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Exhibit 10.3    
    


 
 

WAIVER AND FIRST AMENDMENT
  TO AMENDED AND RESTATED CREDIT AGREEMENT    
    


        This WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT ("Amendment") is dated as of June 30, 2003 and is entered into by and among
Cherokee International Corporation, a Delaware corporation ("Borrower"), Heller Financial, Inc., in its capacity as Agent for the Lenders party to the Agreement described below ("Agent"), and
the Lenders which are signatories hereto. 


        WHEREAS,
Agent, Lenders and Borrower are parties to a certain Amended and Restated Credit Agreement dated as of November 27, 2002 (as such agreement may be further amended,
restated, supplemented or otherwise modified and in effect from time to time, the "Agreement"); 


        WHEREAS,
Borrower has requested a waiver of compliance with the provisions set forth on Exhibit A hereto (the "Waived Provisions") and the Lenders are willing to waive the Waived
Provisions on the terms, and subject to the conditions, set forth herein; and 



        WHEREAS,
the Borrower has requested that the Agreement be amended as set forth herein and the Lenders are willing to so amend the Agreement subject to the terms and conditions set forth
in this Amendment. 


        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 in this Amendment, the Agreement is hereby amended as
follows: 



        (a)   Section 4.3
of the Agreement is amended by deleting the table therein in its entirety and replacing it with the following table: 



	Period
 
	 	Minimum Fixed

Charge Coverage
	 
	Restatement Effective Date through 12/31/02	 	N.A.	 
	3/31/03	 	0.65	x
	6/30/03 through 9/30/03	 	0.55	x
	12/31/03	 	0.75	x
	3/31/04 through 6/30/05	 	1.00	x
	Thereafter	 	1.05	x






        (b)   Section 4.4
of the Agreement is amended by deleting the table therein in its entirety and replacing it with the following table: 



	Period
 
	 	Minimum Total

Interest Coverage
	 
	Restatement Effective Date through 12/31/02	 	N.A.	 
	3/31/03	 	0.85	x
	6/30/03	 	0.75	x
	9/30/03	 	0.90	x
	Thereafter	 	1.50	x








 

        (c)   Section 4.5
of the Agreement is amended by deleting the table therein in its entirety and replacing it with the following table: 



	Period
 
	 	Maximum Senior

Indebtedness to

EBITDA Ratio
	 
	Restatement Effective Date through 12/31/02	 	N.A.	 
	3/31/03	 	1.55	x
	6/30/03 through 9/30/03	 	2.30	x
	12/31/03	 	2.20	x
	3/31/04 through 3/31/05	 	1.75	x
	6/30/05	 	1.60	x
	Thereafter	 	1.50	x






        (d)   Section 6.1
of the Agreement is amended by inserting a new subsection (S) at the end of such Section, which subsection (s) shall read as follows: 



        (S)    Foreign Pledges.    The failure of Borrower to provided to Agent for the benefit of the Lenders a valid and
enforceable first priority pledge of stock of 65% of each of its Foreign Subsidiaries by August 15, 2003. 




        (e)   Exhibit 1.5(B)
of the Agreement is amended by adding to the end of the paragraph on page 2 thereof that begins "The aggregate of all voluntary prepayments of the
Term Loans," the following phrase: "and all prepayments of the Term Loans under the GSC Credit Agreement". 


        (f)    Exhibit 4.6(D)
of the Agreement is amended as follows: 



          (i)  By
deleting in its entirety the first paragraph in the section entitled "Fixed Charge Coverage," which begins "Fixed Charge Coverage shall be calculated on a trailing
twelve month basis," and replacing it with the following paragraph: 




"Fixed
Charge Coverage shall be calculated on a trailing twelve-month basis ending on the most recent Determination Date, and is otherwise defined as follows:". 





         (ii)  By
deleting in its entirety the paragraph under the heading "Operating Cash Flow" in the section entitled "Fixed Charge Coverage," which begins "EBITDA shall be
calculated on a trailing twelve month basis," and replacing it with the following paragraph: 




"EBITDA
shall be calculated on a trailing twelve-month basis ending on the most recent Determination Date, and is otherwise defined as follows:". 





        (iii)  By
adding the following paragraph after the paragraph that begins "Losses (or less gains) from Asset Dispositions," which is located under the heading "Operating Cash
Flow" in the section entitled "Fixed Charge Coverage": 




"Expenses
included in the determination of net income that relate to the operational restructuring of Borrower's European Subsidiaries". 





        (iv)  By
deleting in their entirety the repetitive paragraphs under the heading "Operating Cash Flow" in the section entitled "Fixed Charge Coverage," which begin, in
succession, "Extraordinary Losses (or less gains)," "Expenses of the Related Transactions," "Less: Expenditures pursuant to the last sentence of subsection 4.7," and "EBITDA," and also by deleting in
their entirety the placeholders for entering calculations corresponding to the aforementioned paragraphs. 




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         (v)  By
deleting in its entirety the paragraph under the heading "Operating Cash Flow" in the section entitled "Fixed Charge Coverage," which begins "Expenses of the Related
Transactions," and replacing it with the following paragraph: 




"Expenses
of the Related Transactions included in the determination of net income". 





        (vi)  By
deleting in its entirety the paragraph under the heading "Operating Cash Flow" in the section entitled "Fixed Charge Coverage," which begins "Unfinanced Capital
Expenditures," and replacing it with the following paragraph: 




"Unfinanced
Capital Expenditures (calculated on a trailing twelve-month basis ending on the most recent Determination Date)". 







        3.    Waiver.    Subject to the conditions set forth herein, the Lenders hereby waive the Waived Provisions and the
Events of Default arising under Section 6.1(B), (C) or (D) of the Agreement which arose directly as a result of Borrower's failure to comply with the Waived Provisions. This is a limited waiver
relating to the Waived Provisions and such Events of Default and shall not be deemed to constitute a waiver of any other Event of Default (now or hereafter existing) or any future breach of the
Agreement or any of the other Loan Documents. 


        4.    Conditions.    The effectiveness of this Amendment is subject to the following conditions precedent: 



        (a)   Borrower,
Agent and Requisite Lenders shall have executed and delivered this Amendment, and such other documents and instruments as Agent may reasonably 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
reasonably satisfactory to Agent, its legal counsel and the Lenders consenting to this Amendment; 


        (c)   No
Default or Event of Default shall have occurred and be continuing after giving effect to this Amendment; 


        (d)   Borrower
shall have paid Agent's legal counsel all amounts owing, including fees incurred in connection with this Amendment; 


        (e)   Borrower
shall have delivered to Agent duly executed, valid and binding amendments and waivers with respect to the other Financing Documents relating to matters similar
to those addressed by this Amendment, in form and substance reasonably satisfactory to the Agent; and 


        (f)    The
representations and warranties set forth in Section 5 of this Amendment shall be true and correct. 




        5.    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 corporate action on the part of Borrower and that this Amendment
has been duly executed and delivered by Borrower; 


        (b)   that
each of the representations and warranties set forth in Section 5 of the Agreement (other than those that, 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 (after giving effect to this Amendment); 



        (c)   there
is no Default or Event of Default other than those resulting from Borrower's failure to comply with the Waived Provisions; 



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        (d)   Borrower
is not paying a fee to any other party to a Financing Document in connection with any waiver and/or amendment relating to similar matters as are set forth
herein greater (calculated on a percentage basis) than the fee being paid to the Lenders pursuant hereto; and 



        (e)   No
default or event of default exists under any Financing Document which has not been (or will not be) permanently waived prior to (or contemporaneously with) the
effectiveness of this Amendment. 




        6.    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. 



        7.    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. 


        8.    Counterparts.    This Amendment may be executed by facsimile or other electronic means and 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. 



        9.    Ratification of Liability; Acknowledgment of Rights; Release of Claims.    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. As of
the date hereof, Borrower hereby ratifies and confirms its liabilities, obligations and agreements under the Agreement and the other Loan Documents, and the liens and security interests created
thereby, and acknowledges that: (i) it has no defenses, claims or set-offs to the enforcement by the Lenders of such liabilities, obligations and agreements; (ii) Agent and
the Lenders have fully performed all undertakings owed to Borrower as of the date hereof; and (iii) neither Agent nor the Lenders waive, diminish or limit any term or condition contained in the
Agreement or in any of the other Loan Documents beyond the waiver contained herein. In consideration of the Lenders' agreement to provide this Amendment, Borrower hereby irrevocably releases and
forever discharges Agent, the Lenders and their respective affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants, attorneys, auditors and accountants
(each, a "Released Person") of and from all damages, losses, claims, demands, liabilities, obligations, actions and causes of action whatsoever that Borrower may have, arising as of or prior to the
date hereof, against Agent or the Lenders or any Released Person on account of or in any way touching, concerning, arising out of or founded upon the Agreement or the other Loan Documents, whether
presently known or unknown and of every nature and extent whatsoever. 


        10.    Governing Law.    This Amendment shall be governed by and shall be construed and enforced in accordance with
the internal laws of the state of Illinois, without regard to conflicts of law principles. 


        11.    Costs.    Borrower agrees to promptly pay all reasonable costs and expenses incurred by the Agent (including
fees and expenses of counsel) incurred in connection with the negotiation and preparation of this Amendment. 


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        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers on the date first written above. 



	 	 	CHEROKEE INTERNATIONAL CORPORATION
	

 	
 	

By:	

/s/  R. V. HOLLAND, JR.      

	 	 	Name:	R. V. Holland, Jr.

	 	 	Title:	Chief Financial Officer










	

 	
 	

HELLER FINANCIAL, INC., as Agent and Lender
	

 	
 	

By:	

/s/  PATRICK T. HENAHAN      

	 	 	Name:	Patrick T. Henahan

	 	 	Title:	Senior Vice President








 
 

EXHIBIT A TO AMENDMENT    
    


DESCRIPTION OF WAIVED PROVISIONS  


	1.
	Section 4.6(C)
of the Agreement, with respect to the obligation to deliver audited year-end financials for the fiscal year ending December 31, 2002.



	2.
	Section 4.6(G)
of the Agreement, with respect to the obligation to deliver management reports with each Compliance Certificate for the fiscal quarters ending December 31,
2002 and March 31, 2003.



	3.
	Section 4.6(J)
of the Agreement, with respect to the obligation to deliver projections prior to December 31, 2002.



	4.
	Section 4.08
of each of the Indentures (as defined in the Agreement), with respect to the obligation to deliver an annual report to the Trustee and the holders of the Notes (as
each such term is respectively defined in the Indentures) as specified in such section for the fiscal year ending December 31, 2002, and a quarterly report as specified in such section, for the
fiscal quarter ending March 31, 2003.



	5.
	Section 4.6(L)
of the Agreement, relating to the obligation to deliver a certificate describing the failure to comply with the aforementioned provisions as of the dates
indicated. 









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Exhibit 10.3


WAIVER AND FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT



EXHIBIT A TO AMENDMENT