Exhibit 10.1

 

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as
of September 5, 2017 (the “Amendment Effective Date”), is entered into by and
among FuelCell Energy, Inc., a Delaware corporation (“Parent”), Versa Power
Systems, Inc., a Delaware corporation (“Versa Delaware”), Versa Power Systems
Ltd. a corporation organized under the laws of Alberta, Canada (“Versa Canada”),
and each of Parent’s Subsidiaries that delivers a Joinder Agreement pursuant to
Section 7.13 of the Loan and Security Agreement (hereinafter collectively
referred to as the “Borrowers” and each, a “Borrower”), the several banks and
other financial institutions or entities from time to time parties thereto as
Lender, constituting the Required Lenders, and HERCULES CAPITAL, INC., a
Maryland corporation, in its capacity as administrative agent and collateral
agent for itself and the Lender (in such capacity, together with its successors
and assigns in such capacity, “Agent”).

 

Borrower the Lender and Agent are parties to a Loan and Security Agreement dated
as of April 14, 2016 (as amended, restated or modified from time to time, the
“Loan and Security Agreement”). The Borrowers have requested that Agent and
Lender agree to certain amendments to the Loan and Security Agreement. Agent and
Lender have agreed to such request, subject to the terms and conditions hereof.

 

Accordingly, the parties hereto agree as follows:

 

SECTION 1         Definitions; Interpretation.

 

(a)          Terms Defined in Loan and Security Agreement. All capitalized terms
used in this Amendment (including in the recitals hereof) and not otherwise
defined herein shall have the meanings assigned to them in the Loan and Security
Agreement.

 

(b)          Interpretation. The rules of interpretation set forth in
Section 1.1 of the Loan and Security Agreement shall be applicable to this
Amendment and are incorporated herein by this reference.

 

SECTION 2         Amendments to the Loan and Security Agreement.

 

(a)          The Loan and Security Agreement shall be amended as follows
effective as of the Amendment Effective Date:

 

(i)          New Definitions. The following definitions are added to Section 1.1
in their proper alphabetical order:

 

“Blocked Account Control Agreement” means an Account Control Agreement wherein
Agent has and maintains exclusive control over the subject account or accounts,
in form and substance acceptable to Agent in its sole discretion.

 

“First Amendment” means that certain First Amendment to Loan and Security
Agreement dated as of September 5, 2017, among Borrowers and Agent.

 

“First Amendment Effective Date” means September 5, 2017.

 

“Series C Convertible Preferred Certificate” means that certain Certificate of
Designations, Preferences and Rights of the Series C Convertible Preferred Stock
of FuelCell Energy, Inc., in the form attached as Exhibit B to the First
Amendment, in each case as in effect on the First Amendment Effective Date.

 

“Series C Convertible Preferred Documents” means (a) that certain Underwriting
Agreement between Parent and Oppenheimer & Co. Inc. dated as of September 5,
2017 in the form attached as Exhibit A to the First Amendment and (b) the Series
C Convertible Preferred Certificate.

 

 1 

 

 

“Series C Convertible Preferred Stock” means the Series C Convertible Preferred
Stock issued by the Borrower pursuant to the Series C Convertible Preferred
Certificate.

 

(ii)         Amended Definitions. The definition of “Permitted Indebtedness” is
amended by removing the word “and” at the end of clause (xiii), inserting the
word “and” at the end of clause (xii) and adding a new clause (xiv) as follows:
“(xiv) subject to Section 7.7, redemption and/or conversion rights as set forth
in the Series C Convertible Preferred Documents”

 

(iii)        Section 7.7. Section 7.7 is hereby amended and restated in its
entirety as follows:

 

7.7            Distributions. Borrower shall not, and shall not allow any
Subsidiary to, (a) repurchase or redeem any class of stock or other equity
interest in cash other than (i) pursuant to employee, director or consultant
repurchase plans or other similar agreements, provided, however, in each case
the repurchase or redemption price does not exceed the original consideration
paid for such stock or equity interest and (ii) so long as no Event of Default
has occurred and is continuing, pursuant to the redemption and/or conversion
rights set forth in the Series C Convertible Preferred Documents; provided that,
Borrower shall make any such repurchase, redemption or payment in the form of
its common stock and not in cash or other consideration unless prohibited
pursuant to the terms of the Series C Convertible Preferred Certificate or
otherwise prohibited by applicable law or (b) declare or pay any cash dividend
or make a cash distribution on any class of stock or other equity interest,
except that (i) a Subsidiary may pay dividends or make distributions to Borrower
and (ii) so long as no Event of Default has occurred and is continuing, Borrower
may pay cash dividends under Borrower’s (A) Series 1 Preferred Shares in an
amount not to exceed Canadian $1,250,000 per year, (B) Series B Preferred Shares
in an amount not to exceed U.S. $3,300,000 per year and (C) Series C Convertible
Preferred Shares as required in the Series C Convertible Preferred Documents
provided that, Borrower shall pay such dividend or distribution in the form of
common stock and not in cash or other consideration unless prohibited pursuant
to the terms of the Series C Convertible Preferred Certificate or otherwise
prohibited by applicable law or (c) lend money to any employees, officers or
directors or guarantee the payment of any such loans granted by a third party in
excess of $100,000 in the aggregate or (d) waive, release or forgive any
Indebtedness owed by any employees, officers or directors in excess of $100,000
in the aggregate. For the avoidance of doubt, Borrower shall not use cash to
retire, redeem or make principal payments other than those referenced in (ii)
above on its Convertible Perpetual Preferred Stock (which, for the avoidance of
doubt, does not include the Series C Convertible Preferred Stock) without the
consent of Agent.

 

(iv)        Section 8.2. Section 8.2 is hereby amended and restated as follows:

 

8.2        Minimum Unrestricted, Blocked Cash Balance. At all times, Borrower
shall maintain an unrestricted, blocked Cash balance of at least the greater of
(x) (a) $20,000,000.00 plus (b) the amount of accounts payable (as defined under
GAAP) not paid within 90 days of the date payment was issued, in accounts
subject to an Account Control Agreement in favor of Agent and (y) (a) 100% of
the outstanding Loan balance plus (b) the amount of accounts payable (as defined
under GAAP) not paid within 90 days of the date payment was issued, in accounts
subject to a Blocked Account Control Agreement in favor of Agent.

 

(v)         Section 9.8. A new Section 9.8 is hereby added as follows:

 

9.8           Series C Convertible Preferred Stock. The delivery of any
Triggering Event Redemption Notice (as defined under the Series C Convertible
Preferred Certificate) under the Series C Convertible Preferred Certificate,
both as in effect on the First Amendment Date and as may be amended.

 

 2 

 

 

(vi)        Notwithstanding any other provision of the Loan and Security
Agreement, as amended, the Borrower shall be permitted to redeem all or a
portion of the Series C Convertible Preferred Stock at an aggregate redemption
price of up to $30,000,000 pursuant to Section 5(b) of the Series C Convertible
Preferred Certificate following a Triggering Event (as defined in the Series C
Convertible Preferred Certificate) pursuant to Section 5(a)(iii) of the Series C
Convertible Preferred Certificate. For the avoidance of doubt, any principal or
accrued amount outstanding at the time of redemption in excess of the aggregate
amount paid to the Holders, shall remain outstanding and remain due and payable
to the Holders. Notwithstanding the foregoing, in no event shall this section or
any other provision of the Loan Documents or otherwise limit any rights of the
Agent and Lenders to be paid prior to the holders of the Series C securities
upon any exercise of remedies by Agent or the Lenders (whether such exercise is
automatic or upon the direction of any parties), in any action either before or
after the consummation of any Insolvency Proceeding.

 

(b)          References within Loan and Security Agreement. Each reference in
the Loan and Security Agreement to “this Agreement” and the words “hereof,”
“herein,” “hereunder,” or words of like import, shall mean and be a reference to
the Loan and Security Agreement as amended by this Amendment.

 

SECTION 3         Conditions of Effectiveness. The effectiveness of Section 2 of
this Amendment shall be subject to the satisfaction of each of the following
conditions precedent:

 

(a)          Fees and Expenses. The Parent shall have paid all attorney fees and
other costs and expenses then due in accordance with Section 5(e), and (ii) all
other fees, costs and expenses, if any, due and payable as of the Amendment
Effective Date under the Loan and Security Agreement.

 

(b)          This Amendment. Agent shall have received this Amendment, executed
by Agent, the Lender and the Loan Parties.

 

(c)          Series C Convertible Preferred Documents. Agent shall have received
executed copies of each Series C Convertible Preferred Document, in form and
substance satisfactory to Agent.

 

(d)          Series C Convertible Preferred Issuance. The Borrower shall have
issued 33,500 shares of Series C Convertible Preferred Stock pursuant to the
Series C Convertible Preferred Documents.

 

(e)          Blocked Account Control Agreement. The Blocked Account Control
Agreement shall be in full force and effect.

 

(f)          Representations and Warranties; No Default. On the Amendment
Effective Date, after giving effect to the amendment of the Loan and Security
Agreement contemplated hereby:

 

(i)          The representations and warranties contained in Section 4 shall be
true and correct on and as of the Amendment Effective Date as though made on and
as of such date; and

 

(ii)         There exist no Events of Default or events that with the passage of
time would result in an Event of Default.

 

SECTION 4        Representations and Warranties. To induce Agent and Lender to
enter into this Amendment, each Borrower hereby confirms, as of the date hereof,
(a) that the representations and warranties made by it in Section 5 of the Loan
and Security Agreement and in the other Loan Documents are true and correct in
all material respects; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; (b) that there has not
been and there does not exist a Material Adverse Effect; and (c) that the
information included in the Perfection Certificate delivered to Agent on the
Effective Date remains true and correct. For the purposes of this Section 4,
(i) each reference in Section 5 of the Loan and Security Agreement to “this
Agreement,” and the words “hereof,” “herein,” “hereunder,” or words of like
import in such Section, shall mean and be a reference to the Loan and Security
Agreement as amended by this Amendment, and (ii) any representations and
warranties which relate solely to an earlier date shall not be deemed confirmed
and restated as of the date hereof (provided that such representations and
warranties shall be true, correct and complete as of such earlier date).

 

 3 

 

 

SECTION 5         Miscellaneous.

 

(a)          Loan Documents Otherwise Not Affected; Reaffirmation. Except as
expressly amended pursuant hereto or referenced herein, the Loan and Security
Agreement and the other Loan Documents shall remain unchanged and in full force
and effect and are hereby ratified and confirmed in all respects. The Lender’s
and Agent’s execution and delivery of, or acceptance of, this Amendment shall
not be deemed to create a course of dealing or otherwise create any express or
implied duty by any of them to provide any other or further amendments, consents
or waivers in the future. Each Borrower hereby reaffirms the grant of security
under Section 3.1 of the Loan and Security Agreement and hereby reaffirms that
such grant of security in the Collateral secures all Secured Obligations under
the Loan and Security Agreement and the other Loan Documents.

 

(b)          Conditions. For purposes of determining compliance with the
conditions specified in Section 3, each Lender that has signed this Amendment
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless Agent shall have
received notice from such Lender prior to the Amendment Effective Date
specifying its objection thereto.

 

(c)          Release. In consideration of the agreements of Agent and each
Lender contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Borrower, on
behalf of itself and its successors, assigns, and other legal representatives,
hereby fully, absolutely, unconditionally and irrevocably releases, remises and
forever discharges Agent and each Lender, and its successors and assigns, and
its present and former shareholders, affiliates, subsidiaries, divisions,
predecessors, directors, officers, attorneys, employees, agents and other
representatives (Agent, Lenders and all such other persons being hereinafter
referred to collectively as the “Releasees” and individually as a “Releasee”),
of and from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings,
damages and any and all other claims, counterclaims, defenses, rights of
set-off, demands and liabilities whatsoever of every name and nature, known or
unknown, suspected or unsuspected, both at law and in equity, which any
Borrower, or any of its successors, assigns, or other legal representatives may
now or hereafter own, hold, have or claim to have against the Releasees or any
of them for, upon, or by reason of any circumstance, action, cause or thing
whatsoever which arises at any time on or prior to the day and date of this
Amendment, including, without limitation, for or on account of, or in relation
to, or in any way in connection with the Loan Agreement, or any of the other
Loan Documents or transactions thereunder or related thereto. Each Borrower
understands, acknowledges and agrees that the release set forth above may be
pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release. Each
Borrower agrees that no fact, event, circumstance, evidence or transaction which
could now be asserted or which may hereafter be discovered shall affect in any
manner the final, absolute and unconditional nature of the release set forth
above. Borrower waives the provisions of California Civil Code section 1542,
which states:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

(d)          No Reliance. Each Borrower hereby acknowledges and confirms to
Agent and the Lender that such Borrower is executing this Amendment on the basis
of its own investigation and for its own reasons without reliance upon any
agreement, representation, understanding or communication by or on behalf of any
other Person.

 

(e)          Costs and Expenses. Each Borrower agrees to pay to Agent on the
Amendment Effective Date the out-of-pocket costs and expenses of Agent and the
Lenders party hereto, and the fees and disbursements of counsel to Agent and the
Lenders party hereto (including allocated costs of internal counsel), in
connection with the negotiation, preparation, execution and delivery of this
Amendment and any other documents to be delivered in connection herewith on the
Amendment Effective Date or after such date.

 

(f)          Binding Effect. This Amendment binds and is for the benefit of the
successors and permitted assigns of each party.

 

 4 

 

 

(g)          Governing Law. This Agreement and the other Loan Documents shall be
governed by, and construed and enforced in accordance with, the laws of the
State of California, excluding conflict of laws principles that would cause the
application of laws of any other jurisdiction.

 

(h)          Complete Agreement; Amendments. This Amendment and the Loan
Documents represent the entire agreement about this subject matter and supersede
prior negotiations or agreements with respect to such subject matter. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Amendment and the Loan
Documents merge into this Amendment and the Loan Documents.

 

(i)          Severability of Provisions. Each provision of this Amendment is
severable from every other provision in determining the enforceability of any
provision.

 

(j)          Counterparts. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, is an original, and all taken together, constitute
one Amendment. Delivery of an executed counterpart of a signature page of this
Amendment by facsimile, portable document format (.pdf) or other electronic
transmission will be as effective as delivery of a manually executed counterpart
hereof.

 

(k)          Loan Documents. This Amendment shall constitute a Loan Document.

 

[Balance of Page Intentionally Left Blank; Signature Pages Follow]

 

 5 

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment, as of
the date first above written.

 

  BORROWERS:       FuelCell Energy, Inc.         Signature: /s/ Michael S.
Bishop         Print Name: Michael S. Bishop         Title: Senior Vice
President, Chief     Financial Officer & Treasurer         Versa Power Systems,
Inc.         Signature: /s/ Michael S. Bishop         Print Name: Michael S.
Bishop         Title: Treasurer         Versa Power Systems Ltd.      
Signature: /s/ Michael S. Bishop         Print Name: Michael S. Bishop        
Title: Treasurer

 

[Signature Page to First Amendment to Loan and Security Agreement]

 

 

 

 

  AGENT:       HERCULES FUNDING II, LLC         Signature: /s/ Jennifer Choe    
    Print Name: Jennifer Choe         Title: Assistant General Counsel      
LENDER:       HERCULES FUNDING II, LLC         Signature: /s/ Jennifer Choe    
    Print Name: Jennifer Choe         Title: Assistant General Counsel

 

[Signature Page to First Amendment to Loan and Security Agreement]

 

 

 

 

Exhibit A

 

Underwriting Agreement

 

 

 

 

Exhibit B

 

Certificate of Designation