Document:

dxpe201210k_ex10-27.htm

FIRST AMENDMENT TO THE CREDIT AGREEMENT

AND INCREMENTAL INCREASE AGREEMENT

Dated as of December 31, 2012

 

This FIRST AMENDMENT TO THE CREDIT AGREEMENT AND INCREMENTAL INCREASE AGREEMENT (this “Amendment”) is by and among DXP ENTERPRISES, INC., a Texas corporation (“US Borrower”), DXP CANADA ENTERPRISES LTD., a corporation organized under the laws of British Columbia, Canada (“Canadian Borrower” and together with US Borrower, the “Borrowers”), the lenders who are party to this Amendment (the
“Consenting Lenders”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”).

 

PRELIMINARY STATEMENTS

 

WHEREAS, the Borrowers, the lenders party thereto (the “Lenders”) and the Administrative Agent entered into a Credit Agreement dated as of July 11, 2012 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”); and

 

WHEREAS, the Borrowers have requested (i) (a) an Incremental Term Loan to the US Borrower in an aggregate principal amount of $37,500,000 and (b) a Revolving Credit Facility Increase in an aggregate principal amount of $37,500,000, in each case in accordance with Section 5.13 of the Credit Agreement, and (ii) to amend the Credit Agreement as specifically set forth herein; and

 

WHEREAS, subject to the terms of this Amendment, (i) certain of the Lenders party hereto and each financial institution party hereto as an “Additional Term Loan Lender” (collectively, the “Incremental Term Loan Lenders”)  are severally willing to make a portion of the Incremental Term Loan, (ii) certain of the Lenders party hereto and each financial institution party hereto as an “Additional Revolving Credit Lender” (collectively, the “Incremental Revolving Credit Lenders”) are severally willing to provide a portion of the
Revolving Credit Facility Increase and (iii) the Administrative Agent and the Consenting Lenders have agreed to amend the Credit Agreement as specifically set forth herein;

 

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

 

Section 1. Capitalized Terms.  All capitalized terms not otherwise defined in this Amendment (including without limitation in the introductory paragraph and the Preliminary Statements hereto) shall have the meanings as specified in the Credit Agreement.

 

Section 2. Amendments to Credit Agreement.  Subject to and in accordance with the terms and conditions set forth herein the Administrative Agent and the Lenders party hereto hereby agree as follows:

 

(a) new definitions of “Applicable Designee,” “First Amendment Effective Date” and ”Incremental Term Loan Commitment” are hereby added to Section 1.1 of the Credit Agreement in appropriate alphabetical order to read in its entirety as follows:

 

“Applicable Designee” means any office, branch or Affiliate of a Revolving Credit Lender designated thereby from time to time with the consent of the Administrative Agent and the US Borrower (which such consents shall not be unreasonably withheld or delayed) to fund all or any portion of such Revolving Credit Lender’s Revolving Credit Commitment with respect to any Canadian Revolving Credit Loans under this Agreement.  Each Applicable Designee will be subject at all times to the terms and provisions of this Agreement.  Notwithstanding the designation by any Revolving Credit Lender of an Applicable Designee, the
Borrowers and the Administrative Agent shall be permitted to deal solely and directly with such Revolving Credit Lender in connection with such Revolving Credit Lender’s rights and obligations under this Agreement, and no such designation shall relieve any such Revolving Credit Lender of its obligations hereunder.

 

“First Amendment Effective Date” means December 31, 2012.

 

“Incremental Term Loan Commitment” means the commitment of any Lender to make an Incremental Term Loan to the Borrower in accordance with Section 5.13.  The aggregate Incremental Term Loan Commitment of all applicable Term Loan Lenders on the First Amendment Effective Date shall be $37,500,000.  The Incremental Term Loan Commitment of each Term Loan Lender, as of the First Amendment Effective Date, is set forth opposite the name of such Lender on Schedule 1.1(c).

 

(b) the definition of “Canadian Swingline Sublimit” is hereby amended by replacing “$5,000,000” with “$15,000,000”.

 

(c) the definition of “Permitted Acquisition” is hereby amended as follows:

 

(i) clause (i) of such definition is hereby amended by replacing “$35,000,000” with “$25,000,000”; and

 

(ii) the proviso at the end of such definition is hereby amended and restated as follows:

 

“provided, however, if the consideration paid for any such Acquisition (or series of related Acquisitions) does not exceed 10% of Consolidated Net Worth, then the US Borrower shall not be subject to the requirements set forth in clauses (e), (f), (i) or (j).”

 

(d) the definition of “Revolving Credit Commitment” is hereby amended by replacing the last two sentences of such definition with the following two sentences:

 

“The aggregate Revolving Credit Commitment of all the Revolving Credit Lenders on the First Amendment Effective Date shall be $262,500,000.  The Revolving Credit Commitment of each Revolving Credit Lender, as of the First Amendment Effective Date, is set forth opposite the name of such Lender on Schedule 1.1(c).”

 

(e) the definition of “Revolving Credit Commitment Percentage” is hereby amended by replacing the last sentence of such definition with the following sentence:

 

“The Revolving Credit Commitment Percentage of each Revolving Credit Lender, as of the First Amendment Effective Date, is set forth opposite the name of such Lender on Schedule 1.1(c).”

 

(f) the definition of “Revolving Credit Lender” is hereby amended by adding the following sentence at the end of such definition:

 

With respect to (a) each provision of this Agreement relating to the making or the repayment of any Canadian Revolving Credit Loan, (b) any rights of set-off, (c) any rights of indemnification or expense reimbursement and (d) reserves, capital adequacy or other provisions, each reference to a “Revolving Credit Lender” shall be deemed to include such Revolving Credit Lender’s Applicable Designee with respect to the portion of such Revolving Credit Lender’s Commitment funded by such Applicable Designee.

 

(g) the definition of “Term Loan Percentage” is hereby amended by replacing such definition in its entirety with the following:

 

“Term Loan Percentage” means, with respect to any Term Loan Lender at any time, the percentage of the total outstanding principal balance of the Term Loans or Incremental Term Loans, as applicable, represented by the outstanding principal balance of such Term Loan Lender’s Term Loans or Incremental Term Loans, respectively.  The Term Loan Percentage of each Term Loan Lender as of the First Amendment Effective Date is set forth opposite the name of such Lender on Schedule 1.1(c).”

 

(h) Section 4.3 of the Credit Agreement is hereby amended by replacing such Section in its entirety with the following:

 

           “SECTION 4.3                                Repayment of Term Loans.

 

(a)           Repayments of Initial Term Loans.  The US Borrower shall repay the aggregate outstanding principal amount of the Initial Term Loan in consecutive quarterly installments on the last Business Day of each of March, June, September and December commencing September 30, 2012 as set forth below, except as the amounts of individual installments may be adjusted pursuant to Section 4.4 hereof:

 

	
Payment Date

	
Principal Installment

	
September 30, 2012

	
$3,750,000

	
December 31, 2012

	
$3,750,000

	
March 31, 2013

	
$3,750,000

	
June 30, 2013

	
$3,750,000

	
September 30 2013,

	
$3,750,000

	
December 31, 2013

	
$3,750,000

	
March 31, 2014

	
$3,750,000

	
June 30, 2014

	
$3,750,000

	
September 30, 2014

	
$5,000,000

	
December 31, 2014

	
$5,000,000

	
March 31, 2015

	
$5,000,000

	
June 30, 2015

	
$5,000,000

	
September 30 2015,

	
$6,250,000

	
December 31, 2015

	
$6,250,000

	
March 31, 2016

	
$6,250,000

	
June 30, 2016

	
$6,250,000

	
September 30, 2016

	
$6,250,000

	
December 31, 2016

	
$6,250,000

	
March 31, 2017

	
$6,250,000

	
Term Loan Maturity Date

	
Remaining Outstanding Principal Amount

 

If not sooner paid, the Initial Term Loan shall be paid in full, together with accrued interest thereon, on the Term Loan Maturity Date.

 

(b)           Repayments of Incremental Term Loans.  The US Borrower will repay the aggregate outstanding principal of the Incremental Term Loan in consecutive quarterly installments on the last Business Day of each of March, June, September and December commencing March 31, 2013 as set forth below, except as the amounts of individual installments may be adjusted pursuant to Section 4.4 hereof:

 

	
Payment Date

	
Principal Installment

	
March 31, 2013

	
$1,406,250

	
June 30, 2013

	
$1,406,250

	
September 30, 2013

	
$1,406,250

	
December 31, 2013

	
$1,406,250

	
March 31, 2014

	
$1,406,250

	
June 30, 2014

	
$1,406,250

	
September 30, 2014

	
$1,875,000

	
December 31, 2014

	
$1,875,000

	
March 31, 2015

	
$1,875,000

	
June 30, 2015

	
$1,875,000

	
September 30, 2015

	
$2,343,750

	
December 31, 2015

	
$2,343,750

	
March 31, 2016

	
$2,343,750

	
June 30, 2016

	
$2,343,750

	
September 30, 2016

	
$2,343,750

	
December 31, 2016

	
$2,343,750

	
March 31, 2017

	
$2,343,750

	
Term Loan Maturity Date

	
Remaining outstanding

principal amount

If not sooner paid, the Incremental Term Loan shall be paid in full, together with accrued interest thereon, on the Term Loan Maturity Date.

 

(i) clause (A) to the proviso of Section 5.13(a) of the Credit Agreement is hereby amended by replacing “$100,000,000” with “$175,000,000”.

 

(j) clauses (a) and (b) of Section 8.1 of the Credit Agreement are hereby amended to delete the parenthetical “(or, if earlier, on the date of any required public filing thereof)” in each such clause.

 

(k) Schedule 1.1(c) to the Credit Agreement is hereby replaced in its entirety with Schedule 1.1(c) attached hereto.

 

Section 3. Incremental Increases.

 

(a) Upon the terms and subject to the conditions of, and in reliance upon the representations and warranties made under this Amendment, (i) each Incremental Term Loan Lender hereby severally agrees (A) that it is a Term Loan Lender under the Credit Agreement with respect to its Incremental Term Loan Commitment, and (B) to make an Incremental Term Loan in a principal amount equal to its Incremental Term Loan Commitment to the US Borrower in a single draw on the First Amendment Effective Date and (ii) each Incremental Revolving Credit Lender hereby severally agrees (A) that it is a Revolving Credit Lender under
the Credit Agreement with respect to its Revolving Credit Commitment and (B) to make Revolving Credit Loans from time to time from the First Amendment Effective Date through, but not including, the Revolving Credit Maturity Date in accordance with the terms of Section 2.3 of the Credit Agreement.

 

(b) The Incremental Term Loan shall be subject to mandatory prepayments pursuant to Section 4.4(b) of the Credit Agreement (ratably between the Term Loan and the Incremental Term Loan) with such prepayment to be applied to the scheduled principal payments of the Incremental Term Loan on a pro rata basis according to the amount of each such scheduled payment.

 

(c) The Incremental Term Loans shall bear interest in accordance with Section 5.1 of the Credit Agreement at the same rate (including Applicable Rate) as the Term Loans.

 

(d) The proceeds of the Incremental Term Loans shall be used for general corporate purposes of the US Borrower and its Subsidiaries.

 

(e) Except to the extent otherwise set forth herein, the terms and conditions applicable to the Incremental Term Loan shall be the same as the terms and conditions applicable to the Term Loans.  Amounts of the Incremental Term Loan that are repaid or prepaid may not be reborrowed.

 

(f) Each Incremental Term Loan made on the First Amendment Effective Date shall be deemed to be an “Incremental Term Loan” for all purposes of the Loan Documents.  Nothing in this Amendment shall affect the amount or terms of the Initial Term Loans which were funded on the Closing Date.

 

Section 4. Additional Lenders and Commitments.

 

(a) Each financial institution party hereto as an “Additional Term Loan Lender” and/or an “Additional Revolving Credit Lender” (each, an “Additional Lender”) agrees that effective as of the First Amendment Effective Date, it shall (i) be a party to the Credit Agreement and the other Loan Documents, (ii) be a “Lender”, a “Revolving Credit Lender” and/or “Term Loan Lender”, as applicable, for all purposes of the Credit Agreement and the other Loan Documents,
(iii) perform all of the obligations that are required to be performed by it as a “Lender”, “Revolving Credit Lender” and/or “Term Loan Lender”, as applicable, under the terms of the Credit Agreement and shall be entitled to the benefits, rights and remedies set forth therein and in each of the other Loan Documents.  Each Additional Lender acknowledges that it has made its own independent investigation and credit evaluation of the Borrowers in connection with entering into this Amendment.

 

(b) Each Additional Lender confirms its respective Incremental Term Loan Commitment and/or Revolving Credit Commitment as set forth on Schedule 1.1(c) hereto.

 

(c) Effective on the First Amendment Effective Date, the outstanding Revolving Credit Loans and Revolving Credit Commitment Percentages of Swingline Loans and L/C Obligations will be reallocated by the Administrative Agent among the Revolving Credit Lenders (including the Additional Lenders participating in the Revolving Credit Facility Increase) in accordance with their revised Revolving Credit Commitment Percentages (and such Revolving Credit Lenders agree to make all payments and adjustments necessary to effect such reallocation and the US Borrower shall pay any and all costs required pursuant to
Section 5.9 in connection with such reallocation as if such reallocation were a repayment).

 

Section 5. Conditions of Effectiveness.  The effectiveness of this Amendment and the obligation of each Additional Lender to makes Loans on the First Amendment Effective Date shall be subject to the satisfaction of each of the following conditions precedent (the date on which all such conditions are satisfied, the “First Amendment Effective Date”):

 

(a) the Administrative Agent shall have received counterparts of this Amendment executed by each Borrower, each other Credit Party, the Administrative Agent, the Required Lenders, the Incremental Term Loan Lenders and the Incremental Revolving Credit Lenders;

 

(b) the Administrative Agent shall have received counterparts of Notes in favor of each applicable Lender (in each case, if requested thereby), duly executed by the applicable Borrower thereto;

 

(c) the representations and warranties of the Borrowers contained in Section 6 shall be true and correct;

 

(d) the Administrative Agent shall have received a certificate of a Responsible Officer of the US Borrower certifying that attached thereto is a true, correct and complete copy of resolutions duly adopted by the board of directors (or equivalent) of the US Borrower authorizing and approving the transactions contemplated hereunder and the execution, delivery and performance of this Amendment and the other Loan Documents executed in connection herewith to which it is a party;

 

(e) the Administrative Agent shall have received a certificate from a Financial Officer of the US Borrower setting forth reasonably detailed calculations demonstrating pro forma compliance with Section 9.12 of the Credit Agreement based on the financial statements most recently delivered pursuant to Section 8.1 of the Credit Agreement after giving effect to the Incremental Increases made pursuant to this Amendment (assuming that the entire Incremental Term Loan and Revolving Credit
Facility Increase is fully funded on the First Amendment Effective Date);

 

(f) all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees, charges and disbursements of legal counsel for the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment) shall have been paid by the Borrowers; and

 

(g) the US Borrower shall have paid all fees payable to the Arranger pursuant to that certain engagement letter dated as of September 19, 2012 by and among the US Borrower and the Arranger.

 

Section 6. Representations and Warranties of the Borrowers.  Each Borrower represents and warrants as follows:

 

(a) The execution, delivery and performance by such Borrower of its obligations in connection with this Amendment are within its corporate (or other organizational) powers, have been duly authorized by all necessary corporate (or other organizational) action and do not and will not (i) violate any provision of its articles or certificate of incorporation or bylaws or similar organizing or governing documents of such Borrower, (ii) contravene any Applicable Law which is applicable to such Borrower, (iii) conflict with, result in a breach of or constitute (with notice, lapse of time or both) a default under any
material indenture or instrument or other material agreement to which such Borrower is a party, by which it or any of its properties is bound or to which it is subject, or (iv) except for the Liens granted in favor of the Administrative Agent pursuant to the Security Documents, result in or require the creation or imposition of any Lien upon any of its properties or assets, except, in the case of clauses (ii) and (iii) above, to the extent such contraventions, conflicts, breaches or defaults could not reasonably be expected to have a Material Adverse Effect.

 

(b) Such Borrower has taken all necessary corporate (or other organizational) action to execute, deliver and perform this Amendment and has validly executed and delivered each of this Amendment.  This Amendment constitutes the legal, valid and binding obligation of such Borrower enforceable against such Borrower in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally, by general equitable principles or by principles of good faith and fair
dealing.

 

(c) No material consent, approval, authorization or other action by, notice to, or registration or filing with, any Governmental Authority or other Person is or will be required as a condition to or otherwise in connection with the due execution, delivery and performance by such Borrower of this Amendment except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents.

 

(d) After giving effect to this Amendment, the representations and warranties contained in each of the Loan Documents are true and correct in all material respects on and as of the date hereof as though made on and as of such date (other than any such representations or warranties that, by their terms, refer to a specific date, in which case as of such specific date).

 

(e) No Default or Event of Default shall exist immediately prior to and after giving effect to (i) this Amendment, (ii) the Incremental Increases and (iii) any Extension of Credit made in connection herewith.

 

(f) The aggregate amount of Indebtedness incurred and outstanding pursuant to Section 9.1(l) of the Credit Agreement, prior to and after giving effect to the Incremental Increases, is less than $25,000,000.

 

Section 7. Reference to and Effect on the Loan Documents.  On and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit
Agreement, as amended by this Amendment and this Amendment shall constitute a Loan Document.

 

(a) The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.  Without limiting the generality of the foregoing, the Security Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Credit Parties under the Loan Documents, in each case as amended or converted by this Amendment.

 

(b) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

 

Section 8. Acknowledgement and Reaffirmation.  Each Borrower and each other Credit Party (a) agrees that the transactions contemplated by this Amendment shall not limit or diminish the obligations of such Person under, or release such Person from any obligations under, the Credit Agreement, the US Subsidiary Guaranty Agreement, the Canadian Subsidiary Guaranty Agreement, the US Borrower Guaranty Agreement, the US Collateral Agreement, the Canadian Collateral Agreement and each other Security Document to which it is a party, (b) confirms
and reaffirms its obligations under the Credit Agreement, the US Subsidiary Guaranty Agreement, the Canadian Subsidiary Guaranty Agreement, the US Borrower Guaranty Agreement, the US Collateral Agreement, the Canadian Collateral Agreement and each other Security Document to which it is a party and (c) agrees that the Credit Agreement, the US Subsidiary Guaranty Agreement, the Canadian Subsidiary Guaranty Agreement, the US Borrower Guaranty Agreement, the US Collateral Agreement, the Canadian Collateral Agreement and each other Security Document to which it is a party remain in full force and effect and are hereby reaffirmed.

 

Section 9. Execution in Counterparts.  This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.    Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a
manually executed counterpart of this Amendment.

 

Section 10. Governing Law.  This Amendment and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Amendment and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.

 

Section 11. Entire Agreement.  This Amendment and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, the Issuing Lender, the Swingline Lender and/or the Arranger, constitute the entire agreement among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

 

[Signature Pages Follow]

  

  

  

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

DXP ENTERPRISES, INC., as US Borrower

 

By:   /s/Mac McConnell                                                               

Name:  Mac McConnell

Title:     Senior Vice President, Chief

              Financial Officer and Secretary

 

DXP CANADA ENTERPRISES LTD., as Canadian Borrower

 

By:    /s/Mac McConnell                                                                  

Name:   Mac McConnell

Title:      Chief Financial Officer

 

DXP HOLDINGS, INC., as a US Subsidiary Guarantor

 

By:     /s/Mac McConnell                                                                

Name:    Mac McConnell

Title:      Vice President

 

PMI OPERATING COMPANY, LTD., as a US Subsidiary Guarantor

 

By:  PUMP-PMI, LLC, as General Partner

 

        By:    /s/Mac McConnell                                                             

        Name:   Mac McConnell

        Title:     Secretary and Treasurer

 

DXP Enterprises, Inc.

First Amendment to the Credit Agreement

and Incremental Increase Agreement

Signature Page

  

  

  

PMI INVESTMENT, LLC, as a US Subsidiary Guarantor

 

By:         /s/Mac
McConnell                                                                                                                     

Name:        Mac McConnell

Title:          Secretary and Treasurer

 

PUMP-PMI, LLC, as a US Subsidiary Guarantor

 

By:            /s/Mac
McConnell                                                                                                                  

Name:           Mac McConnell

Title:             Secretary and Treasurer

 

VERTEX CORPORATE HOLDINGS, INC., as a US Subsidiary Guarantor

 

By:           /s/Mac
McConnell                                                                                                                   

Name:          Mac McConnell

Title:            Vice President, Secretary and Treasurer

 

VERTEX-PFI, INC., as a US Subsidiary Guarantor

 

By:             /s/Mac
McConnell                                                                                                                 

Name:            Mac McConnell

Title:              Vice President, Secretary and Treasurer

 

PFI, LLC, as a US Subsidiary Guarantor

 

By:               /s/Mac
McConnell                                                                                                               

Name:              Mac McConnell

Title:                Vice President and Secretary

 

INDUSTRIAL PARAMEDIC SERVICES LTD., as a Canadian Subsidiary Guarantor

 

By:              /s/Mac
McConnell                                                                                                                

Name:             Mac McConnell

Title:               Director

 

HSE INTEGRATED LTD., as a Canadian Subsidiary Guarantor

 

By:             /s/Mac
McConnell                                                                                                                 

Name:            Mac McConnell

Title:              Senior Vice President

 

DXP Enterprises, Inc.

First Amendment to the Credit Agreement

and Incremental Increase Agreement

Signature Page

  

  

  

ADMINISTRATIVE AGENT AND LENDERS:

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent, Swingline Lender, Issuing Lender and Lender

By:   /s/Thomas F. Caver, III                                                             

Name:  Thomas F. Caver, III

Title:    Senior Vice President

DXP Enterprises, Inc.

First Amendment to the Credit Agreement

and Incremental Increase Agreement

Signature Page

  

  

  

REGIONS BANK, as a Lender

By:   /s/Larry C. Stephens                                                         

Name:  Larry C. Stephens

Title:    Senior Vice President

DXP Enterprises, Inc.

First Amendment to the Credit Agreement

and Incremental Increase Agreement

Signature Page

  

  

  

BANK OF AMERICA, N.A., as a Lender

By:   /s/Gary L. Mingle                                                            

Name:  Gary L. Mingle

Title:    Senior Vice President

ACKNOWLEDGED BY:

BANK OF AMERICA, N.A. (CANADA BRANCH),

as its Applicable Designee

By:   /s/Medina Sales de Andrade                                           

Name:  Medina Sales de Andrade

Title:    Vice President

DXP Enterprises, Inc.

First Amendment to the Credit Agreement

and Incremental Increase Agreement

Signature Page

  

  

  

BRANCH BANKING AND TRUST COMPANY, as a Lender

By:   /s/Matt McCain                                                              

Name:  Matt McCain

Title:    Senior Vice President

DXP Enterprises, Inc.

First Amendment to the Credit Agreement

and Incremental Increase Agreement

Signature Page

  

  

  

ROYAL BANK OF CANADA, as a Lender

By:   /s/Karen Pitz                                                                  

Name:  Karen Pitz

Title:    Director, Energy Services

By:   /s/Roger Straathof                                                           

Name:  Roger Straathof

Title:    Vice President, Commercial Financial Services

DXP Enterprises, Inc.

First Amendment to the Credit Agreement

and Incremental Increase Agreement

Signature Page

  

  

  

JPMORGAN CHASE BANK, N.A., as a Lender

By:   /s/Seth Laroche                                                             

Name:  Seth Laroche

Title:    Officer

ACKNOWLEDGED BY:

JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as its Applicable Designee

By:   /s/Michael N. Tam                                                            

Name:  Michael N. Tam

Title:  Senior Vice President

DXP Enterprises, Inc.

First Amendment to the Credit Agreement

and Incremental Increase Agreement

Signature Page

  

  

  

BOKF, NA dba Bank of Texas, as a Lender

By:   /s/Marian Livingston                                                         

Name:  Marian Livingston

Title:    Senior Vice President

DXP Enterprises, Inc.

First Amendment to the Credit Agreement

and Incremental Increase Agreement

Signature Page

  

  

  

Schedule 1.1(c)

Commitments and Commitment Percentages

	
Lender

	
Revolving Credit Commitment as of the First Amendment Effective Date

	
Revolving Credit Commitment Percentage as of the First Amendment Effective Date

	
Initial Term Loan Commitment

	
Term Loan Percentage for Initial Term Loans

	
Incremental Term Loan Commitment on the First Amendment Effective Date

	
Term Loan Percentage for Incremental Term Loans Made on the First Amendment Effective Date

	
Wells Fargo Bank, National Association

	
$77,692,308.00

	
29.597069714%

	
$32,307,692.00

	
32.307692000%

	
$5,000,000.00

	
13.333333333%

	
Regions Bank

	
$45,000,000.00

	
17.142857142%

	
$20,000,000.00

	
20.000000000%

	
$0.00

	
0.000000000%

	
Bank of America, N.A.

	
$50,000,000.00

	
19.047619048%

	
$20,000,000.00

	
20.000000000%

	
$5,000,000.00

	
13.333333333%

	
Branch Banking and Trust Company

	
$33,653,846.00

	
12.820512762%

	
$13,846,154.00

	
13.846154000%

	
$2,500,000.00

	
6.666666667%

	
U.S. Bank National Association

	
$31,153,846.00

	
11.868131809%

	
$13,846,154.00

	
13.846154000%

	
$0.00

	
0.000000000%

	
Royal Bank of Canada

	
$10,000,000.00

	
3.809523810%

	
$0.00

	
0.000000000%

	
$10,000,000.00

	
26.666666667%

	
JPMorgan Chase Bank, N.A.

	
$10,000,000.00

	
3.809523810%

	
$0.00

	
0.000000000%

	
$10,000,000.00

	
26.666666667%

	
BOKF, NA dba

Bank of Texas

	
$5,000,000.00

	
1.904761905%

	
$0.00

	
0.000000000%

	
$5,000,000.00

	
13.333333333%

	
Total

	
$262,500,000.00

	
100.000000000%

	
$100,000,000.00

	
100.000000000%

	
$37,500,000.00

	
100.000000000%

42638321_7Exhibit 4.2

 

THIS WARRANT AND ANY SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

 

OMTHERA PHARMACEUTICALS, INC.

WARRANT TO PURCHASE STOCK

 

	
NO. W-       
    	
February 15, 2013
    

 

THIS CERTIFIES THAT, for value received,                                               , or its assigns (the “Holder”), is entitled to subscribe for and purchase from  OMTHERA PHARMACEUTICALS, INC., a Delaware corporation (the “Company”), up to that number of shares of Warrant Stock (as defined below) as is equal to $[25% of principal amount of Note] divided by the Warrant Stock Price (as defined below), at an exercise price of $0.01 per share (the “Exercise Price”), which Exercise Price shall be paid to the Company in immediately available funds as a condition to the Holder’s receipt of any shares of Warrant Stock (as defined below) upon the exercise hereof, unless this Warrant is exercised in accordance with Section 2.1(b) below.

 

This Warrant is being issued as one of a series of warrants pursuant to, and is subject to, the terms and conditions of the Note and Warrant Purchase Agreement by and among the Company, the Holder and the other parties thereto, dated as of February 15, 2013, as the same may be amended and/or restated from time to time (the “Purchase Agreement”), and may be amended from time to time in accordance with the terms of the Purchase Agreement.  Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Purchase Agreement.

 

1.                                      Definitions.

 

(a)                                 “Warrant Exercisability Trigger” shall mean a moment in time immediately prior to the first to occur of: (i) a Deemed Liquidation Event (as defined in the Company’s certificate of incorporation); (ii) any optional conversion of the Notes pursuant to Section 3.1 thereof; (iii) any optional conversion of the Notes pursuant to Section 3.2 thereof; (iv) any mandatory conversion of the Notes pursuant to Section 3.3 thereof or (v) the Maturity Date (as defined in the Notes).

 

 

(b)                                 “Warrant Stock” shall mean (i) in the event the Warrant Exercisability Trigger is one of the events described in clause (i) or clause (v) of the definition thereof, shares of the Company’s Series B Preferred Stock, par value $0.001 per share (the “Series B Preferred”); and (ii) in the event the Warrant Exercisability Trigger is one of the events described in clauses (ii), (iii) or (iv) of the definition thereof, shares of the class and series of equity securities issued upon conversion of the Notes upon the occurrence of the applicable Warrant Exercisability Trigger.

 

(c)                                  “Warrant Stock Price” shall mean (i) in the event the Warrant Stock is shares of Series B Preferred, $4.89884 (subject to adjustment for stock splits, stock dividends, combinations and the like affecting the Series B Preferred after the date hereof) and (ii) in the event the Warrant Stock is any other class or series of equity securities corresponding to the class and series of equity securities issued upon conversion of the Notes, the price per share at which shares of the applicable class and series of Warrant Stock were issued upon conversion of the Notes.

 

2.                                      Exercise of Warrant.  The rights represented by this Warrant may be exercised in whole or in part from the date of the Warrant Exercisability Trigger to February 15, 2023 (the “Exercise Period”) by delivery of the following to the Company at its address set forth in the Purchase Agreement (or at such other address as it may designate in writing to the Holder):

 

(a)                                 an executed Notice of Exercise in the form attached hereto;

 

(b)                                 payment of the aggregate Exercise Price for the shares of Warrant Stock being purchased either in cash or by check, or by wire transfer of immediately available funds to an account designated by the Company; and

 

(c)                                  this Warrant.

 

Upon the exercise of the rights represented by this Warrant, a certificate or certificates for the shares of Stock so purchased, registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates, shall be issued and delivered to the Holder as promptly as practicable after the rights represented by this Warrant shall have been so exercised.

 

The person in whose name any certificate or certificates for shares of Warrant Stock are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price for such shares was made, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.

 

2.1                               Net Exercise.  Notwithstanding any provisions herein to the contrary, if the fair market value of one share of Warrant Stock issuable hereunder is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the

 

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principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue or cause to be issued to the Holder a number of shares of Warrant Stock computed using the following formula:

 

X = Y (A-B)

A

 

Where             X =                             the number of shares of Warrant Stock to be issued to the Holder

 

Y =                             the number of shares of Warrant Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation)

 

A =                             the fair market value of one share of Warrant Stock purchasable under the Warrant (at the date of such calculation)

 

B =                             Exercise Price (as adjusted to the date of such calculation)

 

For purposes of the above calculation, the fair market value of one share of Warrant Stock shall be:

 

(i) If exercised in connection with a public offering, the fair market value of the Warrant Stock shall be the offering price to the public in connection with the public offering;

 

(ii) If traded on a securities exchange, the fair market value of the Warrant Stock shall be deemed to be the average of the closing prices of the Warrant Stock on such exchange over the five trading days immediately prior to exercise date; and

 

(iii) If there is no public market for the Warrant Stock, the fair market value shall be the price per share of Warrant Stock as determined in good faith by the Company’s Board of Directors.

 

2.2                               Automatic Exercise.  Notwithstanding the provisions of this Section 2, if the Holder has not exercised this Warrant prior to the closing of a Deemed Liquidation Event (as defined in the Company’s certificate of incorporation) or the Company’s initial public offering, this Warrant shall automatically be deemed to be exercised in full in the manner set forth in Section 2.1, without any further action on behalf of the Holder, immediately prior to such closing.

 

3.                                      Covenants of the Company.

 

3.1                               Covenants as to Warrant Stock.  The Company covenants and agrees that all Warrant Stock that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof.  The Company further covenants and agrees that the Company will use commercially reasonable efforts at all times during the Exercise Period to have authorized and reserved, free from preemptive rights, a sufficient number of shares of its (a) Preferred Stock to provide for the exercise of the rights

 

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represented by this Warrant and (b) Common Stock to provide for the conversion of such shares of Preferred Stock.  If at any time during the Exercise Period the number of authorized but unissued shares of (x) Preferred Stock shall not be sufficient to permit exercise of this Warrant or (y) Common Stock shall not be sufficient to permit the conversion of such shares of Preferred Stock, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Preferred Stock or Common Stock, as applicable, to such number of shares as shall be sufficient for such purposes.

 

3.2                               No Impairment.  Except and to the extent as waived or consented to by the Holder, the Company will not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment.

 

3.3                               Notices of Record Date.  In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least ten (10) days prior to the date specified herein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.

 

4.                                      Adjustment of Exercise Price.  In the event of changes in the outstanding class and series of Warrant Stock by reason of stock dividends, split-ups, recapitalizations, reclassifications, combinations or exchanges of shares, separations, reorganizations, liquidations, or the like, the number of shares of Warrant Stock available under this Warrant in the aggregate and the Exercise Price shall be correspondingly adjusted to give the Holder of the Warrant, on exercise for the same aggregate Exercise Price, the total number of shares of Warrant Stock as the Holder would have owned had the Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment.  The form of this Warrant need not be changed because of any adjustment in the number of shares of Warrant Stock subject to this Warrant.

 

5.                                      Fractional Shares.  No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto.  All shares of Warrant Stock (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share.  If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then current fair market value of a share of Warrant Stock by such fraction.

 

6.                                      No Rights or Liabilities as Equity Holder. This Warrant does not by itself entitle the Holder to any voting rights or other rights as a holder of stock of the Company.  In the absence of exercise of this Warrant, no provisions of this Warrant, and no enumeration herein of

 

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the rights or privileges of the Holder, shall cause the Holder to be a holder of stock of the Company for any purpose.

 

7.                                      Waivers and Amendments.  No delay or omission on the part of the Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right of the Holder, nor shall any such delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion.  Neither this Warrant nor any part hereof may be changed, waived, or amended except by an instrument in writing in accordance with Section 6.7 of the Purchase Agreement.

 

8.                                      Governing Law. This Warrant shall be governed by and construed under the internal laws of the State of Delaware without reference to principles of conflict of laws or choice of laws.

 

9.                                      New Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of the Warrant, the Company will issue a new Warrant, of like tenor and amount of shares of Warrant Stock for which the Warrant was then exercisable, in lieu of such lost, stolen, destroyed or mutilated Warrant, and in such event the Holder agrees to indemnify and hold harmless the Company in respect of any such lost, stolen, destroyed or mutilated Warrant.

 

10.                               Headings.  The headings and captions used in this Warrant are used only for convenience and are not to be considered in construing or interpreting this Warrant.

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of the date first above written.

 

 

	
 
    	
 
    	
OMTHERA   PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Gerald Wisler
    
	
 
    	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Acknowledged   and agreed to by Holder:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[NAME   OF HOLDER]
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

[SIGNATURE PAGE TO WARRANT]

 

 

NOTICE OF EXERCISE

 

1.a.                        o                                    The undersigned hereby elects to purchase                  shares of Warrant Stock (the “Securities”) of Omthera Pharmaceuticals, Inc. (the “Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

1.b.                            o                                    The undersigned hereby elects to purchase                  shares of Warrant Stock pursuant to the terms of the net exercise provisions set forth in Section 2.1 of the attached Warrant, and shall tender payment of all applicable transfer taxes, if any.

 

2.                                      Please issue a certificate or certificates representing said shares of Warrant Stock in the name of the undersigned or in such other name as is specified below:

 

 

(Name)

 

 

(Address)

 

3.                                      The undersigned represents that: (a) the undersigned was not organized for the specific purpose of acquiring the Securities; (b) the undersigned has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company’s stage of development so as to be able to evaluate the risks and merits of its investment in the Company and it is able financially to bear the risks thereof; (c) the undersigned has made an investigation of the Company and its business as it deemed necessary and has had an opportunity to discuss and review the Company’s business, management and financial affairs with the Company’s management as it deemed necessary; (d) the Securities being purchased by the undersigned are being acquired for the undersigned’s own account for the purpose of investment and not with a view to the public resale or distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”); (e) the undersigned understands that (i) the Securities have not been registered under the Securities Act by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Rule 504, 505 or 506 promulgated under the Securities Act, (ii) under the Securities Act and applicable regulations thereunder the Securities may be resold without registration under the Securities Act only in certain limited circumstances, (iii) the certificates evidencing the Securities will bear a legend substantially similar to that set forth below:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT.  INVESTORS

 

 

SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

 

and (iv) the Company will make a notation on its transfer books to such effect; and (f) the undersigned is an “accredited investor” as that term is defined in Rule 501 promulgated under the Securities Act.

 

 

	
 
    	
 
    	
 
    
	
(Date)
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Print   name)

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