FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "FIRST AMENDMENT"), dated as
of February 1, 1996, is entered into among Power-One, Inc., a Delaware
corporation formerly known as Power-Merger, Inc. (the "BORROWER"), the banks
listed on the signature page hereof (the "LENDERS"), and NATIONSBANK OF TEXAS,
N.A., as administrative agent for the Lenders (in said capacity, the
"ADMINISTRATIVE LENDER").
A. Power-One LLC, a Delaware limited liability company ("POWER-ONE"),
NationsBank of Texas, N.A., in its capacity as a lender ("NationsBank"), and the
Administrative Lender heretofore entered into that certain Credit Agreement,
dated as of September 27, 1995 (the "CREDIT AGREEMENT"; the terms defined in the
Credit Agreement and not otherwise defined herein shall be used herein as
defined in the Credit Agreement).
B. Power-One has merged into the Borrower pursuant to the Agreement of
Merger effective as of February 1, 1996 (the "MERGER").
C. Union Bank and City National Bank became Lenders pursuant to
Section 1.6 of the Credit Agreement, effective November 15, 1995.
D. By matter of law and by the terms of that certain Assumption
Agreement, dated as of February 1, 1996, the Borrower has assumed all of the
obligations of Power-One under the Loan Documents.
E. The Borrower, Lenders and the Administrative Lender desire to amend
the Credit Agreement to make certain changes therein as a result of the Merger.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the Borrower,
Lenders and the Administrative Lender covenant and agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT.
(a) The definition of "Borrower" set forth in Article I of the Credit
Agreement is hereby amended to read as follows:
"`BORROWER' means Power-One, Inc., a Delaware corporation, successor
by merger with Power-One LLC, a limited liability company."
(b) The definition of "Excess Cash Flow" set forth in Article I of the
Credit Agreement is hereby amended to read as follows:
"`EXCESS CASH FLOW' means, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the remainder of (i) EBITDA, minus
(ii) Restricted Payments, minus (iii) interest expense (including interest
expense pursuant to Capitalized Lease Obligations), minus (iv) Capital
Expenditures (excluding any Capital Expenditures made as a result of a
Shareholder Contribution), minus (v) expenditures in respect of
Acquisitions (excluding any portion of Acquisition expenditures made as a
result of a Shareholder Contribution), minus (vi) Working Capital
Adjustment, minus (vii) payments of principal of Indebtedness, minus
(viii) income Taxes, in each case for the four fiscal quarters immediately
preceding the date of calculation."
(c) The definition of "Loan Documents" set forth in Article I of the
Credit Agreement is hereby amended to read as follows:
"`LOAN DOCUMENTS' means this Agreement, the Notes, the Security
Agreement, the Deeds of Trust, any other Collateral Document, the Fee
Letter, any Interest Hedge Agreement entered into with any Lender, and any
other document or agreement executed or delivered from time to time by the
Borrower, any Subsidiary of the Borrower or any other Person in connection
herewith or as security for the Obligations, including any such Loan
Document which is executed as a renewal, amendment, modification or
restatement of a Loan Document previously executed by Power-One LLC, a
Delaware limited liability company."
(d) The definition of "Member Contribution" set forth in Article I of the
Credit Agreement is hereby amended to be "Shareholder Contribution" and shall
read as follows:
"`SHAREHOLDER CONTRIBUTION' means any contribution of cash to the
Borrower or any Subsidiary of the Borrower made by any shareholder of the
Borrower or any of its Affiliates which is used by the Borrower for Capital
Expenditures or Acquisitions or pursuant to SECTION 8.1(c) or 8.1(q)
hereof."
(e) The definition of "Member Distributions" set forth in Article I of the
Credit Agreement is hereby amended to be "Shareholder Distributions" and shall
read as follows:
"`SHAREHOLDER DISTRIBUTIONS' means, as to any shareholder of the
Borrower or an Affiliate of such shareholder, the making by the Borrower of
any distribution, loan or advance to, or investment in, such Borrower or an
Affiliate of such member other than (a) advances, drawing accounts and
similar expenditures and salaries and bonuses paid in the ordinary course
of business, (b) sales of goods in the ordinary course of business, and
(c) Dividends."
(f) The definition of "Pretax Net Income" set forth in Article I of the
Credit Agreement
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is hereby amended to read as follows:
"`PRETAX NET INCOME' means net profit (or loss) before taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP."
(g) The definition of "Restricted Payments" set forth in Article I of the
Credit Agreement is hereby amended to read as follows:
"`RESTRICTED PAYMENTS' means, collectively, (i) Dividends,
(ii) Deferred Compensation, (iii) Shareholder Distributions, (iv) Xxxxxxxx
Fees, and (v) any (A) payment or prepayment of principal, premium or
penalty on any Subordinated Debt of the Borrower or any Subsidiary of the
Borrower or any defeasance, redemption, purchase, repurchase or other
acquisition or retirement for value, in whole or in part, of any
Subordinated Debt (including, without limitation, the setting aside of
assets or the deposit of funds therefor) and (B) prepayment of interest on
any Subordinated Debt.
(h) The definition of "Tax Distributions" set forth in Article I of the
Credit Agreement is hereby deleted therefrom.
(i) The fourth sentence of Section 4.1(a) of the Credit Agreement is
hereby amended to read as follows:
"Each of the Borrower and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
state, country or province of organization."
(j) The last sentence of Section 4.1(i) of the Credit Agreement is hereby
amended to read as follows:
"The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of their Taxes are, in the judgment of the
Borrower, adequate."
(k) Section 7.3(g) of the Credit Agreement is hereby amended to read as
follows:
"(g) Investments in the form of loans to Xxxxx X. Xxxx and Xxxx X
Xxxxxxx in a principal amount not to exceed $100,000 each for the purpose
of financing a portion of the purchase by such Persons of their respective
shareholder interest in the Borrower; and"
(l) Section 7.7 of the Credit Agreement is hereby amended to read as
follows:
"Section 7.7 CAPITAL EXPENDITURES. The Borrower shall not, and
shall not permit
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any Subsidiary of the Borrower to, make or commit to make any Capital
Expenditures (excluding any Capital Expenditures made as a result of a
Shareholder Contribution) during any fiscal year in an aggregate amount in
excess of $3,750,000 (the "MAXIMUM AMOUNT"); PROVIDED, HOWEVER, that the
Maximum Amount for each fiscal year shall be increased by an amount equal
to the excess, if any, of the Maximum Amount for the previous fiscal year
(before making any adjustments in accordance with this proviso) over the
actual aggregate Capital Expenditures (excluding any Capital Expenditures
made as a result of a Shareholder Contribution) for such previous fiscal
year."
(m) Section 7.8 of the Credit Agreement is hereby amended to read as
follows:
"Section 7.8 RESTRICTED PAYMENTS. The Borrower shall not, and shall
not permit any Subsidiary of the Borrower to, directly or indirectly
declare, pay or make any Restricted Payments except (i) any Subsidiary may
declare and pay Dividends to the Borrower, (ii) the Borrower shall be
permitted to pay (A) Deferred Compensation and (B) Xxxxxxxx Fees; provided,
further, however, the Borrower shall not pay or make any Restricted
Payments permitted by this SECTION 7.8 unless there shall exist no Default
or Event of Default prior to or after giving effect to any such proposed
Restricted Payment."
(n) Section 7.16 of the Credit Agreement is hereby amended to read as
follows:
"Section 7.16 CAPITAL STOCK. The Borrower shall not, and shall not
permit any Subsidiary of the Borrower to, issue, sell or otherwise dispose
of any Capital Stock in the Borrower or any Subsidiary of the Borrower or
any options or any rights to acquire such Capital Stock, except (i) to the
extent that the Net Cash Proceeds thereof are applied as provided in
SECTION 2.5(e) hereof or as described in SECTION 8.1(c) or (q) hereof and
(ii) any Subsidiary of the Borrower may issue Capital Stock to the
Borrower."
(o) Section 7.20 of the Credit Agreement is hereby amended to read as
follows:
"Section 7.20 AMENDMENT OF ORGANIZATIONAL DOCUMENTS. The Borrower
shall not, and shall not permit any Subsidiary of the Borrower to,
materially amend its certificate of formation, articles of incorporation or
partnership agreement, as applicable.
(p) Section 8.1(p) of the Credit Agreement is hereby amended to read as
follows:
"(p) Xxxxxxxx Group, Inc. and its Affiliates shall fail to (i) own at
least 51% of the voting Capital Stock of the Borrower or (ii) otherwise
manage and control the Borrower; or"
(q) Existing Section 8.1(q) of the Credit Agreement is hereby deleted and
existing Section 8.1(r) of the Credit Agreement is hereby redesignated as
"Section 8.1(q)" to read as follows:
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"(q) Except as a result of the Administrative Lender's gross
negligence or wilful misconduct, the Administrative Lender shall fail to
have a valid and perfected first priority Lien in 100% of the Capital Stock
of the Borrower."
2. CONSENT. Lenders hereby (i) consent to the Merger and (ii) agree that
the Merger shall not cause or result in a Default or Event of Default under the
Credit Agreement.
3. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its
execution and delivery hereof, the Borrower represents and warrants that,as of
the date hereof and after giving effect to the amendments provided in the
foregoing Section 1 and the consent provided in the foregoing Section 2:
(a) the representations and warranties contained in the Credit Agreement
are true and correct on and as of the date hereof as if made on and as of such
date;
(b) no event has occurred and is continuing which constitutes a Default or
an Event of Default;
(c) the Borrower has full power and authority to execute, deliver and
perform this First Amendment, the Notes (as defined in Section 4(c) of this
First Amendment), the Amended Collateral Documents (as defined in Section 4(d)
of this First Amendment) and the Credit Agreement, as amended by this First
Amendment, the execution, delivery and performance of this First Amendment, the
Notes, the Amended Collateral Documents, and the Credit Agreement, as amended by
this First Amendment, has been duly authorized by all corporate action of the
Borrower, and this First Amendment, the Notes, the Amended Collateral Documents,
and the Credit Agreement, as amended hereby, constitute the legal, valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable debtor
relief laws and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and except as rights
to indemnity may be limited by federal or state securities laws;
(d) neither the execution, delivery and performance of this First
Amendment, the Notes, the Amended Collateral Documents, or the Credit Agreement,
as amended by this First Amendment, nor the consummation of any transactions
herein or therein, will contravene or conflict with any Law to which the
Borrower or any of its Subsidiaries is subject or any indenture, agreement or
other instrument to which the Borrower or any of its Subsidiaries or any of
their respective property is subject; and
(e) no authorization, approval, consent or other action by, notice to, or
filing with, any governmental authority or other Person, is required for the
(i) execution, delivery or performance by the Borrower of this First Amendment,
the Notes, the Amended Collateral Documents, and the
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Credit Agreement, as amended by this First Amendment, or (ii) acknowledgement of
this First Amendment by PEI or PUM.
4. CONDITIONS OF EFFECTIVENESS. The First Amendment shall be effective
as of February 1, 1996, subject to the following (except as otherwise waived by
Determining Lenders):
(a) the Administrative Lender shall have received counterparts of this
First Amendment executed by the Determining Lenders;
(b) the Administrative Lender shall have received counterparts of this
First Amendment executed by the Borrower and acknowledged by PEI and PUM;
(c) the Administrative Lender shall have received for (i) NationsBank a
$7,500,000 Revolving Credit Note and a $15,000,000 Term Loan Note, (ii) Union
Bank a $5,000,000 Revolving Credit Note and a $10,000,000 Term Loan Note, and
(iii) City National Bank a $2,500,000 Revolving Credit Note and a $5,000,000
Term Loan Note, each duly executed by the Borrower (collectively, the "NOTES");
(d) the Administrative Lender shall have received such amendments,
modifications or restatements to the Collateral Documents as the Administrative
Lender shall require (collectively, the "AMENDED COLLATERAL DOCUMENTS"),
together with stock certificates evidencing 100% of the Capital Stock of the
Borrower and related stock powers;
(e) the Administrative Lender shall have received an Officer's Certificate
of the Borrower containing (i) certificate of incorporation of the Borrower
issued by the Delaware Secretary of State, (ii) bylaws of the Borrower,
(iii) corporation resolutions of the Borrower authorizing the execution and
delivery of this First Amendment, the Notes and the Amended Collateral Documents
to be executed by the Borrower and (iv) signatures and titles of officers of the
Borrower authorized to sign this First Amendment, the Notes and the Amended
Collateral Documents to be executed by the Borrower;
(f) the representations and warranties set forth in Section 3 shall be
true and correct; and
(g) the Administrative Lender and the Lenders shall have received in form
and substance satisfactory to the Administrative Lender and the Lenders, such
other documents, certificates and instruments as the Lenders shall require.
5. ACKNOWLEDGEMENT. By signing below, each of PEI and PUM
(i) acknowledges, consents and agrees to the execution, delivery and performance
by the Borrower of this First Amendment, the Notes, and the Amended Collateral
Documents and (ii) acknowledges and agrees that (A) its obligations in respect
of its Subordination Agreement are not released,
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diminished, waived, modified, impaired or affected in any manner by this First
Amendment or any of the provisions contemplated herein and (B) references to the
Borrower in the Subordination Agreement shall mean and refer to Power-One, Inc.,
a Delaware corporation.
6. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this First Amendment, each reference in the
Credit Agreement to "this Agreement", "hereunder", or words of like import shall
mean and be a reference to the Credit Agreement, as amended by this First
Amendment.
(b) The Credit Agreement, as amended by this First Amendment, and all
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.
7. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all
costs and expenses of the Administrative Lender in connection with the
preparation, reproduction, execution and delivery of the First Amendment and the
other instruments and documents to be delivered hereunder (including the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Lender).
8. EXECUTION IN COUNTERPARTS. This First Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which when taken together shall constitute but one and
the same instrument.
9. GOVERNING LAW; BINDING EFFECT. This First Amendment shall be governed
by and construed in accordance with the laws of the State of Texas and shall be
binding upon the Borrower and each Lender and their respective successors and
assigns.
10. HEADINGS. Section headings in this First Amendment are included
herein for convenience of reference only and shall not constitute a part of this
First Amendment for any other purpose.
11. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIRST
AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AS TO THE SUBJECT MATTER THEREIN AND HEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES.
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REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the date first above written.
POWER-ONE, INC.
By:
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Name:
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Title:
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NATIONSBANK OF TEXAS, N.A.,
Individually and as Administrative Lender
By:
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Name:
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Title:
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UNION BANK
By:
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Name:
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Title:
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CITY NATIONAL BANK
By:
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Name:
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Title:
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