THIRD AMENDMENT
TO FINANCING AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO FINANCING AND SECURITY AGREEMENT (this "Amendment")
is made as of this 13th day of March, 1996, by and among CHARTER POWER SYSTEMS,
INC., a corporation organized and existing under the laws of the State of
Delaware ("Charter Power"), C&D CHARTER POWER SYSTEMS, INC., a corporation
organized and existing under the laws of the State of Delaware ("C&D Charter"),
CACTUS HOLDINGS, INC., a corporation organized and existing under the laws of
the State of Delaware ("Cactus"), INTERNATIONAL POWER SYSTEMS, INC., a
corporation organized and existing under the laws of the State of Arizona
("International"), RATELCO ELECTRONICS, INC., a corporation organized and
existing under the laws of the State of Delaware ("Ratelco"), C&D/CHARTER
HOLDINGS, INC., a corporation organized and existing under the laws of the State
of Delaware ("Charter Holdings"), and CHARTER POWER OF CALIFORNIA, a corporation
organized and existing under the laws of the State of California ("Charter
California") (Charter Power, C&D Charter, Cactus, International, Ratelco,
Charter Holdings and Charter California are herein collectively referred to as
the "Existing Borrowers" and individually as an "Existing Borrower"); POWER
CONVERTIBLES CORPORATION, a corporation organized and existing under the laws of
the State of Arizona ("PCC"), PCC DE MEXICO S.A. DE C.V. ("PCC Mexico"), POWER
CONVERTIBLES IRELAND LIMITED ("PCC Ireland") and LH RESEARCH, INCORPORATED, a
corporation organized and existing under the laws of the State of Delaware ("LH
Research") (PCC, PCC Mexico, PCC Ireland and LH Research are herein sometimes
collectively referred to as the "Additional Borrowers" and individually as an
"Additional Borrower") and NATIONSBANK, N.A., a national banking association, in
its capacity as a lender ("NationsBank"), NATWEST BANK N.A., a national banking
association being formerly known as National Westminster Bank NJ ("NatWest"),
CORESTATES BANK, N.A., a national banking association ("CoreStates")
(NationsBank, CoreStates, and NatWest are herein collectively referred to as the
"Lenders" and individually, as a "Lender"); and NATIONSBANK, N.A., a national
banking association (the "Agent"); Witnesseth:
RECITALS
A. The Lenders, the Existing Borrowers and the Agent are parties to that
certain Financing and Security Agreement dated September 26, 1994 (as amended,
restated, supplemented or otherwise modified, the "Credit Agreement"). Under and
subject to the provisions of the Credit Agreement, the Lenders agreed to
establish jointly and severally in favor of the Existing Borrowers (i) a
revolving credit facility in an increased maximum principal amount not to exceed
SIXTY-FIVE MILLION DOLLARS ($65,000,000) (the "Total
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Revolving Credit Committed Amount"), (ii) a term loan facility (collectively,
the "Term Loans") in a maximum principal amount not to exceed FIFTEEN MILLION
DOLLARS ($15,000,000) (the "Total Term Loan Committed Amount") and (iii) a
letter of credit facility as part of the Revolving Credit Facility (the "Letter
of Credit Facility") in a maximum principal amount not to exceed EIGHT MILLION
DOLLARS ($8,000,000) (the "Letter of Credit Committed Amount").
B. International intends to acquire or has acquired all of the issued and
outstanding stock of PCC (the "PCC Acquisition") in accordance with the
provisions of that certain Purchase Agreement by and between International and
Burr-Brown Corporation (as amended, restated, supplemented or otherwise
modified, the "PCC Purchase Agreement") and has requested that the Agent and the
Lenders consent and agree to the proposed acquisition of PCC by International.
PCC Mexico and PCC Ireland are each and will remain wholly-owned subsidiaries of
PCC.
C. In addition, International has formed or intends to form LH Research, as
a wholly-owned subsidiary of International, and LH Research has acquired or will
acquire all or substantially all of the assets of LH Research, Inc. (the "LH
Acquisition") in accordance with the provisions of that certain Asset Purchase
Agreement by and between LH Research, Inc. and International (as amended,
restated, supplemented or otherwise modified, the "LH Purchase Agreement").
D. The Existing Borrowers have requested that (i) the Lenders and the Agent
consent and agree to the PCC Acquisition and the LH Acquisition and to the
formation of LH Research, the Lenders and the Agent have so agreed provided
that, among other things, (a) the Existing Borrowers and the New Borrowers
execute and deliver this Amendment, (b) the Existing Borrowers and the New
Borrowers, as appropriate, furnish to the Agent such information, items,
certifications and other documents (including, without limitation, such
additional agreements, documents, instruments, financing statements and
assignments) as the Agent and/or any of the Lenders may reasonably request in
connection with the closing and consummation of the transactions contemplated by
this Amendment.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Existing Borrowers, the New Borrowers, the Lenders and the
Agent hereby agree as follows:
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1. The recitals set forth above are true and accurate in each and every
respect and are incorporated herein by reference. All capitalized terms used
herein but not specifically defined herein shall have the respective meanings
given such terms in the Credit Agreement, unless the context indicates or
dictates a contrary meaning.
2. The Credit Agreement is hereby amended as follows:
a. Section 1.1 of the Credit Agreement is hereby amended to add the
following additional definitions:
"LH Research" means LH Research, Incorporated, a corporation
organized and existing under the laws of the State of Delaware, and its
successors and assigns.
"LH Research Acquisition Agreement" means that certain asset
purchase agreement by and among International and LH Research, Inc., as the same
may from time to time be amended, restated, supplemented or modified, together
with any and all exhibits and schedules thereto, amendments, modifications, and
supplements thereto, restatements thereof, and substitutes therefor.
"LH Research Acquisition Agreement Documents" means
collectively the LH Research Acquisition Agreement and any and all other
agreements, documents or instruments, previously, now or hereafter executed and
delivered by International, LH Research, Inc., or any other Person in connection
with the LH Research Acquisition Agreement Transaction, as the same may from
time to time be amended, restated, supplemented and modified.
"LH Research Acquisition Agreement Transaction" means the
asset purchase transaction contemplated by the LH Research Acquisition
Agreement.
"LH Research Assets" means all assets, equipment, inventory,
receivables and other tangible and intangible personal property of LH Research,
Inc. acquired by International or LH Research in accordance with the LH Research
Acquisition Agreement Transaction and also including any and all licensing
rights with respect to intellectual property acquired by International or LH
Research from LH Research, Inc., together with any and all proceeds and products
thereof.
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"PCC" means Power Convertibles Corporation, a corporation
organized and existing under the laws of the State of Arizona, and its
successors and assigns.
"PCC - Ireland" means Power Convertibles Ireland Limited, as
organized and existing under the laws of the Republic of Ireland, and its
successors and assigns.
"PCC - Mexico" means PCC De Mexico S.A. De C.V., as organized
and existing under the laws of the Republic of Mexico, and its successors and
assigns.
"PCC Acquisition Agreement" means that certain stock purchase
agreement by and among International and Burr-Brown Corporation, as the same may
from time to time be amended, restated, supplemented or modified, together with
any and all exhibits and schedules thereto, amendments, modifications, and
supplements thereto, restatements thereof, and substitutes therefor.
"PCC Acquisition Agreement Documents" means collectively the
PCC Acquisition Agreement and any and all other agreements, documents or
instruments, previously, now or hereafter executed and delivered by
International, Burr-Brown Corporation, or any other Person in connection with
the PCC Acquisition Agreement Transaction, as the same may from time to time be
amended, restated, supplemented and modified.
"PCC Acquisition Agreement Transaction" means the asset
purchase transaction contemplated by the PCC Acquisition Agreement.
b. The definition of "Additional Borrower" on page 2 of the Credit
Agreement is hereby amended to include PCC, PCC-Ireland, PCC-Mexico and LH
Research; provided that PCC, PCC-Ireland, PCC-Mexico and LH Research each
execute and deliver to the Agent an Additional Borrower Joinder Supplement in
the form required by the Credit Agreement.
c. The Agent and the Lenders agree that, subject to the terms,
conditions and understandings set forth in this Amendment, the LH Research
Acquisition Agreement Transaction and the PCC Acquisition Agreement Transaction
shall be deemed Permitted Acquisitions under the Credit Agreement.
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d. Section 4.1.1 on page 75 of the Credit Agreement is hereby amended
to add the following:
PCC-Ireland and PCC-Mexico are each Wholly-Owned Subsidiaries of PCC
and PCC has no Subsidiaries other than PCC-Ireland and PCC-Mexico.
Neither PCC-Ireland nor PCC-Mexico have any Subsidiaries. LH Research
is a Wholly-Owned Subsidiary of International.
e. As required by the Credit Agreement, the Borrowers have furnished to
the Agent and the Lenders financial projections which give effect to the closing
and consummation of both the LH Research Acquisition Agreement Transaction and
the PCC Acquisition Agreement Transaction in accordance with the provisions of
the LH Research Acquisition Agreement and the PCC Acquisition Agreement (the
"LH/PCC Financial Projections"). The Agent and the Lenders have reviewed the
LH/PCC Financial Projections and found them to be in the form required by the
Credit Agreement. Section 4.1.12 on page 78 of the Credit Agreement is hereby
amended to add the following:
The LH/PCC Financial Projections represent the Borrowers' good faith
estimate of the future Consolidated financial condition and results of
the operations of the Borrowers (including the Additional Borrowers)
and are based on assumptions included therein, which the Borrowers
believe in good faith to be reasonable. The Agent and the Lenders
acknowledge and agree that the representations and warranties with
respect to the LH/PCC Financial Projections are made only as of the
date such LH/PCC Financial Projections are furnished to the Agent and
shall not be deemed made or remade at any time thereafter.
f. The last sentence in Section 4.1.20 on page 81 of the Credit
Agreement is hereby amended to exclude Collateral located in Ireland.
g. Article 4 of the Credit Agreement is hereby amended to add the
following additional representations and warranties:
4.1.29. LH Research Acquisition Agreement Transaction. The Agent
has received true and correct photocopies of the fully executed LH Research
Acquisition Agreement and each of the LH Research Acquisition Agreement
Documents. Neither the LH Research Acquisition Agreement nor any of the LH
Research Acquisition Agreement Documents have been or will be modified, changed,
supplemented, canceled, amended or otherwise altered or affected, except as
otherwise disclosed to the Agent in writing. The LH Research
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Acquisition Agreement Transaction has been effected, closed and consummated
pursuant to, and in accordance with, the terms and conditions of the LH Research
Acquisition Agreement and all applicable Laws, including, without limitation,
any applicable bulk transfer laws. The photocopies of the LH Research
Acquisition Agreement and each of the LH Research Acquisition Agreement
Documents furnished to the Agent are true and correct photocopies thereof as of
the date furnished, and each of such documents is in full force and effect, as
appropriate. LH Research has obtained all consents, licenses and approvals to
permit it to engage in the business previously operated and conducted by LH
Research, Inc. and LH Research, Inc. has duly and properly assigned to LH
Research all of its right, title and interest in, and to, any and all
Proprietary Rights.
4.1.30. Transfer of LH Research Assets. The LH Research Assets
have been sold and transferred to LH Research free from all claims, Liens,
encumbrances, and security interests of any nature whatsoever, except for Liens
permitted by the Financing Agreement and those expressly disclosed in the LH
Research Acquisition Agreement.
4.1.31. PCC Acquisition Agreement Transaction. The Agent has
received true and correct photocopies of the fully executed PCC Acquisition
Agreement and each of the PCC Acquisition Agreement Documents. Neither the PCC
Acquisition Agreement nor any of the PCC Acquisition Agreement Documents have
been modified, changed, supplemented, canceled, amended or otherwise altered or
affected, except as otherwise disclosed to the Agent in writing. The PCC
Acquisition Agreement Transaction has been effected, closed and consummated
pursuant to, and in accordance with, the terms and conditions of the PCC
Acquisition Agreement and all applicable Laws. The photocopies of the PCC
Acquisition Agreement and each of the PCC Acquisition Agreement Documents
furnished to the Agent are or will be true and correct photocopies thereof as of
the date furnished, and each of such documents is in full force and effect, as
appropriate. International has obtained all consents, licenses and approvals to
permit it to acquire the stock of PCC.
4.1.32. Transfer of PCC Stock. The issued and outstanding stock
of PCC has been sold and transferred to International free from all claims,
Liens, encumbrances, and security interests of any nature whatsoever, except for
Liens
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permitted by the Financing Agreement and those expressly disclosed in the PCC
Acquisition Agreement.
4.1.33 No Environmental Liabilities. The Borrowers represent and
warrant to the best of their knowledge, information and belief, after due and
diligent inquiry, that there are no primary or contingent liabilities imposed on
any of the Borrowers relating to any environmental matter, condition, clean-up
or violation of any Environmental Law relating to any or all of the LH Research
Assets, any assets or properties of any of the Additional Borrowers and/or any
operations or other properties or interests of LH Research, Inc. or any of the
Additional Borrowers. None of the Additional Borrowers own any interest in real
property.
h. Section 6.1.23 on page 101 of the Credit Agreement is hereby
amended to temporarily increase the amount of Inventory which may be stored with
any one or more bailees, warehousemen or similar Persons without the Agent's
prior written consent, to Two Million Five Hundred Thousand Dollars
($2,500,000); such increase shall be in effect only during the period commencing
on January 1, 1996 and ending on, and including, April 30, 1996.
i. Subject to the terms, conditions and understandings expressed in
this Amendment, Section 6.2.1 on page 104, Section 6.2.2 on page 105, and
Section 6.2.6 on page 110 of the Credit Agreement are hereby amended to permit
the closing and consummation of the LH Research Acquisition Agreement
Transaction and the PCC Acquisition Agreement Transaction in accordance with the
provisions of the LH Research Acquisition Agreement and the PCC Acquisition
Agreement, respectively and the formation of LH Research as a Wholly-Owned
Subsidiary of International.
j. Section 6.2.7 on page 111 is hereby amended to permit a one-time
only increase in the maximum amount of permitted Capital Expenditures to
Seventeen Million Dollars ($17,000,000) for the fiscal year ending January 31,
1997. Any unused portion of this increase above the Eight Million Dollars
($8,000,000) currently permitted for Capital Expenditures for such fiscal year,
shall not be added to or constitute a part of the Carry Forward Amount allowed
under Section 6.2.7. For all fiscal years ending after January 31, 1997, the
Capital Expenditure Ceiling shall remain equal to the amounts currently
permitted under Section 6.2.7.
3. The terms, conditions and provisions of this Amendment shall not be
effective until each of the following conditions precedent have been satisfied
fully to the extent and in the manner
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required by the Agent: (i) the Borrowers (including the Additional Borrowers),
the Agent and the Lenders execute and deliver this Amendment, (ii) the Borrowers
(including the Additional Borrowers) execute and deliver such financing
statements in form and for filing as the Agent may require to perfect the liens
and security interests of the Agent and the Lenders in the Collateral owned by
any of the Additional Borrowers, in form and content acceptable to the Agent,
(iii) the Borrowers (including the Additional Borrowers) execute and deliver
such other agreements, assignments and other documents which the Agent may
require to create, perfect, and effect the liens and security interests of the
Agent and the Lenders in all real and personal property interests of
International (including, without limitation, the issued and outstanding stock
of PCC and LH Research) and any of the Additional Borrowers, all in form and
content acceptable to the Agent, (iv) the Borrowers furnish or cause to be
furnished to the Agent all of the items to be provided by the Borrowers as
listed in the "List of Closing Documents" prepared by the Agent's counsel and
previously furnished to the Borrowers within thirty (30) days of the closing and
consummation of the PCC Acquisition Agreement Transaction, (v) as of the date of
this Amendment and as of the date of closing of the LH Research Acquisition
Agreement Transaction and the PCC Acquisition Agreement Transaction, the
conditions precedent set forth in Section 5.2 shall have been fulfilled and
satisfied in a manner acceptable to the Agent, and (vi) the Borrowers shall have
reimbursed the Agent for all fees and expenses reasonably incurred by the Agent
in connection with the transactions contemplated by this Amendment (including,
without limitation, recordation costs and expenses and attorneys' fees and
expenses).
4. The Borrowers understand and agree that given the time circumstances the
Agent has elected not to require perfection of Liens on certain properties and
assets of the Additional Borrowers, including Proprietary Rights, Instruments,
Securities (other than the issued and outstanding stock of PCC) or Collateral
located in Mexico or Ireland. The Borrowers agree that the Agent reserves the
right to require such perfection at any time after the date of this Amendment as
the Agent or the Required Lenders may determine in their sole and absolute
discretion. All reasonable, out-of-pocket costs and expenses incurred by the
Agent and/or any of the Lenders, including, without limitation, attorneys' fees
and expenses, with respect to any such perfection shall be payable by the
Borrowers within ten (10) days of the Agent's written request therefor, and
shall be deemed part of the Obligations.
5. The terms "this Agreement" as used in the Credit Agreement and the terms
"Credit Agreement" as used in any of the
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Financing Documents shall mean the Credit Agreement as modified by herein unless
the context clearly indicates or dictates a contrary meaning.
6. The Borrowers will execute such confirmatory instruments with respect to
the Credit Agreement and/or any of the Financing Documents as the Agent may
reasonably require.
7. The Borrowers ratify and confirm all of their respective liabilities and
obligations under the Credit Agreement and agree that, except as expressly
modified in this Amendment, the Credit Agreement continues in full force and
effect as if set forth specifically herein. The Borrowers, the Agent and the
Lenders agree that this Amendment shall not be construed as an agreement to
extinguish the original obligations under the Credit Agreement and shall not
constitute a novation as to any of the joint and several obligations of the
Borrowers under the Credit Agreement.
8. This Amendment may not be amended, changed, modified, altered or
terminated without in each instance the prior written consent of the Agent, the
Lenders and the Borrowers. This Amendment shall be construed in accordance with,
and governed by, the laws of the State of Maryland.
9. The Borrowers agree that neither the execution and delivery of this
Amendment nor any of the terms, provisions, covenants, or agreements contained
in this Amendment shall in any manner release, impair, lessen, waive, or
otherwise adversely affect the joint and several liability and obligations of
the Borrowers under the terms of the Credit Agreement.
10. This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the Borrowers, the Agent and the Lenders have caused
this Amendment to be executed under seal as of the date first above written.
ATTEST: CHARTER POWER SYSTEMS, INC.
/s/ A. Kambouroglou By:/s/ Stephen E. Markert, Jr.(Seal)
Name: Name:
Title: VP and Gen. Mgr Title: CFO - V.P.
Motive Div.
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ATTEST: C&D CHARTER POWER SYSTEMS, INC.
/s/ Robert Marley By:/s/ Stephen E. Markert, Jr.(Seal)
Name: Name:
Title: Treasurer Title:C.F.O. - V.P.
ATTEST: CACTUS HOLDINGS, INC.
/s/ Robert Marley By:/s/ Kerry M. Kane (Seal)
Name: Name:
Title: Vice President Title: Pres.
ATTEST: INTERNATIONAL POWER SYSTEMS, INC.
/s/ Robert Marley By:/s/ Stephen E. Markert, Jr.(Seal)
Name: Name:
Title: Treasurer Title: V.P. Finance
ATTEST: RATELCO ELECTRONICS, INC.
/s/ Robert Marley By:/s/ Stephen E. Markert, Jr.(Seal)
Name: Name:
Title: Treasurer Title: V.P. Finance
ATTEST: C&D/CHARTER HOLDINGS, INC.
/s/ Robert Marley By:/s/ Kerry M. Kane (Seal)
Name: Name:
Title:V. President Title: President
ATTEST: CHARTER POWER OF CALIFORNIA
/s/ Robert Marley By:/s/ Stephen E. Markert, Jr.(Seal)
Name: Name:
Title: Treasurer Title: V.P. Finance
ATTEST: POWER CONVERTIBLES CORPORATION
_________________________ By:/s/ Stephen E. Markert, Jr.(Seal)
Name: Name:
Title: Title: Treasurer
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ATTEST: PCC DE MEXICO S.A. DE C.V.
_________________________ By:/s/ Michael McDonald (Seal)
Name: Name: Michael McDonald
Title: Title: Director
ATTEST: POWER CONVERTIBLES IRELAND LIMITED
/s/ Sean Young By:/s/ Edward G. Baker (Seal)
Name: Sean Young Name: Edward G. Baker
Title: Mktg Director Title: Controller
ATTEST: LH RESEARCH, INCORPORATED
/s/ Robert Marley By:/s/ Stephen E. Markert, Jr.(Seal)
Name: Name:
Title: Treasurer Title: V.P. Finance
WITNESS: NATIONSBANK, N.A.
in its capacity as Agent
/s/ Lisa Kartman By:/s/ Patrick M. Moore (Seal)
Name: Patrick M. Moore
Title: Vice President
WITNESS: NATIONSBANK, N.A.
in its capacity as a Lender
/s/ Lisa Kartman By:/s/ Patrick M. Moore (Seal)
Name: Patrick M. Moore
Title: Vice President
WITNESS: CORESTATES BANK, N.A.
in its capacity as a Lender
/s/ John Gerhardt By:/s/ Karl Schultz (Seal)
Name: Karl Schultz
Title: Vice President
WITNESS: NATWEST BANK N.A.
in its capacity as a Lender
/s/ Theresa A. Mazzilli By:/s/ Thomas L. Savage (Seal)
Name:Thomas L. Savage
Title: Vice President
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