Exhibit 10.1





Exhibit 10.1




FIRST AMENDMENT AND WAIVER UNDER CREDIT AGREEMENT




This FIRST AMENDMENT AND WAIVER UNDER CREDIT AGREEMENT (the “Amendment”),
dated this 12 day of August, 2009, is by and among SL INDUSTRIES, INC., a New Jersey corporation
(“Parent Borrower”), the Subsidiaries of the Parent Borrower party hereto (each a
“Subsidiary Borrower” and collectively, the “Subsidiary Borrowers” and together
with the Parent Borrower, each a “Borrower” and collectively, the “Borrowers”), the
lenders party hereto, being not less than the Majority Lenders (the “Amendment Lenders”),
and BANK OF AMERICA, N.A., a national banking association (acting in its capacity as administrative
agent for the Lenders, the “Agent”).



BACKGROUND




A. Pursuant to that certain Amended and Restated Revolving Credit Agreement entered into as of
October 23, 2008, by and among the Borrowers, the Lenders, and the Administrative Agent (as
amended, modified, restated or otherwise supplemented from time to time, the “Credit
Agreement”), the Lenders agreed, inter alia, to extend to the Borrowers a revolving credit
facility of Sixty Million Dollars ($60,000,000).



B. The Parent Borrower has advised the Agent that the Borrowers failed to meet, for the fiscal
quarter ending on June 30, 2009, the Interest Coverage Ratio of not less than 2:50 to 1:00 as of
the end of each fiscal quarter as set forth in Section 7.1(b) of the Credit Agreement, and as
reported in the compliance certificate delivered on August 10, 2009 and such failure resulted in an
Event of Default under Section 10.1(d)(i) of the Credit Agreement (the “Specified
Default”).



C. The Borrowers have requested, and the Amendment Lenders have agreed, upon the terms and
subject to the conditions set forth herein, to: (i) waive the Specified Default; (ii) make certain
amendments to the Interest Coverage Ratio and calculation thereof; (iii) reduce the Commitment from
$60,000,000 to $40,000,000; (iv) increase the Commitment Fee Margin; and (v) make certain other
amendments to the Credit Agreement as hereinafter provided.



Now, therefore, for value received, and in consideration of Loans made or to be made,
and other credit accommodations given or to be given, to the Borrowers by the Lenders from time to
time, each Borrower, each Amendment Lender and the Agent hereby agree as follows:



1. Definitions. Except as expressly set forth herein, all capitalized terms used and
not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement.


 


 









 





2. Waiver of the Specified Default. On the terms and subject to the conditions of
this Amendment, the Amendment Lenders hereby waive the Specified Default for the fiscal quarter
ending on June 28, 2009. Notwithstanding the foregoing, neither the Amendment Lenders’ waiver of the Specified Default, nor any communication between the Agent, Lenders and the
Borrowers or any party’s respective officers, agents, employees or representatives shall be deemed
to constitute a waiver of: (i) any Default or Event of Default existing under the Loan Documents,
whether now existing or hereafter arising under the Loan Documents, other than the Specified
Default; (ii) the ongoing obligations of the Loan Parties to comply with the Credit Agreement and
the other Loan Documents, as amended hereby; or (iii) any rights or remedies which the Agent and
Lenders have against the Loan Parties under the Credit Agreement, the other Loan Documents and/or
applicable law, with respect to any Default or Event of Default, other than rights and remedies
which directly result from the occurrence and existence of the Specified Default. The Agent and
the Lenders hereby reserve and preserve all of their rights and remedies against the Loan Parties
under the Credit Agreement and other Loan Documents and under applicable law, other than the right
to exercise remedies based upon the occurrence and existence of the Specified Default.



3. Schedule A to the Credit Agreement. Schedule A to the Credit Agreement
(being the Commitments of the Lenders) is hereby amended and restated to be in the form of
Schedule A attached hereto.



4. Amendment to Section 7.1(b) of the Credit Agreement. Section 7.1(b) of the Credit
Agreement is hereby amended and restated in its entirety as follows:



(b) Minimum Interest Coverage Ratio. As of any fiscal
quarter end, with the exception of the fiscal quarter ending on
September 30, 2009, the Interest Coverage ratio shall not be less
than 2:50 to 1:00. As of the fiscal quarter ending on September 30,
2009, the Interest Coverage Ratio shall not be less than 1:00 to
1:00.




5. Amendments to Section 11.1 of the Credit Agreement.



(a) The definition of “Commitment” is hereby amended and restated in its
entirety as follows:



“Commitment” means the obligations of the Lenders pursuant
to the terms hereof to make Revolving Credit Loans to the Borrowers
in the aggregate principal amount outstanding at any time not to
exceed Forty Million Dollars ($40,000,000), from time to time until
the Termination Date. The amount of the Commitment may be reduced
pursuant to the terms hereof.



(b) The definition of “Commitment Fee Margin” is hereby amended to amend and
restate the table contained therein in its entirety as follows:



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Then the Commitment Fee
	Tier	 	If the Total Leverage Ratio is:	 	Margin is
	 	1	 	 	Less than or equal to 1.50 to 1.00

	 	 	0.50	%
	 	2	 	 	Greater than 1.50 to 1.00, but less
than or equal to 2.50 to 1.00

	 	 	0.60	%
	 	3	 	 	Greater than 2.50 to 1.00, but less
than or equal to 3.00 to 1.00

	 	 	0.75	%
	 	4	 	 	Greater than 3.00 to 1.00

	 	 	0.90	%





 


 









 





(c) The definition of “Interest Coverage Ratio” is hereby amended and restated
in its entirety as follows:



“Interest Coverage Ratio” means, as of any date, the ratio
of (a) EBIT, for the period of four (4) consecutive fiscal quarters
ending on or immediately prior to such date, to (b) Interest Expense
(whether or not paid), payable during the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such
date; provided that for the period of four (4) consecutive
fiscal quarters ending on or immediately prior to September 30, 2009
only, EBIT shall include the Restructuring Charges.



(d) The following definition of “Restructuring Charges” is hereby added in its
entirety as follows:



“Restructuring Charges” means, for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to
September 30, 2009, certain restructuring charges resulting from
work force reductions actually incurred and paid by (i) SL Power
Electronics Corporation in an amount not to exceed Five Hundred
Eighty-Five Thousand Dollars ($585,000) and (ii) MTE Corporation in
an amount not to exceed One Hundred Fifteen Thousand Dollars
($115,000), which charges in the aggregate shall not exceed Seven
Hundred Thousand Dollars ($700,000), during such period and included
in the calculation of EBIT.



6. No Further Consent or Waiver. Other than the Specified Default, no Default or
Event of Default exists immediately before or immediately after the date hereof. Other than the
Specified Default, nothing in this Amendment nor any communication between the Agent, any Lender,
the Loan Parties or any of their respective officers, agents, employees or representatives shall be
deemed to constitute a waiver of: (i) any Default or Event of Default arising as a result of the
foregoing representation proving to be false or incorrect in any material respect; or (ii) any
rights or remedies which the Agent or any Lender has against the Loan Parties under the Credit
Agreement or any other Loan Document and/or applicable law, with respect to any such Default or
Event of Default arising as a result of the foregoing representation proving to be false or
incorrect in any material respect.



7. Representations and Warranties. Each of the Borrowers hereby represents and
warrants to the Agent and the Lenders that: (i) the representations and warranties set forth in
the Credit Agreement are true and correct in all material respects as of the date hereof, except
those representations and warranties made as of a date certain which remain true and correct in all
material respects as of such date or otherwise would be incorrect as a result of the Specified



 


 









 






Default; (ii) after giving effect to the waiver provided in this Amendment there is no Default
or Event of Default under the Credit Agreement; (iii) each Borrower has the corporate or limited
liability company power necessary to execute, deliver this Amendment, to the extent each is a party
thereto; and (iv) the execution, delivery and performance of this Amendment have been duly
authorized by the applicable governing body of each Borrower, and when executed, this Amendment
will constitute the valid, binding and enforceable obligations of each Borrowers.



8. Further Agreements and Representations. Each of the Borrowers hereby, jointly and
severally:




(a) ratifies, confirms and acknowledges that the Credit Agreement, as amended hereby,
and all other Loan Documents continue to be valid, binding and in full force and effect as
of the date hereof, and enforceable in accordance with their terms;




(b) covenants and agrees to perform all of their respective obligations under the
Credit Agreement, as amended hereby, and all other Loan Documents;




(c) acknowledges and agrees that as of the date hereof, no Borrower has any defense,
set-off, counterclaim or challenge against the payment of any sums owing to the Agent or the
Lenders or the enforcement of any of the terms of the Credit Agreement, as amended hereby,
or any of the other Loan Documents;




(d) acknowledges and agrees that all Loans presently or hereafter outstanding under the
Loan Documents shall continue to be secured by the Collateral;




(e) acknowledges and agrees that this Amendment does not constitute a novation of the
Loans;




(f) ratifies, confirms and continues all rights and remedies granted to the Agent and
the Lenders in the Loan Documents; and




(g) ratifies and confirms all waivers made by the Borrowers in the Loan Documents.



9. Conditions to Effectiveness of this Amendment. The Agent’s and the Amendment
Lenders’ obligations hereunder are conditioned upon the satisfaction by the Borrowers of the
following conditions precedent:




(a) receipt by the Agent of this Amendment, duly executed by each of the Borrowers and
Majority Lenders;




(b) the Borrowers shall have paid to the Agent for the ratable benefit of the Amendment
Lenders an amendment and waiver fee equal to 0.50% of the Commitments (as reduced by this
Amendment) of the Amendment Lenders, which shall be fully earned upon each such Amendment
Lender’s execution of this Amendment, together with all reasonable out of pocket expenses of
the Administrative Agent incurred in connection with this Amendment, including, without
limitation, the reasonable fees and expenses of Administrative Agent’s counsel; and


 


 









 






(c) receipt by the Agent of such additional agreements, instruments, documents,
writings and actions as the Agent and the Lenders may reasonably request.




10. Miscellaneous.




(a) No reference to this Amendment need be made in the Credit Agreement or in any other
Loan Document.




(b) This Amendment shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no Loan Party shall assign its
rights or obligations under this Amendment.




(c) This Amendment shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania without reference to the choice of law doctrine of the
Commonwealth of Pennsylvania.




(d) This Amendment may be executed in any number of counterparts with the same effect
as if all the signatures on such counterparts appeared on one document and each such
counterpart shall be deemed an original. Any signature on this Amendment, delivered by any
party by facsimile transmission shall be deemed to be an original signature thereto.




(e) To the extent of any inconsistency between the terms and conditions of this
Amendment and the terms and conditions of the Loan Documents, the terms and conditions of
this Amendment shall prevail. All terms and conditions of the Credit Agreement and any
other Loan Documents not inconsistent herewith shall remain in full force and effect.




(f) This Amendment is the entire agreement between the parties relating to the subject
matter hereof, incorporates or rescinds all prior agreements and understandings between the
parties hereto relating to the subject matter hereof, cannot be changed or terminated orally
or by course of conduct, and shall be deemed effective as of the date it is accepted by the
Agent.




(g) Except as expressly set forth herein, neither the execution, delivery or
performance of this Amendment, nor anything contained herein, shall be construed as or shall
operate as a course of conduct, course of dealing or a consent to or waiver of any provision
of, or any right, power or remedy of the Agent or any Lender under, the Credit Agreement and
the agreements and documents executed in connection therewith.



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Schedule A




Lenders and Commitments




	 	 	 	 	 
	Lender	 	Commitment	 
	Bank of America, N.A.
	 	$	20,000,000	 
	PNC Bank, National Association
	 	$	10,000,000	 
	KeyBank, N.A.
	 	$	10,000,000	 







 


 












 





IN WITNESS WHEREOF, the parties hereto have caused this First Amendment and Waiver under
Credit Agreement to be duly executed as of the date first above written.



	 	 	 	 	 
	 	Parent Borrower:

SL INDUSTRIES, INC.

 	 
	 	By:  	/s/ David R. Nuzzo
 	 
	 	 	David R. Nuzzo 	 
	 	 	Vice President & Chief Financial Officer 	 
	 





Subsidiary Borrowers:


SL DELAWARE, INC.

SL DELAWARE HOLDINGS, INC.

MTE CORPORATION

RFL ELECTRONICS INC.

SL MONTEVIDEO TECHNOLOGY, INC.

CEDAR CORPORATION

TEAL ELECTRONICS CORPORATION

MEX HOLDINGS LLC

SL POWER ELECTRONICS CORPORATION

SLGC HOLDINGS, INC.

SLW HOLDINGS, INC.

SL AUBURN, INC.

SL SURFACE TECHNOLOGIES, INC.



	 	 	 	 	 
	 	 	 
	 	By:  	/s/ David R. Nuzzo
 	 
	 	 	David R. Nuzzo 	 
	 	 	Authorized Officer 	 
	 



 


 









 





	 	 	 	 	 
	 	BANK OF AMERICA, N.A., in its capacity as Agent

 	 
	 	By:  	/s/ Anne Zeschke 	 
	 	 	Name:  	Anne Zeschke	 
	 	 	Title  	Vice President