EXHIBIT 10.1
CONSENT, WAIVER AND FIRST AMENDMENT TO CREDIT AGREEMENT
This CONSENT, WAIVER AND FIRST AMENDMENT TO CREDIT AGREEMENT
("Amendment") is dated as of June 15, 2000, and is entered into by and between
Cherokee International, LLC, a California limited liability company
("Borrower"), ▇▇▇▇▇▇ Financial, Inc., in its capacity as Agent for the Lenders
party to the Credit Agreement described below ("Agent"), and the Lenders which
are signatories hereto.
WHEREAS, Agent, Lenders and Borrower are parties to a certain Credit
Agreement dated April 30, 1999 (as such agreement has from time to time been
amended, supplemented or otherwise modified, the "Agreement"); and
WHEREAS, the Company desires to acquire Industrial and
Telecommunications Systems S.C.A., a Belgian company ("ITS OpCo") and Industrial
and Telecommunications Systems SPRL, a Belgian company ("ITS MgmtCo"; together
with ITS OpCo hereinafter sometimes referred to collectively as "ITS"); and
WHEREAS, the parties desire to amend the Agreement as hereinafter set
forth.
NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Agreement and this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINITIONS. Capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Agreement.
2. AMENDMENTS. Subject to the conditions set forth below, the
Agreement is amended as follows:
(a) Subsection 1.2 is amended by deleting the definition of
"LIBOR" and inserting the following in lieu thereof:
"LIBOR" means, for each Interest Period, a rate per
annum equal to:
(a) the offered rate for deposits in U.S. dollars in
an amount comparable to the amount of the applicable
Loan in the London interbank market which is
published by the British Bankers' Association, and
that currently appears on Telerate Page 3750, or any
other source available to Agent, as of 11:00 a.m.
(London time) on the day which is two (2) Business
Days prior to the first day of the relevant Interest
Period for a term comparable to such Interest Period;
or if, for any reason, such a rate is not published
by the British Bankers' Association on Telerate or
any other source available to Agent, the rate per
annum equal to the average rate (rounded
upwards, if necessary, to the nearest 1/100 of 1%)
at which Agent determines that U.S. dollars in an
amount comparable to the amount of the applicable
Loans are being offered to prime banks at
approximately 11:00 a.m. (London time) on the day
which is two (2) Business Days prior to the first day
of such Interest Period for a term comparable to such
Interest Period for settlement in immediately
available funds by leading banks in the London
interbank market selected by Agent DIVIDED BY
(b) a number equal to 1.0 MINUS the aggregate (but
without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect
on the day which is two (2) Business Days prior to
the beginning of such Interest Period (including,
without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other
governmental authority having jurisdiction with
respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of
such Board) which are required to be maintained by a
member bank of the Federal Reserve System; such rate
to be rounded upward to the next whole multiple of
one-sixteenth of one percent (.0625%).
(b) Subsection 1.1(A) is amended by deleting such
subsection in its entirety and inserting the following in lieu thereof:
(A) TERM LOANS.
(i) Each Lender agrees, severally and not jointly, to lend to
Borrower in one draw on the Closing Date, its Pro Rata Share of the
aggregate amount of $50,000,000.00 (the "Term Loan A"). Borrower shall
repay the Term Loan A through periodic payments on the dates and in the
amounts indicated below ("Term Loan A Scheduled Installments"). Amounts
borrowed under this subsection 1.1(A)(i) and repaid may not be
reborrowed.
DATE SCHEDULED INSTALLMENT
---- ---------------------
September 30, 1999 $625,000.00
December 31, 1999 $625,000.00
March 31, 2000 $625,000.00
June 30, 2000 $582,278.48
September 30, 2000 $1,397,468.35
December 31, 2000 $1,397,468.35
March 31, 2001 $1,397,468.35
June 30, 2001 $1,397,468.35
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September 30, 2001 $1,863,291.14
December 31, 2001 $1,863,291.14
March 31, 2002 $1,863,291.14
June 30, 2002 $1,863,291.14
September 30, 2002 $2,072,911.39
December 31, 2002 $2,072,911.39
March 31, 2003 $2,072,911.39
June 30, 2003 $2,072,911.39
September 30, 2003 $2,562,025.32
December 31, 2003 $2,562,025.32
March 31, 2004 $2,562,025.32
June 30, 2004 $2,562,025.32
September 30, 2004 $3,144,303.80
December 31, 2004 $3,144,303.80
March 31, 2005 $3,144,303.80
April 30, 2005 The remaining unpaid principal
balance of the Term Loan A
(ii) Each Term Loan B Lender agrees, severally and not
jointly, to lend to Borrower in one draw on the First Amendment Closing
Date, its Pro Rata Share of the aggregate amount of $8,000,000.00 (the
"Term Loan B"). Borrower shall repay the Term Loan B through periodic
payments on the dates and in the amounts indicated below ("Term Loan B
Scheduled Installments"). Amounts borrowed under this subsection
1.1(A)(ii) and repaid may not be reborrowed.
June 30, 2000 $20,000.00
September 30, 2000 $20,000.00
December 31, 2000 $20,000.00
March 31, 2001 $20,000.00
June 30, 2001 $20,000.00
September 30, 2001 $20,000.00
December 31, 2001 $20,000.00
March 31, 2002 $20,000.00
June 30, 2002 $20,000.00
September 30, 2002 $20,000.00
December 31, 2002 $20,000.00
March 31, 2003 $20,000.00
June 30, 2003 $20,000.00
September 30, 2003 $20,000.00
December 31, 2003 $20,000.00
March 31, 2004 $20,000.00
June 30, 2004 $20,000.00
September 30, 2004 $20,000.00
December 31, 2004 $20,000.00
March 31, 2005 $20,000.00
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April 30, 2005 The remaining unpaid principal
balance of the Term Loan B
(c) Subsection 1.1(E)(ii) is amended by deleting such
subsection in its entirety and inserting the following in lieu thereof:
(ii) a Note to evidence each Term Loan, such Notes to be in
the principal amount of such Lender's Pro Rata Share of the
respective Term Loans
(d) Subsection 1.2(A)(2) is amended by deleting such
subsection in its entirety and inserting the following in lieu thereof:
(2) The Term Loans shall bear interest as follows:
(a) If a Base Rate Loan, then at the sum of the
Base Rate PLUS the Base Rate Margin applicable to the
respective Term Loan.
(b) If a LIBOR Loan then at the sum of the LIBOR
PLUS the LIBOR Margin applicable to the respective Term Loan.
(e) Subsection 1.2(A) is amended by deleting the Pricing
Table appearing in such subsection in its entirety and inserting the following
Pricing Table in lieu thereof:
PRICING TABLE
====================================================================================================================
Total Indebtedness Base Rate Base LIBOR LIBOR
to Pro Forma EBITDA Margin Rate Margin Margin
Ratio Margin
--------------------------------------------------------------------------------
Revolving Term Revolving Term
Loans and Loan B Loans and Loan B
Term Loan A Term Loan A
--------------------------------------------------------------------------------------------------------------------
Greater than or equal to 1.75% 2.25% 3.00% 3.50%
5.50:1
--------------------------------------------------------------------------------------------------------------------
Greater than or equal to 1.50% 2.00% 2.75% 3.25%
4.75:1 but less than
5.50:1
--------------------------------------------------------------------------------------------------------------------
Greater than or equal to 1.25% 1.75% 2.50% 3.00%
4.00:1 but less than
4.75:1
--------------------------------------------------------------------------------------------------------------------
Greater than or equal to 1.00% 1.75% 2.25% 3.00%
3.25:1 but less than
4.00:1
--------------------------------------------------------------------------------------------------------------------
Less than 3.25:1 0.75% 1.75% 2.00% 3.00%
====================================================================================================================
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(f) Subsection 1.2(G) is amended by deleting the first
two sentences of such subsection in its entirety and inserting the following
sentences in lieu thereof:
All Loans made on the Closing Date and the Term Loan B made on the
First Amendment Closing Date shall be Base Rate Loans and remain so for
three (3) days. Borrower may request that Revolving Loans to be made be
LIBOR Loans, that outstanding portions of the Term Loans be converted
to LIBOR Loans and that all or any portion of a LIBOR Loan be continued
as a LIBOR Loan upon expiration of the applicable Interest Period.
(g) Subsection 1.5(A) is amended by deleting such
subsection in its entirety and inserting the following in lieu thereof:
(A) VOLUNTARY PREPAYMENT OF TERM LOANS. At any
time, Borrower may prepay the Term Loans, in whole or in part, but with
LIBOR Breakage Fees, if applicable. Borrower may prepay Term Loan B
before or on a Pro Rata basis with Term Loan A. Payments shall be
applied in accordance with subsection 1.5(E) or as otherwise may be
agreed to by Requisite Lenders.
(h) Section 3 is amended by inserting the following at
the end of said section:
3.15 ITS COMPANY RESTRICTIONS. Borrower will not
at any time permit (i) Cherokee Netherlands I B.V. to engage in any
line of business or conduct any business operations other than acting
as a single purpose holding company of the stock of Cherokee
Netherlands II B.V., nor permit Cherokee Netherlands I B.V. to have any
Indebtedness or any creditor other than Indebtedness owing to the
Borrower in accordance with the terms hereof which is subject to the
Tri-Party Agreement Re: Payment Procedures, (ii) Cherokee Netherlands
II B.V. to engage in any line of business or conduct any business
operations other than acting as a single purpose holding company of the
stock of Cherokee Belgium I, nor permit Cherokee Netherlands II B.V. to
have any Indebtedness or any creditor other than Indebtedness owing to
the Cherokee Netherlands I B.V. in accordance with the terms hereof,
(iii) Cherokee Belgium I to engage in any line of business or conduct
any business operations other than acting as a single purpose holding
company of the stock of Industrial and Telecommunications Systems
S.C.A. and/or Industrial and Telecommunications Systems SPRL, nor
permit Cherokee Belgium I to have any Indebtedness or any creditor
other than Indebtedness owing to Cherokee Netherlands II B.V. in
accordance with the terms hereof. The Borrower will not permit the ITS
Companies to form or permit to exist any Subsidiary other than those in
existence on June 15, 2000 and as disclosed to the Banks prior to such
date. The Borrower will at all times maintain ownership of 100% of the
capital stock of Cherokee Netherlands I B.V.
(i) Subsection 3.1(B) is deleted in its entirety and the
following is substituted in lieu thereof:
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(B) Indebtedness owing: (a) by the Borrower to a
Subsidiary; (b) by a Domestic Subsidiary to the Borrower or a
Subsidiary; (c) by a Foreign Subsidiary, other than an ITS Company,
owing to the Borrower or any Domestic Subsidiary in an aggregate amount
not to exceed $7,500,000.00; (d) by the ITS Companies owing to
non-affiliated third parties in an aggregate amount not to exceed
$5,000,000.00; and (e) in connection with the ITS acquisition, by the
ITS Companies and Borrower to each other and Borrower, as applicable,
in an aggregate amount not to exceed $53,000,000.00.
(j) Subsection 3.3 is amended by inserting the following
at the end of said subsection:
(L) Following the First Amendment Closing Date,
Investments in the ITS Companies not to exceed $3,500,000.00 in the
aggregate at any time.
(k) Subsection 4.1 is amended by deleting such subsection
in its entirety and inserting the following Subsection in lieu thereof:
4.1 CAPITAL EXPENDITURE LIMITS. Borrower shall not permit
the aggregate amount of all Capital Expenditures of Borrower and its
Subsidiaries to exceed (the "Capex Limit"): (i) from the Closing Date through
and including December 31, 1999, $2,100,000.00, (ii) for calendar year 2000,
$5,500,000.00, (iii) for calendar year 2001, $7,000,000.00 plus 10% of the
amount of EBITDA for such calendar year (and NOT on Pro Forma EBITDA) in excess
of $48,000,000.00, and (iv) for each calendar year after 2001, $4,600,000.00
annually plus 10% of the amount of EBITDA for such calendar year (and NOT on Pro
Forma EBITDA) in excess of $48,000,000.00.
(l) Subsection 4.3 is amended by deleting such subsection
in its entirety and inserting the following Subsection in lieu thereof:
4.3 FIXED CHARGE COVERAGE. Borrower shall not permit the
Fixed Charge Coverage on the last day of any fiscal quarter ending during any of
the periods set forth below to be less than the Fixed Charge Coverage set forth
below for such period.
------------------------------------------------------------------
PERIOD MINIMUM FIXED
CHARGE COVERAGE
------------------------------------------------------------------
Closing Date through 1.05x
12/31/99
------------------------------------------------------------------
1/1/00 through 3/31/00 1.10x
------------------------------------------------------------------
4/1/00 through 12/31/01 1.00x
------------------------------------------------------------------
1/1/02 through 9/30/03 1.05x
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Thereafter 1.10x
------------------------------------------------------------------
"Fixed Charge Coverage" will be calculated as illustrated on Exhibit
4.6(D).
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(m) Subsection 4.4 is amended by deleting such subsection
in its entirety and inserting the following Subsection in lieu thereof:
4.4 TOTAL INTEREST COVERAGE. Borrower shall not permit
the Total Interest Coverage on the last day of any fiscal quarter ending during
any of the periods set forth below to be less than the Total Interest Coverage
set forth below for such period:
------------------------------------------------------------------
PERIOD MINIMUM TOTAL
INTEREST COVERAGE
------------------------------------------------------------------
Closing Date through 1.80x
12/31/99
------------------------------------------------------------------
1/1/00 - 3/31/00 2.10x
------------------------------------------------------------------
4/1/00 - 12/31/00 1.60x
------------------------------------------------------------------
1/1/01 - 6/30/01 1.65x
------------------------------------------------------------------
7/1/01 - 9/30/01 1.75x
------------------------------------------------------------------
10/1/01 - 12/31/01 1.90x
------------------------------------------------------------------
1/1/02 - 6/30/02 2.20x
------------------------------------------------------------------
7/1/02 - 12/31/02 2.45x
------------------------------------------------------------------
Thereafter 2.75x
------------------------------------------------------------------
"Total Interest Coverage" will be calculated as illustrated on Exhibit
4.6(D).
(n) Subsection 4.5 is amended by deleting such subsection
in its entirety and inserting the following Subsection in lieu thereof:
4.5 TOTAL INDEBTEDNESS TO PRO FORMA EBITDA
RATIO. Borrower shall not permit the Total Indebtedness to Pro Forma EBITDA
Ratio calculated as of the last day of any fiscal quarter for any of the periods
set forth below to be greater than the Total Indebtedness to Pro Forma EBITDA
Ratio set forth below for such period:
----------------------------------------------------------------
PERIOD MAXIMUM TOTAL
INDEBTEDNESS TO
PRO FORMA
EBITDA RATIO
----------------------------------------------------------------
Closing through 9/30/99 5.25x
----------------------------------------------------------------
10/1/99 - 12/31/99 5.00x
----------------------------------------------------------------
1/1/00 - 3/31/00 4.50x
----------------------------------------------------------------
4/1/00 - 6/30/00 5.50x
----------------------------------------------------------------
7/1/00 - 9/30/00 5.35x
----------------------------------------------------------------
10/1/00 - 12/31/00 5.25x
----------------------------------------------------------------
1/1/01 - 3/31/01 5.15x
----------------------------------------------------------------
4/1/01 - 6/30/01 4.95x
----------------------------------------------------------------
7/1/01 - 9/30/01 4.70x
----------------------------------------------------------------
10/1/01 - 12/31/01 4.50x
----------------------------------------------------------------
7
1/1/02 - 3/31/02 4.30x
----------------------------------------------------------------
4/1/02 - 6/30/02 4.10x
----------------------------------------------------------------
7/1/02 - 9/30/02 3.90x
----------------------------------------------------------------
10/1/02 - 12/31/02 3.75x
----------------------------------------------------------------
1/1/03 - 3/31/03 3.65x
----------------------------------------------------------------
4/1/03 - 6/30/03 3.50x
----------------------------------------------------------------
7/1/03 - 9/30/03 3.35x
----------------------------------------------------------------
10/1/03 - 12/31/03 3.20x
----------------------------------------------------------------
Thereafter 3.00x
----------------------------------------------------------------
(o) Subsection 10.1 is amended by inserting the following
definitions in their proper alphabetical order and where, necessary, deleting
the existing definition:
"CONSENTING LENDER" or "CONSENTING LENDERS" means each Lender
under the Agreement that consents to and is a signatory to the First Amendment.
"FIRST AMENDMENT" means that certain Consent, Waiver and First
Amendment to Credit Agreement dated as of June 15, 2000, entered into by and
between Borrower and Consenting Lenders.
"FIRST AMENDMENT CLOSING DATE" means June 15, 2000.
"ITS COMPANIES" means those companies formed in connection
with the acquisition of Industrial and Telecommunications Systems S.C.A., a
Belgian company ("ITS OpCo") and Industrial and Telecommunications Systems SPRL,
a Belgian company ("ITS MgmtCo"), including Cherokee Netherlands I B.V.,
Cherokee Netherlands II B.V., and Cherokee Belgium I.
"PRO RATA SHARE" means (a) with respect to a Lender's
obligation to lend a portion of the Term Loan A and receive payments of interest
and principal with respect thereto, the percentage obtained by dividing (i) such
Lender's commitment to make a portion of the Term Loan A, as set forth on the
signature page of this Agreement opposite such Lender's signature or in the most
recent Assignment and Acceptance Agreement, if any, executed by such Lender, by
(ii) all such commitments of all Lenders to make the Term Loan A, (b) with
respect to a Lender's obligation to lend a portion of the Term Loan B and
receive payments of interest and principal with respect thereto, the percentage
obtained by dividing (i) such Lender's commitment to make a portion of the Term
Loan B, as set forth on the signature page of the First Amendment opposite such
Lender's signature or in the most recent Assignment and Acceptance Agreement, if
any, executed by such Lender, by (ii) all such commitments of all Lenders to
make the Term Loan B, (c) with respect to a Lender's obligation to make
Revolving Loans and receive payments of interest and principal with respect
thereto (and with respect to the related commitment fee described in subsection
1.2(B)) and with respect to a Lender's obligation to share in Risk Participation
Liability (and with respect to the related Risk Participation Liability fee
described in subsection 1.2(C)), the percentage obtained by dividing (i) such
Lender's commitment to make Revolving Loans, as set forth on the signature page
of this Agreement opposite such Lender's signature or in the most recent
Assignment and Acceptance Agreement, if any, executed by such Lender, by (ii)
all such commitments of all Lenders
8
to make Revolving Loans and (d) with respect to all other matters (including
without limitation the indemnification obligations arising under subsection
8.2(E)), the percentage obtained by dividing (i) the sum of the then
outstanding portion of the Term Loans which was funded by such Lender, PLUS
the commitment of such Lender to make Revolving Loans, as set forth on the
signature page of this Agreement opposite such Lender's signature or in the
most recent Assignment and Acceptance Agreement, if any, executed by such
Lender, by (ii) the sum of the then outstanding Term Loans, PLUS the
aggregate Revolving Loan Commitment.
"SECURITY DOCUMENTS" means all instruments, documents and
agreements executed by or on behalf of any Person to guaranty or provide
collateral security with respect to the Obligations including, without
limitation, any security agreement or pledge agreement, the Tri-Party
Agreement Re: Payment Procedures, any guaranty of the Obligations, any
mortgage or deed of trust, and all instruments, documents and agreements
executed pursuant to the terms of the foregoing.
"SCHEDULED INSTALLMENTS" means the Term Loan A Scheduled
Installments and the Term Loan B Scheduled Installments.
"TERM LOAN B LENDER" or "TERM LOAN B LENDERS" means each
Lender that lends a portion of the Term Loan B as indicated on the signature
pages attached hereto.
"TERM LOANS" means the Term Loan A and the Term Loan B, and
"TERM LOAN" means any one of them.
"TRI-PARTY AGREEMENT RE: PAYMENT PROCEDURES" means the that
certain Tri-Party Agreement Re: Payment Procedures among Borrower, Agent and
Cherokee Netherlands I B.V. dated on or about the First Amendment Closing Date,
as from time to time amended or modified in accordance with the terms thereof.
(p) The term "Term Loan" appearing in (i) the definition
of "Total Indebtedness to Pro Forma EBITDA Ratio in Subsection 1.2(A) of the
Credit Agreement, (ii) the final paragraph of Subsection 1.2(A), (iii)
Subsections 1.5(B) through 1.5(E), (iii) Subsection 6.3, (iv) Subsection 6.5,
(v) Subsection 8.1, (vi) Subsection 8.6(B), and (vii) the definitions of "Loan",
"Loans", and "Requisite Lenders" in Subsection 10.1 of the Credit Agreement is
hereby deleted and the phrase "Term Loans" inserted in lieu thereof.
3. WAIVERS. Each of the following waivers is a limited
waiver and shall not be deemed to constitute a waiver of any other Event of
Default or any future breach of the Agreement or any of the other Loan
Documents.
(a) Agent and Consenting Lenders, other than Bank Austria
Creditanstalt Corporate Finance, Inc. ("Bank Austria"), hereby waive the
requirement pursuant to Subsection 1.5(B) that the Borrower make a prepayment of
Excess Cash Flow for the 1999 fiscal year. The preceding sentence
notwithstanding, and pursuant to Subsection 1.5(B), Borrower shall deliver to
Agent, for the account of Bank Austria, an amount equal to Bank Austria's Pro
Rata Share of the Excess Cash Flow prepayment otherwise payable to Bank Austria
for fiscal year 1999 pursuant to
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Subsection 1.5(B). Agent and Consenting Lenders hereby agree that such
prepayment shall be applied solely to Bank Austria.
(b) In connection with, and solely limited to, Borrower's
acquisition of ITS and the formation of the various companies in connection
thereto (the "Acquisition"), as contemplated herein, Agent and the Consenting
Lenders hereby waive the following requirements under the Agreement: (i) that
the Borrower make a prepayment pursuant to Subsection 1.5(D) as a result of the
issuance of new securities arising out of the Acquisition; (ii) the restrictions
pursuant to Subsection 3.6(d) on the purchase of all or a substantial part of
the business or assets of a Person, other than Permitted Acquisitions; (iii) the
restrictions pursuant to Subsection 3.8 on transactions with affiliates; and
(iv) the restriction pursuant to Subsection 3.13 on the creation or acquisition
of any new Subsidiary.
4. CONSENT. Agent and Lenders hereby consent, subject to the
satisfaction of the conditions described in Section 5 below, to the acquisition
by the Borrower of ITS and the use of proceeds of up to $12,000,000.00 of
Revolving Loans to pay a portion of the purchase price of the Acquisition.
5. CONDITIONS. The effectiveness of this Amendment is subject to
the following conditions precedent (unless specifically waived in writing by
Agent):
(a) Borrower and the Requisite Lenders shall have
executed and delivered this Amendment, and such other documents and instruments
as Agent may require shall have been executed and/or delivered to Agent;
(b) All proceedings taken in connection with the
transactions contemplated by this Amendment and all documents, instruments and
other legal matters incident thereto shall be satisfactory to Agent and its
legal counsel;
(c) No Default or Event of Default shall have occurred
and be continuing;
(d) Borrower shall have paid Agent (i) for the benefit of
Consenting Lenders, other than Bank Austria, an amendment fee of .25% of each
Consenting Lender's aggregate commitments as in effect immediately prior to the
execution of this Amendment, (ii) for the benefit of Term Loan B Lenders an
amendment fee in the amount of 1.50% of the amount of Term Loan B, payable to
each Lender based upon its Pro Rata Share of Term Loan B, and (iii) all
expenses, including reasonable attorney's fees, incurred by the Agent in
connection with the preparation, negotiation and execution of this Amendment and
the other documents executed in connection therewith;
(e) The Acquisition shall have been consummated and in
connection therewith the Agent shall have received: (i) a pledge agreement
pledging 65% of the capital stock or similar equity interest, whether
certificated or uncertificated, of Cherokee Netherlands I B.V., (ii) a deed of
pledge pledging 65% of the capital stock or similar equity interest, whether
certificated or uncertificated, of Cherokee Netherlands I B.V., (iii) a pledge
agreement pledging 65% of the capital
10
stock or similar equity interest, whether certificated or uncertificated, of
Cherokee Netherlands II B.V., (iv) a deed of pledge pledging 65% of the capital
stock or similar equity interest, whether certificated or uncertificated, of
Cherokee Netherlands II B.V., (v) an opinion of Dutch counsel that the Agent has
a perfected first priority security interest in such stock, (vi) an opinion of
Borrower's United States counsel as to the validity and enforceability of this
Amendment and the other documents executed in connection herewith, (vii) a Term
Loan B Note for each Term Loan B Lender, (viii) evidence reasonably satisfactory
to the Agent that the aggregate consideration paid for the Acquisition does not
exceed $55,000,000.00, approximately $34,300,000.00 of which shall have been
contributed in cash by the shareholders of the Borrower, and (ix) an officer's
certificate of the Borrower certifying that the incurrence of the Indebtedness
in connection with the Acquisition does not violate the provisions of that
certain Indenture, dated as of April 30, 1999 (the "Indenture"), by and among
Borrower and Cherokee International Finance, Inc., as Issuers, and Firstar Bank
of Minnesota, N.A., as Trustee. Borrower hereby agrees that Agent's failure to
receive the documents referenced in and pursuant to this Subsection 5(e) via (i)
facsimile on the First Amendment Closing Date and (ii) overnight delivery within
four Business Days of the First Amendment Closing Date will constitute an Event
of Default under the Agreement.
(f) Agent shall receive (a) via facsimile within one day
of the First Amendment Closing Date and (b) via overnight delivery within four
Business Days of the First Amendment Closing Date (i) a pledge agreement
pledging 100% of the membership interests of Borrower owned by OCM/GFI Cherokee
Investments II, Inc., together with an assignment separate from certificate
relating thereto and the original membership interest certificate evidencing
such membership interests, (ii) an opinion from the general counsel of OCM/GFI
Cherokee Investments II, Inc. as to the validity and enforceability of said
pledge agreement and that Agent has a perfected first priority security interest
in such membership interests, (iii) a reliance letter addressed to the Agent
from the seller's Dutch counsel covering the seller's obligations under the ITS
acquisition documents. Borrower hereby agrees that Agent's failure to receive
the documents referenced in and pursuant to this Subsection 5(f) will constitute
an Event of Default under the Agreement, and (iv) delivery of all membership
interest certificates relating to the Pledge Agreements (as defined below) which
evidence the membership interests described on the applicable Exhibits A-1
through A-9 attached hereto .
6. REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders to
enter into this Amendment, Borrower represents and warrants to Agent and
Lenders:
(a) that the execution, delivery and performance of this
Amendment has been duly authorized by all requisite limited liability action on
the part of Borrower and that this Amendment has been duly executed and
delivered by Borrower; and
(b) that, except as set forth on the schedules attached
hereto, each of the representations and warranties set forth in Section 5 of the
Agreement (other than those which, by their terms, specifically are made as of
certain date prior to the date hereof) are true and correct in all material
respects as of the date hereof.
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7. SEVERABILITY. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
8. REFERENCES. Any reference to the Agreement contained in any
document, instrument or agreement executed in connection with the Agreement
shall be deemed to be a reference to the Agreement as modified by this
Amendment.
9. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument.
10. RATIFICATION. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions of
the Agreement and shall not be deemed to be a consent to the modification or
waiver of any other term or condition of the Agreement. Except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Agreement are ratified and confirmed and shall continue in full force and
effect.
11. SENIOR INDEBTEDNESS. The Obligations, including, without
limitation, the principal of, and interest on, Term Loan B, shall constitute
"Senior Indebtedness"under the Indenture and the Borrower hereby certifies that
the incurrence of such Indebtedness does not violate the provisions of said
Indenture.
12. PLEDGE AGREEMENTS. Reference is hereby made to the following
membership interest pledge agreements dated as of April 30, 1999 relating to the
pledge of membership interests of the Borrower (collectively, the "Pledge
Agreements"):
a. Member Interest Pledge Agreement by and between
Cherokee Investor Partners and ▇▇▇▇▇▇
b. Member Interest Pledge Agreement by and between Bikor
and ▇▇▇▇▇▇
c. Member Interest Pledge Agreement by and between
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustees of the
▇▇▇▇▇ Family Trust dated July 17, 1987 ("▇▇▇▇▇ Family
Trust") and ▇▇▇▇▇▇
d. Member Interest Pledge Agreement by and between ▇▇▇▇
▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇ 1997 Irrevocable
Trust I dated November 3, 1997 ("▇▇▇▇▇▇ ▇▇▇▇▇ Trust
I") and ▇▇▇▇▇▇
e. Member Interest Pledge Agreement by and between ▇▇▇▇
▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇ 1997 Irrevocable
Trust II dated November 3, 1997 ("▇▇▇▇▇▇ ▇▇▇▇▇ Trust
II") and ▇▇▇▇▇▇
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f. Member Interest Pledge Agreement by and between ▇▇▇▇
▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇ 1997 Irrevocable
Trust III dated November 3, 1997 ("▇▇▇▇▇▇ ▇▇▇▇▇ Trust
III") and ▇▇▇▇▇▇
g. Member Interest Pledge Agreement by and between ▇▇▇▇
▇▇▇▇▇, Trustee of the ▇▇▇▇▇ ▇▇▇▇▇ 1997 Irrevocable
Trust I dated November 3, 1997 ("▇▇▇▇▇ ▇▇▇▇▇ Trust
I") and ▇▇▇▇▇▇
h. Member Interest Pledge Agreement by and between ▇▇▇▇
▇▇▇▇▇, Trustee of the ▇▇▇▇▇ ▇▇▇▇▇ 1997 Irrevocable
Trust II dated November 3, 1997 ("▇▇▇▇▇ ▇▇▇▇▇ Trust
II") and ▇▇▇▇▇▇
i. Member Interest Pledge Agreement by and between ▇▇▇▇
▇▇▇▇▇, Trustee of the ▇▇▇▇▇ ▇▇▇▇▇ 1997 Irrevocable
Trust III dated November 3, 1997 and ▇▇▇▇▇▇
As part of the acquisition by the Borrower of the ITS Companies, the
various Pledgors (as such term is defined in the Pledge Agreements) are
modifying their holdings of Pledged Shares (as such term is defined in the
Pledge Agreements). Such Pledged Shares are required to be pledged to the
Pledgee (as defined in the Pledge Agreements). Accordingly, effective as of the
First Amendment Closing Date, a substitute Exhibit A to each Pledge Agreement in
the form attached to this Amendment, as applicable, as Exhibit A-1 through A-9,
reflecting certain changes in the membership ownership of the Pledgors shall
apply to the various Pledge Agreements.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal and delivered by their respective duly authorized
officers on the date first written above.
CHEROKEE INTERNATIONAL, LLC
By: ____________________________________
Name:____________________________________
Title: _________________________________
Consent, Waiver and First Amendment to Credit Agreement
▇▇▇▇▇▇ FINANCIAL, INC., as Agent and
Lender
By: ____________________________________
Name:___________________________________
Title: _________________________________
Commitment to make
Term Loan B:
$4,000,000.00
Percentage of Term Loan B:
50.00%
Consent, Waiver and First Amendment to Credit Agreement
15
FLEET CAPITAL
By: _____________________________________
Name:____________________________________
Title: __________________________________
Commitment to make
Term Loan B:
$2,000,000.00
Percentage of Term Loan B:
25.00%
Consent, Waiver and First Amendment to Credit Agreement
16
U.S. BANK
By: _____________________________________
Name:____________________________________
Title: __________________________________
Commitment to make
Term Loan B:
$2,000,000.00
Percentage of Term Loan B:
25.00%
Consent, Waiver and First Amendment to Credit Agreement
17
KEY CORPORATE CAPITAL INC.
By: ____________________________________
Name:___________________________________
Title: _________________________________
Consent, Waiver and First Amendment to Credit Agreement
18
FINOVA CAPITAL CORPORATION
By: ____________________________________
Name:___________________________________
Title: _________________________________
Consent, Waiver and First Amendment to Credit Agreement
19
CONSENT AND REAFFIRMATION
The undersigned ("Guarantor") hereby (i) acknowledges receipt of a copy
of the foregoing Consent, Waiver and First Amendment to Credit Agreement; (ii)
consents to Borrower's execution and delivery thereof; (iii) agrees to be bound
thereby; and (iv) affirms that nothing contained therein shall modify in any
respect whatsoever its guaranty of the obligations of Borrower to Agent and
Lenders pursuant to the terms of that certain Guaranty dated April 30, 1999 (the
"Guaranty") and reaffirms that the Guaranty is and shall continue to remain in
full force and effect. Although Guarantor has been informed of the matters set
forth herein and has acknowledged and agreed to same, Guarantor understands that
Agent and Lenders have no obligation to inform Guarantor of such matters in the
future or to seek Guarantor's acknowledgment or agreement to future amendments
or waivers, and nothing herein shall create such a duty.
IN WITNESS WHEREOF, the undersigned has executed this Consent and
Reaffirmation on and as of the date of such Amendment.
CHEROKEE INTERNATIONAL FINANCE, INC.
By: _______________________________________
Name:______________________________________
Title: ____________________________________
Consent, Waiver and First Amendment to Credit Agreement
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