Exhibit 10.2
EXECUTION COPY
AMENDMENT NO. 1 to LOAN AND SECURITY AGREEMENT
This AMENDMENT NO. 1, dated as of March 30, 2006 (this "Amendment"), to the
Loan and Security Agreement, dated as of December 7, 2005 (as amended, restated
or otherwise modified from time to time, the "Loan Agreement"), by and among C&D
Technologies, Inc., a Delaware corporation ("Parent"), C&D Technologies Datel,
Inc., a Delaware corporation ("Datel"), C&D Technologies (CPS) LLC, a Delaware
limited liability company ("CPS, and together with Parent and Datel, each
individually a "Borrower" and collectively, "Borrowers" as hereinafter further
defined), C&D Charter Holdings, Inc., a Delaware corporation ("Charter"), C&D
Dynamo Corp., a Delaware corporation ("Dynamo"), Dynamo Acquisition Corp., a
Delaware corporation ("Acquisition"), C&D International Investment Holdings
Inc., a Delaware corporation ("International") and Datel Holding Corporation, a
Delaware corporation ("Datel Holding", and together with Charter, Dynamo,
Acquisition and International, each individually a "Guarantor" and collectively,
"Guarantors" as hereinafter further defined), the parties hereto from time to
time as lenders, whether by execution of this Agreement or an Assignment and
Acceptance (each individually, a "Lender" and collectively, "Lenders" as
hereinafter further defined) and Ableco Finance LLC, a Delaware limited
liability company, in its capacity as agent for Lenders (in such capacity,
"Agent"). Capitalized terms used but not defined herein have the meanings
ascribed thereto in the Financing Agreement.
WHEREAS, pursuant to the Loan Agreement referred to above, the Lenders have
extended credit to the Borrowers consisting of a term loan in the original
principal amount of $50,000,000; and
WHEREAS, the Borrowers have requested that the Agent and the Lenders amend
the Loan Agreement to, among other things, (a) modify certain definitions, and
(b) modify certain financial covenants, including, without limitation,
permissible Leverage Ratios; and
WHEREAS, the Agent and the Lenders are willing to amend the Loan Agreement
subject to the terms and conditions contained herein.
1. Definitions. All terms used herein which are defined in the Loan
Agreement and not otherwise defined herein are used herein as defined therein.
2. Change to Existing Defined Term. The following definitions in Section
1.01 of the Loan Agreement are hereby amended and restated in their entirety to
read as follows:
"'Availability Block' shall mean $10,000,000; provided, that, the
Availability Block shall be zero if as of December 31, 2006 (a) the Leverage
Ratio shall be equal to or less than 3:00:1:00 and (b) no Default or Event of
Default shall exist or have occurred and be continuing. Notwithstanding the
foregoing, in no event shall the Availability Block be less than $10,000,000
prior to December 31, 2006."
"'Excess Availability' shall mean the term "Excess Availability" as defined
in the Working Capital Loan Agreement as in effect on the effective date of
Amendment No.1 to this Agreement."
"'Interest Rate' shall mean,
(i) as to Prime Rate Loans, a rate equal to the Prime Rate plus the
Applicable Margin for Prime Rate Loans, and
(ii) as to Eurodollar Rate Loans, a rate equal to the Adjusted Eurodollar
Rate plus the Applicable Margin for Eurodollar Rate Loans (in each case, based
on the London Interbank Offered Rate applicable for the Interest Period selected
by a Borrower, or by Administrative Borrower on behalf of such Borrower, as in
effect two (2) Business Days prior to the commencement of the Interest Period
whether such rate is higher or lower than any rate previously quoted to any
Borrower or Guarantor).
Notwithstanding anything to the contrary contained in this definition, the
Interest Rate shall mean the percentage per annum set forth above plus (in each
case) two (2%) percent per annum, at Agent's option, for the period (i) from and
after the effective date of termination or non-renewal hereof until such time as
all Obligations are indefeasibly paid and satisfied in full in immediately
available funds, or (ii) from and after the date of the occurrence of any Event
of Default, and for so long as such Event of Default is continuing as determined
by Agent. Notwithstanding anything to the contrary contained in this definition,
if the Leverage Ratio of Parent and its Subsidiaries (on a consolidated basis)
as of the last day of each calendar month commencing with the month ending
February 28, 2006 is greater than 3.00:1.00, then the Interest Rate shall be
increased by twenty-five hundredths (0.25%) percent until such Leverage Ratio is
less than 3.00:1.00."
3. Financial Covenants. Clause (b) of Section 9.17 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:
"Leverage Ratio. (i) Borrowers and Guarantors shall not permit, as of the
last day of each calendar month ending February 28, 2006 through and including
December 31, 2006, the Leverage Ratio of Parent and its Subsidiaries (on a
consolidated basis) to be greater than the applicable ratio set forth below:
Month Ending Leverage Ratio
February 28, 2006 ........................................ 3.90:1.00
March 31, 2006 ........................................... 5.35:1.00
April 30, 2006 ........................................... 5.35:1.00
May 31, 2006 ............................................. 5.75:1.00
June 30, 2006 ............................................ 5.90:1.00
July 31, 2006 ............................................ 5.90:1.00
August 31, 2006 .......................................... 5.60:1.00
September 30, 2006 ....................................... 5.50:1.00
October 31, 2006 ......................................... 4.05:1.00
November 30, 2006 ........................................ 3.75:1.00
December 31, 2006 ........................................ 3.25:1:00
(ii) After December 31, 2006, the Borrowers and Guarantors shall not
permit, as of the last day of each calendar month, the Leverage Ratio of Parent
and its Subsidiaries (on a consolidated basis) to be more than 3.00:1.00 as of
the last day of any calendar month thereafter."
4. Affirmative and Negative Covenants.
(a) Section 9.9(i) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
"(i) Indebtedness of any Borrowers evidenced by or arising under the
Convertible Note Indenture as in effect on the date hereof, provided, that:
(i) the aggregate principal amount of such Indebtedness shall not exceed
$75,000,000, less the aggregate amount of all repayments, repurchases or
redemptions thereof from and after such date, whether optional or mandatory,
plus interest thereon at any of the applicable rates provided in the Convertible
Note Indenture and/or in the Registration Rights Agreement executed in
connection with the Convertible Note Indenture, each as in effect on the date
hereof;
(ii) Agent shall have received a true, correct and complete copy of the
Convertible Note Indenture as in effect on the day hereof;
(iii) such Indebtedness is and shall remain unsecured;
(iv) Borrowers and Guarantors shall not, directly or indirectly, make, or
be required to make, any payments in respect of such Indebtedness, except, that,
Borrowers may make regularly scheduled payments of interest and fees, on an
unaccelerated basis, in respect of such Indebtedness in accordance with the
terms of the Convertible Note Indenture and/or in the Registration Rights
Agreement as in effect on the date hereof; and
(v) Borrowers shall not , directly or indirectly, (A) amend, modify, alter
or change any of the material terms of such Indebtedness or of any of the
Convertible Note Indenture as in effect on the date hereof, except, that,
Borrowers may, after prior written notice to Agent, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness other than pursuant to payments thereof, or to reduce the
interest rate or any fees in connection therewith, or to make the provisions
thereof less restrictive or burdensome than the terms or conditions of the
Convertible Note Indenture as in effect on the date hereof, or (B) make optional
prepayments of principal or interest or redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest
any sums for such purpose;"
(b) Section 9 of the Loan Agreement is hereby amended by inserting a new
clause 9.24 therein to read as follows:
"Minimum Amount of Excess Availability, Cash and Cash Equivalents. If the
Leverage Ratio of Parent and its Subsidiaries (on a consolidated basis) as of
the last day of each calendar month commencing with the month ending February
28, 2006, is greater than 3.00:1.00, then the Borrowers shall cause the sum of
Excess Availability and the aggregate amount of all cash and Cash Equivalents
maintained in the Borrowers' deposit accounts located in the United States and
Canada to equal or exceed $7,500,000."
5. EBITDA. Schedule 1.38 to the Loan Agreement is hereby deleted in its
entirety and replaced with the revised Schedule 1.38 attached hereto.
6. Conditions to Effectiveness. This Amendment shall become effective only
upon satisfaction in full, in a manner satisfactory to the Agent, of the
following conditions precedent (the first date upon which all such conditions
have been satisfied being herein called the "Amendment No. 1 Effective Date"):
(a) The Working Capital Loan Agreement shall have been amended (i) to
modify the definitions of 'Availability Block' and 'Excess Availability' in a
manner acceptable to the Agent; (ii) to reflect the amended and restated Section
9.9(i) set forth in Section 4(a) hereof; and (iii) to authorize the Working
Capital Agent to file those certain Mortgages pursuant to Section 7 below.
(b) The representations and warranties of the Borrowers and Guarantors
contained herein and in the other Financing Agreements shall be true and correct
on and as of the Amendment No. 1 Effective Date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties shall have been true and correct on and
as of such earlier date, and no Default or Event of Default shall have occurred
after giving effect to this Amendment.
(c) The Agent shall have received counterparts of this Amendment which
bears the signatures of each Borrower, each Guarantor, the Agent and the
Lenders.
(d) The Borrowers shall have paid to the Agent, for the account of the
Lenders, an amendment fee equal to $500,000 such fee to be distributed pro rata
among the Lenders.
(e) The Borrowers shall have paid all fees and expenses of the Agent
related to this Amendment and the administration of the Loan Agreement and the
other Financing Agreements, including without limitation the reasonable fees and
expenses of Schulte Roth & Zabel LLP, counsel to the Agent.
7. Post-Effective to Amendment. The obligation of the Lenders to continue
to make the Loan is subject to the qualification that (a) within forty-five (45)
days after the Amendment No.1 Effective Date, the Borrowers shall have delivered
to the Working Capital Agent, Mortgages and title searches with respect to the
Real Property of Parent located in each of Leola, Pennsylvania and Mansfield,
Massachusetts and (b) within forty-five (45) days of any request by the Working
Capital Agent therefor, Borrowers shall deliver to the Working Capital Agent a
Mortgage and title search with respect to the Real Property of Parent located in
Conyers, Georgia. The failure by the Borrowers and the Guarantors to perform or
cause to be performed the foregoing obligations will constitute an Event of
Default.
8. Representations and Warranties. Each Borrower and Guarantor represents
and warrants to the Agent and the Lenders as follows:
(a) Each Borrower and Guarantor is a corporation or limited liability
company, as the case may be, duly organized and in good standing under the laws
of its jurisdiction of organization and is duly qualified as a foreign
corporation or limited liability company, as the case may be, and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a Material Adverse Effect.
(b) The execution, delivery and performance of this Amendment and the
performance by each Borrower and Guarantor of the Loan Agreement, as amended
hereby, (i) are all within each Borrower's and Guarantor's organizational
powers, (ii) have been duly authorized, (iii) are not in contravention of law or
the terms of any Borrower's or Guarantor's certificate of incorporation, by
laws, or other organizational documentation, or any indenture, agreement or
undertaking to which any Borrower or Guarantor is a party or by which any
Borrower or Guarantor or its property are bound and (iv) will not result in the
creation or imposition of, or require or give rise to any obligation to grant,
any lien, security interest, charge or other encumbrance upon any property of
any Borrower or Guarantor, except for liens in favor of Agent and Working
Capital Agent.
(c) No authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority which has not already been obtained is
required in connection with the (i) due execution, delivery and performance by
any Borrower or Guarantor of this Amendment or (ii) performance by each Borrower
and Guarantor of the Loan Agreement, as amended hereby, or any Financing
Agreements to which it is or will be a party.
(d) Each of this Amendment and the Loan Agreement, as amended hereby, and
the other Financing Agreements to which any Borrower or Guarantor is a party
constitute the legal, valid and binding obligations of such Borrower or
Guarantor enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or similar
laws affecting creditors' rights generally and by general equitable principles.
(e) The representations and warranties contained herein, in Article VIII of
the Loan Agreement and in each other Financing Agreements are true and correct
on and as of the date hereof as though made on and as of such date, except to
the extent that any such representation or warranty expressly relates solely to
an earlier date (in which case such representation or warranty shall be true and
correct on and as of such earlier date); and no Default or Event of Default
shall have occurred and be continuing on the Amendment No. 1 Effective Date
after giving effect to this Amendment in accordance with its terms.
9. Miscellaneous. Except as otherwise expressly provided herein,
(a) (i) The Loan Agreement and the other Financing Agreements are, and
shall continue to be, in full force and effect and are hereby ratified and
confirmed in all respects, except that on and after the Amendment No. 1
Effective Date (A) all references in the Loan Agreement to "this Agreement",
"hereto", "hereof", "hereunder" or words of like import referring to the Loan
Agreement shall mean the Loan Agreement as amended by this Amendment and (B) all
references in the other Financing Agreements to the "Loan Agreement", "thereto",
"thereof", "thereunder" or words of like import referring to the Loan Agreement
shall mean the Loan Agreement as amended by this Amendment, (ii) to the extent
that the Loan Agreement or any other Financing Agreements purports to pledge to
the Agent, or to grant to the Agent, a security interest in or lien on any
collateral as security for the Obligations, such pledge or grant of a security
interest or lien is hereby ratified and confirmed in all respects, and (iii)
except as expressly agreed to in this Amendment, the execution, delivery and
effectiveness of this Amendment shall not operate as an amendment of any right,
power or remedy of the Agent or the Lenders under the Loan Agreement or any
other Financing Agreement, nor constitute an amendment of any provision of the
Loan Agreement or any other Financing Agreement.
(b) This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together shall constitute one and the
same agreement.
(c) Section and paragraph headings herein are included for convenience of
reference only and shall not constitute a part of this Amendment for any other
purpose.
(d) This Amendment shall be governed by, and construed in accordance with,
the laws of the State of New York.
(e) Each Borrower and each Guarantor hereby acknowledges and agrees that
this Amendment constitutes a "Financing Agreement" under the Loan Agreement.
Accordingly, it shall be an Event of Default under the Loan Agreement if (i) any
representation or warranty made by a Borrower or a Guarantor under or in
connection with this Amendment shall have been untrue, false or misleading in
any material respect when made, or (ii) a Borrower or a Guarantor shall fail to
perform or observe any term, covenant or agreement contained in this Amendment.
(f) This Amendment is not, and shall not be deemed to be, a waiver of, or a
consent to any Event of Default, event with which the giving of notice or lapse
of time or both may result in an Event of Default, or other noncompliance now
existing or hereafter arising under the Loan Agreement and the other Financing
Agreements, and the Agent and the Lenders expressly reserve all of their rights
and remedies under the Loan Agreement and the other Financing Agreements, under
applicable law or otherwise.
10. Waiver of Jury Trial. THE BORROWERS, THE GUARANTORS, THE AGENT AND THE
LENDERS EACH HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE ACTIONS OF THE AGENT OR THE
LENDERS IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be executed as of the date first above
written.
AGENT AND LENDER BORROWERS
ABLECO FINANCE LLC, C&D TECHNOLOGIES, INC.
on behalf of itself and its Affiliate assigns
By:/s/ Robert T. Marley
-----------------------
By:/s/ Kevin Genda
- ------------------ Title:V.P. Treasurer
--------------------
Title: Senior Vice President
- ----------------------------
C&D TECHNOLOGIES (DATEL), INC.
LENDERS
LBC CREDIT PARTNERS, L.P. By:/s/ Robert T. Marley
-----------------------
By:/s/ Christopher J. Calabrese Title:V.P. Treasurer
- ------------------------------- --------------------
Title: EVP
- ----------
C&D TECHNOLOGIES (CPS) LLC
LBC CREDIT PARTNERS PARALLEL, L.P.
By:/s/ Robert T. Marley
-----------------------
By:/s/ Christopher J. Calabrese
- -------------------------------
Title:Treasurer
---------------
Title: EVP
- ----------
FORTRESS CREDIT OPPORTUNITIES I LP
By: Fortress Credit Opportunities I GP LLC,
its general partner
By:/s/ Constantine Dakolias
- ---------------------------
Title:Chief Credit Officer
- --------------------------
GUARANTORS
C&D CHARTER HOLDINGS, INC.
By:/s/ Robert T. Marley
- -----------------------
Title:V.P. Treasurer
- --------------------
C&D DYNAMO CORP.
By:/s/ Robert T. Marley
- -----------------------
Title:V.P. Treasurer
- --------------------
DYNAMO ACQUISITION CORP.
By:/s/ Robert T. Marley
- -----------------------
Title:V.P. Treasurer
- --------------------
C&D INTERNATIONAL INVESTMENT HOLDINGS INC.
By:/s/ Robert T. Marley
- -----------------------
Title:V.P. Treasurer
- --------------------
DATEL HOLDING CORPORATION
By:/s/ Robert T. Marley
- -----------------------
Title:Treasurer
- ---------------
Schedule 1.38
See Attached
Schedule 1.38
-------------
Adjustments to EBITDA
Cash Expense directly related to any announced closure of a plant or business
classified as a discontinued operation for restructuring charges incurred
prior to March 31, 2007................................................................ $8,750,000
Severance Costs in fiscal 2006 ........................................................ $2,500,000
Inventory write down in PED related to RoHS which occurred in the quarter ended
October 31, 2005....................................................................... $2,400,000
Inventory write down for the quarter ended January 31, 2006 ........................... $1,000,000
Executive Severance Costs charged to the Power Systems Division and incurred
prior to April 30, 2006................................................................ $ 500,000