Exhibit 10.3

 

SYPRIS SOLUTIONS, INC.

 

FIRST AMENDMENT

TO NOTE PURCHASE AGREEMENT

 

$7,500,000 4.73% Senior Notes, Series A

Due June 30, 2009

 

$27,500,000 5.35% Senior Notes, Series B

Due June 30, 2011

 

$20,000,000 5.78% Senior Notes, Series C

Due June 30, 2014

 

Dated as of August 3, 2005

 

To the Holders of the Senior Notes

of Sypris Solutions, Inc.

Named in the Attached Schedule I

 

Ladies and Gentlemen:

 

Reference is made to the Note Purchase Agreement dated as of June 1, 2004 (the
“Note Agreement”) among Sypris Solutions, Inc., a Delaware corporation (the
“Company”), and each of the Purchasers named in Schedule A thereto pursuant to
which the Company issued $7,500,000 aggregate principal amount of its 4.73%
Senior Notes, Series A, due June 30, 2009, $27,500,000 aggregate principal
amount of its 5.35% Senior Notes, Series B, due June 30, 2011 and $20,000,000
aggregate principal amount of its 5.78% Senior Notes, Series C, due June 30,
2014 (together, the “Notes”). You are referred to herein individually as a
“Holder” and collectively as the “Holders.” Capitalized terms used and not
otherwise defined in this First Amendment to Note Purchase Agreement (this
“Amendment”) shall have the meanings ascribed to them in the Note Agreement, as
amended hereby.

 

The Company has requested the amendment of Section 10.1 (Consolidated Net Debt)
of the Note Agreement to better conform to its operations and its bank facility.
The Holders have agreed to modify the Note Agreement on the terms and conditions
set forth herein.

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In consideration of the premises and for good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the Company and the Holders
agree as follows:

 

1. AMENDMENTS TO NOTE AGREEMENT

 

1.1. Amendment of Section 10.1. Section 10.1 of the Note Agreement is amended to
read in its entirety as follows:

 

“10.1 Consolidated Net Debt; Fixed Charge Coverage Ratio.

 

(a) The Company will not permit the ratio of Consolidated Net Debt to
Consolidated EBITDA (for the Company’s then most recently completed four fiscal
quarters) as of the last day of any fiscal quarter to be greater than the
following:

 

(i) 3.25 to 1.00 for the period of four fiscal quarters ending June 30, 2005;

 

(ii) 3.75 to 1.00 for the period of four fiscal quarters ending September 30,
2005;

 

(iii) 3.25 to 1.00 for the period of four fiscal quarters ending December 31,
2005; and

 

(iv) 3.00 to 1.00 for the period of four fiscal quarters ending March 31, 2006
and for the period of four fiscal quarters ending on each fiscal quarter
thereafter.

 

If, during the period for which Consolidated EBITDA is being calculated, the
Company or a Subsidiary has (i) acquired one or more Persons (or the assets
thereof) or (ii) disposed of one or more Subsidiaries (or substantially all of
the assets thereof), Consolidated EBITDA shall be calculated on a pro forma
basis (including adjustments to reflect consolidation savings) as if all of such
acquisitions and all such dispositions had occurred on the first day of such
period.”

 

(b) The Company shall not permit the Fixed Charge Coverage Ratio for any fiscal
quarter to fall below the following applicable ratio calculated as of the end of
the applicable fiscal quarter set forth below:

 

Fiscal Quarter Ending

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Applicable Minimum Ratio

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3/31/05

 

1.25 to 1.00

6/30/05

 

1.25 to 1.00

9/30/05

 

1.25 to 1.00

12/31/05

 

1.50 to 1.00

3/31/06

 

1.75 to 1.00

6/30/06 and thereafter

 

2.00 to 1.00”

 

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1.2. Schedule B. The following defined terms are added to Schedule B:

 

“EBIT” means, as the end of any fiscal quarter, the sum of the amounts for such
period of the Company’s (i) Consolidated Net Income, (ii) Consolidated Interest
Expense and (iii) provisions for taxes based on income for the previous four
fiscal quarters, determined on a consolidated basis in accordance with GAAP.

 

“Fixed Charge Coverage Ratio” means, as of any date, the ratio of (i) the sum of
the Company’s EBIT plus Operating Lease Rentals to (ii) the sum of the Company’s
Consolidated Interest Expense, plus Operating Lease Rentals.

 

“Operating Lease Rentals” means the periodic expense for the portion of
obligations with respect to non-capital leases determined on a consolidated
basis in accordance with GAAP.

 

2. REAFFIRMATION; REPRESENTATIONS AND WARRANTIES

 

2.1. Reaffirmation of Note Agreement. The Company reaffirms its agreement to
comply with each of the covenants, agreements and other provisions of the Note
Agreement and the Notes, including the additions and amendments of such
provisions effected by this Amendment.

 

2.2. Note Agreement. The Company represents and warrants that the
representations and warranties contained in the Note Agreement are true and
correct as of the date hereof, except (a) to the extent that any of such
representations and warranties specifically relate to an earlier date and (b)
for such changes, facts, transactions and occurrences that have arisen since
June 1, 2004 in the ordinary course of business, (c) such other matters as have
been previously disclosed in writing by the Company (including in its financial
statements and notes thereto) to the Holders and (d) other changes that could
not reasonably be expected to have a Material Adverse Effect, except for changes
in Indebtedness permitted by the Note Agreement.

 

2.3. No Default or Event of Default. After giving effect to the transactions
contemplated hereby, there will exist no Default or Event of Default.

 

2.4. Authorization. The execution, delivery and performance by the Company of
this Amendment have been duly authorized by all necessary corporate action and
do not require any registration with, consent or approval of, notice to or
action by, any Person (including any Governmental Authority) in order to be
effective and enforceable. The Note Agreement and this Amendment each constitute
the legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other 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).

 

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3. EFFECTIVE DATE

 

This Amendment shall become effective as of the date set forth above upon the
satisfaction of the following conditions:

 

3.1. Consent of Holders to this Amendment. Execution by the Holders of at least
a majority of the aggregate principal amount of the Notes outstanding and
receipt by the Holders of a counterpart of this Amendment duly executed by the
Company.

 

3.2. Amendment Fee. Each Holder shall have received payment of an amendment fee
equal to 0.20% of the principal amount of the outstanding Notes held by such
Holder.

 

3.3. Expenses. The Company shall have paid all fees and expenses of special
counsel to the Holders.

 

4. MISCELLANEOUS

 

4.1. Ratification. The Note Agreement, as amended hereby, shall remain in full
force and effect and is ratified, approved and confirmed in all respects.

 

4.2. Reference to and Effect on the Note Agreement. Upon the final effectiveness
of this Amendment, each reference in the Note Agreement and in other documents
describing or referencing the Note Agreement to the “Agreement,” “Note
Agreement,” “hereunder,” “hereof,” “herein,” or words of like import referring
to the Note Agreement, shall mean and be a reference to the Note Agreement, as
amended hereby.

 

4.3. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto.

 

4.4. Governing Law. This Amendment shall be governed by and construed in
accordance with Illinois law, excluding choice-of-law principles of the law of
such State that would require the application of the laws of a jurisdiction
other than such State.

 

4.5. Counterparts. This Amendment may be executed in any number of counterparts,
each executed counterpart constituting an original, but altogether only one
instrument.

 

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IN WITNESS WHEREOF, the Company and the Holders have caused this Amendment to be
executed and delivered by their respective officer or officers thereunto duly
authorized.

 

SYPRIS SOLUTIONS, INC.

By:

 

 

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Name:

 

 

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Title:

 

 

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S-1

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HOLDERS:

 

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

By:

 

 

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Name:

 

 

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Title:

 

 

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S-2

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CONNECTICUT GENERAL LIFE INSURANCE COMPANY

By:

 

CIGNA Investments, Inc. (authorized agent)

By:

 

 

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Name:

 

 

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Title:

 

 

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LIFE INSURANCE COMPANY OF NORTH AMERICA

By:

 

CIGNA Investments, Inc. (authorized agent)

By:

 

 

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Name:

 

 

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Title:

 

 

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S-3

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JEFFERSON PILOT FINANCIAL INSURANCE COMPANY

By:

 

 

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Name:

 

 

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Title:

 

 

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JEFFERSON-PILOT LIFE INSURANCE COMPANY

By:

 

 

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Name:

 

 

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Title:

 

 

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JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY

By:

 

 

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Name:

 

 

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Title:

 

 

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S-4

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SCHEDULE I

 

     Principal Amount

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Holder

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   Series A

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   Series B

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   Series C

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The Guardian Life Insurance Company of America

                 $ 20,000,000

Connecticut General Life Insurance Company

          $ 12,000,000       

Life Insurance Company of North America

            8,000,000       

Jefferson Pilot Financial Insurance Company

   $ 6,000,000              

Jefferson-Pilot Life Insurance Company

            5,000,000       

Jefferson Pilot LifeAmerica Insurance Company

     1,500,000      2,500,000       

 

Schedule I