Item 2.03 Creation of
a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Amendment and Restatement of Revolving Credit Facility
On October 10, 2017, Hudson Technologies Company (“HTC”),
an indirect subsidiary of Hudson Technologies, Inc. (the “Company”), and HTC’s affiliates Hudson Holdings, Inc.
and Airgas-Refrigerants, Inc., as borrowers (collectively, the “Borrowers”), and the Company as a guarantor, became
obligated under an Amended and Restated Revolving Credit and Security Agreement (the “PNC Facility”) with PNC Bank,
National Association, as administrative agent, collateral agent and lender (“Agent” or “PNC”), PNC Capital
Markets LLC as lead arranger and sole bookrunner, and such other lenders as may thereafter become a party to the PNC Facility.
The PNC Facility amends and restates HTC’s existing credit facility with PNC.
Under the terms of the PNC Facility, the Borrowers may borrow,
from time to time, up to $150 million at any time consisting of revolving loans in a maximum amount up to the lesser of $150 million
and a borrowing base that is calculated based on the outstanding amount of the Borrowers’ eligible receivables and eligible
inventory, as described in the PNC Facility. The PNC Facility also contains a sublimit of $15 million for swing line loans and
$5 million for letters of credit.
Amounts borrowed under the PNC Facility may be used by the Borrowers
to consummate the Acquisition and for working capital needs, certain permitted future acquisitions, and to reimburse drawings under
letters of credit. At October 10, 2017, total borrowings under the PNC Facility were $80 million.
Interest on loans under the PNC Facility is payable in arrears
on the first day of each month with respect to loans bearing interest at the domestic rate (as set forth in the PNC Facility) and
at the end of each interest period with respect to loans bearing interest at the Eurodollar rate (as set forth in the PNC Facility)
or, for Eurodollar rate loans with an interest period in excess of three months, at the earlier of (a) each three months from the
commencement of such Eurodollar rate loan or (b) the end of the interest period. Interest charges with respect to loans are computed
on the actual principal amount of loans outstanding during the month at a rate per annum equal to (A) with respect to domestic
rate loans, the sum of (i) a rate per annum equal to the higher of (1) the base commercial lending rate of PNC, (2) the federal
funds open rate plus 0.5% and (3) the daily LIBOR plus 1.0%, plus (ii) between 0.50% and 1.00% depending on average quarterly undrawn
availability and (B) with respect to Eurodollar rate loans, the sum of the Eurodollar rate plus between 1.50% and 2.00% depending
on average quarterly undrawn availability.
Borrowers granted to the Agent, for the benefit of the lenders,
a security interest in substantially all of Borrowers’ assets, including receivables, equipment, general intangibles (including
intellectual property), inventory, subsidiary stock, real property, and certain other assets.
The PNC Facility contains a fixed charge coverage ratio covenant.
The PNC Facility also contains customary non-financial covenants relating to the Company and the Borrowers, including limitations
on Borrowers’ ability to pay dividends on common stock or preferred stock, and also includes certain events of default, including
payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of
bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change
of control.
The commitments under the PNC Facility will expire and the full
outstanding principal amount of the loans, together with accrued and unpaid interest, are due and payable in full on October 10,
2022, unless the commitments are terminated and the outstanding principal amount of the loans are accelerated sooner following
an event of default.
In connection with the closing of the PNC Facility, the Company
also entered into an Amended and Restated Guaranty and Suretyship Agreement, dated as of October 10, 2017 (the “Revolver
Guarantee”), pursuant to which the Company affirmed its unconditional guarantee of the payment and performance of all obligations
owing by Borrowers to PNC, as Agent for the benefit of the revolving lenders.
New Term Loan Facility
On
October 10, 2017, Hudson Technologies Company (“HTC”), an indirect subsidiary of Hudson Technologies, Inc. (the “Company”),
and HTC’s affiliates Hudson Holdings, Inc. and Airgas-Refrigerants, Inc., as borrowers (collectively, the “Borrowers”),
and the Company, as guarantor, became obligated under a Term Loan Credit and Security Agreement (the “Term Loan Facility”)
with U.S. Bank National Association, as administrative agent and collateral agent (“Term Loan Agent”) and
funds
advised by FS Investments and sub-advised by GSO Capital Partners LP
and
such other lenders as may thereafter become a party to the PNC Facility (the “Term Loan Lenders”).
Under the terms of the Term Loan Facility, the Borrowers have
immediately borrowed $105 million pursuant to a term loan (the “Initial Term Loan”) and may borrow up to an additional
$25 million for a period of eighteen months after closing to fund additional permitted acquisitions (the “Delayed Draw Commitment”,
and together with the Initial Term Loan, the “Term Loans”).
The Term Loans mature on October 10, 2023. Principal payments
on the Term Loans are required on a quarterly basis, commencing with the quarter ending March 31, 2018, in the amount of 1% of
the original principal amount of the outstanding Term Loans per annum. The Term Loan Facility also requires annual payments of
up to 50% of Excess Cash Flow (as defined in the Term Loan Facility) depending upon the Company’s Total Leverage Ratio (as
defined in the Term Loan Facility) for the applicable year. The Term Loan Facility also requires mandatory prepayments of the Term
Loans in the event of certain asset dispositions, debt issuances, and casualty and condemnation events. The Term Loans may be prepaid
at the option of the Borrowers at par in an amount up to $30 million. Additional prepayments are permitted after the first anniversary
of the closing date subject to a prepayment premium of 3% in year two, 1% in year three and zero in year four and thereafter.
Interest
on the Term Loans is generally payable
on the earlier of the last day of the interest period applicable to such Eurodollar
rate loan and the last day of the Term Loan Facility, as applicable. Interest is payable at the rate per annum of
LIBOR
plus 7.25%
.
The Borrowers have the option of paying 3.00% interest
per annum in kind by adding such amount to the principal of the Term Loans during no more than five fiscal quarters during the
term of the Term Loan Facility.
Borrowers and the Company granted to the Term Loan Agent, for
the benefit of the Term Loan Lenders, a security interest in substantially all of their respective assets, including receivables,
equipment, general intangibles (including intellectual property), inventory, subsidiary stock, real property, and certain other
assets.
The Term Loan Facility contains a total leverage ratio covenant,
tested quarterly. The Term Loan Facility also contains customary non-financial covenants relating to the Company and the Borrowers,
including limitations on their ability to pay dividends on common stock or preferred stock, and also includes certain events of
default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations,
events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees
and a change of control.
In connection with the closing of the Term Loan Facility, the
Company also entered into a Guaranty and Suretyship Agreement, dated as of October 10, 2017 (the “Term Loan Guarantee”),
pursuant to which the Company affirmed its unconditional guarantee of the payment and performance of all obligations owing by Borrowers
to Term Loan Agent, as agent for the benefit of the Term Loan Lenders.
The Term Loan Agent and the Agent have entered into an intercreditor
agreement governing the relative priority of their security interests granted by the Borrowers and the Guarantor in the collateral,
providing that the Agent shall have a first priority security interest in the accounts receivable, inventory, deposit accounts
and certain other assets (the “Revolving Credit Priority Collateral”) and the Term Loan Agent shall have a first priority
security interest in the equipment, real property, capital stock of subsidiaries and certain other assets (the “Term Loan
Priority Collateral”).
The descriptions of the PNC Facility, the Revolver Guarantee,
the Term Loan Facility, and the Term Loan Guarantee do not purport to be complete and are qualified in their entirety by reference
to the full text of the PNC Facility, the Revolver Guarantee, the Term Loan Facility, and the Term Loan Guarantee which are filed
as exhibits to this Report. The agreements have been included to provide investors and security holders with information regarding
their respective terms. The descriptions are not intended to provide any other factual information about the Company or the other
parties thereto. The agreements contain representations and warranties the parties thereto made to, and solely for the benefit
of, the other parties thereto. Accordingly, investors and security holders should not rely on the representations and warranties
as characterizations of the actual state of facts, since they were only made as of the date of such agreements. In addition, the
agreements are modified by the underlying disclosure schedules. Moreover, information concerning the subject matter of the representations
and warranties may change after the date of the agreements, which subsequent information may or may not be fully reflected in the
Company's public disclosures.