KIRR XXXXXXX
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
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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"), Xxxxx X. Xxxx,
Xxxxxx Xxxxxxxxx, 621 Partners, X. Xxxx & Associates, Strafe & Company for the
account of Xxxxx X. Xxxx, Strafe & Company for the account of Xxxxx X. Xxxxxxx,
and Strafe and Company for the account of Xxxxx X. Xxxxxxxxxxx, (the "KM
Purchasers"), and WEXFORD MANAGEMENT LLC, as agent for the KM Purchasers 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 KM Purchasers 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 KM Purchasers has
heretofore purchased, the Company's 10%/13% convertible subordinated promissory
notes (the "Notes") in the aggregate principal amount of $1,000,000 pursuant to
the Agreement;
WHEREAS, concurrently with the Agreement, the Company entered into that
certain Note Purchase Agreement (the "Impleo Note Agreement") with Impleo LLC,
on terms substantially identical to the terms contained in the Agreement,
providing for the issuance of $5,000,000 principal amount of the Company's
10%/13% convertible subordinated promissory notes (the "Impleo Notes");
WHEREAS, the Company has requested the KM Purchasers to make certain
adjustments to the covenants and other terms of the Agreement;
WHEREAS, the KM Purchasers 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 KM Purchasers and the holders of the Impleo Notes collateral security for
the prompt payment when due and performance by the Company of its obligations
under the Notes and the Impleo Notes;
WHEREAS, the KM Purchasers 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 KM Purchasers 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 KM Purchasers one or more new Notes
(the "New Notes") in the aggregate principal amount of $1,000,000, in form and
substance identical to the Notes issued to the KM 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 KM Purchasers shall deliver to the
Company the original Note issued pursuant to the Purchase Agreement.
1.2 Notes. Section 8.9 of the Agreement shall and is hereby amended by
substituting the address under "With a copy to" under Purchaser's address with
the following:
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
1.3 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 KM
Purchasers, neither the Company nor any Subsidiary shall transfer any assets to
Drew Shoe Corporation, an Ohio corporation ("Drew"). With the consent of the KM
Purchasers, 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 KM Purchasers that BCAM Technologies, Inc., a New York
corporation ("BT-NY"), is inactive. The Company agrees that it will not transfer
any asset 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 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.
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1.5 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 required by Section 4.1(a) of the
Agreement to the KM Purchasers 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 KM Purchasers hereby waive (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 KM
Purchasers 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 KM Purchasers agree
as follows:
(i) Concurrently herewith, each of the Company and BCAM Technologies, Inc.
("BT") and 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 of the Capital Stock of each of Drew and BT,
(B) 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
Services, Inc., a New York corporation ("BCA").
(iii) Concurrently herewith, the Company shall deliver to the KM
Purchasers such Certificates evidencing the issuance to the KM Purchasers
of 1.67% of the issued and outstanding shares of common stock of each of
Drew and BT;
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(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, 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 KM
Purchasers 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, at 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 KM
Purchasers agrees to cancel and return to the Company 66,667 Warrants to
purchase 66,667 Shares of the Company previously issued to the KM Purchasers
pursuant to the Warrant Agreement. Concurrently with the delivery by the KM
Purchasers to the Company of Warrant Certificates issued pursuant to the Warrant
Agreement, the Company shall execute and deliver to the KM Purchasers one or
more Warrant Certificates in the amount of 333,333 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 KM Purchasers shall have received executed
counterparts of this First Amendment, duly executed by the KM Purchasers and the
Company.
(b) Opinion of Counsel. The KM Purchasers shall have received from Ruskin,
Moscou, Xxxxx & Faltischek, P.C., counsel to the Company, a favorable opinion
dated the date of this First Amendment, which opinion shall be in form and
substance satisfactory to the KM Purchasers.
(c) Security Agreement. The Agent and each of the Company, BT and BCA have
executed and delivered the Security Agreement substantially in the form of
Exhibit A attached hereto.
(d) Stock Pledge Agreement. The Agent and the Company 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 KM
Purchasers stock certificates evidencing 1.67% of the issued and outstanding
common
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stock of each of Drew and BT, which shares shall be allocated pro rata among the
holders of the notes.
(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 Impleo 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
KM Purchasers, and the KM Purchasers 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 KM Purchasers 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 KM Purchasers long-form good standing certificates for
Drew, BT, HCS and BCA.
(j) Payment of Fees. The KM Purchasers shall have received evidence that
the Company has paid the fees and disbursements of XxXxxxxxx, Will & Xxxxx,
counsel to the Purchaser, in connection with the negotiation, preparation,
approval, execution and delivery of the Transaction Documents and (ii) any
unpaid fees and disbursements owed to Berlack, Israels & Xxxxxxxx LLP, prior
counsel to the KM Purchasers..
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 KM Purchasers 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 KM Purchasers:
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(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 KM
Purchasers.
(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.
6. AGENCY PROVISIONS
6.1 Appointment. The KM Purchasers 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 KM Purchasers acknowledges and agrees that the Agent will also
act as agent for the holders of the Impleo Notes. This appointment is coupled
with an interest, and the Company as well as the KM Purchasers and the holders
of Impleo 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
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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 and the Noteholders, 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 KM Purchasers agree, jointly and severally, to
indemnify, save and hold the Agent 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
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.
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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 KM Purchasers. The KM Purchasers' 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 KM Purchasers
thereafter to demand strict compliance and performance therewith. Except as
specifically provided herein, any suspension or waiver by the KM Purchasers 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 KM Purchasers, 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 KM Purchasers 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.
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.
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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.
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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
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Xxxxxxx Xxxxxxx
President
WEXFORD MANAGEMENT LLC,
As Agent
By
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Xxxxxx Xxxxxx
By
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Xxxxx X. Xxxx
By
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Xxxxxx Xxxxxxxxx
621 PARTNERS
By
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X. XXXX & ASSOCIATES
By
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[Signatures continued on following page]
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STRAFE & COMPANY
for the account of Xxxxx X. Xxxx
By
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STRAFE & COMPANY
for the account of Xxxxx X. Xxxxxxx
By
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STRAFE & COMPANY
for the account of Xxxxx X. Xxxxxxxxxxx
By
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SCHEDULE II
SUBSIDIARIES
Company's
Jurisdiction of Form Of Percentage
Name Organization Entity Ownership
---- ------------ ------- ---------
Drew Shoe
Corporation Ohio corporation 90%*
BCAM
Technologies, Inc. Delaware corporation 90%*
BCAM New York corporation 100%
Technologies, Inc.
Human Cad
Systems Inc. Ontario corporation 100%
BCA Services, Inc. New York corporation 100% of the
Common Stock
0% of the
Preferred Stock
* After giving effect to the stock issued to the Noteholders,
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