Exhibit 10.3

 

SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as
of February 28, 2019 (the “Sixth Amendment Closing Date”) and effective as of
February 22, 2019 (the “Sixth 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”).

 

Borrowers, the Lender and Agent are parties to a Loan and Security Agreement
dated as of April 14, 2016 (as amended as of September 5, 2017, October 27,
2017, March 28, 2018, August 29, 2018 and December 19, 2018, and as may be
further 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 Sixth Amendment Effective Date:

 

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

 

“Sixth Amendment” means that certain Sixth Amendment to Loan and Security
Agreement dated as of the Sixth Amendment Closing Date, among Borrowers, Agent
and Lender.

 

“Sixth Amendment Closing Date” means February 28, 2019.

 

“Sixth Amendment Effective Date” means February 22, 2019.

 

“Sixth Amendment Fee” means a non-refundable fee of $250,000.

 

(ii)         Section 2.10. A new Section 2.10 is hereby added as follows:

 

2.10.     Additional Fees. Borrower shall pay Lender the Sixth Amendment Fee on
or prior to the Sixth Amendment Closing Date.

 

(iii)        Section 2.11. A new Section 2.11 is hereby added as follows:

 

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2.11       Treatment of Prepayment Charge and End of Term Charge. Borrower
agrees that any Prepayment Charge and any End of Term Charge payable shall be
presumed to be the liquidated damages sustained by each Lender as the result of
the early termination, and Borrower agrees that it is reasonable under the
circumstances currently existing and existing as of the Closing Date. The
Prepayment Charge and the End of Term Charge shall also be payable in the event
the Secured Obligations (and/or this Agreement) are satisfied or released by
foreclosure (whether by power of judicial proceeding), deed in lieu of
foreclosure, or by any other means. Borrower expressly waives (to the fullest
extent it may lawfully do so) the provisions of any present or future statute or
law that prohibits or may prohibit the collection of the foregoing Prepayment
Charge and End of Term Charge in connection with any such acceleration. Borrower
agrees (to the fullest extent that each may lawfully do so): (a) each of the
Prepayment Charge and the End of Term Charge is reasonable and is the product of
an arm’s length transaction between sophisticated business people, ably
represented by counsel; (b) each of the Prepayment Charge and the End of Term
Charge shall be payable notwithstanding the then prevailing market rates at the
time payment is made; (c) there has been a course of conduct between the Lenders
and Borrower giving specific consideration in this transaction for such
agreement to pay the Prepayment Charge and the End of Term Charge as a charge
(and not interest) in the event of prepayment or acceleration; (d) Borrower
shall be estopped from claiming differently than as agreed to in this paragraph.
Borrower expressly acknowledges that their agreement to pay each of the
Prepayment Charge and the End of Term Charge to the Lenders as herein described
was on the Closing Date and continues to be a material inducement to the Lenders
to provide the Term Loans.

 

(iv)        Section 2.5. Section 2.5 is hereby amended and restated in its
entirety as follows:

 

2.5         Prepayment. At its option upon at least seven (7) Business Days
prior notice to Agent, Borrower may prepay all, but not less than all, of the
outstanding Advances by paying the entire principal balance, and all accrued and
unpaid interest thereon, together with a prepayment charge equal to the
following percentage of the Advance amount being prepaid: if such Advance
amounts are prepaid in any of the first twelve (12) months following the Sixth
Amendment Effective Date, 2.00%; and thereafter, 1.00% (each, a “Prepayment
Charge”). Borrower agrees that the Prepayment Charge is a reasonable calculation
of Lender’s lost profits in view of the difficulties and impracticality of
determining actual damages resulting from an early repayment of the Advances.
Borrower shall prepay the outstanding amount of all principal and accrued
interest through the prepayment date and the Prepayment Charge upon the
occurrence of a Change in Control.

 

(v)         Section 8.2. Section 8.2 is hereby amended and restated in its
entirety as follows:

 

8.2         Minimum Unrestricted Cash Balance. At all times following the Sixth
Amendment Effective Date through March 31, 2019, Borrower shall maintain an
unrestricted Cash balance of at least (a) 50% of the outstanding Loan balance
plus (b) the amount of accounts payable (as defined under GAAP) not paid within
90 days of the invoice date, in accounts subject to an Account Control Agreement
in favor of Agent. At all times after March 31, 2019, Borrower shall maintain an
unrestricted Cash balance of at least (a) 75% of the outstanding Loan balance
plus (b) the amount of accounts payable (as defined under GAAP) not paid within
90 days of the invoice date, in accounts subject to an Account Control Agreement
in favor of Agent.

 

(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 fees, costs and
expenses due and payable as of the Sixth Amendment Closing Date under the Loan
and Security Agreement, including the Sixth Amendment Fee.

 

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

 

(c)          Representations and Warranties; No Default. On the Sixth Amendment
Closing 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 Sixth Amendment Closing 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 Sixth
Amendment Closing Date, (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 Fifth Amendment 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).

 

SECTION 5        Miscellaneous.

 

(a)          Loan Documents Otherwise Not Affected; Reaffirmation. Except as
expressly amended pursuant hereto or referenced herein, the Loan and Security
Agreement, as amended, 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 Sixth Amendment Closing 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 Sixth Amendment Closing
Date, 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:

 

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

 

(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
Sixth Amendment Closing 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
Sixth Amendment Closing 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.

 

(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]

 

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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: Sr. Vice President,
Chief Financial Officer         Versa Power Systems, Inc.         Signature: /s/
Michael S. Bishop         Print Name: Michael S. Bishop         Title: Sr. Vice
President, Chief Financial Officer         Versa Power Systems Ltd.        
Signature: /s/ Michael S. Bishop         Print Name: Michael S. Bishop        
Title: Sr. Vice President, Chief Financial Officer

 

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

 

 

 

 

  AGENT:       HERCULES CAPITAL INC.         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 Sixth Amendment to Loan and Security Agreement]