EXHIBIT 99.2
SECOND AMENDMENT AND WAIVER
TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment"), dated as of May 23, 2002, is made by and among SL
Industries, Inc. and SL Delaware, Inc. (together, the "Borrower"); GE Capital
CFE, Inc., both individually "GECC" and as Agent for the Banks (this and all
other capitalized terms not defined herein shall have the meanings set forth in
the Credit Agreement described below); and the Banks party to the Credit
Agreement described below.
Background
The Borrower, the Agent and the Banks are parties to that certain
Second Amended and Restated Credit Agreement dated as of December 13, 2001, as
amended by that certain Omnibus Amendment Agreement dated as of February 26,
2002 (as so amended, the "Credit Agreement"). The aggregate principal amount of
the Loans (as defined in the Credit Agreement) outstanding as of the date hereof
is $26,160,171.24, and such amount is due and payable to the Banks in accordance
with the terms of the Credit Agreement without defense, counterclaim or offset
by the Borrower.
The Borrower has requested that the Agent and the Banks amend the
Credit Agreement to make certain adjustments to the scheduled reductions and
repayments of the Commitment (as defined therein) and waive certain events of
default. The Agent and the Banks are willing to provide for the amendment and
waiver requested by the Borrower on the terms and conditions set forth below.
Among other things, this Amendment modifies the mandatory Commitment reduction
schedule and increases the amount of net losses of the Borrower permitted in
certain fiscal quarters.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
1. AMENDMENTS. The Credit Agreement is amended as follows:
(a) DEFERRAL OF REDUCTION. The reduction of the Commitment scheduled
on March 1, 2002, pursuant to Subsection 2.12(c) of the Credit Agreement, is
deferred until the effective date of this Amendment. On the effective date of
this Amendment, the aggregate amount of the Commitment shall be reduced to
$25,500,000 and the Borrower shall repay the Loans such that the aggregate
amount of the outstanding Loans and any outstanding letters of credit referred
to in Section 2.01 of the Credit Agreement shall not exceed $25,500,000.
(b) SCHEDULE 2.12. Schedule 2.12 (Commitment Reduction Amounts) to
the Credit Agreement is amended and restated in its entirety to read as follows:
"Period Amount of Commitment
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Second Amendment Effective Date $25,500,000
through 12/30/02
12/31/02 $0
The foregoing schedule is subject to further reduction pursuant to the mandatory
commitment reduction provisions of the Credit Agreement."
(c) SECTION 1.01. Section 1.01 (Certain Definitions) of the Credit
Agreement is amended as follows:
(i) The following new definitions are added in their correct
alphabetical locations:
"Second Amendment" shall mean the Second Amendment and Waiver to
Second Amended and Restated Credit Agreement, dated as of May 23, 2002,
by and among the Borrower, the Agent and the Banks.
"Second Amendment Effective Date" shall mean the effective date
of the Second Amendment.
(ii) The defined term "Designated Subsidiary Equity" is
amended by replacing "65%" with "100%".
(d) SUBSECTION 2.01(c). Subsection 2.01(c) (Coordination with
Letters of Credit) of the Credit Agreement is amended by deleting the word
"trade" in clause (iii) thereof.
(e) SUBSECTION 2.04(c). Subsection 2.04(c) (Amendment Fee) of the
Credit Agreement is amended by adding the following new sentence at the end
thereof: "In addition, an amendment fee of $130,000 shall be payable by the
Borrower on the closing date of the Second Amendment and earned by the Banks as
follows: $32,560 by GE Capital CFE, Inc., $48,720 by Fleet and $48,720 by PNC."
(f) SECTION 2.12. Section 2.12 (Reduction of Commitment and
Prepayment) of the Credit Agreement is amended by:
(i) deleting paragraph (iv) of Subsection 2.12(a) (Foreign
Tax Refund) and replacing it with "Intentionally Omitted"; and
(ii) adding the following new paragraph (d) at the end
thereof:
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"(d) If at any time the aggregate amount of the outstanding
Loans (including Loans advanced pursuant to Section 2.01(e)) and any
outstanding letters of credit referred to in Section 2.01 (Loans)
exceeds the amount of the Commitment, the Borrower shall immediately,
and without the necessity of demand, repay the Loans in such amount as
may be necessary to eliminate such excess."
(g) SECTION 5.01. Section 5.01 (Reporting Requirements) of the
Credit Agreement is amended by:
(i) amending and restating paragraph (c) in its entirety to
read as follows:
"(c) MONTHLY REPORTS. As soon as practicable, and in any
event within 30 days after the close of each month of each fiscal year
of the Borrower, the Borrower shall furnish to the Banks: (i) an
unaudited consolidated statement of income for the Borrower and its
Subsidiaries for such month prepared by the Borrower, in reasonable
detail; (ii) an unaudited consolidated balance sheet of the Borrower
and its Subsidiaries as of the close of such month prepared by the
Borrower, in reasonable detail; (iii) a summary of the aging of the
accounts receivable of the Borrower and its Subsidiaries for such
month; (iv) a chart showing the number of days outstanding for the
accounts payable of the Borrower and its Subsidiaries for such month;
and (v) a report or letter as to progress of any assets sales and/or
refinancing options.
(ii) replacing the existing paragraph (g) (which currently
reads "Intentionally Omitted") with the following paragraph (g):
"(g) By June 30, 2002, the Borrower shall deliver to the
Banks: (i) a current valuation analysis prepared by the Borrower; (ii)
an outline and explanation of the strategic plan for the sale of the
Borrower and its Subsidiaries approved by the board of directors of the
Borrower, prepared by Credit Suisse First Boston ("CSFB"); and (iii)
the sale book relating to the sale of the Borrower and its
Subsidiaries, prepared by CSFB."
(h) SUBSECTION 6.01(a). Subsection 6.01(a) (Net Income Test) of the
Credit Agreement is amended as follows:
(i) For the quarter ending December 31, 2001, by replacing
"Net Loss not exceeding $800,000" with "Net Loss not exceeding
$1,310,000"; and
(ii) For the quarter ending March 31, 2002, by replacing "Net
Loss not exceeding $175,000" with "Net Loss not exceeding $400,000".
2. CONDITIONS PRECEDENT. The amendments to the Credit Agreement set forth
in Section 1 above and the waivers set forth in Section 4 below shall become
effective as of the date hereof, upon the satisfaction of the following
conditions precedent:
(a) the delivery of a mortgage, duly executed and in form for
recording, in favor of the Banks on the Boonton, NJ property owned by RFL
Electronics, Inc. (the "Boonton Property");
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(b) the execution and delivery by each of the pledgors under the
Pledge Agreement dated as of January 11, 2002 of an Amended and Restated Pledge
Agreement providing for the pledge of 100% of the equity of each of Cedar
Corporation, Condor Holdings, Inc. and SL Delaware, Inc., together with such
certificates, assignment powers and other documentation as shall be desirable to
perfect such pledge;
(c) the execution and delivery by the Borrower, SL Delaware, Inc.
and SL Delaware Holdings, Inc. (the "Pledgors") of a control agreement among the
Agent, the Pledgors and Mellon Bank, N.A. ("Mellon"), in form and substance
reasonably satisfactory to the Agent, with respect to all deposit accounts other
than the imprest balance account referred to below;
(d) the execution and delivery by the Borrower of an Imprest Balance
Account Agreement Letter between the Borrower and Mellon, with respect to an
imprest balance account to be maintained with Mellon, and the payment by the
Borrower of $5,000 to Mellon to be deposited in such imprest balance account;
(e) the delivery by the Borrower of updated financial projections
for fiscal year 2002, an operating plan and a budget by division to the Banks
and to Xxxx-Xxxxxx Financial Group, Inc. ("Xxxx-Xxxxxx");
(f) the delivery by the Borrower of (i) unaudited consolidated
statement of income for the Borrower and its Subsidiaries for the month ended
March 31, 2002 prepared by the Borrower, in reasonable detail; (ii) an unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as of the close
of such month prepared by the Borrower, in reasonable detail; (iii) a summary of
the aging of the accounts receivable of the Borrower and its Subsidiaries for
such month; (iv) a chart showing the number of days outstanding for the accounts
payable of the Borrower and its Subsidiaries for such month; and (v) a report or
letter as to progress of any assets sales and/or refinancing options;
(g) the execution and delivery of this Amendment by each of the
Banks, the Agent and the Borrower;
(h) the execution and delivery of the Consent and Acknowledgment
attached to this Amendment by each of the Guarantors;
(i) the payment of the amendment fee referred to in Section 1(e)
above by the Borrower; and
(j) the payment by the Borrower of the Agent's costs and fees then
due and payable, including the fees and expenses of its counsel, Drinker Xxxxxx
& Xxxxx LLP.
3. CONDITIONS SUBSEQUENT. Within the time period specified below for each
item, the Borrower shall satisfy each of the following conditions subsequent.
The failure to satisfy any such condition within the time period specified shall
be an Event of Default under the Credit Agreement.
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(a) If requested by the Agent, the Borrower shall deliver to the
Agent title insurance for the Boonton Property, as soon as practicable after
such request;
(b) as soon as practicable after the delivery of the financial
information described in Section 2(e) above, but in any event no later than
three (3) weeks after the delivery of such information, the Borrower shall cause
Xxxx-Xxxxxx to meet with the Banks and discuss the same with the Banks. In
connection therewith, the Borrower shall provide such information to Xxxx-Xxxxxx
as Xxxx-Xxxxxx reasonably deems appropriate and authorize Xxxx-Xxxxxx to
candidly and fully discuss the same with the Banks;
(c) within ten (10) days after the date of this Amendment, the
Borrower shall deliver a legal opinion addressed to the Agent and each Bank, in
form and substance reasonably satisfactory to the Agent; and
(d) within thirty (30) days after the date of this Amendment or as
soon as practicable thereafter, the Borrower shall deliver to the Agent a
completed collateral perfection questionnaire which is complete and correct in
all material respects.
4. WAIVERS. As of the effective date of the amendments set forth in
Section 1 above, the Banks hereby waive any Event of Default under the Credit
Agreement as of April 30, 2002, which would not have occurred had this Amendment
been in place as of such date and further waive the imposition of the default
rate of interest under Section 2.05(c) of the Credit Agreement which would have
arisen out of such Event of Default through the date hereof. In addition, the
Banks hereby waive the Event of Default arising out of the Borrower's failure to
deliver the December 2001, January 2002 and February 2002 monthly financial
statements when due under Section 5.01(c) of the Credit Agreement and further
waive the imposition of the default rate of interest under Section 2.05(c) of
the Credit Agreement which would have arisen out of such Event of Default
through the date of this Amendment. These waivers are limited to their terms and
do not imply a waiver of any other Potential Defaults or Events of Default which
may have occurred or which may hereafter occur or any willingness to waive any
similar or other defaults in the future (including, without limitation, any
default with respect to the delivery of the financial statements as set forth in
Section 2(f) above).
5. RELEASE. As a material inducement to the Agent and the Banks to enter
into this Amendment, the Borrower (a) does hereby remise, release, acquit,
satisfy and forever discharge the Agent and the Banks and all of their past,
present and future officers, directors, employees, agents, attorneys,
representatives, participants, heirs, successors and assigns, from any and all
manner of debts, accountings, bonds, warranties, representations, covenants,
promises, contracts, controversies, agreements, liabilities, obligations,
expenses, damages, judgments, executions, actions, claims, demands and causes of
action of any nature whatsoever, whether at law or in equity, which the Borrower
has by reason of any matter, cause or thing, from the beginning of the world to
and including the date of this Amendment with respect to any matters,
transactions, occurrences, agreements, actions, or events arising out of, in
connection with or relating to the Credit Agreement, any Guaranty or any
Security Document; and (b) does hereby covenant and agree never to institute or
cause to be instituted or continue prosecution of any suit or other form of
action or proceeding of any kind or nature whatsoever against the Agent and the
Banks, or any of their past, present or future officers, directors, employees,
agents, attorneys, representatives,
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participants, heirs, successors or assigns, by reason of or in connection with
any of the foregoing matters, claims or causes of action. The Borrower expressly
acknowledges and agrees that the releases contained in this Amendment shall not
be construed as an admission of wrongdoing, liability or culpability on the part
of the Agent or any of the Banks or the existence of any claims of the Borrower
against the Agent or any of the Banks.
6. REPRESENTATIONS. The Borrower represents and warrants to the Banks and
the Agent that each of the representations in the Credit Agreement is true and
correct in all material respects after giving effect to this Amendment and that
no Event of Default or, to the Borrower's knowledge, Potential Default exists
after giving effect to this Amendment.
7. MISCELLANEOUS.
(a) RATIFICATION. Except as herein provided, the Credit Agreement
shall remain unchanged and in full force and effect and is hereby ratified and
confirmed.
(b) REFERENCES. From and after the date that this Amendment becomes
effective, any reference in the Credit Agreement or any other related documents
to the Credit Agreement shall be and mean a reference to such agreement as
amended hereby and as the same may be further amended, modified or supplemented
from time to time.
(c) COUNTERPARTS; COPIES OF SIGNATURES. This Amendment may be
executed in any number of counterparts and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument. A photocopy or facsimile copy of a signature shall be the functional
equivalent of a manually executed counterpart for all purposes.
(d) GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the law of the Commonwealth of Pennsylvania
without regard to its conflict of laws principles.
[Signature page follows]
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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
duly executed by their respective duly authorized officers as of the date first
above written.
BORROWER:
SL INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
SL DELAWARE, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
BANKS:
GE CAPITAL CFE, INC., as a Bank and as Agent
By:
-------------------------------
Name:
Title:
FLEET NATIONAL BANK
By:
-------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CONSENT AND ACKNOWLEDGEMENT
Reference is made to that certain Second Amended and Restated Credit
Agreement dated as of December 13, 2001, as amended by that certain Omnibus
Amendment Agreement dated as of February 26, 2002, among SL Industries, Inc. and
SL Delaware, Inc. (together, the "Borrower"); GE Capital CFE, Inc. ("GECC"),
Fleet National Bank, and PNC Bank, National Association; and GECC, as Agent (as
so amended and as further amended pursuant to the foregoing Second Amendment and
Waiver to Second Amended and Restated Credit Agreement (the "Amendment") and as
the same may be further amended, restated, modified and/or supplemented from
time to time, the "Credit Agreement"). Terms not otherwise defined herein are
used herein as defined in the Credit Agreement.
Each Guarantor confirms the following for the benefit of the Banks and
the Agent that:
(a) it is a Subsidiary of the Borrower and has signed the Guaranty;
(b) the Guaranty is in full force and effect;
(c) the principal of and interest on the Loans and all other amounts
owed from time to time to the Agent and the Banks under the Credit Agreement, as
amended by the Amendment, are among the Guaranteed Obligations (as defined in
the Guaranty) entitled to the benefits of the guarantees set forth in the
Guaranty; and
(d) without limiting the generality of the foregoing, (i) it is
jointly and severally unconditionally guarantying and acting as surety for, and
shall continue to jointly and severally unconditionally guarantee and act as
surety for, the Guaranteed Obligations and (ii) the Agent's and the Banks'
agreement to enter into the Amendment is based, in part, upon its guarantying
and acting as surety for the repayment of the Guaranteed Obligations.
As a material inducement to the Agent and the Banks to enter into the
Amendment, each Guarantor (a) does hereby remise, release, acquit, satisfy and
forever discharge the Agent and the Banks and all of their past, present and
future officers, directors, employees, agents, attorneys, representatives,
participants, heirs, successors and assigns, from any and all manner of debts,
accountings, bonds, warranties, representations, covenants, promises, contracts,
controversies, agreements, liabilities, obligations, expenses, damages,
judgments, executions, actions, claims, demands and causes of action of any
nature whatsoever, whether at law or in equity, which such Guarantor has by
reason of any matter, cause or thing, from the beginning of the world to and
including the date of the Amendment with respect to any matters, transactions,
occurrences, agreements, actions, or events arising out of, in connection with
or relating to the Credit Agreement, any Guaranty or any Security Document; and
(b) does hereby covenant and agree never to institute or cause to be instituted
or continue prosecution of any suit or other form of action or proceeding of any
kind or nature whatsoever against the Agent and the Banks, or any of their past,
present or future officers, directors, employees, agents, attorneys,
representatives, participants, heirs, successors or assigns, by reason of or in
connection with any of the foregoing matters, claims or causes of action. Each
Guarantor expressly acknowledges and agrees that these releases shall not be
construed as an admission of wrongdoing, liability or culpability on
the part of the Agent or any of the Banks or the existence of any claims of such
Guarantor against the Agent or any of the Banks.
SL DELAWARE HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
SL DELAWARE, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
CEDAR CORPORATION
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
CONDOR D.C. POWER SUPPLIES, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
CONDOR HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: President
SL AUBURN, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
SL MONTEVIDEO TECHNOLOGY, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
RFL ELECTRONICS, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
SL SURFACE TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
SLW HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
TEAL ELECTRONICS
CORPORATION
By: /s/ Xxxxx X. Xxxxx
------------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
WABER POWER LTD.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
CEDRO DE MEXICO S.A. DE C.V.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
CONDOR POWER SUPPLIES DE MEXICO
S.A. DE C.V.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
INDUSTRIAS SL S.A. DE C.V.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
