Exhibit 10.1

 

[image_003.gif]

 

 

modification/EXTENSION to the Amended and Restated Revolving line note and the
second amended and restated credit facility agreement

 

This MODIFICATION/EXTENSION AGREEMENT is entered into at Albany, New York, as of
April 28, 2015, between Premier Packaging Corporation, a New York corporation,
with an address of 6 Framark Drive, Victor, New York 14564 (the "Borrower") and
Citizens Bank, N.A., a national banking association with an address of 833
Broadway, Albany, New York 12207 (the "Bank"), (formerly known as RBS Citizens,
N.A. ("Predecessor"))

 

WHEREAS, Predecessor established a revolving line of credit (the "Revolving
Loan") for Borrower which matures on May 31, 2015 (the "Maturity Date")
respecting which Bank agreed to lend to Borrower upon Borrower’s request, but
subject to the terms and conditions set forth in various loan documents, of up
to One Million Dollars and Zero Cents ($1,000,000.00) (the "Revolving Loan
Amount");

 

WHEREAS, the Revolving Loan is evidenced by that certain Amended and Restated
Revolving Line Note, dated July 26, 2011 (as previously amended, modified or
supplemented, the "Note"), by the Borrower in favor of Predecessor in the face
amount of the Revolving Loan Amount;

 

WHEREAS, in connection with the Revolving Loan, Borrower entered into that
certain Second Amended and Restated Credit Facility Agreement, dated July 26,
2011 (as previously amended, modified or supplemented, the "Loan Agreement");

 

WHEREAS, as further security for the Loan, Document Security Systems, Inc.,
Plastic Printing Professionals, Inc. and Secuprint Inc. issued a Guaranty and
Indemnity Agreement, dated February 12, 2010 (as previously amended, modified or
supplemented, the "Document Security Systems, Inc., Plastic Printing
Professionals, Inc. and Secuprint Inc. Guaranty and Indemnity Agreement"),
pursuant to which Document Security Systems, Inc., Plastic Printing
Professionals, Inc. and Secuprint Inc. guaranteed to Predecessor the payment and
performance of all of the Borrower's obligations with respect to the Loan and
the other Loan Documents (as hereinafter defined);

 

WHEREAS, the Loan Agreement, the Note, the Document Security Systems, Inc.
Guaranty, the Plastic Printing Professionals, Inc. Guaranty and the Secuprint
Inc. Guaranty and all other documents and instruments executed in connection
with or relating to the Loan are referred to herein, collectively, as the "Loan
Documents"; and all collateral granted to the Predecessor and the Bank to secure
the Loan is referred to herein, collectively, as the "Collateral";

 

WHEREAS, the Bank was formerly known as Predecessor with respect to the Loan and
the Loan Documents, is the owner and holder of the Loan and the Loan Documents
and, as such, the Borrower is indebted to the Bank therefor and thereunder;

 

WHEREAS, the Borrower has requested and the Bank has agreed to extend the
Maturity Date of the Loan;

 

WHEREAS, the Borrower has requested and the Bank has agreed to amend certain of
the covenants applicable to the Loan;

 

WHEREAS, the Borrower has requested and the Bank has agreed to amend certain of
Terms and Conditions applicable to the Loan;

 

WHEREAS, the Borrower has requested and the Bank has agreed to reduce the amount
of availability under the Loan Documents;

 

WHEREAS, the Borrower and the Bank have agreed to modify the Loan and the Loan
Documents in accordance with the terms of this Agreement.

  

 

 

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Bank and the Borrower mutually agree as
follows:

 

1.    EXTENSION

 

1.1          Recitals and Representations Accurate. The above recitals are
hereby made a part of this Agreement and the Borrower acknowledges and agrees
that each of the recitals is true and correct.

 

1.2          Ratification. All of the terms, covenants, provisions,
representations, warranties, and conditions of the Loan Documents, as amended or
modified hereby, are ratified, acknowledged, confirmed, and continued in full
force and effect as if fully restated herein.

 

1.3          Maturity Date. The Bank hereby agrees to extend the Maturity Date
of the Note to May 31, 2016 (the "New Maturity Date"). On the New Maturity Date,
the Loan and all fees, costs, expenses and other amounts owing by the Borrower
to the Bank shall be due and payable, in full, without further notice or demand.
All references to the Maturity Date in the Loan Documents shall be modified
accordingly. The Borrower hereby agrees to pay to the Bank all payments due
prior to the New Maturity Date in accordance with the terms of the Note, as
affected hereby, and that any failure to make any such payments in accordance
with the terms of the Note shall be a default under this Agreement, the Note and
each of the Loan Documents.

 

1.4          Reduced Availability. Availability under the Loan Documents shall
be reduced from One Million Dollars and Zero Cents ($1,000,000.00) to Eight
Hundred Thousand Dollars and Zero Cents ($800,000.00) (the "Revised Borrowing
Limit") and all references to availability in the Loan Documents shall be
modified accordingly. All amounts outstanding under the Loan Documents in excess
of the Revised Borrowing Limit, and all fees due and owing under the Loan
Documents, shall be paid to the Bank simultaneously with the execution of this
Agreement.

 

1.5          Amendment to Covenants. Notwithstanding anything to the contrary
contained in the Loan Documents, the Borrower will not at any time or during any
fiscal period (as applicable) fail to be in compliance with any of the financial
covenants set forth in Schedule 1.5, attached hereto (the "Amended Covenants").

 

1.6          Amendment to Terms and Conditions. Notwithstanding anything to the
contrary contained in the Loan Documents, the Borrower will not at any time or
during any fiscal period (as applicable) fail to be in compliance with any of
the terms and conditions set forth in Schedule 1.6, attached hereto (the
"Amended Terms and Conditions").

 

1.7          Representations and Warranties. The Borrower hereby represents and
warrants to the Bank that:

 

(a)The person executing this Agreement is duly authorized to do so and to bind
the Borrower to the terms hereof;

 

(b)Each of the Loan Documents is a valid and legal binding obligation of the
Borrower, enforceable in accordance with its terms, and is not subject to any
defenses, counterclaims, or offsets of any kind;

 

(c)All financial statements delivered to the Bank were true, accurate and
complete, in all material respects, as of the date of delivery to the Bank;

 

(d)Since the date of the Loan Documents there has been no material adverse
change in the condition, financial or otherwise, of the Borrower, except as
disclosed to the Bank in writing;

 

(e)There exists no action, suit, proceeding or investigation, at law or in
equity, before any court, board, administrative body or other entity, pending or
threatened, affecting the Borrower or its property, wherein an unfavorable
decision, ruling or finding would materially adversely affect the business
operations, property or financial condition of the Borrower; and

 

(f)There exists no event of default, or other circumstance that with the passage
of time or giving of notice or both will become an event of default, under any
of the Loan Documents.

 

1.8          Interest, Fees, Costs and Expenses. The Borrower shall,
simultaneously with the execution of this Agreement, pay to the Bank all accrued
interest owing on the Loan as of the date of this Agreement together with all
fees, costs and expenses due and owing to the Bank by the Borrower under the
Loan Documents.

 

2

 

 

2.    Miscellaneous

 

2.1          Set-Off. The Borrower hereby grants to the Bank a continuing lien
and security interest in any and all deposits or other sums at any time credited
by or due from the Bank or any Bank Affiliate (as hereinafter defined) to the
Borrower and any cash, securities, instruments or other property of the Borrower
in the possession of the Bank or any Bank Affiliate, whether for safekeeping or
otherwise, or in transit to or from the Bank or any Bank Affiliate (regardless
of the reason the Bank or Bank Affiliate had received the same or whether the
Bank or any Bank Affiliate has conditionally released the same) as security for
the full and punctual payment and performance of all of the liabilities and
obligations of the Borrower to the Bank or any Bank Affiliate and such deposits
and other sums may be applied or set off against such liabilities and
obligations of the Borrower to the Bank or any Bank Affiliate at any time,
whether or not such are then due, whether or not demand has been made and
whether or not other collateral is then available to the Bank or any Bank
Affiliate.

 

The term "Bank Affiliate" as used in this Agreement shall mean any "Affiliate"
of the Bank or any lender acting as a participant under any loan arrangement
between the Bank and the Borrower. The term "Affiliate" shall mean with respect
to any person, (a) any person which, directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
such person, or (b) any person who is a director or officer (i) of such person,
(ii) of any subsidiary of such person, or (iii) any person described in clause
(a) above. For purposes of this definition, control of a person shall mean the
power, direct or indirect, (x) to vote 5% or more of the Capital Stock having
ordinary voting power for the election of directors (or comparable equivalent)
of such person, or (y) to direct or cause the direction of the management and
policies of such person whether by contract or otherwise. Control may be by
ownership, contract, or otherwise.

 

2.2          Release of the Bank. The Borrower hereby confirms that as of the
date hereof it has no claim, set-off, counterclaim, defense, or other cause of
action against the Bank including, but not limited to, a defense of usury, any
claim or cause of action at common law, in equity, statutory or otherwise, in
contract or in tort, for fraud, malfeasance, misrepresentation, financial loss,
usury, deceptive trade practice, or any other loss, damage or liability of any
kind, including, without limitation, any claim to exemplary or punitive damages
arising out of any transaction between the Borrower and the Bank. To the extent
that any such set-off, counterclaim, defense, or other cause of action may exist
or might hereafter arise based on facts known or unknown that exist as of this
date, such set-off, counterclaim, defense and other cause of action is hereby
expressly and knowingly waived and released by the Borrower. The Borrower
acknowledges that this release is part of the consideration to the Bank for the
financial and other accommodations granted by the Bank in this Agreement.

 

 

 

2.3          Costs and Expenses. The Borrower shall pay to the Bank on demand
any and all costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements, court costs, litigation and other expenses)
incurred or paid by the Bank in establishing, maintaining, protecting or
enforcing any of the Bank's rights or any of the obligations owing by the
Borrower to the Bank, including, without limitation, any and all such costs and
expenses incurred or paid by the Bank in defending the Bank's security interest
in, title or right to, the Collateral or in collecting or attempting to collect
or enforcing or attempting to enforce payment of the Loan.

 

2.4          Indemnification. The Borrower shall indemnify, defend and hold the
Bank and the Bank Affiliates and their directors, officers, employees, agents
and attorneys (each an "Indemnitee") harmless against any claim brought or
threatened against any Indemnitee by the Borrower or any guarantor or endorser
of the obligations of the Borrower to the Bank, or any other person (as well as
from attorneys' fees and expenses in connection therewith) on account of the
Bank's relationship with the Borrower, or any guarantor or endorser of the
obligations of the Borrower to the Bank (each of which may be defended,
compromised, settled or pursued by the Bank with counsel of the Bank's election,
but at the expense of the Borrower), except for any claim arising out of the
gross negligence or willful misconduct of the Bank. The within indemnification
shall survive payment of the obligations of the Borrower to the Bank, and/or any
termination, release or discharge executed by the Bank in favor of the Borrower.

 

3

 

 

2.5          Severability. If any provision of this Agreement or portion of such
provision or the application thereof to any person or circumstance shall to any
extent be held invalid or unenforceable, the remainder of this Agreement (or the
remainder of such provision) and the application thereof to other persons or
circumstances shall not be affected thereby.

 

2.6          Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.

 

2.7          Bank's Predecessor(s). All references in the Loan Documents to Bank
and RBS Citizens, N.A. shall hereafter mean Citizens Bank, N.A., its successors
and assigns. The Bank's address, for all purposes, shall be as set forth in the
first paragraph of this Agreement.

 

2.8          Complete Agreement. This Agreement and the other Loan Documents
constitute the entire agreement and understanding between and among the parties
hereto relating to the subject matter hereof, and supersedes all prior
proposals, negotiations, agreements and understandings among the parties hereto
with respect to such subject matter.

 

2.9          Binding Effect of Agreement. This Agreement shall be binding upon
and inure to the benefit of the respective heirs, executors, administrators,
legal representatives, successors and assigns of the parties hereto, and shall
remain in full force and effect (and the Bank shall be entitled to rely thereon)
until released in writing by the Bank. The Bank may transfer and assign this
Agreement and deliver the Collateral to the assignee, who shall thereupon have
all of the rights of the Bank; and the Bank shall then be relieved and
discharged of any responsibility or liability with respect to this Agreement and
the Collateral. Except as expressly provided herein or in the other Loan
Documents, nothing, expressed or implied, is intended to confer upon any party,
other than the parties hereto, any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.

 

2.10        Further Assurances. The Borrower will from time to time execute and
deliver to the Bank such documents, and take or cause to be taken, all such
other further action, as the Bank may request in order to effect and confirm or
vest more securely in the Bank all rights contemplated by this Agreement
(including, without limitation, to correct clerical errors) or to vest more
fully in or assure to the Bank the security interest in the Collateral or to
comply with applicable statute or law and to facilitate the collection of the
Collateral (including, without limitation, the execution of stock transfer
orders and stock powers, endorsement of promissory notes and instruments and
notifications to obligors on the Collateral). To the extent permitted by
applicable law, the Borrower authorizes the Bank to file financing statements,
continuation statements or amendments without the Borrower's signature appearing
thereon, and any such financing statements, continuation statements or
amendments may be signed by the Bank on behalf of the Borrower, if necessary,
and may be filed at any time in any jurisdiction. The Bank may at any time and
from time to time file financing statements, continuation statements and
amendments thereto which contain any information required by the New York
Uniform Commercial Code as amended from time to time (the "Code") for the
sufficiency or filing office acceptance of any financing statement, continuation
statement or amendment, including whether the Borrower is an organization, the
type of organization and any organization identification number issued to the
Borrower. The Borrower agrees to furnish any such information to the Bank
promptly upon request. In addition, the Borrower shall at any time and from time
to time take such steps as the Bank may reasonably request for the Bank (i) to
obtain an acknowledgment, in form and substance satisfactory to the Bank, of any
bailee having possession of any of the Collateral that the bailee holds such
Collateral for the Bank, (ii) to obtain "control" (as defined in the Code) of
any Collateral comprised of deposit accounts, electronic chattel paper, letter
of credit rights or investment property, with any agreements establishing
control to be in form and substance satisfactory to Bank, and (iii) otherwise to
insure the continued perfection and priority of the Bank's security interest in
any of the Collateral and the preservation of its rights therein. The Borrower
hereby constitutes the Bank its attorney-in-fact to execute, if necessary, and
file all filings required or so requested for the foregoing purposes, all acts
of such attorney being hereby ratified and confirmed; and such power, being
coupled with an interest, shall be irrevocable until this Agreement terminates
in accordance with its terms, all obligations of the Borrower to the Bank are
irrevocably paid in full and the Collateral is released.

 

4

 

 

2.11        Amendments and Waivers. This Agreement may be amended and the
Borrower may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Borrower shall obtain the Bank's
prior written consent to each such amendment, action or omission to act. No
delay or omission on the part of the Bank in exercising any right hereunder
shall operate as a waiver of such right or any other right and waiver on any one
or more occasions shall not be construed as a bar to or waiver of any right or
remedy of the Bank on any future occasion.

 

2.12        Terms of Agreement. This Agreement shall continue in force and
effect so long as any obligation of the Borrower to Bank shall be outstanding
and is supplementary to each and every other agreement between the Borrower and
Bank and shall not be so construed as to limit or otherwise derogate from any of
the rights or remedies of Bank or any of the liabilities, obligations or
undertakings of the Borrower under any such agreement, nor shall any
contemporaneous or subsequent agreement between the Borrower and the Bank be
construed to limit or otherwise derogate from any of the rights or remedies of
Bank or any of the liabilities, obligations or undertakings of the Borrower
hereunder, unless such other agreement specifically refers to this Agreement and
expressly so provides.

 

2.13        Notices. Any notices under or pursuant to this Agreement shall be
deemed duly received and effective if delivered in hand to any officer or agent
of the Borrower or Bank, or if mailed by registered or certified mail, return
receipt requested, addressed to the Borrower or Bank at the address set forth in
this Agreement or as any party may from time to time designate by written notice
to the other party.

 

2.14        New York Law. This Agreement shall be governed by federal law
applicable to the Bank and, to the extent not preempted by federal law, the laws
of the State of New York.

 

2.15        Reproductions. This Agreement and all documents which have been or
may be hereinafter furnished by Borrower to the Bank may be reproduced by the
Bank by any photographic, photostatic, microfilm, xerographic or similar
process, and any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made in the
regular course of business).

 

2.16        Venue. Borrower irrevocably submits to the nonexclusive jurisdiction
of any Federal or state court sitting in New York, over any suit, action or
proceeding arising out of or relating to this Agreement. Borrower irrevocably
waives to the fullest extent it may effectively do so under applicable law, any
objection it may now or hereafter have to the laying of the venue of any such
suit, action or proceeding brought in any such court and any claim that the same
has been brought in an inconvenient forum. Borrower irrevocably appoints the
Secretary of State of the State of New York as its authorized agent to accept
and acknowledge on its behalf any and all process which may be served in any
such suit, action or proceeding, consents to such process being served (i) by
mailing a copy thereof by registered or certified mail, postage prepaid, return
receipt requested, to Borrower’s address shown above or as notified to the Bank
and (ii) by serving the same upon such agent, and agrees that such service shall
in every respect be deemed effective service upon Borrower.

 

2.17        JURY WAIVER. BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, WAIVE
(A) ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN
CONNECTION WITH THIS AGREEMENT, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND (B) AGREE NOT TO SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT
BE, OR HAS NOT BEEN WAIVED. THE BORROWER CERTIFIES THAT NEITHER THE BANK NOR ANY
OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE BANK WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

 

5

 

 

Executed on this day 28 of April, 2015.

 

  Borrower:                     Premier Packaging Corporation                  
  By: /S/ Robert B. Bzdick       Robert B. Bzdick, Chief Executive Officer  

 

 

 

Accepted: Citizens Bank, N.A.

  

By:/S/ Lynn Ryan   Name:Lynn Ryan   Title:Vice President  

 

6

 

 

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned guarantor(s) hereby irrevocably and
unconditionally acknowledge and confirm to the Bank that the guaranty of the
obligations of the Borrower including without limitation respecting the Note
continues in full force and effect and is a valid and binding obligation of the
undersigned guarantor(s) in accordance with its terms, that no defenses,
offsets, claims, counterclaims exist with respect to such guaranty(s), and that
each such guaranty is enforceable in accordance with its terms, and guarantees
and shall continue to guarantee in accordance with its terms the performance of
all amounts guaranteed thereby including without limitation in addition to all
other liabilities and obligations guaranteed thereby, all liabilities and
obligations of the Borrower to the Bank respecting the Note and the other Loan
Documents as affected hereby.

 

Executed on this day 28 of April, 2015

 

  Guarantor:             Document Security Systems, Inc.                     By:
/S/ Robert B. Bzdick       Robert B. Bzdick, President                    
Guarantor:             Plastic Printing Professionals, Inc.                    
By: /S/ Robert B. Bzdick       Robert B. Bzdick, Secretary                    
Guarantor:             Secuprint Inc.                     By: /S/ Robert B.
Bzdick       Robert B. Bzdick, President  

 

7

 

  

SCHEDULE 1.5

 

AMENDED COVENANTS

 

The Second Amended and Restated Credit Facility Agreement is hereby modified by
deleting from Article X entitled "Financial Covenants", Subsection (10.1) in its
entirety and substituting in lieu thereof the following:

 

Covenant Definitions:

 

(i)      "GAAP" shall mean generally accepted accounting principles in effect
from time to time in the United States.

 

(ii)     "Capital Expenditures" ("CAPEX") shall mean for any period, all
acquisitions of machinery, equipment, land, leaseholds, buildings, improvements
and all other expenditures considered to be for fixed assets under GAAP,
consistently applied. Where an asset is acquired under a capital lease, the
amount required to be capitalized shall be considered a capital expenditure
during the first year of the lease

 

(iii)           "Current Maturity of Long-Term Debt" ("CMLTD") shall mean, for
any period, the current scheduled principal or capital lease payments required
to be paid during the applicable period.

 

(iv)           "Distributions" shall mean all cash dividends to shareholders,
and all cash distributions to shareholders of Subchapter S corporations, to
partners of partnerships, to members of limited liability companies or to
beneficiaries of trusts.

 

(v)            "Earnings" shall mean earnings as defined under GAAP.

 

(vi)           "EBITDA" shall mean, for any period, Earnings from continuing
operations before payment of federal, state and local income taxes, plus
Interest Expense, depreciation and amortization, in each case for such period,
computed and calculated in accordance with GAAP.

 

(vii)          "Interest Expense" shall mean, for any period, ordinary, regular,
recurring and continuing expenditures for interest on all borrowed money.

 

(viii)         "Unfinanced CAPEX" shall mean, for any period, Capital
Expenditures less new long-term Indebtedness issued during such period to fund
the Capital Expenditures.

 

EBITDA (after Taxes, Distributions and Unfinanced CAPEX) to Interest Expense
plus CMLTD. The Borrower shall not permit the ratio of its EBITDA, minus taxes
paid in cash(including any tax payments to its affiliates), minus Dividends and
Distributions and Unfinanced CAPEX, minus loans and advances to any related
individuals, partnership, corporation, limited liability company, trust or other
organization or person plus non cash stock based compensations which are
converted to capital, to Interest Expense plus CMLTD, to be less than 1.15 to
1.0, tested every quarter on a rolling four quarter basis commencing with the
quarter ending June 30, 2015.

 

8

 

 

SCHEDULE 1.6

 

AMENDED TERMS AND CONDITIONS

 

The Second Amended and Restated Credit Facility Agreement is hereby modified by
deleting from Article I entitled “Definitions”, the definition entitled “Fixed
Charge Coverage Ratio” in its entirety.

 

The Second Amended and Restated Credit Facility Agreement is hereby modified by
adding to Article IX entitled "Negative Covenants of the Borrower", a new
subsection 9.14 in its entirety:

 

9.14Dividends and Distributions.  Borrower shall not, without prior written
consent of the Bank, pay any dividends on or make any distribution on account of
any class of Borrower's capital stock in cash or in property (other than
additional shares of such stock), or redeem, purchase or otherwise acquire,
directly or indirectly, any of such stock, except, so long as Borrower is not in
default hereunder, distributions not to exceed $100,000.00 during any fiscal
quarter and, if Borrower is a Subchapter S corporation, under the regulations of
the Internal Revenue Service of the United States, distributions to the
Shareholders of Borrower in such amounts as are necessary to pay the tax
liability of such Shareholders due as a result of such Shareholders' interest in
the Borrower.

 

The Second Amended and Restated Credit Facility Agreement is hereby modified by
deleting from Article I entitled “Definitions”, the definition entitled “Letters
of Credit” in its entirety.

  

The Second Amended and Restated Credit Facility Agreement is hereby modified by
deleting from Article II entitled “Revolving Line”, Subsection (2.7) entitled
“Letter of Credit Sub-facility” in its entirety.

 

9