FOURTH AMENDMENT
TO FINANCING AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT (this
"Amendment") is made as of this 3rd day of September, 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"), 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"), CHARTER POWER OF CALIFORNIA, a corporation organized and existing
under the laws of the State of California ("Charter California"), 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") (Charter Power, C&D Charter, International, Ratelco, Charter Holdings
and Xxxxxxx Xxxxxxxxxx, XXX, XXX Xxxxxx, XXX Xxxxxxx and LH Research are herein
collectively referred to as the "Borrowers" and individually as a "Borrower");
NATIONSBANK, N.A., a national banking association, in its capacity as a lender
("NationsBank"), FLEET BANK, NATIONAL ASSOCIATION, a national banking
association and successor in interest to NatWest Bank N.A., being formerly known
as National Westminster Bank NJ ("Fleet"), CORESTATES BANK, N.A., a national
banking association ("CoreStates") (NationsBank, CoreStates, and Fleet are
herein collectively referred to as the "Lenders" and individually, as a
"Lender"); and NATIONSBANK, N.A., a national banking association, in its
capacity as agent for the Lenders (the "Agent"); Witnesseth:
RECITALS
A. The Lenders, the 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 a maximum principal amount not to exceed SIXTY-FIVE MILLION DOLLARS
($65,000,000) (the "Total Revolving Credit Committed Amount"), (ii) a term loan
facility (collectively, the "Term Loans") in an original 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. The Borrowers have requested that the Lenders and the Agent agree to
amend certain terms and conditions of the Credit Agreement, and subject to the
provisions of this Amendment, the Lenders and the Agent have so agreed;
provided, that the Borrowers execute and deliver this Amendment and the
Borrowers furnish to the Agent such information, items, certifications and other
documents as the Agent and/or any of the Lenders may reasonably request to close
and consummate any of the transactions contemplated by this Amendment or
otherwise by the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers, the Lenders and the Agent hereby agree as follows:
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. The definition of "Revolving Credit Expiration Date" on page 28 of
the Credit Agreement is hereby amended to mean January 31, 1999, as may be
further extended in accordance with the provisions of Section 2.1.9. of the
Credit Agreement.
b. Section 2.1.7 on page 38 of the Credit Agreement is hereby deleted
in its entirety and the following is substituted in its place:
2.1.7 REVOLVING CREDIT UNUSED LINE FEE. The Borrowers shall
jointly and severally pay to the Agent, in arrears, for the ratable
benefit of the Lenders, a quarterly revolving credit unused line fee
(collectively, the "Revolving Credit Unused Line Fees" and
individually, a "Revolving Credit Unused Line Fee") in an amount to be
determined based upon the ratio of Funded Debt to EBITDA for the
rolling four (4) quarter month period covered by the then most recent
financial statements furnished or required to be furnished to the
Agent pursuant to and in the form required by Section 6.1.1(a) and
Section 6.1.1(c). Within three (3) Business Days of the Agent's
receipt of such financial statements in the form required, the Agent
shall calculate the ratio of Funded Debt to EBITDA for the then
rolling four (4) quarter period covered by such financial statements,
and shall notify the Borrowers and the Lenders of its determination.
If such financial statements are not furnished as and when required,
the Borrowers may not be permitted to select or change an Interest
Rate or an
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Interest Period. Following, the Agent's determination of the Funded
Debt to EBITDA ratio, the Revolving Credit Unused Line Fee shall be as
follows:
FUNDED DEBT TO EBITDA RATIO FEE AMOUNT
--------------------------- ----------
Less than 1.0 to 1.0 .125%
Greater than or equal to .15%
1.0 to 1.0, but less than
1.75 to 1.0
Greater than or equal to .18%
1.75 to 1.0, but less than
2.25 to 1.0
Greater than or equal to .22%
2.25 to 1.0, but less than
2.75 to 1.0
Greater than or equal to .25%
2.75 to 1.0, but not more
than 3.0 to 1.0
Greater than or equal to
3.0 to 1.0 .50%
c. Section 2.1.11 of the Credit Agreement (as added by the Second
Amendment to Financing and Security Agreement dated January 26, 1996) is hereby
deleted in its entirety and the following is substituted in its place:
2.1.11 CONVERSION OF REVOLVING LOAN ADVANCES FOR STOCK PURCHASES;
MANDATORY REDUCTIONS IN TOTAL REVOLVING CREDIT FACILITY. The Borrowers
jointly and severally covenant and agree that if at any time the
aggregate principal amount of Revolving Loan advances used to purchase
Stock at any time and from time to time equals or exceeds Twelve
Million Dollars ($12,000,000) and such aggregate principal amount
(each a "Stock Purchase Advance") has not yet been converted to a
Converted Stock Loan in accordance with the provisions of this Section
2.1.11, that portion of the Stock Purchase Advance in excess of Seven
Million Dollars ($7,000,000) shall be converted into a term loan
having a maturity date which is three (3) years after the effective
date of the conversion (each referred to herein as a "Converted Stock
Loan"); provided that (i) all Stock purchased with the proceeds of
such Stock Purchase Advance shall have been purchased by Charter Power
in accordance with the provisions of Section 6.2.4 of this Agreement,
(ii) there shall not exist a Default or an Event of Default under
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this Agreement as of the effective date of such conversion, and (iii)
the Borrowers shall have executed and delivered to the Agent a series
of promissory notes (as from time to time extended, amended, restated,
supplemented or otherwise modified, the "Converted Stock Notes" and
individually a "Converted Stock Note") substantially in the form of
Exhibit A-3 attached to and made a part of this Agreement, with
appropriate insertions and such other documents as the Agent and/or
any of the Lenders may reasonably require to confirm the validity of
the Obligations, as converted, and any Liens and security interests.
Each Lender's Converted Stock Note shall be dated as of the date the
Stock Purchase Advance, in part evidenced by such Converted Stock
Note, equals or exceeds Twelve Million Dollars ($12,000,000), shall be
payable to the order of such Lender at the times provided in the
Converted Stock Note, and shall be in the principal amount of such
Lender's Proportionate Share of that portion of the respective Stock
Purchase Advance exceeding Seven Million Dollars ($7,000,000)
evidenced, in part, by such Converted Stock Note. If as of the
effective date of any proposed conversion the Borrowers would not be
entitled to convert any Stock Purchase Advance to a Converted Stock
Loan, such Stock Purchase Advance, together with any unpaid and
accrued interest thereon, shall be payable jointly and severally by
the Borrowers ON DEMAND.
The unpaid principal balance of each Converted Stock Loan shall bear
interest at a floating and fluctuating rate of interest equal to the
Interest Rate or Interest Rates then available for the Converted Term
Loan, as selected by the Borrowers in accordance with the provisions
of Section 2.4. The unpaid principal balance of each Converted Stock
Loan, together with unpaid and accrued interest thereon, shall be due
and payable in consecutive quarterly installments on the first day of
each quarterly period commencing with the first such date following
the effective date of the Converted Stock Loan; the principal amount
of each such quarterly installment shall be sufficient to fully
amortize the principal balance of the Converted Stock Loan in
approximately equal quarterly principal installments by the maturity
date of such Converted Stock Loan.
Subject to the terms of Section 2.4.5 of the Credit Agreement, the
Borrowers may, at their option, at any time and from time to time,
prepay, the Converted Stock
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Loans, in whole or in part, upon at least five (5) Business Days prior
written notice to the Agent, specifying the date and amount of the
proposed prepayment. Subject to the terms of Section 2.4.5 of the
Credit Agreement, each Converted Stock Note may be prepaid, in whole
or in part, without premium or penalty. The amount to be prepaid,
together with unpaid and accrued interest thereon through the date of
prepayment if the prepayment is intended to prepay the Converted Stock
Loans in whole, shall be paid by the Borrowers to the Agent for the
ratable benefit of the Lenders on the date specified for such
prepayment. Partial prepayments shall be in an amount not less than
Two Hundred Thousand Dollars ($200,000) and shall be applied first to
all unpaid and accrued late charges, second to any unpaid and
outstanding Enforcement Costs, third to any billed and unpaid interest
on the Converted Stock Loans, and then to principal against the
principal installments in the inverse order of their maturities.
The Total Revolving Credit Committed Amount shall be automatically and
permanently reduced by the principal amount of each Converted Stock
Loan as of the effective date of such Converted Stock Loan. If, after
giving effect to any such reduction in the Total Revolving Credit
Committed Amount, the then outstanding principal amount of the
Revolving Loan exceeds the Total Revolving Credit Committed Amount as
so reduced, the Borrowers jointly and severally shall
contemporaneously with such reduction (a) make a mandatory prepayment
of the Revolving Loan in the amount of such excess, and (b) pay to the
Agent for the ratable benefit of the Lenders an amount equal to unpaid
interest on the amount of such excess and the pro rata portion of the
Revolving Credit Unused Line Fee accrued to the date of such mandatory
prepayment. After each such reduction, the Revolving Credit Unused
Line Fee shall be calculated with respect to the Total Revolving
Credit Committed Amount as so reduced.
For purposes of this Agreement, all Stock purchases shall be deemed to
have been financed with the proceeds of the Revolving Loan, regardless
of the actual source of funds for the purchase.
d. Subsections (b) and (c) of Section 2.3.2 on page 43 of the Credit
Agreement are hereby amended to provide that the Letter of Credit Fee for any
Letter of Credit (other than the
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Rockdale Letter of Credit and the PEDFA Obligations) shall be in an amount equal
to one and one-eighth percent (1-1/8%) per annum of the face amount of such
Letter of Credit.
e. Section 2.4.1(b)(i) on pages 55 and 56 of the Credit Agreement is
hereby deleted in its entirety and the following is substituted in its place:
(i) with respect to advances under the Revolving Loan, the Applicable
Margin to be added when calculating the available Interest Rates shall
be as follows:
FUNDED DEBT TO EBITDA RATIO APPLICABLE MARGIN
--------------------------- -----------------
Less than 1.0 to 1.0 LIBOR Loans: .60%
Prime Loans: -.40%
Greater than or equal to LIBOR Loans: .75%
1.0 to 1.0, but less than Prime Loans: -.25%
1.75 to 1.0
Greater than or equal to LIBOR Loans: .95%
1.75 to 1.0, but less than Prime Loans: 0%
2.25 to 1.0
Greater than or equal to LIBOR Loans: 1.25%
2.25 to 1.0, but less than Prime Loans: .25%
2.75 to 1.0
Greater than or equal to LIBOR Loans: 1.60%
2.75 to 1.0, but less than Prime Loans: .60%
3.0 to 1.0
The initial Interest Rate adjustment, if any, shall be effective as of
September 1, 1996 if and to the extent the ratio of Funded Debt to
EBITDA as set forth above results in any such Interest Rate
adjustment.
f. Section 2.4.1(b)(iv) on pages 56 of the Credit Agreement is hereby
deleted in its entirety and the following is substituted in its place:
(iv) If the ratio of Funded Debt to EBITDA at any time exceeds 3.0 to
1.0 all Loans (including the Converted Term Loan) shall bear interest
at the Post-Default Rate.
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g. Section 2.4.1(d) of the Credit Agreement (as added by the Second
Amendment to Financing and Security Agreement dated January 26, 1996) is hereby
deleted in its entirety. For purposes of calculating Interest Rates available
under the Credit Agreement at any time after the date of this Amendment, the
Stock Margin shall be equal to zero.
h. Section 6.1.15 on page 99 of the Credit Agreement is hereby deleted
in its entirety and the following is substituted in its place:
6.1.15 LIABILITIES TO TANGIBLE NET WORTH. The Borrowers and the
Restricted Subsidiaries, on a Consolidated basis and as of the end of
each fiscal quarter, commencing with the first such fiscal quarter
ending on or after July 31, 1996, shall have a ratio of Liabilities to
Tangible Net Worth of not more than 2.25 to 1.0.
i. Section 6.1.17 on page 99 of the Credit Agreement is hereby deleted
in its entirety and the following is substituted in its place:
6.1.17 FIXED CHARGE COVERAGE RATIO. The Borrowers and the Restricted
Subsidiaries, on a Consolidated basis and as of the end of each fiscal
quarter, commencing with the first such fiscal quarter ending on or
after July 31, 1996, shall have a Fixed Charge Coverage Ratio of not
less than 1.5 to 1.0. The Fixed Charge Coverage Ratio shall be
calculated on a rolling four (4) quarter basis.
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 required by the Agent: (i) the Borrowers,
the Agent and the Lenders execute and deliver this Amendment, (ii) 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 in connection with the
Third Amendment to Financing and Security Agreement dated March 13, 1996, and as
more particularly indicated in Exhibit A attached hereto and made a part hereof,
and (iii) 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, attorneys' fees
and expenses).
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4. The terms "this Agreement" as used in the Credit Agreement and the terms
"Credit Agreement" as used in any of the Financing Documents shall mean the
Credit Agreement as modified herein unless the context clearly indicates or
dictates a contrary meaning.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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/ XXXXXX X. XXXXXX By:/s/ XXXXXXX X. XXXXXXX, XX.(Seal)
Name: Name:
Title: Treasurer Title:
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ATTEST: C&D CHARTER POWER SYSTEMS, INC.
/s/ XXXXXX X. XXXXXX By:/s/ XXXXXXX X. XXXXXXX, XX.(Seal)
Name: Name:
Title: Treasurer Title: V. Pres.
ATTEST: INTERNATIONAL POWER SYSTEMS, INC.
/s/ XXXXXX X. XXXXXX By:/s/ XXXXXXX X. XXXXXXX, XX.(Seal)
Name: Name:
Title: Treasurer Title: V. Pres.
ATTEST: RATELCO ELECTRONICS, INC.
/s/ XXXXXX X. XXXXXX By:/s/ XXXXXXX X. XXXXXXX, XX.(Seal)
Name: Name:
Title: Treasurer Title: V. Pres
ATTEST: C&D/CHARTER HOLDINGS, INC.
/s/ XXXXXXX X. XXXXXXX, XX. By: /s/ XXXXXX X. XXXXXX (Seal)
Name: Name:
Title: Director Title: Vice President
ATTEST: CHARTER POWER OF CALIFORNIA
/s/ XXXXXX X. XXXXXX By:/s/ XXXXXXX X. XXXXXXX, XX.(Seal)
Name: Name:
Title: Treasurer Title: V. Pres
ATTEST: POWER CONVERTIBLES CORPORATION
/s/ XXXXXX X. XXXXXX By:/s/ XXXXXXX X. XXXXXXX, XX.(Seal)
Name: Name:
Title: Title: Treasurer
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ATTEST: PCC DE MEXICO S.A. DE C.V.
/s/ XXXXXX X. XXXXXX By:/s/ XXXXXXX X. XXXXXXX, XX.(Seal)
Name: Name:
Title: Title:
ATTEST: POWER CONVERTIBLES IRELAND LIMITED
/s/ XXXXXX X. XXXXXX By:/s/ XXXXXXX X. XXXXXXX, XX.(Seal)
Name: Name:
Title: Title:
ATTEST: LH RESEARCH, INCORPORATED
/s/ XXXXXX X. XXXXXX By:/s/ XXXXXXX X. XXXXXXX, XX.(Seal)
Name: Name:
Title: Treasurer Title: V. Pres
WITNESS: NATIONSBANK, N.A.
in its capacity as Agent
/s/ XXXXX X. XXXXXX By: /s/XXXXXXX X. XXXXX (Seal)
Name: Xxxxxxx X. Xxxxx
Title: Vice President
WITNESS: NATIONSBANK, N.A.
in its capacity as a Lender
/s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXX (Seal)
Name: Xxxxxxx X. Xxxxx
Title: Vice President
WITNESS: CORESTATES BANK, N.A.
in its capacity as a Lender
/s/ XXXX XXXXXXX By: /s/ XXXX X. XXXXXXX (Seal)
Name:Xxxx X. Xxxxxxx
Title:Vice President
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WITNESS: FLEET BANK, NATIONAL ASSOCIATION
(formerly known as NatWest Bank
N.A.) in its capacity as a Lender
_________________________ By: /s/ XXXX X. XXXXXX (Seal)
Name: Xxxx X. Xxxxxx
Title: SVP
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