Document:

Exhibit 10.1

		

			Exhibit 10.1

		

		

			EXECUTION VERSION

		

		

			 

		

		
			FIFTH Amendment to Credit Agreement
		

		
			This FIFTH Amendment to Credit Agreement (this “Amendment”) is made as of March 17, 2022, by and among SIGMATRON INTERNATIONAL, INC., a Delaware corporation (“Borrower”), the other Loan Parties party hereto, and JPMorgan Chase Bank, N.A. (“Lender”).
		

		
			Recitals:
		

		
			A.The Loan Parties and the Lender have heretofore entered into a Credit Agreement dated as of January 29, 2021 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.
		

		
			B.The Loan Parties and the Lender have agreed to make certain amendments to the Credit Agreement on the terms and conditions set forth herein.
		

		
			NOW, THEREFORE,  in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows:
		

		
			Section 1.Amendments.
		

		
			Subject to the satisfaction of the conditions precedent set forth in Section 2 below,  the Credit Agreement shall be and hereby is amended as follows:
		

		
			1.1.Sections 1.02 and 1.05 of the Credit Agreement are amended and restated in their entirety to read as follows: 
		

		
			SECTION 1.02.Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “SOFR Loan”) or by Class and Type (e.g., a “SOFR Revolving Loan”).  Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “SOFR Borrowing”) or by Class and Type (e.g., a “SOFR Revolving Borrowing”).
		

		
			SECTION 1.05.Interest Rates; Benchmark Notifications.  The interest rate on a Loan denominated in dollars may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform.  Upon the occurrence of a Benchmark Transition Event, Section 2.13(c) provides a mechanism for determining an alternative rate of interest.  The Lender does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability.  The Lender and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Alternate Rate) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower.  The Lender may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to 
		

		 

		

			 

		

		

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		the Borrower or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
		

		
			1.2.Sections 2.13, 2.14 and 2.15 of the Credit Agreement are amended and restated in their entirety to read as follows:
		

		
			SECTION 2.13.  Alternate Rate of Interest; Illegality.
		

		
			(a)Subject to clause (c) of this Section 2.13, if prior to the commencement of any Interest Period for a SOFR or REVSOFR30 Borrowing: 
		

		
			(i)the Lender determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR Rate or the Term SOFR Rate and/or the Adjusted REVSOFR30 Rate or the REVSOFR30 Rate, as applicable (including because the Term SOFR Reference Rate is not available or published on a current basis) for such Interest Period; or
		

		
			(ii)the Lender determines the Adjusted Term SOFR Rate or the Term SOFR Rate and/or the Adjusted REVSOFR30 Rate or the REVSOFR30 Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to the Lender of making or maintaining its Loans included in such Borrowing for such Interest Period;
		

		
			then the Lender shall give notice thereof to the Borrower through Electronic System as provided in Section 8.01 as promptly as practicable thereafter and, until the Lender notifies the Borrower that the circumstances giving rise to such notice no longer exist, (A) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a SOFR Borrowing or REVSOFR30 Borrowing shall be ineffective and any such SOFR Borrowing or REVSOFR30 Borrowing shall be repaid or converted to a CBFR Borrowing on the last day of the then current Interest Period applicable thereto, and (B) if any Borrowing Request requests a SOFR Borrowing or REVSOFR30 Borrowing, such Borrowing shall be made as a CBFR Borrowing.
		

		
			(b)If the Lender determines that any Requirement of Law has made it unlawful, or if any Governmental Authority has asserted that it is unlawful, for the Lender or its applicable lending office to make, maintain, fund or continue any SOFR Borrowing and/or REVSOFR30 Borrowing, or any Governmental Authority has imposed material restrictions on the authority of the Lender to purchase or sell, or to take deposits of, dollars in the interbank offering market, then, on notice thereof by the Lender to the Borrower, any obligations of the Lender to make, maintain, fund or continue SOFR Loans and/or REVSOFR30 Loans or to convert CBFR Borrowings to SOFR Borrowings will be suspended until the Lender notifies the Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrower will upon demand from the Lender, either convert or prepay all SOFR Borrowings and/or REVSOFR30 Borrowings to CBFR Borrowings, either on the last day of the Interest Period therefor, if the Lender may lawfully continue to maintain such SOFR Borrowings and/or REVSOFR30 Borrowings to such day, or immediately, if the Lender may not lawfully continue to maintain such Loans.  Upon any such conversion or prepayment, the Borrower will also pay accrued interest on the amount so converted or prepaid.
		

		

		

		 

		

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		(c)Notwithstanding anything to the contrary herein or in any other Loan Document, (and any Swap Agreement shall be deemed not to be a “Loan Document” for purposes of this Section 2.13), if a Benchmark Transition Event occurs, Lender may, by written notice to Borrower, amend this Agreement to establish an alternate rate of interest for the Term SOFR Rate and the REVSOFR30 Rate that gives due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) the then-evolving or prevailing market convention for determining a rate of interest for business loans in Dollars at such time (the “Alternate Rate”); Borrower acknowledges that the Alternate Rate may include a mathematical adjustment using any then-evolving or prevailing market convention or method for determining a spread adjustment for the replacement of the Term SOFR Rate and/or the REVSOFR30 Rate (which may include, if the Term SOFR Rate and/or the REVSOFR30 Rate already contains such a spread, adding that spread to the Alternate Rate). The Lender may further amend this Agreement by such notice to Borrower to make technical, administrative or operational changes (including, without limitation, changes to the definition of "CBFR", the definition of “Interest Period”, timing and frequency of determining rates and making payments of interest, the timing of prepayment or conversion notices, the length of lookback periods, the applicability of breakage provisions and other technical, administrative or operational matters) that Lender decides in its reasonable discretion may be appropriate to reflect the adoption and implementation of the Alternate Rate. The Alternate Rate, together with all such technical, administrative and operational changes as specified in any notice, shall become effective at the later of (i) the fifth (5th) Business Day after Lender has provided notice (including without limitation for this purpose, by electronic means) to the Borrower (the “Objection  Date”) and (ii) a date specified by Lender in the notice, without any further action or consent of the Borrower, so long as Lender has not received, by 5:00 pm Eastern time on the Objection Date, written notice of objection to the Alternate Rate from the Borrower. If, on the date the Term SOFR Rate and/or the REVSOFR30 Rate, as applicable, actually becomes permanently unavailable pursuant to a Benchmark Transition Event, an Alternate Rate has not been established in this manner, Advances will, until an Alternate Rate is so established, bear interest at the CB Floating Rate. In no event shall the Alternate Rate be less than the Floor.
		

		
			(d)All determinations by Lender under this Section 2.13 shall be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.13.
		

		
			SECTION 2.14.  Increased Costs.
		

		
			(a)If any Change in Law shall:
		

		
			(i)impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, the Lender (except any such reserve requirement reflected in the applicable Rate Indices); 
		

		
			(ii)impose on the Lender or the applicable offshore interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans hereunder or any Letter of Credit; or 
		

		
			(iii)subject the Lender to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clause (b) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, 
		

		 

		

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		commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;
		

		
			and the result of any of the foregoing shall be to increase the cost to the Lender of making, continuing, converting into or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to the Lender of  issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by the Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to the Lender such additional amount or amounts as will compensate the Lender for such additional costs incurred or reduction suffered.
		

		
			(b)If the Lender determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the Lender’s capital or on the capital of the Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by, the Commitments of or the Letters of Credit issued by the Lender to a level below that which the Lender or the Lender’s holding company could have achieved but for such Change in Law (taking into consideration the Lender’s policies and the policies of the Lender’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to the Lender such additional amount or amounts as will compensate the Lender or the Lender’s holding company for any such reduction suffered.
		

		
			(c)A certificate of the Lender setting forth the amount or amounts necessary to compensate the Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay the Lender the amount shown as due on any such certificate within 10 days after receipt thereof.  
		

		
			(d)Failure or delay on the part of the Lender to demand compensation pursuant to this Section shall not constitute a waiver of the Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate the Lender pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that the Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of the Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.
		

		
			SECTION 2.15.  Break Funding Payments.    In the event of (a) the payment of any principal of any SOFR Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or as a result of any prepayment pursuant to Section 2.10 or any Rider), (b) the conversion of any SOFR Loan other than on the last day of the Interest Period applicable thereto or (c) the failure to borrow, convert, continue or prepay any SOFR Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.08(c) and is revoked in accordance therewith), then, in any such event, the Borrower shall compensate the Lender for the loss, cost and expense attributable to such event.  A certificate of the Lender setting forth any amount or amounts that the Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay the Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
		

		

		

		 

		

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		1.3.The following defined terms are either amended or restated in their entirety or added to the Definitions Schedule to the Credit Agreement in their appropriate alphabetical position, as applicable, each to read as follows:
		

		
			“Adjusted REVSOFR30 Rate” means an interest rate per annum equal to (a) the REVSOFR30 Rate plus (b) 0.10%; provided that (x) if the Adjusted REVSOFR30 Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement and (y) if the REVSOFR30 Rate shall not be available, then the Adjusted REVSOFR30 Rate shall be equal to the CB Floating Rate (unless an Alternate Rate shall have been established in accordance with Section 2.14).
		

		
			“Adjusted Term SOFR Rate” means for any Interest Period, an interest rate per annum equal to (a) the Term SOFR Rate for such Interest Period plus (b) 0.10%; provided that if the Adjusted Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
		

		
			“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the Term SOFR Rate and/or the REVSOFR30 Rate, as applicable:
		

		
			(i)a public statement or publication of information by or on behalf of the CME Term SOFR Administrator (or any successor administrator of the Term SOFR Rate and/or REVSOFR30 Rate, as applicable, or the published component used in the calculation thereof) announcing that such CME Term SOFR Administrator has ceased or will cease to provide the Term SOFR Rate and/or REVSOFR30 Rate, as applicable (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Term SOFR Rate and/or REVSOFR30 Rate, as applicable (or such component thereof); or
		

		
			(ii)a public statement or publication of information by the NYFRB, the Federal Reserve Board, or, as applicable, the regulatory supervisor for the CME Term SOFR Administrator, an insolvency official with jurisdiction over the CME Term SOFR Administrator, a resolution authority with jurisdiction over the CME Term SOFR Administrator, or a court or an entity with similar insolvency or resolution authority over the CME Term SOFR Administrator, in each case, which states that the CME Term SOFR Administrator (or any successor administrator of the Term SOFR Rate and/or REVSOFR30 Rate, as applicable, or the published component used in the calculation thereof) has ceased or will cease to provide the Term SOFR Rate and/or REVSOFR30 Rate, as applicable (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Term SOFR Rate and/or REVSOFR30 Rate, as applicable (or such component thereof); or
		

		
			(iii)a public statement or publication of information by the Federal Reserve Board, the NYFRB, the CME Term SOFR Administrator, or the regulatory supervisor for the CME Term SOFR Administrator (or any successor administrator of the Term SOFR Rate and/or REVSOFR30 Rate, as applicable, or the published component used in the calculation thereof), announcing that the Term SOFR Rate and/or REVSOFR30 Rate, as applicable (or such component thereof) is no longer, or as of a specified future date will no longer be, representative.
		

		

		

		 

		

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		For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to the Term SOFR Rate and/or REVSOFR30 Rate, as applicable if a public statement or publication of information set forth above has occurred with respect to each then-current available tenor of the Term SOFR Rate and/or REVSOFR30 Rate, as applicable.
		

		
			“Bill and Hold Letter”  means a letter agreement entered into between an Account Debtor and Borrower, in the form previously approved by Lender (or such other form acceptable to Lender in its sole discretion), which includes, among other things, a no-offset acknowledgment from the Account Debtor.
		

		
			“Business Day” means any day (other than a Saturday or a Sunday) on which banks are open for business in New York City or Chicago; provided that, when determining the Term SOFR Reference Rate used in connection with a SOFR Loan or a Loan accruing interest at the Adjusted REVSOFR30 Rate without giving effect to the proviso contained in the definition for “REVSOFR30 Rate”, the term “Business Day” shall also exclude any day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
		

		
			“CB Floating Rate” means the greater of the Prime Rate or 2.50%.  Any change in the CB Floating Rate due to a change in the Prime Rate shall be effective from and including the effective date of such change in the Prime Rate.
		

		
			“CBFR” when used in reference to: (a) a rate of interest, refers to the Adjusted REVSOFR30 Rate, unless the REVSOFR30 Rate shall not be available at such time, then it refers to the CB Floating Rate (unless an Alternate Rate shall have been established in accordance with Section 2.13), and (b) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Adjusted REVSOFR30 Rate or the CB Floating Rate.
		

		
			“Fifth Amendment Effective Date” means March 17, 2022.
		

		
			“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Adjusted Term SOFR Rate or the Adjusted REVSOFR30 Rate, as applicable.  For the avoidance of doubt, the initial Floor for each of the Adjusted Term SOFR Rate or the Adjusted REVSOFR30 Rate shall be 0.00%.
		

		
			“Interest Payment Date” means (a) with respect to any CBFR Loan, the first Business Day of each calendar month and the Maturity Date, (b) with respect to any SOFR Loan, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a SOFR Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, and (c) with respect to all Loans, the Maturity Date.
		

		
			“Interest Period” means with respect to any SOFR Borrowing the period commencing on the date of such SOFR Borrowing and ending on the numerically corresponding day in the calendar month that is one, three or six months thereafter, as the Borrower may elect; provided, that (a) if any Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, 
		

		 

		

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		(b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period, and (c) no Interest Period may extend beyond the Maturity Date.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, thereafter, shall be the effective date of the most recent conversion or continuation of such Borrowing.
		

		
			“Objection Date”  has the meaning assigned to such term in Section 2.13(c).
		

		
			“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated in Dollars by U.S.–managed banking offices of depository institutions (as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s Website from time to time) and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
		

		
			“Rate Indices” means CB Floating Rate, Adjusted Term SOFR Rate, Adjusted REVSOFR30 Rate, REVSOFR30 Rate, Term SOFR Reference Rate, and Term SOFR Rate.
		

		
			“Relevant Governmental Body” means the Federal Reserve Board and/or the NYFRB, the CME Term SOFR Administrator, as applicable, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.
		

		
			“Revolving Borrowing” means Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of SOFR Loans, as to which a single Interest Period is in effect.
		

		
			““Revolving Commitment” means the commitment of the Lender to make Revolving Loans hereunder up to the amount set forth in the Terms Schedule.  The amount of the Lender’s Revolving Commitment as of the Fifth Amendment Effective Date is $60,000,000.
		

		
			“REVSOFR30 Rate” means (i) means the Term SOFR Reference Rate for a (1) month period, as such rate is published by the CME Term SOFR Administrator, at approximately 5:00 a.m., Chicago time, two (2) Business Days prior to the first (1st) Business Day of each month, adjusted monthly on the first (1st) Business Day of each month and (ii) when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted REVSOFR30 Rate.  Any change in the REVSOFR30 Rate shall be effective from and include the effective date of such change.
		

		
			“SOFR” means a rate equal to the secured overnight financing rate as administered by the NYFRB (or a successor administrator of the secured overnight financing rate) and when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted Term SOFR Rate.
		

		
			“Term SOFR Rate” means, for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two (2) Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator.
		

		

		

		 

		

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		“Term SOFR Reference Rate” means, for any day and time, and for any tenor comparable to the applicable Interest Period, the rate per annum determined by the Lender as the forward-looking term rate based on SOFR.
		

		
			1.4.The defined terms “Adjusted LIBO Rate”, “Adjusted One-Month LIBOR Rate”, “Eurodollar”, “Impacted Interest Period”, “Interpolated Rate”, “LIBO Rate”, “LIBO Screen Rate”, “Notice Date”, “REVLIBOR30 Rate”, REVLIBOR30 Rate Loan” and “Statutory Reserve Rate” are deleted from the Credit Agreement; and (a) each reference to “Eurodollar” in the Credit Agreement is replaced with a reference to “SOFR”; and (b) each reference to “Adjusted LIBO Rate” in the Credit Agreement is replaced with a reference to “Adjusted Term SOFR Rate”.
		

		
			1.5.Clause (c) of the defined term “Eligible In-Transit Inventory” set forth in the Borrowing Base Schedule to the Credit Agreement is amended and restated in its entirety to read as follows:
		

		
			(c)if the bill of lading is negotiable, the In-Transit Inventory must be in transit from outside the U.S., and the Lender shall have received (i) confirmation that the bill is issued in the name of a Loan Party and consigned to the order of the Lender, and an acceptable agreement has been executed with the Loan Party’s customs broker, in which the customs broker agrees that it holds the negotiable bill as agent for the Lender and has granted the Lender access to the In-Transit Inventory, (ii) confirmation that a Loan Party has, promptly upon removal of such goods from the applicable vessel, paid for the goods, and (iii) an estimate from the Loan Party of the customs duties and customs fees associated with such In-Transit Inventory in order to establish an appropriate Reserve;
		

		
			1.6.Clause (g) of the defined term “Eligible Accounts” set forth in the Terms Schedule to the Credit Agreement is amended and restated in its entirety to read as follows:
		

		
			(g)which (i) does not arise from the sale of goods or performance of services in the ordinary course of business, (ii) is not evidenced by an invoice or other documentation satisfactory to the Lender which has been sent to the Account Debtor, (iii) represents a progress billing, (iv) is contingent upon a Loan Party’s completion of any further performance, (v) represents a sale on a bill-and-hold  (unless subject to a Bill and Hold Letter that has been delivered to and accepted by Lender), guaranteed sale, sale-and-return, sale on approval, consignment, cash-on-delivery or any other repurchase or return basis, or (vi) relates to payments of interest;
		

		
			1.7.Sections 1 and 3 of the Term Schedule to the Credit Agreement are amended and restated in their entirety to read as follows:
		

		
			1.Revolving Commitment (Definitions Schedule):    $60,000,000.
		

		
			(a)The Borrower may request that the Lender increase the Revolving Commitment at any after the Fifth Amendment Effective Date;  provided that (i) the Borrower may make a maximum of one (1) such request, (ii) after giving effect thereto, the sum of the total of the additional Commitments does not exceed $5,000,000, and (iii) the procedure described in clause (b) below has been satisfied.  Nothing contained in this section shall constitute, or otherwise be deemed to be, a commitment on the part of the Lender to increase its Commitment hereunder at any time and the Borrower acknowledges that the Lender may decline the request for any reason, or no reason whatsoever, notwithstanding the absence of a Material Adverse Effect, Default or Event of Default.
		

		
			(b)The amendment hereto for such an increase shall be in form and substance satisfactory to the Lender.  As a condition precedent to (i) requesting such an 
		

		 

		

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		increase, the Borrower shall deliver to the Lender a certificate of each Loan Party signed by an authorized officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (B) in the case of the Borrower, certifying that, before and after giving effect to such increase or addition, (1) the representations and warranties contained in Article III and the other Loan Documents are true and correct, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, (2) no Default exists and (3) the Borrower is in compliance (on a pro forma basis) with the covenants contained in the Financial Covenants Schedule, and (ii) the Lender agreeing to such an increase, the Borrower shall deliver to the Lender legal opinions and documents consistent with those delivered on the Effective Date, to the extent requested by the Lender.
		

		
			3.Applicable Margin (Definitions Schedule):
		

		
			For any day, with respect to any Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the applicable caption below:
		

			
					
						CBFR Spread REVSOFR30

					
					
						CBFR Spread CB Floating Rate

					
					
						Term SOFR Spread

					
					
						Commitment Fee Rate

				
	
					
						2.00%

					
					
						0.00%

					
					
						2.00%

					
					
						0.25%

				

		
			Section 2.Conditions to Effectiveness.
		

		
			The effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent:
		

		
			2.1.Lender shall have received duly executed copies of this Amendment from Borrower.
		

		
			2.2.Lender shall have received a duly executed legal opinion from counsel to Borrower in respect of this Amendment (including the Revolving Commitment increase), which opinion shall be in form and substance reasonably acceptable to Lender.
		

		
			2.3.Legal matters incident to the execution and delivery of this Amendment shall be reasonably satisfactory to Lender and its counsel.
		

		
			Section 3.Representations, Warranties and Covenants.
		

		
			In order to induce Lender to enter into this Amendment, each Loan Party hereby jointly and severally represents, warrants and covenants to Lender, as of the date hereof that:
		

		
			3.1.Representations, Warranties and Covenants.  (i) After giving effect to this Amendment, no representation or warranty of any Loan Party contained in the Credit Agreement or any of the Loan Documents, including this Amendment, shall be untrue or incorrect in any material respect as of the date hereof, except to the extent that such representation or warranty expressly relates to an earlier date and (ii) no Default has occurred or is continuing, or would result after giving effect hereto.
		

		
			3.2.Authorization, Etc.  Each Loan Party has the corporate or limited liability company power, as applicable, and authority to execute, deliver and perform this Amendment.  Since the Effective Date, there has been no amendment, modification, restatement or supplement to (a) any 
		
		
 

		

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		Loan Party’s organizational documents (i.e., articles of incorporation or organization and by-laws or operating agreement) (the “Organizational Documents”) or (b) the resolutions that were delivered to the Lender (i) with respect to the Borrower, on January 29, 2021 and (ii) with respect to Wagz, Inc., on December 31, 2021, and such Organizational Documents and resolutions are in full force and effect as of the date hereof.  Each Loan Party has taken all necessary corporate or limited liability company action (including, without limitation, obtaining approval of its stockholders or members, if necessary) to authorize its execution, delivery and performance of this Amendment.  No consent, approval or authorization of, or declaration or filing with, any Governmental Authority, and no consent of any other Person, is required in connection with any Loan Party’s execution, delivery and performance of this Amendment, except for those already duly obtained.  This Amendment has been duly executed and delivered by each Loan Party and constitutes the legal, valid and binding obligation of each Loan Party, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditor rights generally or by equitable principles relating to enforceability.  No Loan Party’s execution, delivery or performance of this Amendment (x) contravenes the terms of any of such Loan Party’s Organizational Documents; (y) conflicts with or constitutes a violation or breach of, or constitutes a default under, or results in the creation or imposition of any Lien (other than pursuant to the Collateral Documents) upon the property of any Loan Party by reason of the terms of any material contractual obligation (including without limitation contractual obligations arising from any Material Agreements to which any Loan Party is a party or which is binding upon it); or (z) violates any Requirement of Law in any material respect.

		
		
			Section 4.Reference to and Effect on Loan Documents.
		

		
			4.1.Ratification.  Except as specifically provided in this Amendment, the Credit Agreement and the Loan Documents shall remain in full force and effect and each Loan Party hereby ratifies and reaffirms each term and condition set forth in the Credit Agreement and in the other Loan Documents, effective as of the date hereof.
		

		
			4.2No Waiver.  This Amendment is only applicable and shall only be effective in the specific instances and for the specific purposes for which made or given.  Except as specifically provided in this Amendment, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver or forbearance of any right, power or remedy of Lender under the Credit Agreement or any of the Loan Documents, or constitute a consent, waiver or modification with respect to any provision of the Credit Agreement or any of the Loan Documents which shall remain in full force and effect.  Upon the effectiveness of this Agreement each reference in (i) the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” or words of similar import and (ii) any Loan Document to “the Agreement” shall, in each case and except as otherwise specifically stated therein, mean and be a reference to the Credit Agreement as amended hereby.
		

		
			4.3.Collateral.  The Loan Parties heretofore executed and delivered to Lender the Collateral Documents.  The Loan Parties hereby acknowledge and agree that the Liens created and provided for by the Collateral Documents continue to secure, among other things, the Secured Obligations arising under the Credit Agreement as amended hereby; and the Collateral Documents and the rights and remedies of Lender thereunder, the obligations of the Loan Parties thereunder, and the Liens created and provided for thereunder remain in full force and effect and shall not be affected, impaired or discharged hereby.  Nothing herein contained shall in any manner affect or impair the priority of the liens and security interests created and provided for by the Collateral Documents as to the indebtedness which would be secured thereby prior to giving effect to this Amendment.
		

		
			Section 5.Affirmation of Guarantors.
		

		
			5.1.Each Loan Guarantor hereby acknowledges that it has reviewed the terms and provisions of this Amendment and consents to any modification of the Credit Agreement effected pursuant to this Amendment.  Each Loan Guarantor hereby confirms to Lender that, after giving effect to the foregoing 
		

		 

		

			-  10 –

		

 

		Amendment, the Loan Guaranty of such Loan Guarantor and each other Loan Document to which such Loan Guarantor is a party continues in full force and effect and is the legal, valid and binding obligation of such Loan Guarantor, enforceable against such Loan Guarantor in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
		

		
			5.2.Each Loan Guarantor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Loan Guarantor is not required by the terms of the Credit Agreement or any other Loan Document to consent to the waivers or modifications to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other Loan Document shall be deemed to require the consent of such Loan Guarantor to any future waivers or modifications to the Credit Agreement.
		

		
			Section 6.Miscellaneous.
		

		
			6.1.Successors and Assigns.  This Amendment shall be binding on and shall inure to the benefit of the Loan Parties and Lender and their respective successors and assigns, except as otherwise provided herein.  No Loan Party may assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder without the prior written consent of Lender.  The terms and provisions of this Amendment are for the purpose of defining the relative rights and obligations of the Loan Parties and Lender with respect to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Agreement.
		

		
			6.2.Entire Agreement.  This Amendment, including all schedules and other documents attached hereto or incorporated by reference herein or delivered in connection herewith, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all other understandings, oral or written, with respect to the subject matter hereof.
		

		
			6.3.Expenses.  As provided in Section 8.03 (Expenses; Limitation of Liability; Indemnity, Etc.) of the Credit Agreement, Borrower agrees to pay promptly on demand all reasonable and documented out-of-pocket expenses incurred by Lender in connection with the preparation, execution and delivery of this Amendment.
		

		
			6.4.Headings.  Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
		

		
			6.5.Severability.  Wherever possible, each provision of this Amendment shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment.
		

		
			6.6.Conflict of Terms.  Except as otherwise provided in this Amendment, if any provision contained in this Amendment is in conflict with, or inconsistent with, any provision in any of the Loan Documents, the provision contained in this Amendment shall govern and control.
		

		

		

		 

		

			-  11 –

		

 

		6.7.Counterparts.  This Amendment may be executed in any number of separate counterparts, each of which shall collectively and separately constitute one agreement.  Delivery of an executed signature page to this Amendment by facsimile or electronic transmission shall be effective as delivery of a manually executed signature page to this Amendment.
		

		
			6.8Incorporation of Credit Agreement.  The provisions contained in Sections 8.09  (Governing Law; Jurisdiction; Consent to Service of Process) and 8.10 (Waiver of Jury Trial) of the Credit Agreement are incorporated herein by reference to the same extent as if reproduced herein in their entirety, except with reference to this Amendment rather than the Credit Agreement.
		

		
			[Signature Pages Follow]
		

		
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			-  12 –

		

 

		

			 

		

		In Witness Whereof, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.
		

		
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						BORROWER

					
					
						 

				
	
					
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						SIGMATRON INTERNATIONAL, INC.

					
					
						 

				
	
					
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						By:

					
					
						/s/ Gary R. Fairhead

				
	
					
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						Name:

					
					
						Gary R. Fairhead

				
	
					
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						Title:

					
					
						Chief Executive Officer

				
	
					
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						OTHER LOAN PARTIES

					
					
						 

				
	
					
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						WAGZ, INC.

					
					
						 

				
	
					
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						By:

					
					
						/s/ Gary R. Fairhead

				
	
					
						﻿

					
					
						Name:

					
					
						Gary R. Fairhead

				
	
					
						﻿

					
					
						Title:

					
					
						Chairman of the Board

				
	
					
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			[Signature Page to Fifth Amendment to Credit Agreement (SigmaTron International, Inc.)]

		

 

		
		

			
					
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						LENDER

					
					
						 

				
	
					
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						JPMORGAN CHASE BANK, N.A.

					
					
						 

				
	
					
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						By:

					
					
						/s/ Lena Centomani

				
	
					
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						Name:

					
					
						Lena Centomani

				
	
					
						﻿

					
					
						Title:

					
					
						Authorized Officer

				

		
			﻿
		

		 

		

			[Signature Page to Fifth Amendment to Credit Agreement (SigmaTron International, Inc.)]ex_349337.htm

Exhibit 10.1

 

Exhibit Includes Redactions

 

Certain information identified with brackets ([$***]) has been excluded from this exhibit in accordance with Item 601(b) of Regulation S-K because it is both not material and is the type that the registrant treats as private or confidential.

 

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is effective as of July 1, 2021 (the “Effective Date”) by and between SUPERIOR GROUP OF COMPANIES, INC, a Florida corporation (the “Company”), and PHILIP KOOSED (“Employee”). Employee and the Company are each referred to herein as a “Party” and collectively as the “Parties.”

 

BACKGROUND

 

A.    A subsidiary of the Company, BAMKO, LLC (“BAMKO”), acquired substantially all of the assets owned or used by BAMKO, Inc., a California corporation, which is now named PEKMA, Inc. (“Original BAMKO”), on the Effective Date pursuant to an Asset Purchase Agreement among BAMKO, Original BAMKO, Employee and all the other shareholders of Original BAMKO (the “Purchase Agreement”).

 

B.    Employee was a shareholder and executive officer of Original BAMKO prior to the Effective Date of the Purchase Agreement, and accepted employment with BAMKO following the closing of the transactions contemplated by the Purchase Agreement (the “Transaction”), and Employee has and will continue to substantially benefit from the Transaction.

 

C.    Employee has been employed with BAMKO since March 1, 2016, and currently holds the title of President.

 

D.    Employee currently has an employment agreement with BAMKO, dated March 8, 2016 (“2016 Employment Agreement”), that expires on December 31, 2021.

 

E.    The Company desires to promote Employee to the position of Chief Strategy Officer of the Company, effective immediately.

 

F.    Employee’s services are of a special, unique, unusual, extraordinary, and intellectual character, and will remain so after being promoted to the role of Chief Strategy Officer.

 

G.    Employee acknowledges that he is and will be employed in a key senior management role with the Company, and that the Company bestows upon and expects from Employee a great deal of responsibility, trust, and reliance.

 

H.    During the course of Employee’s employment with the Company, the Company will (and already has as part of his employment with BAMKO) impart to Employee certain proprietary, confidential, and/or trade secret information, data, and/or materials of the Company Parties (as defined below).

 

 

 

 

I.    It is essential to the conduct of the Company’s business, the sale of its products, and the provision of its services that all proprietary, confidential, and/or trade secret information, data, and/or materials of the Company Parties be kept confidential and that the professional and business relationships of the Company Parties be protected.

 

AGREEMENT

 

The Parties agree as follows:

 

1.    Incorporation. The provisions set forth under the heading “Background” are true and correct and are hereby incorporated into and made a part of this Agreement for all purposes.

 

2.    Term of Employment. The Company agrees to employ Employee, and Employee accepts employment with the Company, on the terms set forth in this Agreement, for a period commencing on the Effective Date and ending on December 31, 2026, unless sooner terminated in accordance with the provisions of Section 5.

 

3.    Position and Duties. The Company will employ Employee, and Employee agrees to work for the Company, as the Chief Strategy Officer of the Company, to perform the duties and responsibilities inherent in such position and such other duties and responsibilities as the Company shall from time to time assign to Employee. Employee will initially report to Chief Executive Officer of the Company. The Company may at any time alter the internal organizational structure of the Company, including the reporting responsibilities of Employee. Employee shall devote his full business time and reasonable best efforts in the performance of the foregoing services in a diligent, trustworthy, professional and efficient manner and, in performing such services, Employee shall comply with the Company’s policies and procedures in effect from time to time and fully support and implement the business and strategic plans of the Company. Employee will act in the best interest of the Company and any other Company Parties (as appropriate) and, except as may be specifically permitted by the Company in writing, will not engage in any other business activity which conflicts with his role at the Company or otherwise causes a conflict of interest. However, Employee may hold passive investment interests or serve in a passive advisory role in other business enterprises that would not constitute a violation of the restrictions described in Sections 6-10 of this Agreement and which would not interfere with Employee’s ability to perform his duties under this Agreement.

 

4.    Compensation and Benefits. During the term of Employee’s employment with the Company under this Agreement:

 

4.1         Salary Compensation. Beginning January 1, 2022, the Company shall pay Employee an annualized base salary of THREE HUNDRED AND SEVENTY-FIVE THOUSAND DOLLARS ($375,000.00), payable in accordance with the Company’s customary payroll practices, no less frequently than monthly. Until January 1, 2022, Employee will continue to earn his current annual base salary, as provided by the 2016 Employment Agreement.

 

4.2         Bonus. Beginning January 1, 2022, Employee shall be eligible for a bonus pursuant to the terms set forth in Exhibit 1 to this Agreement. Employee will also be eligible to participate in such bonus plans as the Company may in its sole and absolute discretion offer to Employee, which may be similar to or entirely different from those available to other similarly situated employees of the Company or any other Company Party. Employee will be paid by March 15, 2022 all bonuses due to him for calendar year 2021, as provided by the 2016 Employment Agreement.

 

 

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4.3         Fringe Benefits. During his employment, Employee shall be entitled to receive all of the Company’s other fringe benefits of employment available to its other employees when and as he becomes eligible for them. The Company reserves the right to modify, suspend or discontinue any and all of its benefit plans as long as such action is taken generally with respect to similarly situated persons and does not single out employee.

 

4.4         Reimbursement of Certain Expenses. Employee shall be reimbursed for such reasonable and necessary business expenses incurred by him while he is employed by the Company, which are directly related to the furtherance of the Company’s business. Employee must submit any request for reimbursement in accordance with the Company’s reimbursement policy regarding same and business expenses must be substantiated by appropriate receipts and documentation as required by applicable Company policy.

 

5.         Termination of Employment. Employee’s employment shall terminate upon the occurrence of any of the following:

 

5.1         Termination for Cause. At the election of the Company, the Company may terminate Employee’s employment immediately for Cause upon written notice by the Company to Employee. For the purposes of this Agreement, “Cause” for termination shall be deemed to exist upon the occurrence of any of the following:

 

(a)         gross negligence or willful misconduct by Employee with respect to any Company Party or in the performance of Employee’s duties hereunder;

 

(b)         Employee’s continued failure to substantially perform his employment duties, which failure is not cured to the good faith reasonable satisfaction of the Company within thirty (30) days after Employee’s receipt of written notice from the Company specifically describing the nature of such failure;

 

(c)         Employee’s material breach of the provisions of Sections 7, 9, 10, 11 or 12;

 

(d)         Employee commits any felony or criminal offense that involves moral turpitude;

 

(e)         Employee commits or engages in any act or omission constituting fraud, theft, dishonesty (including relating to financial matters), deceit, embezzlement, misappropriation or misconduct against or at the expense of any Company Party, or which results in, material harm to the business or reputation of any Company Party; or

 

(f)          Employee commits or engages in any act or omission constituting a material violation of applicable law or a material violation of the Company’s published policies and procedures applicable to senior management employees, including those related to the workplace environment (such as laws or policies relating to sexual harassment or age, race, sex or other prohibited discrimination) and insider trading.

 

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5.2    Death or Disability. Employee’s employment shall terminate automatically and immediately upon his death. At the election of the Company, the Company may terminate Employee’s employment immediately upon Employee’s disability by sending written notice of such election to Employee. The term “disability” shall mean (1) the declaration in accordance with any applicable long-term disability insurance policy that Employee is disabled, or (2) Employee’s inability, due to illness, accident, injury, physical or mental incapacity or other disability or similar cause, to perform the essential functions of his job, with reasonable accommodation, for a period of at least 90 consecutive days or for shorter periods aggregating at least 90 days (whether or not consecutive) during any 12-month period. A determination of disability shall be made by a physician satisfactory to both Employee and the Company; provided, that if Employee and the Company are unable to agree on the physician, Employee and the Company shall each select a physician and the two physicians selected by the Parties shall together select a third physician, whose determination as to the existence of a disability shall be binding on all Parties.

 

 

5.3    Termination after Resignation without Good Reason. Employee may resign his employment immediately, at any time, upon sixty (60) days’ written notice to the Company of Employee’s resignation without Good Reason.

 

 

	 	
			5.4

				
			Effect of Termination.

			

 

(a)          If Employee’s employment is terminated pursuant to Sections 5.1-5.3, (i) the Company shall pay Employee his base salary and any bonus amount that is earned and accrued but unpaid through the date of employment termination (but in no event shall Employee be eligible to receive any bonus and/or commission related to Pre-Tax Hybrid Income booked after Employee’s employment is terminated), (ii) the Company shall reimburse Employee in accordance with Section 4.4 for reasonable expenses incurred but not reimbursed prior to such termination of employment, and (iii) Employee shall be entitled to receive any nonforfeitable benefits already earned and payable to Employee in accordance with the terms and provisions of any agreements, plans or programs of the Company.

 

(b)         Except as otherwise expressly provided herein, Employee shall not be entitled to any other salary, salary continuation, severance, bonuses, employee benefits or compensation or payments of any kind from any Company Party after the termination of his employment under Sections 5.1-5.3, and all of Employee’s rights to salary, bonuses, employee benefits and other compensation and payments of any kind which would have been earned and accrued or become payable after his termination shall cease upon such termination, other than as expressly required under applicable law (such as the federal law known as COBRA).

 

4

 

 

(c)         If, during the Term of Employment set forth in Section 2, Employee’s employment is (i) terminated pursuant to a Change in Control Termination; or (ii) Employee resigns his employment for Good Reason; or (iii) is terminated by the Company for any reason other than those provided for in Section 5.1 or Section 5.2 (such as a termination by the Company without Cause), in addition to the items detailed in Section 5.4(a), the Company will pay Employee an amount equal to 2.0 times Employee’s highest total annual compensation, as determined by the sum of Employee’s single highest base salary during the preceding three-year period and the average of the annual cash bonuses paid or payable to Employee that were calculated based on the results of the three (3) full fiscal years ended immediately before Employee’s termination of employment (regardless of when paid) or, if greater, the three (3) full fiscal years ended immediately prior to a Change in Control (or, if applicable, such lesser period for which cash annual bonuses were paid or payable to Employee) (“Separation Payment”). The Separation Payment shall be paid in a single lump sum, no later than sixty (60) days after Employee’s employment is terminated pursuant to this Section 5.4(c). Notwithstanding anything to the contrary, and without limitation of any remedies to which the Company may be entitled under this Agreement or applicable law: (i) the Company shall not be required to make any payment of the Separation Payment unless and until Employee signs and delivers a Release (defined below) and the period (if any) during which such Release can be revoked expires without any revocation, and (ii) Employee shall not be entitled to any payment of the Separation Payment during the period in which Employee is violating any of his obligations under Sections 6-10 or under the Restrictive Covenants Agreement among BAMKO, Original BAMKO, and its shareholders or under the separate Confidentiality Agreement between Employee and the Company. For purposes of this Agreement, a “Release” means a written release, in form and substance reasonably satisfactory to the Company, whereby Employee waives and releases the Company, its officers, directors, employees and Affiliates from any and all claims that Employee may have against any of them (including, without limitation, any claims in connection with Employee’s employment or the termination thereof) and affirms his post-termination obligations hereunder, provided, that the Release will not apply to any vested benefit under the Company’s qualified retirement plan, any rights under the Purchase Agreement, or any other employee benefit required to be provided by applicable law.

 

(d)         For purposes of this Agreement, “Good Reason” shall mean (i) a material, adverse reduction in Employee’s authority, duties, or responsibilities (other than temporarily while Employee is physically or mentally incapacitated or as required by applicable law); (ii) Employee is required by the Company to reside in a location not of his choosing; or (iii) the Company’s uncured breach of a material provision of this Agreement. Prior to resignation for Good Reason, Employee is required to give written notice to the Company of the intent to resign for Good Reason, describing the reason for the resignation in sufficient detail in order to allow the Company the opportunity to address the situation. Such notice must be provided within thirty (30) days of the event(s) constituting Good Reason and must be given at least thirty (30) days in advance of the effective date of resignation. The Company shall be entitled to ninety (90) days after the date of Employee’s written notice during which it can cure the situation. If the situation has not been cured within ninety (90) days after the date of Employee’s written notice, Employee may then resign for Good Reason, by written notice, effective immediately, which date shall be the Effective Date of resignation.

 

(e)         A “Change in Control Termination” means the termination of Employee by the Company or its successor without Cause within twelve (12) months after the consummation of a Change in Control. In this Agreement, “Change in Control” means any of the following occurs: (A) the Company sells all or substantially all of its assets to an entity that is not an Affiliate (in a transaction requiring shareholder approval), (B) any person or group of persons within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, other than the Company’s Affiliates, becomes the beneficial owner, directly or indirectly, of more than 50% of the Company’s equity securities or outstanding voting stock (whether by way of purchase of stock or other equity securities, merger or otherwise), or (C) any transaction that qualified as a liquidation, dissolution, or winding up of the Company. Notwithstanding the foregoing, the following transactions shall in no event constitute a Change in Control: (x) any equity or debt financing transaction pursuant to which the Company sells securities with the principal purpose of raising capital, or (y) any ownership or acquisition of stock by any of the Benstock family or their Affiliates, including pursuant to transfers for estate planning purposes. In this Agreement, “Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise, and such control will be presumed if any Person owns 10% or more of the voting capital stock or other ownership interests, directly or indirectly, of any other Person. In this Agreement, “Person” means any individual, association (incorporated or unincorporated), corporation, partnership (of any designation - limited partnership, general partnership, limited liability partnership, or otherwise), limited liability company, trust, or any other entity or organization, public or private, including a governmental entity.

 

5

 

 

(f)         The Parties mutually agree and acknowledge that the termination of Employee’s employment (whether by termination or resignation) and/or the termination of this Agreement, by either party, for any reason, shall have no impact on the rights and obligations of either Party under the terms of the Purchase Agreement, except as may be expressly stated and provided therein.

 

6.         Restrictive Covenants - Definitions. In this Agreement, the following terms shall have the meanings defined below. Terms may be used in the singular or plural.

 

(a)         “Business” means the business of (i) designing, manufacturing, and marketing of employee uniforms, image apparel, scrubs, patient apparel, and personal protective equipment (PPE), (ii) designing, manufacturing, marketing, selling and distributing promotional products, gifts to a third party’s employees and/or customers, point of sale (POS), point of purchase (POP), accessories, and related goods and services, including product sourcing, ideation, quality control, (iii) global logistics related to (i) and/or (ii), and (iv) the provision of business process and contact center outsourced solutions. For clarity, the Business includes all sourcing of products for customers, whether through distribution or direct supply arrangements.

 

(b)         “Company Parties” means Superior Group of Companies, Inc., and any of its direct or indirect parents, subsidiaries, and/or Affiliates, and any of their successors or assigns.

 

(c)         “Confidential Information” means all data or information that is related to the Company or the Business (including any data or information that relates to or results from any historical or projected financial results or financial information, products, services, vendors, customers or research or development of any Company Party), regardless of whether it constitutes a “trade secret” under applicable common law or statute, is labeled or identified as “confidential” or is now existing or to be developed in the future, in any form of medium, that was disclosed to Employee or became known by Employee as a consequence of, or through, Employee’s employment with Original BAMKO, BAMKO, or the Company and/or Employee’s affiliation with Original BAMKO, BAMKO, or the Company (including information conceived, originated, discovered, or developed in whole or in part by Employee, including while he was employed by Original BAMKO), having value to the Company, not generally known to competitors of the Company, and about the Company’s and the Company Parties’ business, finances, operating results, products, processes, and services, including, but not limited to, (i) information relating to research, development, inventions, computer program designs, flow charts, source and object codes, products and services under development, pricing and pricing strategies, marketing and selling strategies, servicing, purchasing, accounting, engineering, cost and costing strategies, sources of supply, customer lists, customer requirements, business methods or practices, training and training programs, financial records, the documentation thereof, and similar information, (ii) confidential information of Original BAMKO and its subsidiaries that was acquired by BAMKO from Original BAMKO under the Purchase Agreement, (iii) identities of, individual requirements of, specific contractual arrangements with, and information about, the Company’s current, former or prospective employees, suppliers, distributors, customers, customer prospects, independent contractors and other business relations and their confidential information, (iv) trade secrets, technology, know-how, compilations of data and analyses, techniques, systems, formulae, records, reports, manuals, documentation, models, data and data bases relating thereto, (v) proprietary software, (vi) innovations, ideas, devices, improvements, developments, methods, processes, designs, analyses, drawings and all similar or related information (whether or not patentable and whether or not reduced to practice), (vii) copyrightable works, and (viii) intellectual property of every kind and description; provided, however, that Confidential Information shall not mean data or information (x) which has been voluntarily disclosed to the public by the Company, except where such public disclosure has been made by Employee or any other party to the Purchase Agreement (other than BAMKO) without authorization from the Company; (y) which has been independently developed and disclosed by others not in breach of a confidentiality obligation, or (z) which has otherwise entered the public domain through lawful means and through no fault of Employee. Confidential Information will be interpreted as broadly as possible to include all information of any sort (whether merely remembered or embodied in a tangible or intangible form) that is (1) related to any Company Party’s current or potential business or operations, and (2) is not generally or publicly known. Notwithstanding the foregoing obligations, pursuant to 18 U.S.C. § 1833(b), Employee understands and acknowledges that he shall not be held criminally or civilly liable under any U.S. federal or state trade secret law for the disclosure of a trade secret that is made: (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (2) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and protected from public disclosure. Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b).

 

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(d)         “Prohibited Term” means the period commencing on the Effective Date and ending two (2) years after Employee’s termination or resignation of employment for any reason.

 

(e)         “Territory” means such geographic area in which Employee is working, worked, and/or over which Employee has or had managerial responsibility during Employee’s employment with the Company, including, but not limited to, the United States of America and Canada.

 

7.         Confidentiality. Employee warrants and agrees that he will not at any time reproduce, use, distribute, disclose, publish, misappropriate, or otherwise disseminate any Confidential Information and will not take any action causing, or fail to take any action to prevent, any Confidential Information to lose its character as Confidential Information until and unless such Confidential Information loses its status as Confidential Information through no fault, either directly or indirectly, of Employee, either during the term of Employee’s employment or engagement by the Company (the “Service Period”) or thereafter, except when such disclosure or use is directly related to and required by Employee’s performance of duties assigned by the Company.

 

Employee will safeguard all Confidential Information and will not take any action causing, or fail to take any action to prevent, any Confidential Information to lose its character as Confidential Information until and unless such Confidential Information loses its status as Confidential Information through no fault, either directly or indirectly, of Employee. Employee will safeguard all documents and things that contain or embody Confidential Information, including but not limited to Confidential Information stored in an electronic format on any Company computer or personal computer owned or used by Employee.

 

Employee will not, in any communication, including but not limited to with the media, social media, prospective or actual employers, current and former employees of Company Parties, and current and prospective suppliers, vendors, business partners or customers, make any derogatory, disparaging, or critical statement, orally, written, or otherwise, against any Company Party.

 

8.         Return of Documents.

 

(a)         Upon termination of Employee’s employment with the Company for any reason, Employee will return to or leave with the Company all documents, records, notebooks, and other repositories of or containing Confidential Information, including all copies thereof, as well as all originals and copies of work made for hire, including all electronic copies of Confidential Information, or other tangible property of any Company Party, whether prepared by Employee or others, then in Employee’s possession or under Employee’s control.

 

(b)         Upon request or immediately upon termination of employment for any reason, Employee shall promptly (and in any event within three (3) days) provide Company access to all computers, mobile phones, tablets, other electronic devices, thumb drives, portable hard drives, any other type of electronic storage device, and any and all email or cloud accounts/services that Employee used at any time during Employee’s employment with the Company to ensure all Confidential Information is identified and permanently deleted or removed from such locations and Employee shall disclose in writing any and all computer, cloud, software, and other passwords and related security protection information Employee used in relation to Employee’s work with the Company.

 

7

 

 

9.         Non-Solicitation.

 

(a)         Employees. During the Prohibited Term, unless Employee receives express written consent from the Company, Employee shall not, directly or indirectly, solicit, recruit, induce or attempt to solicit, recruit, or induce any then current or former employee, of a Company Party to leave the employ of, any Company Party; provided however, that the restrictions set forth in this Section 9 shall apply only to employees with whom Employee had business contact during the last twenty-four (24) months as of the date of Employee’s employment termination.

 

(b)         Contractors. During the Prohibited Term, unless Employee receives express written consent from the Company, Employee shall not, directly or indirectly, solicit, recruit, or induce any independent contractor of a Company Party to cease performing services for a Company Party or reduce the amount or quality of the services performed for a Company Party, other than in response to general solicitations not targeted to such independent contractors.

 

(c)         Customers. During the Prohibited Term, unless Employee receives express written consent from the Company, Employee shall not, directly or indirectly, on behalf of any Person other than a Company Party, solicit business from any customer or customer prospect of a Company Party, or any representative of the same, with a view toward the sale or providing of any service or product competitive with the Business; provided, however, the restrictions set forth in this Section 9(c) shall apply only to customers or prospects of a Company Party, or representatives of the same, with which Employee or the Company Party had Material Contact during the last twenty-four (24) months immediately prior to the date of Employee's employment termination. “Material Contact” means contact between Employee or the Company Party and each customer or customer prospect: (i) with whom or which Employee dealt on behalf of the Company Party; (ii) whose dealings with the Company Party were directly or indirectly coordinated or supervised by Employee; (iii) about whom Employee obtained Confidential Information in the course of Employee's employment for the Company; and/or (iv) who receives products or services authorized by the Company Party, the sale or provision of which results or resulted in revenue to the Company Party or compensation, commissions, or earnings for Employee within two years prior to the date of Employee's termination.

 

10.         RESTRICTIONS ON COMPETITION. During the Prohibited Term, unless performed for or provided on behalf of a Company Party, and unless Employee receives express written consent from the Chief Executive Officer of the Company, Employee shall not (a) directly or indirectly, in the Territory, provide the same or similar duties that Employee performed on behalf of a Company Party within the two years prior to the cessation of Employee’s employment for any person or business which competes with a Company Party in the Business, (b) directly or indirectly provide the same or similar duties that Employee performed on behalf of a Company Party related to any customer or customer prospect of a Company Party on whose account Employee worked and/or over which Employee had managerial responsibility within the two years prior to the cessation of Employee’s employment for any person or business which competes with a Company Party in the Business, and/or (c) directly or indirectly, own, control, manage, or participate in the ownership, control, or management of any business (whether as principal, agent, shareholder, participant, partner, promoter, director, officer, manager, member, equity lender, employee, consultant, sales representative, or otherwise) which competes with a Company Party in the Business within the Territory, however, notwithstanding the foregoing, Employee shall not be prohibited from owning, as a passive investment, not more than 1.0% of the capital stock of any corporation that competes with a Company Party in the Business that is traded on a national securities exchange so long as neither Employee nor any family member of Employee has active participation in the business of such corporation.

 

8

 

 

11.         Intellectual Property, Inventions and Patents.

 

(a)         In the event that Employee, during the Service Period, individually or in conjunction with another Person, generates, authors, conceives, develops, acquires, makes, reduces to practice or contributes to any discovery, formula, trade secret, invention, innovation, improvement, development, method of doing business, process, program, design, analysis, drawing, report, data, software, firmware, logo, device, method, product or any similar or related information, any copyrightable work or any Confidential Information (collectively, “Intellectual Property”), Employee expressly acknowledges and agrees that such Intellectual Property is and shall be the exclusive property of the Company; provided, however, that such Intellectual Property relates to the Business or results from any work performed by Employee for the Company. Any copyrightable work prepared in whole or in part by Employee and relating to the actual or contemplated business of any Company Party shall be deemed “a work made for hire” to the maximum extent permitted under Section 201(b) of the 1976 Copyright Act as amended, and the Company shall own all of the rights comprised in the copyright therein. Employee hereby assigns his entire right, title and interest in and to all Intellectual Property to the Company. During and after the Service Period, Employee shall promptly disclose all Intellectual Property to the Company and shall cooperate with the Company to establish, confirm and protect all rights, title and interest of the Company to such Intellectual Property (including, without limitation, providing reasonable assistance in securing patent protection and copyright registrations and executing all documents as reasonably requested by the Company). Employee agrees that he will not use or disclose any work made for hire of any Company Party to benefit a Person that competes with the Company Parties, any current, former or prospective vendors, suppliers, distributors, customers, customer prospects, independent contractors and other business relations of any Company Party, or any other individual or entity (except in performing his obligations to the Company during his employment with the Company), without the express, written permission of the Company.

 

(b)         Nonassignable Inventions. Notwithstanding any provision of this Agreement to the contrary, this Agreement does not apply to work that does not relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company or result from any work performed by the Employee for the Company. Employee agrees to disclose promptly in writing to the Company all inventions created, conceived, developed or reduced to practice by Employee during the term of his employment, whether or not Employee believes such inventions are subject to this Agreement, to permit a determination by the Company as to whether or not the inventions should be the property of the Company. Any such information will be received in confidence by the Company.

 

(c)         Prior Inventions. Employee represents and warrants that he has not, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice any work prior to the commencement of Employee's employment with or services to the Company which Employee considers to be Employee's property or the property of third parties (collectively referred to as “Prior Inventions”). If, in the course of Employee's employment with or services to the Company, Employee incorporates a Prior Invention into a Company product, service or item of content, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to make, have made, modify, use and sell such Prior Invention. Notwithstanding the foregoing, Employee agrees that Employee will not incorporate, or permit to be incorporated, Prior Inventions in any work without the Company's prior written consent.

 

9

 

 

12.         Duty Of Loyalty. While employed by the Company, Employee agrees that he will not engage in or deal with any activities, products, or services that are competitive with the Company Parties’ activities, products, business, or services, and that Employee will not usurp any Company Party business opportunity, without the express prior written consent of the Company. Employee further agrees to faithfully render Employee’s services to the Company and to devote Employee’s best efforts, ability, skill, and attention, in good faith, to the Company’s business while employed by the Company.

 

13.         Notice to Future Employers. Employee agrees to provide to any subsequent, anticipated, and/or contemplated employer an executed copy of this Agreement and to provide written notice to the Company of such event occurring within two (2) business days after such event. These requirements shall cease only after the expiration of the Prohibited Term and/or required by law expire. During the Prohibited Term, Employee authorizes the Company to provide an executed copy of this Agreement to third parties, including but not limited to, Employee’s subsequent, anticipated, and/or contemplated future employers.

 

14.         Assignability. All of Employee’s obligations under this Agreement shall be binding upon Employee’s heirs, assigns, and legal representatives. The terms and provisions of this Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. The Company shall have the right to assign this Agreement to any Company Party or to any successor or assignee of all or substantially all of the business or assets of the Company. This Agreement is personal to Employee, and he shall not have the right to assign this Agreement without the express written consent of the Company, and any attempted assignment in violation thereof shall be invalid and ineffective against the Company.

 

15.         Obligations Survive Termination Of Employment. Any termination of Employee’s employment with the Company shall not impair or relieve Employee of his obligations hereunder that otherwise survive the termination of this Agreement pursuant to their respective terms or by their nature.

 

16.         Governing Law and Forum Selection. This Agreement shall be deemed to have been made and entered into in the State of Delaware and shall be construed and enforced in accordance with the laws of the State of Delaware, without regard to the conflicts of laws provisions therein. Employee acknowledges that this Agreement is governed by 6 DE Code § 2708 and it shall conclusively be presumed to be a significant, material and reasonable relationship with this State of Delaware and it shall be enforced whether or not there are other relationships with this State of Delaware. To the extent that any dispute, controversy, or claim under this Agreement arises that is not subject to Arbitration pursuant to Section 23 of this Agreement (“Claim”) or a party breaches Section 23 of this Agreement, the parties agree that the exclusive venue and jurisdiction with respect to any such Claim or dispute shall be in either the Superior Court of Delaware or the federal courts for the District of Delaware. Employee indicates that he has in fact been represented by counsel of his choice and received advice from such counsel in entering this Agreement, including this Section 16. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING UNDER SECTION 16 AND ARBITRATION IN DELAWARE AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE PARTIES ACKNOWLEDGE THAT DELAWARE HAS PERSONAL JURISDICTION OVER THEM AND THAT THEY SHALL NOT CHALLENGE PERSONAL JURISDICTION IN ANY ACTION OR ARBITRATION BROUGHT IN THOSE FORUMS AS APPLICABLE PURSUANT TO THIS AGREEMENT.

 

10

 

 

17.         Severability. The Parties believe that the restrictions and covenants in this Agreement are, under the circumstances, reasonable and enforceable. However, if any one or more of the restrictions, covenants, or provisions contained in this Agreement shall, for any reason under the law as it shall then be construed, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other restriction, covenant, or provision of this Agreement. In such an instance, this Agreement shall be construed as if such invalid, illegal, or unenforceable restriction, covenant, or provision had never been contained herein. Additionally, if any one or more of the restrictions, covenants, or provisions contained in this Agreement shall for any reason be held to be excessively broad as to time, duration, geographical scope, activity, or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.

 

18.         Remedy. Employee acknowledges that the covenants specified in Sections 6-12 contain reasonable limitations as to time, geographic area, and scope of activities to be restricted, and that such promises do not impose a greater restraint on Employee than is necessary to protect the goodwill, Confidential Information, customer and employee relations, and other legitimate business interests of the Company. Employee also acknowledges and agrees that any violation of the restrictive covenants set forth in Sections 6-12 would bestow an unfair competitive advantage upon any Person which might benefit from such violation, in part because of the special, unique, unusual, extraordinary, and intellectual character of the services provided by Employee which gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated in damages, and would necessarily result in substantial and irreparable damage and loss to the Company. Accordingly, in the event of a breach or a threatened breach by Employee of Sections 6-12 of this Agreement, the Company shall have grounds to terminate the employment of Employee and will therefore be entitled to cease salary, benefits, and any and all remaining contingent future payments to Employee that have not already vested. The Company also shall be entitled to an injunction restraining Employee from such breach or threatened breach in Court or arbitration. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages from Employee. In the event that the Company should seek an injunction, Employee waives any requirements that the Company post a bond or any other security.

 

11

 

 

19.         Independent Covenants. The covenants specified in Sections 6-14 are intended by each Party hereto to be, and shall be construed as, agreements independent of each other and of any other agreement between the Parties, and the existence of any claim or cause of action of Employee or any of his affiliates (including Original BAMKO) against the Company Parties, whether predicated on this Agreement, the Purchase Agreement or any other agreement between Employee and a Company Party, shall not constitute a defense to the enforcement by the Company of such covenants. Further, Employee acknowledges that he is also bound by restrictive covenants in the Purchase Agreement, which were agreed to by Employee as a material inducement to the Company to enter into Purchase Agreement and consummate the Transaction. The Parties agree that the restrictive covenants in the Purchase Agreement are separate, independent of, and in addition to the restrictive covenants in this Agreement, and nothing in this Agreement shall be interpreted as modifying, replacing, terminating, or otherwise affecting the enforceability of the restrictive covenants in the Purchase Agreement, which remain in full force and effect in accordance with their terms.

 

20.         Blue-Pencil; Modification; Enforcement. If a court holds that the duration, scope or area restrictions in Sections 6-10 are unenforceable, the maximum duration, scope or area enforceable shall be substituted, or, if such substitution is not permissible by law, only the unenforceable or unlawful portion should be stricken and all remaining portions should remain enforceable. Because Employee’s services are unique and Employee has access to Confidential Information, in the event of a breach or a threatened breach by Employee of any of Sections 6-10, the Parties acknowledge and agree that the Company and other Company Parties would suffer irreparable and continuing harm for which money damages would be an inadequate remedy. Accordingly, in addition and supplementary to all other rights and remedies that may be available, the Company Parties shall be entitled to specific performance and/or injunctive or other equitable relief in order to enforce or prevent any violations of this Agreement (without posting a bond or security, if permitted by applicable law, and without proof of monetary damages or an inadequate remedy at law). In addition, (i) the Prohibited Term shall be tolled until the activity causing a breach of any of Sections 6-10 has been stopped, and (ii) the Company Parties shall be entitled to recover from Employee all profit Employee gains from such breach or violation in addition to any damages that the Company Parties suffer. Employee acknowledges and agrees that the Company Parties may exercise any of the foregoing remedies concurrently, independently or successively. Employee acknowledges that the restrictions contained in Sections 6-10 are reasonable.

 

21.         Amendments Or Modifications; Waiver. No amendments or modifications to this Agreement shall be binding on any of the Parties, unless such amendment or modification is in writing and executed by all of the Parties to this Agreement. No term, provision, or clause of this Agreement shall be deemed waived and no breach excused, unless such waiver or consent shall be in writing and executed by Employee and on behalf of the Company. No delay or course of dealing by a Party to this Agreement in exercising any right, power, or remedy under this Agreement will operate as a waiver of any right, power, or remedy of that Party, except to the extent expressly manifested in such a writing. The failure at any time of either Party to require performance by the other Party of any provision of this Agreement will in no way affect the Party’s right thereafter to enforce the provision or this Agreement. In addition, the waiver by a Party of a breach of any provision of this Agreement will not constitute a waiver of any succeeding breach of the provision or a waiver of the provision itself.

 

12

 

 

22.         Notice. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) if delivered personally or actually received, as of the date received, (b) if delivered by certified mail, return receipt requested, five (5) business days after being mailed or, if earlier, the actual date of receipt evidenced by the written receipt, (c) if delivered by a nationally recognized overnight delivery service, one (1) business day after being deposited with such delivery service for next business day delivery, or (d) if sent via electronic mail in portable document format (.pdf) or similar electronic transmission with proof of receipt and a hard copy to follow by first class mail or overnight delivery, as of the date received, to such party at its address set forth below (or such other address as it may from time to time designate in writing to the other parties hereto):

 

If to Company:

 

Superior Group of Companies, Inc.

 

10055 Seminole Boulevard

Seminole, Florida 33772-2539

Attn: Chief Executive Officer

email: mbenstock@superiorgroupofcompanies.com

 

With copy to:

 

Superior Group of Companies, Inc.

10055 Seminole Boulevard

Seminole, Florida 33772-2539

Attn: General Counsel

email: SGC-Legal@superiorgroupofcompanies.com

 

If to Employee:

 

Philip Koosed

 

[***]

 

[***]

 

email: [***]

 

23.         WAIVER OF JURY TRIAL; ARBITRATION; WAIVER OF CLASS AND COLLECTIVE CLAIMS.

 

WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.

 

13

 

 

ARBITRATION. Any dispute or controversy arising under or in connection with this Agreement, Employee’s employment by the Company or Employee’s compensation and benefits shall be settled exclusively by final and binding arbitration in Dover, Delaware by an arbitrator in accordance with the Comprehensive Rules of Judicial Arbitration & Mediation Service, Inc. (“JAMS”) in effect at the time of submission to arbitration. The rules can be found at https://www.jamsadr.com/rules-comprehensive-arbitration/.

 

The following claims are excluded from this arbitration provision: claims arising under the National Labor Relations Act which are brought before the National Labor Relations Board, workers' compensation claims under applicable workers’ compensation laws, Employment Development Department claims, ERISA claims covered by an ERISA plan with a dispute resolution provision, or any other claims that are non-arbitrable under applicable state or federal law. Nothing herein shall prevent Employee from filing and pursuing proceedings before the Department of Fair Employment and Housing, the Division of Labor Standards Enforcement, or the United States Equal Employment Opportunity Commission (although if Employee chooses to pursue a claim following the exhaustion of such remedies, that claim would be subject to the provisions of this Agreement).

 

The statutes of limitations otherwise applicable under law shall apply to all Claims made in arbitration. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The arbitration shall be conducted in a procedurally fair manner by a mutually agreed upon neutral arbitrator selected in accordance with the applicable JAMS rules (“Rules”) or if none can be mutually agreed upon, then by one arbitrator appointed pursuant to the Rules; the arbitration shall be conducted confidentially in accordance with the Rules unless provided otherwise by applicable law; the arbitration fees shall be paid by the Company; each party shall have the right to conduct reasonable discovery including depositions, requests for production of documents and such other discovery as permitted under the Rules or ordered by the arbitrator; the arbitrator shall have the authority to award any damages authorized by law for the claims presented, including punitive damages; the decision of the arbitrator shall be final and binding on all parties and shall be the exclusive remedy of the parties; and the award shall be in writing in accordance with the Rules, and shall be subject to judicial enforcement and review in accordance with applicable law.

 

WAIVER OF CLASS AND COLLECTIVE CLAIMS. THE PARTIES AGREE THAT ALL CLAIMS WILL BE ARBITRATED (OR LITIGATED, IF APPLICABLE) ONLY ON AN INDIVIDUAL BASIS, AND THAT BOTH PARTIES WAIVE THE RIGHT TO BRING, PARTICIPATE IN, JOIN, OR RECEIVE MONEY OR ANY OTHER RELIEF FROM ANY CLASS, COLLECTIVE, OR REPRESENTATIVE PROCEEDING. NO PARTY MAY BRING A CLAIM ON BEHALF OF OTHER INDIVIDUALS (WHETHER IN ARBITRATION OR IN COURT), AND AN ARBITRATOR MAY NOT (AND EMPLOYEE MAY NOT ASK A COURT TO): (I) COMBINE MORE THAN ONE INDIVIDUAL’S CLAIM OR CLAIMS INTO A SINGLE CASE; (II) PARTICIPATE IN OR FACILITATE NOTIFICATION OF OTHERS OF POTENTIAL CLAIMS; OR (III) ARBITRATE (OR LITIGATE) ANY FORM OF A CLASS, COLLECTIVE, OR REPRESENTATIVE PROCEEDING.

 

14

 

 

24.         Entire Agreement. This Agreement represents the entire agreement between the Parties and supersedes any and all other prior oral or written agreements, proposals, representations, communications, and/or understandings between Employee and the Company related to the subject matter of this Agreement, and Employee has not relied upon any representation that is not expressly set forth in this Agreement; provided that the following agreements remain applicable and enforceable in accordance with their respective terms and that nothing contained in this Agreement shall be interpreted as waiving, modifying, amending, replacing, terminating, or accelerating or giving rise to any rights under such previous agreements: (a) the separate Confidentiality Agreement between Employee and the Company; (b) the Performance Shares Agreement between Employee and the Company; (c) the Restrictive Covenants Agreement among BAMKO, Original BAMKO, and its shareholders (including Employee); and (d) the Purchase Agreement, the Transaction Documents, and the other agreements, instruments and documents delivered in connection with the Purchase Agreement and closing of the transactions contemplated therein (except the 2016 Employment Agreement, which upon the effectiveness of this Agreement, will be superseded by this Agreement in its entirety, other than any terms and/or conditions of that Employment Agreement that explicitly or by their nature survive termination or expiration and that do not conflict with this Agreement).

 

25.         Counterparts; Electronic Signatures; Effectiveness. This Agreement may be executed in one or more counterpart signature pages, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement, which shall be binding upon all of the Parties hereto notwithstanding the fact that all Parties are not signatory to the same counterpart. The exchange and delivery of executed copies of this Agreement and of signature pages by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature and shall be binding for all purposes hereof. A Party’s receipt of a facsimile signature page or electronic copy of a signature page to this Agreement shall be treated as the Party’s receipt of an original signature page. Alternatively, an electronic signature (whether digital or encrypted, such as one transmitted via DocuSign or RightSignature) shall be effective to bind the Party that transmitted the signature to the same extent as would a handwritten signature.

 

26.         Tax Provisions.

 

26.1         The Company will have no obligation to Employee or any other Person entitled to payment or benefits under this Agreement with respect to any tax obligation Employee or such other Person incurs as a result of or attributable to this Agreement or arising from any payments made or to be made under this Agreement.

 

26.2         The Company shall have the right to deduct from any payment made to Employee any amount required to be withheld for any federal, state or local income, employment or other taxes. In the event the Company does not make such deductions or withholdings, Employee shall indemnify the Company for any amounts paid with respect to any such taxes, together (if such failure to withhold was at the written direction of Employee or if Employee was informed that such deductions or withholdings were not made) with any interest, penalties and related expenses thereto.

 

15

 

 

26.3         409A Provisions.

 

(a)         The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.

 

(b)         For purposes of determining Employee’s entitlement to any compensation payable upon his termination of employment with the Company that is subject to Section 409A, if any, Employee’s employment will be deemed to have terminated on the date of Employee’s “separation from service” from the Company within the meaning of Section 409A of the Internal Revenue Code. If Employee is a “specified employee” of the Company as of such date, any such benefit or payment that Employee is entitled to receive before the date that is six (6) months after the separation from service date that is not otherwise exempt from the requirements of Section 409A of the Internal Revenue Code shall not be provided or paid on the date such benefit or payment is otherwise required to be provided or paid. Instead, the payment of all such amounts shall be accumulated and paid in a single lump sum payment on the first business day after the date that is six months after the separation from service date (or, if earlier, within fifteen (15) days following Employee’s date of death). All benefits or payments otherwise required to be provided or paid on or after the date that is six (6) months after the separation from service date shall not be affected by the preceding sentence, and shall be provided and paid in accordance with the payment schedule otherwise applicable to such payment or benefit.

 

(c)         Notwithstanding anything to the contrary in this Agreement, if the specified period during which the Release may be returned and become effective spans two calendar years, any payments conditioned upon the execution of the Release shall not be paid earlier than the first day of the second calendar year.

 

(d)         To the extent that any reimbursements under this Agreement are subject to Section 409A, any such reimbursements payable to Employee shall be paid to Employee no later than December 31 of the year following the year in which the expense was incurred; provided, that Employee submits Employee’s reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and Employee’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.

 

(e)         Employee’s right to receive any installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A.

 

(f)         Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

27.         Acknowledgements. Employee acknowledges that he has read and understands the provisions of this Agreement, that Employee has been given an opportunity for his legal counsel to review this Agreement, that Employee’s legal counsel has reviewed and advised Employee regarding this Agreement (including, but not limited to, its choice of law, venue, and forum provisions), that the provisions of this Agreement are reasonable, that Employee enters into this Agreement voluntarily without duress or pressure from the Company and with full knowledge and understanding of the contents, nature, and effect of this Agreement, and that Employee has received a copy of this Agreement.

 

[Signature Page Follows]

 

16

 

 

IN WITNESS WHEREOF, the Parties hereto have duly executed and delivered this Agreement as of the Effective Date.

 

 

EMPLOYEE:

 

 

/s/ Philip Koosed_____________________

Philip Koosed

 

Date Signed: ___________________

 

 

 

 

COMPANY:

 

 

SUPERIOR GROUP OF COMPANIES, INC.

 

 

By: ___________________________

 

Name: _________________________

 

Title: __________________________

 

 

17

 

 

 

Exhibit 1

 

Bonus Plan

 

Pre-Tax Hybrid Income Bonus - Employee shall be paid a Pre-Tax Hybrid Income Bonus for each of the calendar years 2022, 2023, 2024, 2025, and 2026, that shall be calculated as follows for the applicable year or any portion thereof in which Employee remains employed by the Company:

 

	 	
			Low PTHI

				
			High PTHI

				
			Bonus %

				
			Incremental Bonus

				
			Total Bonus

			
	
			Tier 1*

				
			$0

				
			$[***]

				
			1.00%

				
			$[***]

				
			$[***]

			
	
			Tier 2

				
			$[***]

				
			$[***]

				
			[***]%

				
			$[***]

				
			$[***]

			
	
			Tier 3

				
			$[***]

				
			$[***]

				
			[***]%

				
			$[***]

				
			$[***]

			
	
			Tier 4

				
			$[***]

				
			$[***]

				
			[***]%

				
			$[***]

				
			$[***]

			
	
			Tier 5

				
			$[***]

				
			$[***]

				
			[***]%

				
			$[***]

				
			$[***]

			
	
			Tier 6

				
			$[***]

				
			$[***]

				
			[***]%

				
			$[***]

				
			$[***]

			
	
			Tier 7

				
			$[***]

				
			uncapped

				
			3.70%

				
			TBD

				
			TBD

			

 

*No Pre-Tax Hybrid Income Bonus shall be earned until the Company’s Pre-Tax Hybrid Income equals $[***] for the applicable calendar year. If the Company’s Pre-Tax Hybrid Income equals or exceeds $[***], Employee shall earn the bonus beginning with the first dollar of Pre-Tax Hybrid Income.

 

This bonus is non-discretionary and shall be paid to Employee regardless of personal performance. This bonus shall be paid by no later than March 15th in the year after it is earned.

 

For purposes of this Exhibit 1 (Bonus Plan), “Company” shall mean Superior Group of Companies, Inc., including all of its present and future-formed subsidiaries.

 

“Pre-Tax Hybrid Income” (also called “PTHI”) shall be calculated as follows: the Company’s EBITDA for the applicable calendar year plus the accrual, if any, for Employee’s Pre-Tax Hybrid Income Bonus and the annual incentive bonuses for any and all SGC-level employees of the Company included in the SGC Director and Officers Bonus Plan. For purposes of this bonus calculation, the Company’s pre-tax income shall be calculated in accordance with accounting principles generally accepted in the United States of America, based upon the Company’s financial statements.

 

“EBITDA” shall mean earnings before interest, taxes, depreciation, and amortization.

 

For illustrative purposes:

 

	 	
			●

				
			If the Company’s Pre-Tax Hybrid Income for 2023 is $[***], Employee shall earn a Pre-Tax Hybrid Income Bonus in the amount of $[***].

			

	 	
			●

				
			If the Company’s Pre-Tax Hybrid Income for 2023 is $[***], Employee shall earn a Pre-Tax Hybrid Income Bonus in the amount of $[***].

			

	 	
			●

				If the Company’s Pre-Tax Hybrid Income for 2023 is $[***], Employee shall earn a Pre-Tax Hybrid Income Bonus in the amount of $[***].

 

18

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