Document:

exv10w1

 

Exhibit 10.1

AMENDMENT NO. 2 to Credit Agreement and

AMENDMENT NO.1 to Security Agreement

          AMENDMENT NO. 2, dated as of April 13, 2005, to that certain Credit Agreement, dated as of
January 23, 2004, and amended and restated as of November 29, 2004, and as further amended on
February 16, 2005 (the “Credit Agreement”; capitalized terms used herein and not defined
herein shall have the meaning set forth in the Credit Agreement), among Communications & Power
Industries, Inc., a Delaware corporation, as borrower (“Borrower”), UBS AG, Stamford
Branch, as administrative agent (the “Administrative Agent”), the lenders from time to time
party thereto (the “Lenders”), and the other parties thereto and AMENDMENT NO. 1 to that
certain Security Agreement, dated as of January 23, 2004 among Borrower, UBS AG, Stamford Branch,
as collateral agent (the “Collateral Agent”) and the other parties thereto (collectively,
the “Amendment”).

W I T N E S S E T H:

          WHEREAS, Section 11.02 of the Credit Agreement permits the Credit Agreement and the other Loan
Documents to be amended from time to time;

          WHEREAS, the Loan Parties request the Lenders to permit (a) Parent to enter into a Hedging
Agreement relating to the Permitted Parent Notes and to provide cash collateral to the hedge
counterparty in respect of Parent’s obligations under such Hedging Agreement and (b) Borrower to
pay dividends or make loans to Parent to allow Parent to provide such cash collateral and to pay
its obligations under the Hedging Agreement;

          NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

          SECTION ONE Amendments.

          (a) The definition of “Debt Issuance” shall be amended by adding the words “, the entry into
any Permitted Parent Hedge” immediately after the words “Notes”.

          (b) The definition of “Consolidated Interest Expense” shall be amended by adding the following
before the period:

“; provided that Consolidated Interest Expense shall be calculated after giving
effect to Hedging Agreements (including associated costs), but excluding unrealized
gains and losses with respect to Hedging Agreements”.

 

 

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          (c) The definition of “Permitted Parent Notes” shall be amended by (i) adding “(a)”
immediately after “shall mean” and (ii) adding the following before the period “and (b) debt
securities issued semiannually as payment of interest on debt securities described in clause (a),
with the same terms and conditions”.

          (d) The following definitions shall be added:

     “Permitted Parent Hedge” shall mean an interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or similar agreement or
arrangement hedging Parent’s exposure with respect to the floating interest rate
component of the Permitted Parent Notes and not entered into for speculation, all on
terms and conditions and with a counterparty that is a Lender or an Affiliate of a
Lender at the time that such agreement is entered into and otherwise reasonably
acceptable to the Administrative Agent (it being understood that a Lender or an
Affiliate of a Lender that is a commercial bank having, or which is the principal
banking subsidiary of a bank holding company organized under the laws of the United
States, any state thereof or the District of Columbia having, at the time the
transaction is entered into, capital and surplus aggregating in excess of $500
million and a rating of “A” (or such other similar equivalent rating) or higher by
at least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) is satisfactory to the Administrative Agent).

     “Secured Permitted Parent Hedge” shall mean any Permitted Parent Hedge
designated as a Secured Permitted Parent Hedge by the Borrower; provided
that (i) only one Permitted Parent Hedge in effect at any time shall be a Secured
Permitted Parent Hedge (with the result that, if a Secured Permitted Parent Hedge
remains outstanding, the Borrower may not designate another Permitted Parent Hedge
to be a Secured Permitted Parent Hedge), (ii) the initial Secured Permitted Parent
Hedge entered into after the date of Amendment No. 2 to this Agreement shall be in a
notional amount that shall not exceed $80,000,000 and (iii) the Borrower shall
deliver a notice to the Collateral Agent that a Permitted Parent Hedge is the
Secured Permitted Parent Hedge no more than 90 days after entering into the Secured
Permitted Parent Hedge.

          (e) Section 6.03 shall be amended by (i) deleting the word “and” at the end of clause (o),
(ii) replacing the period at the end of clause (p) with “; and” and (iii) adding a new clause (q)
as follows:

          “(q) Investments permitted by Section 6.05(g) and (h).”

          (f) Section 6.05 shall be amended by (i) deleting the word “and” at the end of clause (f) and
(ii) replacing clause (g) in its entirety with the following:

 

 

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     “(g) Borrower may pay cash dividends or distributions, or make loans to, Parent
in an amount not in excess of the amount required by Parent to enable it to make
cash interest payments in respect of the Permitted Parent Notes, which Dividends may
be made not earlier than the fifth Business Day preceding the date on which such
cash interest payments are due; provided that (i) if any Permitted Parent Hedge is
in effect, (A) the amount permitted to be paid by Parent pursuant to the foregoing
shall not be greater than (x) the Applicable Margin as defined in the Permitted
Parent Notes as in effect on the date hereof times the principal amount of Permitted
Parent Notes then outstanding plus (y) the amount of Parent’s payment obligation
under the Permitted Parent Hedge associated with such interest payment (net of
payments then due to Parent under the Permitted Parent Hedge) and (B) if Borrower
has elected to make payments of interest on the Permitted Parent Notes by the
issuance of additional Permitted Parent Notes, (x) Borrower may pay cash dividends
or distributions, or make loans to, Parent in an amount not in excess of the amount
required by Parent to enable it to make its payment obligation under the Permitted
Parent Hedge associated with such interest payment (net of payments then due to
Parent under the Permitted Parent Hedge) not earlier than the fifth Business Day
preceding the date on which such payments are due and (y) if Parent receives a net
payment under the Permitted Parent Hedge, Parent shall contribute such payment as an
equity contribution to Borrower or as repayment of any loan from Borrower pursuant
to this Section 6.05(g) and (ii) on a Pro Forma Basis after giving effect to
such dividend, distribution or loan and the payment of such interest or payment
obligations (including any borrowing to fund such dividend, distribution or loan),
Borrower and Parent shall be in compliance with all covenants set forth in
Section 6.07 and no Default shall exist; and

     (h) Borrower may pay cash dividends or distributions, or make loans to, Parent
of up to $3,500,000 in the aggregate (the “Cash Collateral Basket”) to be
used by Parent to provide cash collateral for the benefit of the counterparty to any
Secured Permitted Parent Hedge; provided that (i) only up to $1,000,000 of the Cash
Collateral Basket shall be dividended, distributed or loaned by Borrower for
providing the initial cash collateral on the initial Secured Permitted Parent Hedge,
(ii) on a Pro Forma Basis after giving effect to each such dividend, distribution or
loan (including any borrowing to fund such dividend, distribution or loan), Borrower
and Parent shall be in compliance with all covenants set forth in Section
6.07 and no Default shall exist, (iii) upon termination of a Secured Permitted
Parent Hedge that is not replaced by another Secured Permitted Parent Hedge, any
amount of the Cash Collateral Basket not paid or owing to such counterparty under
the terms of the master agreement relating to such Secured Permitted Parent Hedge
shall be returned to

 

 

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Borrower (as an equity contribution to the extent that the payment to Parent
was in the form of a dividend or distribution and as repayment of loan to the extent
that the payment to Parent was in the form of a loan) and (iv) if Parent enters into
a Secured Permitted Parent Hedge after termination of a Secured Permitted Parent
Hedge, any portion of the Cash Collateral Basket not already paid to a counterparty
to a Secured Permitted Parent Hedge shall be available again as provided above.”

          (g) Section 6.06 shall be amended by replacing clause (b) in its entirety with the following:

   “(b) loans may be made and other transactions may be entered into between and
among any Company and its Affiliates to the extent permitted by Sections
6.01(d), 6.03(d) and 6.03(q);”

          (h) Section 6.12(a) shall be amended by (i) replacing deleting the “and” immediately prior to
clause (vi) and replacing it with a “,”, (ii) adding the words “or as contemplated by Sections
6.05(g) and (h)” at the end of clause (iv) and (iii) replacing clause (vi) in its entirety with the
following:

“(vi) the entry into any Permitted Parent Hedge and the deposit of cash collateral
and the making of payments pursuant to the terms of any Secured Permitted Parent
Hedge and (vii) activities and assets reasonably related to the foregoing clauses.”

          (i) Section 2.01 of the Security Agreement shall be amended by including the following as the
last paragraph in such Section:

   “Further notwithstanding the foregoing provisions of this Section 2.01, the
Security Agreement Collateral shall not include any cash or any Deposit Account
which is created by Parent in order to pledge cash collateral (which shall be
subject to the separate security interest of the counterparty to any Secured
Permitted Parent Hedge) for the benefit of any counterparty to any Secured Permitted
Parent Hedge.”

          SECTION TWO Conditions to Effectiveness. This Amendment shall become effective as of
the date (the “Effective Date”) which is the date on which the Administrative Agent shall
have received counterparts of this Amendment executed by the Borrower, Parent, the Administrative
Agent, the Collateral Agent and the Required Lenders.

          SECTION THREE Reference to and Effect on the Credit Agreement. On and after the
Effective Date, each reference in the Credit Agreement or the Security Agreement, as applicable, to
“this Agreement,” “hereunder,” “hereof”
or words of like import refer-

 

 

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ring the Credit Agreement or the Security Agreement, as applicable, and each reference in each
of the Loan Documents to “the Credit Agreement,” “the Security Agreement,” “thereunder,” “thereof”
or words of like import referring to the Credit Agreement or the Security Agreement, as applicable,
shall mean and be a reference to the Credit Agreement or the Security Agreement, as applicable, as
amended by this Amendment. The Credit Agreement, the Security Agreement and each of the other Loan
Documents, as specifically amended by this Amendment, are and shall continue to be in full force
and effect and are hereby in all respects ratified and confirmed. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.

          SECTION FOUR Costs and Expenses. Borrower agrees to pay all reasonable costs and
expenses of the Administrative Agent in connection with the preparation, execution and delivery of
this Amendment and the other instruments and documents to be delivered hereunder, if any
(including, without limitation, the reasonable fees and expenses of Cahill Gordon & Reindel
llp, counsel to the Administrative Agent).

          SECTION FIVE Execution in Counterparts. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute but one
and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment
by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

          SECTION SIX Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[Signature Pages Follow]

 

 

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	 	COMMUNICATIONS & POWER 

INDUSTRIES, INC., as Borrower

 	 
	 	By:  	   Joel A. Littman /s/
 	 
	 	 	Name:  	Joel A. Littman 	 
	 	 	Title:  	CFO, Secretary and Treasurer 	 
	 
	 	CPI HOLDCO, INC., as Parent

 	 
	 	By:  	   Joel A. Littman /s/
 	 
	 	 	Name:  	Joel A. Littman 	 
	 	 	Title:  	CFO, Secretary and Treasurer 	 

 

 

	 	 	 	 	 

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	 	UBS AG, STAMFORD BRANCH, as Administrative
 Agent
and as Collateral Agent

 	 
	 	By:  	   Edward Gripps /s/
 	 
	 	 	Name:  	Edward Gripps 	 
	 	 	Title:  	Director, Banking Products Services, US 	 
	 
	 	 	 
	 	By:  	                                                  Christopher M. Altkin /s/
 	 
	 	 	Name:  	Christopher M. Altkin 	 
	 	 	Title:  	Associate Director, Banking Products
	 
	 	
Services, USUMBRELLA AGREEMENT

between   TBS International Ltd. ("TBS"),
          and its indirect subsidiaries:   o    Whitehall Marine Transport Corp.

                                           o    Bedford Maritime Corp.

                                           o    Brighton Maritime Corp.

                                           o    Hari Maritime Corp.

                                           o    Prospect Navigation Corp.

                                           o    Hancock Navigation Corp.

                                           o    Columbus Maritime Corp.

                                           o    Frankfort Maritime Corp.

                                           o    Newkirk Maritime Corp.

and       Arkadia Shipping Inc. ("Arkadia")

     WHEREAS TBS is the indirect owner of the shares of the registered owners of
the following Vessels:

     o    Cherokee Princess

     o    Apache Maiden

     o    Kickapoo Belle

     o    Navajo Princess

     o    Inca Maiden

     o    Kiowa Princess

     o    Seneca Maiden
          (these seven vessels referred to as the "Vessels")

     o    Shawnee Princess

     o    Dakota Belle
          (these last two vessels referred to as the "Guarantee Vessels")

     WHEREAS the Vessels will be sold and delivered by their registered owners
to Arkadia, each on the basis of the Memoranda of Agreement, (all seven together
called the "MoAs"), which have been entered into by Arkadia, as buyer, and the
respective registered owner, as seller, of each vessel on the same date as this
Agreement.

     WHEREAS the Vessels will be delivered from Arkadia, as Owner, back to the
present registered owners of the Vessels, who will accept delivery as Charterers
under the respective Bareboat Charter Parties each dated 5 December 2003 (all
seven together called the "Bareboat Charter Parties") simultaneously with the
delivery under the MoAs. The MoAs and the Bareboat Charter Parties and this
Agreement together called the "Contracts".

     WHEREAS in order to secure the performance of this Agreement, the MoAs and
the Bareboat Charter Parties, the owners of the Guarantee Vessels have executed
guarantees in favour of Arkadia on the same date as this Agreement and will
register mortgages securing these

guarantees in favour of Arkadia on each of the Guarantee Vessels to Arkadia (the
"Guarantee Mortgages").

     WHEREAS in order to further secure the performance of this Agreement, the
MoAs and the Bareboat Charter Parties, TBS has executed a guarantee in favour of
Arkadia on the same date as this Agreement.

     WHEREAS Arkadia will finance the Vessels with HSH Nordbank AG, Hamburg. The
Parties have agreed to enter into a Tripartite Agreement for each Bareboat
Charter Party with HSH Nordbank AG in the form attached as ANNEX 1 to the
Bareboat Charter Parties.

     IT IS HEREBY AGREED THAT:

     1. The Purchase Price for all seven Vessels together shall be USD
31,500,000.00 (United States Dollar Thirty One Million Five Hundred Thousand).
The Purchase Price shall be paid in full upon delivery of all Vessels to Arkadia
under the MoAs, plus delivery of the Guarantee Mortgages having occurred by the
owners of the Guarantee Vessels. Delivery of all seven Vessels under the MoAs
will be simultaneous, and Arkadia shall simultaneously with such delivery,
deliver the Vessels to the respective Charterers under the Bareboat Charter
Parties.

     2. Simultaneous with delivery of the Vessels to Arkadia, the Owners of the
Guarantee Vessels shall deliver guarantees and Guarantee Mortgages to Arkadia
and record the Guarantee Mortgages on the Guarantee Vessels in the forms as per
the samples attached hereto. The Guarantee Vessels shall be free and clear of
all liens and encumbrances other than the Guarantee Mortgages.

     3. If at any time Arkadia becomes entitled to cancel any MoA or to withdraw
any Vessel under any of the Bareboat Charter Parties, Arkadia shall, in
addition, have the right to cancel any one or more (at its option) of the MoAs
which are yet to be performed and/or to withdraw any one or more (at its option)
of the Vessels from the service of the Charterers under any of the Bareboat
Charter Parties whereupon each Party's rights and obligations under the relevant
MoA(s) and Bareboat Charter Party or Parties (including any purchase option)
will terminate.

     4. The Contracts shall be governed by and construed in accordance with
English law and any dispute arising out of or in connection with the Contracts
shall be referred to arbitration in London in accordance with the Arbitration
Act 1996 or any statutory modification or re-enactment thereof save to the
extent necessary to give effect to the provisions of this Clause.

     The arbitration shall be conducted in accordance with the London Maritime
Arbitrators Association (LMAA) terms current at the time when the arbitration
proceedings are commenced.

     The reference shall be to three arbitrators. A party wishing to refer a
dispute to arbitration shall appoint its arbitrator and send notice of such
appointment in writing to the other party requiring the other party to appoint
its own arbitrator within 14 calendar days of that notice and stating that it
will appoint its arbitrator as sole arbitrator unless the other party appoints
its own arbitrator and gives notice that it has done so within the 14 days
specified. If the other party does not appoint its own arbitrator and give
notice that it has done so with the 14 days specified,

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the party referring a dispute to arbitration may, without the requirement of any
further prior notice to the other party, appoint its arbitrator as sole
arbitrator and shall advise the other party accordingly. The award of a sole
arbitrator shall be binding on both parties as if he had been appointed by
agreement.

     In cases where neither the claim nor any counterclaim exceeds the sum of
USD 50,000.00 (or such other sum as the parties may agree) the arbitration shall
be conducted in accordance with the LMAA Small Claims Procedure current at the
time when the arbitration proceedings are commenced.

December 5, 2003

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       TBS International Ltd.                     Arkadia Shipping Inc.

------------------------------------    ----------------------------------------
  Whitehall Marine Transport Corp.               Bedford Maritime Corp.

------------------------------------    ----------------------------------------
       Brighton Maritime Corp.                     Hari Maritime Corp.

------------------------------------    ----------------------------------------
      Prospect Navigation Corp.                 Hancock Navigation Corp.

------------------------------------    ----------------------------------------
       Columbus Maritime Corp.                   Newkirk Maritime Corp.

------------------------------------
      Frankfort Maritime Corp.

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