| Item 1.01 | Entry into a Material Definitive Agreement. |
On May 1, 2020, Graham Corporation (the “Company”) entered into a letter agreement (the “Letter Agreement”) with HSBC Bank USA, National Association (“HSBC”), that amended and restated the facility letter dated October 8, 2019 between the Company and HSBC. The Letter Agreement increases the Company’s uncommitted discretionary demand line of credit with HSBC for the issuance of Performance Standby Letters of Credit, as defined in the Letter Agreement (the “Credit Facility”), from $10,000,000 to $14,000,000. The Company incurs an annual facility fee under the Credit Facility of $5,000, as well as an annual fee on the undrawn face amount of each letter of credit issued pursuant to the Credit Facility, which ranges from 0.75% to 0.85% per annum depending on the term of the letter of credit. Interest is payable on the principal amounts of unreimbursed letter of credit draws under the Credit Facility at a rate of 3% plus HSBC’s prime rate. The Company’s obligations under the Letter Agreement are secured by certain of the Company’s deposit accounts held with HSBC and is evidenced by a pledge agreement between the Company and HSBC (the “Pledge Agreement”).
Also on May 1, 2020, the Company entered into an amendment (the “First Amendment to Credit Agreement”) to the credit agreement dated December 2, 2015 (the “Credit Agreement”) between the Company and JPMorgan Chase Bank, N.A. (“JPMorgan”), whereby JPMorgan and the Company agreed to amendments to the Credit Agreement to reflect the increase in the Company’s uncommitted discretionary demand line of credit with HSBC to $14,000,000.
The foregoing summaries of the Letter Agreement, Pledge Agreement, and the First Amendment to Credit Agreement do not purport to be complete, and are qualified in their entirety by reference to the Letter Agreement, Pledge Agreement, and the First Amendment to Credit Agreement, copies of which are filed as exhibits to this Current Report on Form8-K as Exhibits 10.1, 10.2, and 10.3, respectively.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 of this Current Report on Form8-K is incorporated by reference into this Item 2.03.
On April 30, 2020, the Board of Directors of the Company amended and restated its Policy on Stockholder Rights Plans (as so amended and restated, the “Amended and Restated Policy on Stockholder Rights Plans”) in response to theCOVID-19 pandemic. The Amended and Restated Policy on Stockholder Rights Plans is filed as an exhibit to this Current Report on Form8-K as Exhibit 99.1 and is incorporated herein by reference.
