Document:

ex10-3.htm

EXHIBIT 10.3

2016 AMENDMENT 

TO EMPLOYMENT AGREEMENT

 

THIS 2016 AMENDMENT TO EMPLOYMENT AGREEMENT (the or this “Amendment”), made and entered into on the 31st day of October, 2016, by and between PRIMO WATER CORPORATION (the “Company”), a Delaware corporation having its principal office at Winston-Salem, North Carolina, and MARK CASTANEDA (the “Executive”), an individual residing in Winston-Salem, North Carolina. This Amendment shall be effective as of October 17, 2016 (the “Amendment Effective Date”).

 

R E C I T A L S :

 

The Executive has heretofore been employed by the Company as its Chief Financial Officer, Secretary and Assistant Treasurer pursuant to the terms of an Amended and Restated Employment Agreement dated June 10, 2013 (the “2013 Agreement”). The Executive is experienced in, and knowledgeable concerning, all aspects of the business of the Company. The Company desires to continue to employ the Executive as its Chief Financial Officer and Assistant Treasurer and the Executive desires to continue to be employed in that capacity. Furthermore, in recognition of the invaluable services previously rendered and to be rendered in the future to the Company in such capacity, the Company desires to increase the Executive’s base salary. It is deemed necessary and advisable to amend the 2013 Agreement to reflect the terms of their new understanding concerning the Executive’s continued employment by the Company as its Chief Financial Officer, Secretary and Assistant Treasurer and to make such other changes as are deemed necessary or advisable to clarify certain provisions of the 2013 Agreement. 

 

NOW, THEREFORE, in consideration of the mutual covenants and obligations herein and the compensation and benefits the Company agrees herein to pay the Executive, and of other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and the Executive agree that the 2013 Agreement shall be amended, effective as of the Amendment Effective Date, as follows:

 

	 	
1.
	
All provisions of the 2013 Agreement shall remain in full force and effect except to the extent such provisions are expressly modified by this Amendment. Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the 2013 Agreement.

 

	 	
2.
	
Replace Exhibit A to the 2013 Agreement with new Exhibit A attached hereto and delete Exhibit B to the 2013 Agreement. 

 

	 	
3.
	
The Executive’s Base Salary as of the Amendment Effective Date shall be the base salary as set forth on new Exhibit A attached hereto. The Executive’s Base Salary shall thereafter be adjusted, if at all, as provided in Section 4.1 of the 2013 Agreement. 

 

 

 

 

 

	 	
4.
	
Insert the following new material immediately before the semicolon in Section 2.13(a):

 

“within 90 days of the initial existence of the events constituting Good Reason” 

 

	 	
5.
	
Delete the first sentence of Section 4.2(b) and substitute therefor the following:

 

“The Executive shall be deemed a ‘Participant’ for purposes of the Company’s Value Creation Plan, as approved by the Company’s Compensation Committee on May 14, 2013, as subsequently amended and restated on March 3, 2016, and as such may be further amended and/or restated from time to time by the Company’s Compensation Committee (the ‘VCP’).”

 

	 	
6.
	
Delete Section 6.1(b) in its entirety and substitute therefor the following:

 

“(b) As a condition to making any severance payment, the continuation of insurance and related benefits under Section 6.2 below and the special equity vesting under Section 6.3 below, the Company will require the Executive or his legal representative(s) to first execute and deliver a release to the Company with such release becoming irrevocable prior to the 60th day following the Termination Date. The release shall be in a form satisfactory to the Company and shall contain a full release of all claims against the Company and certain other provisions, including, but not limited to, a reaffirmation of the covenants in Sections 8, 9.1 and 9.2.” 

 

	 	
7.
	
Insert the following new material to the end of Section 12:

 

“To the extent that the reimbursement of any expenses or the provision of any in-kind benefits under this Agreement is subject to Code Section 409A, the amount of any reimbursable expenses incurred, or in-kind benefits to be provided, in one taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year. Each category of reimbursement shall be paid as soon as administratively practicable, but in no event shall any such reimbursement be paid after the last day of Executive’s taxable year following the taxable year in which the expense was incurred. No right to reimbursement is subject to liquidation or exchange for other benefits.”

 

 

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IN WITNESS WHEREOF, the parties have executed this 2016 Amendment to Employment Agreement as of the day and year first above written.

 

 

	
 
	
EXECUTIVE

	
 
	
 

	
 
	
 

	
 
	
/s/ Mark Castaneda

	
 
	
Mark Castaneda

	
 
	
 

	
 
	
PRIMO WATER CORPORATION

	
 
	
 

	
 
	
 

	
 
	
By:  /s/ Jamila Granger         

	 	
VP, General Counsel and Secretary 

  

 

3

 

 

Exhibit A

 

	
Office
	
Winston-Salem, NC

	  	  
	
Position
	
Chief Financial Officer and Assistant Treasurer 

	  	  
	
Base Salary 
	
$325,000

 

 4Exhibit 10.1

 

NINTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT
 AND SECURITY AGREEMENT

 

THIS NINTH AMENDMENT (the “Amendment”),  dated effective as of September 29, 2016, is entered into by and between NORTECH SYSTEMS INCORPORATED, a Minnesota corporation (“Company”),  and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”),  acting through its Wells Fargo Business Credit operating division.

 

RECITALS

 

A.                                    Company and Wells Fargo are parties to a Third Amended and Restated Credit and Security Agreement dated May 27, 2010 (as amended from time to time, the “Credit Agreement”).  Capitalized terms used in these recitals have the meanings given to them in the Credit Agreement unless otherwise specified.

 

B.                                    The Company has requested that certain amendments be made to the Credit Agreement, which Wells Fargo is willing to make pursuant to the terms and conditions set forth herein.

 

C.                                    The Company has requested that certain amendments be made to the Credit Agreement, which Wells Fargo is willing to make pursuant to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:

 

1.                                      Definitions. Capitalized terms not defined herein have the meanings given to them in the Credit Agreement.

 

2.                                      Dividends and Distributions. Section 5.7 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

5.7                               Dividends and Distributions. Company shall not declare or pay any dividends (other than dividends payable solely in the stock of the Company) on any class of its stock, or make any payment on account of the purchase, redemption or retirement of any shares of its stock, or other securities, or evidence of its indebtedness or make any distribution regarding its stock, either directly or indirectly. Nothwithstanding the foregoing, so long as no Default or Event of Default exists and is continuing or would result from such transaction, Borrower may purchase, redeem or retire shares of its stock in an annual amount not to exceed $500,000 per fiscal year for each of the fiscal years ending December 31 2016 through December 31, 2019.

 

3.                                      Compliance Certificate. Exhibit E  to the Credit Agreement is hereby replaced with Exhibit E  attached hereto.

 

4.                                      Conditions Precedent. This Amendment shall be effective when Wells Fargo shall have received an executed original hereof, together with such other matters as Wells Fargo may require.

 

5.                                      Representations and Warranties. The Company hereby represents and warrants to Wells Fargo as follows:

 

(a)                                 The Company has all requisite power and authority to execute this Amendment and any other agreements or instruments required hereunder and to perform all of its obligations

 

 

hereunder, and this Amendment and all such other agreements and instruments has been duly executed and delivered by the Company and constitute the legal, valid and binding obligation of the Company, enforceable in accordance with its terms.

 

(b)                                 The execution, delivery and performance by the Company of this Amendment and any other agreements or instruments required hereunder have been duly authorized by all necessary corporate action and do not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to the Company, or the articles of incorporation or by-laws of the Company, or (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Company is a party or by which it or its properties may be bound or affected.

 

(c)                                  All of the representations and warranties contained in Article V of the Credit Agreement are correct on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date.

 

6.                                      References. All references in the Credit Agreement to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby; and any and all references in the Security Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended hereby.

 

7.                                      No Other Waiver. The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default under the Credit Agreement or a waiver of any breach, default or event of default under any Security Document or other document held by Wells Fargo, whether or not known to Wells Fargo and whether or not existing on the date of this Amendment.

 

8.                                      Release. The Company hereby absolutely and unconditionally releases and forever discharges Wells Fargo, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which the Company has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.

 

9.                                      Costs and Expenses. The Company hereby reaffirms its agreement under the Credit Agreement to pay or reimburse Wells Fargo on demand for all costs and expenses incurred by Wells Fargo in connection with the Loan Documents, including without limitation all reasonable fees and disbursements of legal counsel. Without limiting the generality of the foregoing, the Company specifically agrees to pay all fees and disbursements of counsel to Wells Fargo for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto. The Company hereby agrees that Wells Fargo may, at any time or from time to time in its sole discretion and without further authorization by the Company, make a loan to the Company under the Credit Agreement, or apply the proceeds of any loan, for the purpose of paying any such fees, disbursements, costs and expenses and the fee required under Paragraph 7 of this Amendment.

 

10.                               Miscellaneous. This Amendment may be executed in any number of counterparts including by facsimile or electronic (pdf) transmission, each of which when so executed and delivered

 

2

 

shall be deemed an original and all of which counterparts, taken together, shall constitute one and the same instrument.

 

[Signature Page Follows]

 

3

 

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

 

	
WELLS FARGO BANK, 
   NATIONAL ASSOCIATION
    	
NORTECH   SYSTEMS INCORPORATED
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Thomas G. Hedberg
    	
 
    	
By:
    	
/s/ Paula M. Graff
    
	
 
    	
Thomas G. Hedberg
    	
 
    	
Name:
    	
 Paula M. Graff
    
	
 
    	
Its Vice President
    	
 
    	
Its:
    	
 Vice President and Chief   Financial Officer
    

 

[Signature Page to Ninth Amendment to Third Amended
 and Restated Credit and Security Agreement]

 

 

Exhibit E to Credit and Security Agreement

 

COMPLIANCE CERTIFICATE

 

	
To:
    	
Wells Fargo Bank, National Association
    
	
Date:
    	
                             ,   201     
    
	
Subject:
    	
Financial Statements
    

 

In accordance with our Third Amended and Restated Credit and Security Agreement dated May 27, 2010 (as amended from time to time, the “Credit Agreement”),  attached are the financial statements of Nortech Systems Incorporated (the “Company”)  dated [                , 201    ]  (the “Reporting Date”) and the year-to-date period then ended (the “Current Financials”).  All terms used in this certificate have the meanings given in the Credit Agreement.

 

A.                                    Preparation and Accuracy of Financial Statements. I  certify that the Current Financials have been prepared in accordance with GAAP, subject to year-end audit adjustments, and fairly present Company’s financial condition as of the Reporting Date.

 

B.                                    Name of Company; Merger and Consolidation. I certify that:

 

(Check one)

 

o                                    Company has not, since the date of the Credit Agreement, changed its name or jurisdiction of organization, nor has it consolidated or merged with another Person.

 

o                                    Company has, since the date of the Credit Agreement, either changed its name or jurisdiction of organization, or both, or has consolidated or merged with another Person, which change, consolidation or merger: o was consented to in advance by Wells Fargo in an Authenticated Record, and/or o is more fully described in the statement of facts attached to this Certificate.

 

C.                                    Events of Default. I certify that:

 

(Check one)

 

o                                    I have no knowledge of the occurrence of an Event of Default under the Credit Agreement, except as previously reported to Wells Fargo in a Record.

 

o                                         I have knowledge of an Event of Default under the Credit Agreement not previously reported to Wells Fargo in a Record, as more fully described in the statement of facts attached to this Certificate, and further, I acknowledge that Wells Fargo may under the terms of the Credit Agreement impose the Default Rate at any time during the resulting Default Period.

 

D.                                    Litigation Matters. I certify that:

 

(Check one)

 

o                                    I have no knowledge of any material adverse change to the litigation exposure of Company or any of its Affiliates or of any Guarantor.

 

o                                    I have knowledge of material adverse changes to the litigation exposure of Company or any of its Affiliates or of any Guarantor not previously disclosed in Exhibit D,  as more fully described in the statement of facts attached to this Certificate.

 

 

E.                                     Financial Covenants. I further certify that:

 

(Check and complete each of the following)

 

1.                                      Minimum Fixed Charge Coverage Ratio. Pursuant to Section 5.2(a) of the Credit Agreement, Company’s Fixed Charge Coverage Ratio for the trailing twelve month period ending on the Reporting Date, was      to 1.00, which o satisfies o does not satisfy the requirement that such ratio be not less than 1.10 to 1.0 on a trailing twelve month basis measured monthly for the months ending January 31, 2015 up to and including December 31, 2015, and 1.15 to 1.0 on a trailing twelve month basis measured monthly thereafter.

 

2.                                      Stop Loss. Pursuant to Section 5.2(d) of the Credit Agreement, for the month ending on the Reporting Date, Company has suffered a Net Loss of $                  , which o satisfies o does not satisfy the requirement that Company suffer a Net Loss in any single month not in excess of $250,000.

 

3.                                      Due From Affiliate. Pursuant to Section 5.6(d) of the Credit Agreement, as of the Reporting Date, Company has

 

(a)                                 $                     in affiliate loans or advances due from Manufacturing & Assembly Solutions of Monterrey S DE RL DE CV, which o satisfies o does not satisfy the requirement that Company not have loans or advances to Manufacturing & Assembly Solutions of Monterrey S DE RL DE CV, in an aggregate amount in excess of $10,750,000 at any time; and

 

(b)                                 $                     in affiliate loans or advances due from Nortech Systems Hong Kong Company, LTD, which o satisfies o does not satisfy the requirement that Company not have loans or advances to Nortech Systems Hong Kong Company, LTD, in an aggregate amount in excess of $1,500,000 at any time.

 

4.                                      Salaries. Company o has o has not paid excessive or unreasonable salaries, bonuses, commissions, consultant fees or other compensation to any Director, Officer or consultant, or any member of their families, as of the Reporting Date, and o has o has not paid any increase in such amounts (on a year over year basis, as of the Reporting Date) from any source other than profits earned in the year of payment, and as a consequence Company o is o is not in compliance with Section 5.8 of the Credit Agreement.

 

5.                                      Stock Repurchases, Redemptions. Pursuant to Section 5.7 of the Credit Agreement, as of the Reporting Date, for the then-current fiscal year to date, Company has purchased, redeemed or retired shares of its stock for an aggregate amount of $                which o satisfies o does not satisfy the requirement that Company not exceed $500,000 in aggregate stock repurchases, redemptions or retirements of its stock in any of each of the fiscal years ending December 31, 2016 through December 31, 2019.

 

Attached are statements of all relevant facts and computations in reasonable detail sufficient to evidence Company’s compliance with the financial covenants referred to above, which computations were made in accordance with GAAP.

 

	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Its: Chief Financial Officer

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