Exhibit 10.34
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
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THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "THIRD
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AMENDMENT"), effective as of the 6th day of May, 2004, is by and among
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MEASUREMENT SPECIALTIES, INC., a New Jersey corporation ("MSI"), IC SENSORS,
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INC., a California corporation ("IC," together with MSI, are collectively
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referred to herein as the "BORROWERS" and individually as a "BORROWER"), and
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FLEET CAPITAL CORPORATION, a Rhode Island corporation ("LENDER").
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W I T N E S S E T H:
WHEREAS, Borrowers and Lender are parties to that certain Loan and Security
Agreement dated as of January 31, 2003 (as amended by that certain First
Amendment to Loan and Security Agreement dated as of March 28, 2003 and that
certain Second Amendment to Loan Agreement dated as of April 11, 2003, the "LOAN
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AGREEMENT") (unless otherwise defined herein, all capitalized terms used herein
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which are defined in the Loan Agreement shall have the meaning given such terms
in the Loan Agreement); and
WHEREAS, Borrowers have advised Lender that MSI intends to complete a corporate
restructuring of MSI's foreign operations and more specifically to effect the
following corporate restructuring transactions (collectively referred to herein
as the "ASIA RESTRUCTURE"):
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A. MSI forms and capitalizes a new, direct, wholly owned Subsidiary known
as Kenabell Holding Limited that will be an international business
company incorporated in the British Virgin Islands ("KENABELL");
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B. MSI forms and capitalizes a new, direct, wholly owned Subsidiary known
as Measurement Limited that will be an exempted company incorporated
in the Cayman Islands ("ML-CAYMAN");
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C. MSI contributes all of the Equity of ML-Cayman to Kenabell;
D. MSI transfers all of the Equity of Measurement Limited, a company
organized under the laws of the Peoples Republic of China (Hong Kong)
("ML-HONG KONG"), to Kenabell in exchange for the issuance by Kenabell
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of additional Equity;
E. MSI files, or causes to be filed, "check-the-box" elections for
ML-Hong Kong and ML-Cayman to be treated as branches of Kenabell for
United States tax purposes;
F. ML-Hong Kong sells certain assets to ML-Cayman in exchange for the
issuance by ML-Cayman of an unsecured demand note in favor of ML-Hong
Kong in an amount determined by the valuation of the assets sold
("ML-NOTE");
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G. ML-Hong Kong distributes the ML-Note to Kenabell;
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H. Kenabell contributes the ML-Note to the paid-in capital of ML-Cayman;
and
WHEREAS, after giving effect to the Asia Restructure, the organizational
structure of the Borrowers and Subsidiaries will be as set forth on Exhibit A
hereto (the "POST-CONSUMMATION ORGANIZATIONAL STRUCTURE CHART"); and
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WHEREAS, Borrowers have requested that Lender (a) consent to the Asia
Restructure and waive any Default or Event of Default which would otherwise
arise or have arisen solely as a result thereof, and (b) amend certain
provisions of the Loan Agreement in connection with the Asia Restructure.
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Borrowers and Lender hereby agree as follows:
SECTION 1 AMENDMENTS TO THE LOAN AGREEMENT. In reliance on the
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representations, warranties, covenants and agreements contained in this Third
Amendment, and subject to the satisfaction of each condition precedent contained
in Section 5 of this Third Amendment, the Loan Agreement shall be amended
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effective as of the date hereof in the manner provided in this Section 1.
1.1 ADDITIONAL DEFINITIONS. Appendix A of the Loan Agreement shall
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be amended to add thereto in alphabetical order the following defined terms:
KENABELL - Kenabell Holding Limited, an international business
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company incorporated in the British Virgin Islands.
ML-CAYMAN - Measurement Limited, an exempted company incorporated
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in the Cayman Islands.
ML-HONG KONG - Measurement Limited, a company existing and duly
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organized under the laws of the Peoples Republic of China (Hong Kong).
1.2 AMENDMENT TO SECTION 8.2(G) OF THE LOAN AGREEMENT. Section
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8.2(g) of the Loan Agreement shall be amended and restated in full to read as
follows:
(g) DISTRIBUTIONS. Declare or make, or permit any Subsidiary
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of any Borrower to declare or make, any Distributions except (i) any
Distribution to a Borrower, (ii) any Distribution from Jingliang
Electronics (Shenzhen) Co., Ltd., a company existing and duly organized
under the laws of the Peoples Republic of China ("JINGLIANG"), to ML-Hong
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Kong, (iii) any Distribution from ML-Hong Kong to Kenabell, and (iv) any
Distribution from ML-Cayman to Kenabell.
SECTION 2 LIMITED CONSENT. In reliance on the representation,
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warranties, covenants and agreements contained in this Third Amendment, and
subject to the limitations set forth herein and the satisfaction of each
condition precedent contained in Section 3 of this Third Amendment, Lender
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hereby consents to and waives any Default or Event of Default which would
otherwise arise or have arisen solely as a result of the Asia Restructure.
Borrowers hereby
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acknowledge that the consent and waiver herein contained is a limited one-time
event, and nothing contained herein shall obligate Lender to grant any
additional or future consent or waiver.
SECTION 3 RELEASE OF PLEDGE OF EQUITY OF ML HONG KONG. As of the
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effective Date hereof, Lender hereby releases the pledge by MSI of any of its
Equity in ML Hong Kong and will execute and deliver to MSI a form of discharge
of that certain Mortgage of Shares dated January 31, 2003 entered into by MSI
and any other documents regarding the release of such pledge as MSI may
reasonably request.
SECTION 4 KENABELL DELIVERIES. By May 17, 2004 Borrowers shall
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deliver, or cause to be delivered, to Lender (1) certificates evidencing
sixty-five percent (65%) of the issued and outstanding Equity of Kenabell,
together with stock powers duly executed in blank, (2) evidence, in form and
substance satisfactory to Lender, that the Lien of Lender on sixty-five percent
(65%) of the issued and outstanding Equity of Kenabell granted pursuant to the
Loan Agreement has been recorded in the share register of Kenabell, and (3)
certificates of authorized officers of Kenabell, certified copies of the
certificate of incorporation, memorandum of association and articles of
associates of Kenabell, certified copies of resolutions of the board of
directors or applicable governing body of Kenabell and such other documents,
instruments and agreements as Lender shall require to evidence the valid
corporate existence and authority to conduct business of Kenabell and any other
legal matters relating to Kenabell, all in form and substance satisfactory to
Lender and its counsel. Borrowers acknowledge and agree that a failure to
deliver each of the foregoing deliveries by May 17, 2004 shall constitute and
immediate Event of Default under the Loan Agreement without notice or
opportunity to cure.
SECTION 5 CONDITIONS PRECEDENT. The effectiveness of the amendments to
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the Loan Agreement contained in Section 1 hereof and the consent contained in
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Section 2 hereof is subject to the satisfaction of each of the following
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conditions precedent:
5.1 OFFICER'S CERTIFICATE, ETC. Borrowers shall have delivered to
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Lender such certificates of authorized officers of MSI, certified copies of
resolutions of the directors of such Borrower and such other documents,
instruments and agreements as Lender shall require to evidence the due
authorization, execution and delivery of this Third Amendment, any documents
related to the Asia Restructure and any other legal matters relating to the Asia
Restructure entered into by MSI, all in form and substance satisfactory to
Lender and its counsel.
5.2 ABSENCE OF DEFAULTS. No Default or Event of Default exists.
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5.3 REPRESENTATIONS AND WARRANTIES. Each representation and
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warranty contained in Section 6 hereof is true and correct in all material
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respects.
SECTION 6 REPRESENTATIONS AND WARRANTIES. In order to induce Lender to
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enter into this Third Amendment, each Borrower hereby jointly and severally
represents and warrants to Lender that:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
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representation and warranty of such Borrower contained in the Loan Documents is
true and correct in all material respects as of the date hereof (except to the
extent that such representations and warranties are
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expressly made as of a particular date, in which event such representations and
warranties were true and correct as of such date).
6.2 DUEAUTHORIZATION, NO CONFLICTS. The execution, delivery and
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performance by Borrowers of this Third Amendment are within Borrowers' corporate
powers, have been duly authorized by necessary action, require no action by or
in respect of, or filing with, any governmental body, agency or official and do
not violate or constitute a default under any provision of applicable law or any
material agreement binding upon any Borrower or any of their Subsidiaries, or
result in the creation or imposition of any Lien upon any of the assets of any
Borrower or any of their Subsidiaries except for Permitted Liens.
6.3 VALIDITY AND BINDING EFFECT. This Third Amendment constitutes
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the valid and binding obligations of Borrowers enforceable in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor's rights generally, and the
availability of equitable remedies may be limited by equitable principles of
general application.
6.4 ABSENCE OF DEFAULTS. Neither a Default nor an Event of
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Default has occurred which is continuing.
6.5 NODEFENSE. Borrowers have no defenses to payment,
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counterclaims or rights of set-off with respect to the Obligations on the date
hereof.
6.6 REVIEWAND CONSTRUCTION OF DOCUMENTS. Each Borrower has had
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the opportunity to consult with legal counsel of its own choice and has been
afforded an opportunity to review this Third Amendment with its legal counsel,
has reviewed this Third Amendment and fully understands the effects thereof and
all terms and provisions contained herein, and has executed this Third
Amendment of its own free will and volition. Furthermore, each Borrower
acknowledges that (i) this Third Amendment shall be construed as if jointly
drafted by Borrowers and Lender, and (ii) the recitals contained in this Third
Amendment shall be construed to be part of the operative terms and provisions of
this Third Amendment.
SECTION 7 MISCELLANEOUS.
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7.1 LOAN DOCUMENT. This Third Amendment is a Loan Document for
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all purposes of the Loan Agreement and the other Loan Documents.
7.2 REAFFIRMATION OF LOAN DOCUMENTS; EXTENSION OF LIENS. Any and
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all of the terms and provisions of the Loan Agreement and the other Loan
Documents shall, except as amended and modified hereby, remain in full force and
effect. Borrowers hereby reaffirm the Liens securing the Obligations until the
Obligations have been paid in full, and agree that the amendments and
modifications herein contained shall in no manner affect or impair the
Obligations or the Liens securing payment and performance thereof.
7.3 PARTIES IN INTEREST. All of the terms and provisions of this
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Third Amendment shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns.
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7.4 LEGAL EXPENSES. Borrowers hereby agree to pay on demand all
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reasonable fees and expenses of counsel to Lender incurred by Lender in
connection with the preparation, negotiation and execution of this Third
Amendment and all related documents.
7.5 COUNTERPARTS. This Third Amendment may be executed in
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counterparts, and all parties need not execute the same counterpart; however, no
party shall be bound by this Third Amendment until this Third Amendment has been
executed by Borrowers and Lender at which time this Third Amendment shall be
binding on, enforceable against and inure to the benefit of Borrowers and
Lender. Facsimiles shall be effective as originals.
7.6 COMPLETE AGREEMENT. THIS THIRD AMENDMENT, THE LOAN AGREEMENT
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AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
7.7 HEADINGS. The headings, captions and arrangements used in
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this Third Amendment are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify or modify the terms of this Third
Amendment, nor affect the meaning thereof.
7.8 NO IMPLIED WAIVERS. No failure or delay on the part of Lender
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in exercising, and no course of dealing with respect to, any right, power or
privilege under this Third Amendment, the Loan Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Third Amendment, the Loan
Agreement or any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
7.9 ARMS-LENGTH/GOOD FAITH. This Third Amendment has been
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negotiated at arms-length and in good faith by the parties hereto.
7.10 INTERPRETATION. Wherever the context hereof shall so
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require, the singular shall include the plural, the masculine gender shall
include the feminine gender and the neuter and vice versa. The headings,
captions and arrangements used in this Third Amendment are for convenience only
and shall not affect the interpretation of this Third Amendment.
7.11 SEVERABILITY. In case any one or more of the provisions
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contained in this Third Amendment shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof, and this Third
Amendment shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
7.12 FURTHER ASSURANCES. Each Borrower agrees to execute,
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acknowledge, deliver, file and record such further certificates, instruments and
documents, and to do all other acts and things, as may be requested by Lender as
necessary or advisable to carry out the intents and purposes of this Third
Amendment.
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7.13 WAIVERS BY BORROWERS. BORROWERS JOINTLY AND SEVERALLY WAIVE
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THE RIGHT TO TRIAL BY JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION,
SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF
THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,
RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL
PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND
GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH BORROWERS MAY IN ANY WAY BE
LIABLE AND HEREBY RATIFY AND CONFIRM WHATEVER LENDER MAY DO IN THIS REGARD;
NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO
EXERCISE ANY OF LENDER'S REMEDIES; THE BENEFIT OF ALL VALUATION, APPRAISEMENT
AND EXEMPTION LAWS; NOTICE OF ACCEPTANCE HEREOF; AND EXCEPT AS PROHIBITED BY
LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY OR PUNITIVE.
BORROWERS ACKNOWLEDGE THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO
LENDER'S ENTERING INTO THIS THIRD AMENDMENT AND THAT LENDER IS RELYING UPON THE
FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS. BORROWERS JOINTLY AND
SEVERALLY WARRANT AND REPRESENT THAT THEY HAVE REVIEWED THE FOREGOING WAIVERS
WITH THEIR LEGAL COUNSEL AND HAVE KNOWINGLY AND VOLUNTARILY WAIVED THEIR JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, THIS THIRD AMENDMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be duly executed by their respective authorized officers on the date and year
first above written.
BORROWERS:
MEASUREMENT SPECIALTIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: CEO
IC SENSORS, INC.
By: /s/ ▇▇▇▇▇ Guidone_
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: CEO
LENDER:
FLEET CAPITAL CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Senior Vice President