Item 1.01 Entry into a Material Definitive Agreement.
On
Borrowing pursuant to the revolving credit facility is subject to a borrowing base amount calculated as (a) 80% of the balance due on acceptable accounts receivable, as defined, plus (b) 50% of the value of acceptable inventory, as defined, minus (c) an amount of certain reserves as the Lender may establish for the amount of estimated exposure, as reasonably determined by the Lender from time to time, under certain interest rate swap contracts. The borrowing base limitation only applies during periods when the Company's quarterly funded debt to EBITDA ratio, as defined, exceeds 2.00 to 1.00.
The revolving credit facility matures on
Borrowings under the revolving credit facility bear interest at a rate per annum
equal to the sum of the LIBOR Daily Floating Rate ("LIBOR"), plus 125 basis
points. LIBOR is subject to a floor of 100 basis points. All outstanding
principal and unpaid accrued interest under the revolving credit facility is due
and payable on the maturity date. On a one-time basis, and subject to there not
existing an event of default, the Company may elect convert up to
The Company made certain representations and warranties to the Lender in the Loan Agreement that are customary for credit arrangements of this type. The Company also agreed to maintain, as of the end of each fiscal quarter, a minimum "basic fixed charge coverage ratio" (as defined in the Loan Agreement) of at least 1.15 to 1.00 and a "funded debt to EBITDA ratio" (as defined in the Loan Agreement) not to exceed 3.00 to 1.00, in each case for the trailing 12-month period ending with the applicable quarterly reporting period. The Company also agreed to certain negative covenants that are customary for credit arrangements of this type, including restrictions on the Company's ability to enter into mergers, acquisitions or other business combination transactions, conduct its business, grant liens, make certain investments, make substantial change in the present executive or management personnel and incur additional indebtedness, which negative covenants are subject to certain exceptions.
The Loan Agreement contains customary events of default that include, among other things (subject to any applicable cure periods and materiality qualifier), non-payment of principal, interest or fees, defaults under related agreements with the Lender, cross-defaults under agreements for other indebtedness, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgements and material adverse change. Upon the occurrence of an event of default, the Lender may terminate all loan commitments, declare all outstanding indebtedness owing under the Loan Agreement and related documents to be immediately due and payable, and may exercise its other rights and remedies provided for under the Loan Agreement.
In connection with the Loan Agreement, the Company entered into with the Lender
(i) a security agreement dated
2
The foregoing descriptions of the Loan Agreement, the Security Agreement, the Pledge Agreement and the Non-encumbrance Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Loan Agreement, the Security Agreement, the Pledge Agreement and the Non-encumbrance Agreement, copies of which are attached to this Current Report on Form 8-K as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, and are incorporated herein by reference.
Copies of theLoan Agreement, the Security Agreement, the Pledge Agreement and the Non-encumbrance Agreement have been included as exhibits to this Current Report on Form 8-K to provide investors with information regarding their respective terms. They are not intended to provide any other factual information about the Company or any of its subsidiaries or affiliates. The representations, warranties and covenants contained in the Loan Agreement, the Security Agreement, the Pledge Agreement and the Non-encumbrance Agreement were made only for purposes of such agreements and as of the specific date of such agreements; were made solely for the benefit of the parties to such agreements; may be subject to limitations agreed upon by the contracting parties, including being qualified by information that may modify, qualify or create exceptions to the representations and warranties set forth in such agreements; may not have been intended to be statements of fact, but rather, as a method of allocating contractual risk and governing the contractual rights and relationships between the parties to such agreements; and may be subject to standards of materiality applicable to contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, . . .
Item 1.02 Termination of a Material Definitive Agreement.
On
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above is hereby incorporated by reference into this Item 2.03. No amounts have been drawn down under the revolving credit facility of the Loan Agreement as of the date hereof.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits The following exhibits are filed herewith: Exhibit Number Description 10.1 Loan Agreement, dated as ofJune 25, 2020 , by and betweenLakeland Industries, Inc. andBank of America, N.A . 10.2 Security Agreement, dated as ofJune 25, 2020 , by and betweenLakeland Industries, Inc. andBank of America, N.A . 10.3 Pledge Agreement, dated as ofJune 25, 2020 , by and betweenLakeland Industries, Inc. andBank of America, N.A . 10.4 Non-encumbrance Agreement, dated as ofJune 25, 2020 , byLakeland Industries, Inc. for the benefit ofBank of America, N.A . 99.1 Press Release datedJuly 1, 2020 . 3
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