On November 15,
\u00a0
2021, we entered
\u00a0
into an Amended
\u00a0
and Restated Credit
\u00a0
Agreement (as amended,
\u00a0
the \u201cCredit Agreement\u201d)
\u00a0
with
a five-year
\u00a0
term. The
\u00a0
Credit Agreement
\u00a0
provides for
\u00a0
a senior
\u00a0
secured revolving
\u00a0
credit facility
\u00a0
(the \u201cCredit
\u00a0
Facility\u201d or
\u00a0
\u201cRevolver\u201d)
in an initial aggregate principal amount of up to $
250
\u00a0
million, which includes a $
15
\u00a0
million sublimit for the issuance of standby
letters of credit and a $
15
\u00a0
million sublimit for swingline loans. The Credit Facility also includes an accordion feature permitting,
with the consent of BMO Harris
\u00a0
Bank N.A. (the \u201cAdministrative Agent\u201d), an increase
\u00a0
in the Credit Facility in the
\u00a0
aggregate up
to $
200
\u00a0
million by
\u00a0
adding one
\u00a0
or more
\u00a0
incremental senior
\u00a0
secured term
\u00a0
loans or
\u00a0
increasing one
\u00a0
or more
\u00a0
times the
\u00a0
revolving
commitments under the Revolver.
No
\u00a0
amounts were borrowed under
\u00a0
the Credit Facility as
\u00a0
of May 31, 2025
\u00a0
or June 1,
\u00a0
2024 or
during fiscal 2025 or fiscal 2024. The Company had $
4.7
\u00a0
million of outstanding standby letters of credit issued under the Credit
Facility at May 31, 2025.
On May 26, 2023, we
\u00a0
entered into the First Amendment
\u00a0
(the \u201cFirst Amendment\u201d) to the
\u00a0
Credit Agreement, which replaced the
London Interbank Offered Rate interest rate benchmark with the secured overnight financing rate as administered
\u00a0
by the Federal
Reserve Bank of New
\u00a0
York
\u00a0
or a successor
\u00a0
administrator of the secured
\u00a0
overnight financing rate
\u00a0
(\u201cSOFR\u201d). The interest rate
\u00a0
in
connection with
\u00a0
loans made under
\u00a0
the Credit
\u00a0
Facility is
\u00a0
based on,
\u00a0
at the
\u00a0
Company\u2019s
\u00a0
election, either
\u00a0
the Adjusted
\u00a0
Term
\u00a0
SOFR
Rate plus the Applicable Margin or the
\u00a0
Base Rate plus the Applicable Margin. The
\u00a0
\u201cAdjusted Term SOFR\u201d
\u00a0
means with respect
to any tenor, the per annum rate equal to the sum of (i) Term SOFR as defined in the Credit Agreement plus (ii)
0.10
% (10 basis
points); provided, if Adjusted
\u00a0
Term
\u00a0
SOFR determined as provided
\u00a0
above shall ever be
\u00a0
less than the Floor,
\u00a0
then Adjusted Term
SOFR shall be deemed to
\u00a0
be the Floor. The \u201cFloor\u201d means the
\u00a0
rate per annum of interest
\u00a0
equal to
0.00
%. The \u201cBase Rate\u201d means
a fluctuating rate per annum equal to the highest of (a) the federal
\u00a0
funds rate plus
0.50
% per annum, (b) the prime rate of interest
established by the Administrative Agent,
\u00a0
and (c) the Adjusted Term
\u00a0
SOFR for a
one
-month tenor plus
1.00
%. The \u201cApplicable
Margin\u201d means
0.00
% to
0.75
% per annum for Base Rate Loans
\u00a0
and
1.00
% to
1.75
% per annum for SOFR Loans,
\u00a0
in each case
depending upon the Total Funded Debt to Capitalization Ratio for the Company at the quarterly pricing date. The Company will
pay a commitment
\u00a0
fee on
\u00a0
the unused
\u00a0
portion of
\u00a0
the Credit
\u00a0
Facility payable
\u00a0
quarterly from
0.15
% to
0.25
%, in
\u00a0
each case
\u00a0
depending
upon the Total Funded Debt to Capitalization Ratio for the Company at the quarterly pricing date.
\u00a0
The Credit
\u00a0
Facility is
\u00a0
guaranteed by
\u00a0
substantially all
\u00a0
the current
\u00a0
and future
\u00a0
wholly-owned direct
\u00a0
and indirect
\u00a0
domestic subsidiaries
of
\u00a0
the
\u00a0
Company
\u00a0
(the
\u00a0
\u201cGuarantors\u201d),
\u00a0
and
\u00a0
is
\u00a0
secured
\u00a0
by
\u00a0
a
\u00a0
first-priority
\u00a0
perfected
\u00a0
security
\u00a0
interest
\u00a0
in
\u00a0
substantially
\u00a0
all
\u00a0
of
\u00a0
the
Company\u2019s and the
\u00a0
Guarantors\u2019 accounts,
\u00a0
payment intangibles,
\u00a0
instruments (including
\u00a0
promissory notes),
\u00a0
chattel paper, inventory
(including farm products) and deposit accounts maintained with the Administrative Agent.
The Credit Agreement
\u00a0
contains customary covenants,
\u00a0
including restrictions on
\u00a0
the incurrence of
\u00a0
liens, incurrence of
\u00a0
additional
debt, sales of
\u00a0
assets and other
\u00a0
fundamental corporate changes
\u00a0
and investments. The
\u00a0
Credit Agreement requires maintenance
\u00a0
of
two financial covenants: (i) a maximum Total
\u00a0
Funded Debt to Capitalization Ratio tested quarterly
\u00a0
of no greater than
50
%; and
(ii) a requirement to maintain Minimum Tangible Net Worth
\u00a0
at all times of $
700
50
% of net income (if net income
is positive) less permitted restricted payments for each fiscal quarter after November 27, 2021.
\u00a0
On March
\u00a0
25, 2025,
\u00a0
the Company
\u00a0
entered into
\u00a0
the Second
\u00a0
Amendment (the
\u00a0
\u201cSecond Amendment\u201d)
\u00a0
to the
\u00a0
Credit Agreement.
Under the
\u00a0
Credit Agreement,
\u00a0
a Change
\u00a0
of Control
\u00a0
is an
\u00a0
event of
\u00a0
default. The
\u00a0
Second Amendment
\u00a0
amended the
\u00a0
definition of
Change of
\u00a0
Control to
\u00a0
exclude from
\u00a0
that definition
\u00a0
the conversion
\u00a0
(the \u201cClass
\u00a0
A Conversion\u201d)
\u00a0
of all
\u00a0
outstanding shares
\u00a0
of the
Company\u2019s Class A Common Stock into Common Stock which occurred on April 14, 2025.
The Second
\u00a0
Amendment states
\u00a0
that after
\u00a0
the Class
\u00a0
A Conversion,
\u00a0
Change of
\u00a0
Control will
\u00a0
mean any
\u00a0
of the
\u00a0
following: (i)
\u00a0
the
acquisition by
\u00a0
any \u201cperson\u201d
\u00a0
or \u201cgroup\u201d
\u00a0
(as such
\u00a0
terms are
\u00a0
used in
\u00a0
sections 13(d)
\u00a0
and 14(d)
\u00a0
of the
\u00a0
Securities Exchange
\u00a0
Act of
1934, as amended) at any
\u00a0
time of beneficial ownership
\u00a0
of 30.0% or more of
\u00a0
the outstanding capital stock
\u00a0
or other equity interests
of the Company on a fully-diluted
\u00a0
basis, (ii) the failure of individuals
\u00a0
who are members of the
\u00a0
Board (or similar governing body)
of the Company on
\u00a0
the effective date
\u00a0
of the Second
\u00a0
Amendment (together with any
\u00a0
new or replacement directors
\u00a0
whose initial
nomination for election was approved
\u00a0
by a majority of the
\u00a0
directors who were either directors
\u00a0
on the effective date of the Second
Amendment or previously so
\u00a0
approved) to constitute a
\u00a0
majority of the Board
\u00a0
(or similar governing body)
\u00a0
of the Company, or (iii)
any \u201cChange
\u00a0
of Control\u201d
\u00a0
(or words
\u00a0
of like
\u00a0
import), as
\u00a0
defined in
\u00a0
any agreement
\u00a0
or indenture
\u00a0
relating to
\u00a0
any issue
\u00a0
of Material
Indebtedness of any Loan Party or any Subsidiary of a Loan Party (each as defined in the Credit Agreement), shall occur.
Further, under
\u00a0
the terms of
\u00a0
the Credit Agreement,
\u00a0
payment of dividends
\u00a0
under the Company\u2019s
\u00a0
current dividend policy
\u00a0
of one-
third of the Company\u2019s net income, computed in accordance
\u00a0
with GAAP,
\u00a0
and payment of other dividends or repurchases by the
Company of its
\u00a0
capital stock is
\u00a0
allowed, as long
\u00a0
as after giving
\u00a0
effect to such
\u00a0
dividend payments or repurchases
\u00a0
no default has
occurred and is continuing and the sum of cash and cash equivalents of the Company and its
\u00a0
subsidiaries plus availability under
the Credit Facility equals at least $
50