EXHIBIT 10.34

 

Third Amendment to Credit Agreement

 

This Third Amendment to Credit Agreement (herein, the “Amendment”) is entered
into as of November 12, 2013, by and among Pioneer Power Solutions, Inc., a
Delaware corporation (the “Borrower”), the direct and indirect Domestic
Subsidiaries of the Borrower, as Guarantors, and Bank of Montreal, a Canadian
chartered bank acting through its Chicago branch (the “Bank”).

 

Preliminary Statements

 

A.       The Borrower, the Guarantors and the Bank entered into a certain Credit
Agreement, dated as of June 28, 2013 (the Credit Agreement, as the same has been
amended prior to the date hereof, being referred to herein as the “Credit
Agreement”). All capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement.

 

B.       The Borrower has requested that the Bank make certain amendments to the
Credit Agreement, and the Bank is willing to do so under the terms and
conditions set forth in this Amendment.

 

Now, Therefore, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

 

Section 1.            Amendments.

 

Subject to the satisfaction of the conditions precedent set forth in Section 2
below, the Credit Agreement shall be and hereby is amended as follows:

 

1.1.          Section 8.7(b) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

(b)          purchase money indebtedness and Capitalized Lease Obligations of
the Loan Parties in an amount not to exceed $1,000,000 in the aggregate at any
one time outstanding;

 

1.2.          Section 8.7 of the Credit Agreement shall be amended by deleting
the word “and” at the end of clause (n), deleting the period at the end of
clause (o) and replacing it with the phrase “; and”, and adding a new clause (p)
as follows:

 

(p)          that certain Guaranty of the Borrower dated as of August 19, 2013,
in favor of PICO Metal Products, Inc. and PICO Electrical Equipment, Inc., in an
amount not to exceed $625,000.

 

1.3.          Section 8.8(d) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

 

 

 

 

(d)          Liens on equipment of any Loan Party created solely for the purpose
of securing indebtedness permitted by Section 8.7(b) (including indebtedness
under that certain Purchase Agreement of Certain Assets by and among PICO Metal
Products, Inc., PICO Electrical Equipment, Inc. and Pioneer Custom Electrical
Products Corp.), representing or incurred to finance the purchase price of such
Property, provided that no such Lien shall extend to or cover other Property of
such Loan Party other than the respective Property so acquired, and the
principal amount of indebtedness secured by any such Lien shall at no time
exceed the purchase price of such Property, as reduced by repayments of
principal thereon;

 

1.4.          Section 8.23(c) of the Credit Agreement is hereby amended by
adding a new sentence at the end thereof to read as follows:

 

Notwithstanding the foregoing, for the fiscal quarters ending September 30, 2013
and December 31, 2013, if the Revolving Credit Exposure is $0 as of the last day
of such quarter, then the Borrower shall not be required to calculate the Fixed
Charge Coverage Ratio pursuant to this Section 8.23(c) for such quarter.

 

Section 2.          Conditions Precedent.

 

Subject to the satisfaction of all of the following conditions precedent,
Sections 1.1, 1.2 and 1.3 hereof shall be effective as of August 19, 2013 and
Section 1.4 hereof shall be effective as of September 30, 2013:

 

2.1.          The Borrower, the Guarantors and the Bank shall have executed and
delivered this Amendment.

 

2.2.         The Bank shall have received copies (executed or certified, as may
be appropriate) of all legal documents or proceedings taken in connection with
the execution and delivery of this Amendment to the extent the Bank or its
counsel may reasonably request.

 

2.3.         Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Bank and its counsel.

 

Section 3.          Representations.

 

In order to induce the Bank to execute and deliver this Amendment, the Borrower
hereby represents to the Bank that as of the date hereof (a)  the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct (except that the representations
contained in Section 6.5 shall be deemed to refer to the most recent financial
statements of the Borrower delivered to the Bank) and (b) the Borrower is in
compliance with the terms and conditions of the Credit Agreement and no Default
or Event of Default has occurred and is continuing under the Credit Agreement or
shall result after giving effect to this Amendment.

 

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Section 4.          Miscellaneous.

 

4.1.     The Borrower and the Guarantors heretofore executed and delivered to
the Bank the Security Agreement and certain other Collateral Documents. The
Borrower and the Guarantors hereby acknowledge and agree that the Liens created
and provided for by the Collateral Documents continue to secure, among other
things, the Secured Obligations arising under the Credit Agreement as amended
hereby; and the Collateral Documents and the rights and remedies of the Bank
thereunder, the obligations of the Borrower and Guarantors thereunder, and the
Liens created and provided for thereunder remain in full force and effect and
shall not be affected, impaired or discharged hereby. Nothing herein contained
shall in any manner affect or impair the priority of the liens and security
interests created and provided for by the Collateral Documents as to the
indebtedness which would be secured thereby prior to giving effect to this
Amendment.

 

4.2.     Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.

 

4.3.     The Borrower agrees to pay on demand all costs and expenses of or
incurred by the Bank in connection with the negotiation, preparation, execution
and delivery of this Amendment, including the reasonable fees and expenses of
counsel for the Bank.

 

4.4.     This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. Delivery
of a counterpart hereof by facsimile transmission or by e-mail transmission of
an Adobe portable document format file (also known as a “PDF” file) shall be
effective as delivery of a manually executed counterpart hereof. This Amendment
shall be governed by, and construed in accordance with, the internal laws of the
State of Illinois.

 

[Signature Page to Follow]

 

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This Third Amendment to Credit Agreement is entered into as of the date and year
first above written.

 

  “Borrower”       Pioneer Power Solutions, Inc.       By /s/ Andrew Minkow  
Name  Andrew Minkow   Title    CFO       “Guarantors”       Jefferson Electric,
Inc.       By /s/ Andrew Minkow   Name  Andrew Minkow   Title    CFO      
Pioneer Critical Power Inc.       By   /s/ Andrew Minkow   Name  Andrew Minkow  
Title    CFO       Pioneer Custom Electrical Products Corp.       By   /s/
Andrew Minkow   Name  Andrew Minkow   Title    CFO     Accepted and agreed to.  
      Bank of Montreal, acting through its Chicago Branch       By   /s/ Larry
Allan Swiniarski   Name  Larry   Title   Larry Allan Swiniarski

 

[Signature Page to Third Amendment to Credit Agreement]