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AMENDMENT NO. 4 TO CREDIT AGREEMENT
This AMENDMENT No. 4 TO CREDIT AGREEMENT (this "Amendment"), is
made and entered into as of October 6 , 1998, among COMMUNICATIONS & POWER
INDUSTRIES, INC. (the "Borrower"), COMMUNICATIONS & POWER INDUSTRIES HOLDING
CORPORATION, CPI SUBSIDIARY HOLDINGS INC., COMMUNICATIONS & POWER INDUSTRIES
INTERNATIONAL INC., COMMUNICATIONS & POWER INDUSTRIES ASIA INC., COMMUNICATIONS
& POWER INDUSTRIES ITALIA S.R.L., COMMUNICATIONS & POWER INDUSTRIES EUROPE
LIMITED, COMMUNICATIONS & POWER INDUSTRIES CANADA INC., COMMUNICATIONS & POWER
INDUSTRIES AUSTRALIA PTY LIMITED, CPI SALES CORP. (collectively, the
"Obligors"), BANKERS TRUST COMPANY, as agent (the "Agent"), and the various
lenders (the "Lenders") from time to time party to the Credit Agreement, dated
as of August 11, 1995 (as the same has been amended and modified through the
date hereof, the "Agreement"), among the Obligors, the Agent and the Lenders.
W I T N E S S E T H:
WHEREAS, the Obligors, the Agent and the Lenders desire (i) to
amend certain provisions of the Agreement, (ii) to increase the Revolving Credit
Commitments by $10,000,000 (the "Facility Increase"); and (iii) that the
Facility Increase (and Revolving Credit Loans made thereunder) constitute
"senior bank indebtedness" (as such term is defined in the Indenture);
NOW, THEREFORE, in consideration of the foregoing, the premises
and mutual covenants contained herein and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings given thereto in the Agreement.
2. Effectiveness of this Amendment. This Amendment shall become
effective and the Agreement shall be amended as provided herein on the first
date (the "Effective Date") on which each of the following conditions shall be
satisfied or waived:
(a) Execution of Amendment. Each Obligor, each Lender and the
Agent shall have executed a copy of this Amendment (whether the same or
different copies) and shall have delivered the same to the Agent.
(b) Reaffirmation. Each Guarantor shall have executed and
delivered to the Agent a counterpart to the Reaffirmation of Guaranty in
substantially the form attached hereto as Exhibit A (the "Reaffirmation
of Guaranty"). Each Pledgor (as such term is defined in the Pledge
Agreement) shall have executed and delivered to the Agent a counterpart
to the Reaffirmation of Pledge Agreement in substantially the form
attached hereto as Exhibit B (the "Reaffirmation of Pledge Agreement").
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(c) Assignment Agreement. The Agent shall have received an
executed counterpart to the Assignment Agreement in substantially the
form attached hereto as Exhibit C (the "Assignment Agreement") (i) from
each Lender that is increasing its Revolving Credit Commitment as part
of the Facility Increase (each, an "Increasing Lender") and each Person
(other than a Lender) that is to make a Revolving Credit Commitment on
the Effective Date (each, a "New Lender"; together with each Increasing
Lender, an "Assignee") and (ii) from each Lender that is not increasing
its Revolving Credit Commitment as part of the Facility Increase (each,
an "Assignor"). By no later than 10:00 a.m. New York City time on the
Settlement Date (as such term is defined in the Assignment Agreement),
the Agent shall have received from each Assignee, by wire transfer of
immediately available funds to the Settlement Account (as such term is
defined in the Assignment Agreement), an amount equal to the amount set
forth opposite such Assignee's name in Annex A to the Assignment
Agreement under the caption "Amount to be Paid (Received)".
(d) Revolving Credit Notes. The Borrower shall have executed and
delivered to the Agent a Revolving Credit Note in the name of each New
Lender and in the principal amount of such New Lender's Revolving Credit
Commitment as set forth in Schedule 1.1(a) to this Amendment (each, a
New Lender Note").
(e) Opinion of Counsel. The Lenders and the New Lenders shall
have received from Irell & Manella LLP, special US counsel to certain of
the Obligors, the Guarantors and the Pledgors, an opinion addressed to
the Agent and each of the Lenders and dated the Effective Date covering
the matters set forth in Exhibit D.
(f) Governing Documents; Proceedings.
(i) The Lenders and the New Lenders shall have received a
certificate of the Secretary or an Assistant Secretary of each
Obligor, Guarantor and Pledgor, dated the Effective Date,
certifying (A) that the Articles or Certificate of Incorporation
(or similar organizational document) and Bylaws of such Obligor,
Guarantor or Pledgor, as the case may be, previously delivered to
the Lenders are true, correct and complete, have not been amended
and remain in effect on the Effective Date, (B) that attached
thereto is a true, complete and correct and complete copy of
resolutions duly adopted by the Board of Directors of such
Obligor, Guarantor or Pledgor, as the case may be, which
resolutions remain in full force and effect without amendment or
modification and which authorize the execution, delivery and
performance by such Obligor, Guarantor or Pledgor, as the case
may be, of the Loan Documents to which it is a party (as such
Loan Documents are amended, modified and supplemented by this
Amendment, the Reaffirmation of Guaranty and the Reaffirmation of
Pledge Agreement) and the consummation of the transactions
contemplated hereby and thereby, (C) that no proceedings have
been commenced for the dissolution or liquidation of such
Obligor, Guarantor or Pledgor, as the case may be, and (D) the
incumbency, signature and authority of the officer of such
Obligor, Guarantor or Pledgor, as the
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case may be, who will execute and deliver this Amendment, the
Reaffirmation of Guaranty and/or the Reaffirmation of Pledge
Agreement.
(ii) The Lenders and the New Lenders shall have received a
certificate, dated the Effective Date, of an officer of each
Obligor, Guarantor and Pledgor certifying that the
representations and warranties of such Person contained in the
Loan Documents to which such Person is a party are true and
correct in all material respects as of the Effective Date with
the same effect as though such representations and warranties had
been made on and as of the Effective Date (except for such
representations and warranties made as of a specified date, which
shall be true and correct in all material respects as of such
specified date).
(g) No Litigation. The Lenders and the New Lenders shall be
satisfied that, on the Effective Date, no judgment, order, injunction or
other restraint shall have been issued or filed which restrains, and no
hearing seeking injunctive relief or other restraint is pending or has
been noticed which seeks to restrain, the Obligors, the Guarantors and
the Pledgors from consummating the transactions described in the Loan
Documents.
(h) No Default; Representations and Warranties. The Lenders and
the New Lenders shall be satisfied that, on the Effective Date and after
giving effect to this Amendment, the Reaffirmation of Guaranty and the
Reaffirmation of Pledge Agreement, (i) there shall exist no Default or
Event of Default and (ii) the representations and warranties of each
Obligor, each Guarantor and each Pledgor contained in the Loan Documents
to which such Person is a party are true and correct in all material
respects as of the Effective Date with the same effect as though such
representations and warranties had been made on and as of the Effective
Date (except for such representations and warranties made as of a
specified date, which shall be true and correct in all material respects
as of such specified date).
(i) Consent Fee. For consenting to the Facility Increase and the
amendments contained in this Amendment, each Lender that executes this
Amendment shall have received on the Effective Date a fee in immediately
available funds equal to the product of (i) 0.15% and (ii) the aggregate
amount of such Lender's Commitments.
(j) Facility Increase Fee. For participating in the Facility
Increase, (i) each Increasing Lender shall have received on the
Effective Date a fee in immediately available funds equal to the product
of (x) 0.50% and (y) the difference obtained by subtracting the
Revolving Credit Commitment of such Increasing Lender immediately prior
to the effectiveness of this Amendment from the Revolving Credit
Commitment of such Increasing Lender set forth in Schedule 1.1(a) to
this Amendment; and (ii) each New Lender shall have received on the
Effective Date, a fee in immediately available funds equal to the
product of (x) 0.50% and (y) the Revolving Credit Commitment of such New
Lender as set forth in Schedule 1.1(a) to this Amendment.
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(k) Other Payments. The Agent and each Lender shall have received
all other amounts, if any, amounts owing from the Obligors to such
Person through and including the Effective Date.
3. Amendments. As of the Effective Date:
(a) The references to "$77,000,000" contained on the cover page
of the Agreement and Recital B of the Agreement shall be amended to read
"$87,000,000".
(b) The reference to "$35,000,000" contained in Section 1.1(a) of
the Agreement shall be amended to read "$45,000,000".
(c) Section 3 of the Agreement shall be amended by adding the
following Section after Section 3.23 and before Section 4:
"3.24 Year 2000 Problem. On the basis of a comprehensive
review and assessment of each Obligor's systems and equipment and
inquiry made of each Obligor's material suppliers, vendors and
customers, each Obligor reasonably believes that the Year 2000
Problem, including the costs of remediation thereof, will not
result in a Material Adverse Effect. Each Obligor has developed
feasible contingency plans to ensure uninterrupted and unimpaired
business operation in the event of failure of its own or a third
party's systems and/or equipment due to the Year 2000 Problem,
including those of vendors, customers and suppliers, as well as a
general failure of or interruption in its communications and
delivery infrastructure.".
(d) Section 5 of the Agreement shall be amended by adding the
following Section after Section 5.14 and before Section 6:
"5.15 Year 2000 Problem. By September 30, 1999, the
Borrower shall, and shall cause each other Obligor to, (a)
renovate all systems and equipment affected by the Year 2000
Problem to cause them to perform correctly date-sensitive
functions for the relevant date data from before and after
December 31, 1999 ("Year 2000 Compliance"), or replace them with
technology not so affected; and (b) complete testing and
installation of all material systems and equipment to ensure
timely Year 2000 Compliance.".
(e) The reference to "$35,000,000" contained in the defined term
"Maximum Revolving Credit Commitment" set forth in Annex A to the
Agreement shall be amended to read "$45,000,000".
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(f) Annex A to the Agreement shall be amended by deleting
subclause (B) of clause (g) of the defined term "Permitted Investments"
and substituting the following therefor:
"(B) such investments (including the amount of any assumed
liabilities thereunder but excluding the amount of the Borrower's
investment in Aydin Corporation's West Coast Microwave Division)
do not exceed $5,000,000 in the aggregate;".
(g) Annex A to the Agreement shall be amended by adding the
following term after the defined term "Working Capital":
"Year 2000 Problem" shall mean the inability of computer
hardware, computer software and embedded microchips in
non-computing devices to perform properly date-sensitive
functions with respect to certain dates prior to, on and after
December 31, 1999.".
(h) Annex D to the Agreement shall be amended by adding the
following parenthetical after the word "report" contained in clause (i)
of Section 4 of Annex D:
"(which report shall not be qualified as to (A) going concern,
(B) any limitation in the scope of the audit or (C) possible
errors generated by financial reporting and related systems due
to the Year 2000 Problem)".
(i) Annex D to the Agreement shall be further amended by adding
the following Section after Section 4 of Annex D:
"11. Promptly, upon the request of the Agent, a copy of
the Borrower's and each Obligor's plan, timetable and budget to
address Year 2000 Problems, together with periodic updates
thereof and expenses incurred to date, any third party assessment
of the Borrower's and any Obligor's Year 2000 remediation
efforts, any Year 2000 contingency plans and any estimates of the
Borrowers' and any Obligor's potential litigation exposure (if
any) to the Year 2000 Problem.".
(j) Annex F shall be amended by deleting the table set forth
therein and substituting the following therefor:
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"Fiscal Quarter Consolidated EBITDA
--------------- -------------------
Q4, 1998 $38,000,000
Q1, 1999 $38,000,000
Q2, 1999 $38,000,000
Q3, 1999 $39,000,000
Q4, 1999 $39,000,000
Q1, 2000 $39,000,000
Q2, 2000 $39,000,000
Q3, 2000 $40,000,000
Q4, 2000 $40,000,000
Q1, 2001 $40,000,000
Q2, 2001 $40,000,000
Q3, 2001 $41,000,000
Q4, 2001 $41,000,000
Q1, 2002 $41,000,000
Q2, 2002 $41,000,000
Q3, 2002 $42,000,000
Q4, 2002 $42,000,000".
(k) Schedule 1.1(a) to the Agreement shall be deleted in its
entirety and Schedule 1.1(a) to this Amendment shall be substituted
therefor.
4. Aydin Purchase. The Borrower has acquired Aydin Corporation's
West Coast Microwave Division ("Aydin") for a purchase price of approximately
$9,000,000. By way of clarification, the purchase price paid for Aydin assets
shall be excluded from the definition of "Capital Expenditures" contained in
Paragraph 4 of Annex F of the Credit Agreement.
5. Settlement. On the Effective Date, the Assignees shall
purchase from the Assignors the Assigned Shares (as such term is defined in the
Assignment Agreement) in accordance with the terms of the Assignment Agreement.
The Borrower agrees that the reallocation of Revolving Credit Loans caused by
the Facility Increase requested by the Borrower shall constitute a prepayment
for purposes of Section 1.9(e) of the Agreement and, accordingly, agrees to pay
all breakage costs, if any, which may be incurred as a result of such
reallocation. The parties hereto hereby agree to use reasonable efforts to
minimize breakage costs which may result from the reallocation of Revolving
Credit Loans. By no later than 3:00 p.m. New York City time on the Settlement
Date (as such term is defined in the Assignment Agreement), the Agent shall, so
long as it has received the same from the Assignees, wire transfer to each
Assignor, an amount equal to the amount set forth opposite such Assignor's name
in Annex A to the Assignment Agreement under the caption "Amount to be Paid
(Received)".
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6. Revolving Credit Notes. Promptly following the Effective Date,
the Agent shall deliver to each New Lender its New Lender Note. Promptly
following the Effective Date, each Lender with a Revolving Credit Commitment (an
"Existing Lender") shall deliver to the Borrower its Revolving Credit Note or,
in lieu thereof, a certificate of lost instrument together with indemnification
in substance reasonably satisfactory to the Borrower, against receipt from the
Borrower of a new Revolving Credit Note in the name of such Existing Lender and
in the principal amount of such Existing Lender's Revolving Credit Commitment as
set forth in Schedule 1.1(a) to this Amendment.
7. Representations and Warranties. Each Obligor makes, as of the
Effective Date, each of the representations and warranties set forth in Section
3 of the Agreement, and such representations and warranties are, by this
reference, incorporated herein as if set forth herein in their entirety,
provided that references to "Loan Documents" shall, for purposes of this
paragraph, be deemed to include this Amendment, the Reaffirmation of Guaranty
and the Reaffirmation of Pledge Agreement. Each Obligor represents and warrants
that the Facility Increase (and Revolving Credit Loans made thereunder)
constitute "senior bank indebtedness" (as such term is defined in the
Indenture).
8. Miscellaneous.
(a) Except as expressly modified by this Amendment, the Agreement
and Schedules and Annexes thereto shall continue to be and remain in full force
and effect in accordance with their terms. Any future reference to the Agreement
and Schedules and Annexes thereto shall, from and after the Effective Date, be
deemed to be a reference to the Agreement and Schedules and Annexes thereto as
amended by this Amendment.
(b) This Amendment may be executed in any number of counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute but one instrument.
(c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CONFLICTS
OF LAW RULES.
(d) This Amendment may be executed by facsimile signature and
each such signature shall be treated in all respects as having the same effect
as an original signature.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first above written.
COMMUNICATIONS & POWER
INDUSTRIES, INC.
By /s/ LYNN E HARVEY
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Name Lynn E. Harvey
Title: Chief Financial Officer, Treasurer
and Secretary
COMMUNICATIONS & POWER
INDUSTRIES HOLDING CORPORATION
By /s/ LYNN E HARVEY
----------------------------------------
Name Lynn E. Harvey
Title: Chief Financial Officer, Treasurer
and Secretary
CPI SUBSIDIARY HOLDINGS INC.
By /s/ LYNN E. HARVEY
----------------------------------------
Name: Lynn E. Harvey
Title: Secretary
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COMMUNICATIONS & POWER
INDUSTRIES INTERNATIONAL INC.
By /s/ LYNN E. HARVEY
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Name: Lynn E. Harvey
Title: Secretary
COMMUNICATIONS & POWER
INDUSTRIES ASIA INC.
By /s/ LYNN E. HARVEY
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Name: Lynn E. Harvey
Title: Treasurer
COMMUNICATIONS & POWER
INDUSTRIES ITALIA S.R.L.
By /s/ LYNN E. HARVEY
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Name: Lynn E. Harvey
Title: (Per Power of Attorney)
COMMUNICATIONS & POWER
INDUSTRIES EUROPE LIMITED
By /s/ LYNN E. HARVEY
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Name: Lynn E. Harvey
Title: Secretary
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COMMUNICATIONS & POWER
INDUSTRIES CANADA INC.
By /s/ LYNN E. HARVEY
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Name: Lynn E. Harvey
Title: Vice President
COMMUNICATIONS & POWER
INDUSTRIES AUSTRALIA
PTY LIMITED
By /s/ LYNN E. HARVEY
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Name: Lynn E. Harvey
Title: (Per Power of Attorney)
CPI SALES CORP.
By /s/ LYNN E. HARVEY
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Name: Lynn E. Harvey
Title: Secretary and Treasurer
BANKERS TRUST COMPANY,
as Lender and as Agent
By /s/ MARY JO JOLLY
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Name: Mary Jo Jolly
Title: Assistant Vice President
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DRESDNER BANK AG,
New York Branch and
Grand Cayman Branch
By /s/ BRIGITTE SAGIN
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Name: Brigitte Sagin
Title: Assistant Treasurer
By /s/ BEVERLY G. CASON
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Name: Beverly G. Cason
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION
(f/k/a FIRST BANK NATIONAL ASSOCIATION)
By /s/ KURT D. EGERTSON
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Name: Kurt D. Egertson
Title: Vice President
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By /s/ GILLES MARCHAND
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Name: Gilles Marchand, CFA
Title: Authorized Signatory
PAMCO CAYMAN LTD.
By HIGHLAND CAPITAL MANAGEMENT, LP,
as Collateral Manager
By /s/ MARK K. OKADA
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Name: Mark K. Okada CFA
Title: Executive Vice President
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ROYALTON COMPANY
By PACIFIC INVESTMENT MANAGEMENT
COMPANY, as Investment Adviser
By /s/ RAYMOND KENNEDY
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Name: Raymond Kennedy
Title: Sr. Vice President
SENIOR DEBT PORTFOLIO
By BOSTON MANAGEMENT AND RESEARCH, as Investment
Adviser
By /s/ SCOTT H. PAGE
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Name: Scott H. Page
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By /s/ STEPHEN R. SWEENEY
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Name: Stephen R. Sweeney
Title: Vice President
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