FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
FIRST AMENDMENT dated as of April 14, 1998 (the "First Amendment"), to the
NOTE PURCHASE AGREEMENT (the "Agreement") dated as of September 19, 1997, among
BCAM INTERNATIONAL, INC., a New York corporation (the "Company"), IMPLEO LLC, a
Connecticut limited liability company (the "Purchaser"), and WEXFORD MANAGEMENT
LLC, as agent for the Purchaser and the holders of Other Notes (the "Agent").
Capitalized terms used herein shall have the respective meanings ascribed
thereto in the Agreement unless herein defined or the context shall otherwise
require.
W I T N E S S E T H
WHEREAS, the Purchaser and the Company have heretofore entered into that
certain Note Purchase Agreement dated as of September 19, 1997 (the
"Agreement"). The Company has heretofore issued, and the Purchaser has
heretofore purchased, the Company's 10%/13% convertible subordinated promissory
notes (the "Notes") in the aggregate principal amount of $5,000,000 pursuant to
the Agreement;
WHEREAS, concurrently with the Agreement, the Company entered into that
certain Note Purchase Agreement (the "Other Note Agreement"), on terms
substantially identical to the terms contained in the Agreement, providing for
the issuance of $1,000,000 principal amount of the Company's 10%/13% convertible
subordinated promissory notes (the "Other Notes");
WHEREAS, the Company has requested the Purchaser to make certain
adjustments to the covenants and other terms of the Agreement;
WHEREAS, the Purchaser and the Company now desire to amend and/or waive
certain provisions of the Agreement in the respects, but only in the respects,
hereinafter set forth;
WHEREAS, the Company has agreed to grant to the Agent, for the benefit of
the Purchaser and the holders of the Other Notes collateral security for the
prompt payment when due and performance by the Company of its obligations under
the Notes and the Other Notes;
WHEREAS, the Purchaser and the holders of the Other Notes desire to
appoint Wexford Management LLC as collateral agent for the purpose of
administering the collateral security;
NOW, THEREFORE, upon the full and complete satisfaction of the conditions
precedent to the effectiveness of this First Amendment set forth in Section 2
hereof, and in consideration of good and valuable consideration the receipt of
which is hereby acknowledged, the Purchaser and the Company hereby agree as
follows:
1. AMENDMENTS
1.1 Maturity Date. Section 1.1 of the Agreement shall be and is hereby
amended by substituting the words "a final maturity date of September 19, 2002"
as such words appear in the second full sentence of said Section 1.1 with the
words "a final maturity date of April 16, 1999".
No later than April 30, 1998, the Company shall execute and deliver to the
Purchaser one or more new Notes (the "New Notes") in the aggregate principal
amount of $5,000,000, in form and substance identical to the Notes issued to the
Purchasers pursuant to the Purchase Agreement, but bearing the amended Maturity
Date. In exchange for the delivery by the Company of the New Notes, the
Purchaser shall deliver to the Company the original Note issued pursuant to the
Purchase Agreement.
1.2 Affirmative Covenants. Section 4.1 of the Agreement shall be and is
hereby amended by deleting the existing Section 4.1 and replacing in its
entirety as follows):
"(n) Board of Directors. Concurrently with the effectiveness of this First
Amendment, the Company agrees that it will appoint Xxxxxx Xxxxxx to its
board of directors. In addition, so long as the Notes are outstanding, the
Purchaser shall have the right to designate a number of directors of the
Company equal to at least 25% (and if the number of directors is not
divisible by four, rounded up to the next whole number) of the number of
such directors. The Company also agrees that it will cause each of Drew
Shoe Corporation, an Ohio corporation ("Drew"), and BCAM Technologies,
Inc., a Delaware corporation ("BT"), to appoint Xxxxxxx Xxxxx to their
respective boards of directors as the nominee of the Purchaser. In the
case that any nominee designated by the Purchaser ceases to serve as a
director of the Company, Drew or BT for any reason, the Company agrees
that, it will nominate to its board of directors or the board of directors
of Drew or BT, as the case may be, one or more replacement nominees
designated by the Purchaser and use its best efforts to cause such
replacement nominees to be elected."
1.3 Negative Covenants. Article 4 of the Agreement is hereby amended by
adding new Sections 4.2 (k), 4.2(l) and 4.2(m), which shall provide in their
entirety as follows:
"(k) Transactions with Drew. Without the consent of the Purchaser,
neither the Company nor any Subsidiary shall transfer any assets to Drew.
Without the consent of the Purchaser, neither the Company nor Drew shall create
any Subsidiaries of Drew.
(l) No Lien on Cash. The Company agrees that it will not, nor permit
any Subsidiary to, create any Lien on cash of the Company or such Subsidiary.
(m) BCAM Technologies, Inc. - New York. The Company represents and
warrants to the Purchaser that BCAM Technologies, Inc., a New York corporation
("BT-NY"), is inactive. The Company agrees that it will not transfer any assets
to, or conduct any business through, BT-NY, and neither the Company nor any
Subsidiary will create any Subsidiary of BT-NY. In addition, no later than April
30, 1998, the Company shall merge BT-NY with and into the Company, with the
Company being the surviving corporation.."
1.4 Notices. Section 8.9 of the Agreement shall and is hereby amended by
substituting the following address for the Purchaser and its counsel:
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If to the Purchaser:
Impleo LLC
c/o Wexford Management LLC
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
XxXxxxxxx, Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx, 00xx Xx.
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
1.5 Schedule II. Schedule II of the Agreement shall be and is hereby
amended in its entirety by substituting Schedule II attached hereto in place of
said Schedule II.
1.6 Schedule VI. Schedule VI of the Agreement shall be and is hereby
amended in its entirety by substituting Schedule VI attached hereto in place of
said Schedule VI.
2. WAIVERS
2.1 Events of Default. The Company hereby acknowledges the existence of
Events of Default under the Agreement arising as a result of (a) the failure of
the Company to make timely deliveries to required by Section 401(a) of the
Agreement to the Purchaser by March 31, 1998; (b) the breaches by the Company of
the debt service coverage covenant contained in Section 4.1(1) of the Agreement;
(c) the breaches by the Company of the leverage ratio covenant contained in
Section 4.1(m) of the Agreement; (d) the material inaccuracy of the
representation made by the Company in Section 6.1(b) of the Agreement; and (e)
the material inaccuracy of the representation made by the Company in Section
6.1(f) of the Agreement. The foregoing Events of Default are hereinafter
referred to collectively as the "Breaches".
2.2 Waivers. The Purchaser hereby waives (a) all Events of Default arising
under or related to the Breaches through and including the date hereof and (b)
compliance by the Company with Sections 4.1(l) and 4.1(m) of the Agreement
through and including April 16, 1999.
3. AGREEMENTS
3.1 Company Undertakings. In consideration of the agreement of the
Purchaser to waive the existing Events of Default under the Agreement as set
forth in Section 2.2 hereof and to consent to amend the Agreement in the
respects set forth in Article 1 hereof, the Company and the Purchaser agree as
follows:
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(i) Concurrently herewith, each of the Company, BT and BCA Services,
Inc., a New York corporation ("BCA"), shall execute and deliver in favor of the
Agent a Security Agreement substantially in the form of Exhibit A attached
hereto providing for the grant of a security interest in favor of the Agent with
respect to the Collateral described therein;
(ii) Concurrently herewith, the Company shall execute and deliver in
favor of the Agent a Stock Pledge Agreement substantially in the form of Exhibit
B attached hereto providing for the pledge of (A) ninety percent (90%) of the
issued and outstanding Capital Stock of each of Drew and BT, (B) to one hundred
percent (100%) of the issued and outstanding Capital Stock of HumanCad Systems,
Inc., an Ontario corporation ("HCS"), and (C) one hundred percent (100%) of the
issued and outstanding common stock of BCA.
(iii) Concurrently herewith, the Company shall deliver to the
Purchaser stock certificates evidencing the issuance to the Purchaser of 8.33%
of the issued and outstanding shares of common stock of each of Drew and BT;
(iv) Unless and until the Company shall have transferred to BT all
of the Company's right, title and interest in any technology patents, pending
patents, trademarks, license agreements, any General Intangibles (as such term
is defined in the Security Agreement), and all other assets associated with the
intelligent surface technology and micro-valve projects that the Company is
engaged in (collectively, the "Intellectual Property"), the Purchaser and the
holders of the Other Notes shall be entitled to receive a royalty (the
"Noteholder Royalty") in the amount of ten percent (10%) of the gross revenues
received by the Company or any Subsidiary from the sale, license royalty, use or
any other form of exploitation of the Intellectual Property, payable pro rata in
accordance with their holdings of Notes and the Other Notes. The Noteholder
Royalty shall be paid to the Agent monthly within fifteen days following the end
of each calendar month, and at the time of making each payment, the Company
shall deliver a certificate, executed by its Chief Financial Officer as to the
sources of and calculation of the amount of the Noteholder Royalty.
3.2 Cancellation of Warrants. On or prior to April 30, 1998 the Purchaser
agrees to cancel and return to the Company 333,333 Warrants to purchase 333,333
Shares of the Company previously issued to the Purchaser pursuant to the Warrant
Agreement. Concurrently with the delivery by the Purchaser to the Company of
Warrant Certificate W-1 issued pursuant to the Warrant Agreement, the Company
shall execute and deliver to the Purchaser one or more Warrant Certificates in
the amount of 1,666,667 Warrants.
4. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT
4.1 Conditions. This First Amendment shall not become effective until, and
shall become effective when, each and every one of the following conditions
shall have been satisfied:
(a) First Amendment. The Purchaser shall have received executed
counterparts of this First Amendment, duly executed by the Purchaser and the
Company.
(b) Opinion of Counsel. The Purchaser shall have received from
Ruskin, Moscou, Xxxxx & Faltischek, P.C., counsel to the Company, a favorable
opinion dated the date
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of this First Amendment, which opinion shall be in form and substance
satisfactory to the Purchaser.
(c) Security Agreement. The Agent and each of the Company, BT and
BCA shall have executed and delivered the Security Agreement substantially in
the form of Exhibit A attached hereto.
(d) Stock Pledge Agreement. The Company and the Agent shall have
executed and delivered the Stock Pledge Agreement substantially in the form of
Exhibit B attached hereto.
(e) Issuance of Shares. The Company shall have delivered to the
Purchaser one or more stock certificates evidencing 8.33% of the issued and
outstanding common stock of each of Drew and BT.
(f) Amendment with Regard to Purchase and Sale of Other Notes.
Concurrently with the consummation of the transactions contemplated by this
First Amendment, the Company shall have entered into an amendment agreement with
the holders of the Other Notes on terms satisfactory to the Purchaser.
(g) Representations and Warranties; No Default. The representations
and warranties of the Company contained in this First Amendment, the Security
Agreement and the Stock Pledge Agreement (collectively, the "Transaction
Documents") or any other agreement or document executed pursuant to the
Transaction Documents shall be true in all material respects on and as of the
date of this First Amendment; the Company shall have complied with all of its
agreements and satisfied all conditions to be complied with or satisfied on or
prior to the date of this First Amendment.
(h) Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be reasonably satisfactory in substance and form to the
Purchaser, and the Purchaser shall have received (i) copies of all corporate
action taken to authorize the Transaction Documents (including, without
limitation, a copy of the resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance by the Company of the
Transaction Documents, certified by the Secretary or an Assistant Secretary of
the Company), and (ii) all such counterpart originals or certified or other
copies of such other documents as it may reasonably request.
(i) Charter Documents. The Purchaser shall have received copies of
the certificate of incorporation of each of Drew, BT, HCS and BCA, and by-laws
of Drew, BT, HCS and BCA, certified in each case as being true and complete as
of the date of this First Amendment. No later than April 30, 1998, the Company
shall deliver to the Purchaser long-form good standing certificates for Drew,
BT, HCS and BCA.
(j) Payment of Fees. The Purchaser shall have received evidence that
the Company has paid (i) the fees and disbursements of XxXxxxxxx, Will & Xxxxx,
counsel to the Purchaser, in connection with the negotiation, preparation,
approval, execution and delivery of
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the Transaction Documents (ii) and any unpaid fees and disbursements owed to
Berlack, Israels & Xxxxxxxx LLP, prior counsel to the Purchaser.
Upon receipt of all of the foregoing, this First Amendment shall
become effective.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations, Warranties and Agreements of the Company. To induce
the Purchaser to execute and deliver this First Amendment (which representations
shall survive the execution and delivery of this First Amendment), the Security
Agreement and the Stock Pledge Agreement, the Company represents and warrants to
and agrees with the Purchaser:
(a) Authorization and Validity. The Company has the power and
authority and legal right to execute and deliver the Transaction Documents and
to perform its obligations hereunder. The execution and delivery by the Company
of the Transaction Documents and the performance of its obligations thereunder
have been duly authorized by the Company, and each of the Transaction Documents
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
(b) No Violation. Neither the execution and delivery by the Company
of each of the Transaction Documents nor the consummation of the transactions
therein contemplated, nor compliance with the provisions hereof will (i) violate
the Company's or any Subsidiary's certificate of incorporation or by-laws; (ii)
violate any judgment, decree, order, statute, law, regulation or rule of any
court or governmental authority to which the Company or any of its Subsidiaries
or any of their respective properties may be subject; or (iii) (A) cause the
acceleration of the maturity of any Debt or obligation of the Company or any of
its Subsidiaries or (B) violate, or be in conflict with, or constitute a default
under, or permit the termination of, or result in the creation of, any Lien upon
any property of the Company or any of its Subsidiaries under any agreement or
instrument to which such Person is a party or by which such Person (or its
properties) may be bound. Neither the Company nor any of its Subsidiaries is (1)
in violation of any term of its respective certificates of incorporation or
by-laws, or (2) in default of or non-compliance with any material instrument,
contract or agreement to which it is a party or of any judgment, decree, order,
statute, rule or governmental regulation which is applicable to it or its
business or properties.
(c) Subsidiaries. The Subsidiaries and the capitalization thereof
are listed on Schedule II hereto.
(d) No Default. As of the date hereof and after giving effect to
this First Amendment, no Default or Event of Default has occurred which is
continuing, except to the extent expressly waived hereunder by the Purchaser.
(e) Representations and Warranties of Agreement. All the
representations and warranties contained in the Agreement are true and correct
in all material respects with the same force and effect as if made by the
Company on and as of the date hereof.
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6. AGENCY PROVISIONS
6.1 Appointment. The Purchaser hereby appoints Wexford Management LLC as
its lawful agent and attorney-in-fact, with full power of substitution, for all
purposes under this First Amendment and all of the other Transaction Documents.
The Purchaser acknowledges and agrees that the Agent will also act as agent for
the holders of the Other Notes. This appointment is coupled with an interest,
and the Company as well as the Purchaser and the holders of Other Notes
(collectively, the "Noteholders") will rely upon the irrevocable nature of such
appointment.
6.2 Acceptance of Appointment. The Agent hereby accepts such appointment,
and agrees to exercise the powers granted hereunder and pursuant to the
Transaction Documents with the same degree of care it would use if the entire
risks and rewards were for its own account.
6.3 Application of Funds. In the event any monies received from the
Company directly or pursuant to any Transaction Document is in an amount
insufficient to pay all sums due to the Agent, the Purchaser and the holders of
the Other Notes, the Agent shall first apply the sum received to its own
out-of-pocket costs reasonably reimbursable under the terms of the Transaction
Documents, and shall pay the balance to the Noteholders pro rata in accordance
with the amounts then due and owing to each of them.
6.4 Agent's Liability. The Agent shall not be liable, except for its own
gross negligence or willful misconduct, and except with respect to claims based
upon such gross negligence or willful misconduct, that are successfully asserted
against the Agent, and any Person acting as the successor to the Agent, from and
against any and all losses, liabilities, claims, actions, damages and expenses,
including reasonable attorneys' fees and disbursements, arising out of or in
connection with the Agent's good faith acceptance of or performances of its
duties and obligations under the Transaction Documents. The Agent shall be under
no duty to institute any suit, or to take any remedial procedures or to enter
any appearance or in any way defend any suit in which it may be made a defendant
hereunder until it shall be indemnified as provided herein. The Agent may act
pursuant to the advice of counsel with respect to any matter relating to the
Transaction Documents, and shall not be liable for any action taken or omitted
in accordance with such advice.
6.5 Indemnity. The Purchaser agrees to indemnify, save and hold the Agent
(and any officer, director, manager, employee or agent thereof) harmless if the
Agent shall at any time or from time to time suffer any damage, liability, loss,
cost, expense (including reasonable attorneys' fees and expenses), penalties,
impositions or fines arising out of or resulting from the performance of its
duties hereunder; provided, however, that the Agent shall not be indemnified for
any acts of gross negligence or willful misconduct.
6.6 Resignation of Agent. The Agent (or any successor Agent) may at any
time resign as such by delivering to the Company, and the Noteholder at least
fifteen (15) days' written notice of such resignation. Within fifteen days after
the giving of such notice, the Agent shall affect a transfer of all funds still
held in such Agent's possession to any successor Agent jointly designated by the
Company and the Noteholders in writing, or in the event no such successor has
been designated within such fifteen day period, to any court of competent
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jurisdiction, whereupon the Agent shall be discharged of and from any and all
further obligations arising in connection with the Transaction Documents. The
Agent's sole responsibility following the delivery of a notice of resignation
and prior to the delivery of the funds still under the Agent's control to a
successor Agent or to a court of competent jurisdiction shall be to safeguard
such funds until delivery thereof as aforesaid pursuant to a joint written
disposition instruction by all the other parties hereto or a final order of a
court of competent jurisdiction.
7. MISCELLANEOUS
7.1 Effect of Amendment. This First Amendment shall be construed in
connection with and as part of the Agreement, and except as modified and
expressly amended by this First Amendment, all terms, conditions and covenants
contained in the Agreement and the Notes are hereby ratified and shall be and
remain in full force and effect. From and after the effective date of this First
Amendment, references to the Agreement shall mean the Agreement as amended by
this First Amendment.
7.2 Limited Waiver. Upon and by virtue of this First Amendment becoming
effective as herein contemplated, the waivers set forth in Section 2.2 hereof
shall become effective. The Company understands and agrees that the waivers
contained in Section 2.2 pertain only to the Events of Default described in
Section 2.1 and to the extent so described and not to any other Default or Event
of Default which may exist under, or any other matters arising in connection
with, the Agreement or to any rights which the holders of the Notes have arising
by virtue of any such other actions or matters.
7.3 No Waiver by Purchaser. The Purchaser's failure, at any time or times,
to require strict performance by the Company of any provision of the Agreement
shall not waive, affect or diminish any right of the Purchaser thereafter to
demand strict compliance and performance therewith. Except as specifically
provided herein, any suspension or waiver by the Purchaser of any breach of the
Agreement shall not suspend, waive or affect any breach or Event of Default
under the Agreement, whether the same is prior or subsequent thereto and whether
of the same or of a different type. None of the undertakings, agreements,
warranties, covenants and representations of the Company contained in the
Agreement shall be deemed to have been suspended or waived by the Purchaser,
except to the extent set forth in Section 2.2 hereof and unless such suspension
or waiver is by an instrument in writing signed by the Purchaser specifying such
suspension or waiver.
7.4 Notices, etc.. Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
First Amendment may refer to the Agreement without making specific reference to
this First Amendment but nevertheless all such references shall include this
First Amendment unless the context otherwise requires.
7.5 Headings. The descriptive headings of the various Sections or parts of
this First Amendment are for convenience only and shall not affect the meaning
or construction of any of the provisions hereof.
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7.6 Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
7.7 Severability. If any part of this First Amendment shall be invalid or
unenforceable, such invalidity or unenforceability shall not affect the validity
and enforceability of the remaining portions.
7.8 Counterparts. The execution hereof by the parties hereto shall
constitute a contract between such parties for the uses and purposes hereinabove
set forth, and this First Amendment may be executed simultaneously in any number
of counterparts, each of which shall be deemed an original, and all of which
shall together constitute one agreement.
IN WITNESS WHEREOF, the parties have executed this First Amendment
to Note Purchase Agreement as of the date first written above.
BCAM INTERNATIONAL, INC.
By
------------------------------
Xxxxxxx Xxxxxxx
President
IMPLEO LLC
By
------------------------------
WEXFORD MANAGEMENT LLC,
as Agent for Impleo LLC
By:
--------------------------
Xxxxxx Xxxxxx
President
WEXFORD MANAGEMENT LLC,
As Agent
By
------------------------------
Xxxxxx Xxxxxx
Title:
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SCHEDULE II
SUBSIDIARIES
Jurisdiction of Company's
Name Organization Form Of Entity Percentage Ownership
---- ------------ -------------- --------------------
Drew Shoe Corporation Ohio corporation 90%*
BCAM Technologies, Inc. Delaware corporation 90%*
HumanCAD Systems, Inc. Canada corporation 100%
BCAM Technologies, Inc. New York corporation 100% - Inactive
BCA Services, Inc. New York corporation 100% of Common
0% of the
Preferred Stock
----------
* After giving effect to the stock issued to the Noteholders
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SCHEDULE VI
INTELLECTUAL PROPERTY
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IMPLEO
EXECUTION COPY
BCAM INTERNATIONAL, INC.
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FIRST AMENDMENT
Dated as of April 14, 1998
to
Note Purchase Agreement
Dated as of September 19, 1997
------------------------------------
