Document:

ex101

12/16/2019                                                                       EX-10.1    EX-10.1 2 d846452dex101.htm EX-10.1                                                                                                                              Exhibit 10.1                                                                                                                         Execution Version                                           EIGHTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND FOURTH                                                     AMENDMENT TO REVOLVING LINE OF CREDIT NOTE                          This EIGHTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND FOURTH AMENDMENT TO REVOLVING LINE OF                    CREDIT NOTE (this “Amendment”), dated as of December 13, 2019 (the “Eighth Amendment Effective Date”), is entered into by and between                    KEWAUNEE SCIENTIFIC CORPORATION, a Delaware corporation (the “Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION                    (the “Bank”).                                                                       W I T N E S S E T H:                          WHEREAS, the Bank has made available to the Borrower certain term loans and lines of credit pursuant to the terms and conditions of (i) that                    certain Credit and Security Agreement, dated as of May 6, 2013, by and between the Borrower and the Bank, as amended by that certain First                    Amendment to Credit and Security Agreement dated as of July 9, 2013, as further amended by that certain Second Amendment to Credit and Security                    Agreement dated as of June 4, 2014, as further amended by that certain Third Amendment to Credit and Security Agreement and First Amendment to                    Revolving Line of Credit Note dated as of June 3, 2015 (the “Third Amendment”), as further amended by that certain Fourth Amendment to Credit and                    Security Agreement and Second Amendment to Revolving Line of Credit Note dated as of March 12, 2018 (the “Fourth Amendment”), as further                    amended by that certain Fifth Amendment to Credit and Security Agreement dated as of April 22, 2019, as further amended by that certain Sixth                    Amendment to Credit and Security Agreement dated as of May 28, 2019, and as further amended by that certain Seventh Amendment to Credit and                    Security Agreement and Third Amendment to Revolving Line of Credit Note dated as of July 9, 2019 (the “Seventh Amendment”) (as the same may be                    further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), (ii) that certain Revolving Line of Credit                    Note, dated May 6, 2013, made by the Borrower and payable to the order of the Bank, as amended by the Third Amendment, the Fourth Amendment                    and the Seventh Amendment (as the same may be further amended, restated, supplemented or otherwise modified from time to time, the “Line of Credit                    Note”) and (iii) certain other Loan Documents executed in connection therewith, as amended, restated, supplemented or otherwise modified from time                    to time;                          WHEREAS, the Borrower has requested that the Bank further amend the Credit Agreement and the Line of Credit Note to (i) effect a change in                    the available amount of the Line of Credit and (ii) amend certain other terms and provisions of the Credit Agreement, on the terms and conditions set                    forth herein.   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                     1/17

 

12/16/2019                                                                       EX-10.1                          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto,                    the parties hereto hereby agree as follows:                         Section 1. Specific Amendments to Credit Agreement. The parties hereto agree that the Credit Agreement is amended as follows:                         (a) Section 1.1(a)(i) of the Credit Agreement is hereby amended and restated in its entirety as follows:                               “(i) Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up to and                               including February 1, 2021 (the “Expiration Date”), not to exceed at any time the aggregate principal amount of Twenty Million and                               00/100 Dollars ($20,000,000.00), provided that, from and after the earlier of (a) January 31, 2020 and (b) the cancellation of the                               Terminating Letter of Credit, such advances shall not exceed the aggregate principal amount of Fifteen Million and 00/100 Dollars                               ($15,000,000.00) (“Line of Credit”), the proceeds of which shall be used (a) to refinance existing indebtedness of the Borrower to Bank of                               America, N.A. and (b) for working capital, the issuance of letters of credit, short term financing of capital equipment, and other general                               corporate purposes. Borrower’s obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated as of                               the Closing Date (“Line of Credit Note”), all terms of which are incorporated herein by this reference.”                         (b) Section 1.1(a)(iii) of the Credit Agreement is hereby deleted in its entirety.                         (c) Section 1.1(b) of the Credit Agreement is hereby amended by separating the Section into two subsections, with the existing text to be labeled                         as subsection (i) and the following subsection (ii) to be inserted thereafter:                               “(ii) Outstanding borrowings under the Line of Credit, to a maximum of the principal amount set forth in clause (a) of this Section 1.1,                               shall not at any time exceed an aggregate of eighty percent (80%) of Borrower’s Eligible Accounts Receivable, plus twenty-one percent                               (21%) of the value of Borrower’s eligible inventory (including unbilled inventory but exclusive of work in process, inventory which is                               obsolete, unsaleable or damaged and crating material), with value defined as the lower of cost or market value; provided, however, that                               unbilled inventory shall not be included in eligible inventory after January 31, 2020; provided, further, that outstanding borrowings against                               inventory shall not at any time exceed an aggregate of Five Million and 00/100 Dollars ($5,000,000); plus, in Bank’s sole discretion, a                               percentage of the value of Borrower’s properly margined unencumbered equipment, such percentage to be determined by Bank in its sole                               discretion, as evidenced by the equipment appraisal delivered to Bank pursuant to Section 4.12. All of the foregoing shall be determined                               by Bank upon receipt and review of all collateral reports required hereunder and such other documents and collateral information as Bank                               may from time to time require. Borrower acknowledges that said borrowing base was established by Bank with the understanding that,                               among other items, the aggregate of all returns, rebates, discounts, credits and allowances for the immediately preceding three (3) months                               at all times shall be less than five percent (5%) of Borrower’s gross sales for said period. If such dilution of Borrower’s accounts for the                               immediately preceding three (3) months at any time exceeds five percent (5%) of Borrower’s gross sales for said period, or if there at any                               time exists any other matters, events, conditions or contingencies which Bank reasonably believes may affect payment of any portion of                               Borrower’s accounts, Bank, in its sole discretion, may reduce the foregoing advance rate against Eligible Accounts Receivable to a                               percentage appropriate to reflect such                                                                                                   2   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                     2/17

 

12/16/2019                                                                       EX-10.1                                additional dilution and/or establish additional reserves against Borrower’s Eligible Accounts Receivable, provided that the amount of any                               reserve established by Bank shall have a reasonable relationship to the matter, event, condition or contingency that is the basis for such                               reserve and shall not be duplicative of any other reserve established and currently maintained.”                         (d) Section 4.3(c) of the Credit Agreement is hereby amended by deleting the reference to “during any period in which the Senior Funded Debt to                         EBITDA Ratio is not tested under Section 4.9(b) of this Agreement,” in clause (iii) thereof.                         (e) Section 4.3 of the Credit Agreement is hereby amended by (i) deleting the word “and” at the end of subsection (g), (ii) re-lettering subsection                         (h) as subsection (j) and (iii) adding new subsections (h) and (i) as follows:                               “(h) on the last business day of each calendar week, a forecast of cash flows of the Borrower for the following thirteen-week period;                               (i) not later than 30 days after the end of each calendar month, a completed and fully executed Borrowing Base Certificate together with all                               supporting schedules and calculations and, upon request by Bank, copies of any executed acknowledgment letters in favor of Bank; and”.                         (f) Section 4.9 of the Credit Agreement is hereby amended and restated in its entirety as follows:                               “SECTION 4.9. FINANCIAL CONDITION. Maintain Borrower’s financial condition as follows using GAAP consistently applied and                               used consistently with prior practices (except to the extent modified by the definitions herein):                               (a) Minimum Monthly Liquidity as of the end of each calendar month not less than (i) during the period from the Eighth Amendment                               Effective Date through January 31, 2020, $1,500,000 and (ii) thereafter, $3,000,000; with “Minimum Monthly Liquidity” defined as the                               “Total Borrowing Base Availability” as indicated on the Borrowing Base Certificate for such calendar month.                               (b) Minimum EBITDA for the Borrower and its Subsidiaries on a consolidated basis at all times during each fiscal quarter, commencing                               with the fiscal quarter ending April 30, 2020, equal to not less than (i) for the fiscal quarter ending April 30, 2020, determined for the                               one-quarter period then ended, $315,000, (ii) for the fiscal quarter ending July 31, 2020, determined for the two-quarter period then ended,                               $1,115,000, (iii) for the fiscal quarter ending October 31, 2020, determined for the three-quarter period then ended, $2,175,000, (iv) for the                               fiscal quarter ending January 31, 2021, determined for the four-quarter period then ended, $3,040,000. As used herein, “EBITDA” means                               consolidated net income determined in accordance with GAAP, consistently applied, less income or plus loss from discontinued operations                               and extraordinary items, plus income taxes, plus interest expense, plus depreciation, depletion, and amortization, all to the extent included                               in the determination of consolidated net income. For purposes of this Section 4.9(c), EBITDA may be increased by scheduled one-time                               non-recurring addbacks in an amount not to exceed $250,000.”                                                                                                   3   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                     3/17

 

12/16/2019                                                                       EX-10.1                          (g)  Article IV of the Credit Agreement is hereby amended by adding new Sections 4.11 and 4.12 as follows:                               “SECTION 4.11. REPATRIATION. Initiate no later than December 31, 2019 a cash repatriation in an amount not less than $4,000,000,                               calculated on a pre-tax basis.”                               “SECTION 4.12. APPRAISALS. Provide to Bank the following, in each case to be prepared by a Person acceptable to Bank in its sole                               discretion, and at the expense of Borrower: (a) as soon as available, but in any event within sixty (60) days after the Eighth Amendment                               Effective Date, an appraisal of all equipment of Borrower, (b) at any time upon request by Bank, but not more than two (2) times per                               calendar year, an appraisal of all inventory of Borrower and (c) at any time upon request by Bank, but not more than two (2) times per                               calendar year, a field examination of Borrower.                                              (h)  Section 5.6 of the Credit Agreement is hereby amended and restated in its entirety as follows:                               “SECTION 5.6. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or distribution either in cash, stock or any other property                               on Borrower’s stock now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of any class of                               Borrower’s stock now or hereafter outstanding, except for (a) dividends and distributions made under Borrower’s restricted stock                               compensation plan, long-term incentive plan or directors’ compensation plan and (b) cash dividends and distributions from the Borrower                               to its owners, so long as (a) no event of default or event which, with notice or the passage of time, will constitute an event of default has                               occurred and is continuing or will result therefrom (giving effect thereto on a pro forma basis as if such payment were made on the first                               day of the fiscal quarter ending April 30, 2020) and (b) the Fixed Charge Coverage Ratio, calculated as of the last day of the immediately                               preceding calendar month, for the twelve-month period then ended, is greater than 2.50. As used herein, “Fixed Charge Coverage Ratio”                               means for the Borrower and its Subsidiaries, as of any date of determination, the ratio of (a) EBITDA for the twelve-month period then                               ended plus lease expense and rent expense for such period, minus income taxes paid, and dividends, withdrawals, and other distributions                               made, in such period, to (b) the sum of interest expense, lease expense, rent expense for such period, plus the current portion of long term                               debt, and the current portion of capitalized lease obligations required to have been made during such period (whether or not such payments                               are actually made).”                         (i) Section 6.1(c) of the Credit Agreement is hereby amended and restated in its entirety as follows:                               “(c) [Reserved].”                                                                                                   4   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                     4/17

 

12/16/2019                                                                       EX-10.1                          (j) Section 6.1(d) of the Credit Agreement is hereby amended by deleting the reference to “(excluding Section 4.9(a))”.                         (k) Annex I (Certain Definitions) of the Credit Agreement is hereby amended by adding the following new definitions in appropriate alphabetical                         order:                               ““Borrowing Base Certificate” means a certificate substantially in the form of Exhibit B or in such other form as determined from time to                               time by Bank in its sole discretion.”                               ““Eighth Amendment Effective Date” means December 13, 2019.”                               ““Eligible Accounts Receivable” (a) means trade accounts created in the ordinary course of Borrower’s business, upon which Borrower’s                               right to receive payment is absolute and not contingent upon the fulfillment of any condition whatsoever, and in which Bank has a                               perfected security interest of first priority and (b) shall not include:                                   (i) any account that has been outstanding more than (A) three times Borrower’s standard selling terms or (B) 60 days past due or 90                               days from the date of the invoice, whichever is less;                                   (ii) that portion of any account for which there exists any right of setoff, defense or discount (except regular discounts allowed in the                               ordinary course of business to promote prompt payment) or for which any defense or counterclaim has been asserted;                                   (iii) that portion of any account which represents an obligation of any state or municipal government or of the United States                               government or any political subdivision thereof (except accounts which represent obligations of the United States government and for                               which the assignment provisions of the Federal Assignment of Claims Act, as amended or recodified from time to time, have been                               complied with to Bank’s satisfaction) that exceeds ten percent (10%) of Borrower’s total accounts;                                   (iv) any account which represents an obligation of an account debtor located in a foreign country, except to the extent any such                               account, in Bank’s determination, is supported by a letter of credit or insured under a policy of foreign credit insurance, in each case in                               form, substance and issued by a party acceptable to Bank;                                   (v) any account which arises from the sale or lease to or performance of services for, or represents an obligation of, an employee,                               affiliate, partner, member, parent or subsidiary of Borrower;                                   (vi) that portion of any account, which represents interim or progress billings or retention rights on the part of the account debtor;                                                                                                   5   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                     5/17

 

12/16/2019                                                                       EX-10.1                                    (vii) that portion of all “bill and hold” receivables that exceeds fifty percent (50%) of Borrower’s total accounts, provided that, on                               and after February 1, 2020, any “bill and hold” receivables that are not subject to an acknowledgment letter in favor of Bank substantially                               in the form of Exhibit A shall be excluded from Eligible Accounts Receivable;                                   (viii) any account which represents an obligation of any account debtor when twenty percent (20%) or more of Borrower’s accounts                               from such account debtor are not eligible pursuant to (i) above;                                   (ix) that portion of any account from an account debtor which represents the amount by which Borrower’s total accounts from said                               account debtor exceeds twenty-five percent (25%) of Borrower’s total accounts; or                                   (x) any account deemed ineligible by Bank when Bank, in its sole discretion, deems the creditworthiness or financial condition of the                               account debtor, or the industry in which the account debtor is engaged, to be unsatisfactory.”                               ““Senior Funded Debt” means Funded Debt, but excluding any debt that is contractually subordinated in right of payment to the Line of                               Credit, either Term Loan or any outstanding borrowings thereunder.””                         (l) The Credit Agreement is hereby amended by (i) adding an Exhibit A thereto substantially in the form of Exhibit A hereto and (ii) adding an                         Exhibit B thereto substantially in the form of Exhibit B hereto.                          Section 2. Specific Amendments to Line of Credit Note. The parties hereto agree that the Line of Credit Note is amended as follows:                         (a) The Section entitled “DEFINITIONS” of the Line of Credit Note is hereby amended by:                                                   (i)  adding the following sentence to the end of the first paragraph thereof:                                   “Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.”; and                                                                                                   6   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                     6/17

 

12/16/2019                                                                       EX-10.1                               (ii) replacing the table in the definition of “Applicable Margin” with the following table:                                                                                           Senior                                                                      Funded                                                                      Debt to       Applicable Margin for Daily                                                                      EBITDA           One Month LIBOR         Applicable Margin for                             Tier                                      Ratio              Advances             Prime Rate Advances                               I                                         < 2.50x                    1.50%                  0.50%                              II                                     >2.50x but                                                                       £ 3.50x                    2.25%                  0.75%                              III                                    >3.50x but                                                                       £ 4.25x                    3.00%                  1.00%                              IV                                        >4.25x                     3.75%                  1.25%                           Section 3. Limited Amendment. Except as expressly set forth in this Amendment, the Credit Agreement, the Line of Credit Note, and each other                    Loan Document shall continue to be, and shall remain, in full force and effect. Except as expressly set forth in this Amendment, this Amendment shall                    not be deemed or otherwise construed (a) to be a waiver of, or consent to or a modification or amendment of, any other term or condition of the Credit                    Agreement, the Line of Credit Note, or any other Loan Document, (b) to prejudice any other right or remedies that Bank may now have or may have in                    the future under or in connection with the Credit Agreement, the Line of Credit Note, or any other Loan Document, as such documents may be                    amended, restated or otherwise modified from time to time, (c) to be a commitment or any other undertaking or expression of any willingness to engage                    in any further discussion with the Borrower or any other person, firm or corporation with respect to any waiver, amendment, modification or any other                    change to the Credit Agreement, the Line of Credit Note, or any other Loan Document or any rights or remedies arising in favor of the Bank under or                    with respect to any such documents or (d) to be a waiver of, or consent to or a modification or amendment of, any other term or condition of any other                    agreement by and among the Borrower, on the one hand, and the Bank, on the other hand. By its execution hereof, Borrower hereby acknowledges and                    agrees that this Amendment is a “Loan Document” and failure to comply with this Amendment shall constitute an Event of Default under the Credit                    Agreement.                          Section 4. Conditions to Effectiveness. This Amendment shall become effective as of the date when the following conditions have been met:                         (a) The Bank shall have received an original of this Amendment duly executed by the Borrower, and by the Bank (whether such parties shall have                         signed the same or different copies);                         (b) The Bank shall have been reimbursed by Borrower for all reasonable fees and third-party out-of-pocket charges and other expenses incurred in                         connection with this Amendment and the transactions contemplated thereby or otherwise due and owing pursuant to the Loan Documents as of the                         date hereof, including, without limitation, (y) the reasonable attorneys’ fees and expenses of Womble Bond Dickinson (US) LLP, as counsel to the                         Bank and (z) lien searches, title and recordation fees, if any;                                                                                                   7   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                     7/17

 

12/16/2019                                                                       EX-10.1                          (c) The Bank shall have received from the Borrower an amendment fee in the amount of $20,000.00 which fee shall be fully earned by the Bank                         and payable on the date of this Amendment;                         (d) The Bank shall have received the Borrower’s updated financial projections/statements;                         (e) The Bank shall have received any other documents, agreements and instruments reasonably requested by the Bank in connection with the                         execution of this Amendment and the transactions contemplated thereby; and                         (f) The Bank shall have received a pro forma Borrowing Base Certificate from the Borrower.                          Section 5. Representations and Warranties. After giving effect to the amendments set forth herein, Borrower hereby represents and warrants to the                    Bank that:                         (a) Each of the representations and warranties set forth in the Credit Agreement, the Line of Credit Note and the other Loan Documents is true and                    correct in all material respects as of the date hereof as if fully set forth herein (except for any representation and warranty made as of an earlier date,                    which representation and warranty shall remain true and correct as of such earlier date);                          (b) No Event of Default has occurred and is continuing as of the date hereof;                          (c) The execution, delivery, and performance of this Amendment have been authorized by all requisite corporate action;                          (d) The execution, delivery and performance by the Borrower of this Amendment, and compliance by it with the terms hereof and thereof, do not                    and will not (i) violate any provision of its certificate of incorporation, bylaws, or other applicable formation or organizational documents,                    (ii) contravene any requirement of law applicable to it, (iii) conflict with, result in a breach of or constitute (with notice, lapse of time or both) a default                    under any material indenture, mortgage, lease, agreement, contract or other instrument to which it is a party, by which it or any of its properties is bound                    or to which it is subject, or (iv) except for the Liens granted in favor of the Bank, result in or require the creation or imposition of any Lien upon any of                    its properties, revenues or assets; except, in the case of clauses (ii) and (iii) above, where such violations, conflicts, breaches or defaults, individually or                    in the aggregate, could not reasonably be expected to have a material adverse effect; and                          (e) This Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, except                    as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally, by                    general equitable principles or by principles of good faith and fair dealing (regardless of whether enforcement is sought in equity or at law).                                                                                                   8   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                     8/17

 

12/16/2019                                                                       EX-10.1                          Section 6. Confirmation of all Loan Documents. By its execution hereof, the Borrower hereby expressly (a) consents to the amendments set forth                    in this Amendment, (b) reaffirms all of its respective covenants, representations, warranties and other obligations set forth in the Credit Agreement, the                    Line of Credit Note and each of the other Loan Documents and (c) acknowledges, represents and agrees that its respective covenants, representations,                    warranties and other obligations set forth in the Credit Agreement, the Line of Credit Note and each of the other Loan Documents remain in full force                    and effect. For the avoidance of doubt, all financial covenants contained in Section 4.9 of the Credit Agreement prior to the execution of this                    Amendment are hereby superseded and replaced by the terms of this Amendment and are no longer in effect.                          Section 7. Expenses. The Borrower shall reimburse the Bank upon demand for all reasonable and documented costs and expenses (including                    attorneys’ fees) incurred by the Bank and outstanding as of the date hereof, including, without limitation, costs incurred in connection with the                    preparation, negotiation, execution, delivery, administration and enforcement of this Amendment and the other agreements and documents executed and                    delivered in connection herewith, whether or not this Amendment becomes effective.                          Section 8. Certain References. On and after the effectiveness of this Amendment, each reference in the Credit Agreement, the Line of Credit Note                    or any other Loan Document shall mean and be a reference to the Credit Agreement, the Line of Credit Note and such other Loan Document as amended                    by this Amendment.                          Section 9. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which                    shall constitute one and the same agreement, and the signature pages from any counterpart may be appended to any other counterpart to assemble fully-                    executed counterparts. Counterparts of this Amendment may be exchanged via electronic means, and a facsimile of any party’s signature shall be                    deemed to be an original signature for all purposes. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their                    respective successors and assigns.                          Section 10. Definitions. All capitalized terms used herein and not otherwise defined shall have the respective meanings provided to such terms in                    the Credit Agreement, as amended hereby.                          Section 11. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL                    BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE TO                    CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.                                                                     [Signature Pages Follow]                                                                                                   9   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                     9/17

 

12/16/2019                                                                       EX-10.1                          IN WITNESS WHEREOF, the Borrower and the Bank, on the day and year first written above, have caused this Amendment to be executed                    under seal.                                                                                                               BORROWER:                                                                                           KEWAUNEE SCIENTIFIC CORPORATION                                                                                           By:  /s/ Donald T. Gardner III                                                                                          Name:  Donald T. Gardner III                                                                                          Title:  CFO/Corporate Secretary                     [Eighth Amendment – Kewaunee Scientific Corporation]   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                    10/17

 

12/16/2019                                                                       EX-10.1                                                                                           BANK:                                                                                           WELLS FARGO BANK, NATIONAL ASSOCIATION                                                                                           By:  /s/ Michael J. Bennett                                                                                          Name:  Michael J. Bennett                                                                                          Title:  Senior Vice President                     [Eighth Amendment – Kewaunee Scientific Corporation]   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                    11/17

 

12/16/2019                                                                       EX-10.1                                                                           Exhibit A                                                       FORM OF BILL/HOLD ACKNOWLEDGMENT LETTER                                                                  BILL AND HOLD LETTER                                                                      [SELLER’S NAME]                                                                                                                                                                                                                                                                                                                              ______________, 201__                     [CUSTOMER’S NAME]                    __________________________                    __________________________                    Attention:________________                     Dear Customer:                         From time to time you (the “Customer”) may request that the undersigned (the “Seller”) manufacture and produce certain goods for future                    shipment to you.                          This will confirm the agreement of Customer and Seller that, notwithstanding anything to the contrary contained in any purchase order, invoice or                    other agreement between Customer and Seller, title to such goods manufactured and produced by Seller for Customer and risk of loss as to such goods                    passes to Customer when Seller has completed production of the goods covered by Customer’s order and the goods have been invoiced by Seller to                    Customer, notwithstanding that the goods so sold may remain on the premises of Seller or otherwise in its control or possession. Such goods are held for                    the account of Customer and at its risk and each invoice with respect to such goods issued to Customer by Seller represents a definitive and final sale                    and Customer shall pay the same when due, regardless of whether the goods have been shipped or delivered to Customer as of such time or are                    otherwise accepted by Customer.                          Customer agrees that, except as provided below, in no event shall Customer, or any person claiming by, through or under it, offset or withhold                    payment in respect of any account for any offset, claim, defense, counterclaim, abatement, suspension, recoupment or deduction which Customer may                    have against Seller for any amounts which may now or hereafter be due to Customer from Seller for any reason, except that Customer may, in the                    ordinary course of business assert any bona fide offsets or deductions it may lawfully have only against accounts due to the Customer by reason of the                    delivery to Customer by Seller of defective or non-conforming goods to the extent that the basis for the offset or deduction arises out of the same                    transaction giving rise to the account due which is subject to the asserted offset or deduction..   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                    12/17

 

12/16/2019                                                                       EX-10.1                     The fact that Customer has limited its setoff and recoupment rights against accounts due to Seller shall not limit any rights or remedies Customer may                    have against Seller or any of its other assets. Customer waives any right that it may have under any Federal, State or other law, including, without                    limitation, all rights under Section 553 of the U.S. Bankruptcy Code, to assert any such rights.                          Seller may store the goods at its premises or in leased warehouse space. The goods will be shipped to Customer from time to time at its request                    upon reasonable prior notice in accordance with Seller’s policies as in effect from time to time.                          All out-of-pocket expenses incurred by Seller for storage, insurance or disposal in connection with the goods manufactured for Customer by Seller                    are to be billed by Seller to Customer in accordance with Seller’s policies as in effect from time to time.   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                    13/17

 

12/16/2019                                                                       EX-10.1                          Seller would appreciate the confirmation of the agreement of Customer to the above arrangements by signing and returning to Seller the enclosed                    copy of this letter. The agreement of Customer in this letter will be binding on its successors and assigns. In making loans to Seller based on the                    accounts payable by Customer to Seller from such sales, Wells Fargo Bank, National Association, the lender to Seller, is relying on the agreements of                    Customer in this letter and the terms of this letter will inure to the benefit of such lender and its successors and assigns (including any other lender that                    refinances or replaces its financing) and such lender and successors and assigns will be entitled to enforce the terms hereof directly. The terms of this                    letter may not be modified by course of dealing or otherwise than in writing signed by Seller and approved in writing by its lender.                          We would like to take this opportunity to thank you for your continued business.                                                                                                               Very truly yours,                                                                                           [SELLER’S NAME]                                                                                           By:                                                                                             Name:                                                                                             Title:                                            AGREED:                     [CUSTOMER’S NAME]                     By:                       Name:                       Title:      https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                    14/17

 

12/16/2019                                                                       EX-10.1                                                                           Exhibit B                                                            FORM OF BORROWING BASE CERTIFICATE                                                                     Kewaunee Scientific Corporation—Borrowing Base Certificate for period ending:      [_____]                     in 000s                                                                                                                            Accounts Receivable                                   Source Document                                                              Gross A/R (Domestic)                                                                 [_____]                                       Less: Ineligible A/R                                                                                                               a. Past Dues                                                          [_____]                                                      b. Past Due Credits                                                   [_____]                                                      c. Cross Age                                                          [_____]                                                      d. Intercompany                                                       [_____]                                                      e. Foreign                                                            [_____]                                                      f. Retainage                                                          [_____]                                                      g. Government Receivables                                             [_____]                                                          h. Advance Sales (FE and ENG)                            [_____]                                                               i. Bill and Hold (B&H Letters on File)                                [_____]                                                      Total A/R Ineligibles                                                                [_____]                                       Net Eligible A/R                                                                              [_____]                                  Advance Rate                                                                                [__]%                                                                                                                                                                                                                                                                                          Available A/R                                                                                           [_____]                      Inventory                                                                                                                          Gross Inventory (Domestic)                                                           [_____]                                       Plus: Bill & Hold Inventory                                           [_____]                                                      Plus: Unbilled Inventory                                              [_____]                                                      Less: Ineligible Inventory                                                                                                         a. Obsolescence/Excess                                                [_____]                                                      b. WIP                                                                [_____]                                                      c. Crating Materials                                                  [_____]   _____________                                      Total Inventory Ineligibles                                                          [_____]                                       Net Eligible Inventory                                                                        [_____]                                  Advance Rate                                                                                [__]%                                                                                                                                                                                                                                                                                          Eligible Inventory                                                                                      [_____]     https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                    15/17

 

12/16/2019                                                                       EX-10.1                     Machinery and Equipment                                                                                                        Appraised M&E                                                                                     [_____]                          Advance Rate                                                                                     [__]%                      Eligible M&E                                                                                                  [          ]                                                                                                                                                                                                                                                                                               TOTAL BB Availability                                                                                      $  [_____]                                                                                                                                                                                                                                                                                               Plus: Outstanding Letters of Credit                                                [_____]                                     Plus: Outstanding Loan Balance                                                     [_____]                                                                                                                                                                                                                                                                                 Total Loans and SLCs Outstanding                                                          [_____]                              Plus: Minimum Additional Liquidity                                                        [_____]                                                                                                                                                                                                                                                                                  Total Required Borrowing Base Assets                                                                          [_____]                                                                                                                                                                                                                                                                                               Excess / (Limited) Availability                                                                            $  [_____]                                                                                                                                                                                                                                                                                                Line of Credit Commitment                                                                                     [_____]                     Excess / (Suppressed) Availability                                                                          ([_____])                                                       Calculations                                                                                                            Gross B&H A/R                                                                           [_____]                                      B&H Cap (50% of total AR)                                                           [_____]                                                                                                                                                                                                                                                                                            Net Eligible B&H A/R (Lesser of 50% or Gross Amount)                                    [_____]                                  Gross B&H Inv                                                                           [_____]                                      B&H Cap (50% of total Inv.)                                                         [_____]                                                                                                                                                                                                                                                                                            Net Eligible B&H Inv. (Lesser of 50% or Gross Amount)                                   [_____]                                  Gross Unbilled Inv                                                                      [_____]                                      B&H Cap (50% of total Inv.)                                                         [_____]                                                                                                                                                                                                                                                                                            Net Eligible Unbilled Inv. (Lesser of 50% or Gross Amount)                              [_____]                                  Gross Government Receivables A/R                                                        [_____]                                      Govt AR Cap (10% of total AR)                                                       [_____]                                                                                                                                                                                                                                                                                            Net Eligible Govt A/R (Lesser of 10% or Gross Amount)                                   [_____]    https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                    16/17

 

12/16/2019                                                                                                  EX-10.1                                                                                            Bill and Hold Schedule                                                     Company Name                                                                                                                        Invoice #       Amount   https://www.sec.gov/Archives/edgar/data/55529/000119312519314689/d846452dex101.htm                                                                                                                      17/17offerlettermandarranade1

                                                                                                           October 28, 2019      Mr. Mandar Ranade  rmandaar@hotmail.com     Dear Mandar,    I  am  pleased  to  confirm  our  offer  of  employment  with  Kewaunee  Scientific  Corporation  as  our Vice  President  of  Information  Technology,  reporting  to Tom  Hull, President and  CEO.  In this  position,  your  starting salary will be $17,500 monthly ($210,000.00 annualized).  Following our normal practices, this  offer is made contingent upon your passing a pre-employment drug test and background screen.    In addition to your salary, we offer an attractive benefits package, which includes a health care program,  dental  plan, life insurance,  disability  income program,  401(k)  retirement  savings  plan, flexible spending  accounts, on-site Nurse Practitioner program, as well as other benefits provided to full-time Associates.  A  copy  of  the  salaried  fringe  benefit  document is  attached  for  your  reference.   If  you  should  have  any  questions concerning the fringe benefits, please feel free to contact me.    We  are  also  delighted  to  offer  you  extended  benefits based  on  your  role  in  the  organization over  and  above our  standard  benefits  package.   These  benefits  include  participation  in our  annual  cash  bonus  program at a rate of 30% of your annual salary, participation in our long term equity incentive program at  a rate  of 30%  of  your  annual  salary  and participation in the Company’s  409(a)  deferred compensation  program.  You will also be entitled to four weeks of vacation upon hire.     We also are delighted to offer you a sign-on bonus of $70,000 payable 30 days after your start date as  well as assistance with relocation as outlined in a separate document.      Pre-employment Requirements    As mentioned  above,  your employment is contingent upon fulfilling a pre-employment drug screen and  background check.           Pursuant  to  the  Immigration  and  Nationality  Act,  our  Company  is  required  to  verify  the  identity  and  employment authorization of all new hires.  In order to comply with this legal obligation, we must complete  an  Employment  Eligibility  Verification  Form  (I-9)  within  your  first  three  days  of  hire.  Kewaunee  also  participates in the E-Verify program.  Please call me if you have any questions regarding our employment  authorization process.           You  will  also  be  required  to  read  and  sign  the  acknowledgements  for  the  following  documents  and  policies:            Kewaunee Associate Handbook Acknowledgement and Agreement             Agreement Concerning Employee Inventions and Confidential Information            Alcohol-Free and Drug-Free Workplace Policy Acknowledgement Form            Conflict of Interest Policy            Policy on Sensitive Payments            Standards of Conduct and Corrective Actions                                                                                                                                                                                                                                                                                                                                                                       P. O. BOX 1842, STATESVILLE, NORTH CAROLINA 28687-1842 ● 2700 WEST FRONT STREET, STATESVILLE, NORTH CAROLINA 28677-2927                                      PHONE 704-873-7202 ● FAX 704-873-1275     

 

Mr. Ranade  Page 2      Pay Schedule    Kewaunee exempt Associates are paid on a monthly schedule, the last day of the month.  Direct deposit  of your payroll check is required; please bring a voided check with you on your start date.    Hours and Holiday Schedule    Corporate Office hours in Statesville, NC are 8:00 a.m. – 5:00 p.m.            Your normal work schedule will be Monday through  Friday 8:00 a.m. – 5:00 p.m.  Due to the nature of  your position, you will be required to work additional hours.           A holiday schedule is enclosed for your reference.            Associate Handbook    You will be provided a copy of the Kewaunee Associate Handbook.  It is your responsibility to familiarize  yourself with the policies and procedures that apply to you as an Associate of Kewaunee.    Mandar,  we  think  this  is  a  very  comprehensive  and  competitive  offer,  reflecting  our  opinion  of  your  potential in our Company.  We believe that you could make a great contribution to our Company, have  fun, and enjoy real personal growth in the years ahead.     Should you have any questions concerning this offer, please call me.  Please confirm your acceptance by  signing a copy of this letter, indicating your start date, and return it to my attention.  We appreciate your  response within five business days or sooner.    Best Regards,                                         Elizabeth Phillips, SPHR, SHRM-SCP  Vice President of Human Resources    Enclosures            Copy to:       Tom Hull, President and CEO                 Personnel File                                                                                                         I, Mandar Ranade, accept the terms and conditions of this offer, and I will report to work on   __________________________, 2019.        Signed ________________________________________             _______________________________10/29/2019          Mandar Ranade                                        Date                                                           

 

                                                    October 28, 2019        Mr. Mandar Ranade  rmandaar@hotmail.com     Dear Mandar,    We hope that you are excited about our offer of employment and that the relocation assistance  described below will be helpful as you are considering your decision.  As a result of relocation,  Kewaunee  Scientific  Corporation  will provide  assistance  with relocation  expenses  acquired  during your move from Milwaukee, Wisconsin to a location closer to Statesville / Charlotte, N.C.   As  part of  our  offering,  we  are  extending  an amount  of  $30,000  (net) for your moving and  relocation expenses.  Your  relocation  expenses  can  include  transportation  costs,  the  move  of  household goods, realtor fees, etc., The amount will be paid as needed.     Additional Relocation Benefits  In  further consideration  of  your move  closer to  Statesville we are offering temporary housing  allowance of $2,000 per month maximum for up to 6 months. We can provide recommendations  and assist  you with  this  process.  Additionally, to ease  your transition  and knowing that  your  family  will not  be moving until  the spring, 2020, we  are offering an allowance of 2 trips  per  month to Wisconsin for up to 6 months.    Repayment Provision   Should you voluntarily resign, or be terminated for cause from the company within the first three  years, we would be entitled to recoup monies paid to you relating to moving expenses.  The pay  back would be proportionate to the time worked and you would assume 1/3 of the costs for each  year short of the three years completion.       If you have any questions regarding the relocation reimbursement arrangement described please  let  me  know.   We  hope  that  you  are  pleased  with  this  arrangement  and  that  it  eases  the  challenges of relocating.    Sincerely,                          Elizabeth D. Phillips,  Vice President, Human Resources

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