Document:

Exhibit 10.5

 

Exhibit 10.5

FIRST AMENDMENT TO CONVERTIBLE SENIOR 

SUBORDINATED ZERO-COUPON PROMISSORY NOTE 

     THIS FIRST AMENDMENT TO CONVERTIBLE SENIOR SUBORDINATED ZERO-COUPON PROMISSORY NOTE (this
“Amendment”) is made and entered into as of the 10th day of December, 2007, by and among
Third Wave Technologies, Inc., a Delaware corporation (the “Company”), and Stark Onshore Master
Holding LLC (“Holder”).

STATEMENT OF PURPOSE

     The Company is indebted to Holder pursuant to that certain Convertible Senior Subordinated
Zero-Coupon Promissory Note dated December 20, 2006, in the original principal amount at maturity
of $20,000,000 (the “Note”). The Company and Holder have agreed to certain modifications and
amendments to the Note as provided for herein.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:

	1.	 	Amendment of Section 4. Section 4 of the Note is hereby amended by adding the following
clauses at the end thereof:

	 	(xii)	 	any “event of default” under (and as defined in) any agreement
evidencing Subordinated Indebtedness; or

	 
	 	(xiii)	 	the validity of or the Securities Purchase Agreement or this Note shall be
contested by any legislative, executive or judicial body of any jurisdiction,
or any treaty, law, regulation, communiqué, decree, ordinance or policy of any
jurisdiction shall purport to render any material provision of the Securities
Purchase Agreement or this Note invalid or unenforceable or shall purport to
prevent or materially delay the performance or observance by the Company of its
obligations under the Securities Purchase Agreement or this Note;

	 
	 	(xiv)	 	there is a failure to perform in any agreement to which the Company is
a party with a third party or parties resulting in a right by such third party
or parties to accelerate the maturity of any Indebtedness in an amount in
excess of $500,000, and such acceleration right is exercised;

	 
	 	(xv)	 	the Company makes any payment on account of Subordinated Indebtedness
except as permitted by the Subordination Agreement;

	 
	 	(xvi)	 	Any license, permit or approval held by the Company from any
Government Authority shall have been suspended, canceled or revoked and such
suspension, cancellation or revocation could reasonably be expected to have a
Material Adverse Effect, and such suspension, cancellation or revocation .shall
not have been cured within 30 days;

 

 

	 	(xvii)	 	The Company has failed to comply with the requirements of the Securities
Exchange Act of 1934 in a manner which could reasonably be expected to have a
Material Adverse Effect; or

	 
	 	(xviii)	 	if the Cash and Cash Equivalents is less than $18,500,000.

	2.	 	Amendment of Section 6. Section 6 of the Note is hereby amended by adding the following
clauses at the end thereof:

	 	(c)	 	Payments on Subordinated Indebtedness. So long as this Note is
outstanding, the Company shall not make any payment on Subordinated
Indebtedness except as permitted by the Subordination Agreement.

	 
	 	(d)	 	Amendments to Subordinated Debt Documents. So long as this Note
is outstanding, the Company shall not agree to any modification or amendment of
any Subordinated Documents (as such term is defined in the Subordination
Agreement) that is prohibited by the Subordination Agreement.

	3.	 	Amendment of Section 19. Section 19 of the Note is hereby amended as follows:

	 	(a)	 	The following definitions are added:

	 	(i)	 	“Cash and Cash Equivalents” means the amount shown as
such on the consolidated balance sheet of the Company and its subsidiaries at
the time such balance sheet is filed with the SEC on Form 10-Q or Form 10-K
under the Securities Exchange Act of 1934 or otherwise made available to the
Company’s stockholders.

	 
	 	(ii)	 	“Government Authority” means any government,
governmental department, ministry, cabinet, commission, board, bureau, agency,
tribunal, regulatory authority, instrumentality, judicial, legislative, fiscal,
or administrative body or entity, domestic or foreign, federal, state or local
having jurisdiction over the matter or matters and Person or Persons in
question, including, without limitation, the SEC.

	 
	 	(iii)	 	“Material Adverse Effect” means a material adverse
effect on (a) the business, operations, prospects, condition (financial or
otherwise) or property of the Company, (b) the validity or enforceability of
any provision of the Securities Purchase Agreement or this Note, (c) the
ability of the Company to timely perform its obligations under the Securities
Purchase Agreement or this Note or (d) the rights and remedies of Holder under
the Securities Purchase Agreement or this Note.

	 
	 	(iv)	 	“Subordinated Indebtedness” is defined in the
Subordination Agreement by and between the Holder and Deerfield Private Design
Fund, L.P. and Deerfield Private Design International, L.P. dated December 10,
2007.

	 	(b)	 	The definition of “Change of Control” is amended and restated to read
as follows:

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	 	(i)	 	“Change of Control” means any Major Transaction (as
such term is defined in subsection (a)(ii) of Article II of the Subordination
Agreement) or any Fundamental Transaction other than (i) any reorganization,
recapitalization or reclassification of the Common Stock in which holders of
the Company’s voting power immediately prior to such reorganization,
recapitalization or reclassification continue after such reorganization,
recapitalization or reclassification to hold publicly traded securities and,
directly or indirectly, the voting power of the surviving entity or entities
necessary to elect a majority of the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities, or
(ii) pursuant to a migratory merger effected solely for the purpose of changing
the jurisdiction of incorporation of the Company.

	4.	 	Full Force and Effect. Except as expressly provided herein, this Amendment shall not amend
or modify the terms and conditions of the Note, which terms and conditions shall remain in
full force and effect.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under
seal as of the date first above written.

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	THIRD WAVE TECHNOLOGIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kevin Conroy
	 

	 	 	 	 
	 

	 	Name:
	 	Kevin Conroy
	 

	 	Title:
	 	President and CEO
	 
	 	 	 	 
	 

	 	STARK ONSHORE MASTER HOLDING LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Brian H. Davidson
	 

	 	 	 	 
	 

	 	By:
	 	STARK OFFSHORE MANAGEMENT LLC, its Manager
	 

	 	Name:
	 	Brian H. Davidson
	 

	 	Title:
	 	MemberEx-10.21 Revolving Loan and Credit Agreement

 

Exhibit 10.21

EIGHTH MODIFICATION TO 

CREDIT AGREEMENT (RESTATED) AND PROMISSORY NOTE

THIS EIGHTH MODIFICATION TO CREDIT AGREEMENT (RESTATED) AND PROMISSORY NOTE (the “Amendment”) is
dated this the 30th day of October, 2007, effective as of November 1, 2007 by and among
FRED’S, INC., a Tennessee corporation (the “Borrower”), FRED’S STORES OF TENNESSEE, INC. (the
“Guarantor”), and REGIONS BANK (the “Lender”).

RECITALS:

     A. The Borrower and the Lender entered into a Credit Agreement (Restated) dated as of April 3,
2000 (as amended and restated from time to time, the “Credit Agreement”). In connection
with the Credit Agreement, the Borrower executed that certain Promissory Note in the original
principal amount not exceeding $40,000,000, dated April 3, 2000 (as amended and restated from time
to time, the “Note”).

     B. The Borrower and the Lender previously entered into: (i) a Modification Agreement (the
“First Modification”) dated May 26, 2000; (ii) a Second Modification Agreement (the “Second
Modification”) dated April 30, 2002; (iii) a Third Modification Agreement (the “Third
Modification”) dated July 31, 2003; (iv) a Fourth Modification Agreement (the “Fourth
Modification”) dated June 28, 2004; (v) a Fifth Modification Agreement (the “Fifth Modification”)
dated October 19, 2004, effective October 20, 2004; (vi) a Sixth Modification Agreement (the “Sixth
Modification”) dated July 29, 2005, effective June 29, 2005; and (vii) a Seventh Modification
Agreement dated September 30, 2005, effective October 10, 2005.

     C. The Borrower, the Lender, and the Guarantor desire to amend the Credit Agreement and Note
as set forth in this Amendment.

     D. Terms not defined herein shall have the meanings ascribed to such terms in the Credit
Agreement.

     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:

     1. Additional Definition. Section 2.1 of the Credit Agreement concerning
“Definitions” is amended by adding the following new definition in the appropriate alphabetical
order:

     “Change in Control” shall mean the occurrence of one or more of the following
events: (a) any sale, lease, exchange or other transfer (in a single transaction or a
series of related transactions) of all or substantially all of the assets of the
Borrower to any Person or “group” (within the meaning of the Securities Exchange Act
of 1934 and the rules of the Securities and Exchange Commission thereunder in effect
on the date hereof), (b) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or “group” (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof) of 30% or more of the
outstanding shares of the voting stock of the Borrower; or (c) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were neither (i) nominated by the current board of directors
or (ii) appointed by directors so nominated.

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     2. Change in Definition. Section 2.1 of the Credit Agreement concerning “Definitions”
is amended to delete the prior definition of “Commitment” and the following is substituted in lieu
thereof:

     “Commitment” means the sum of $75,000,000. Notwithstanding the use of the term
“commitment” with respect to the calculation of fees, the actual amount which the
Lender has agreed to lend or provide credit to the Borrower shall be limited to the
ratios and conditions in this Credit Agreement.

     3. Revision to Use of Proceeds Provision. Section 3.8 of the Credit Agreement
concerning “Use of Loans” is amended to add the repurchase of shares of common stock of Borrower as
a permissible use of proceeds of Advances.

     4. Revision of Commitment Amount. Section 4.1 of the Credit Agreement concerning
“Commitment” is deleted and the following is substituted in lieu thereof:

     4.1 Commitment. Subject to and upon the terms and conditions herein set
forth, the Lender agrees to lend to the Borrower, and the Borrower may borrow from the
Lender an amount not exceeding Seventy-Five Million Dollars ($75,000,000.00) (the
“Commitment”) the same to be advanced from time to time and repaid in accordance with
the terms hereof (the “Loan”). The Loan shall be used to finance its acquisition of
inventory, for general business purposes, to repurchase shares of the common stock of
Borrower and to generally finance the business operations of the Borrower.

     5. Amendment to Events of Default. Section 9.1.1 of the Credit Agreement is deleted
and the following is substituted in lieu thereof:

     9.1.1 Any representation or warranty made by the Borrower herein, in any other
Loan Document, or in any certificate or report furnished by Borrower hereunder or
thereunder, shall prove to have been incorrect in any material adverse effect when
made.

     6. Additional Event of Default. Section 9.1.10 of the Credit Agreement which is a
listed Event of Default is deleted and the following is inserted in lieu thereof as an Event of
Default:

     9.1.10 A Change in Control with respect to the Borrower or the Guarantor.

     7. Article 10 Amendments. Article 10 of the Credit Agreement entitled “Miscellaneous”
is amended by adding the following as Sections 10.14 and 10.15 thereto:

     10.14 Right of Setoff. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, the Lender shall
have the right, at any time or from time to time upon the occurrence and during the
continuance of an Event of Default, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by applicable
law, to set off and apply against all deposits (general or special, time or demand) of
the Borrower at any time held or other obligations at any time owing by the Lender to
or for the credit or the account of the Borrower against any and all Obligations held
by the Lender, irrespective of whether the Lender shall have previously made demand
hereunder. The Lender agrees promptly to notify the Borrower after any such set-off
and any application made by the Lender; provided, that the failure to give such notice
shall not affect the validity of such set-off and application.

     10.15 USA Patriot Act Notice. The Lender hereby notifies the Borrower
that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into

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law October 26, 2001)) (the “Patriot Act”), it is required to obtain,
verify and record information that identifies the Borrower and the Guarantor, which
information includes the name and address of the Borrower and the Guarantor and other
information that will allow the Lender to identify the Borrower and the Guarantor in
accordance with the Patriot Act.

     8. Amendment to Note. The Note is amended to revise the principal amount thereof from
Fifty Million Dollars ($50,000,000) to Seventy-Five Million Dollars ($75,000,000).

     9. Up-Front Fee. In consideration for the increase of the Commitment pursuant to this
Amendment, the Borrower shall pay Lender a fee (“Up-Front Fee”) in an amount equal to five basis
points (5 bp) of the amount of the increase set forth herein, equaling the sum of Twelve Thousand
Five Hundred and 00/100 Dollars ($12,500.00). The amount shall be pro rated based upon the
participation in the Credit Agreement. Bank of America shall receive thirty-seven and one-half of
one percent (37.5%) of the fee which equals $4,687.50, and Regions shall receive sixty-two and
one-half of one percent (62.5%) of the fee which equals $7,812.50.

     10. Other Documents. All other documents executed and delivered in connection with
the Credit Agreement are hereby amended to the extent necessary to conform to this Amendment.

     11. Representations and Warranties. To induce the Lender to enter into this
Amendment, the Borrower hereby represents and warrants to the Lender that:

     (a) Reaffirmation. As of the date of this Amendment and after giving effect to
this Amendment, the representations and warranties set forth in Article 3 of the
Credit Agreement are true and correct in all material respects (except to the extent that any
such representation or warranty relates to a specified earlier date, and except for changes
in facts and circumstances that are not prohibited by the terms of the Credit Agreement); and

     (b) No Default. As of the date hereof and after giving effect to this
Amendment, no Event of Default has occurred and is continuing.

     12. Payment of Expenses. The Borrower agrees to pay or reimburse the Lender for all
its reasonable out-of-pocket costs and expenses incurred in connection with the preparation and
execution of this Amendment.

     13. Counterparts. This Amendment may be executed by one or more of the parties hereto
on any number of separate counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.

     14. Severability; Headings. Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The section and subsection headings used
in this Amendment are for convenience of reference only and are not to affect the construction
hereof or to be taken into consideration in the interpretation hereof.

     15. Continuing Effect of Other Documents. This Amendment shall not constitute an
amendment or waiver of any other provision of the Credit Agreement and Note not expressly referred
to herein and, except to the extent that the Credit Agreement and Note has been amended hereby,
shall not be construed as a waiver or consent to any further or future action on the part of the
Borrower that would require a waiver or consent of the Lender. Except as expressly amended,
modified or supplemented hereby, the provisions of the Credit Agreement, the Note and the Loan
Documents are and shall remain in full force and effect.

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     16. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF TENNESSEE.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Eighth Modification to Credit
Agreement (Restated) and Promissory Note as of the day and date first set forth above.

	 	 	 	 	 
	 	FRED’S, INC., the Borrower

 	 
	 	By:  	/s/ Jerry A Shore
 	 
	 
	 	Title:	      Executive Vice-President & Chief Financial Officer 	 
	 	 	 	 
	 
	 	REGIONS BANK, as Lender

 	 
	 	By:  	/s/ Brian W. Ford
 	 
	 
	 	Title:    	   Senior Vice-President 	 
	 	 	 	 
	 

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CONSENT OF GUARANTOR

The undersigned, as Guarantor, hereby executes this Amendment to evidence its consent thereto, as
well as the transactions contemplated thereby, and agrees that the Guaranty Agreement dated March
27, 2000, effective April 3, 2000, remains in full force and effect.

	 	 	 	 	 
	 	FRED’S STORES OF TENNESSEE, INC.

 	 
	Date: October 30, 2007 	By:  	/s/ Jerry A. Shore
 	 
	 
	 	Title:   	             Vice-President 	 
	 	 	 	 
	 

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