Document:

EXHIBIT 10.1

 

EXECUTION VERSION

 

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of June 9, 2014, is by and among (a) ESTERLINE TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company”), (b) ESTERLINE TECHNOLOGIES EUROPE LIMITED, a company incorporated in England and Wales with registration number 06787209 (“ETEL”), (c) ESTERLINE TECHNOLOGIES LIMITED, a company incorporated in England and Wales with registration number 03837209 (“ETL”), ESTERLINE TECHNOLOGIES GLOBAL LIMITED, a company incorporated in England and Wales with registration number 09002080 (“ETGL”), TA MFG LIMITED, a company incorporated in England and Wales with registration number 01979171 (“TA MFG”) and ESTERLINE INTERFACE TECHNOLOGIES LIMITED, a company incorporated in England and Wales with registration number 08331349 (“EITL” and together with ETL, ETGL and TA MFG, collectively, the “Additional U.K. Borrowers”; the Additional U.K. Borrowers, together with ETEL, collectively, the “U.K. Borrowers”; the U.K. Borrowers, together with the Company, collectively the “Borrowers”), (d) the Domestic Subsidiaries of the Company party hereto (collectively, the “Guarantors”), (e) the Lenders (as defined below) party hereto and (f) WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent on behalf of the Lenders under the Credit Agreement (as hereinafter defined) (in such capacity, the “Administrative Agent”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement. 

 

W I T N E S S E T H

 

WHEREAS, the Company, ETEL, the Guarantors, the Obligated Foreign Subsidiaries, the banks and financial institutions from time to time party thereto (the “Lenders”) and the Administrative Agent are parties to that certain Credit Agreement dated as of March 11, 2011 (as amended by that certain First Amendment to Credit Agreement dated as of April 29, 2011, that certain Second Amendment to Credit Agreement dated as of May 17, 2011, that certain Third Amendment to Credit Agreement dated as of July 20, 2011, that certain Fourth Amendment to Credit Agreement dated as of April 8, 2013, and as further amended, modified, extended, restated, replaced, or supplemented from time to time, the “Credit Agreement”); 

 

WHEREAS, the Credit Parties have requested that the Required Lenders amend certain provisions of the Credit Agreement; 

 

WHEREAS, the Credit Parties have requested that the Required Lenders consent to certain transactions among the Company and its Subsidiaries (the “Financing Structure Transactions”) that are depicted in the step plan attached to this Amendment as Exhibit A (the “Step Plan”) and described in the analysis attached to this Amendment as Exhibit B (the “Analysis”); and

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

WHEREAS, the Required Lenders are willing to make such amendments to the Credit Agreement and consent to the Financing Structure Transactions, in accordance with and subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I
AMENDMENTS TO CREDIT AGREEMENT

 

1.1Amendment to Introduction.  The first paragraph of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

THIS CREDIT AGREEMENT, dated as of March 11, 2011, is by and among ESTERLINE TECHNOLOGIES CORPORATION, a Delaware corporation (the “Company”), ESTERLINE TECHNOLOGIES EUROPE LIMITED, a company incorporated in England and Wales with registration number 06787209 (“ETEL”), ESTERLINE TECHNOLOGIES LIMITED, a company incorporated in England and Wales with registration number 03837209 (“ETL”), ESTERLINE TECHNOLOGIES GLOBAL LIMITED, a company incorporated in England and Wales with registration number 09002080 (“ETGL”), TA MFG LIMITED, a company incorporated in England and Wales with registration number 01979171 (“TA MFG”) and ESTERLINE INTERFACE TECHNOLOGIES LIMITED, a company incorporated in England and Wales with registration number 08331349 (“EITL”), the Guarantors (as hereinafter defined), the Obligated Foreign Subsidiaries (as hereinafter defined), the Lenders (as hereinafter defined) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for the Lenders hereunder (in such capacity, the “Administrative Agent”).

 

1.2New Definitions.  The following definitions are hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order:

 

“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.).  

 

“EITL” shall have the meaning set forth in the first paragraph of this Agreement.  

 

“EITL Security Agreement” shall mean the security agreement dated the Fifth Amendment Effective Date entered into by EITL and the Trustee.

 

“ETEL” shall have the meaning set forth in the first paragraph of this Agreement.  

 

“ETEL Security Agreement” shall mean the security agreement dated the Fifth Amendment Effective Date entered into by ETEL and the Trustee.

 

“ETGL” shall have the meaning set forth in the first paragraph of this Agreement. 

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“ETGL Security Agreement” shall mean the security agreement dated the Fifth Amendment Effective Date entered into by ETGL and the Trustee. 

 

“ETHL Security Agreement” shall mean the security agreement dated 1 September 2011 entered into by, among others, Esterline Technologies Holdings Limited and the Trustee.

 

“ETL” shall have the meaning set forth in the first paragraph of this Agreement.  

 

“ETL Security Agreement” shall mean the security agreement dated the Fifth Amendment Effective Date entered into by ETL and the Trustee.

 

“Excluded Swap Obligation” means, with respect to any Guarantor or Obligated Foreign Subsidiary, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor or such Obligated Foreign Subsidiary of, or the grant by such Guarantor or such Obligated Foreign Subsidiary of a security interest to secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s or such Obligated Foreign Subsidiary’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guaranty of such Guarantor or such Obligated Foreign Subsidiary or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guaranty or security interest is or becomes illegal.

 

“Fifth Amendment” means that certain Fifth Amendment to Credit Agreement, dated as of the Fifth Amendment Effective Date, by and among the Company, the U.K. Borrowers, the Guarantors, the Lenders and the Administrative Agent.  

 

“Fifth Amendment Effective Date” means June 9, 2014.  

 

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Guarantor or Obligated Foreign Subsidiary that has total assets exceeding $10,000,000 at the time such Swap Obligation is incurred or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder.  

 

“Swap Obligations” means, with respect to any Guarantor or Obligated Foreign Subsidiary, an obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of § 1a(47) of the Commodity Exchange Act.

 

“TA MFG” shall have the meaning set forth in the first paragraph of this Agreement.  

 

“TA MFG Security Agreement” shall mean the security agreement dated the Fifth Amendment Effective Date entered into by TA MFG and the Trustee.

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1.3Amendment to Definition of Account Designation Notice.  The definition of Account Designation Notice set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Account Designation Notice” shall mean (a) the Account Designation Notice dated as of the Closing Date from the Company to the Administrative Agent, (b) the Account Designation Notice dated as of the Third Amendment Effective Date from the U.K. Borrower to the Administrative Agent, (c) the Account Designation Notice dated as of the Fourth Amendment Effective Date from the Company to the Administrative Agent, and (d) the Account Designation Notice dated as of the Fifth Amendment Effective Date from the U.K. Borrowers to the Administrative Agent, in each case in substantially the form attached hereto as Exhibit 1.1(a).

 

1.4Amendment to Definition of Borrowers.  The definition of Borrowers set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Borrowers” shall mean the U.K. Borrowers and the Company.  

 

1.5Amendment to Definition of Change in Law.  The definition of Change in Law set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 

 

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

1.6Amendment to Definition of Credit Party Obligations.  The definition of Credit Party Obligations set forth in Section 1.1 of the Credit Agreement is hereby amended by adding the text “, but in all cases excluding Excluded Swap Obligations” after “Bank Product Debt” in such definition.  

 

1.7Amendment to Definition of French Pledge Agreements.  The definition of French Pledge Agreements set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 

 

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“French Pledge Agreements” shall mean the pledge of the shares of the French Subsidiary dated as of the Third Amendment Effective Date executed by ETEL, Esterline Technologies French Acquisition Limited and the Administrative Agent, for and on behalf of the Secured Parties, as the same may be amended, modified, extended, restated, replaced or supplemented from time to time in accordance with the terms hereof and thereof.

 

1.8Amendment to Definition of Joined U.K. Subsidiary.  The definition of Joined U.K. Subsidiary set forth in Section 1.1 of the Credit Agreement is hereby deleted in its entirety.  

 

1.9Amendment to Definition of Obligations.  The definition of Obligations set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“Obligations” shall mean, collectively, all of the obligations, Indebtedness and liabilities of the Credit Parties and the Obligated Foreign Subsidiaries to the Lenders (including the Issuing Lender) and the Administrative Agent, whenever arising, under this Agreement, the Notes or any of the other Credit Documents, including principal, interest, fees, costs, charges, expenses, professional fees, reimbursements, all sums chargeable to the Credit Parties and the Obligated Foreign Subsidiaries or for which any Credit Party or Obligated Foreign Subsidiary is liable as an indemnitor and whether or not evidenced by a note or other instrument and indemnification obligations and other amounts (including, but not limited to, any interest accruing after the occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code with respect to any Credit Party or Obligated Foreign Subsidiary, regardless of whether such interest is an allowed claim under the Bankruptcy Code).  In no event shall the Obligations include any Excluded Swap Obligations.

 

1.10Amendment to Definition of Responsible Officer.  The definition of Responsible Officer set forth in Section 1.1 of the Credit Agreement is hereby amended by deleting the text “, U.K. Guarantor” in such definition.    

 

1.11Amendments to Definitions of U.K. Asset Disposition, U.K. Recovery Event and U.K. Net Cash Proceeds.  The definitions of U.K. Asset Disposition, U.K. Recovery Event and U.K. Net Cash Proceeds set forth in Section 1.1 of the Credit Agreement are hereby amended by replacing the references to “the U.K. Borrower” in such definitions with “ETEL”.      

 

1.12Amendment to Definition of U.K. Borrower.  The definition of U.K. Borrower set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as set forth below in this Section 1.12.  As used in all provisions of the Credit Agreement, all references to the term “U.K. Borrower” shall constitute references to the “U.K. Borrowers” as defined below, unless the context requires otherwise, in which case such references shall mean any of the U.K. Borrowers.  

 

“U.K. Borrowers” shall mean a collective reference to ETEL, ETL, TA MFG, ETGL and EITL, together with any Subsidiary of the Company formed under the laws of England and Wales that is joined as a U.K. Borrower pursuant to Section 5.10(c) of this Agreement.  

 

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1.13Amendment to Definition of U.K. Collateral Documents.  The definition of U.K. Collateral Documents set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 

 

“U.K. Collateral Documents” shall mean (a) the U.K. Security Agreements, (b) the U.K. Trust Agreement and (c) the Security Assignment of Escrow Agreement and Escrow Account, dated as of the Third Amendment Effective Date, by and among the ETEL and the Administrative Agent.  

 

1.14Amendment to Definition of U.K. Security Agreements.  The definition of U.K. Security Agreements set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 

 

“U.K. Security Agreements” shall mean (a) the ETHL Security Agreement, (b) the ETL Security Agreement, (c) the ETEL Security Agreement, (d) the ETGL Security Agreement, (e) the TA MFG Security Agreement, (f) the EITL Security Agreement and (g) any other security now or in the future granted by any Subsidiary of the Company in favor of the Trustee as security for the Secured Liabilities (as defined in the U.K. Security Agreements).

 

1.15Amendment to Definition of U.K. Guarantors.  The definition of U.K. Guarantors set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“U.K. Guarantors” shall mean those Subsidiaries of the U.K. Borrowers that executed or became party to the U.K. Guaranty prior to the Fifth Amendment Effective Date which were released from their obligations as U.K. Guarantors under the Credit Documents pursuant to the Fifth Amendment.  

 

1.16Amendments to Foreign Currency Sublimit and U.K. Borrower Sublimit. The references to (a) $75,000,000 appearing in the definition of Foreign Currency Sublimit and (b) “SEVENTY-FIVE MILLION DOLLARS ($75,000,000)” appearing in proviso (D) contained in Section 2.1(a) of the Credit Agreement are each hereby amended to read “THREE HUNDRED AND FIFTY MILLION DOLLARS ($350,000,000)”.  A new sentence is hereby added to the end of Section 2.1(a) to read as follows:

 

Notwithstanding any provision in the Credit Documents to the contrary, (a) no U.K. Borrower shall be liable for Loans made to or other Obligations of any other U.K. Borrower, either as a Guarantor or pursuant to joint and several liability as a co-U.K. Borrower, (b) no U.K. Borrower shall be liable for Loans made to the Company or other Obligations of the Company other than Obligations of the Company with respect to Loans made to such U.K. Borrower and (c) no collateral owned by any U.K. Borrower shall secure any Obligations other than the Obligations of such U.K. Borrower.

 

1.17Amendment to Section 2.2.  Section 2.2 of the Credit Agreement is hereby amended by changing all references to the “U.K. Borrower” in such Section to “ETEL”.  

 

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1.18Amendment to Section 2.7(a).  Section 2.7(a) of the Credit Agreement is hereby amended by replacing the references to “the U.K. Borrower” in such Section with “ETEL”.   

 

1.19Amendment to Section 2.7(b)(i).  Section 2.7(b)(i) of the Credit Agreement is hereby amended by replacing the reference to “$75,000,000” in clause (z) therein with “$350,000,000”.

 

1.20Amendment to Section 2.7(b).  Section 2.7(b) of the Credit Agreement is hereby amended by replacing the references to the “U.K. Borrower” in Sections 2.7(b)(ii)(A) and 2.7(b)(iii)(A) with “ETEL”.  

 

1.21Amendment to Section 3.28.  Section 3.28 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:  

 

(a) None of the Borrowers, any of their Subsidiaries or, to the knowledge of the Borrowers, any director or officer of the Borrowers or any of their Subsidiaries is an individual or entity (“Person”) that is, or is owned or controlled by Persons that are: (i) the subject of any sanctions administered or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of State, the United Nations Security Council, the European Union or Her Majesty’s Treasury (collectively, “Sanctions”), or (ii) located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions, which currently includes Cuba, Iran, North Korea, Sudan and Syria; and 

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

1.22Amendment to Section 5.10(b).  Section 5.10(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(b)[Reserved].

 

1.23Amendment to Section 5.10(c).  A new subsection 5.10(c) is hereby added to Section 5.10 of the Credit Agreement to read as follows:

 

(c)The Borrowers may elect to add as a U.K. Borrower under this Agreement any Subsidiary of the Company that is formed under the laws of England and Wales with the consent of the Administrative Agent on terms and conditions satisfactory to the Administrative Agent, so long as the Lenders (a) have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including, without 

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limitation, the Patriot Act and (b) are satisfied with the results of such documentation and other information.    

 

1.24Amendment to Section 5.12(b).  Section 5.12(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(b)Equity Interests (U.K. Borrowers).  Each U.K. Borrower, in order to secure the Obligations of such U.K. Borrower hereunder, will cause 100% of the Equity Interests in each of its direct Subsidiaries to be subject at all times to a first priority, perfected Lien (to the extent such Lien can be perfected under the laws of the United Kingdom and France) in favor of the Administrative Agent pursuant to the terms and conditions of security documents as the Administrative Agent shall reasonably request.

 

1.25Amendment to Section 5.12(d).  A new subsection 5.12(d) is hereby added to Section 5.12 of the Credit Agreement to read as follows: 

 

(d)Personal Property (U.K. Borrowers). Each U.K. Borrower will cause all of its tangible and intangible personal property now owned or hereafter acquired by it to be subject at all times to a first priority, perfected Lien (subject in each case to Permitted Liens) in favor of the Administrative Agent for the benefit of the Secured Parties to secure the Credit Party Obligations of such U.K. Borrower pursuant to the terms and conditions of the Security Documents or such other security documents as the Administrative Agent shall reasonably request.    

 

1.26Amendment to Section 5.18(e).  A new subsection 5.18(e) is hereby added to Section 5.18 of the Credit Agreement to read as follows:

 

(e)Within ninety (90) days after the Fifth Amendment Effective Date (or such longer period of time as may be agreed to by the Administrative Agent in its reasonable discretion), the Credit Parties will cause Esterline Technologies Denmark ApS to become a Guarantor hereunder by way of execution of a joinder agreement (in form and substance satisfactory to the Administrative Agent).  The Credit Party Obligations shall be secured by, among other things and provided that the Equity Interests of Esterline Technologies Denmark ApS are owned by the Company or a Guarantor, a first priority perfected security interest in the Collateral of Esterline Technologies Denmark ApS and a pledge of 100% of the Equity Interests of Esterline Technologies Denmark ApS and each of its Domestic Subsidiaries and 65% (or such higher percentage that would not reasonably be expected to result in adverse tax consequences for Esterline Technologies Denmark ApS) of the voting Equity Interests and 100% (or such lower percentage that would not reasonably be expected to result in adverse tax consequences for such the Company) of the non-voting Equity Interests of its first-tier Foreign Subsidiaries, in each case to the same extent required of Guarantors pursuant to Section 5.12.  In connection with the foregoing, the applicable Credit Parties shall deliver to the Administrative Agent, with respect to Esterline Technologies Denmark ApS to the extent applicable, substantially the same documentation required pursuant to Sections 4.1(b) – 

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(e), (i) and Section 5.12 and such other documents or agreements as the Administrative Agent may reasonably request.

 

1.27Amendments to Section 6.4.  

 

(a)Section 6.4(a)(i) is of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(i)any Subsidiary of the Company (other than the U.K. Borrowers) may merge into or consolidate or amalgamate with or liquidate into the Company or any other Subsidiary of the Company; provided that, in the case of any such merger, consolidation or amalgamation, the Person formed by such merger, consolidation or amalgamation shall be the Company, if the Company is involved in such merger, consolidation or amalgamation, or a wholly owned Subsidiary of the Company; provided further that, in the case of any such merger, consolidation or amalgamation to which a Guarantor or a U.K. Borrower is a party, the Person formed by such merger, consolidation or amalgamation shall be a Guarantor or a U.K. Borrower, as applicable;

 

(b)Section 6.4(b)(iii) is of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(iii)(A) sales, transfers or other dispositions of assets among (1) the Company and the Guarantors, (2) a Guarantor and other Guarantors and (3) the U.K. Borrowers, (B) sales, transfers or other dispositions of assets from any Subsidiary to the Company or any Guarantor and (C) sales, transfers or other dispositions of assets from any Subsidiary that is not a Guarantor to a U.K. Borrower; provided, however, and except to the extent permitted by Section 6.5, no such sales, transfers or other dispositions may be made by a U.K. Borrower to another U.K. Borrower if (x) the U.K. Borrower selling, transferring or disposing of such assets has any outstanding Revolving Loans hereunder at the time of such sale, transfer or disposition and (y) no Default or Event of Default exists at the time or such sale, transfer or disposition or would result therefrom.    

 

(c)Section 6.4(b)(v) is of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(v)sales, transfers and dispositions of assets by the Company or any Subsidiary of the Company to the Company or any Subsidiary of the Company (A) if the terms of such sale, transfer or disposition, and consideration therefor, are on an arm’s-length basis, would be fair and reasonable for non-Affiliated transactions and are for 100% cash or (B) to the extent not prohibited by Section 6.5; 

 

1.28Amendment to Section 6.5(a).  Section 6.5(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 

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(a)(i) Investments by the Company and its Subsidiaries in their Subsidiaries outstanding on the Third Amendment Effective Date (after giving effect to the Acquisition), (ii) additional Investments in Credit Parties (other than the U.K. Borrowers) and Investments in newly-formed, wholly-owned Subsidiaries that become Guarantors upon formation thereof, (iii) additional Investments in the U.K. Borrowers and in Subsidiaries that are not Credit Parties in an aggregate amount invested from the Closing Date not to exceed $100,000,000, (iv) Investments by Subsidiaries that are not Guarantors in the Company or other Subsidiaries (other than Investments by any U.K. Borrower, if (x) such U.K. Borrower has any outstanding Revolving Loans hereunder at the time such Investment is made or (y) a Default or Event of Default exists at the time of such Investment or would result therefrom) and (v) additional Investments in Subsidiaries of the Company in order to implement a restructure that is primarily to achieve tax benefits, provided that such restructure is approved by the Administrative Agent;

 

1.29Amendment to Section 6.5(g).  Section 6.5(g) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 

 

(g)Permitted Acquisitions, including (i) any Investments by the Company and/or any Subsidiary (including, without limitation, any U.K. Borrower) in another Subsidiary in order to provide funding to such Subsidiary to consummate a Permitted Acquisition (so long as such Permitted Acquisition is consummated within thirty (30) days after such Investment; provided that such thirty (30) day limitation shall not apply to any such Investment made prior to the Third Amendment Effective date in connection with the Acquisition) and (ii) any Investments held by the acquired Person at the time of any such Permitted Acquisition, provided that such Investment was not made in contemplation or anticipation of such Permitted Acquisition;

 

1.30Amendment to Section 6.7.  Section 6.7 of the Credit Agreement is amended by deleting the text “(c) if the new Subsidiary is a U.K. Guarantor and complies with the requirement of a U.K. Guarantor set forth herein and in the U.K. Collateral Documents” at the end of such Section and replacing such provision with the following: “(c) if the new Subsidiary is joined as a U.K. Borrower pursuant to Section 5.10(c) and complies with the requirements of a U.K. Borrower set forth herein and in the U.K. Collateral Documents”.        

 

1.31Amendments to Section 6.10.  

 

(a)Clause (a)(iii) of Section 6.10 of the Credit Agreement is amended and restated in its entirety to read as follows:

 

(iii) the amount paid by the Company with respect to such repurchases, redemptions or other acquisitions during the term of this Agreement shall not exceed an aggregate amount equal to $200,000,000;

 

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(b) Clause (g) of Section 6.10 of the Credit Agreement is amended by replacing the text “Guarantors, the U.K. Borrower and U.K. Guarantors” at the beginning of such clause with “Guarantors and the U.K. Borrowers”. 

 

1.32Amendments to Article X.  New Sections 10.10 and 10.11 are hereby added to Article X of the Credit Agreement to read as follows:

 

Section 10.10Eligible Contract Participant.

 

Notwithstanding anything to the contrary in any Credit Document, no Guarantor or Obligated Foreign Subsidiary shall be deemed under this Article X to be a guarantor of any Swap Obligations if such Guarantor or such Obligated Foreign Subsidiary was not an “eligible contract participant” as defined in § 1a(18) of the Commodity Exchange Act, at the time the guarantee under this Article X becomes effective with respect to such Swap Obligation and to the extent that the providing of such guarantee by such Guarantor or such Obligated Foreign Subsidiary would violate the Commodity Exchange Act; provided however that in determining whether any Guarantor or Obligated Foreign Subsidiary is an “eligible contract participant” under the Commodity Exchange Act, the guarantee of the Credit Party Obligations of such Guarantor or such Obligated Foreign Subsidiary under this Article X by a Guarantor or an Obligated Foreign Subsidiary that is also a Qualified ECP Guarantor shall be taken into account.

 

Section 10.11Keepwell.

 

Without limiting anything in this Article X, each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time to each Guarantor or Obligated Foreign Subsidiary that is not an “eligible contract participant” under the Commodity Exchange Act at the time the guarantee under this Article X becomes effective with respect to any Swap Obligation, to honor all of the Obligations of such Guarantor or such Obligated Foreign Subsidiary under this Article X in respect of such Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 10.11 for the maximum amount of such liability that can be hereby incurred without rendering its undertaking under this Section 10.11, or otherwise under this Article X, voidable under applicable Law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The undertaking of each Qualified ECP Guarantor under this Section 10.11 shall remain in full force and effect until termination of the Commitments and payment in full of all Loans and other Credit Party Obligations. Each Qualified ECP Guarantor intends that this Section 10.11 constitute, and this Section 10.11 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each Guarantor and Obligated Foreign Subsidiary that would otherwise not constitute an “eligible contract participant” under the Commodity Exchange Act.

 

1.33Amendment to Schedules and Exhibits.  Those certain Schedules and Exhibits attached as Exhibit C to this Amendment shall replace the corresponding Schedules and Exhibits to the Credit Agreement.  All other Schedules and Exhibits to the Credit Agreement shall not be modified or otherwise affected.

 

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ARTICLE II

CONSENT

 

2.1Consent. The Required Lenders hereby consent to the Financing Structure Transactions on the following terms and subject to the following conditions:

 

(a)At the discretion of the Company, not all of the steps that constitute the Financing Structure Transactions must be consummated;

 

(b)In addition to the releases of Guaranties and Collateral specifically described in the Analysis, the Administrative Agent shall have the authority, in its reasonable discretion, to release additional Guaranties and Collateral (other than Guaranties and Collateral granted by the Company) in order to enable the Company to implement the Financing Structure Transactions; 

 

(c)The consent of the Required Lenders is conditioned upon (i) the satisfaction of the conditions precedent set forth in Article IV of this Amendment and (ii) the Company and its Subsidiaries providing to the Administrative Agent such Guaranties, Joinder Agreements and Security Documents as are required pursuant to Sections 5.10 and 5.12 of the Credit Agreement and are contemplated by the Analysis within 90 days of the particular Financing Structure Transaction that gives rise to the requirement for such Guaranty, Joinder Agreement and Security Documents (or such longer period of time as agreed to by the Administrative Agent in its reasonable discretion); and

 

(d)The consent set forth in this Article II shall be effective only to the extent specifically set forth herein and shall not (i) be construed as a waiver of any breach or default nor as a waiver of any breach or default of which the Lenders have not been informed by the Company, (ii) affect the right of the Lenders to demand compliance by the Company and the other Credit Parties with all terms and conditions of the Credit Agreement, except as consented to pursuant to the terms hereof, (iii) be deemed a waiver of any transaction or future action on the part of the Company or any other Credit Party requiring the Lenders’ or the Required Lenders’ consent or approval under the Credit Agreement or (iv) except as consented to herein, be deemed or construed to be a waiver or release of, or a limitation upon, the Administrative Agent’s or the Lenders’ exercise of any rights or remedies under the Credit Agreement or any other Credit Document, whether arising as a consequence of any Event of Default which may now exist or otherwise, all such rights and remedies hereby being expressly reserved.

 

ARTICLE III

JOINDER AGREEMENT AND RELEASE OF GUARANTOR

 

3.1Joinder of Additional U.K. Borrowers.  Each Additional U.K. Borrower hereby acknowledges, agrees and confirms that, by its execution of this Amendment, such Additional U.K. Borrower will be deemed to be a party to and a “Borrower” and “U.K. Borrower” under the Credit Agreement and shall have all of the obligations of a U.K Borrower as set forth in the Credit Agreement as if it had executed the Credit Agreement.  Each Additional U.K. Borrower hereby 

12

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the applicable Credit Documents to which it is a party (to the extent applicable to the U.K. Borrower), including, without limitation (a) all of the applicable representations and warranties set forth in Article III of the Credit Agreement and (b) all of the applicable affirmative and applicable negative covenants set forth in Articles V and VI of the Credit Agreement.  Each Additional U.K. Borrower acknowledges and confirms that it has received a copy of the Credit Agreement and the schedules and exhibits thereto.

 

3.2Release of Guarantor.  On the Amendment Effective Date, (a) ETL shall be released as a Guarantor and shall be discharged from all of its obligations as a Guarantor, and have no liability as a Guarantor, under the Guaranty or any of the other Credit Documents and (b) all Collateral owned by ETL shall not secure any Obligations other than ETL’s Obligations as a U.K. Borrower.  This release and discharge shall be effective without any additional action being taken by the Administrative Agent or any Lender; provided that, at the request of ETL, the Administrative Agent shall, and each Required Lender party hereto hereby authorizes the Administrative Agent to, deliver to ETL, any instrument, document or certificate to confirm that it has been released and discharged (as a Guarantor) from all such obligations and liabilities and to give further effect to this Section 3.2.  For the avoidance of doubt, after the Amendment Effective Date, ETL shall have all obligations and liabilities of a U.K. Borrower under the Credit Documents.    

 

3.3Release of U.K. Guarantors.  On the Amendment Effective Date, (a) each U.K. Guarantor shall be released as a U.K. Guarantor and shall be discharged from all of its obligations as a U.K. Guarantor, and have no liability as a U.K. Guarantor, under the U.K. Guaranty or any of the other Credit Documents and (b) all Collateral owned by each U.K. Guarantor shall hereby be deemed released and shall no longer secure any Obligations.  This release and discharge shall be effective without any additional action being taken by the Administrative Agent or any Lender; provided that, at the request of a U.K. Guarantor, the Administrative Agent shall, and each Required Lender party hereto hereby authorizes the Administrative Agent to, deliver to such U.K. Guarantor, any instrument, document or certificate to confirm that it has been released and discharged (as a U.K. Guarantor) from all such obligations and liabilities and such Collateral has been released from all encumbrances under the Security Documents and to give further effect to this Section 3.3.  For the avoidance of doubt, after the Amendment Effective Date, each U.K. Borrower shall have all obligations and liabilities of a U.K. Borrower under the Credit Documents.    

 

ARTICLE IV

CONDITIONS TO EFFECTIVENESS

 

This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”) upon satisfaction of the following conditions (in form and substance reasonably acceptable to the Administrative Agent):

 

(a)Executed Amendment.  The Administrative Agent shall have received a copy of this Amendment duly executed by each of the Credit Parties, the Additional U.K. Borrowers, the Administrative Agent and the Required Lenders and acknowledged and agreed to by the U.K. Guarantors.

 

13

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

(b)Organizational Documents.  The Administrative Agent shall have received (i) a certificate of a secretary or assistant secretary of (A) the Company certifying that the articles of incorporation, bylaws and/or other organizational documents (or their equivalent), as applicable, of each Credit Party that were delivered on the Closing Date, the Third Amendment Effective Date, the Fourth Amendment Effective Date or the date on which any Credit Party was joined as a Guarantor pursuant to the terms of the Credit Agreement, as applicable, or certified updates as applicable, remain true and correct and in force and effect as of the Amendment Effective Date and (B) each Additional U.K. Borrower, attaching the articles of incorporation, bylaws and/or other organizational documents (or their equivalent), as applicable and (ii) resolutions, incumbency and good standing certificates (or their equivalent), as applicable, for the Credit Parties and the Additional U.K. Borrowers.

 

(c)Officer’s Certificate.  The Administrative Agent shall have received a certificate or certificates executed by an officer of the Company as of the Amendment Effective Date stating that (i) all consents and approvals of boards of directors, shareholders, governmental authorities and other applicable third parties necessary in connection with this Amendment have been obtained and remain in full force; (ii) there exists no action, suit, proceeding or, to such officer’s knowledge, investigation (whether previously existing, newly instituted or, to such officer’s knowledge, threatened) before, and no order, injunction or decree has been entered by, any court, arbitrator or governmental authority, in each case seeking to enjoin, restrain, restrict, set aside or prohibit, to impose material conditions upon, or to obtain substantial damages in respect of, this Amendment or that could reasonably be expected to have a material adverse effect upon the financial condition, operations, properties, assets, liabilities or business of the Company and its subsidiaries taken as a whole, or on the ability of any Credit Party and any of its subsidiaries to perform their respective obligations under or in connection with this Amendment and the Credit Documents; and (iii) immediately after giving effect to this Amendment and all the transactions contemplated hereby to occur on the Amendment Effective Date, (1) no Default or Event of Default exists; (2) all representations and warranties contained herein and in the Credit Documents (as amended hereby) are true and correct in all material respects; (3) the Company is in compliance with each of the financial covenants set forth in Section 5.9 of the Credit Agreement; and (4) the Credit Parties, taken as a whole, are Solvent.

 

(d)Legal Opinion.  The Administrative Agent shall have received (i) an opinion of counsel for the Credit Parties and (ii) an opinion of U.K. counsel with respect to the U.K. Borrowers, in each case dated the Amendment Effective Date, addressed to the Administrative Agent and the Lenders and in form and substance acceptable to the Administrative Agent.

 

(e)Security Interests and Perfection.  The Administrative Agent shall have received a copy of amendments and/or joinders to the U.K. Collateral Documents duly executed by each of ETEL and the Additional U.K. Borrowers and the Administrative Agent.  All documents, instruments, reports and policies required to insure, perfect or evidence the Administrative Agent’s first priority security interest in the collateral of 

14

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

ETEL and the Additional U.K. Borrowers identified in the U.K. Collateral Documents will have been executed and/or delivered and, to the extent applicable, be in proper form for filing. 

 

(f)Fees and Expenses.  

 

(i)The Administrative Agent shall have received from the Company such other fees and expenses that are payable in connection with the consummation of the transactions contemplated hereby and King & Spalding LLP shall have received from the Company payment of all outstanding fees and expenses previously incurred and all fees and expenses incurred in connection with this Amendment.

 

(ii)All fees due in connection with this Amendment will be payable in U.S. dollars.  To the extent any portion of any fee is calculated in a Foreign Currency, such amount shall be converted to the equivalent amount thereof in Dollars as reasonably determined by the Administrative Agent as of the Amendment Effective Date on the basis of the Spot Rate for the purchase of Dollars with such Foreign Currency.

 

(g)Miscellaneous.  All other documents and legal matters in connection with the transactions contemplated by this Amendment shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.

 

ARTICLE V
MISCELLANEOUS

 

5.1Amended Terms.  On and after the Amendment Effective Date, all references to the Credit Agreement in each of the Credit Documents shall hereafter mean the Credit Agreement as amended by this Amendment.  Except as specifically amended hereby or otherwise agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms.

 

5.2Representations and Warranties of Credit Parties.  Each of the Credit Parties and the Additional U.K. Borrowers represents and warrants as follows:

 

(a)It has taken all necessary action to authorize the execution, delivery and performance of this Amendment and, in the case of each Borrower, to obtain the Extensions of Credit on the terms and conditions of the Credit Agreement, as amended hereby.

 

(b)This Amendment has been duly executed and delivered by such Person and constitutes such Person’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws 

15

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

 

(c)No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by such Person of this Amendment except consents, approvals, authorizations, filings or registrations which have been obtained or made and are in full force and effect.

 

(d)The representations and warranties set forth in Article III of the Credit Agreement and each other Credit Document are true and correct as of the date hereof (except for those which expressly relate to an earlier date).

 

(e)After giving effect to this Amendment, no event has occurred and is continuing which constitutes a Default or an Event of Default.

 

(f)Except as specifically provided in this Amendment, the Credit Party Obligations are not reduced or modified by this Amendment and are not subject to any offsets, defenses or counterclaims.

 

5.3Reaffirmation of Obligations.  Each Credit Party and each Additional U.K. Borrower hereby ratifies the Credit Agreement and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Agreement applicable to it and (b) that it is responsible for the observance and full performance of its respective Credit Party Obligations.  Each Guarantor hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Amendment.  Each Guarantor hereby confirms that the Guaranty to which it is a party will continue to guarantee to the fullest extent possible the payment and performance of all obligations, including, without limitation, the Credit Party Obligations, of the Borrowers and the other Credit Parties now or hereafter existing under or in respect of the Credit Agreement or any other Credit Document.   Each Guarantor acknowledges and agrees that each Credit Document to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations, including, without limitation, the Credit Party Obligations, shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment.

 

5.4Credit Document.  This Amendment shall constitute a Credit Document under the terms of the Credit Agreement.

 

5.5Expenses.  The Company agrees to pay all reasonable costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including without limitation the reasonable fees and expenses of the Administrative Agent’s legal counsel.

 

5.6Further Assurances.  The Credit Parties agree to promptly take such action, upon the request of the Administrative Agent, as is necessary to carry out the intent of this Amendment.

16

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

 

5.7Entirety.  This Amendment and the other Credit Documents embody the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.

 

5.8Counterparts; Telecopy.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  Delivery of an executed counterpart to this Amendment by telecopy or other electronic means shall be effective as an original and shall constitute a representation that an original will be delivered.  

 

5.9GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

5.10Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

5.11Consent to Jurisdiction; Service of Process; Waiver of Jury Trial.  The jurisdiction, service of process and waiver of jury trial provisions set forth in Sections 9.13 and 9.16 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

17

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

IN WITNESS WHEREOF the parties hereto have caused this Amendment to be duly executed on the date first above written.

 

	
COMPANY:
	
ESTERLINE TECHNOLOGIES CORPORATION,

a Delaware corporation

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Chief Financial Officer, Vice President & Corporate Development

 

 

	
GUARANTORS:
	
ADVANCED INPUT DEVICES, INC.,

a Delaware corporation

ANGUS ELECTRONICS CO.,

a Delaware corporation

ARMTEC COUNTERMEASURES CO.,

a Delaware corporation

ARMTEC COUNTERMEASURES TNO CO.,

a Delaware corporation

ARMTEC DEFENSE PRODUCTS CO.,

a Delaware corporation

AVISTA, INCORPORATED,

a Wisconsin corporation

BVR TECHNOLOGIES CO.,

a Delaware corporation

CMC ELECTRONICS AURORA LLC, 

a Delaware limited liability company

ECLIPSE ELECTRONIC SYSTEMS, INC.,

a Texas corporation

ESTERLINE INTERNATIONAL COMPANY,

a Delaware corporation

ESTERLINE SENSORS SERVICES AMERICAS,

INC., a Delaware corporation

ESTERLINE US LLC,

a Delaware limited liability company

HYTEK FINISHES CO.,

a Delaware corporation

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Vice President of each of the foregoing

 

 

 

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

JANCO CORPORATION,

a California corporation

KIRKHILL-TA CO.,

a California corporation

KORRY ELECTRONICS CO.,

a Delaware corporation

LEACH HOLDING CORPORATION,

a Delaware corporation

LEACH INTERNATIONAL CORPORATION,

a Delaware corporation

LEACH TECHNOLOGY GROUP, INC.,

a Delaware corporation

MASON ELECTRIC CO.,

a Delaware corporation

MC TECH CO.,

a Delaware corporation

MEMTRON TECHNOLOGIES CO.,

a Delaware corporation

NMC GROUP, INC.,

a California corporation

NORWICH AERO PRODUCTS, INC.,

a New York corporation

PALOMAR PRODUCTS, INC.,

a Delaware corporation

PACIFIC AEROSPACE & ELECTRONICS, INC.,

a Washington corporation

SOURIAU USA, INC.,

a Delaware corporation

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Vice President of each of the foregoing

 

ESTERLINE EUROPE COMPANY LLC,

a Delaware limited liability company

ESTERLINE TECHNOLOGIES SGIP LLC, 

a Delaware limited liability company

 

By:  Esterline Technologies Corporation,

its Sole Manager

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Chief Financial Officer, Vice President & Corporate Development

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

ESTERLINE TECHNOLOGIES HOLDINGS LIMITED 

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Director 

 

LEACH INTERNATIONAL MEXICO S. DE R.L. DE C.V.

 

By: /s/ Robert D. George

Name:Robert D. George

Title:First Vice President

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

	
U.K. BORROWERS:
	
ESTERLINE TECHNOLOGIES EUROPE 

LIMITED, a company organized under the laws of England and Wales

 

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Director

 

ESTERLINE TECHNOLOGIES LIMITED, a company organized under the laws of England and Wales 

 

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Director

 

ESTERLINE TECHNOLOGIES GLOBAL LIMITED, a company organized under the laws of England and Wales

 

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Director

 

TA MFG LIMITED, a company organized under the laws of England and Wales 

 

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Director

 

ESTERLINE INTERFACE TECHNOLOGIES LIMITED, a company organized under the laws of England and Wales 

 

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Director

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

Acknowledged and Agreed:

 

U.K. GUARANTORS:

 

ESTERLINE TECHNOLOGIES FRENCH ACQUISITION LIMITED

GAMESMAN LIMITED

WESTON AEROSPACE LIMITED

DARCHEM HOLDINGS LIMITED

DARCHEM ENGINEERING LIMITED

RACAL ACOUSTICS GROUP LIMITED

RACAL ACOUSTICS HOLDINGS LIMITED

RACAL ACOUSTICS LIMITED

 

By: /s/ Robert D. George

Name:Robert D. George

Title:Director of each of the foregoing

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

	
ADMINISTRATIVE AGENT:
	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender and as Administrative Agent 

 

 

By: /s/ Russ Carson

Name: Russ Carson

Title: Vice President

 

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

LENDERS:U.S. BANK NATIONAL ASSOCIATION

 

 

By: /s/ Kurban H. Merchant

Name: Kurban H. Merchant

Title: Vice President

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:UNION BANK

 

 

By: /s/ Ray Ward 

Name: Ray Ward

Title: Vice President

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:TD Bank N.A.

 

 

By: /s/ Bernadette Collins

Name: Bernadette Collins

Title: Senior Vice President

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:ROYAL BANK OF CANADA

 

 

By: /s/ Richard C. Smith

Name: Richard C. Smith

Title: Authorized Signatory

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:BNP PARIBAS

 

 

By: /s/ Rick Pace

Name: Rick Pace

Title: Managing Director

 

By: /s/ James Goodall

Name: James Goodall

Title: Managing Director

 

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:The Northern Trust Company

 

 

By: /s/ Brandon Rolek

Name: Brandon Rolek

Title: Senior Vice President

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:KEYBANK NATIONAL ASSOCIATION

 

 

By: /s/ Geoff Smith

Name: Geoff Smith

Title: Senior Vice President

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:HSBC Bank USA, National Association

 

 

By: /s/ Deborah S. Watson

Name: Deborah S. Watson

Title: SVP, Relationship Manager

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:Comerica Bank

 

 

By: /s/ Elizabeth Gonzalez

Name: Elizabeth Gonzalez

Title: Corporate Banking Officer

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:Bank of America, N.A.

 

 

By: /s/ Arthur Ng

Name: Arthur Ng

Title: Vice President

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:Barclays Bank PLC

 

 

By: /s/ Aarti Rau

Name: Aarti Rau

Title: Director

 

 

ESTERLINE TECHNOLOGIES CORPORATION

FIFTH AMENDMENT TO CREDIT AGREEMENT

 

LENDERS:Bank of the West

 

 

By: /s/ David M. Purcell

Name: David M. Purcell

Title: Vice Presidentalco8k09042014ex101.htm

EXHIBIT 10.1

Alco Stores, Inc.

751 Freeport Parkway

Coppell, Texas 75019

 

September 4, 2014

 

Mr. Stanley B. Latacha

N9282 Council Bay

Holmen, WI 54636

Re: Employment Agreement

 

This is your Employment Agreement (this “Agreement’) with Alco Stores, Inc., a Kansas corporation (the “Company”).  It sets forth the terms of your employment with the Company.

 

	
1.  

	
Your Position, Performance and Other Activities

 

	
(a)  

	
Position.  You will be employed in the position of Interim Chief Executive Officer of the Company.

 

	
(b)  

	
Authority, Responsibilities and Reporting.  You will report directly to the Company’s Board of Directors (the “Board’) and be given such duties, authorities and responsibilities that are consistent with your being the most senior executive officer of the Company as determined by the Board.

 

	
(c)  

	
Performance.  During your employment, except as permitted under Section 1(d), you will devote your full business time and attention to the Company and will use good faith efforts to discharge your responsibilities under this Agreement to the best of your ability.  During your employment, your primary work place will be at the Company’s corporate headquarters in Coppell, Texas.

 

	
(d)  

	
Other Activities.  You may (1) continue to serve as a member of the Board of Directors of any civic or charitable boards in your individual capacity, and (2) manage personal investments, so long as (A) these activities do not interfere with your performance of your responsibilities under this Agreement, and (B) any service on a civic or charitable board is approved by the Board.

 

	
2.  

	
Employment Period

 

Your employment under this Agreement will begin on September 4, 2014 (the “Start Date”) and shall continue until the first anniversary thereof (the “Initial Term”), unless terminated earlier pursuant to Section 5 of this Agreement.  Upon expiration of the Initial Term, this Agreement shall automatically renew for successive 90 day periods (each a “Renewal Term” and together with the Initial Term, the 

 

 

  

  

  

 

“Term”) unless either party provides written notice of its intention not to extend the Term of this Agreement at least thirty (30) days’ prior to the expiration of the Initial Term or the then-current Renewal Term.  During the Term, you will be an “at-will” employee of the Company.

 

	
3.  

	
Your Compensation

 

	
(a)  

	
Salary.  During your employment, you will receive an annual base salary of $437,400 (your “Salary”).  Your Salary will be paid in accordance with the Company’s normal practices for senior executives.

 

	
(b)  

	
Bonus.

 

	
(i)  

	
For each Bonus Period (as defined below), you will be eligible to receive a quarterly cash bonus (your  “Bonus”).  Your Bonus shall be based upon achieving certain financial and operating targets to be established for each Bonus Period by the Compensation Committee of the Board taking into consideration the operating plan and budget that you provide to the Board.  If you achieve 100% of such financial and operating targets for such Bonus Period, you will earn a Bonus equal to 110% of your Salary earned for such Bonus Period.  If you exceed 100% of such financial and operating targets for such Bonus Period, the Compensation Committee of the Board may authorize a larger Bonus but in no event shall any Bonus exceed 125% of your Salary earned for such Bonus Period.  Your Bonus will be paid in cash on a quarterly basis within sixty (60) days following the public release of the Company’s quarterly financial results for the applicable Bonus Period.  “Bonus Period” means each of the First Bonus Period and any Subsequent Bonus Period.  “First Bonus Period” means the period commencing on the Start Date and ending at the end of the fiscal quarter.  “Subsequent Bonus Period” means each period commencing at the start of each fiscal quarter subsequent to the First Bonus Period and ending at the end of such fiscal quarter.  Any Bonus payments will be prorated based on changes in Salary that may occur during the fiscal year.

 

	
(ii)  

	
You agree to reimburse the Company for, or have the Company offset against additional amounts owed to you under this Agreement or otherwise, any Bonus paid to you to the extent that such Bonus was paid on financial information which is later determined to be materially overstated and results in any financial restatement, which would have lessened the amount paid to you.

 

	
4.  

	
Other Employee Benefits

 

	
(a)  

	
Vacation.  You will be entitled to four (4) weeks of paid annual vacation during your employment.

 

	
(b)  

	
Business Expenses.  You will be reimbursed for all reasonable business expenses, including reasonable living expenses in the Dallas area, incurred by you in performing your responsibilities under this Agreement in accordance with 

 

 

  

  

  

 

 

	
 

 

(c)  

	
company policies which may require prior approval of certain expenses and amounts.  If any business expense is taxable, reimbursement will not be paid later than December 31 of the year in which the expense is incurred.

 

Employee Benefit Plans.  During your employment, you will be eligible to participate in each of the Company’s employee benefit plans, on a basis that is at least as favorable as that provided to other senior executives of the Company, subject to the terms of the plans.  However, nothing in this Agreement prohibits the Company from amending any employee benefit plan in accordance with its terms.

 

	
(d)  

	
Legal Fees; Relocation.  The Company will reimburse you for (i) reasonable legal fees and expenses in connection with the negotiation, preparation and execution of this Agreement, in an amount not to exceed $10,000 in the aggregate, and (ii) reasonable relocation expenses related to your move from Holmen, Wisconsin to Dallas, Texas, including temporary housing and travel.  Any reimbursements made to you under this Section 4(d) will be made on or before December 31, 2014, subject to your prior submission of appropriate supporting documentation in accordance with the Company’s policies which may require prior approval of certain expenses and amounts.

 

	
5.  

	
Early Termination of Your Employment

 

	
(a)  

	
No Reason Required.  You or the Company may terminate your employment at any time for any reason, or for no reason, subject to compliance with Section 5(e).

 

	
(b)  

	
Termination by the Company for Cause.

 

	
(1)  

	
“Cause” means any of the following:

 

	
(A)  

	
Your continued failure, either due to willful action or as a result of negligence, to perform your duties and responsibilities to the Company under this Agreement.

 

	
(B)  

	
Your engagement in conduct which is injurious to the Company, or that harms the reputation or financial position of the Company, unless the conduct in question was undertaken in good faith on an informed basis with due care and with a rational business purpose and based upon the honest belief that such conduct was in the best interest of the Company.

 

	
(C)  

	
Your conviction of, or plea of guilty or nolo contendere to, a felony or any other crime involving dishonesty, fraud or moral turpitude.

 

	
(D)  

	
Your being found liable in any SEC or other civil or criminal securities law action or entering any cease and desist order with 

 

 

  

  

  

 

 

	
 

 

(E)  

	
respect to such action (regardless of whether or not you admit or deny liability).

 

Your breach of your fiduciary duties to the Company which may reasonably be expected to have a material adverse effect on the Company.

 

	
(F)  

	
Your unauthorized use or disclosure of confidential or proprietary information, or related materials, or the violation of any of the terms of the Company’s standard confidentiality policies and procedures.

 

	
(G)  

	
Your violation of the Company’s policies on discrimination, harassment or substance abuse.

 

	
(2)  

	
To terminate your employment “for Cause”, the Board must determine in good faith that Cause has occurred, the Company must comply with Section 5(e) and the Company must deliver to you a copy of a resolution duly adopted by a majority of the entire Board at a meeting of the Board called and held for such purpose (after reasonable notice to you and a reasonable opportunity for you to be heard) that finds that in the good faith opinion of the Board, Cause has occurred and states the basis for that belief.

 

	
(c)  

	
Termination by You for Good Reason.

 

	
(1)  

	
“Good Reason” means any of the following:

 

	
(A)  

	
Any material diminution in your Salary, other than any such reduction agreed to by you in writing.

 

	
(B)  

	
Any material diminution in your authority, duties or responsibilities, other than any such diminution agreed to by you in writing.

 

	
(C)  

	
Any other action or inaction that constitutes a material breach by the Company of this Agreement.

 

	
(2)  

	
The Company’s placing you on paid leave for up to ninety (90) consecutive days while it is determining whether there is a basis to terminate your employment for Cause will not constitute Good Reason.

 

	
(3)  

	
To terminate your employment for “Good Reason”, you must give the Company a Termination Notice detailing why you believe a Good Reason event has occurred and such notice must be provided to the Company within ninety (90) days of the initial occurrence of such alleged Good Reason event.  The Company shall then have thirty (30) days after its receipt of written notice to cure the item cited in the written notice.  “Good 

 

 

  

  

  

 

 

 

	
 

 

 

(d)  

	
Reason” will not have formally occurred with respect to the event in question, unless and until the cure period has expired and the item remains uncured.  At the end of the cure period, if the Company has not cured the basis for the Good Reason termination, your obligation to serve the Company, and the Company’s obligation to employ you under the terms of this Agreement, shall terminate simultaneously.

 

Termination on Disability or Death.

 

	
(1)  

	
The term “Disability” means your permanent disability or incapacity as determined in accordance with the Company’s long term or permanent disability insurance policy, if such policy is then in effect, or if no such policy is then in effect, such permanent disability or incapacity shall be determined by the Company in its good faith judgment based upon your inability to perform the essential functions of your position, with reasonable accommodation by the Company, for a period in excess of one hundred eighty (180) days during any period of three hundred sixty-five (365) calendar days.

 

	
(2)  

	
Your employment will terminate automatically on your death.  If you die before your employment starts, all of the provisions of this Agreement will also terminate and there will be no liability of any kind under this Agreement.

 

	
(e)  

	
Advance Notice Generally Required.

 

	
(1)  

	
To terminate your employment, either you or the Company must provide a written notice of termination to the other (a “Termination Notice”)

 

	
(2)  

	
You and the Company agree to provide thirty (30) days’ advance Termination Notice of any termination, unless your employment is terminated by the Company for Cause or because of your Disability or death.

 

	
6.  

	
The Company’s Obligations in Connection With Your Termination

 

	
(a)  

	
General Effect.  On termination in accordance with Section 5, your employment will end and the Company will have no further obligations to you except as provided in this Section 6.

 

	
(b)  

	
Without Cause or for Good Reason.  If the Company terminates your employment without Cause or you terminate for Good Reason:

 

	
(1)  

	
The Company will pay you the following through the effective date of your termination of employment with the Company (the “Termination Date”): (A) your unpaid Salary on the next regular payroll date, (B) your Salary for any accrued but unused vacation on the next regular payroll date, (C) any accrued expense reimbursements due under Sections 4(b) 

 

 

  

  

  

 

 

	
 

 

 

 

(2)  

	
and 4(d), and (D) any earned but unpaid Bonus for a Bonus Period that has been completed before the Termination Date, paid when it otherwise would have been paid if you had remained employed by the Company (together, your “Accrued Compensation”).  In addition, the Company will timely pay you any amounts and provide you any benefits that are required, or to which you are entitled under any plan, contract or arrangement of the Company in accordance with the terms of such plans, contracts or arrangements, (together, the “Other Benefits”).

 

In addition to the amounts set forth in Section 6(b)(1), the Company will provide you the following amounts after your “separation from service” (within the meaning of 409A (defined in Section 12(i)) and the Treasury Regulations thereunder), in exchange for your release of any claims in the form attached hereto as Exhibit A, provided you sign said release and it becomes effective within sixty (60) calendar days after such “separation from service” (the “Release Deadline”):

 

	
(A)  

	
your then current Salary, at regular pay cycle intervals, for twelve (12) months (the “Severance Period”), commencing in the first regular pay cycle in the calendar month following the calendar month containing the Release Deadline, subject to Section 12(i); and

 

	
(B)  

	
if your Termination Date occurs more than six (6) months after the commencement of the most recent Bonus Period, your Pro-Rated Bonus, payable on the later of (i) the first day following the Release Deadline and (ii) the date it would have been paid if you had remained employed by the Company.  Your “Pro-Rated Bonus” means the Bonus that you otherwise would have received had you continued to be employed through the end of the applicable Bonus Period in which your Termination Date occurs, payable based on the actual performance results for such Bonus Period, multiplied by a fraction, the numerator of which is the number of days from the beginning of such applicable Bonus Period through your Termination Date and the denominator of which is the total number of days in such applicable Bonus Period.

 

	
(c)  

	
For Cause or Termination Without Good Reason by Executive.  If the Company terminates your employment for Cause or you terminate your employment without Good Reason, the Company will pay your Accrued Compensation and provide your Other Benefits.

 

	
(d)  

	
For Your Disability or Death.  If your employment terminates as a result of your death or Disability, the Company will pay your Accrued Compensation and provide your Other Benefits.  In addition, if you are terminated due to death or Disability and the termination occurs more than six (6) months after the commencement of the most recent Bonus Period, the Company will pay your Pro-

 

 

  

  

  

Rated Bonus on the date it would have been paid if you had remained employed by the Company.

 

	
7.  

	
Proprietary Information

 

	
(a)  

	
Definition.  “Proprietary Information” means confidential or proprietary information, knowledge or data concerning (1) the Company’s businesses, strategies, operations, financial affairs, organizational matters, personnel matters, budgets, business plans, marketing plans, studies, policies, procedures, products, ideas, processes, software systems, trade secrets and technical know-how, (2) any other matter relating to the Company and (3) any matter relating to customers of the Company or other third parties having relationships with the Company.  Proprietary Information includes (I) information regarding any aspect of your tenure as an employee of the Company or the termination of your employment, (II) the names, addresses, and phone numbers and other information concerning customers and prospective customers of the Company, and (III) information and materials concerning the personal affairs of employees of the Company.  In addition, Proprietary Information may include information furnished to you orally or in writing (whatever the form or storage medium) or gathered by inspection, in each case before or after the date of this Agreement.  However, Proprietary Information does not include information (X) that was or becomes generally available to you on a non-confidential basis, if the source of this information was not reasonably known to you to be bound by a duty of confidentiality, (Y) that was or becomes generally available to the public, other than as a result of a wrongful disclosure by you, directly or indirectly, or (Z) that you can establish was independently developed by you without reference to any Proprietary Information.

 

	
(b)  

	
Use and Disclosure.  You will obtain or create Proprietary Information in the course of your involvement in the Company’s activities and may already have Proprietary Information.  You agree that the Proprietary Information is the exclusive property of the Company, and that, during your employment; you will use and disclose Proprietary Information only for the Company’s benefit and in accordance with any restrictions placed on its use or disclosure by the Company.  After your employment, you will not use or disclose any Proprietary Information.  In addition, nothing in this Agreement will operate to weaken or waive any rights the Company may have under statutory or common law, or any other agreement, to the protection of trade secrets, confidential business information and other confidential information.

 

	
(c)  

	
Limitations.  Nothing in this Agreement prohibits you from providing truthful testimony concerning the Company to governmental, regulatory or self-regulatory authorities.

 

 

  

  

  

 

 

	
8.  

	
Ongoing Restrictions on Your Activities

 

	
(a)  

	
General Effect.  This Section 8 applies during the Term and for the twelve (12) month period following the Term.  This Section uses the following defined terms:

 

“Competitive Enterprise” means any business enterprise that either (1) engages in any material activity that competes anywhere with any material activity in which the Company is then engaged or (2) holds a 5% or greater equity, voting or profit participation interest in any enterprise that engages in such a competitive activity.

 

“Customer” means any customer or prospective customer of the Company to whom you provided services, or for whom you transacted business, or whose identity became known to you in connection with your relationship with or employment by the Company.

 

“Solicit” means any direct or indirect communication of any kind, regardless of who initiates it, that in any way invites, advises, encourages or requests any person to take or refrain from taking any action.

 

	
(b)  

	
Your Importance to the Company and the Effect of this Section 8.  You acknowledge that:

 

	
(1)  

	
In the course of your involvement in the Company’s activities, you will have access to Proprietary Information and the Company’s customer base and will profit from the goodwill associated with the Company.  On the other hand, in view of your access to Proprietary Information and your importance to the Company, if you compete with the Company for some time after your employment, the Company will likely suffer significant harm.  In return for the benefits, you will receive from the Company and to induce the Company to enter into this Agreement, and in light of the potential harm, you could cause the Company, you agree to the provisions of this Section 8.  The Company would not have entered into this Agreement if you did not agree to this Section 8.

 

	
(2)  

	
In light of Section 8(b)(1), if you breach any provision of this Section 8, the loss to the Company would be material but the amount of loss would be uncertain and not readily ascertainable.

 

	
(3)  

	
This Section 8 limits your ability to earn a livelihood in a Competitive Enterprise and your relationships with Customers.  You acknowledge, however, that complying with this Section 8 will not result in severe economic hardship for you or your family.

 

	
(c)  

	
Your Payment Obligations.

 

	
(1)  

	
If you fail to comply with this Section 8 during the Term and for a twelve (12) month period thereafter, other than any isolated, insubstantial and inadvertent failure that is not in bad faith, you will:

 

 

  

  

  

 

 

	
(A)  

	
forfeit all (i) Options and other equity-based compensation (with features similar to exercise) that have been awarded by the Company to you and not been exercised at the time of determination and (ii) restricted stock and other equity-based compensation (without features similar to exercise) that have been awarded by the Company and not vested at the time of determination; and

 

	
(B)  

	
pay to the Company the amount of all gain to you within the twelve (12) months before the time of determination from (i) the exercise of any Options and other equity-based compensation (with features similar to exercise) that have been awarded by the Company to you, (ii) the vesting of any restricted stock and other equity-based compensation (without features similar to exercise) that have been awarded by the Company to you and (iii) the forgiveness by the Company of any loan to you.

 

	
(2)  

	
To determine the amount you owe under Section 8(c)(1)(B):

 

	
(A)  

	
The value of the Company’s common stock on any date will be calculated using the average closing sale price of the Company’s common stock on the NASDAQ Global Market for the twenty (20) full trading days ending on that date.

 

	
(B)  

	
Gain on the exercise of stock options and other equity-based compensation with features similar to exercise will be based on the value of the Company’s common stock on the date of exercise.

 

	
(C)  

	
Gain on the vesting of any restricted stock and other equity-based compensation without features similar to exercise will be based on the value of the Company’s common stock on the date of vesting.

 

	
(D)  

	
Gain will be determined after any income taxes that you owe as a result of vesting, exercise or forgiveness (or would owe if the exercise or vesting resulted in the realization of income or gain at the time for income tax purposes) so long as you timely pay all of these taxes that you owe and you pay to the Company any federal, state or local income tax benefit to you as a result of paying the Company under this Section 8(c) within five (5) Business Days of the time that you actually realize the benefit.  A “Business Day” means any day on which banks are open for business in New York, New York.

 

	
(3)  

	
You will pay the Company under this Section 8(c) within five (5) Business Days of notice by the Company, and the date of notice will be the date of determination for purposes of this Section.  You will pay the Company in cash.  However, you may choose to deliver Company stock (valued in 

 

 

  

  

  

 

accordance with Section 8(c)(2)) in partial or full satisfaction of your obligation.  Your obligations under Section 8(c) are full 

recourse obligations.  The Company will have the right to offset your obligations under this Section 8(c) against any amounts 

otherwise owed to you by the Company, including under this Agreement.

 

	
(d)  

	
Non-Competition.  During Term and for a twelve (12) month period thereafter, you will not directly or indirectly:

 

	
(1)  

	
hold a 5% or greater equity, voting or profit participation interest in a Competitive Enterprise; or

 

	
(2)  

	
associate (including as a director, officer, employee, partner, consultant, agent or advisor) with a Competitive Enterprise.

 

	
(e)  

	
Non-Solicitation of Customers.  During the Term and for a twelve (12) month period thereafter, you will not attempt to:

 

	
(1)  

	
Solicit any Customers to transact business with a Competitive Enterprise;

 

	
(2)  

	
cause Customers to reduce or refrain from doing any business with the Company;

 

	
(3)  

	
transact business with any Customers that would cause you to be a Competitive Enterprise or to cause Customers to reduce or refrain from doing any business with the Company, or

 

	
(4)  

	
interfere with or damage any relationship between the Company and a Customer.

 

	
(f)  

	
Non-Solicitation of Company Employees.  During Term and for a twelve (12) month period thereafter, you will not attempt to Solicit anyone who is then an employee of the Company (or who was an employee of the Company within the six (6) months prior to your Termination Date) to resign from the Company or to apply for or accept employment with any Competitive Enterprise.

 

	
(g)  

	
Notice to New Employers.  Before you either apply for or accept employment with any other person or entity while any of Section 8(d), (e) or (f) is in effect, you will provide the prospective employer with written notice of the provisions of this Section 8 and will deliver a copy of the notice to the Company.

 

	
(h)  

	
No Public Statements.  You agree that you will not make any public statements regarding your employment or the termination of your employment (for whatever reason) that are not agreed to by the Company.  You agree that you will not make any public statement that would libel, slander or disparage the Company or any of its respective past or present officers, directors, employees or agents.  The Company agrees that it will not make any public statement that would libel or slander you.  This Section 8(h) is subject to Section 7(c).

 

 

  

  

  

 

 

	
9.  

	
Effect on Other Agreements; Entire Agreement

 

	
(a)  

	
This Agreement is the entire agreement between you and the Company with respect to the relationship contemplated by this Agreement and supersedes any earlier agreement, written or oral, with respect to the subject matter of this Agreement.  In entering into this Agreement, no party has relied on or made any representation, warranty, inducement, promise or understanding that is not in this Agreement.

 

	
(b)  

	
You represent and warrant that you do not have any agreements, obligations, relationships or commitments to any other person or entity that conflict or would conflict with accepting this offer or fully performing your duties and obligations of this position, including, without limitation any ongoing obligations you may have to your former employer.  You further represent that the credentials and information you provided to the Company (or its agents) related to your qualifications and ability to perform this position are true and correct.

 

	
10.  

	
Successors

 

	
(a)  

	
Payments on Your Death.  If you die and any amounts become payable under this Agreement, we will pay those amounts to your designated beneficiaries and in the absence thereof, your estate.

 

	
(b)  

	
Assignment by You.  You may not assign this Agreement without the Company’s prior written consent.  Also, except as required by law, your right to receive payments or benefits under this Agreement may not be subject to execution, attachment, levy or similar process.  Any attempt to affect any of the preceding in violation of this Section 10(b), whether voluntary or involuntary, will be void.

 

	
(c)  

	
Assumption by any Surviving Company.  Before the effectiveness of any merger, consolidation, statutory share exchange or similar transaction (including an exchange offer combined with a merger or consolidation) involving the Company (a “Reorganization”) or any sale, lease or other disposition (including by way of a series of transactions or by way of merger, consolidation, stock sale or similar transaction involving one or more subsidiaries) of all or substantially all of the Company’s consolidated assets (a “Sale”), the Company will cause (1) the Surviving Company to assume this Agreement in writing and (2) a copy of the assumption to be provided to you.  After the Reorganization or Sale, the Surviving Company will be treated for all purposes as the Company under this Agreement.  The “Surviving Company” means (i) in a Reorganization, the entity resulting from the Reorganization or (ii) in a Sale, the entity that has acquired all or substantially all of the assets of the Company.

 

	
11.  

	
Disputes

 

	
(a)  

	
This Section 11 applies to any controversy or claim between you and the Company arising out of or relating to or concerning this Agreement or any aspect 

 

 

  

  

  

 

 

	
 

 

(b)  

	
of your employment with the Company or the termination of that employment (together, an “Employment Matter”).

 

Mandatory Arbitration.  Subject to the provisions of this Section 11, any Employment Matter will be finally settled by arbitration in the County of New York administered by the American Arbitration Association under its Employee Arbitration Rules then in effect.  However, the rules will be modified in the following ways: (1) the decision must not be a compromise but must be the adoption of the submission by one of the parties, (2) each arbitrator will agree to treat as confidential evidence and other information presented to the same extent as the information is required to be kept confidential under Section 7, (3) there will be no authority to amend or modify the terms of this Agreement except as provided in Section 12(c) (and you and the Company agree not to request any such amendment or modification), (4) a decision must be rendered within ten (10) Business Days of the parties’ closing statements or submission of post-hearing briefs and (5) the arbitration will be conducted before a panel of three arbitrators, one selected by you within ten (10) days of the commencement of arbitration, one selected by the Company in the same period and the third selected jointly by these arbitrators (or, if they are unable to agree on an arbitrator within thirty (30) days of the commencement of arbitration, the third arbitrator will be appointed by the American Arbitration Association; provided that the arbitrator shall be a partner or former partner at a nationally recognized law firm).

 

	
(c)  

	
Limitation on Damages.  You and the Company agree that there will be no punitive damages payable as a result of any action brought under this Agreement and agree not to request punitive damages.

 

	
(d)  

	
Injunctions and Enforcement of Arbitration Awards.  You or the Company may bring an action or special proceeding in a state or federal court of competent jurisdiction sitting in the County of New York to enforce any arbitration award under Section 11(b).  Also, the Company may bring such an action or proceeding, in addition to its rights under Section 11(b) and whether or not an arbitration proceeding has been or is ever initiated, to temporarily, preliminarily or permanently enforce any part of Sections 7 and 8.  You agree that (1) your violating any part of Sections 7 and 8 would cause damage to the Company that cannot be measured or repaired, (2) the Company therefore is entitled to an injunction, restraining order or other equitable relief restraining any actual or threatened violation of those Sections, (3) no bond will need to be posted for the Company to receive such an injunction, order or other relief, and (4) no proof will be required that monetary damages for violations of those Sections would be difficult to calculate and that remedies at law would be inadequate.

 

	
(e)  

	
Jurisdiction and Choice of Forum.  You and the Company irrevocably submit to the exclusive jurisdiction of any state or federal court located in the County of New York over any Employment Matter that is not otherwise arbitrated or resolved according to Section11(b).  This includes any action or proceeding to compel arbitration or to enforce an arbitration award.  Both you and the Company 

 

 

  

  

  

 

 

	
 

 

 

 

 

 

(f)  

	
(1) acknowledge that the forum stated in this Section 11(e) has a reasonable relation to this Agreement and to the relationship between you and the Company and that the submission to the forum will apply even if the forum chooses to apply non-forum law, (2) waive, to the extent permitted by law, any objection to personal jurisdiction or to the laying of venue of any action or proceeding covered by this Section 11(e) in the forum stated in this Section, (3) agree not to commence any such action or proceeding in any forum other than the forum stated in this Section 11(e) and (4) agree that, to the extent permitted by law, a final and non-appealable judgment in any such action or proceeding in any such court will be conclusive and binding on you and the Company.  However, nothing in this Agreement precludes you or the Company from bringing any action or proceeding in any court for the purpose of enforcing the provisions of Section 11(b) and this Section 11(e).

 

Waiver of Jury Trial.  To the extent permitted by law, you and the Company waive any and all rights to a jury trial with respect to any Employment Matter.

 

	
(g)  

	
Governing Law.  This Agreement will be governed by and construed in accordance with the law of the State of Kansas applicable to contracts made and to be performed entirely within that State.

 

	
12.  

	
General Provisions

 

	
(a)  

	
Construction

 

	
(1)  

	
References (A) to Sections are to sections of this Agreement unless otherwise stated; (B) to any contract (including this Agreement) are to the contract as amended, modified, supplemented or replaced from time to time; (C) to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under the statute) and to any section of any statute, rule or regulation include any successor to the section; (D) to any governmental authority include any successor to the governmental authority; (E) to any plan include any programs, practices and policies; (F) to any entity include any corporation, limited liability company, partnership, association, business trust and similar organization and include any governmental authority; and (G) to any affiliate of any entity are to any person or other entity directly or indirectly controlling, controlled by or under common control with the first entity.

 

	
(2)  

	
The various headings in this Agreement are for convenience of reference only and in no way define, limit or describe the scope or intent of any provisions or Sections of this Agreement.

 

	
(3)  

	
Unless the context requires otherwise, (A) words describing the singular number include the plural and vice versa, (B) words denoting any gender 

 

 

  

  

  

 

 

	
 

 

(4)  

	
include all genders and (C) the words “include”, “includes” and “including” will be deemed to be followed by the words “without limitation."

 

It is your and the Company’s intention that this Agreement not be construed more strictly with regard to you or the Company.

 

	
(b)  

	
Withholding.  You and the Company will treat all payments to you under this Agreement as compensation for services.  Accordingly, the Company may withhold from any payment any taxes that are required to be withheld under any law, rule or regulation.

 

	
(c)  

	
Severability.  If any provision of this Agreement is found by any court of competent jurisdiction (or legally empowered agency) to be illegal, invalid or unenforceable for any reason, then (1) the provision will be amended automatically to the minimum extent necessary to cure the illegality or invalidity and permit enforcement and (2) the remainder of this Agreement will not be affected.  In particular, if any provision of Section 8 is so found to violate law or be unenforceable because it applies for longer than a maximum permitted period or to greater than a maximum permitted area, it will be automatically amended to apply for the maximum permitted period and maximum permitted area.

 

	
(d)  

	
Notices.  All notices, requests, demands and other communications under this Agreement must be in writing and will be deemed given (1) on the business day sent, when delivered by hand during normal business hours, (2) on the business day after the business day sent, if delivered by a nationally recognized overnight courier or (3) on the third business day after the business day sent if delivered by registered or certified mail, return receipt requested, in each case to the following address (or to such other addresses as may be specified by notice that conforms to this Section 12(d)):

 

If to you, to your address then on file with the Company’s payroll department.

 

If to the Company or any other member of the Company, to:

 

Alco Stores, Inc.

751 Freeport Parkway

Coppell, Texas 75019

Attention:  Chairman of the Board of Directors

 

	
(e)  

	
Consideration and Approvals.  This Agreement is in consideration of the mutual covenants contained in it.  You and the Company acknowledge the receipt and sufficiency of the consideration to this Agreement and intend this Agreement to be legally binding.  The Company represents and warrants it has taken all actions necessary to approve this Agreement, including the equity grants provided by this Agreement.

 

 

  

  

  

 

 

	
(f)  

	
Amendments and Waivers.  Any provision of this Agreement may be amended or waived but only if the amendment or waiver is in writing and signed, in the case of an amendment, by you and the Company or, in the case of a waiver, by the party that would have benefited from the provision waived.  Except as this Agreement otherwise provides, no failure or delay by you or the Company to exercise any right or remedy under this Agreement will operate as a waiver, and no partial exercise of any right or remedy will preclude any further exercise.

 

	
(g)  

	
Third Party Beneficiaries.  Subject to Section 10, this Agreement will be binding on, inure to the benefit of and be enforceable by the parties and their respective heirs, personal representatives, successors and assigns.  This Agreement does not confer any rights, remedies, obligations or liabilities to any entity or person other than you and the Company and your and the Company’s permitted successors and assigns, although this Agreement will inure to the benefit of the Company.

 

	
(h)  

	
Counterparts.  This Agreement may be executed in counterparts, each of which will constitute an original and all of which, when taken together, will constitute one agreement.

 

	
(i)  

	
Internal Revenue Code Section 409A.  Notwithstanding anything contained in this Agreement to the contrary, if you are deemed by the Company at the time of your “separation from service” with the Company to be a “specified employee,” each within the meaning of Section 409A of the Internal Revenue Code (“409A”), severance payments in Section 6(b)(2)(A) that otherwise would be paid in the first six months following separation from service will instead be paid in the seventh month following separation from service or, if earlier, within 30 days of your death, except no delay shall apply with respect to amounts that are due only upon an involuntary separation from service (as defined in Section 1.409A-1(n) of the Department of Treasury Regulations), and that, when combined with all other such payments, do not exceed the amount specified in Section 1.409A1(b)(9)(iii)(A) of the Department of Treasury Regulations (generally the lesser of two times annualized payor two times the compensation limit in Section 401(a)(17) of the Internal Revenue Code), and to the extent severance amounts are required to be delayed, such severance amounts are considered for purposes of 409A to be separate payments from the severance amounts that are not required to be delayed.  The Agreement shall be interpreted to ensure that the payments made to you are exempt from, or comply with, 409A; provided, however, that nothing in this Agreement shall be interpreted or construed to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with 409A) from you to the Company or to any other individual or entity.

 

 

 

  

  

  

Very truly yours,

ALCO STORES, INC.

/s/ Robert J. Sarlls

Robert J. Sarlls

Chairman of the Board

Accepted and Agreed to:

/s/ Stanley B. Latacha

Stanley B. Latacha

 

  

  

  

SEPARATION AND RELEASE AGREEMENT

 

THIS SEPARATION AND RELEASE AGREEMENT (this “Agreement”) is made as of the ____ day of ______________, by and between Stanley B. Latacha (the “Executive”) and Alco Stores, Inc., a Kansas corporation (the “Company”).

 

WHEREAS, the Executive’s employment as an executive of the Company has terminated; and

 

WHEREAS, pursuant to Section 6(b)(2) of the Employment Agreement by and between the Company and the Executive dated September 4, 2014 (the “Employment Agreement”), the Company has agreed to pay the Executive certain amounts, subject to the execution of this Agreement.

 

NOW THEREFORE, in consideration of these premises and the mutual promises contained herein, and intending to be legally bound hereby, the parties agree as follows:

 

1. Consideration.  The Executive acknowledges that: (i) the payments set forth in Section 6(b) of the Employment Agreement constitute full settlement of all his rights under the Employment Agreement, (ii) he has no entitlement under any other severance or similar arrangement maintained by the Company, and (iii) except as otherwise provided specifically in this Agreement, the Company does not and will not have any other liability or obligation to the Executive.  The Executive further acknowledges that, in the absence of his execution of this Agreement, the benefits and payments specified in Section 6(b) of the Employment Agreement would not otherwise be due to him.

 

2. Release and Covenant Not to Sue.

 

2.1 The Executive, his heirs and representatives release, waive and forever discharge the Company, its predecessors and successors, assigns, stockholders, subsidiaries, parents, affiliates, officers, directors, trustees, current and former employees, agents and attorneys, past and present and in their respective capacities as such (the Company and each such person or entity is each referred to as a “Released Person”) from all pending or potential claims, counts, causes of action and demands of any kind whatsoever or nature for money or anything else, whether such claims are known or unknown, that arose prior to the Executive’s signing this Agreement or that relate in any way to the Executive’s employment or termination of employment with the Company.  This release includes, but is not limited to, any and all claims of race discrimination, sexual discrimination, national origin discrimination, religious discrimination, disability discrimination, age discrimination and unlawful retaliation and any and all claims under the following: Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.; Civil Rights Act of 1866,42 U.S.C. § 1981 et seq.; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601, et seq.; the Americans with Disabilities Act, as amended, 42 U.S.C. § 12101, et seq.; the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act, 29 U.S.C. § 621, et seq.; Kansas Act Against Discrimination, Chapter 44, Art. 10, K.S.A.; Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq.; Rehabilitation Act of 1973,29 U.S.C. § 706, et seq.; any state, municipal and other local anti-discrimination statutes; any and all claims for alleged breach of an express or implied contract; any and all tort claims 

 

 

  

  

  

 

including, but not limited to, alleged retaliation for assertion of workers’ compensation rights; any and all claims under workers’ compensation law; and any and all claims for attorney’s fees.

 

2.2 The Executive expressly represents that he has not filed a lawsuit or initiated any other administrative proceeding against a Released Person and that he has not assigned any claim against a Released Person.  The Executive further promises not to initiate a lawsuit or to bring any other claim against any Released Person arising out of or in any way related to the Executive’s employment by the Company or the termination of that employment.  This Agreement will not prevent the Executive from filing a charge with the Equal Employment Opportunity Commission (or similar state agency) or participating in any investigation conducted by the Equal Employment Opportunity Commission (or similar state agency); provided, however, that any claims by the Executive for personal relief in connection with such a charge or investigation (such as reinstatement or monetary damages) would be barred.  In addition, this release shall not affect the Executive’s rights under the Older Workers Benefit Protection Act to have a judicial determination of the validity of this release and waiver.

 

2.3 The foregoing will not be deemed to release the Company from (a) claims solely to enforce this Agreement, (b) claims solely to enforce Section 6(b) of the Employment Agreement, (c) claims solely to enforce the terms of any equity incentive award agreement between the Executive and the Company, (d) claims for indemnification under the Company’s Amended and Restated Bylaws and/or any applicable indemnification agreements, and/or (e) claims to continue health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended or similar state law.  The foregoing will not be deemed to release any person or entity from claims arising after the date of this Agreement, whether under this Agreement, under the Employment Agreement or otherwise.

 

3. Restrictive Covenants.  The Executive acknowledges that the restrictive covenants contained in Sections 7 and 8 of the Employment Agreement (the “Restrictive Covenants”) will survive the termination of Executive’s employment.  The Executive affirms that the Restrictive Covenants are reasonable and necessary to protect the legitimate interests of the Company, that he received adequate consideration in exchange for agreeing to those restrictions and that he will abide by those restrictions.  The Company acknowledges that its obligations contained in Section 8(h) of the Employment Agreement will survive the termination of the Executive’s employment.

 

4. Return of Company Property.  The Executive represents and warrants that he has returned all property belonging to the Company, including, but not limited to, all keys, access cards, office equipment, computers, cellular telephones, notebooks, documents, records, files, written materials, electronic information, credit cards bearing the Company’s name, and other Company property (originals or copies in whatever form) in the Executive’s possession or under the Executive’s control.

 

5. Cooperation.  The Executive further agrees that, subject to reimbursement of his reasonable expenses, he will cooperate fully with the Company and its counsel with respect to 

 

  

  

  

 

any matter (including litigation, investigations, or governmental proceedings) in which the Executive was in any way involved during his employment with the Company; provided that such cooperation shall not unreasonably interfere with Executive’s employment with another employer after termination of his employment with the Company.  The Executive shall render such cooperation in a timely manner on reasonable notice from the Company.

 

6. Rescission Right.  The Executive expressly acknowledges and recites that (a) he has read and understands the terms of this Agreement in its entirety, (b) he has entered into this Agreement knowingly and voluntarily, without any duress or coercion; (c) he has been advised orally and is hereby advised in writing to consult with an attorney with respect to this Agreement before signing it; (d) he was provided twenty-one (21) calendar days after receipt of this Agreement to consider its terms before signing it; and (e) he is provided seven (7) calendar days from the date of signing to terminate and revoke this Agreement, in which case this Agreement shall be unenforceable, null and void.  The Executive may revoke this Agreement during those seven (7) days by providing written notice of revocation to the Company at the address specified in Section 12(d) of the Employment Agreement.

 

7. Challenge.  If the Executive violates or challenges the enforceability of any provisions of the Restrictive Covenants or this Agreement, no further payments, rights or benefits under Section 6(b)(2) of the Employment Agreement will be due to the Executive.

 

8. Miscellaneous.

 

8.1 No Admission of Liability.  This Agreement is not to be construed as an admission of any violation of any federal, state or local statute, ordinance or regulation or of any duty owed by the Company to the Executive.  There have been no such violations, and the Company specifically denies any such violations.

 

8.2 No Reinstatement.  The Executive agrees that he will not without the consent of the Company apply for reinstatement with the Company or seek in any way to be reinstated, re-employed or hired by the Company in the future.

 

8.3 Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the Company and the Executive and their respective successors, permitted assign, executors, administrators and heirs.  The Executive may not make any assignment of this Agreement or any interest herein, by operation of law or otherwise.  The Company may assign this Agreement to any successor to all or substantially all of its assets and business by means of liquidation, dissolution, merger, consolidation, transfer of assets, or otherwise.

 

8.4 Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law.  However, if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provision, and this Agreement will be reformed, construed and enforced as though the invalid, illegal or unenforceable provision had never been herein contained.

 

 

  

  

  

8.5 Entire Agreement; Amendments.  Except as otherwise provided herein, this Agreement contains the entire agreement and understanding of the parties hereto relating to the subject matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature relating to the subject matter hereof.  This Agreement may not be changed or modified, except by an agreement in writing signed by each of the parties hereto.

 

8.6 Governing Law.  This Agreement shall be governed by, and enforced in accordance with, the laws of the State of Kansas, without regard to the application of the principles of conflicts of laws.

 

8.7 Counterparts and Facsimiles.  This Agreement may be executed, including execution by facsimile signature, in multiple counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has executed this Agreement, in each case as of the date first above written.

 

EXECUTIVE

By: ______________________________  

    Stanley B. Latacha        

                              

COMPANY

ALCO STORES, INC.

By: _____________________________

 

Its:  _____________________________    

 

Date: ____________________________

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