Document:

exhibit101amendment961

                                                                      Exhibit 10.1                                                                   Execution Version                AMENDMENT NO. 4, dated as of December 21, 2018 (this “Amendment”), among  JELD-WEN   Holding, Inc., a Delaware corporation (“Holdings”), JELD-WEN, Inc., a Delaware  corporation (the “Borrower Representative”), JELD-WEN of Canada, Ltd., an Ontario corporation  (“JW Canada”), the other Borrowers (this and each other capitalized term used herein without definition  having the meaning assigned to such term in the Credit Agreement described below) party hereto, the  Subsidiary Guarantors party hereto, Wells Fargo Bank, National Association, as Administrative Agent,  U.S. Issuing Bank, Canadian Issuing Bank and Swingline Lender (in such capacities, the “Agent”), and  the Lenders party hereto.               WHEREAS, reference is hereby made to the Amended Revolving Credit Agreement,  dated as of October 15, 2014 (as amended, supplemented, amended and restated or otherwise modified  from time to time prior to the date hereof, the “Credit Agreement”), among the Borrower   Representative, JW Canada, the other Borrowers party thereto, Holdings, the other Guarantors party   thereto, the Agent and the Lenders party thereto;                  WHEREAS, pursuant to Section 2.23 of the Credit Agreement, the Borrower  Representative is requesting an increase in the amount of the Commitments in the amount of  $100,000,000 (to be allocated to the Maximum U.S. Credit Amount), and the existing U.S. Revolving  Lenders have agreed to provide such requested increase as set forth on Annex A hereto;                WHEREAS, American Building Supply, Inc. (“ABS”) and its wholly owned Subsidiary,   J B L Hawaii, Limited (“JBL” and, together with ABS, the “New Borrowers”) will become a party to,  and be bound by the terms of, the Credit Agreement and the other applicable Loan Documents and the  Borrower Representative has requested that each New Borrower be designated as a ‘U.S. Borrower’ in  accordance with Section 2.25 of the Credit Agreement;                WHEREAS, pursuant to Section 10.1 of the Credit Agreement, the Loan Parties, the   Agent and the Lenders party hereto, constituting the Required Lenders, may, and hereby express their   desire to, amend the Credit Agreement for certain additional purposes;                NOW, THEREFORE, in consideration of the premises and covenants contained herein  and for other good and valuable consideration, the receipt and sufficiency of which are hereby  acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:                Section 1.  U.S. Revolving Commitment Increase.  The Borrower Representative   has requested an increase in the U.S. Revolving Commitments in the aggregate amount of $100,000,000   (the “U.S. Revolving Commitment Increase”).  Subject to the terms and conditions contained herein and   in Section 2.23 of the Credit Agreement, each existing U.S. Revolving Lender has agreed to increase its   respective U.S. Revolving Commitment by providing its respective portion of the U.S. Revolving  Commitment Increase as set forth on Annex A hereto.  This Amendment shall serve as the notice of   Commitment Increase from the Borrower Representative referred to in Section 2.23(b) of the Credit   Agreement and the ‘Incremental Amendment’ referred to in Section 2.23(c) of the Credit Agreement.                Section 2.  Joinder of New Borrowers.  As of the Amendment Effective Date (as   defined below), the New Borrowers shall be designated U.S. Borrowers.                Section 3.  Amendments to Credit Agreement.  On the Amendment Effective   Date, the Credit Agreement shall be amended as follows:        8797368                                                                                            

 

             (a)   Section 1.1 of the Credit Agreement shall be amended by amending and restating   the definitions of “Fee Letter”, “Loan Documents”, and “Receivables Agreement” in their entirety as   follows:          “Fee Letter” means (i) that certain letter agreement dated as of September 8, 2014 between the         Borrower Representative and the Administrative Agent, (ii) that certain letter agreement dated as        of December 14, 2017 between the Borrower Representative and Administrative Agent, and/or        (iii) that certain letter agreement dated as of December 21, 2018 between the Borrower         Representative and the Administrative Agent, as the context may require.                  “Loan Documents”:  this Agreement, Amendment No. 1, Amendment No. 2, Amendment No. 3,         Amendment No. 4, any Intercreditor Agreement, the Notes, the Security Documents, an         Incremental Amendment, if any, and an Extension Agreement, if any.          “Receivables Agreement” means that certain Accounts Receivable Purchase Agreement effective         as of April 2009, between the American Building Supply, Inc. and Bank of America, N.A.                (b)   Section 1.1 of the Credit Agreement shall be amended by amending and restating  clause (r) of “Eligible Accounts” as follows:         (r)    Accounts owed by an Account Debtor where any other Accounts owed by that Account        Debtor have been sold or assigned in connection with a factoring or other similar arrangement,        including without limitation in connection with a Qualified Receivables Financing (other than        Accounts owing to a Borrower (other than American Building Supply, Inc.) by Lowe’s         Companies, Inc. or its affiliates which have not been sold and are not subject to a Lien pursuant to         the Receivables Agreement);                (c)   Section 1.1 of the Credit Agreement shall be amended by adding the following   new defined terms (and corresponding definitions) in appropriate alphabetical order therein:          “Amendment No. 4”:  Amendment No. 4, dated as of the Amendment No. 4 Effective Date, by         and among the Loan Parties, the Administrative Agent and the Lenders party thereto.          “Amendment No. 4 Effective Date” means December 21, 2018.          “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.                (d)   Section 2.9(b) of the Credit Agreement shall be amended and restated in its  entirety as follows:          “(i) U.S. Facility.  The U.S. Borrowers shall, and hereby jointly and severally agree to, pay to         the Administrative Agent, for the ratable account of the U.S. Revolving Lenders, an unused line         fee (the “U.S. Commitment Fee”) in an amount equal to 0.25% per annum times the result of (i)         the aggregate amount of the U.S. Revolving Commitments, less (ii) the average daily amount of         the U.S. Usage (other than U.S. Swingline Usage) during the immediately preceding month (or         portion thereof), which U.S. Commitment Fee shall be due and payable on the first day of each         month from and after the Closing Date up to the first day of the month prior to the date on which        the U.S. Finance Obligations are paid in full and on the date on which the U.S. Finance        Obligations are paid in full.  

 

       (ii) Canadian Facility.  The Canadian Borrowers shall, and hereby jointly and severally agree         to, pay to the Administrative Agent, for the ratable account of the Canadian Revolving Lenders,         an unused line fee (the “Canadian Commitment Fee” and collectively with the U.S. Commitment         Fee, the “Commitment Fees” and individually, “Commitment Fee”) in an amount equal to the         0.25% per annum times the result of (i) the aggregate amount of the Canadian Revolving         Commitments, less (ii) the average daily amount of the Canadian Usage (other than Canadian         Swingline Usage) during the immediately preceding month (or portion thereof), which Canadian         Commitment Fee shall be due and payable on the first day of each month from and after the         Closing Date up to the first day of the month prior to the date on which the Canadian Finance         Obligations are paid in full and on the date on which the Canadian Finance Obligations are paid         in full.”                (e)   Section 5.2(j) of the Credit Agreement shall be amended and restated in its  entirety as follows:         “(j)   promptly following any Lender’s request therefor, all documentation and other        information that such Lender reasonably requests in order to comply with its ongoing obligations         under applicable “know your customer,” beneficial ownership and anti-money laundering or         terrorist financing rules and regulations, including the Patriot Act, the Proceeds of Crime Act and         the Beneficial Ownership Regulation.”                (f)   Section 5.17(a)(C) of the Credit Agreement shall be amended and restated in its   entirety as follows:          “(C)  Other DDAs.  The Loan Parties shall cause each of their DDAs and securities accounts         not constituting Collection DDAs (other than Excluded DDAs and any zero balance cash         disbursement accounts) to be subject to a Depositary Bank Agreement among the applicable Loan         Party, the Administrative Agent and the applicable depository bank.”                        (g)   Section 6.3(b)(ix) is hereby amended by deleting the reference to clause “(22)” in  clause (v) of the first proviso and substituting in lieu therefor “(21)”.               (h)   Section 6.8 of the Credit Agreement shall be amended by adding the following  new clause (d):         “(d)   Notwithstanding the foregoing, (i) the Company may not divide and (ii) in the event that        any Loan Party divides itself into two or more Persons, each surviving or resulting Person shall        be a Loan Party (and, if the dividing Person is a Borrower, then upon not less than 5 Business        Days prior notice to the Agent, and each surviving or resulting Person shall be a Borrower, unless        the Agent otherwise consents) and shall remain jointly and severally liable for all Finance        Obligations, Guarantee Obligations and Other Obligations.”                (i)   Schedule 1.1D to the Credit Agreement (Responsible Officers) shall be deleted in   its entirety and replaced with the updated Schedule 1.1D  attached hereto at Annex B.                (j)   Schedule 1.1F to the Credit Agreement (Commitments) shall be deleted in its   entirety and replaced with the updated Schedule 1.1F  attached hereto at Annex C.                 Section 4. Representations and Warranties.  Each of the Loan Parties represents   and warrants to the Agent and the Lenders as of the Amendment Effective Date that:  

 

             (a)   This Amendment has been duly authorized, executed and delivered by it and  constitutes a legal, valid and binding obligation of such Loan Party, enforceable against it in accordance  with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization,  receivership, moratorium or other laws affecting creditors’ rights generally and by general principles of  equity.  The Credit Agreement, as amended by this Amendment, constitutes a legal, valid and binding  obligation of such Loan Party.                (b)   The execution, delivery and performance by such Loan Party of the Amendment,  and the consummation of the transactions contemplated hereby taking place on or about the Amendment  Effective Date (including the U.S. Revolving Commitment Increase), are within such Loan Party’s  corporate or other powers, have been duly authorized by all necessary corporate or other organizational  action and do not (a) contravene the terms of any of such Person’s Organizational Documents, or (b)  violate any Law; except with respect to any violation referred to in this clause (b) to the extent that such  violation could not reasonably be expected to have, individually or in the aggregate, a Material Adverse  Effect.               (c)   All representations and warranties of each Loan Party contained in Section 3 of  the Credit Agreement or any other Loan Document are true and correct in all material respects (and in all  respects if any such representation or warranty is already qualified by materiality) on and as of the  Amendment  Effective Date after giving effect thereto and the consummation of the transactions  contemplated hereby taking place on or about the Amendment Effective Date (including the U.S.  Revolving Commitment Increase), except to the extent that such representations and warranties  specifically refer to an earlier date, in which case they are true and correct in all material respects (and in  all respects if any such representation or warranty is already qualified by materiality) as of such earlier  date, and except that, the representations and warranties contained in Sections 3.1(a) and 3.1(b) of the  Credit Agreement shall be deemed to refer to the most recent financial statements furnished pursuant to  Section 5.1(a) and (b) of the Credit Agreement, respectively, prior to the Amendment Effective Date;               (d)   No Default or Event of Default exists or has occurred and is continuing on and as  of the Amendment Effective Date or, after giving effect hereto and thereto, would result from the   Amendment and the transactions contemplated hereby (including the U.S. Revolving Commitment   Increase); and                (e)   The execution, delivery, performance or effectiveness of this Amendment will   not (a) impair the validity, effectiveness or priority of the Liens granted pursuant to any Loan Document,   and such Liens continue unimpaired with the same priority to secure repayment of all of the applicable   Obligations, whether heretofore or hereafter incurred, or (b) require that any new filings be made or other   action taken to perfect or to maintain the perfection of such Liens.                Section 5.  Conditions to Effectiveness.  The effectiveness of this Amendment shall   be subject to the satisfaction of the following conditions precedent (the date upon which this Amendment   becomes effective, the “Amendment Effective Date”):                (a)   The Agent shall have received:                       (1)   counterparts of this Amendment that, when taken together, bear the               signatures of (A) each Loan Party and (B) each U.S. Revolving Lender;                      (2)   a counterpart of the fee letter (the “Amendment Fee Letter”) to be               delivered in connection with this Amendment duly executed by the Borrower               Representative;  

 

                   (3)   amended and restated U.S. Revolving Notes executed by the Borrowers              in favor of each U.S. Revolving Lender requesting the same;                      (4)   each of the following with respect to the joinder of the New Borrowers              as Borrowers to the Credit Agreement and the other Loan Documents:                            (i)   a Borrower Joinder Agreement, an Assumption Agreement and                     an acknowledgement and Consent, each executed by the New Borrowers;                            (ii)  a Trademark Security Agreement and Patent Security Agreement                     executed by ABS;                           (iii)   (x) (1) a certificate of each New Borrower, dated as of the date                     hereof, in form and substance reasonably acceptable to the Agent, with                     appropriate insertions and attachments, including certified organizational                     authorizations, resolutions, incumbency certifications, the certificate of                     incorporation or other similar Organizational Document of each New Borrower                     certified as of a recent date by the relevant authority of the jurisdiction of                     organization of such New Borrower and bylaws or other similar Organizational                     Document of each New Borrower certified by a Responsible Officer as being in                     full force and effect on the date hereof, and (2) a certificate of each Loan Party                     (other than each New Borrower), dated as of the date hereof, in form and                     substance reasonably acceptable to the Agent, with incumbency certifications and                     (y) a good standing certificate for each Loan Party from its jurisdiction of                     organization certified by the relevant authority of the jurisdiction of organization                     of such Loan Party as of a recent date;                           (iv)   evidence that certificates representing all the outstanding                     certificated Equity Interests of each New Borrower, together with any                     appropriate powers and instruments of transfer, endorsed in blank, with respect to                     such certificates and a counterpart of the Global Intercompany Note executed by                    each New Borrower, together with any appropriate powers and instruments of                    transfer, endorsed in blank, with respect to such note, have been delivered to the                    Term Agent;                      (5)   the Agent and Lenders shall 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 limitation the USA              PATRIOT Act;                      (6)   the Agent shall have received an executed Borrowing Base Certificate              dated as of the Amendment Effective Date, relating to the month ended              November 24, 2018; and                      (7)   duly executed documents evidencing the joinder of the New Borrowers              pursuant to the Term Loan Credit Agreement and the other Term Loan Documents.               (b)    No Default or Event of Default shall have occurred and be continuing on and as  of the Amendment Effective Date or, after giving effect hereto and thereto, would result from this  Amendment and the transactions contemplated hereby (including the U.S. Revolving Commitment  Increase).  

 

             (c)   The Agent shall have received all fees and other amounts due and payable on or   prior to the Amendment Effective Date, including, without limitation, any and all fees due and payable  under the Fee Letter and, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses  (including the legal fees and expenses of Choate, Hall & Stewart LLP, counsel to the Administrative  Agent) required to be reimbursed or paid by the Loan Parties under the Credit Agreement.                Section 6.  Post-Closing Obligations.  As soon as reasonably practicable following   the date of this Amendment, the New Borrowers shall deliver to the Agent, with respect to all insurance  required by Section 5.5 of the Credit Agreement, insurance certificates of such New Borrower and  endorsements with respect thereto indicating the Agent as an additional insured or lenders loss payee, as  applicable, and otherwise reasonably acceptable to the Agent.                Section 7.  Expenses.  As and to the extent provided in Section 10.5 of the Credit   Agreement, the Loan Parties agree to reimburse the Agent for its reasonable out-of-pocket expenses  incurred in connection with this Amendment, including the reasonable fees, charges and disbursements of  Choate, Hall & Stewart LLP, counsel for the Agent.                 Section 8. Counterparts.  This Amendment may be executed in any number of   counterparts and by different parties hereto on separate counterparts, each of which when so executed and   delivered shall be deemed to be an original, but all of which when taken together shall constitute a single  instrument.  Delivery of an executed counterpart of a signature page of this Amendment by facsimile  transmission or by email in Adobe “.pdf” format shall be effective as delivery of a manually executed  counterpart hereof.                 Section 9. Applicable Law.  The validity, interpretation and enforcement of this   Amendment and any dispute arising out of the relationship between the parties hereto, whether in   contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but   excluding any principles of conflicts of law or other rule of law that would cause the application of the   law of any jurisdiction other than the laws of the State of New York.                 Section 10. Headings.  The headings of this Amendment are for purposes of   reference only and shall not limit or otherwise affect the meaning hereof.                 Section 11. Effect of Amendment.  Except as expressly set forth herein, this   Amendment shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations,  covenants or agreements contained in the Credit Agreement or any other provision of the Credit   Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall   continue in full force and effect.  As of the Amendment Effective Date, each reference in the Credit   Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each   reference in the other Loan Documents to the Credit Agreement (including, without limitation, by means  of words like “thereunder,” “thereof” and words of like import), shall mean and be a reference to the  Amended Credit Agreement, and this Amendment and the Credit Agreement shall be read together and   construed as a single instrument.  This Amendment shall constitute a Loan Document.                   Section 12. Acknowledgement and Affirmation.  Each Loan Party party hereto   hereby expressly acknowledges, (i) all of its obligations under the Guarantee and the Security Documents   to which it is a party are reaffirmed and remain in full force and effect on a continuing basis, (ii) its grant   of security interests pursuant to the Security Documents are reaffirmed and remain in full force and effect   after giving effect to this Amendment and (iii) except as expressly set forth herein, the execution of this  Amendment shall not operate as a waiver of any right, power or remedy of the Agent or Lenders,  

 

constitute a waiver of any provision of any of the Loan Documents or serve to effect a novation of the  Obligations.                                 [signature pages follow]  

 

                 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly  executed as of the date first above written.    BORROWERS:                          JELD-WEN, INC.                                                                                                                                                         By: /s/ John Linker                                                             Name: John Linker                                       Title: Executive Vice President and                                              Chief Financial Officer                                                                                                                     JELD-WEN OF CANADA, LTD.                                       KARONA, INC.                                       AMERICAN BUILDING SUPPLY, INC.                                       J B L HAWAII, LIMITED                                                                                                                                                            By: /s/ Brian Luke                                                               Name: Brian Luke                                       Title:   Treasurer                                                                    Signature Page to Amendment No. 4 (ABL Facility)  

 

   HOLDINGS:                           JELD-WEN HOLDING, INC.                                            By: /s/ Brian Luke                                                              Name: Brian Luke                                      Title:   Treasurer                                                            Signature Page to Amendment No. 4 (ABL Facility)  

 

     OTHER GUARANTORS:                   CREATIVE MEDIA DEVELOPMENT, INC.                                      JW INTERNATIONAL HOLDINGS, INC.                                      JW REAL ESTATE, INC.                                                                                                                  By:/s/ Brian Luke________________________________                                      Name: Brian Luke                                      Title:   Treasurer                                                                                                                  HARBOR ISLES, LLC                                      By: JELD-WEN, Inc., its Sole Member                                                                                                                  By:/s/ Brian Luke________________________________                                      Name: Brian Luke                                      Title:   Treasurer                                                                                                                  JELD-WEN DOOR REPLACEMENT SYSTEMS,                                      INC.                                                                                                                  By: /s/ Michael E. Westfall_________________________                                      Name: Michael E. Westfall                                      Title:    Secretary and Treasurer                                                                                                     Signature Page to Amendment No. 4 (ABL Facility)  

 

                              WELLS FARGO BANK, NATIONAL                 ASSOCIATION, as Administrative Agent and a U.S.                 Revolving Lender                                                                    By:/s/ Peter Schuebler                                    Name: Peter Schuebler                 Title:   Vice President                      Signature Page to Amendment No. 4 (ABL Facility)  

 

                               BANK OF AMERICA, N.A.,                 as Syndication Agent and  a U.S. Revolving Lender                                                            By:/s/ Andrew A. Doherty________________________                 Name: Andrew A. Doherty                 Title:   Senior Vice President    Signature Page to Amendment No. 4 (ABL Facility)  

 

                               Barclays Bank PLC,                 as a U.S. Revolving Lender                                                                  By: /s/ Craig Malloy_____________________________                 Name: Craig Malloy                  Title:   Director    Signature Page to Amendment No. 4 (ABL Facility)  

 

                               SunTrust Bank,                 as a U.S. Revolving Lender                                                                 By:/s/ Christopher M. Waterstreet________________                 Name: Christopher M. Waterstreet                  Title:   Director    Signature Page to Amendment No. 4 (ABL Facility)  

 

                               ROYAL BANK OF CANADA,                 as a U.S. Revolving Lender and a Canadian Revolving                 Lender                                                                 By:/s/ Anna Bernat______________________________                 Name: Anna Bernat                  Title:   Attorney in Fact                                                                    By:/s/ Farhan Lodhi_____________________________                 Name: Farhan Lodhi                 Title:   Attorney in Fact                     Signature Page to Amendment No. 4 (ABL Facility)  

 

                              JPMORGAN CHASE BANK, N.A.,                 as a U.S. Revolving Lender                                                              By: /s/ Antje Focke_____________________________                 Name: Antje Focke                  Title:   Executive Director                                    Signature Page to Amendment No. 4 (ABL Facility)arotech8k20181220kellarn

           AMENDED AND RESTATED EMPLOYMENT AGREEMENT        THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is signed on  the 10th day of December, 2018, effective as of the 1st day of January, 2019, by and between Arotech  Corporation, a Delaware corporation with offices at 1229 Oak Valley Drive, Ann Arbor, Michigan  48108 (the “Company”), and Kelli L. Kellar, an individual residing at 1939 Cedar Hill Drive,  Bloomfield Hills, Michigan 48301 (the “Executive”).                               W I T N E S S E T H :        WHEREAS, the Company and the Executive are parties to an employment agreement dated  in January 2018 (the “Original Agreement”); and        WHEREAS, the Company and the Executive desire to extend the Executive’s employment  and to supersede the Original Agreement in its entirety in accordance with the terms of this  Agreement;        NOW, THEREFORE, the parties hereto do hereby agree as follows:        1.    Title and Duties.              (a)   The Executive will serve as Vice President – Finance and Chief Financial  Officer of the Company, except that the Company may, from time to time, change the title and/or  duties of the Executive in such manner as shall not unduly prejudice the rights of the Executive  hereunder. The Executive will report to the chief executive officer of the Company or to such other  person as shall be designated, from time to time, by the Board of Directors of the Company.              (b)   The Executive shall not during the term hereof undertake or accept any other  employment or occupation, whether paid or unpaid. The Executive acknowledges and agrees that,  although ordinary working hours are expected to be Monday through Friday, 8 a.m. to 5 p.m., under  certain circumstances the performance of her duties hereunder may require additional time and/or  domestic and international travel. The Executive acknowledges that this is a managerial position,  and that accordingly overtime hours will be worked as needed, without additional compensation.               (c)   The Executive’s place of work will be in Ann Arbor, Michigan, or at such  other place as the Company may from time to time specify, provided that the employment of the  Executive on a permanent basis at a place which is located more than fifty (50) miles from Ann  Arbor, Michigan shall be done only with the Executive’s prior consent.         2.    Compensation and Benefits.             (a)   The Company shall pay the Executive, as compensation for all of the  employment services provided by her hereunder during the term of this Agreement, an annualized  base salary of two hundred twenty-five thousand dollars ($225,000) (the “Base Salary”). The Base  Salary will be paid semi-monthly in arrears on the fifteenth and final day of each month. The Base  Salary will, effective March 31 of each year beginning March 31, 2019, be adjusted annually,  retroactive to January 1 of that year, in accordance with the change in the Consumer Price Index  

 

for Urban Wage Earners and Clerical Workers in Detroit-Ann Arbor-Flint, Michigan (All Items),  as reported by the Bureau of Labor Statistics of the United States Department of Labor, during the  previous year (the “CPI Adjustment”). Additionally, the Base Salary may be increased from time  to time, effective January 1 of each year beginning January 1, 2019, in accordance with the  Company’s procedures, and in the Company’s sole discretion, based on the Executive’s performance  during the prior year.               (b)   The Company agrees to pay or cause to be paid to the Executive, in a single  lump-sum payment in cash on each March 31 following the first anniversary of this Agreement, or  as soon thereafter as may be possible in order to determine the relevant results of the Company (but  in no event later than May 31 of each year), and irrespective of whether the Executive is then  employed by the Company (unless the Executive’s employment was terminated pursuant to Section  5(b) below), an annual bonus (if and to the extent earned according to the criteria below), as follows:                    (i)   If, as of such anniversary, the Company shall have attained        100% of the Company’s Budgeted Number (as defined below) for the year preceding        such anniversary, then Executive’s bonus shall be equal to 20% of Executive’s gross        annual Base Salary as then in effect for the year preceding such anniversary;                     (ii)  If, as of such anniversary, the Company shall have attained        110% of the Company’s Budgeted Number (as defined below) for the year preceding        such anniversary, then Executive’s bonus shall be equal to 40% of Executive’s gross        annual Base Salary as then in effect for the year preceding such anniversary;                    (iii) If, as of such anniversary, the Company shall have attained        more than 100% but less than 110% of the Company’s Budgeted Number (as defined        below), then Executive’s bonus shall be calculated as follows:                    B =   (S x 20%) + (N-100)/10 x (S x 20%)                    Where:                    B  =  The amount of Executive’s annual bonus; and                    N  =  The percentage of the Budgeted Number (as                          defined below) that was attained by the                          Company  in the immediately preceding                          fiscal year; provided, however, that N is more                          than 100 and less than 110;                    S  =  Executive’s gross annual Base Salary.  For the purposes of this Section 2(b), the Budgeted Number shall be the budgeted results of the  Company as agreed by the Board prior to the end of each fiscal year for the fiscal year designated  in such budget, and may include targets for any or all of the following factors: (i) revenues; (ii) cash  flow, and (iii) EBITDA. In the event that some but not all targets are reached, the Compensation                                         2 

 

Committee shall made a determination as to what percentage of the Budgeted Number was attained.  It is hereby clarified that no bonus shall be due unless the Company shall have attained at least  100% of the Company’s Budgeted Number.              (c)   The Executive shall be entitled to a paid annual vacation of twenty-two (22)  business days with respect to, and during, each twelve (12) month period of her employment  hereunder, provided that up to five days of the unused portion of any such vacation, in respect to  any year, may be carried forward only to the next year, with the remainder being redeemed by the  Company for cash. Upon termination Executive shall be paid for all accrued but unused vacation.  Any vacation days taken by Executive in advance of their actual accrual shall be considered an  advance on wages and deducted from any wages owing at termination. Timing of vacations will be  cleared in advance with the Company.              (d)   The Company shall provide the Executive with paid holidays and sick leave  in accordance with the policies generally in place from time to time for employees of the Company’s  subsidiary FAAC Incorporated.              (e)   The Company shall provide the Executive and her family with medical  insurance and related insurance benefits in accordance with its policies from time to time for all  employees generally.              (f)   The Company  shall reimburse the Executive’s work-related expenses,  against proper receipts, subject to and in accordance with policies adopted, from time to time, by  the Company.         3.    Confidential Information; Return of Materials; Non-Competition and Non- Solicitation.             (a)   In the course of her employment by the Company hereunder, the Executive  will have access to, and become familiar with, “Confidential Information” (as hereinafter defined)  of the Company. The Executive shall at all times hereinafter maintain in the strictest confidence all  such Confidential Information and shall not divulge any Confidential Information to any person,  firm or corporation without the prior written consent of the Company. For purposes hereof,  “Confidential Information” shall mean all information in any and all media which is confidential  by its nature including, without limitation, data, technology, know-how, inventions, discoveries,  designs, processes, formulations, models, customer lists and contact people, prices and any other  trade and business secrets relating to any line of business in which the Company’s marketing and  business plans relating to current, planned or nascent products.              (b)   The Executive shall not use Confidential Information for, or in connection  with, the development, manufacture or use of any product or for any other purpose whatsoever  except as and to the extent necessary for her to perform her obligations under this Agreement.              (c)   Notwithstanding the foregoing, Confidential Information shall not include  information which the Executive can demonstrate to the Company by appropriate documentation  is in, or enters, the public domain otherwise than by reason of breach hereof by the Executive.                                        3 

 

            (d)   All Confidential Information made available to, or received by, the Executive  shall remain the property of the Company, and no license or other rights in or to the Confidential  Information is granted hereby.              (e)   All files, records, documents, drawings, specifications, equipment, and  similar items relating to the business of the Company, whether prepared by the Executive or  otherwise coming into her possession, and whether classified as Confidential Information or not,  shall remain the exclusive property of the Company. Upon termination or expiration of this  Agreement, or upon request by the Company at any time, the Executive shall promptly turn over  to the Company all such files, records, reports, analyses, documents, and other material of any kind  and in any medium concerning the Company which the Executive obtained, received or prepared  pursuant to this Agreement without retaining any copies thereof in any medium.              (f)   Until one (1) year after the termination of this Agreement (irrespective of the  reason for such termination), the Executive shall not, directly or indirectly, except on behalf and at  the request of the Company, control, manage, be employed or engaged by, provide services to, be  employed by, or otherwise be connected with – whether as an individual proprietor, partner, officer,  director, employee, consultant, 3% or greater shareholder, broker, finder, joint venturer or otherwise  – any company or other entity that competes or intends to compete with the business then being  conducted by the Company. This restrictive covenant is of the essence of the Agreement, and the  Executive understands that she would not be offered employment by the Company were she not  willing to make this commitment.               (g)   Until two (2) years after the termination of this Agreement (irrespective of  the reason for such termination), the Executive shall not solicit nor in any manner encourage other  employees of the Company to leave its employ. The Executive further agrees that during that two  (2) year period she will not offer, or cause to be offered, employment to any person who was  employed by the Company at any time during the three months prior to the termination of this  Agreement.              (h)   The Executive acknowledges that the provisions set forth in Section 3 of this  Agreement are fair and reasonable. The Executive further acknowledges that the Company will be  irreparably harmed if the Executive’s obligations under this Section 3 are not specifically enforced  and that the Company would not have an adequate remedy at law in the event of an actual or  threatened violation by the Executive of the Executive’s obligations. Therefore, and in addition to  any and all other remedies to which it may be entitled, the Company shall be entitled to an injunction  or any appropriate decree of specific performance for any actual or threatened violations or breach  by the Executive without the necessity of the Company showing actual damages or that monetary  damages would not afford an adequate remedy, and without posting a bond.               (i)   The provisions of this Section 3 shall survive the expiration or termination  of this Agreement regardless of the reasons therefor. Furthermore, the period of time during which  the restrictions set forth in subsections (f) and (g) above shall be in effect shall be extended by the  length of time during which the Executive is in breach of any of the terms of such subsection.                                         4 

 

      4.    Prohibition on Trading While  in Possession of Material Non-Public  Information.             (a)   The Executive acknowledges that the Company is a publicly-listed company,  and that the Executive is a “person having a duty of trust or confidence” as defined in Rule 10b5-2  promulgated under the United States Securities Exchange Act of 1934, as amended, and that the  Executive is accordingly prohibited from trading in shares of the Company on the basis of material  non-public information. The Executive covenants and agrees that the Executive will not trade in,  or, without the express consent of the Company, exercise any option to purchase securities of the  Company (the “Arotech Shares”) (1) until at least one Trading Day (a “Trading Day” being a day  on which the U.S. Financial markets are open for trading) have passed since such material  information was released to the public, and (2) during the period beginning on the eleventh calendar  day of the third month of each fiscal quarter and ending at the close of the first Trading Day following  the release of quarterly or annual financial results. The Executive understands and acknowledges  that the most appropriate time to trade in Arotech Shares is the period beginning on the second  Trading Day and ending on the twelfth Trading Day following the release of quarterly or financial  information, provided that during such period the Executive possesses no other material non-public  information which is not disclosed in such release.              (b)   If at any time the Executive is working on securities matters regarding the  Company, or is aware that the Company is offering or selling its own securities or is involved in a  tender offer situation, the Executive shall consult with the General Counsel of the Company before  trading in Arotech Shares.              (c)   The provisions of this Section 4 shall survive the expiration or termination  of this Agreement regardless of the reasons therefor.        5.    Term and Termination. This Agreement shall remain in effect throughout the term  of the Executive’s employment with the Company and shall govern the relationship between the  parties until terminated in accordance with the terms hereof. This Agreement may be terminated at  any time, as follows:             (a)   This Agreement shall terminate upon the death or incapacitation of the  Executive. For purposes hereof, the Executive shall be deemed to be incapacitated if she is unable  to perform her duties hereunder, as evidenced by a certificate(s) to that effect, signed by a doctor  reasonably satisfactory to the Company, for a continuous period of one hundred fifty (150) days or  for shorter periods aggregating more than two hundred (200) days in any period of twelve (12)  consecutive months.              (b)   The Company shall have the right to terminate this Agreement and the  employment relationship hereunder for cause, at any time, by informing the Executive that such  termination is for and cause and by further informing the Executive of the acts or omissions  constituting cause. In such event, this Agreement and the employment relationship between the  Company and the Executive shall be terminated as of the time Executive is informed that such  termination is for cause. For purposes hereof, “cause” shall mean: (1) a breach of trust by the  Executive, including, for example, but without limitation, commission of an act of moral turpitude,  theft, embezzlement, self-dealing or insider trading; (2) the unauthorized disclosure by the Executive                                        5 

 

of confidential information of or relating to the Company; (3) a material breach by the Executive  of this Agreement; or (4) any act of, or omission by, the Executive which, in the reasonable judgment  of the Company, amounts to a serious failure by the Executive to perform her responsibilities or  functions or in the exercise of her authority, which failure, in the reasonable judgment of the  Company, rises to a level of gross nonfeasance, misfeasance or malfeasance.              (c)   Each party shall have the right to terminate this Agreement at any time, for  any reason or for no reason, upon advance written notice of no less than forty-five (45) days,  delivered in accordance with the provisions of Section 6(a) below.              (d)   Upon termination of this Agreement by the Company other than for the  reasons set forth in subsection (b) above, including without limitation a Change of Control (as  hereinafter defined) and a Non-Renewal (as hereinafter defined), the Company shall pay the  Executive as severance pay an amount equal to six (6) times the monthly Base Salary at the highest  rate in effect at any time within the ninety (90) day period ending on the Termination Date. As used  herein, a “Change of Control” means any of the following: (i) the acquisition (other than from  Arotech in any public offering or private placement of equity securities) by any person or entity of  beneficial ownership of fifty-one percent (51%) or more of the combined voting power of Arotech’s  then-outstanding voting securities; or (ii) approval by the shareholders of Arotech of a complete  winding-up of Arotech or an agreement for the sale or other disposition of all or substantially all  of the assets of Arotech. As used herein, a “Non-Renewal” means this Agreement coming to the  end of the Term and not being extended or immediately succeeded by a new substantially similar  employment agreement.              (e)   Upon termination of this Agreement for any reason, including without  limitation Non-Renewal, the Executive will return to the Company (and will not keep in her  possession or deliver to anyone else) any and all devices that are Company property, including  without limitation mobile telephone, laptop computer, records, data, notes, and correspondence,  whether in written, magnetic or other form, developed or received by the Executive pursuant to her  employment with the Company or otherwise belonging to the Company.              (f)   The parties agree that irrespective of the reasons for the termination of this  Agreement, including in the event that this Agreement shall have been terminated for the reasons  set forth in subsection (b) above, they will not at any time make any disparaging or derogatory  statements concerning the other or, in the case of the Executive, the Company’s business, products  or services. Nothing in the foregoing shall require the Company to provide the Executive with a  particular type of reference beyond confirming dates of employment.        6.    Miscellaneous.             (a)   All notices and other communications required or permitted under this  Agreement shall be in writing and shall be sent by email to the other party at the email address set  forth below, with a copy sent by first class mail or express courier to said party at the address set  forth below, or to such other email address and/or physical address as a party may hereinafter  designate by notice to the other. All notices and communications shall be deemed to have been  received on the date of delivery thereof or on the fifth business day after the mailing thereof, except                                         6 

 

that notice of change of address shall be effective only upon receipt. Notices sent by email shall be  effective on the date they are sent by email if the email transmission confirms delivery. The initial  addresses of the parties for purposes of this Agreement shall be as follows:        The Company:      Arotech Corporation                         1229 Oak Valley Drive                         Ann Arbor, Michigan 48108                         Attention: Dean Krutty, President and CEO                         Email: krutty@arotechusa.com        with a copy to:   Yaakov Har-Oz, Senior Vice President and General Counsel                         Email: yaakovh@arotech.com        The Executive:    Kelli L. Kellar                         1939 Cedar Hill Drive                         Bloomfield Hills, Michigan 48301                         Email: kstile@yahoo.com              (b)   This Agreement shall be subject to, governed by and construed in accordance  with, the laws of the State of Michigan without regard to conflicts of law provisions and principles  of that State, and the courts located in Washtenaw County, Michigan shall have exclusive jurisdiction  and venue of any dispute hereunder.              (c)   This Agreement contains the entire agreement between the Executive and  the Company with respect to all matters relating to the Executive’s employment with the Company  and will supersede and replace all prior agreements and understandings, written or oral, between  the parties relating to the subject matter hereof. This Agreement may be amended, modified, or  supplemented only by a written instrument signed by both of the parties hereto. No waiver or failure  to act by either party with respect to any breach or default hereunder, whether or not the other party  has notice thereof, shall be deemed to be a waiver with respect to any subsequent breach or default,  whether of similar or different nature.              (d)   If any provision of this Agreement, under all the then relevant circumstances,  is held to be invalid, illegal or unenforceable, the other provisions shall remain in full force and  effect, and the relevant provision shall automatically be modified by substituting for the  unenforceable provision an enforceable provision which most closely approximates the intent and  economic effect of the invalid provision.              (e)   This Agreement shall inure to the benefit of the Company and its successors  and assigns.                                         7 

 

            (f)   The headings contained in this Agreement are intended solely for ease of  reference and shall be given no effect in the construction or interpretation of this Agreement.        IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the  effective date set forth above:                                           AROTECH CORPORATION                                                                                                                                    /s/ Kelli K. Kellar                                             By:     /s/ Dean Krutty                                              KELLI L. KELLAR                      Name:  Dean M. Krutty                 12-20-18                        Title:    President and CEO                                         8

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