Document:

Exhibit 10.1

  

   

  

  
    Drive Shack Inc.

    218 W. 18th St., Third Floor

    New York, NY 10014

  

  
    September 27, 2020

    

    

    Michael Nichols

    

    

    Dear Michael:

    

    

    We are delighted at the prospect that you will be joining Drive Shack Inc. (the “Company”) as Chief Financial Officer.  Your primary place of employment will be located at the Company’s office in Dallas, TX.  You understand and agree that the
        Company’s business is nationwide and in performing your duties hereunder for the Company, you will be required to travel to the Company’s other business locations.  You will devote your full working time to the Company. This letter confirms
      our offer of employment to you with an anticipated hire date to be mutually agreed following your review of this offer letter (the “Hire Date”).

     

    Your base salary will be $350,000.00 per annum, payable bi-weekly in
        accordance with the Company’s normal payroll practices, to compensate you for all hours you worked during the preceding pay period, regardless of whether more or less than 40 in a regularly scheduled workweek. This salary, and the Company’s payroll practices and schedule, are each subject to review and possible adjustment in the Company’s discretion periodically.

     

    As part of your employment and for the role you will be fulfilling, you will be eligible to receive an annual cash bonus targeted at
      50% of your base annual salary.  Your equity bonus target under the Company’s 2018 Omnibus Equity Plan will be considered and determined by the Compensation Committee of the Board of Directors of the Company, in consultation with the Chief Executive
      Officer of the Company, following your Hire Date.  Bonuses are awarded in the Company’s sole discretion, are not guaranteed, and are determined after an evaluation of the Company’s performance as well as your own performance for the period reviewed. 
      Payment of a bonus for one year does not guarantee payment in any subsequent year.  Any bonus in respect of your first year of employment will be prorated for the number of full months worked.  Cash bonuses are typically paid no later than April 15
      after the calendar year for which they are awarded, and only employees who remain on the Company’s payroll on the date of payment are eligible.  No pro-rated bonus is awarded for the final year of employment.

     

    You hereby acknowledge and agree, without limiting the Company’s rights
        otherwise available at law or in equity, that, to the extent permitted by law, any or all amounts or other consideration payable by any affiliate of the Company pursuant to the provisions hereof or pursuant to any other agreement with the Company
        or any of its affiliates, may be set-off against any or all amounts or other consideration payable by you to the Company or any of its affiliates or to the Company or any of its affiliates under any other agreement between you and the Company or
        any of its affiliates; provided that any such set-off does not result in a penalty under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).

     

    You agree to comply fully with all the Company policies and procedures applicable to employees, as amended and implemented from time
      to time, including, without limitation, paid time off, tax, regulatory and compliance procedures.  Such policies and procedures are, and any future modifications thereto will be made, available on the Company’s payroll portal and will also be
      provided upon request to human resources.

     

    
      
        

    

    
    You (and your spouse, registered domestic partner and/or eligible dependents, if any) shall be entitled to participate in the same
      manner as other similarly situated employees of the Company in any employee benefit plan that the Company has adopted or may adopt, maintain or contribute to for the benefit of such employees generally, subject to satisfying the applicable
      eligibility requirements.  Your participation will be subject to the terms of the applicable plan documents and generally applicable Company policies.  Notwithstanding the foregoing, the Company may, consistent with applicable law, prospectively
      modify or terminate any employee benefit plan at any time

     

    You represent that on the Hire Date, (a) you will be free to accept employment hereunder without any contractual restrictions,

      express or implied, with respect to any of your prior employers, (b) you have not taken or otherwise misappropriated and you do not have in your possession or control any confidential and proprietary information belonging to any of your prior
      employers or connected with or derived from your services to prior employers, (c) you have returned to all prior employers any and all such confidential and proprietary information, (d) the Company has informed you that you are not to use or cause
      the use of such confidential or proprietary information in any manner whatsoever in connection with your employment by the Company and you agree that you will not use such information and (e) you are not currently a party to any pending or threatened
      litigation with any former employer or business associate.

     

    Nothing in this letter modifies your at-will employment status. Accordingly, either you or the Company may end the employment
      relationship at any time and for any reason or no reason, with or without notice.  Your employment with the Company shall terminate immediately in the event of your death or disability.  During your employment with the Company, you will be a
      full-time employee thereof, will dedicate all of your working time thereto and will have no other employment and no other business ventures which are undisclosed to the Company.

     

    Effective concurrently with the commencement of your employment, you agree to the protective covenants set forth on Exhibit A to this letter (the “Protective Covenants”).

     

    As we have discussed, this offer is subject to your satisfactory
        completion of the pre-employment background check, which was previously authorized by you, and all other pre-hire clearances.  Without limiting the generality of the foregoing, this offer is contingent upon our verification of your right to
      work in the United States, as demonstrated by your completion of the Form I-9 upon hire and your submission of acceptable documents (as noted on the Form I-9) verifying your identity and work authorization within three days of your start date.

     

    If you accept this offer of employment, please sign and date this
        agreement in the space provided below and return a copy to Nicholas Foley (nfoley@driveshack.com), to indicate your acceptance.  We look forward to you joining
        the Company.

     

    Nicholas Foley

    General Counsel

    

    

    I affirm my understanding of, and agreement to, the terms and conditions set forth above, and hereby accept this offer of employment:

     

    
      	Legal Name (Printed):	

            	Signature:	

            	

            

    

    

    

    
      2

      
        

    

    
    Exhibit A to Offer Letter

    Protective Covenants

    

    

    You shall not, directly or indirectly, without prior written consent of the Company, at any time during your employment hereunder or
      for 12 months following the termination of your employment for any reason, be involved or connected in any manner (including, but not limited to, provide consultative services to, own, manage, operate, join, control, participate in, be engaged in,
      and/or employed by) any business, individual, partner, firm, corporation, or other entity that competes with (any such action, individually, and in the aggregate, to “compete with”),

      the Company anywhere in the United States of America, including, but not limited to, any such business, individual, partner, firm, corporation, or other entity engaged in the business of operating eatertainment or golf venues, whether related to the
      game of golf, mini-golf or other form of sporting amusement, or traditional golf.

     

    Notwithstanding anything else herein, the mere “beneficial ownership” by you, either individually or as a member of a “group” (as such
      terms are used in Rule 13(d) issued under the United States Securities Exchange Act of 1934, as amended from time to time) of not more than five percent of the voting stock of any public company shall not be deemed a violation of these Protective
      Covenants.

     

    You further agree that you shall not, directly or indirectly, for your benefit or for the benefit of any other person (including,
      without limitation, an individual or entity), or knowingly assist any other person to during your employment with the Company and for 12 months thereafter, in any manner:

     

    (a)          hire or Solicit (as
        hereinafter defined) the employment or services of any person who provided services to the Company or any of its affiliates (collectively, the “Company Group”), as an
        employee, independent contractor or consultant at the time of termination of your employment with the Company, or within six months prior thereto;

     

    (b)          Solicit any person
        who is an employee of the Company or any member of the Company Group to apply for or accept employment with any enterprise;

     

    (c)          Accept employment or
        work, in any capacity (including as an employee, consultant or independent contractor), with any firm, corporation, partnership or other entity that is, directly or indirectly, owned or controlled by any Former Employee of the Company involving the
        provision of services that are substantially similar to the services that you provided to the Company at any time during the twelve months prior to your termination of employment with the Company;

     

    (d)          Solicit or otherwise
        attempt to establish any business relationship (in connection with any business in competition with the Company) with any limited partner, investor, person, firm, corporation or other entity that is, at the time of your termination of employment,
        or was a Client, Investor or Business Partner of the Company or any member of the Company Group; or

     

    (e)        Interfere with or
        damage (or attempt to interfere with or damage) any relationship between the Company and any member of the Company Group and the respective Clients, Investors, Business Partners, or employees of the foregoing entities.

     

    
      Exhibit A - 1

      
        

    

    For purposes of these Protective Covenants, the term “Solicit”
      means (a) active solicitation of any Client, Investor, or Business Partner or Company employee; (b) the provision of non-public information regarding any Client, Investor, or Business Partner or Company employee to any third party where such
      information could be useful to such third party in attempting to obtain business from such Client, Investor, or Business Partner or attempting to hire any such Company employee; (c) participation in any meetings, discussions, or other communications
      with any third party regarding any Client, Investor, or Business Partner or Company employee where the purpose or effect of such meeting, discussion or communication is to obtain business from such Client, Investor, or Business Partner or employ such
      Company employee; or (d) any other passive use of non-public information about any Client, Investor, or Business Partner, or Company employee which has the purpose or effect of assisting a third party to obtain business from Clients, Investors, or
      Business Partners, assisting a third party to hire any Company employee or causing harm to the business of the Company.

     

    For purposes of these Protective Covenants, the term “Client,”

      “Investor,” or “Business Partner” shall mean (a) anyone who is or has been a client of, investor
      in, or business partner of any member of the Company Group during your employment; and (b) any prospective client of, investor in, or business partner to whom any member of the Company Group made a new business presentation (or similar offering of
      services) at any time during the one-year period immediately preceding, or two-month period immediately following, your employment termination (but only if initial discussions between any member of the Company Group and such prospective client,
      investor, or business partner relating to the rendering of services occurred prior to the termination date).  Notwithstanding the preceding paragraph, the Protective Covenants shall not apply to Clients who are currently your clients at your current
      employer.

     

    For purposes of these Protective Covenants, the term “Former
          Employee” shall mean anyone who was an employee of or exclusive consultant to any member of the Company Group as of, or at any time during the one-year period immediately preceding, the termination of your employment.

     

    Any works of authorship, databases, discoveries, developments, improvements, computer programs, or other intellectual property, etc.  (“Works”) that
      you make or conceive, or have made or conceived, solely or jointly, during the period of your employment with the Company, whether or not patentable or registerable under copyright, trademark or similar statutes, which either (a) are related to or
      useful in the current or anticipated business or activities of any member of the Company Group; (b) fall within your responsibilities as employed by the Company; or (c) are otherwise developed by you through the use of the confidential information,
      equipment, software, or other facilities or resources of any member of the Company Group or at times during which you are or have been an employee constitute “work for hire” under the United States Copyright Act, as amended.  If for any reason any portion of the Works shall be deemed not to be a “work for hire,” then you hereby assign to the Company all rights, title and interest therein and shall cooperate to
        establish the Company’s ownership rights, including the execution of all documents necessary to establish the Company’s exclusive ownership rights.

     

    During your employment you will gain knowledge of, or have access to, information relating to the business and affairs of the Company
      Group and its Clients, Investors and Business Partners (“Information”). The Information, regardless of the form in which it is recorded, transmitted, observed or expressed,
      or to which it may be converted or transcribed, shall include, without limitation, written and electronically stored or accessible information and data.  All Information is strictly confidential and you shall not reveal to any person or entity, or
      use any Information at any time, except as expressly directed by the Company, or as may be required by law. Your obligation of confidentiality is of indefinite duration.  You shall not distribute, alter, copy, interfere with or destroy, Information,
      except in accordance with the instructions of the Company.  You shall use extreme caution with, and take all steps to safeguard, the confidentiality of any part of the Information that may come into your possession at any time or in any place.

     

  

   

    

  Exhibit A - 2smtx-ex101_9.htm

 

Exhibit 10.1

 

CERTAIN IMMATERIAL PROVISIONS OF THIS DOCUMENT THAT WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED (INDICATED BY AN ASTERICK [***]) HAVE BEEN OMITTED PURSUANT TO ITEM 601(b)(2) OF REGULATION S-K.  A COPY OF THE UNREDACTED DOCUMENT WILL BE FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST. 

 

 

FIFTH AMENDMENT TO 

AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT

 

This Fifth Amendment to Amended and Restated Revolving Credit and Security Agreement (the “Amendment”) is made as of this 25th day of September, 2020 by and among SMTC Corporation, a Delaware corporation (“SMTC”), SMTC Manufacturing Corporation of California, a California corporation (“SMTC California”), SMTC Mex Holdings, Inc., a Delaware corporation (“SMTC Mex”), HTM Holdings, Inc., a Delaware corporation (“HTM”), MC TEST SERVICE, INC., a Florida corporation (“MC Test”), MC ASSEMBLY INTERNATIONAL LLC, a Delaware limited liability company (“MC Assembly International”), MC ASSEMBLY LLC, a Delaware limited liability company (“MC Assembly” and together with SMTC, SMTC California, SMTC Mex, HTM, MC Test, and MC Assembly International, and each other Person joined hereto as a borrower from time to time, each a “Borrower” and collectively the “Borrowers”), the financial institutions which are now or which hereafter become a party to the Credit Agreement (each a “Lender” and collectively, the “Lenders”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent for the Lenders (in such capacity, the “Agent”).

 

BACKGROUND

 

A.On November 8, 2018, Borrowers, Lenders and Agent entered into, inter alia, a certain Amended and Restated Revolving Credit and Security Agreement (as same has been or may be amended, modified, supplemented, renewed, extended, replaced or substituted from time to time, the “Credit Agreement”) to reflect certain financing arrangements between the parties thereto.

 

B.The Borrowers have requested, and the Agent and the Lenders have agreed, subject to the terms and conditions of this Amendment, to modify certain definitions, terms and provisions of the Credit Agreement.

 

NOW, THEREFORE, with the foregoing background hereinafter deemed incorporated by reference herein and made part hereof, the parties hereto, intending to be legally bound, promise and agree as follows:

 

1.Definitions.

 

(a)Interpretation.  All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.  In the case of a direct conflict between 

 

 

 

the provisions of the Credit Agreement and the provisions of this Amendment, the provisions of this Amendment shall govern and control.

 

 

2.Amendment.  

(a)Section 1.2 of the Credit Agreement is hereby amended by adding the following defined term in the proper alphabetical order: 

 “Eligible Consigned Inventory” shall mean Inventory that would be Eligible Inventory but for the fact that it is Consigned Inventory, but only if (a) such Inventory is located with [***] (“[***]”), (b) such Inventory is located with [***] for purchase by [***], (c) Agent has received and been reasonably satisfied with its review of the consignment agreement between the applicable Loan Party and [***], (d) the applicable Loan Party has duly filed a Uniform Commercial Code filing, as applicable, as to such consignment arrangement with respect to [***] and assigned such filing to Agent, (e) all applicable notices to the holders of Liens with respect to the inventory of [***] have received notice of such Loan Party’s and Agent’s interests and (f) Agent has received a Lien Waiver Agreement satisfactory to Agent in its Permitted Discretion, duly executed by [***].

 

(b)The definition of “Consolidated EBITDA” in Section 1.2 of the Credit Agreement is hereby amended by replacing clause (xix) in its entirety as follows: 

(xix)     non-recurring labor costs, temporary employee bonuses to reduce absenteeism, personal protective equipment costs, facility sanitization costs, and excess freight and logistics costs, in an aggregate amount not to exceed (A) $200,000 for the Fiscal Quarter ended March 31, 2020, (B) $1,000,000 for the Fiscal Quarter ending June 30, 2020, and (C) $1,500,000 for the Fiscal Quarter ending September 27, 2020; and

(c)The definition of “Eligible Inventory” in Section 1.2 of the Credit Agreement is hereby amended by amending and restating the following definition: 

“Eligible Inventory” shall mean and include Inventory, excluding work in process, with respect to each Borrower, valued at the lower of cost or market value, determined on a first-in-first-out basis, which is not, in Agent’s Permitted Discretion, obsolete, slow moving or unmerchantable and which Agent, in its Permitted Discretion, shall not deem ineligible Inventory, based on such considerations as Agent may from time to time deem appropriate including whether the Inventory is subject to a perfected, first priority security interest in favor of Agent and no other Lien (other than a Permitted Encumbrance).  In addition, Inventory shall not be Eligible Inventory if it (i) does not conform to all standards imposed by any Governmental Body which has regulatory authority over such goods or the use or sale thereof, (ii) is in transit, (iii) is located outside of the continental United States of America or Mexico or at a location that is not otherwise in compliance with this Agreement, (iv) constitutes Consigned Inventory, other 

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than Eligible Consigned Inventory, (v) is the subject of an Intellectual Property Claim; (vi) is subject to a License Agreement or other agreement that limits, conditions or restricts any Borrower’s or Agent’s right to sell or otherwise dispose of such Inventory, unless Agent is a party to a Licensor/Agent Agreement with the Licensor under such License Agreement; (vii) is situated at a location not owned by a Borrower unless the owner or occupier of such location has executed in favor of Agent a Lien Waiver Agreement; or (viii) or if the sale of such Inventory would result in an ineligible Receivable.

(d)Section 2.1(c) of the Credit Agreement is hereby amended by amending and restating the following section:

(c)Sublimit for Revolving Advances made against Inventory.  The aggregate amount of Revolving Advances made to Borrowers against (i) Eligible Inventory shall not exceed $35,000,000 in the aggregate at any time outstanding; (ii) Eligible Inventory located in Mexico in the aggregate shall not exceed $15,000,000 in the aggregate at any time outstanding and (iii) Eligible Consigned Inventory shall not exceed $2,000,000 in the aggregate at any time outstanding. 

3.Representations and Warranties.  Each Borrower hereby:

 

(a)reaffirms all representations and warranties made to Agent and Lenders under the Credit Agreement and all of the Other Documents and confirms that all are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof as if made on and as of the date hereof, except for representations and warranties which related exclusively to an earlier date, which shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of such earlier date; 

 

(b)reaffirms all of the covenants contained in the Credit Agreement, covenants to abide thereby until all Advances, Obligations and other liabilities of Borrowers to Agent and Lenders under the Credit Agreement of whatever nature and whenever incurred, are satisfied and/or released by Agent and Lenders;

 

(c)represents and warrants that no Default or Event of Default has occurred and is continuing under the Credit Agreement or any of the Other Documents;

 

(d)represents and warrants that it has the authority and legal right to execute, deliver and carry out the terms of this Amendment, that such actions were duly authorized by all necessary corporate action and that the officers executing this Amendment on its behalf were similarly authorized and empowered, and that this Amendment does not contravene any provisions of its articles of incorporation, bylaws or other formation documents, or of any contract or agreement to which it is a party or by which any of its properties are bound; and

 

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(e)represents and warrants that this Amendment and all assignments, instruments, documents, and agreements executed and delivered in connection herewith are valid, binding and enforceable in accordance with their respective terms except as such enforceability may be limited by equitable principles or any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally.

 

4.Conditions Precedent/Effectiveness Conditions.  This Amendment shall be effective upon: 

 

(a)execution and delivery of this Amendment by all parties hereto;

 

(b)receipt by Agent of an executed copy of the Amendment No. 6 to Financing Agreement, in form and substance reasonably satisfactory to Agent;

 

(c)on the date of this Amendment and after giving effect hereto, no Default or Event of Default shall exist or shall have occurred and be continuing.

 

5.Further Assurances.  Borrowers hereby agree to take all such actions and to execute and/or deliver to Agent and Lenders all such documents, assignments, financing statements and other documents, as Agent and Lenders may reasonably require from time to time, to effectuate and implement the purposes of this Amendment.

 

6.[Reserved].

 

7.Payment of Expenses.  Borrowers shall pay or reimburse Agent and Lenders for their reasonable attorneys’ fees and expenses in connection with the preparation, negotiation and execution of this Amendment and the documents provided for herein or related hereto.

 

8.Reaffirmation of Credit Agreement.  Except as modified by the terms hereof, all of the terms and conditions of the Credit Agreement, as amended, and all of the Other Documents are hereby reaffirmed and shall continue in full force and effect as therein written.

 

9.Acknowledgment of Guarantors.  By execution of this Amendment, each Guarantor hereby covenants and agrees that each of its respective Amended and Restated Guaranty and Suretyship Agreements, dated November 8, 2018, shall remain in full force and effect and shall continue to cover the existing and future Obligations of Borrowers to Agent and Lenders.

 

10.Miscellaneous.  

 

(a)Third Party Rights.  No rights are intended to be created hereunder for the benefit of any third party donee, creditor, or incidental beneficiary.

 

(b)Headings.  The headings of any paragraph of this Amendment are for convenience only and shall not be used to interpret any provision hereof. 

 

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(c)Modifications.  No modification hereof or any agreement referred to herein shall be binding or enforceable unless in writing and signed on behalf of the party against whom enforcement is sought.

 

(d)Governing Law.  This Amendment shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York.

 

(e)Counterparts.  This Amendment may be executed in any number of counterparts and by facsimile or electronic transmission, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Any signature to this Amendment delivered by a party by facsimile or other electronic means of transmission shall be deemed to be an original signature hereto.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first above written.

 

 

LOAN PARTIES: 

SMTC CORPORATION

 

By:/s/ Edward Smith

Name:Edward Smith

Title:President and Chief Executive Officer

 

SMTC MANUFACTURING CORPORATION OF CALIFORNIA

 

By:/s/ Edward Smith

Name:Edward Smith

Title:President and Chief Executive Officer

 

SMTC MEX HOLDINGS INC.

 

By:/s/ Edward Smith

Name:Edward Smith

Title:Chief Executive Officer

 

HTM HOLDINGS, INC.

 

By:/s/ Edward Smith

Name:Edward Smith

Title:Chief Executive Officer

 

MC TEST SERVICE, INC. 

 

By:/s/ Edward Smith

Name:Edward Smith

Title:Chief Executive Officer

 

MC ASSEMBLY INTERNATIONAL LLC

 

By:/s/ Edward Smith

Name:Edward Smith

Title:Chief Executive Officer

 

 

 

[Signature Page to FIFTH Amendment to amended and restated Revolving Credit and Security Agreement]

S-1

 

 

MC ASSEMBLY LLC

 

By:/s/ Edward Smith

Name:Edward Smith

Title:Chief Executive Officer

[Signature Page to FIFTH Amendment to amended and restated Revolving Credit and Security Agreement]

S-2

 

AGENT AND LENDERS:PNC BANK, NATIONAL ASSOCIATION, 

  as Agent and Lender 

 

By: /s/ James Sierakowski

Name: James Sierakowski

Title: Senior Vice President

 

 

 

 

[Signature Page to FIFTH Amendment to amended and restated Revolving Credit and Security Agreement]

S-3

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