ending March 31, 2010
|
1.10
to one
|
|
For
each 12 month period ending on the last day of each fiscal quarter after
March 31, 2010
|
1.10
to one”
|
6. Amendment
Fee. On the date first
stated above, the Company shall pay an amendment fee to the Investors, in the
aggregate amount of $46,499.67 (the “Amendment
Fee”).
7. Conditions
to Effectiveness. The effectiveness
of the Investors’ agreements contained in this First Amendment are subject to
the satisfaction of the following conditions:
(a) Executed Documents.
Each of the Investors shall have received fully executed copies of this
Amendment, in form and substance satisfactory to it and its
counsel.
(b) Consent of Holders of Senior
Indebtedness. The Company shall have obtained, and provided to the
Investors (i) the consent of the holders of the Senior Indebtedness outstanding
under the New Senior Credit Agreement (or, if authorized to do so, the Senior
Agents) to the amendment of the Securities Purchase Agreement in the manner
contemplated herein, and (ii) the waiver of the prohibitions and restrictions
applicable to this Amendment contained in the New Senior Credit Agreement
(including, without limitation, the provisions of Section 9.9(c)(v)
thereof).
(c) Payment of Fees and
Expenses. The Company shall have paid the Amendment Fee, together with
the reasonable legal fees and expenses of the Investors’ legal counsel incurred
in connection with this Amendment.
(d) Pledge
Agreements. The Company shall have provided to the Investors a
fully executed and completed stock pledge agreement, pledging to the Investors,
as additional security for the Obligations, a second priority lien (subject only
to the holders of Senior Indebtedness) in and to all of the issued and
outstanding capital stock now owned by Borrower in each of the Subsidiaries
listed on Exhibit
A attached hereto (the “Pledge
Agreement”).
(e) No
Default. No Default or Event of Default under the Securities
Purchase Agreement shall exist.
(f) Representations and
Warranties; Performance of Covenants. The representations and
warranties of the Company contained herein and in the Securities Purchase
Agreement shall be correct in all material respects and the Company shall have
performed each of the covenants on its part to be performed under the Securities
Purchase Agreement.
8. Representations
and Warranties. The Company
hereby represents and warrants to and for the benefit of the Investors as
follows:
(a) The
execution, delivery and performance by the Company of this Amendment and the
performance by the Company of the Securities Purchase Agreement, as amended
hereby, (i) have been duly authorized by all requisite corporate action on the
part of the Company, (ii) do not require the consent or approval of any
Governmental Authority or any third party, (iii) do not and will not violate (A)
any provision of any law, statute, rule or regulation or the certificate of
incorporation or by-laws of the Company, (B) any order of any court,
administrative body or arbitrator or any rule regulation or order of any
Governmental Authority binding upon the Company or any of its Subsidiaries, or
any of their respective properties, or (C) any provision of any loan or credit
agreement, indenture, mortgage or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their respective properties are or may be bound, and (iv) do not and will not
result in any breach of, constitute (alone or with notice or lapse of time or
both) a default under or trigger to any right of acceleration under, any such
loan or credit agreement, indenture, mortgage or other agreement or
instrument.
(b) As of the
date hereof, and after giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing under the Securities Purchase Agreement
and the Notes.
(c) This
Amendment, and the Securities Purchase Agreement as amended hereby, constitute
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
9. Miscellaneous.
(a) The
Company shall pay all reasonable fees and expenses, including reasonable
attorneys’ fees and expenses, incurred by the Investors in connection with the
transactions contemplated by this Amendment.
(b) No term,
covenant, agreement or condition of this Amendment or the Securities Purchase
Agreement as amended hereby may be amended or waived unless such amendment or
waiver is in writing and is signed by the Company and each of the Investors. No
failure or delay by any Investor in exercising any right hereunder, or under the
Securities Purchase Agreement as amended hereby, shall operate as a waiver
thereof or of any other right nor shall any single or partial exercise of any
such right preclude any other further exercise thereof or of any other right.
Unless otherwise specified in such waiver or consent, a waiver or consent given
hereunder shall be effective only in the specific instance and for the specific
purpose for which given.
(c) This
Amendment is intended as a separate agreement between the Company, on the one
hand, and each of the Investors, on the other hand. This Amendment
shall be construed together with and as part of the Securities Purchase
Agreement and the Notes. Except as expressly amended pursuant to this
Amendment, the terms, covenants and conditions contained in the Securities
Purchase Agreement and the Notes are hereby ratified and confirmed in all
respects and each of the Notes and, as amended hereby, the Securities Purchase
Agreement, shall remain in full force and effect. Any and all
notices, requests, certificates and other instruments executed and delivered
subsequent to the date of the effectiveness of this Amendment may refer to the
Securities Purchase Agreement without making specific reference to this
Amendment, and all such references nevertheless shall be deemed to include,
unless the context otherwise requires, this Amendment.
(d) This
Amendment, and the Securities Purchase Agreement as amended hereby, shall be
governed by and construed in accordance with the laws of the State of Alabama,
without regard to its conflicts of laws principles.
(e) This
Agreement may be executed in any number of identical counterparts, any set of
which signed by all the parties hereto shall be deemed to constitute a complete,
executed original for all purposes.
(The
signature page follows)
IN
WITNESS WHEREOF, the Company and the Investors have caused this First Amendment
to the Securities Purchase Agreement to be executed as of the day and year first
above written.
| THE COMPANY: | XXXX MICROPRODUCTS INC. | |||
|
|
By:
|
/s/ W. Xxxxxx Xxxx | ||
| Name: | W. Xxxxxx Xxxx | |||
| Title: | President and Chief Executive Officer | |||
| THE INVESTORS: |
THE
TEACHERS’ RETIREMENT SYSTEM OF ALABAMA
|
|||
|
|
By:
|
/s/ Xxxxx X. Xxxxxxx | ||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | Chief Executive Officer | |||
|
THE
EMPLOYEES’ RETIREMENT SYSTEM OF ALABAMA
|
||||
|
|
By:
|
/s/ Xxxxx X. Xxxxxxx | ||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | Chief Executive Officer | |||
Exhibit
A
Subsidiaries of the
Company
|
Name
|
Jurisdiction of
Organization
|
| Xxxx Microproducts Brazil Holdings, LLC |
Minnesota
|
|
Xxxx
Microproducts Canada Inc.
|
California
|
|
Xxxx
Microproducts Canada – Tenex Data ULC
|
Nova
Scotia
|
|
Xxxx
Microproducts Europe Inc.
|
California
|
|
Xxxx
Microproducts Funding Corporation
|
Delaware
|
|
Xxxx
Microproducts – Future Tech, Inc.
|
California
|
|
Xxxx
Microproducts Mexico Shareholder, LLC
|
Florida
|
|
Forefront
Graphics US Inc.
|
Ontario
|
|
New
ProSys Corp.
|
Georgia
|
|
Now
Direct, Inc.
|
Nevada
|
|
ProSys
Information Systems, Inc.
|
Xxxxxxx
|
|
Xxxxx
Data, Inc.
|
Minnesota
|
|
Total
Tec Systems, Inc.
|
New
Jersey
|
