ex10-8.htm


Exhibit 10.9

 

 

$75,000,000 REDUCING REVOLVING CREDIT FACILITY

$2,000,000 LETTER OF CREDIT FACILITY

 

CREDIT AGREEMENT

 

by and among

 

PARK ELECTROCHEMICAL CORP., as Borrower,

 

THE GUARANTORS PARTY HERETO,

 

and

 

HSBC BANK USA, NATIONAL ASSOCIATION, as Lender

 

 

Dated: as of January 15, 2016 and effective as of January 21, 2016

 

 


 

 




 


 

TABLE OF CONTENTS

 

Pages

 

	
1. DEFINED TERMS  
	  1
	
1.1
	
Certain Definitions.
	
1

	
1.2
	
Construction.
	
17

	
1.3
	
Accounting Principles; Changes in GAAP.
	
17

	
2. REVOLVING CREDIT FACILITY  
	  1
	
2.1
	
Revolving Credit Commitment.
	
17

	
2.2
	
Nature of Lender’s Obligations with Respect to Revolving Credit Loans.
	
18

	
2.3
	
Unused Line Fee.
	
18

	
2.4
	
Revolving Credit Loan Requests.
	
18

	
2.5
	
Repayment of Revolving Credit Loans.
	
19

	
2.6
	
Use of Proceeds.
	
19

	
2.7
	
Letter of Credit Facility.
	
19

	 	2.7.1  	
Issuance of Letters of Credit.
	
19

	
 
	2.7.2  	
Letter of Credit Fees.
	
20

	
 
	2.7.3  	
Disbursements; Reimbursement.
	
20

	
 
	2.7.4  	
Documentation.
	
20

	
 
	2.7.5  	
Determinations to Honor Drawing Requests.
	
20

	
 
	2.7.6  	
Nature of Reimbursement Obligations.
	
20

	
 
	2.7.7  	
Indemnity.
	
21

	
 
	2.7.8 	
Liability for Acts and Omissions.
	
21

	
3. INTEREST RATES  
	  24
	
3.1
	
Interest Rate Options.
	
24

	
 
	3.1.1  	
Revolving Credit Interest Rate Options.
	
24

	
 
	3.1.2  	
Rate Quotations.
	
24

	
3.2
	
Interest Periods.
	
24

	
3.3
	
Interest After Default.
	
24

	
 
	3.3.1  	
Interest Rate.
	
24

	
 
	3.3.2  	
Other Obligations.
	
24

	
 
	3.3.3  	
Acknowledgment.
	
25

	
3.4
	
LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.
	
25

	
 
	3.4.1  	
Unascertainable.
	
25



 


 

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	3.4.2  	
Illegality; Increased Costs; Deposits Not Available.
	
25

	
 
	3.4.3  	
Lender’s Rights.
	
25

	
 
	3.5	
Selection of Interest Rate Options
	
26

	
4. PAYMENTS  
	  26
	
4.1
	
Payments.
	
26

	
4.2
	
Interest and Principal Payment Dates.
	
26

	
4.3
	
Voluntary Prepayments or Revolving Credit Commitment Reductions.
	
27

	
4.4
	
Mandatory Prepayments and Revolving Credit Commitment Reductions.
	
27

	
 
	4.4.1  	
Mandatory Prepayment from Repatriated Foreign Earnings.
	
27

	 	4.4.2  	
Application Among Interest Rate Options.
	
27

	
4.5
	
Increased Costs; Yield Protection.
	
27

	
4.6
	
No Offsets.
	
28

	
4.7
	
Indemnity.
	
28

	
4.8
	
Interbank Market Presumption.
	
28

	
5. REPRESENTATIONS AND WARRANTIES
	  29
	 	5.1.1  	
Organization and Qualification; Power and Authority; Compliance With Laws; Title to Properties; Event of Default.
	
29

	 	5.1.2  	
Subsidiaries and Owners; Investment Companies.
	
29

	 	5.1.3  	
Validity and Binding Effect.
	
30

	 	5.1.4  	
No Conflict; Material Agreements; Consents.
	
30

	 	5.1.5  	
Litigation.
	
30

	 	5.1.6  	
Financial Statements.
	
30

	 	5.1.7   	
Margin Stock.
	
31

	 	5.1.8   	
Full Disclosure.
	
31

	 	5.1.9  	
Taxes.
	
31

	 	5.1.10  	
Patents, Trademarks, Copyrights, Licenses, etc.
	
32

	 	5.1.11  	
Liens in the Collateral.
	
32

	 	5.1.12  	
Insurance.
	
32

	 	5.1.13  	
ERISA Compliance.
	
32

	 	5.1.14  	
Environmental Matters.
	
33

	 	5.1.15  	
Solvency.
	
33

	 	5.1.16  	
Anti-Terrorism Laws.
	
33

	 	5.1.17  	
Anti-Bribery Laws.
	
33

	
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT  
	  33
	
6.1
	
First Loans and Letters of Credit.
	
34



 


 

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	 	6.1.1  	
Deliveries.
	
34

	 	6.1.2  	
Payment of Fees.
	
34

	
6.2
	
Each Loan or Letter of Credit.
	
35

	
7. COVENANTS  
	  35
	
7.1
	
Affirmative Covenants.
	
35

	 	7.1.1	
Preservation of Existence, etc.
	
35

	 	7.1.2	
Payment of Liabilities, Including Taxes, etc.
	
35

	 	7.1.3	
Maintenance of Insurance.
	
35

	 	7.1.4	
Maintenance of Properties and Leases.
	
35

	 	7.1.5	
Visitation Rights.
	
35

	 	7.1.6	
Keeping of Records and Books of Account.
	
36

	 	7.1.7	
Compliance with Laws; Use of Proceeds.
	
36

	 	7.1.8	
Further Assurances.
	
36

	
7.2
	
Negative Covenants.
	
36

	 	7.2.1	
Indebtedness.
	
36

	 	7.2.2	
Liens.
	
37

	 	7.2.3	
Guaranties.
	
37

	 	7.2.4	
Loans and Investments.
	
38

	 	7.2.5	
Dividends and Related Distributions.
	
39

	 	7.2.6	
Liquidations, Mergers, Consolidations, Acquisitions.
	
39

	 	7.2.7	
Dispositions of Assets or Subsidiaries.
	
40

	 	7.2.8	
Affiliate Transactions.
	
41

	 	7.2.9	
Subsidiaries.
	
42

	 	7.2.10	
Continuation of or Change in Business.
	
43

	 	7.2.11	
Fiscal Year.
	
43

	 	7.2.12	
Changes in Organizational Documents.
	
43

	 	7.2.13	
Total Gross Leverage Ratio.
	
43

	 	7.2.14	
Minimum Fixed Charge Coverage Ratio.
	
43

	 	7.2.15	
Minimum Domestic Liquid Assets; Quick Ratio.
	
43

	 	7.2.16	
Negative Pledges.
	
44

	 	7.2.17	
Use of Proceeds.
	
44

	 	7.2.18	
Anti-Bribery.
	
44

	
7.3
	
Reporting Requirements.
	
44

	 	7.3.1	
Quarterly Financial Statements.
	
44



 


 

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	 	7.3.2	
Annual Financial Statements.
	
45

	 	7.3.3	
Certificates of the Borrowers.
	
45

	 	7.3.4	
Notices.
	
45

	 	7.3.5	
Organizational Documents.
	
45

	
8. DEFAULT  
	  46
	
8.1
	
Events of Default.
	
46

	 	8.1.1	
Payments under Loan Documents.
	
46

	 	8.1.2	
Breach of Warranty.
	
46

	 	8.1.3	
Breach of Negative Covenants or Visitation Rights.
	
47

	 	8.1.4	
Breach of Other Covenants.
	
47

	 	8.1.5	
Defaults in Other Agreements or Indebtedness.
	
47

	 	8.1.6	
Final Judgments or Orders.
	
47

	 	8.1.7	
Loan Document Unenforceable.
	
47

	 	8.1.8	
Uninsured Losses; Proceedings against Assets.
	
47

	 	8.1.9	
Events Relating to Plans and Benefit Arrangements.
	
47

	 	8.1.10	
Change in Control.
	
48

	 	8.1.11	
Relief Proceedings.
	
48

	
8.2
	
Consequences of Event of Default.
	
48

	 	8.2.1	
Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.
	
48

	 	8.2.2	
Bankruptcy, Insolvency or Reorganization Proceedings.
	
48

	 	8.2.3	
Set-off.
	
48

	 	8.2.4	
Application of Proceeds.
	
49

	
9. MISCELLANEOUS  
	  49
	
9.1
	
Modifications, Amendments or Waivers.
	
49

	
9.2
	
No Implied Waivers; Cumulative Remedies.
	
49

	
9.3
	
Expenses; Indemnity; Damage Waiver.
	
50

	 	9.3.1 	
Costs and Expenses.
	
50

	 	9.3.2	
Indemnification by the Borrowers.
	
50

	 	9.3.3	
Waiver of Consequential Damages, etc.
	
51

	 	9.3.4	
Payments.
	
51

	
9.4
	
Holidays.
	
51

	
9.5
	
Notices; Effectiveness; Electronic Communication.
	
52

	 	9.5.1	
Notices Generally.
	
52

	 	9.5.2	
Electronic Communications.
	
53



 


 

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	 	9.5.3	
Change of Address, etc.
	
53

	
9.6
	
Severability.
	
53

	
9.7
	
Duration; Survival.
	
53

	
9.8
	
Successors and Assigns.
	
53

	 	9.8.1	
Successors and Assigns Generally.
	
53

	 	9.8.2	
Assignments by Lender.
	
54

	 	9.8.3	
Participations.
	
54

	 	9.8.4	
Certain Pledges.
	
54

	
9.9
	
Confidentiality.
	
54

	 	9.9.1	
General.
	
54

	 	9.9.2	
Sharing Information with Affiliates of the Lender.
	
55

	9.10	
Counterparts; Integration; Effectiveness.
	
55

	 	9.10.1	
Counterparts; Integration; Effectiveness.
	
55

	
9.11
	
CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
	
55

	 	9.11.1	
Governing Law.
	
55

	 	9.11.2	
SUBMISSION TO JURISDICTION.
	
56

	 	9.11.3	
WAIVER OF VENUE.
	
56

	 	9.11.4	
SERVICE OF PROCESS.
	
56

	 	9.11.5	
WAIVER OF JURY TRIAL.
	
57



 


 

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LIST OF SCHEDULES AND EXHIBITS

 

	
SCHEDULES
	  
	  	  
	
SCHEDULE 5.1.2
	
SUBSIDIARIES, EQUITY INTERESTS AND OPTIONS, WARRANTS AND OTHER RIGHTS

	
SCHEDULE 5.1.13
	
PENSION PLANS

	
SCHEDULE 7.2.4
	
LOANS

	  	  
	
EXHIBITS
	  
	  	  
	
EXHIBIT 1.1(G)(1)
	
FORM OF GUARANTOR JOINDER

	
EXHIBIT 1.1(G)(2)
	
GUARANTY AGREEMENT

	
EXHIBIT 1.1(N)

EXHIBIT 1.1(P)

EXHIBIT 1.1(Q)
	
FORM OF REDUCING REVOLVING CREDIT NOTE

INVESTMENT POLICY

EXISTING PERMITTED LIENS

	
EXHIBIT 1.1(R)
	
PLEDGE AGREEMENT (STOCKS, BONDS AND COMMERCIAL PAPER)

	
EXHIBIT 1.1(S)
	
PLEDGE AGREEMENT (HYPOTHECATION)

	
EXHIBIT 2.4
	
FORM OF LOAN REQUEST

	
EXHIBIT 7.3.3
	
FORM OF COMPLIANCE CERTIFICATE



 


 

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CREDIT AGREEMENT

 

 

THIS CREDIT AGREEMENT (as hereafter amended, modified, supplemented or restated, this “Agreement”) is dated as of January 15, 2016 and effective as of January 21, 2016 and is made by and among PARK ELECTROCHEMICAL CORP., a New York corporation (the “Parent Company”), and any of its Subsidiaries that hereafter join this Agreement as Borrowers (with the Parent Company, each a “Borrower” and collectively, the “Borrowers”), each of the GUARANTORS (as hereinafter defined) party hereto, and HSBC BANK USA, NATIONAL ASSOCIATION (“HSBC” or “Lender”).

 

IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrower and Lender hereby agree as follows:

 

1.     DEFINED TERMS

 

1.1     Certain Definitions. In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise:

 

“Affiliate” shall mean, with respect to any Person, another Person that, directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“Approved Fund” shall mean any fund that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of business and that is administered or managed by (a) the Lender, (b) an Affiliate of the Lender or (c) an entity or an Affiliate of an entity that administers or manages the Lender.

 

“Authorized Officer” shall mean, with respect to any Loan Party, the Chief Executive Officer, President, Chief Financial Officer, Secretary or Treasurer of such Loan Party or such other individuals, designated by written notice to the Lender from the Borrowers, authorized to execute notices, reports and other documents on behalf of the Loan Parties required hereunder. The Borrowers may amend such list of individuals from time to time by giving written notice of such amendment which shall be acknowledged by the Lender.

 

“Base Rate” shall mean, for any day, a fluctuating per annum rate of interest equal to the Prime Rate plus 115 basis points (1.15%). Any change in the Base Rate (or any component thereof) shall take effect at the opening of business on the day such change occurs.

 

“Base Rate Option” shall mean the option of the Borrowers to have Loans bear interest at the rate and under the terms set forth in Section 3.1.1(i) [Revolving Credit Base Rate Option].

 

“Borrower” and “Borrowers” shall have the meanings set forth in the Preamble.

 

“Borrowing Date” shall mean, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which shall be a Business Day.

 


 

 




 


 

“Borrowing Tranche” shall mean specified portions of Loans outstanding as follows: (a) any Loans to which a LIBOR Rate Option applies which become subject to the same Interest Rate Option under the same Loan Request by the Borrowers shall constitute one Borrowing Tranche, and (b) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche.

 

“Business Day” shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in New York, New York, and if the applicable Business Day relates to any Loan to which the LIBOR Rate Option applies, such day must also be a day on which dealings are carried on in the London interbank market.

 

“Capital Lease” shall mean, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP; provided, however, that, should any change in GAAP occur after the Closing Date that would require the Loan Parties’ operating leases to be treated as capital leases, up to $15 million of such operating leases shall be excluded from this definition of Capital Lease for purposes of this Agreement.

 

“Cash Collateralize” shall mean to pledge and deposit with or deliver to the Lender, as collateral for the Letter of Credit Obligations, cash or deposit account balances pursuant to documentation satisfactory to the Lender. Such cash collateral shall be maintained in blocked, interest bearing deposit accounts at the Lender.

 

“CEA” shall mean the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute. 

 

“CFTC” shall mean the Commodity Futures Trading Commission.

 

“Change in Control” shall mean:

 

(a)     any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)) directly or indirectly, of 50% or more of the equity securities of the Parent Company entitled to vote for members of the board of directors or equivalent governing body of the Parent Company on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or

 

(b)     any Person or two or more Persons acting in concert shall have acquired by contract or otherwise the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Parent Company, or control over the equity securities of the Parent Company entitled to vote for members of the board of directors or equivalent governing body of the Parent Company on a fully-diluted basis (and taking into account all such securities that such Person or group has the right to acquire pursuant to any option right) representing 50% or more of the combined voting power of such securities.

 


 

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“Change in Law” shall have the meaning specified in Section 4.5.

 

“Closing Date” shall mean the date on which the conditions specified in Sections 6.1 and 6.2 shall first have been satisfied, as confirmed in writing by (a) the Borrower pursuant to its certificate delivered under Section 6.1.1(i), and (b) the Lender (which writing may be from the Lender or its counsel, and may be in the form of an electronic message), which shall be the date hereof. For the sake of clarity, the Closing Date shall occur prior to the funding of any Loans or issuance of any Letters of Credit.

 

“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

 

“Collateral” shall mean the collateral under the Pledge Agreement and the Pledge Agreement (Hypothecation) and any cash collateral referred to in the definition of Cash Collateralize.

 

“Commercial Letter of Credit” shall mean any letter of credit which is a commercial letter of credit issued in respect of the purchase of goods or services by one or more of the Loan Parties or any Subsidiary thereof in the ordinary course of their business.

 

“Compliance Certificate” shall have the meaning specified in Section 7.3.3 [Certificates of the Borrowers].

 

“Consolidated EBITDA” for any period of determination shall mean an amount equal to EBITDA of the Borrowers and their Subsidiaries for such period. 

 

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

 

“Covered Person” shall have the meaning specified in Section 5.1.16 [Anti-Terrorism Laws].

 

“Current Maturities” shall mean, for any period, the scheduled payments of principal made during the prior four (4) fiscal quarters on all Indebtedness for borrowed money having an original term of more than one (1) year (including but not limited to amortization of Capital Lease obligations), for the Borrowers and their consolidated Subsidiaries for such period.

 

“Dollar, Dollars, U.S. Dollars” and the symbol $ shall mean lawful money of the United States of America.

 

“Drawing Date” shall have the meaning specified in Section 2.7.3 [Disbursements; Reimbursement].

 


 

3




 


 

“EBITDA” for any period of determination shall mean the sum of net income, interest expense, income tax expense, depreciation, amortization and non-cash charges (including non-cash charges related to deferred tax liabilities), minus non-cash gains, in each case of the Borrowers and their Subsidiaries for such period determined and consolidated in accordance with GAAP. 

 

“Eligible Contract Participant” shall mean an “eligible contract participant” as defined in the CEA and regulations thereunder.

 

“Environmental Laws” shall mean all applicable federal, state, local, tribal, territorial and foreign Laws (including common law), constitutions, statutes, treaties, regulations, rules, ordinances and codes and any consent decrees, settlement agreements, judgments, orders, directives, policies or programs issued by or entered into with an Official Body pertaining or relating to: (i) pollution or pollution control; (ii) protection of human health from exposure to regulated substances; (iii) protection of the environment and/or natural resources; (iv) employee safety in the workplace; (v) the presence, use, management, generation, manufacture, processing, extraction, treatment, recycling, refining, reclamation, labeling, packaging, sale, transport, storage, collection, distribution, disposal or release or threat of release of regulated substances; (vi) the presence of contamination; (vii) the protection of endangered or threatened species; and (viii) the protection of environmentally sensitive areas.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

 

“ERISA Affiliate” shall mean, at any time, any trade or business (whether or not incorporated) under common Control with any of the Borrowers and treated as a single employer under Section 414 of the Code.

 

“ERISA Event” shall mean (a) a reportable event (under Section 4043 of ERISA and regulations thereunder) with respect to a Pension Plan; (b) a withdrawal by any Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) complete or partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA of, or the commencement of proceedings by the PBGC to terminate, a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA or contributions due but not delinquent, upon any Borrower or any ERISA Affiliate.

 

“Event of Default” shall mean any of the events described in Section 8.1 [Events of Default] and referred to therein as an “Event of Default.”

 


 

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“Evergreen Letter of Credit” shall mean a Letter of Credit having an automatic renewal feature (subject to Lender’s annual right to not renew such Letter of Credit on terms acceptable to the Lender) and a final expiration date prior to the Expiration Date.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“Expiration Date” shall mean, with respect to the Revolving Credit Commitment and the Letter of Credit Facility, January 21, 2019.

 

“FCPA” shall have the meaning specified in Section 5.1.16 [Anti-Terrorism Laws]. 

 

“First Funding Date” shall mean the Business Day on which proceeds of the Revolving Credit Loans are first advanced under this Agreement.

 

“Fixed Charge Coverage Ratio” for any period shall mean the ratio of (i) Consolidated EBITDA, less cash taxes, less cash interest expense, less unfunded capital expenditures, less cash dividends, less share repurchases to (ii) the sum of Current Maturities, plus interest expense; provided, however, stock buybacks not to exceed the greater (acquisition value) of 500,000 shares or $8,000,000 in the aggregate and capital expenditures not to exceed $17,000,000 for a projected plant expansion shall be excluded.

 

“Foreign Subsidiary” shall mean the Borrower’s foreign Subsidiaries, other than Immaterial Foreign Subsidiaries. As of the Closing Date, Nelco Products Pte. Ltd. is a Foreign Subsidiary.

 

“Funded Debt” shall mean, without duplication, all Indebtedness for borrowed money, including but not limited to Capital Lease Obligations, reimbursement obligations in respect of letters of credit (that are not fully collateralized by cash or cash equivalents held by Lender), and guaranties of any such Indebtedness.

 

“GAAP” shall mean generally accepted accounting principles as are in effect from time to time, subject to the provisions of Section 1.3 [Accounting Principles], and applied on a consistent basis both as to classification of items and amounts.

 

“Guarantor” shall mean each of the parties to this Agreement which is designated as a “Guarantor” on the signature page hereof and each other Person (if any) which joins this Agreement as a Guarantor after the date hereof. As of the Closing Date, Nelco Products, Inc., a Delaware corporation, Neltec, Inc., a Delaware corporation, and Park Aerospace Technologies Corp., a Kansas corporation, are Guarantors.

 

“Guarantor Joinder” shall mean a joinder by a Person as a Guarantor under the Loan Documents in the form of Exhibit 1.1(G)(1). 

 


 

5




 


 

“Guaranty” of any Person shall mean any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business, including without limitation such Person’s liabilities under agreements to indemnify that are (a) characterized as debt or guaranteed debt, (b) the subject of footnotes in the Borrowers’ financial statements, or (c) if paid, could result in a Material Adverse Change, but excluding other agreements to indemnify in the ordinary course of business.

 

“Guaranty Agreement” shall mean the Guaranty and Suretyship Agreement dated as of the date hereof by each of the Guarantors in favor of Lender, a copy of which is attached hereto as Exhibit 1.1(G)(2), as the same may be amended, restated or otherwise modified.

 

“Immaterial Domestic Subsidiary” shall mean, as of the Closing Date, any domestic Subsidiary of the Parent Company other than a Guarantor. In accordance with Section 7.2.9, the Borrowers and Lender may agree in writing to designate (or remove the designation of) domestic Subsidiaries of the Parent Company as “Immaterial Domestic Subsidiaries” from time to time after the Closing Date.

 

“Immaterial Foreign Subsidiary” shall mean, as of the Closing Date, any Foreign Subsidiary of the Parent Company other than Nelco Products Pte. Ltd., a Singapore entity. In accordance with Section 7.2.9, the Borrowers and Lender may agree in writing to designate (or remove the designation of) Foreign Subsidiaries of the Parent Company as “Immaterial Foreign Subsidiaries” from time to time after the Closing Date.

 

“Immaterial Subsidiary” shall mean any Immaterial Domestic Subsidiary or Immaterial Foreign Subsidiary, as the case may be. 

 

“Indebtedness” shall mean, as to any Person at any time, without duplication:

 

(a)     its liabilities for borrowed money;

 

(b)     its liabilities for the deferred purchase price of property acquired by such Person (excluding (i) accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property, and (ii) contingent earn-out payment obligations and other similar purchase price adjustments that (A) are not characterized as debt, (B) are not the subject of footnotes in the Borrowers’ financial statements, and (C) if paid, could not result in a Material Adverse Change) and its liabilities under agreements to indemnify that are (x) characterized as debt, (y) the subject of footnotes in the Borrowers’ financial statements, or (z) if paid, could result in a Material Adverse Change, but excluding other agreements to indemnify in the ordinary course of business;

 

(c)     (i) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases and (ii) all liabilities which would appear on its balance sheet in accordance with GAAP in respect of Synthetic Leases assuming such Synthetic Leases were accounted for as Capital Leases;

 

(d)     all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities);

 


 

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(e)     all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money); and

 

(f)     any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (e) hereof.

 

Indebtedness of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP.

 

“Indemnitee” shall have the meaning specified in Section 9.3.2 [Indemnification by the Borrowers].

 

“Information” shall mean all information received from the Loan Parties or any of their Subsidiaries relating to the Loan Parties or any of such Subsidiaries or any of their respective businesses, other than any such information that is available to the Lender on a non-confidential basis prior to disclosure by the Loan Parties or any of their Subsidiaries.

 

“Insolvency Proceeding” shall mean, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or otherwise relating to the liquidation, dissolution, winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of its creditors undertaken under any Law.

 

“Interest Period” shall mean the period of time selected by the Borrowers in connection with (and to apply to) any election permitted hereunder by the Borrowers to have Revolving Credit Loans bear interest under the LIBOR Rate Option. Subject to the last sentence of this definition, such period shall be one, two, three or six Months. Such Interest Period shall commence on the effective date of such Interest Rate Option, which shall be (a) the Borrowing Date if the Borrowers are requesting new Loans, or (b) the date of renewal of or conversion to the LIBOR Rate Option if the Borrowers are renewing or converting to the LIBOR Rate Option applicable to outstanding Loans. Notwithstanding the second sentence hereof: (A) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (B) the Borrowers shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Expiration Date.

 

“Interest Rate Hedge” shall mean (a) any and all interest rate swap transactions, basis swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward foreign exchange transactions, cap transactions, floor transactions, currency options, spot contracts or any other similar transactions or any of the foregoing (including, but without limitation, any options to enter into any of the foregoing), and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., International Foreign Exchange Master Agreement.

 


 

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“Interest Rate Option” shall mean any LIBOR Rate Option or Base Rate Option. 

 

“Investment Policy” shall mean the investment policy set forth in Exhibit 1.1(P).

 

“IRS” shall mean the Internal Revenue Service.

 

“Law” shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award by or settlement agreement with any Official Body.

 

“Lender” shall mean HSBC Bank USA, National Association, and its successors and assigns, as lender of the Loans hereunder and issuer of Letters of Credit hereunder.

 

“Lender Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is provided to any of the Loan Parties by the Lender or any of its Affiliates.

 

“Letter of Credit” shall mean any Commercial Letter of Credit or standby or trade letter of credit.

 

“Letter of Credit Documents” shall mean the Lender’s application, telephone/facsimile/email indemnity letter and other letters and agreements for Letters of Credit.

 

“Letter of Credit Facility” shall have the meaning specified in Section 2.7.1 [Issuance of Letters of Credit]. 

 

“Letter of Credit Fee” shall have the meaning specified in Section 2.7.2 [Letter of Credit Fees].

 

“Letter of Credit Obligation” shall mean, as of any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit on such date (if any Letter of Credit shall increase in amount automatically in the future, such aggregate amount available to be drawn shall currently give effect to any such future increase) plus without duplication the aggregate Reimbursement Obligations on such date.

 


 

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“LIBOR Rate” shall mean with respect to the Loans comprising any Borrowing Tranche to which the LIBOR Rate Option applies for any Interest Period, the interest rate per annum determined by the Lender by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM 1 (or on such other substitute Bloomberg page that displays rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by the Lender which has been approved by the British Bankers’ Association as an authorized information vendor for the purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market (for purposes of this definition, an “Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the London interbank offered rate for U.S. Dollars for an amount comparable to such Borrowing Tranche and having a borrowing date and a maturity comparable to such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM 1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by the Lender at such time (which determination shall be conclusive absent manifest error)), by (ii) a number equal to 1.00 minus the LIBOR Reserve Percentage. LIBOR may also be expressed by the following formula:

 

                                      London interbank offered rates quoted by Bloomberg
LIBOR Rate = or appropriate successor as shown on Bloomberg Page BBAM1
                                                           1.00 - LIBOR Reserve Percentage

 

The LIBOR Rate shall be adjusted with respect to any Loan to which the LIBOR Rate Option applies that is outstanding on the effective date of any change in the LIBOR Reserve Percentage as of such effective date. The Lender shall give prompt notice to the Borrowers of the LIBOR Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

 

“LIBOR Rate Option” shall mean the option of the Borrowers to have Loans bear interest at the rate and under the terms set forth in Section 3.1.1(ii) [Revolving Credit LIBOR Rate Option].

 

“LIBOR Reserve Percentage” shall mean as of any day the maximum percentage in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).

 

“Lien” shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing); provided, however, that a filed financing statement that was not authorized by the applicable debtor will not, by itself, constitute a Lien, so long as the applicable debtor is pursuing in good faith with appropriate diligence to have such financing statement terminated of record, for a period of time not to exceed ninety (90) days after the date of the applicable Person’s knowledge thereof.

 

“Loan Documents” shall mean this Agreement, the Guaranty Agreement, the Note, the Pledge Agreement (Stocks, Bonds and Commercial Paper), the Pledge Agreement (Hypothecation), the Letter of Credit Documents, and any other instruments, certificates or documents delivered in connection herewith or therewith.

 


 

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“Loan Parties” shall mean the Borrowers and the Guarantors.

 

“Loan Request” shall have the meaning specified in Section 2.4 [Revolving Credit Loan Requests].

 

“Loans” shall mean collectively and “Loan” shall mean separately all Revolving Credit Loans or any Revolving Credit Loan. 

 

“Material Adverse Change” shall mean any set of circumstances or events which (a) has any material adverse effect upon the validity or enforceability of the Loan Documents, (b) is material and adverse to the business, assets, financial condition or results of operations of the Loan Parties and their Subsidiaries, (c) impairs materially the ability of the Loan Parties to duly and punctually pay or perform the Obligations, or (d) impairs materially the ability of the Lender to enforce its legal remedies pursuant to the Loan Documents.

 

“Month,” with respect to an Interest Period under the LIBOR Rate Option, shall have the meaning commonly associated therewith; provided that, if any LIBOR Rate Interest Period begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month.

 

“Multiemployer Plan” shall mean any employee benefit plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to which any Borrower or any ERISA Affiliate is then making or accruing an obligation to make contributions or, within the preceding five Plan years, has made or had an obligation to make such contributions.

 

“Note” shall mean the promissory note in the form of Exhibit 1.1(N) evidencing the Revolving Credit Loan.

 

“Obligation” shall mean any obligation or liability of any of the Loan Parties, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under or in connection with (i) this Agreement, the Note, the Letters of Credit, or any other Loan Document whether to the Lender or its Affiliates or other persons provided for under such Loan Documents, (ii) any Lender Provided Interest Rate Hedge and (iii) any Other Lender Provided Financial Service Product, including without limitation any interest accruing thereon after maturity, the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to a Loan Party. Notwithstanding anything to the contrary contained in the foregoing, the term “Obligation” shall not include any Excluded Hedge Liabilities.

 

“Official Body” shall mean the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).

 


 

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“Other Lender Provided Financial Service Product” shall mean an agreement or other arrangement under which the Lender or any Affiliate of the Lender provides any of the following products or services to any of the Loan Parties: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) foreign currency exchange.

 

“Parent Company” shall mean Park Electrochemical Corp., a New York corporation, its successors and assigns.

 

“Participant” has the meaning specified in Section 9.8.3 [Participations].

 

“Payment Date” shall mean (i) the date that is three (3) Business Days following the end of any fiscal quarter of the Borrowers after the date hereof, (ii) the Expiration Date or (iii) the date upon which the Note is accelerated.

 

“Payment In Full” shall mean the indefeasible payment in full in cash of the Loans and other Obligations hereunder (other than future obligations consisting of contingent Obligations that may be owing or for which no claims have been made and which expressly survive termination of the Loan Documents), termination of the Revolving Credit Commitment and cash collateralization, expiration and/or termination of all Letters of Credit.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.

 

“Pension Plan” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Borrower or any ERISA Affiliate or to which any Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

 

“Permitted Acquisitions” shall have the meaning assigned to such term in Section 7.2.6(ii). 

 

“Permitted Investments” shall mean:

 

(a)     investments in cash;

 

(b)     direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America maturing in twelve (12) months or less from the date of acquisition;

 

(c)     short-term commercial paper, including variable amount master demand notes, in Dollars, carrying the highest rating by Standard & Poor’s or P-1 by Moody’s Investors Service, Inc. issued for corporations headquartered in the United States on the date of acquisition;

 


 

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(d)     time certificates of deposit or repurchase agreements (including those purchased through the Certificate of Deposit Account Registry Service) in Dollars maturing within one year in commercial banks carrying the highest rating by Standard & Poor’s or P-1 by Moody’s Investors Service, Inc. issued for commercial banks headquartered in the United States on the date of acquisition or having capital, surplus and undivided profits in excess of $200,000,000;

 

(f)     money market or mutual funds whose investments are limited to those types of investments described in clauses (b)-(e) above; and

 

(g)     other investments consistent with (or more conservative than) the Parent Company’s written investment policy, a copy of which is attached hereto as Schedule 1.1(P).

 

“Permitted Liens” shall mean:

 

(a)     Liens for taxes, assessments, or similar charges, incurred in the ordinary course of business and which are not yet due and payable, or are being contested in good faith, with adequate reserves set aside, by appropriate proceedings diligently conducted;

 

(b)     Pledges or deposits made in the ordinary course of business to secure payment of workmen’s compensation, or to participate in any fund in connection with workmen’s compensation, unemployment insurance, old-age pensions or other social security programs;

 

(c)     Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default;

 

(d)     Good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business;

 

(e)     Encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use;

 

(f)     Liens in favor of the Lender and its Affiliates securing the Obligations;

 

(g)     Liens on property leased by any Loan Party or Subsidiary of a Loan Party under operating leases securing obligations of such Loan Party or Subsidiary to the lessor under such leases;

 

(h)     Any Lien existing on the date of this Agreement and described on Exhibit 1.1(Q), together with any renewals thereof; provided that the principal amount secured thereby is not hereafter increased, and no additional assets become subject to such Lien;

 


 

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(i)     Purchase Money Security Interests and Capital Leases securing Indebtedness permitted under Section 7.2.1(iii)(a), so long as such Liens extend only to the assets purchased (and proceeds thereof);

 

(j)     The following, (A) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed and continue to be stayed or (B) if a final judgment is entered and such judgment is discharged within forty-five (45) days of entry, and in either case they do not affect the Collateral or, in the aggregate, materially impair the ability of any Loan Party to perform its Obligations hereunder or under the other Loan Documents:

 

(1)     Claims or Liens for taxes, assessments or charges due and payable and subject to interest or penalty; provided that the applicable Loan Party maintains such reserves or other appropriate provisions as shall be required by GAAP and pays all such taxes, assessments or charges forthwith upon the commencement of proceedings to foreclose any such Lien;

 

(2)     Claims, Liens or encumbrances upon, and defects of title to, real or personal property other than the Collateral, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits;

 

(3)     Claims or Liens of mechanics, materialmen, warehousemen, carriers, or other statutory nonconsensual Liens; or

 

(4)     Liens resulting from final judgments or orders described in Section 8.1.7 [Final Judgments or Orders].

 

(k)     Liens securing Indebtedness permitted under Sections 7.2.1(ii) and 7.2.1(iii);

 

(l)     statutory or common law rights of setoff upon deposits of cash in favor of depository institutions;

 

(m)     any title transfer, retention of title, hire purchase or conditional sale arrangements having similar effect arising in the ordinary course of business in favor of the suppliers of goods or services to any Loan Party or Subsidiary thereof;

 

(n)     Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;

 

(o)     Liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code on the items in the course of collection;

 

(p)     Liens (i) on cash advances or cash earnest money deposits in favor of the seller of any property to be acquired in a joint venture permitted under Section 7.2.4(vi) or a Permitted Acquisition under Section 7.2.6(ii) to be applied against the purchase price for such joint venture or Permitted Acquisition, or (ii) consisting of any agreement to dispose of any property in a disposition permitted under Section 7.2.7 [Disposition of Assets or Subsidiaries]; and

 


 

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(q)     Liens that are contractual rights of setoff relating to purchase orders and other agreements entered into with third party customers in the ordinary course of business; provided that the only “Permitted Liens” on the pledged Subsidiary Equity Interests and related Collateral are the Liens of the Lender pursuant to the Pledge Agreement (Stocks, Bonds and Commercial Paper) and the Pledge Agreement (Hypothecation) and inchoate Liens for taxes not yet due and payable.

 

“Person” shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity.

 

“Pledge Agreement (Stocks, Bonds and Commercial Paper)” shall mean the Pledge Agreement dated as of the date hereof granting Lender a lien on and security interest in 65% of all issued and outstanding equity interests in Nelco Products Pte. Ltd., a copy of which is attached hereto as Exhibit 1.1(R), as the same may be amended, restated or otherwise modified 

 

“Pledge Agreement (Hypothecation)” shall mean the Pledge Agreement (Hypothecation) dated as of the date hereof granting Lender a lien on and security interest in the deposit account with lender, a copy of which is attached hereto as Exhibit 1.1(S), as the same may be amended, restated or otherwise modified. 

 

“Potential Default” shall mean any event or condition which with notice or passage of time, or both, would constitute an Event of Default.

 

“Prime Rate” shall mean the interest rate per annum announced from time to time by the Lender at its Principal Office as its then prime rate, which rate may not be the lowest or most favorable rate then being charged commercial borrowers or others by the Lender. Any change in the Prime Rate shall take effect at the opening of business on the day such change is announced.

 

“Principal Office” shall mean the main banking office of the Lender in New York, New York.

 

“Prior Security Interest” shall mean a valid and enforceable perfected first-priority security interest under the Uniform Commercial Code in the Collateral which is subject only to Liens of the Lender pursuant to the Loan Documents, and inchoate Liens for taxes not yet due and payable.

 

“Pro Forma Operating Leverage Ratio” shall mean the ratio of (a) the aggregate Funded Debt of the Borrowers and their Subsidiaries after giving effect to any Indebtedness incurred or assumed in a Permitted Acquisition, to (b) the trailing twelve (12) month Consolidated EBITDA, including the trailing twelve (12) month EBITDA of the Person, business or division proposed to be acquired in such Permitted Acquisition. 

 

“Purchase Money Security Interest” shall mean Liens upon tangible personal property securing loans to any Loan Party or Subsidiary of a Loan Party or deferred payments by such Loan Party or Subsidiary for the purchase of such tangible personal property.

 

“Reducing Revolving Credit Note” shall have the meaning specified in Section 2.1.

 


 

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“Reimbursement Obligation” shall have the meaning specified in Section 2.7.3 [Disbursements, Reimbursement].

 

“Related Parties” shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

 

“Relief Proceeding” shall mean any proceeding seeking a decree or order for relief in respect of any Loan Party or Subsidiary of a Loan Party in a voluntary or involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or Subsidiary of a Loan Party for any substantial part of its property, or for the winding-up or liquidation of its affairs, or an assignment for the benefit of its creditors.

 

“Revolving Credit Commitment” shall mean, as to the Lender at any time, $75,000,000, as such Commitment is thereafter assigned or modified in accordance with the terms of this Agreement including the provisions of Sections 4.2, 4.3 and 4.4 as to reductions in such Commitment. 

 

“Revolving Credit Loans” shall mean collectively and Revolving Credit Loan shall mean separately all Revolving Credit Loans or any Revolving Credit Loan made by the Lender to the Borrowers pursuant to Section 2.1 [Revolving Credit Commitment] or 2.7.3 [Disbursements; Reimbursement].

 

“Revolving Facility Usage” shall mean at any time the sum of the outstanding Revolving Credit Loans and the Letter of Credit Obligations.

 

“Sanctions” shall have the meaning specified in Section 5.1.16 [Anti-Terrorism Laws].

 

“Solvent” shall mean, with respect to any Person on any date of determination, taking into account such right of reimbursement, contribution or similar right available to such Person from other Persons, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 


 

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“Standard & Poor’s” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. 

 

“Statements” shall have the meaning specified in Section 5.1.6(i) [Historical Statements].

 

“Subordinated Debt” shall mean Funded Debt that has been subordinated to the Obligations pursuant to subordination terms and conditions satisfactory to the Lender in its discretion.

 

“Subsidiary of a Person” shall mean a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Parent Company.

 

“Subsidiary Equity Interests” shall have the meaning specified in Section 5.1.2 [Subsidiaries and Owners; Investment Companies].

 

“Synthetic Lease” shall mean, at any time, with respect to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such Person is the lessor.

 

“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto.

 

“Total Gross Leverage Ratio” shall mean the ratio of (a) the aggregate Funded Debt of the Borrowers and their Subsidiaries net of the $10,000,000.00 that will be Cash Collateralized hereunder to (b) Consolidated EBITDA. 

 

“Unfunded Capital Expenditures” shall mean, for any period, capital expenditures made from funds other than the proceeds of the Loans or other permitted term Indebtedness incurred to finance such capital expenditures for the Borrowers and their Subsidiaries for such period, in each case excluding $17,000,000 for a projected plant expansion.

 

“UK Bribery Act” shall have the meaning specified in Section 5.1.16 [Anti-Terrorism Laws].

 

“Unused Line Fee” shall have the meaning specified in Section 2.3 [Unused Line Fees].

 


 

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1.2     Construction. Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents: (i) references to the plural include the singular, the plural, the part and the whole, except where the context requires otherwise, and the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; (ii) the words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, respectively, as a whole; (iii) article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified; (iv) reference to any Person includes such Person’s successors and assigns; (v) reference to any agreement, including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto, document or instrument means such agreement, document or instrument as amended, modified, replaced, substituted for, superseded or restated; (vi) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding,” and “through” means “through and including”; (vii) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights; (viii) section headings herein and in each other Loan Document are included for convenience and shall not affect the interpretation of this Agreement or such Loan Document; and (ix) unless otherwise specified, all references herein to times of day shall be references to Eastern Time.

 

1.3     Accounting Principles; Changes in GAAP. Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP; provided, however, that all accounting terms used in Section 7.2 [Negative Covenants] (and all defined terms used in the definition of any accounting term used in Section 7.2 shall have the meaning given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistent with those used in preparing Statements referred to in Section 5.1.6(i) [Historical Statements]. Notwithstanding the foregoing, if the Borrowers notify the Lender in writing that the Borrowers wish to amend any financial covenant in Section 7.2 of this Agreement and/or any related definition to eliminate the effect of any change in GAAP occurring after the Closing Date on the operation of such financial covenants and/or interest (or if the Lender notifies the Borrower in writing that the Lender wishes to amend any financial covenant in Section 7.2 and/or any related definition to eliminate the effect of any such change in GAAP), then the Lender and the Borrowers shall negotiate in good faith to amend such ratios or requirements to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, the Loan Parties’ compliance with such covenants shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenants or definitions are amended in a manner satisfactory to the Borrowers and the Lender, and the Loan Parties shall provide to the Lender, when they deliver their financial statements pursuant to Section 7.3.1 [Quarterly Financial Statements] and 7.3.2 [Annual Financial Statements] of this Agreement, such reconciliation statements as shall be reasonably requested by the Lender.

 


 

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2.     REVOLVING CREDIT FACILITY

 

2.1     Revolving Credit Commitment. Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, the Lender agrees to make Revolving Credit Loans to the Borrowers at any time or from time to time on or after the date hereof to the Expiration Date; provided that after giving effect to each such Loan (i) the aggregate amount of Revolving Credit Loans from the Lender shall not exceed the Lender’s Revolving Credit Commitment plus the amount of Letter of Credit Facility, and (ii) the Revolving Facility Usage shall not exceed the Revolving Credit Commitment. Within such limits of time and amount and subject to the other provisions of this Agreement including without limitation Section 4.2, the Borrowers may borrow, repay and reborrow pursuant to this Section 2.1. The Obligation of the Borrowers to repay the aggregate unpaid principal amount of the Revolving Credit Loans made by the Lender, together with interest thereon, shall be evidenced by a Reducing Revolving Credit Note, dated the Closing Date, payable to the order of the Lender in a face amount equal to the maximum amount of the Revolving Credit Commitment, in the form of Exhibit 1.1(N).

 

2.2     Nature of Lender’s Obligations with Respect to Revolving Credit Loans. The aggregate of the Lender’s Revolving Credit Loans outstanding hereunder to the Borrowers at any time shall never exceed its Revolving Credit Commitment. The Lender shall have no obligation to make Revolving Credit Loans hereunder on or after the Expiration Date.

 

2.3     Unused Line Fee. Accruing from the date hereof until the earlier to occur of the Expiration Date and the date on which the Revolving Credit Commitment and the Letter of Credit Facility are terminated, the Borrowers agree to pay to the Lender a nonrefundable commitment fee (the “Unused Line Fee”) equal to 0.10% per annum (computed on the basis of a year of 360 days and actual days elapsed) multiplied by the average daily difference between the amount of (i) the Revolving Credit Commitment plus the Letter of Credit Facility and (ii) the Revolving Facility Usage, payable quarterly in arrears on each Payment Date commencing on March 2, 2016. 

 

2.4     Revolving Credit Loan Requests. Except as otherwise provided herein, the Borrowers may from time to time prior to the Expiration Date request the Lender to make Revolving Credit Loans, or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans pursuant to Section 3.2 [Interest Periods], by delivering to the Lender, not later than 11:00 a.m., (i) three (3) Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit Loans to which the LIBOR Rate Option applies or the conversion to or the renewal of the LIBOR Rate Option for any Loans; and (ii) the same Business Day of the proposed Borrowing Date with respect to the making of a Revolving Credit Loan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, a duly completed request therefor substantially in the form of Exhibit 2.4 signed by an Authorized Officer or a request by telephone from an Authorized Officer immediately confirmed in writing by letter, facsimile or telex signed by an Authorized Officer in such form (each, a “Loan Request”), it being understood that the Lender may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Loan Request shall specify the aggregate amount of the proposed Loans comprising each Borrowing Tranche, and, if applicable, the Interest Period.

 


 

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2.5     Repayment of Revolving Credit Loans. The Borrowers shall pay accrued interest on the unpaid principal balance of the Note in arrears: (a) for the portion of advances bearing interest under the Base Rate Option, on the first day of each month during the term hereof, (b) for the portion of advances bearing interest under the LIBOR Rate Option, on the last day of the respective Interest Period for such advance, (c) if any Interest Period is longer than three (3) months, then also on the three (3) month anniversary of the commencement of such interest period and every three (3) months thereafter, and (d) for all advances, at maturity, whether by acceleration of the Note or otherwise, and after maturity, on demand until paid in full. All outstanding principal and accrued interest hereunder shall be due and payable in full on the Expiration Date, if not required to be paid earlier pursuant to this Agreement. If any payment under this Agreement shall become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing interest in connection with such payment. Each Borrower hereby authorizes the Lender to charge any Borrower’s deposit account at the Lender for any payment when due hereunder.

 

2.6     Use of Proceeds. The proceeds of the Loans shall be used to satisfy on the Closing Date obligations owing under the Amended and Restated Credit Agreement by and among the Parent Company, the Guarantors party thereto and PNC Bank, National Association dated as of February 12, 2014.

 

2.7     Letter of Credit Facility.

 

2.7.1     Issuance of Letters of Credit. The Borrowers may at any time prior to the Expiration Date request the issuance of a Letter of Credit denominated in Dollars on behalf of itself or another Loan Party or any other Subsidiary of the Parent Company, or the amendment or extension of an existing Letter of Credit, by delivering or having such other Loan Party deliver to the Lender a completed application and agreement for letters of credit, or request for such amendment or extension, as applicable, signed by an Authorized Officer, in such form as the Lender may specify from time to time by no later than 10:00 a.m. at least five (5) Business Days, or such shorter period as may be agreed to by the Lender, in advance of the proposed date of issuance. Subject to the terms and conditions hereof, the Lender or any of the Lender’s Affiliates will issue a Letter of Credit or agree to such amendment or extension, provided that each Letter of Credit shall (A) have a maximum maturity of twelve (12) months from the date of issuance, except in the case of an Evergreen Letter of Credit, and (B) in no event expire later than the date which is 364 days after the Expiration Date and provided further that in no event shall (i) the Letter of Credit Obligations exceed, at any one time, $2,000,000 (the “Letter of Credit Facility”) or (ii) the Revolving Facility Usage exceed, at any one time, the Revolving Credit Commitment and the Letter of Credit Facility. Each request by the Borrowers for the issuance, amendment or extension of a Letter of Credit shall be deemed to be a representation by the Borrowers that they shall be in compliance with the preceding sentence and with Section 6 [Conditions of Lending and Issuance of Letters of Credit] after giving effect to the requested issuance, amendment or extension of such Letter of Credit. Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to the beneficiary thereof, the Lender will also deliver to Borrowers a true and complete copy of such Letter of Credit or amendment. Upon the request of the Lender (i) if the Lender has honored any full or partial drawing request under any Letter of Credit and has not been reimbursed therefor as required in this Agreement, or (ii) if, on the Expiration Date, any Letter of Credit Obligation for any reason remains outstanding, the Borrowers shall, in each case, immediately Cash Collateralize the then outstanding amount of all Letter of Credit Obligations. The Borrowers hereby grant to the Lender a security interest in all cash collateral pledged pursuant to this Section or otherwise under this Agreement.

 


 

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2.7.2     Letter of Credit Fees. The Borrowers shall pay to the Lender a fee (the “Letter of Credit Fee”) equal to 1.00% for Letters of Credit (computed on the basis of a year of 360 days and actual days elapsed), which fee shall be computed on the daily average of Letter of Credit Obligations and shall be payable quarterly in arrears on each Payment Date following issuance of each Letter of Credit. The Borrowers shall also pay to the Lender for the Lender’s sole account the Lender’s then in effect customary fees and administrative expenses payable with respect to the Letters of Credit as the Lender may generally charge or incur from time to time in connection with the issuance, maintenance, amendment (if any), assignment or transfer (if any), negotiation, and administration of Letters of Credit to the extent invoiced by the Lender. 

 

2.7.3     Disbursements; Reimbursement. In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Lender will promptly notify the Borrowers thereof. Provided that it shall have received such notice, the Borrowers shall reimburse (such obligation to reimburse the Lender shall sometimes be referred to as a “Reimbursement Obligation”) the Lender on each date that an amount is paid by the Lender under any Letter of Credit (each such date, a “Drawing Date”) by paying to the Lender an amount equal to the amount so paid by the Lender.

 

2.7.4     Documentation. Each Loan Party agrees to be bound by the terms of the Lender’s Letter of Credit Documents and the Lender’s written regulations and customary practices relating to letters of credit as set forth in such Letter of Credit Documents or, if none are stated therein, in Section 9.11.1 hereof. In the event of a conflict between such Letter of Credit Documents and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct, the Lender shall not be liable for any errors, negligence and/or mistakes, whether of omission or commission, in following any Loan Party’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.

 

2.7.5     Determinations to Honor Drawing Requests. In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.

 

2.7.6     Nature of Reimbursement Obligations. The Obligations of the Borrowers to reimburse the Lender upon a drawing under a Letter of Credit shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.7 under all circumstances, including the following circumstances:

 

(i)     any set-off, counterclaim, recoupment, defense or other right which the Lender may have against the Borrowers or any other Person for any reason whatsoever, or which any Loan Party may have against the Lender or any of its Affiliates or any other Person for any reason whatsoever;

 


 

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(ii)     any lack of validity or enforceability of any Letter of Credit, the issuance of which was requested by the Borrowers;

 

(iii)     any claim of breach of warranty that might be made by any Loan Party or the Lender against any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which any Loan Party or the Lender may have at any time against a beneficiary, successor beneficiary, any transferee or assignee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the Lender or its Affiliates or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any Letter of Credit was procured);

 

(iv)     the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provision of services relating to a Letter of Credit, in each case even if the Lender or any of its Affiliates has been notified thereof;

 

(v)     payment by the Lender or any of its Affiliates under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;

 

(vi)     the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;

 

(vii)     any failure by the Lender or any of its Affiliates to issue any Letter of Credit in the form requested by any Loan Party, unless the Lender has received written notice from such Loan Party of such failure, has had sufficient time and the beneficiary thereof has agreed to amend such Letter of Credit, and no drawing has been made thereon;

 

(viii)     any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Loan Party or Subsidiaries of a Loan Party;

 

(ix)     any breach of this Agreement or any other Loan Document by any party thereto;

 

(x)     the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party;

 

(xi)     the fact that an Event of Default or a Potential Default shall have occurred and be continuing;

 


 

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(xii)     the fact that the Expiration Date shall have passed or this Agreement or the Revolving Credit Commitment hereunder shall have been terminated; and

 

(xiii)     any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

 

2.7.7     Indemnity. The Borrowers, jointly and severally, hereby agree to protect, indemnify, pay and save harmless the Lender and any of its Affiliates that has issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Lender or any of its Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (A) the gross negligence or willful misconduct of the Lender or Lender’s Affiliate as determined by a final non-appealable judgment of a court of competent jurisdiction or (B) the wrongful dishonor (or wrongful honor) by the Lender or any of the Lender’s Affiliates of a proper demand (or, in the case of wrongful honor, improper demand) for payment made under any Letter of Credit, except if such dishonor (or honor, as applicable) resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Official Body. Notwithstanding the foregoing, the Borrowers shall be responsible for allocated costs of internal counsel only during a post-Event of Default out-of-court restructuring or after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to a Loan Party.

 

2.7.8     Liability for Acts and Omissions. As between any Loan Party and the Lender, or the Lender’s Affiliates, such Loan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Lender shall not be responsible for any of the following, including any losses or damages to any Loan Party or other Person or property relating therefrom: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the Lender or its Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Loan Party against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Loan Party and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Lender or its Affiliates, as applicable, including any act or omission of any Official Body, and none of the above shall affect or impair, or prevent the vesting of, any of the Lender’s or its Affiliate’s rights or powers hereunder. Nothing in the preceding sentence shall relieve the Lender from liability for the Lender’s gross negligence or willful misconduct in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall the Lender or its Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.

 


 

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Without limiting the generality of the foregoing, the Lender and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by the Lender or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit; (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by the Lender or its Affiliate; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored presentation under the laws or practices of the place where such bank is located, provided such negotiating bank was authorized by Lender (or the Borrowers, as applicable) to act in such capacity; and (vi) may settle or adjust any claim or demand made on the Lender or its Affiliates in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each, an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.

 

In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the Lender or its Affiliates under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put the Lender or its Affiliates under any resulting liability to any Borrower or any other Loan Party. This paragraph is not intended to relieve the Lender from liability, subject to the terms of Section 2.7.7 and set forth above in this Section 2.7.8, for conduct for which the Lender would not be entitled to indemnification under clause (A) of Section 2.7.7.

 


 

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3.     INTEREST RATES

 

3.1     Interest Rate Options. The Borrowers shall pay interest in respect of the outstanding unpaid principal amount of the Loans as selected by it from the Base Rate Option or LIBOR Rate Option set forth below applicable to the Loans, it being understood that, subject to the provisions of this Agreement, the Borrowers may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the Loans comprising any Borrowing Tranche, provided that there shall not be at any one time outstanding more than six (6) Borrowing Tranches in the aggregate among all of the Loans and provided further that if an Event of Default exists and is continuing, the Borrowers may not request, convert to, or renew the LIBOR Rate Option for any Loans and the Lender may demand that all existing Borrowing Tranches bearing interest under the LIBOR Rate Option shall be converted immediately to the Base Rate Option, subject to the obligation of the Borrowers to pay any indemnity under Section 4.7 [Indemnity] in connection with such conversion. If at any time the designated rate applicable to any Loan made by the Lender exceeds the Lender’s highest lawful rate, the rate of interest on such Loan shall be limited to the Lender’s highest lawful rate.

 

3.1.1     Revolving Credit Interest Rate Options. The Borrowers shall have the right to select from the following Interest Rate Options applicable to the Revolving Credit Loans:

 

(i)     Revolving Credit Base Rate Option: A fluctuating rate per annum (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base Rate, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate; or

 

(ii)     Revolving Credit LIBOR Rate Option: A rate per annum (computed on the basis of a year of 360 days and actual days elapsed) equal to the one (1), two (2), three (3) or six (6) month LIBOR Rate (as selected by Borrower) plus 1.15%.

 

3.1.2     Rate Quotations. The Borrowers may call the Lender on or before the date on which a Loan Request is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such indication shall not be binding on the Lender nor affect the rate of interest which thereafter is actually in effect when the election is made.

 

3.2     Interest Periods. At any time when the Borrowers shall select, convert to or renew a LIBOR Rate Option, the Borrowers shall notify the Lender thereof at least three (3) Business Days prior to the effective date of such LIBOR Rate Option by delivering a Loan Request. The notice shall specify an Interest Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, in the case of the renewal of a LIBOR Rate Option at the end of an Interest Period, the first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day.

 

3.3     Interest After Default. To the extent permitted by Law, upon the occurrence of an Event of Default and until such time such Event of Default shall have been cured or waived, and at the discretion of the Lender:

 

3.3.1     Interest Rate. The rate of interest for each Loan otherwise applicable pursuant to Section 3.1 [Interest Rate Options] shall be increased by 3.0% per annum;

 

3.3.2     Other Obligations. Each other Obligation hereunder if not paid when due shall bear interest at a rate per annum equal to the sum of the rate of interest applicable under the Revolving Credit Base Rate Option plus an additional 3.0% per annum from the time such Obligation becomes due and payable and until it is paid in full; and

 


 

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3.3.3     Acknowledgment. The Borrowers acknowledge that the increase in rates referred to in this Section 3.3 reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Lender is entitled to additional compensation for such risk; and all such interest shall be payable by Borrowers upon demand by Lender.

 

3.4     LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.

 

3.4.1     Unascertainable. If on any date on which a LIBOR Rate would otherwise be determined, the Lender shall have determined that:

 

(i)     adequate and reasonable means do not exist for ascertaining such LIBOR Rate, or

 

(ii)     a contingency has occurred which materially and adversely affects the London interbank eurodollar market relating to the LIBOR Rate, 

 

then the Lender shall have the rights specified in Section 3.4.3 [Lender’s Rights].

 

3.4.2     Illegality; Increased Costs; Deposits Not Available. If at any time the Lender shall have determined that:

 

(i)     the making, maintenance or funding of any Loan to which a LIBOR Rate Option applies has been made impracticable or unlawful by compliance by the Lender in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law), or

 

(ii)     such LIBOR Rate Option will not adequately and fairly reflect the cost to the Lender of the establishment or maintenance of any such Loan, or

 

(iii)     after making all reasonable efforts, deposits of the relevant amount in Dollars for the relevant Interest Period for a Loan to which a LIBOR Rate Option applies are not available to the Lender with respect to such Loan, or to banks generally, in the interbank eurodollar market, 

 

then the Lender shall have the rights specified in Section 3.4.3 [Lender’s Rights].

 

3.4.3     Lender’s Rights. In the case of any event specified in Section 3.4.1 [Unascertainable] or in Section 3.4.2 [Illegality; Increased Costs; Deposits Not Available] above, the Lender shall promptly so notify the Borrowers and endorse a certificate to such notice as to the specific circumstances of such notice. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of the Lender to allow the Borrowers to select, convert to or renew a LIBOR Rate Option shall be suspended until the Lender shall have later notified the Borrowers of the Lender’s determination that the circumstances giving rise to such previous determination no longer exist. If at any time the Lender makes a determination under Section 3.4.1 [Unascertainable] and the Borrowers have previously notified the Lender of its selection of, conversion to or renewal of a LIBOR Rate Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans. If the Lender notifies the Borrowers of a determination under Section 3.4.2 [Illegality; Increased Costs; Deposits Not Available], the Borrowers shall, subject to the Borrowers’ indemnification Obligations under Section 4.7 [Indemnity], as to any Loan of the Lender to which a LIBOR Rate Option applies, on the date specified in such notice either (i) as applicable, convert such Loan to the Base Rate Option otherwise available with respect to such Loan, or (ii) prepay such Loan as accordance with Section 4.3 [Voluntary Prepayments]. Absent due notice from the Borrowers of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date.

 


 

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3.5     Selection of Interest Rate Options. If the Borrowers fail to select a new Interest Period to apply to any Borrowing Tranche of Loans under the LIBOR Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of Section 3.2 [Interest Periods], the Borrowers shall be deemed to have converted such Borrowing Tranche to the Base Rate Option, commencing upon the last day of the existing Interest Period.

 

4.     PAYMENTS

 

4.1     Payments. All payments and prepayments to be made in respect of principal, interest, Commitment Fees, Letter of Credit Fees or other fees or amounts due from the Borrowers hereunder shall be payable prior to 4:00 p.m. on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrowers, and without set-off, counterclaim or other deduction of any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Lender at the Principal Office for the account of the Lender in Dollars and in immediately available funds. The Lender’s statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount of principal of and interest on the Loans and other amounts owing under this Agreement and shall be deemed an “account stated.”

 

4.2     Interest and Principal Payment Dates. Interest on Loans to which the Base Rate Option applies shall be due and payable in arrears on the third Business Day following the end of each fiscal quarter of the Borrower (for purposes of this Section 4.2, a “Payment Date”). Interest on Loans to which the LIBOR Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans. Interest on the principal amount of each Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated Expiration Date, upon acceleration or otherwise). Principal of Loans shall be due in installments as follows: (i) $3,000,000 per annum, in quarterly installments of $750,000 on each quarterly Payment Date until the outstanding principal amount due under the Loans has been reduced to $25,000,000 and the Total Gross Leverage Ratio calculated on such quarterly Payment Date for the four (4) immediately preceding fiscal quarters of the Borrower is not more that 2.5 to 1.00. The Borrowers may make any of the preceding installment payments in advance of the applicable Payment Date. Once paid, such principal amounts shall not be available for re-borrowing and shall reduce the Revolving Credit Commitment on a dollar-for-dollar basis.

 


 

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4.3     Voluntary Prepayments or Revolving Credit Commitment Reductions. The Borrowers shall have the right at their option from time to time to prepay the Loans or reduce the unborrowed Revolving Credit Commitment in whole or part, with a minimum of three (3) Business Days’ prior written notice, without premium or penalty, except for customary reimbursement of funding breakage costs and as provided in Section 4.5 [Increased Costs; Yield Protection] and Section 4.7 [Indemnity]. Any such partial prepayment shall be in an amount equal to $500,000 or a higher integral multiple of $100,000. Once paid, such principal amounts shall not be available for re-borrowing and shall reduce the Revolving Credit Commitment on a dollar-for-dollar basis.

 

4.4     Mandatory Prepayments and Revolving Credit Commitment Reductions. 

 

4.4.1     Mandatory Prepayment from Repatriated Foreign Earnings.If the Total Gross Leverage Ratio calculated at the end of any fiscal quarter for the four (4) immediately preceding fiscal quarters of the Borrower is more than 2.50 to 1.00, Borrower shall immediately make a mandatory prepayment of principal on the Loans equal to 50% of the after-tax proceeds of any cash distribution of earnings from Foreign Subsidiaries received during such preceding fiscal quarters. Principal prepaid under this Section 4.4.1 shall not be available for re-borrowing and shall reduce the Revolving Credit Commitment on a dollar-for-dollar basis. This Section 4.4.1 shall not apply if the Revolving Credit Commitment and the Obligations have been reduced to $25,000,000 as provided herein.

 

4.4.2     Application Among Interest Rate Options. All prepayments required pursuant to this Section 4.4 shall first be applied among the Interest Rate Options to the principal amount of the Loans subject to the Base Rate Option, then to Loans subject to a LIBOR Rate Option (and to such Loans, in the order among different LIBOR Rate Options as directed by Borrowers, or in the absence of such direction, as determined by Lender). In accordance with Section 4.7 [Indemnity], the Borrowers shall indemnify the Lender for any loss or expense, including loss of margin, incurred with respect to any such prepayments applied against Loans subject to a LIBOR Rate Option on any day other than the last day of the applicable Interest Period.

 

4.5     Increased Costs; Yield Protection. Within ten (10) Business Days of written demand therefor, together with written evidence of the justification therefor, the Borrowers jointly and severally agree to pay the Lender all direct costs incurred, any losses suffered or payments made by the Lender as a result of any Change in Law (hereinafter defined), imposing any reserve (without duplication of the LIBOR Reserve), deposit, allocation of capital or similar requirement (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System) on the Lender, its holding company or any of their respective assets specifically relative to the Revolving Credit Commitment or Revolving Credit Loans. “Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any governmental authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any governmental authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith (to the extent enacted, adopted or issued after the Closing Date) and (y) all requests, rules, guidelines or directives promulgated by the Lender for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued. Notwithstanding the foregoing, Borrowers shall not be required to compensate the Lender pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than one (1) year prior to the date that Lender notifies the Borrowers of the change giving rise to such increased costs or reductions and of Lender’s intention to claim compensation therefor (except that, if the change giving rise to such increased costs or reductions is retroactive, then the one (1) year period referred to above shall be extended to include the period of retroactive effect thereof).

 


 

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4.6     No Offsets. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be without deduction or withholding for any taxes, offsets or other deductions.

 

4.7     Indemnity. Each Borrower jointly and severally agrees to indemnify the Lender against any liabilities, losses or expenses (including, without limitation, loss of margin, any loss or expense sustained or incurred in liquidating or employing deposits from third parties, and any loss or expense incurred in connection with funds acquired to effect, fund or maintain any advance (or any part thereof) bearing interest under the LIBOR Rate Option which the Lender sustains or incurs as a consequence of either (i) the Borrowers’ failure to make a payment on the due date thereof, (ii) the Borrowers’ revocation (expressly, by later inconsistent notices or otherwise) in whole or in part of any notice given to Lender to request, convert, renew or prepay any advance bearing interest under the LIBOR Rate Option, or (iii) the Borrowers’ payment or prepayment (whether voluntary, after acceleration of the maturity of this Agreement or otherwise) or conversion of any advance bearing interest under the LIBOR Rate Option on a day other than the last day of the applicable Interest Period. A notice as to any amounts payable pursuant to this paragraph (including calculations with a reasonable level of detail, when available) given to the Borrowers by the Lender shall, in the absence of manifest error, be conclusive and shall be payable within ten (10) Business Days of written demand therefor. The Borrowers’ indemnification obligations hereunder shall survive the payment in full of the Loans and all other amounts payable hereunder.

 

4.8     Interbank Market Presumption. Subject to the definition of LIBOR Rate, for all purposes of this Agreement and each Note with respect to any aspects of the LIBOR Rate and any Loan under the LIBOR Rate Option, the Lender shall be presumed to have obtained rates, funding, currencies, deposits, and the like in the Relevant Interbank Market regardless of whether it did so or not; and, the Lender’s determination of amounts payable under, and actions required or authorized by, Section 4.5 [Increased Costs; Yield Protection] and Section 4.7 [Indemnity] shall be calculated, at the Lender’s option, as though the Lender funded each Borrowing Tranche of Loans under the LIBOR Rate Option through the purchase of deposits of the types and maturities corresponding to the deposits used as a reference in accordance with the terms hereof in determining the LIBOR Rate applicable to such Loans, whether in fact that is the case.

 


 

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5.     REPRESENTATIONS AND WARRANTIES

 

The Loan Parties, jointly and severally, represent and warrant to the Lender as follows:

 

5.1.1     Organization and Qualification; Power and Authority; Compliance With Laws; Title to Properties; Event of Default. Each Loan Party and each Subsidiary of each Loan Party (i) is a corporation, partnership or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (ii) has the lawful power to own or lease its properties and to engage in the business it presently conducts or proposes to conduct, (iii) is duly licensed or qualified and in good standing in each jurisdiction where the property owned or leased by it or the nature of the business transacted by it or both makes such licensing or qualification necessary, except where the failure to do so would not result in a Material Adverse Change, (iv) has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness to be incurred by it under the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part, (v) is in compliance in all material respects with all applicable Laws (other than Environmental Laws which are specifically addressed in Section 5.1.14 [Environmental Matters]) in all jurisdictions in which any Loan Party or Subsidiary of any Loan Party is presently or will be doing business, except where the failure to do so would not constitute a Material Adverse Change, and (vi) has good and marketable title to or valid leasehold interest in all properties, assets and other rights which it purports to own or lease or which are reflected as owned or leased on its books and records, free and clear of all Liens and encumbrances except Permitted Liens. No Event of Default or Potential Default exists or is continuing.

 

5.1.2     Subsidiaries and Owners; Investment Companies. Schedule 5.1.2 states as of the Closing Date (i) the name of each of the Parent Company’s Subsidiaries, its jurisdiction of organization and the amount, percentage and type of equity interests in such Subsidiary (the “Subsidiary Equity Interests”), (ii) the name of each holder of an equity interest in the Parent Company (in the case of the Parent Company, such disclosure is limited to each holder having, to the knowledge of Parent Company, an equity interest of 5% or more) and its Subsidiaries, the amount, percentage and type of such equity interest (the “Parent Company Equity Interests”), and (iii) any options, warrants or other rights outstanding to purchase any such equity interests referred to in clause (i) or (ii), other than employee stock options (collectively with the Subsidiary Equity Interests and Parent Company Equity Interests, the “Equity Interests”). The Parent Company and each of its Subsidiaries has good and marketable title to all of the Subsidiary Equity Interests it purports to own, free and clear in each case of any Lien, other than Permitted Liens, and all such Subsidiary Equity Interests have been validly issued, fully paid and are nonassessable. None of the Loan Parties or Subsidiaries of any Loan Party is an “investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control” of an “investment company” as such terms are defined in the Investment Company Act of 1940 and shall not become such an “investment company” or under such “control.”

 


 

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5.1.3     Validity and Binding Effect. This Agreement and each of the other Loan Documents (i) has been duly and validly executed and delivered by each Loan Party named as a party thereto, and (ii) constitutes, or will constitute, legal, valid and binding obligations of each Loan Party which is or will be a party thereto, enforceable against such Loan Party in accordance with its terms, except to the extent such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, preference and other similar laws affecting creditors’ rights generally, and by general principles of equity (regardless of whether enforcement is sought in equity or at law).

 

5.1.4     No Conflict; Material Agreements; Consents. Neither the execution and delivery of this Agreement or the other Loan Documents by any Loan Party nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by any of them will conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents of any Loan Party or (ii) any Law or any material agreement or instrument or order, writ, judgment, injunction or decree to which any Loan Party or any of its Subsidiaries is a Party or by which it or any of its Subsidiaries is bound or to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan Party or any of its Subsidiaries (other than Liens granted under the Loan Documents). There is no default under such material agreement (referred to above) and none of the Loan Parties or their Subsidiaries is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law, in each case, which would result in a Material Adverse Change. No consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Person is required by any Law or any agreement in connection with the execution, delivery and carrying out of this Agreement and the other Loan Documents, except for such consents and approvals that have been duly obtained.

 

5.1.5     Litigation. There are no actions, suits, proceedings or investigations pending or, to the knowledge of any Loan Party, threatened against such Loan Party or any Subsidiary of such Loan Party at law or in equity before any Official Body which, individually or in the aggregate is reasonably likely to result in any Material Adverse Change. None of the Loan Parties or any Subsidiaries of any Loan Party is in violation of any order, writ, injunction or any decree of any Official Body which would result in any Material Adverse Change.

 

5.1.6     Financial Statements.

 

(i)     Historical Statements. The Parent Company and its Subsidiaries (including Borrowers) have delivered to the Lender copies (by filing thereof on EDGAR) of their audited consolidated year-end financial statements for and as of the end of the fiscal year ended March 1, 2015. In addition, the Parent Company and its Subsidiaries (including Borrowers) have delivered to the Lender copies of their (A) unaudited consolidated interim financial statements for the fiscal year to date and as of the end of the fiscal quarter ended August 30, 2015 and (B) unaudited consolidated interim financial statements for the fiscal year to date and as of the fiscal quarter ended November 29, 2015 (all such annual and interim statements being collectively referred to as the “Statements”). The Statements were compiled from the books and records maintained by the Parent Company and its Subsidiaries’ management, are correct and complete and fairly represent the consolidated and consolidating financial condition of the Parent Company and its Subsidiaries (including Borrowers) as of the respective dates thereof and the results of operations for the fiscal periods then ended and have been prepared in accordance with GAAP consistently applied, subject (in the case of the interim statements) to normal year-end audit adjustments.

 


 

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(ii)     Accuracy of Financial Statements. Neither any Borrower nor any Subsidiary of the Borrowers has any liabilities, contingent or otherwise, or forward or long-term commitments that are not disclosed in the Statements or in the notes thereto, and except as disclosed therein there are no unrealized or anticipated losses from any commitments of any Borrower or any Subsidiary of the Borrowers which may cause a Material Adverse Change. Since March 1, 2015, and with respect to future Loans, since the date of the most recently delivered audited financial statements delivered pursuant to this Agreement, no Material Adverse Change has occurred.

 

5.1.7     Margin Stock. None of the Loan Parties or any Subsidiaries of any Loan Party engages or intends to engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U, T or X as promulgated by the Board of Governors of the Federal Reserve System). No part of the proceeds of any Loan has been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System. None of the Loan Parties or any Subsidiary of any Loan Party holds or intends to hold margin stock in such amounts that more than 25% of the reasonable value of the assets of any Loan Party or Subsidiary of any Loan Party are or will be represented by margin stock.

 

5.1.8     Full Disclosure. Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or other document furnished to the Lender in connection herewith or therewith (as modified or supplemented, but excluding financial projection information and information of a general economic or industry specific nature), when furnished or taken as a whole, contains any material misstatement of fact or omits to state a fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not materially misleading. With respect to projected financial information, the Borrowers represent and warrant only that such information reflects their good faith estimates as of the date of preparation thereof, based upon methods and data the Borrowers believe to be reasonable and accurate, notwithstanding that actual results may differ materially from such projected financial information.

 

5.1.9     Taxes. All federal tax returns, and all material state, local and other tax returns required to have been filed with respect to each Loan Party and each Subsidiary of each Loan Party have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments and other governmental charges which have or may become due pursuant to said returns or to assessments received, except to the extent that such taxes, fees, assessments and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made.

 


 

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5.1.10     Patents, Trademarks, Copyrights, Licenses, etc. Each Loan Party and each Subsidiary of each Loan Party owns or possesses all the material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights necessary to own and operate its properties and to carry on its business as presently conducted and planned to be conducted by such Loan Party or Subsidiary, without known possible, alleged or actual conflict with the rights of others (except for any such conflict which is not reasonably likely to result in a Material Adverse Change).

 

5.1.11     Liens in the Collateral. The Liens in the Collateral granted to the Lender pursuant to the Loan Documents, other than Liens in the Subsidiary Equity Interests in Foreign Subsidiaries as to which the Lender has not required that it obtain Prior Security Interests under any foreign jurisdictions that may be applicable, constitute and will continue to constitute Prior Security Interests and are subject only to Permitted Liens. All filing fees and other expenses in connection with the perfection of such Liens have been or will be paid by the Borrowers.

 

5.1.12     Insurance. The properties of each Loan Party and each of its Subsidiaries are insured pursuant to policies and other bonds which are valid and in full force and effect and which provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of each such Loan Party and Subsidiary in accordance with prudent business practice in the industry of such Loan Parties and Subsidiaries.

 

5.1.13     ERISA Compliance.

 

(i)     Each Pension Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state Laws, except where such failure to comply would not result in a Material Adverse Change. Each Pension Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter or prototype opinion letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of Borrowers, nothing has occurred which would prevent, or cause the loss of, such qualification. Each Borrower and each ERISA Affiliate have made all required contributions to each Pension Plan, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Pension Plan.

 

(ii)     No ERISA Event has occurred or is reasonably expected to occur with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party or any Subsidiary of a Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $2,250,000; (a) each Pension Plan is in compliance in all material respects with the minimum funding requirements of Section 412 and 430 of the Code; (b) neither any Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA or contributions due and not delinquent); (c) neither any Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (d) neither any Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

 


 

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(iii)     As of the Closing Date, no Loan Party or ERISA Affiliate sponsors, maintains, participates in or has any liability under any Pension Plan, except as set forth on Schedule 5.13 attached hereto.

 

5.1.14     Environmental Matters. Each Loan Party is and has been and, to the knowledge of each respective Loan Party, each of its Subsidiaries is and has been, (a) as of the Closing Date, in compliance with applicable Environmental Laws except as disclosed in the SEC filings of the Parent Company, provided that such matters so disclosed would not in the aggregate result in a Material Adverse Change and except for any noncompliance that would not result in a Material Adverse Change, and (b) as of any other date on which the representations set forth in this Section 5.14 are or are deemed made, in compliance with applicable Environmental Laws, except for any non-compliance which would not result in a Material Adverse Change.

 

5.1.15     Solvency. Before and after giving effect to the initial Loans hereunder, each of the Loan Parties is Solvent.

 

5.1.16     Anti-Terrorism Laws. None of the Loan Parties, any of their Subsidiaries, any director or officer, or any employee, agent, or Affiliate, of any of the Loan Parties or any of their Subsidiaries is an individual or entity (hereafter “Covered Person”) that is, or is owned or controlled by Covered Persons that are, (i) the subject of any sanctions administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the United Nations Security Council or the European Union (collectively, “Sanctions”), or (ii) located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions, including, without limitation, the Crimea Region, Iran, North Korea, Sudan and Syria.

 

5.1.17     Anti-Bribery Laws. None of the Loan Parties, nor to the knowledge of any of the Loan Parties, any director, officer, agent, employee, Affiliate or other person acting on behalf of any of the Loan Parties or any of their Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such Persons of any applicable anti-bribery law, including but not limited to, the United Kingdom Bribery Act 2010 (the “UK Bribery Act”) or the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”). Furthermore, each of the Loan Parties and, to the knowledge of the Loan Parties, its Affiliates have conducted their businesses in compliance with the UK Bribery Act, the FCPA and similar laws, rules or regulations and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

6.     CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT

 

The obligation of the Lender to make Loans and to issue Letters of Credit hereunder is subject to the performance by each of the Loan Parties of its Obligations to be performed hereunder at or prior to the making of any such Loans or issuance of such Letters of Credit and to the satisfaction of the following further conditions:

 


 

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6.1     First Loans and Letters of Credit.

 

6.1.1     Deliveries. On the Closing Date, the Lender shall have received each of the following in form and substance satisfactory to the Lender:

 

(i)     A certificate of each of the Loan Parties signed by an Authorized Officer, dated the Closing Date stating that (w) all representations and warranties of the Loan Parties set forth in this Agreement are true and correct in all material respects (except for those representations and warranties that are qualified by reference to materiality, which shall be true and correct in all respects), (x) no Event of Default or Potential Default exists, and (y) no Material Adverse Change has occurred since March 1, 2015;

 

(ii)     A certificate dated the Closing Date and signed by the Secretary or an Assistant Secretary of each of the Loan Parties, certifying as appropriate as to: (a) all action taken by each Loan Party to duly authorize the execution, delivery and performance of this Agreement and the other Loan Documents; (b) the names of the Authorized Officers authorized to sign the Loan Documents and their true signatures; (c) copies of its organizational documents as in effect on the Closing Date certified by the appropriate state official where such documents are filed in a state office (or certified as not having changed since the versions most recently delivered to Lender); and (d) certificates from the appropriate state officials as to the continued existence and good standing of each Loan Party in each state where organized;

 

(iii)     This Agreement and each of the other Loan Documents (to the extent being executed on the date hereof) duly signed by an Authorized Officer and each other party thereto;

 

(iv)     All appropriate stock powers and certificates evidencing the pledged Subsidiary Equity Interests (to the extent not already delivered to Lender);

 

(v)     A written opinion of U.S. counsel for the Loan Parties, dated the Closing Date;

 

(vi)     A lien search in acceptable scope and with acceptable results;

 

(vii)     A Loan Request for any Loans being requested on the Closing Date;

 

(viii) All documentation and other information about the Borrowers that shall have been reasonably requested by the Lender and that the Lender reasonably determines is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations; and

 

(ix)     Such other documents in connection with such transactions as the Lender or Parties’ counsel may have reasonably requested.

 

6.1.2     Payment of Fees. The Borrowers shall have paid all fees payable on or before the Closing Date as required by this Agreement or any other Loan Document, including without limitation a commitment fee which Borrower shall pay to the Lender by the Closing Date in the amount of $150,000 (which fee shall be fully earned and non-refundable when paid).

 


 

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6.2     Each Loan or Letter of Credit. At the time of making any Loans or issuing, extending or increasing any Letters of Credit and after giving effect to the proposed extensions of credit: (i) the representations and warranties of the Loan Parties in the Loan Documents shall then be true and correct in all material respects (except for those representations and warranties that are qualified by reference to materiality, which shall be true and correct in all respects), (ii) no Event of Default or Potential Default shall have occurred and be continuing, and (iii) the Borrowers shall have delivered to the Lender a duly executed and completed Loan Request or an application for a Letter of Credit, as the case may be.

 

7.     COVENANTS

 

The Loan Parties, jointly and severally, covenant and agree that until Payment In Full, the Loan Parties shall comply at all times with the following covenants:

 

7.1     Affirmative Covenants.

 

7.1.1     Preservation of Existence, etc. Each Loan Party shall, and shall cause each of its Subsidiaries (other than Immaterial Subsidiaries) to, maintain its legal existence as a corporation, limited partnership or limited liability company and its license or qualification and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary, except as otherwise expressly permitted in Section 7.2.6 [Liquidations, Mergers, etc.].

 

7.1.2     Payment of Liabilities, Including Taxes, etc. Each Loan Party shall, and shall cause each of its Subsidiaries to, duly pay and discharge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable, including all taxes, assessments and governmental charges upon it or any of its properties, assets, income or profits in an amount in excess of $2,250,000, prior to the date on which penalties attach thereto, except to the extent that such liabilities, including taxes, assessments or charges, are being contested in good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made.

 

7.1.3     Maintenance of Insurance. Each Loan Party shall, and shall cause each of its Subsidiaries to, insure its properties and assets against loss or damage by fire and such other insurable hazards as such assets are commonly insured and in such amounts as are substantially consistent with past practice and with reputable and financially sound insurers.

 

7.1.4     Maintenance of Properties and Leases. Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in good repair, working order and condition (ordinary wear and tear excepted) all of those properties necessary to its business, and from time to time, such Loan Party will make or cause to be made all commercially reasonable repairs, renewals or replacements thereof.

 

7.1.5     Visitation Rights. Each Loan Party shall, and shall cause each of its Subsidiaries to, permit any of the officers or authorized employees or representatives of the Lender to visit and inspect any of its properties and to examine and make excerpts from its books and records and discuss its business affairs, finances and accounts with its officers, all in such detail and at such times and as often as the Lender may reasonably request provided that the Lender shall provide the Borrowers with reasonable notice prior to any visit or inspection.

 


 

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7.1.6     Keeping of Records and Books of Account. Each Borrower shall, and shall cause each Subsidiary of the Borrowers to, maintain and keep proper books of record and account which enable the Borrowers and their Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws of any Official Body having jurisdiction over any Borrower or any Subsidiary of the Borrowers, and in which full, true and correct entries shall be made in all material respects of all its dealings and business and financial affairs.

 

7.1.7     Compliance with Laws; Use of Proceeds. Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with all applicable Laws, including all Environmental Laws, in all material respects. The Loan Parties will use the Letters of Credit and the proceeds of the Loans only in accordance with Section 2.6 [Use of Proceeds] and as permitted by applicable Laws.

 

7.1.8     Further Assurances. Each Loan Party shall, from time to time, at its expense, faithfully preserve and protect the Lender’s Lien on and Prior Security Interest in the Collateral whether now owned or hereafter acquired as a continuing first priority perfected Lien, subject only to Permitted Liens, and shall do such other acts and things as the Lender in its sole discretion may deem necessary or advisable from time to time in order to preserve, perfect and protect the Liens granted under the Loan Documents and to exercise and enforce its rights and remedies thereunder with respect to the Collateral.

 

7.2     Negative Covenants.

 

7.2.1     Indebtedness. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Indebtedness, except:

 

(i)     Indebtedness under the Loan Documents;

 

(ii)     Indebtedness incurred with respect to Purchase Money Security Interests and Capital Leases, secured by such Purchase Money Security Interests or Capital Leases (as applicable), Indebtedness assumed in connection with (but not incurred in contemplation of) a Permitted Acquisition secured by Liens that extend only to the property so acquired in such Permitted Acquisition, and other secured Indebtedness in an aggregate amount not to exceed $5,000,000 outstanding at any time;

 

(iii)     so long as no Potential Default or Event of Default exists at the time of, or will be caused by, the incurrence thereof (including without limitation under Section 7.2.14 or 7.2.15), the following additional Indebtedness:

 

(a)     additional Indebtedness incurred with respect to Purchase Money Security Interests and Capital Leases;

 


 

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(b)     additional Indebtedness assumed in connection with (but not incurred in contemplation of) a Permitted Acquisition; and

 

(c)     other additional Indebtedness;

 

provided however, that the aggregate outstanding amount of secured Indebtedness existing under Sections 7.2.1(iii)(b) and 7.2.1(iii)(c) above shall not exceed $5,000,000 at any time.

 

(iv)     any (i) Lender Provided Interest Rate Hedge, (ii) other unsecured Interest Rate Hedges approved by the Lender and not otherwise causing a Potential Default or Event of Default hereunder (including without limitation under a financial covenant set forth herein), or (iii) Indebtedness under any Other Lender Provided Financial Services Product; provided however, the Loan Parties and their Subsidiaries shall enter into Lender Provided Interest Rate Hedges or other Interest Rate Hedges only for hedging (rather than speculative) purposes;

 

(v)     Guaranties permitted by Section 7.2.3 [Guaranties];

 

(vi)     Indebtedness representing deferred compensation incurred in the ordinary course of business;

 

(vii)     Indebtedness to current or former officers, directors, managers, consultants and employees to finance the required purchase or redemption of stock of the Parent Company in the ordinary course of business;

 

(viii)     Indebtedness incurred in respect of letters of credit, bank guarantees, bankers’ acceptances, warehouse receipts or similar instruments (including reimbursement-type obligations) issued or created in the ordinary course of business consistent with past practice in respect of workers compensation claims, health, disability or other employee benefits, property, casualty or liability insurance, or performance, bid, appeal or surety bonds; and

 

(ix)     Indebtedness arising from intercompany loans and advances permitted by Section 7.2.4 [Loans and Investments].

 

7.2.2     Liens. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien on any of its property or assets, tangible or intangible, now owned or hereafter acquired, except Permitted Liens.

 

7.2.3     Guaranties. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time, directly or indirectly, become or be liable in respect of any Guaranty, or assume, guarantee, become surety for, endorse or otherwise agree to, become or remain directly or contingently liable upon or with respect to any obligation or liability of any other Person, except for:

 

(i)     Indebtedness in the form of Guaranties of Indebtedness permitted under Sections 7.2.1(i) through (iv) and (vi) through (x);

 


 

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(ii)     Guaranties in favor of other Loan Parties;

 

(iii)     Guaranties in favor of the Lender; and

 

(iv)     so long as no Potential Default or Event of Default exists at the time of, or will be caused by, the incurrence thereof (including without limitation under Section 7.2.14 or 7.2.15), Guaranties of lease obligations of non-Loan Parties in respect of leases that are not Capital Leases;

 

provided that the aggregate outstanding amount of Guaranties referred to in the preceding Sections 7.2.3(i) and (iv) by the Parent Company or its domestic Subsidiaries of obligations of foreign Subsidiaries shall not exceed $5,000,000 at any time.

 

7.2.4     Loans and Investments. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time make or suffer to remain outstanding any loan or advance to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership interest (whether general or limited) or limited liability company interest in, or any other investment or interest in, or make any capital contribution to, any other Person, except:

 

(i)     trade credit or investments in the nature of accounts receivable or notes receivable extended to third parties, or trade receivables extended to Subsidiaries, in any case on usual and customary terms in the ordinary course of business;

 

(ii)     loans or advances to employees in the ordinary course of business;

 

(iii)     Permitted Investments;

 

(iv)     loans, advances and investments (other than trade receivables extended on usual and customary terms in the ordinary course of business) by: (A) any Loan Party in or to any other Loan Party; (B) any Subsidiary of the Parent Company that is not a Loan Party in or to any other Subsidiary of the Parent Company that is not a Loan Party; (C) any Subsidiary of the Parent Company that is not a Loan Party in or to any Loan Party, which, if in the form of Indebtedness, is Subordinated Debt; and (D) any Loan Party in or to any Subsidiary of the Parent Company that is not a Loan Party, provided that, in the case of this clause (D), either such loans, advances and investments are (a) set forth on Schedule 7.2.4 attached hereto or (b) in an aggregate amount not to exceed $3,000,000 outstanding at any time;

 

(v)     investments made in connection with Permitted Acquisitions in accordance with Section 7.2.1 [Indebtedness], 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] and/or Section 7.2.9 [Subsidiaries];

 

(vi)     joint ventures, provided that (A) if such joint venture involves the acquisition of ownership interests in, or other creation of, a Subsidiary, then such Subsidiary shall comply with Section 7.2.9 [Subsidiaries] promptly following consummation of such joint venture, (B) the business acquired or otherwise to be conducted by the joint venture shall comply with Section 7.2.10 [Continuation or Change in Business], (C) no Potential Default or Event of Default shall exist immediately prior to and after giving effect to such joint venture and (D) in the case of a joint venture outside the ordinary course of business, the Total Gross Leverage Ratio shall meet the requirements set forth in Section 7.2.6(ii)(d) as applied to the joint venture (rather than a Permitted Acquisition or acquired Person) as demonstrated by a certificate (in form and substance reasonably acceptable to the Lender) delivered by the Borrowers to the Lender at least five (5) Business Days prior to consummating such joint venture;

 


 

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(vii)     promissory notes and other non-cash consideration received in connection with dispositions permitted under Section 7.2.7 [Dispositions of Assets or Subsidiaries];

 

(viii)     investments (including debt obligations and equity interests) received in connection with the bankruptcy or reorganization of third party suppliers and customers or in settlement of delinquent obligations of, or other disputes with, third party customers and suppliers arising in the ordinary course of business or upon the foreclosure with respect to any secured such investment or other transfer of title with respect to any such secured investment; and

 

(ix)     Guaranties permitted under Section 7.2.3 [Guaranties].

 

7.2.5     Dividends and Related Distributions. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, make or pay, or agree to become or remain liable to make or pay, any dividend or other distribution of any nature (whether in cash, property, securities or otherwise) on account of or in respect of its shares of capital stock, partnership interests or limited liability company interests on account of the purchase, redemption, retirement or acquisition of its shares of capital stock (or warrants, options or rights therefor), partnership interests or limited liability company interests, dividends or other distributions payable to another Loan Party except for (a) dividends and distributions from Subsidiaries of the Parent Company to the Parent Company or another Loan Party, (b) only so long as no Potential Default or Event of Default is occurring, regular quarterly dividends of Parent Company to its shareholders in amounts not exceeding $.10 per share, and (c) after prior written notice to the Lender, and only so long as no Potential Default or Event of Default is occurring, an annual special dividend of Parent Company to its shareholders in amounts ranging up to $2.50 per share.

 

7.2.6     Liquidations, Mergers, Consolidations, Acquisitions. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries (other than Immaterial Subsidiaries) to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, or acquire by purchase, lease or otherwise all or substantially all of the assets or capital stock of any other Person other than dispositions of assets or Subsidiaries permitted under Section 7.2.7 [Dispositions of Assets or Subsidiaries]; provided that:

 

(i)     (A) any Loan Party and any Subsidiary of a Loan Party (other than the Borrowers) may consolidate or merge into another Loan Party, and (B) any Subsidiary of the Parent Company that is not a Loan Party may consolidate or merge into a Loan Party or another Subsidiary of the Parent Company that is not a Loan Party, and

 


 

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(ii)     any Loan Party or any Subsidiary thereof may acquire, whether by purchase or by merger, (A) all of the ownership interests of another Person or (B) substantially all of assets of another Person or of a business or division of another Person (each, a “Permitted Acquisition”) provided that each of the following requirements is met for each Permitted Acquisition:

 

(a)     if such Loan Party or Subsidiary is acquiring the ownership interests in such Person, such Person shall comply with the requirements of Section 7.2.9 [Subsidiaries] promptly following such Permitted Acquisition;

 

(b)     the business acquired, or the business conducted by the Person whose ownership interests are being acquired shall comply with Section 7.2.10 [Continuation of or Change in Business];

 

(c)     no Potential Default or Event of Default shall exist immediately prior to and after giving effect to such Permitted Acquisition;

 

(d)     the Pro Forma Operating Leverage Ratio shall not exceed 3.7 to 1.00 and the Borrowers shall have delivered to the Lender a certificate (in form and substance reasonably acceptable to the Lender) demonstrating such compliance, at least five (5) Business Days prior to consummating such Permitted Acquisition; provided, however, that if the trailing twelve (12) month EBITDA of such acquired Person, business or division is not available for purposes of calculating the Pro Forma Operating Leverage Ratio, the Borrowers shall instead deliver to the Lender within such time period the Parent Company’s projections of the expected consolidated pro forma EBITDA of the Borrower, its Subsidiaries and such acquired Person, business or division over the subsequent twelve (12) month period, demonstrating that the consummation of such Permitted Acquisition will not result in a ratio of consolidated Funded Debt of the Borrowers and their Subsidiaries (including any Indebtedness incurred or assumed) to trailing twelve (12) month Consolidated EBITDA that exceeds 3.75 to 1.00; and

 

(e)     the Loan Parties shall deliver to the Lender as soon as available prior to the consummation of a Permitted Acquisition copies of any agreements entered into by such Loan Party or Subsidiary in connection with such Permitted Acquisition and shall deliver to the Lender such other information about such Person or its assets as any Loan Party may reasonably require.

 

7.2.7     Dispositions of Assets or Subsidiaries. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, sell, convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any of its properties or assets, tangible or intangible (including sale, assignment, discount or other disposition of accounts, contract rights, chattel paper, equipment or general intangibles with or without recourse or of capital stock, shares of beneficial interest, partnership interests or limited liability company interests of a Subsidiary of such Loan Party), except:

 

(i)     transactions involving the sale of inventory in the ordinary course of business;

 

(ii)      any sale, transfer or lease of assets in the ordinary course of business which are no longer necessary or required in the conduct of such Loan Party’s or such Subsidiary’s business;

 


 

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(iii)     any sale, transfer or lease of assets by:

 

(A)     any Loan Party to another Loan Party;

 

(B)     any Subsidiary of the Parent Company that is not a Loan Party to another Subsidiary of the Parent Company that is not a Loan Party;

 

(C)     any Subsidiary of the Parent Company that is not a Loan Party to a Loan Party, or any Loan Party to any Subsidiary of the Parent Company that is not a Loan Party, in each case in the ordinary course of business substantially consistent with past practice (“Ordinary Course”);

 

(D)     any Subsidiary of the Parent Company that is not a Loan Party to a Loan Party, outside the Ordinary Course, provided that the consideration paid by such Loan Party (x) must not be greater than fair market value of the assets sold, transferred or leased, (y) if paid as Indebtedness, is permitted under Section 8.2.1 [Indebtedness], and (z) either (I) when added with the outstanding loans, investments and advances made by Loan Parties in Subsidiaries of the Parent Company that are not Loan Parties pursuant to Section 7.2.4(iv)(D) (not including those set forth on Schedule 7.2.4), does not exceed $3,000,000 in the aggregate at any time or (II) is set forth on Schedule 7.2.4; and

 

(E)     any Loan Party to any Subsidiary of the Parent Company that is not a Loan Party, outside the Ordinary Course, provided that the consideration paid by such Subsidiary (x) must not be less than fair market value of such sold, transferred or leased assets, and, if paid as Indebtedness, is permitted under Section 7.2.1 [Indebtedness], and (y) when added with the outstanding loans, investments and advances made by Loan Parties in Subsidiaries of the Parent Company that are not Loan Parties pursuant to Section 7.2.4(iv)(D), does not exceed $5,000,000 in the aggregate;

 

(iv)     any sale, transfer or lease of assets in the ordinary course of business which are replaced by substitute assets acquired or leased;

 

(v)     sales, transfers, leases or other dispositions of assets of Immaterial Subsidiaries;

 

(vi)     dividends and distributions permitted by Section 7.2.5 [Dividends and Related Distributions];

 

(vii)     investments, advances and loans permitted by Section 7.2.4 [Loans and Investments]; and

 

(viii)     assignments, licenses and sublicenses of intellectual property in the ordinary course of business.

 

7.2.8     Affiliate Transactions. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, enter into or carry out any transaction with any Affiliate of any Loan Party (including purchasing property or services from or selling property or services to any Affiliate of any Loan Party or other Person) unless such transaction (a) is not otherwise prohibited by this Agreement, (b) is in accordance with all applicable Law, and (c) either is entered into with a Loan Party or, if entered into with a non-Loan Party, is entered into in the ordinary course of business upon fair and reasonable arm’s-length terms.

 


 

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7.2.9     Subsidiaries. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, own or create directly or indirectly any Subsidiary other than:

 

(i)     any domestic Subsidiary, not designated as an Immaterial Domestic Subsidiary, existing as of the Closing Date which has joined the Loan Documents as a Guarantor as of the Closing Date (including any domestic Subsidiary that the Lender and Borrowers agree in accordance with this Section 7.2.9 after the Closing Date will no longer be designated as an “Immaterial Domestic Subsidiary”);

 

(ii)     any Immaterial Domestic Subsidiary or Immaterial Foreign Subsidiary (including any Subsidiary that the Lender and Borrowers agree in accordance with this Section 7.2.9 to designate as an “Immaterial Domestic Subsidiary” or “Immaterial Foreign Subsidiary,” as the case may be);

 

(iii)     any Foreign Subsidiary, existing as of the Closing Date, as to which 65% of all issued and outstanding equity interests of such Foreign Subsidiary is pledged to the Lender under the Pledge Agreement, including delivery to the Lender of documents necessary to grant and perfect Prior Security Interests to the Lender in equity interests of such Foreign Subsidiary under U.S. law, all of which is satisfactory in form and substance to the Lender;

 

(iv)     any domestic Subsidiary (other than any domestic Subsidiary that the Lender and Borrowers agree in accordance with this Section 7.2.9 will be designated as an “Immaterial Domestic Subsidiary”) created or acquired after the Closing Date which joins the Loan Documents as a Guarantor by delivering to the Lender a signed Guarantor Joinder and other documents in the forms described in Section 6.1 [First Loans] modified as appropriate and in form and substance satisfactory to the Lender; or

 

(v)     any Foreign Subsidiary created or acquired after the Closing Date, as to which 65% of all issued and outstanding equity interests of such Foreign Subsidiary is pledged to the Lender under the Pledge Agreement, including delivery to the Lender of documents necessary to grant and perfect Prior Security Interests to the Lender in equity interests of such Foreign Subsidiary under U.S. law and the laws of its jurisdiction if so required by Lender, all of which is satisfactory in form and substance to the Lender, provided that Lender shall not require perfection in such foreign jurisdiction to the extent (i) such pledge would be unlawful under applicable Law, and (ii) in the reasonable discretion of the Lender (in consultation with the Borrowers), the costs and burdens of obtaining such pledge are excessive in relation to the value of the security being afforded by such pledge; provided that the designation of any Subsidiary as an Immaterial Subsidiary shall be made by agreement among the Borrowers and Lender in writing, with the understanding that any Subsidiary that materially contributes to the overall assets or revenues of the Borrowers and their Subsidiaries, as reasonably determined by the Lender, will not be designated as an Immaterial Subsidiary.

 


 

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7.2.10     Continuation of or Change in Business. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, engage in any business if, as a result, the general nature of the business in which the Loan Parties and their Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which the Loan Parties and their Subsidiaries, taken as a whole, are engaged on the Closing Date.

 

7.2.11     Fiscal Year. Each Borrower shall not, and shall not permit any Subsidiary of the Borrowers to, change its fiscal year from the twelve-month period ending the Sunday nearest to the last day of February, or the last day of February, for each calendar year, without providing at least thirty (30) days’ prior written notice to the Lender.

 

7.2.12     Changes in Organizational Documents. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, amend in any respect its certificate of incorporation (including any provisions or resolutions relating to capital stock), by-laws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents without, if such change would be materially adverse to the Lender, providing at least thirty (30) days’ prior written notice to the Lender. Notwithstanding the foregoing, if any Loan Party as a grantor under the Pledge Agreement changes its jurisdiction of organization from that listed on Schedule 5.1.2 or anyone other than such Loan Party as a grantor under the Pledge Agreement comes to own any equity interests pledged under the Pledge Agreement or if any new equity interests (whether by increase of amount or creation of a new class or type, or otherwise) in any issuer referenced in the Pledge Agreement exist, Borrowers shall provide Lender with immediate written notice thereof and promptly deliver such documents, instruments or certificates as Lender may require to perfect or continue perfection of its Lien pursuant to the Pledge Agreement and promptly take any other actions required pursuant to the Pledge Agreement.

 

7.2.13     Total Gross Leverage Ratio. The Loan Parties shall not permit the ratio of Funded Debt of the Borrowers and their consolidated Subsidiaries minus $10,000,000 to Consolidated EBITDA, calculated as of the end of each fiscal quarter for the four (4) immediately preceding fiscal quarters, beginning with the fiscal quarter first ending after the Closing Date and continuing thereafter, to exceed 3.75 to 1.00 (the “Total Gross Leverage Ratio”). 

 

7.2.14     Minimum Fixed Charge Coverage Ratio. The Loan Parties shall not permit the Fixed Charge Coverage Ratio of the Borrowers and their consolidated Subsidiaries, calculated as of the end of each fiscal quarter for the four (4) immediately preceding fiscal quarters, beginning with the fiscal quarter first ending after the Closing Date and continuing thereafter, to be less than 1.10 to 1.00. 

 

7.2.15     Minimum Domestic Liquid Assets; Quick Ratio. The Loan Parties covenant and agree that (A) they shall not, and shall not permit the Borrowers and their consolidated Subsidiaries to maintain for the Borrowers and their consolidated Subsidiaries less than an aggregate of $10,000,000 in cash held at all times in a domestic deposit account with the Lender titled in the name of, and under enforceable ownership of, the Parent Company, and (B) they and their consolidated Subsidiaries shall maintain, on a consolidated basis the ratio of (i) cash plus cash equivalents plus marketable securities minus deferred income tax (owed on repatriated funds) plus accounts receivable to (ii) current liabilities plus Indebtedness hereunder, to be calculated as of the end of each fiscal quarter, beginning with the fiscal quarter first ending after the Closing Date and continuing thereafter, to exceed 2.00 to 1.00.

 


 

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7.2.16     Negative Pledges. Each of the Loan Parties covenants and agrees that it shall not, and shall not permit any of its Subsidiaries to, enter into any Agreement with any Person which, in any manner, whether directly or contingently, prohibits, restricts or limits the right of any of the Loan Parties from granting any Liens to the Lender.

 

7.2.17     Use of Proceeds. The Loan Parties will not, directly or indirectly, use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds to any Subsidiary of any of the Loan Parties, joint venture partner or other Person, (i) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of Sanctions or (ii) in any other manner that would result in a violation of Sanctions by any Person (including any Person participating in the Loans, whether as underwriter, advisor, investor or otherwise).

 

7.2.18     Anti-Bribery. No part of the proceeds of the Loans will be used, directly or indirectly, for any payments that could constitute a violation of any applicable anti-bribery law.

 

7.3     Reporting Requirements. The Loan Parties will furnish or cause to be furnished to the Lender:

 

7.3.1     Quarterly Financial Statements. As soon as available and in any event within sixty (60) calendar days after the end of each of the first three fiscal quarters in each fiscal year of the Borrowers, financial statements of the Parent Company and its Subsidiaries (including Borrowers), prepared by management, consisting of a consolidated balance sheet as of the end of such fiscal quarter and related consolidated statement of income for the fiscal quarter then ended and the fiscal year through that date, as well as a consolidated statement of cash flows for the fiscal year through that date, all in reasonable detail and reviewed by independent certified public accountants of nationally recognized standing reasonably satisfactory to the Lender and certified by an officer of the Parent Company as presenting fairly (subject to normal year-end audit adjustments), in all material respects, the financial position of the companies being reported upon, and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year having been prepared in conformity with GAAP. Delivery within the time period specified above of copies of the Parent Company’s Quarterly Report on Form 10-Q prepared in compliance with the requirements thereunder and filed with the SEC shall be deemed to satisfy the requirements of this Section.

 


 

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7.3.2     Annual Financial Statements.

 

7.3.2.1     Consolidated Financial Statements. As soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year of the Borrowers, financial statements of the Parent Company and its Subsidiaries (including Borrowers), consisting of a consolidated balance sheet as of the end of such fiscal year, and related consolidated statement of income and stockholders’ equity and statement of cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified public accountants of nationally recognized standing reasonably satisfactory to the Lender as presenting fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and having been prepared in conformity with GAAP. Delivery within the time period specified above of copies of the Parent Company’s Annual Report on Form 10-K prepared in compliance with the requirements thereunder and filed with the SEC shall be deemed to satisfy the requirements of this Section; and

 

7.3.2.2     Consolidating Financial Statements. As soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year of the Borrowers, financial statements of the Parent Company and its Subsidiaries (including Borrowers) consisting of a consolidating balance sheet as of the end of such fiscal year, and related consolidating statement of income and stockholders’ equity and statement of cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified (subject to normal year-end audit adjustments) by an Authorized Officer of the Borrowers as having been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year.

 

7.3.3     Certificates of the Borrowers. Concurrently with the financial statements of the Borrowers furnished to the Lender pursuant to Sections 7.3.1 [Quarterly Financial Statements] and 7.3.2 [Annual Financial Statements], a certificate of the Borrowers signed by an Authorized Officer of the Borrowers in the form of Exhibit 7.3.3 (each a “Compliance Certificate”).

 

7.3.4     Notices. Borrowers shall deliver to the Lender the following notices and reports:

 

7.3.4.1     Default. Promptly after any officer of any Loan Party has learned of the occurrence of an Event of Default or Potential Default, a certificate signed by an Authorized Officer setting forth the details of such Event of Default or Potential Default and the action which such Loan Party proposes to take with respect thereto.

 

7.3.4.2     Litigation. Promptly after the commencement thereof, notice of any action, suit, proceeding or investigation before or by any Official Body or any other Person against any Loan Party or Subsidiary of any Loan Party which relate to the Collateral or which if adversely determined would constitute a Material Adverse Change.

 

7.3.5     Organizational Documents. If any amendment to the organizational documents of any Loan Party is required to be delivered to Lender pursuant to Section 7.2.12, within the time limits set forth in Section 7.2.12 [Changes in Organizational Documents].

 


 

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7.3.5.1     Erroneous Financial Information. Promptly and in any event within five (5) Business Days in the event that the Borrowers or their accountants conclude or advise that any previously issued financial statement, audit report or interim review should no longer be relied upon or that disclosure should be made or action should be taken to prevent future reliance.

 

7.3.5.2     ERISA Event. Promptly upon the occurrence of any ERISA Event with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party or any Subsidiary of a Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $2,250,000.

 

7.3.5.3     Other Reports. Promptly upon their becoming available to the Borrowers:

 

(i)     Financial Projections. If the Parent Company hereafter ceases to be publicly traded on a U.S. stock exchange, within sixty (60) days after commencement of each fiscal year of the Parent Company, the annual projections of the Parent Company and its Subsidiaries for the then-current fiscal year.

 

(ii)     Material Management Letters. Any material reports, including material management letters, submitted to the Borrowers by independent accountants in connection with any annual, interim or special audit.

 

(iii)     Other Material Information. A copy of each material public filing as to any Loan Party or their Subsidiaries (or notice of the filing thereof on EDGAR), and such other reports and information as the Lender may from time to time reasonably request.

 

8.     DEFAULT

 

8.1     Events of Default. An Event of Default shall mean the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law):

 

8.1.1     Payments under Loan Documents. The Borrowers shall fail to pay any principal of any Loan (including scheduled installments, mandatory prepayments or the payment due at maturity) or Reimbursement Obligation or any interest on any Loan or Reimbursement Obligation or any other amount owing hereunder or under the other Loan Documents on the date on which such principal, interest or other amount becomes due in accordance with the terms hereof or thereof; provided, however, that the Borrowers shall have a grace period of two (2) Business Days for the payment of amounts owing hereunder or under the other Loan Documents other than principal;

 

8.1.2     Breach of Warranty. Any representation or warranty made at any time by any of the Loan Parties herein or by any of the Loan Parties in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect as of the time it was made or furnished;

 


 

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8.1.3     Breach of Negative Covenants or Visitation Rights. Any of the Loan Parties shall default in the observance or performance of any covenant contained in Section 7.1.5 [Visitation Rights] or Section 7.2 [Negative Covenants];

 

8.1.4     Breach of Other Covenants. Any of the Loan Parties shall default in the observance or performance of any other covenant, condition or provision hereof or of any other Loan Document and such default shall continue unremedied for a period of thirty (30) days (provided that no such grace period shall apply to Sections 7.3.1 [Quarterly Financial Statements], 7.3.2 [Annual Financial Statements] and 7.3.3 [Certificates of Borrowers]);

 

8.1.5     Defaults in Other Agreements or Indebtedness. A default or event of default shall occur at any time under the terms of any other agreement involving borrowed money or the extension of credit or any other Indebtedness under which any Loan Party or Subsidiary of any Loan Party may be obligated as a borrower or guarantor in excess of $2,250,000 in the aggregate, and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any Indebtedness when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of any such Indebtedness (whether or not such right shall have been waived) or the termination of any commitment to lend;

 

8.1.6     Final Judgments or Orders. Any final judgments or orders for the payment of money in excess of $2,250,000 in the aggregate, not covered by insurance, shall be entered against any Loan Party or any Subsidiary of a Loan Party by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of thirty (30) days from the date of entry;

 

8.1.7     Loan Document Unenforceable. Any of the Loan Documents shall cease to be legal, valid and binding agreements enforceable against the party executing the same or such party’s successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof or shall in any way be terminated (except in accordance with its terms) or become or be declared ineffective or inoperative or shall in any way be challenged or contested or cease to give or provide the respective Liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby;

 

8.1.8     Uninsured Losses; Proceedings against Assets. There shall occur any uninsured damage to or loss, theft or destruction of any of the assets or properties of a Loan Party or any Subsidiary of a Loan Party that constitutes a Material Adverse Change, or any of the Loan Parties’ or any of their Subsidiaries’ assets with a fair market value of $2,250,000 or greater are attached, seized, levied upon or subjected to a writ or distress warrant; or such come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and the same is not cured within thirty (30) days thereafter;

 

8.1.9     Events Relating to Plans and Benefit Arrangements. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in the liability of any Loan Party or any Subsidiary of a Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $2,250,000, or (ii) any Loan Party or any Subsidiary of a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $2,250,000;

 


 

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8.1.10     Change in Control. If any Change in Control shall occur; and 

 

8.1.11     Relief Proceedings. (i) A Relief Proceeding shall have been instituted against any Loan Party or Subsidiary of a Loan Party and such Relief Proceeding shall remain undismissed or unstayed and in effect for a period of thirty (30) consecutive days or a court shall enter a decree or order granting any of the relief sought in such Relief Proceeding, (ii) any Loan Party or Subsidiary of a Loan Party institutes, or takes any action in furtherance of, a Relief Proceeding, or (iii) any Loan Party or any Subsidiary of a Loan Party (other than an Immaterial Subsidiary) ceases to be Solvent or admits in writing its inability to pay its debts as they mature.

 

8.2     Consequences of Event of Default.

 

8.2.1     Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings. If an Event of Default specified under Sections 8.1.1 through 8.1.11 shall occur and be continuing, the Lender shall be under no further obligation to make Loans or under no obligation to issue Letters of Credit and the Lender may (i) by written notice to the Borrowers, declare the unpaid principal amount of the Note then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the Lender hereunder and thereunder to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to the Lender without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, and (ii) require the Borrowers to, and the Borrowers shall thereupon, deposit in a non-interest-bearing account with the Lender, as cash collateral for its Obligations under the Loan Documents, an amount equal to the maximum amount currently or at any time thereafter available to be drawn on all outstanding Letters of Credit, and the Borrowers hereby pledge to the Lender, and grant to the Lender a security interest in, all such cash as security for such Obligations.

 

8.2.2     Bankruptcy, Insolvency or Reorganization Proceedings. If an Event of Default specified under Section 8.1.12 [Relief Proceedings] shall occur, the Lender shall be under no further obligations to make Loans hereunder and shall be under no obligation to issue Letters of Credit and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the Lender hereunder and thereunder shall be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived.

 

8.2.3     Set-off. If an Event of Default shall have occurred and be continuing, the Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Lender or any such Affiliate to or for the credit or the account of any Loan Party against any and all of the Obligations of such Loan Party now or hereafter existing under this Agreement or any other Loan Document to the Lender or Affiliate, irrespective of whether or not the Lender or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such Obligations of such Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of the Lender different from the branch or office holding such deposit or obligated on such Indebtedness. The rights of the Lender and its Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that the Lender or its Affiliates may have. The Lender agrees to notify the Borrowers promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

 


 

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8.2.4     Application of Proceeds. From and after the date on which the Lender has taken any action pursuant to this Section 8.2 and until all Obligations of the Loan Parties have been paid in full, any and all proceeds received by the Lender from any sale or other disposition of any Collateral, or any part thereof, or the exercise of any other remedy by the Lender, shall be applied as follows:

 

(i)     first, to reimburse the Lender for out-of-pocket costs, expenses and disbursements, including reasonable attorneys’ fees and expenses, incurred by the Lender in connection with realizing on any Collateral or collection of any Obligations of any of the Loan Parties under any of the Loan Documents, including advances made by the Lender for the reasonable maintenance, preservation, protection or enforcement of, or realization upon, any Collateral, including advances for taxes, insurance, repairs and the like and reasonable expenses incurred to sell or otherwise realize on, or prepare for sale or other realization on, any Collateral;

 

(ii)     second, to the repayment of all Obligations then due and unpaid of the Loan Parties to the Lender or its Affiliates incurred under this Agreement or any of the other Loan Documents or agreements evidencing any Lender Provided Interest Rate Hedge or Other Lender Provided Financial Services Obligations, whether of principal, interest, fees, expenses or otherwise and to cash collateralize the Letter of Credit Obligations, in such manner as the Lender may determine in its discretion; and

 

(iii)     the balance, if any, to the Loan Parties or as otherwise required by Law.

 

9.     MISCELLANEOUS

 

9.1     Modifications, Amendments or Waivers. The Lender and the Borrowers, on behalf of the Loan Parties, may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of the Lender or the Loan Parties hereunder or thereunder, or may grant written waivers or consents hereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Loan Parties and the Lender.

 

9.2     No Implied Waivers; Cumulative Remedies. No course of dealing and no delay or failure of the Lender in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any further exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of the Lender under this Agreement and any other Loan Documents are cumulative and not exclusive of any rights or remedies which it would otherwise have.

 


 

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9.3     Expenses; Indemnity; Damage Waiver.

 

9.3.1     Costs and Expenses. The Borrowers shall pay (i) all out-of-pocket expenses incurred by the Lender and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Lender), and shall pay all reasonable fees and time charges and disbursements for attorneys who may be employees of the Lender, in connection with the participation of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all out-of-pocket expenses incurred by the Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all out-of-pocket expenses incurred by the Lender (including the reasonable fees, charges and disbursements of any counsel for the Lender), and shall pay all reasonable fees and time charges for attorneys who may be employees of the Lender in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, and (iv) all reasonable out-of-pocket expenses of the Lender’s regular employees and agents engaged periodically, in accordance with Section 7.1.5, to perform audits of the Loan Parties’ books, records and business properties. Notwithstanding the foregoing, the Borrowers shall be responsible for allocated costs of internal counsel only during a post-Event of Default out-of-court restructuring or after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to a Loan Party.

 

9.3.2     Indemnification by the Borrowers. The Borrowers shall jointly and severally indemnify and defend the Lender (and any agent thereof) and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance or nonperformance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) breach of representations, warranties or covenants of the Borrowers under the Loan Documents, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, including any such items or losses relating to or arising under Environmental Laws or pertaining to environmental matters, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by any Borrower or any other Loan Party against an Indemnitee for breach in bad faith of Lender’s or such Indemnitee’s obligations hereunder or under any other Loan Document, if such Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. This Section 9.3.2 [Indemnification by the Borrowers] shall not apply with respect to Taxes other than Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

 


 

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If any such claim or action shall be brought against any Indemnitee, such Indemnitee shall notify the Borrowers thereof, and the Borrowers shall be entitled to participate in the defense against such claim, though all aspects of the defense shall be principally managed by counsel selected by the Lender or such Indemnitee (with the understanding that Lender and any other Indemnities will not retain duplicative counsel for their representation, unless there are conflicts necessitating separate counsel). Notwithstanding the foregoing, the Borrowers, Lender and such Indemnitee may agree, in their discretion, in writing to share a single counsel in any such claim or action, on such terms and conditions as they may establish at such time.

 

Notwithstanding the foregoing, the Borrowers shall be responsible for allocated costs of internal counsel only during a post-Event of Default out-of-court restructuring or after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to a Loan Party.

 

9.3.3     Waiver of Consequential Damages, etc. To the fullest extent permitted by applicable Law, each Indemnitee and each Loan Party shall not assert, and hereby waives, any claim against any Indemnitee or any Loan Party (as applicable), on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in Section 9.3.2 [Indemnification by Borrowers] shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it, other than through gross negligence or willful misconduct, through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

 

9.3.4     Payments. All amounts due under this Section shall be payable not later than ten (10) Business Days after demand therefor.

 


 

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9.4     Holidays. Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day, such payment shall be due on the next Business Day (except as provided in Section 3.2 [Interest Periods]) and such extension of time shall be included in computing interest and fees, except that the Loans shall be due on the Business Day preceding the Expiration Date if the Expiration Date is not a Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.

 

9.5     Notices; Effectiveness; Electronic Communication.

 

9.5.1     Notices Generally. Except as provided in Section 9.5.2 [Electronic Communications]), all notices and other communications provided for herein shall be in writing and shall be delivered by (a) hand, (b) overnight courier service, (c) certified or registered mail, return receipt requested, or (d) telecopy to the applicable party hereto with electronic confirmation of receipt, at its address set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section 9.5.1.

 

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopy shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in Section 9.5.2 [Electronic Communications], shall be effective as provided in such Section.

 

     (A)     If to Lender:                          HSBC Bank USA, National Association

534 Broadhollow Road, Suite 130

Melville, New York 11747

Attention: Jose L. Won

Telephone: (631) 752-4361

Facsimile: (631) 752-4340

 

With a copy to:                    Schnader Harrison Segal & Lewis LLP

140 Broadway, Suite 3100

New York, New York 10005-1101

Attention: Richard G. Satin, Esq.

Telephone:   (212) 973-8060

Facsimile:      (212) 973-8798

 

     (B)     If to Borrower                         Park Electrochemical Corp.

48 South Service Road

Melville, New York 11747

Attention: P. Matthew Farabaugh, VP and CFO

Telephone:    (631) 465-3625

Facsimile:      (631) 465-3100     

 


 

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9.5.2     Electronic Communications. Notices and other communications to the Lender hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Lender. The Lender or the Borrowers may, in their discretion, agree to accept notices and other communications to them hereunder by electronic communications pursuant to procedures approved by them; provided that approval of such procedures may be limited to particular notices or communications. Unless the Lender otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt or an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

 

9.5.3     Change of Address, etc. Any party hereto may change its address, e-mail address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.

 

9.6     Severability. The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

 

9.7     Duration; Survival. All representations and warranties of the Loan Parties contained herein or made in connection herewith shall survive the execution and delivery of this Agreement, the completion of the transactions hereunder and Payment In Full. All covenants and agreements of the Loan Parties contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in the Note, Section 5 [Payments] and Section 9.3 [Expenses; Indemnity; Damage Waiver], shall survive Payment In Full. All other covenants and agreements of the Loan Parties shall continue in full force and effect from and after the date hereof and until Payment In Full.

 

9.8     Successors and Assigns.

 

9.8.1     Successors and Assigns Generally. The provisions of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns permitted hereby, except that neither any Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lender and the Lender may not assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 9.8.2 [Assignments by Lender], (ii) by way of participation in accordance with the provisions of Section 9.8.3 [Participations], or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 9.8.4 [Certain Pledges; Successors and Assigns Generally] (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 9.8.3 [Participations] and, to the extent expressly contemplated hereby, the Related Parties of the Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 


 

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9.8.2     Assignments by Lender. The Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Revolving Credit Commitment and the Loans at the time owing to it). Any assignment by the Lender under this Section 9.8.2 when no Event of Default has occurred and is continuing shall be subject to the Borrowers’ consent (not to be unreasonably withheld); provided, however, that if the Lender has requested Borrowers’ consent and no consent (or refusal to provide consent) has been received within ten (10) days, such consent shall be deemed granted.

 

9.8.3     Participations. The Lender may at any time, without the consent of, or notice to, the Borrowers, sell participations to any Person (other than a natural person or any Borrower or any of the Borrowers’ Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of the Lender’s rights and/or obligations under this Agreement (including all or a portion of its Revolving Credit Commitment and/or the Loans owing to it); provided that (i) the Lender’s obligations under this Agreement shall remain unchanged, (ii) the Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers and the Lender shall continue to deal solely and directly with the Lender in connection with the Lender’s rights and obligations under this Agreement.

 

9.8.4     Certain Pledges. The Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of the Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release the Lender from any of its obligations hereunder or substitute any such pledgee or assignee for the Lender as a party hereto.

 

9.9     Confidentiality.

 

9.9.1     General. The Lender agrees to maintain the confidentiality of the Information, except that Information may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives who need to know such Information (the “Shared Affiliates”), (ii) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (iii) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (iv) to any other party hereto, (v) to the extent required in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (vii) with the consent of the Borrowers or (viii) to the extent such Information (X) becomes publicly available other than as a result of a breach of this Section or (Y) becomes available to the Lender or any of its Affiliates on a nonconfidential basis from a source other than the Borrowers or the other Loan Parties, which source the Lender or its applicable Affiliates are not actually aware to be bound by an obligation of confidentiality. If any disclosure is made pursuant to clause (i) above of this Section to any Shared Affiliate, such Shared Affiliates are obligated to maintain the confidential nature of such Information the same as Lender is pursuant to this Section and, if requested by the Borrowers, shall reasonably confirm said obligation in writing. The Lender acknowledges that it has developed compliance procedures regarding the use of material non-public information and it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Lender shall be responsible for any disclosure of Information by Shared Affiliates or any Persons contemplated by clause (vi) above.

 


 

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9.9.2     Sharing Information with Affiliates of the Lender. Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to one or more Borrowers or one or more of their Affiliates (in connection with this Agreement or otherwise) by the Lender or by one or more Subsidiaries or Affiliates of the Lender, and each of the Loan Parties hereby authorizes the Lender to share any information delivered to the Lender by such Loan Party and its Subsidiaries pursuant to this Agreement to any such Subsidiary or Affiliate subject to the provisions of Section 9.9.1 [General].

 

9.10     Counterparts; Integration; Effectiveness.

 

9.10.1     Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Lender, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof including any prior confidentiality agreements and commitments. Except as provided in Section 6 [Conditions of Lending and Issuance of Letters of Credit], this Agreement shall become effective when it shall have been executed by the Lender and when the Lender shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or e-mail shall be as effective as delivery of a manually executed counterpart of this Agreement.

 


 

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9.11     CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF JURY TRIAL.

 

9.11.1     Governing Law. This Agreement shall be deemed to be a contract under the Laws of the State of New York without regard to its conflict of laws principles. Each standby Letter of Credit issued under this Agreement shall be subject either to the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the “ICC”) at the time of issuance (“UCP”) or the rules of the International Standby Practices (ICC Publication Number 590), as determined by the Lender, and each trade Letter of Credit shall be subject to UCP, and in each case to the extent not inconsistent therewith, the Laws of the State of New York (including for such purpose Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York) without regard to is conflict of laws principles.

 

9.11.2     SUBMISSION TO JURISDICTION. EACH BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK, COUNTY OF NEW YORK (MANHATTAN BOROUGH) IN THE STATE OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

9.11.3     WAIVER OF VENUE. EACH BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION 9.11. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT TO ASSERT ANY SUCH DEFENSE.

 

9.11.4     SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION]. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 


 

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9.11.5     WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, LENDER OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.

 

 

 

[Signature Pages Follow]

 


 

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BORROWER:

 

PARK ELECTROCHEMICAL CORP.

 

By:        ___________________________

Name:   P. Matthew Farabaugh

Title:     Vice President and CFO

 

GUARANTORS:

 

NELCO PRODUCTS, INC.

 

By:        ___________________________

Name:   P. Matthew Farabaugh

Title:     Treasurer

 

NELTEC, INC.

 

By:        ____________________________

Name:   P. Matthew Farabaugh

Title:     Treasurer

 

PARK AEROSPACE TECHNOLOGIES CORP.

 

By:        ____________________________

Name:   P. Matthew Farabaugh

Title:     Treasurer

 

LENDER:

 

HSBC BANK USA, NATIONAL ASSOCIATION

 

By:        ____________________________

Name:   Jose L. Won

Title:     Vice President

 


 






 


 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment”), dated as of March 11, 2016, by and among PARK ELECTROCHEMICAL CORP., a New York corporation (“Borrower”), and HSBC BANK USA, NATIONAL ASSOCIATION (“Lender”).

 

RECITALS

 

A.     WHEREAS, Borrower, each of the Guarantors party thereto and Lender are parties to that certain Credit Agreement dated as of January 15, 2016 and effective as of January 26, 2016 (the “Credit Agreement”); and

 

B.     WHEREAS, as provided in Section 9.1 of the Credit Agreement, the Credit Agreement may be amended by a written instrument signed and delivered by Borrower and Lender. 

 

NOW, THEREFORE, in consideration of and subject to the mutual agreements, terms and conditions herein contained, Borrower and Lender agree as follows:

 

1.     Defined Terms. All capitalized terms used in this Amendment and not defined in this Amendment shall have the meanings ascribed thereto in the Credit Agreement.

 

2.     Amendment to Credit Agreement. Section 7.2.5(b) of the Credit Agreement is hereby amended by deleting the words and figures “$.10 per share” in such section and inserting, in lieu thereof, “$.12 per share.”

 

3.     Representations and Warranties of Borrower. Borrower represents and warrants that, as of the Amendment Effective Date (as hereafter defined) and the date hereof:

 

3.1     this Amendment is a legal, valid and binding obligation of each of the Borrower and the Guarantors enforceable against the Borrower and the Guarantors in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors' rights generally and to general principles of equity; 

 

3.2     the representations and warranties of the Loan Parties set forth in the Credit Agreement are true and correct in all material respects (except for those representations and warranties that are qualified by reference to materiality, which are true and correct in all respects);

 

3.3     no Material Adverse Change has occurred since March 1, 2015; and

 

3.4     no Event of Default or Potential Default exists.

 

4.     Conditions to Effectiveness. This Amendment shall become effective upon satisfaction of each of the following conditions (such date, the “Amendment Effective Date”):

 

4.1 Lender shall have received a copy of this Amendment duly executed and delivered by Borrower; and 

 


 

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4.2 Schnader Harrison Segal & Lewis LLP shall have received in good and immediately available funds $945.00 for legal fees incurred on behalf of Lender.

 

5.     Reference to and Effect upon the Loan Documents.

 

5.1        The Credit Agreement and the other Loan Documents shall remain in full force and effect, as amended hereby, and are hereby ratified and confirmed.

 

5.2        Except as otherwise expressly set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Credit Agreement or any other Loan Document, nor constitute a waiver or amendment of any provision of the Credit Agreement or any other Loan Document, except as specifically set forth herein. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby.

 

6.     GOVERNING LAW. THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTION 51401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

 

7.     Ratification of Liability: Acknowledgment of Rights. Borrower hereby ratifies and confirms its liabilities, obligations and agreements under the Credit Agreement and the other Loan Documents and acknowledges that: (i) it has no defenses, claims or set-offs to the enforcement by Lender of such liabilities, obligations and agreements through and as of the date hereof; (ii) Lender has fully performed all undertakings owed to Borrower and Guarantors through and as of the date hereof; and (iii) except as otherwise expressly set forth herein, Lender does not waive, diminish or limit any term or condition contained in the Credit Agreement or in any of the other Loan Documents.

 

8.     Headings. The headings contained in this Amendment are for convenience only and shall not affect the construction of this Amendment.

 

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IN WITNESS WHEREOF, Borrower and Lender have executed and delivered this Amendment as of the Amendment Effective Date.

 

	
 
	
BORROWER:

	
 
	
 

	
 
	
PARK ELECTROCHEMICAL CORP. 

	 	 
	 	By: 	 	 
	 	Name:   P. Matthew Farabaugh	 
	 	Title:     Vice President and CFO
	 	 
	 	
LENDER:

	 	 
	 	
HSBC BANK USA, NATIONAL 

ASSOCIATION

	 	 
	 	
By:     
	 	 
	 	Name:   Jose L. Won
	 	
Title:     Vice President



 


 

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AMENDMENT NO. 2 TO CREDIT AGREEMENT

 

AMENDMENT NO. 2 TO CREDIT AGREEMENT (this “Amendment”), dated as of April 5, 2016, by and among PARK ELECTROCHEMICAL CORP., a New York corporation (“Borrower”), and HSBC BANK USA, NATIONAL ASSOCIATION (“Lender”).

 

RECITALS

 

A.     WHEREAS, Borrower, each of the Guarantors party thereto and Lender are parties to that certain Credit Agreement dated as of January 15, 2016 and effective as of January 26, 2016 as amended by Amendment No. 1 to Credit Agreement dated as of March 11, 2016 (as so amended, the “Credit Agreement”); and

 

B.     WHEREAS, as provided in Section 9.1 of the Credit Agreement, the Credit Agreement may be amended by a written instrument signed and delivered by Borrower and Lender. 

 

NOW, THEREFORE, in consideration of and subject to the mutual agreements, terms and conditions herein contained, Borrower and Lender agree as follows:

 

1.     Defined Terms. All capitalized terms used in this Amendment and not defined in this Amendment shall have the meanings ascribed thereto in the Credit Agreement.

 

2.     Amendment to Credit Agreement. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of “Fixed Charge Coverage Ratio” in such section in its entirety and inserting, in lieu thereof, the following: 

 

“Fixed Charge Coverage Ratio” for any period shall mean the ratio of (i) Consolidated EBITDA, less cash taxes, less cash interest expense, less unfunded capital expenditures, less cash dividends, less share repurchases subsequent to the Closing Date to (ii) the sum of Current Maturities, plus interest expense; provided, however, stock buybacks not to exceed the greater (acquisition value) of 500,000 shares or $8,000,000 in the aggregate subsequent to the Closing Date and capital expenditures not to exceed $17,000,000 for a plant expansion subsequent to the Closing Date shall be excluded.

 

3.     Representations and Warranties of Borrower. Borrower represents and warrants that, as of the Amendment Effective Date (as hereafter defined) and the date hereof:

 

3.1     this Amendment is a legal, valid and binding obligation of each of the Borrower and the Guarantors enforceable against the Borrower and the Guarantors in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors' rights generally and to general principles of equity; 

 

3.2     the representations and warranties of the Loan Parties set forth in the Credit Agreement are true and correct in all material respects (except for those representations and warranties that are qualified by reference to materiality, which are true and correct in all respects);

 

3.3     no Material Adverse Change has occurred since March 1, 2015; and

 


 

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3.4     no Event of Default or Potential Default exists.

 

4.     Conditions to Effectiveness. This Amendment shall become effective upon satisfaction of each of the following conditions (such date, the “Amendment Effective Date”):

 

4.1 Lender shall have received an originally signed copy of this Amendment duly executed and delivered by Borrower; and 

 

4.2 Schnader Harrison Segal & Lewis LLP shall have received in good and immediately available funds $1,500 for legal fees incurred on behalf of Lender.

 

5.     Reference to and Effect upon the Loan Documents.

 

5.1        The Credit Agreement and the other Loan Documents shall remain in full force and effect, as amended hereby, and are hereby ratified and confirmed.

 

5.2        Except as otherwise expressly set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Credit Agreement or any other Loan Document, nor constitute a waiver or amendment of any provision of the Credit Agreement or any other Loan Document, except as specifically set forth herein. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby.

 

6.     GOVERNING LAW. THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTION 51401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

 

7.     Ratification of Liability: Acknowledgment of Rights. Borrower hereby ratifies and confirms its liabilities, obligations and agreements under the Credit Agreement and the other Loan Documents and acknowledges that: (i) it has no defenses, claims or set-offs to the enforcement by Lender of such liabilities, obligations and agreements through and as of the date hereof; (ii) Lender has fully performed all undertakings owed to Borrower and Guarantors through and as of the date hereof; and (iii) except as otherwise expressly set forth herein, Lender does not waive, diminish or limit any term or condition contained in the Credit Agreement or in any of the other Loan Documents.

 

8.     Headings. The headings contained in this Amendment are for convenience only and shall not affect the construction of this Amendment.

 

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IN WITNESS WHEREOF, Borrower and Lender have executed and delivered this Amendment as of the Amendment Effective Date.

 


	
 
	
BORROWER:

	
 
	
 

	
 
	
PARK ELECTROCHEMICAL CORP. 

	 	 
	 	By: 	 	 
	 	Name:   P. Matthew Farabaugh	 
	 	Title:     Senior Vice President and CFO
	 	 
	 	
LENDER:

	 	 
	 	
HSBC BANK USA, NATIONAL 

ASSOCIATION

	 	 
	 	
By:     
	 	 
	 	Name:   Jose L. Won
	 	
Title:     Vice President




 

 

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