Exhibit 10.12
THIS WAIVER AND FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(this "Waiver and Amendment"), dated as of March 30, 2001, is entered into by
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and among Katy Industries, Inc., a Delaware corporation (the "Company"), the
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financial institutions from time to time party to the Credit Agreement referred
to below (collectively, the "Banks"; individually, a "Bank"), and Bank of
----- ----
America, N.A., as letter of credit issuing bank and as administrative agent for
the Banks (in the latter capacity, the "Agent").
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RECITALS
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WHEREAS, the Company, the Banks and the Agent are parties to an Amended
and Restated Credit Agreement dated as of December 11, 1998 (as amended by the
First, Second and Third Amendments thereto, the "Credit Agreement"), pursuant to
----------------
which the Banks have extended certain credit facilities to the Company;
WHEREAS, the Company, the Banks and the Agent now wish to amend the Credit
Agreement in certain respects, all as set forth in greater detail below;
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise defined
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shall have the meanings assigned in the Credit Agreement.
2. Waiver.
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(a) The Banks hereby permanently waive compliance by the Company with
Sections 8.18 ("Minimum Net Worth"), 8.19 ("Maximum Leverage Ratio") and 8.20
("Minimum Fixed Charge Coverage Ratio") of the Credit Agreement for the fiscal
quarter ending March 31, 2001.
(b) In respect of any deterioration since September 30, 2000 in the
operations, business, properties, condition (financial or otherwise) or
prospects of the Company or the Company and its Restricted Subsidiaries taken as
a whole, arising in the ordinary course of business, or resulting from any
termination of the Preferred Stock Purchase and Recapitalization Agreement
between the Company and KKTY Acquisition Company, Inc., the Banks hereby agree
to waive until June 30, 2001 any Event of Default under Section 9.1(m) of the
Credit Agreement and any inability to satisfy the condition set forth in Section
5.3(b) of the Credit Agreement.
(c) Nothing contained herein shall be deemed a waiver of (or
otherwise affect the Agent's or the Banks' ability to enforce) and Default or
Event of Default arising at any time under any covenant for any fiscal quarter
as to which compliance is not waived herein or arising under any financial
covenant contained in the Credit Agreement.
3. Amendments to Credit Agreement. The Credit Agreement is hereby amended by
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inserting the blacklined changes reflected on Exhibit A attached hereto.
4. Representations and Warranties. The Company hereby represents and warrants
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to the Agent and the Banks as follows:
(a) No Default or Event of Default has occurred and is continuing.
(b) The execution, delivery and performance by the Company of this
Waiver and Amendment has been duly authorized by all necessary corporate and
other action and does not and will not require any registration with, consent or
approval of, notice to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable. The Credit Agreement as
amended by this Waiver and Amendment constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its respective terms, without defense, counterclaim or offset.
(c) All representations and warranties of the Company contained in
the Credit Agreement (other than that contained in Section 6.11(b) thereof, as
to which no representation and warranty is made) are true and correct as though
made on and as of the Perfection Date (except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true and correct as of such earlier date) and all representations of each
Subsidiary party to any Collateral Document are true and correct as though made
on and as of the Perfection Date (except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true
and correct as of such earlier date).
(d) The Company is entering into this Waiver and Amendment on the
basis of its own investigation and for its own reasons, without reliance upon
the Agent, the Banks or any other person.
5. Effective Date. This Waiver and Amendment will become effective on the
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Business Day (which must be a Business Day prior to March 31, 2001) (the
"Effective Date") on which the Agent shall have received all of the following,
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in form and substance satisfactory to the Agent, and, to the extent requested by
the Agent, in sufficient copies for each Bank:
(a) Signature Pages. From the Company and the Required Banks, a duly
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executed original or facsimile of this Waiver and Amendment and from each
Guarantor, a duly executed original or facsimile of the Guarantor
Acknowledgement and Consent attached hereto;
(b) Back-Up Financing. The Company shall have engaged the business credit
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division of Bank of America, N.A. to begin due diligence with respect to back-up
financing for the Company to be available to the Company in the event the
Preferred Stock Purchase and Recapitalization Agreement among KKTY Acquisition
Company, Inc. and the Company is terminated.
(c) Collateral Documents.
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(i) Security Agreement, duly executed by each Person party thereto;
(ii) each Pledge Agreement and each Foreign Pledge Agreement as shall
have been requested to be delivered by the Agent, duly executed by each Person
party thereto;
(iii) each Mortgage, duly executed by each Person party thereto;
(iv) Guaranties, duly executed by each of the following (1) Contico
International, L.L.C, (2) Wabash Holding Corp., and (3) Thorsen Tools, Inc.
(d) Additional Collateral Documents.
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(i) UCC-1 and UCC-2 financing statements executed by each Debtor, to
be filed, registered or recorded as necessary and advisable to perfect the Liens
of the Agent for the benefit of the Banks in accordance with applicable law;
(ii) written advice relating to such Lien and judgment searches as
the Agent shall have reasonably requested with respect to any of the Collateral,
and such termination statements or other documents, including payoff letters, as
may be necessary to release any Lien in favor of any Person not otherwise
permitted by Section 8.1 of the Credit Agreement;
(iii) evidence that all other actions necessary or, in the reasonable
opinion of the Agent, desirable to perfect and protect the first priority
security interest, subject to Permitted Liens, created by the Collateral
Documents have been taken;
(iv) evidence that adequate arrangements have been made for payment
by the Company of any filing or recording tax or fee in connection with the
Mortgages;
(v) to the extent requested by the Agent, with respect to any
Mortgaged Property , an A.L.T.A. mortgagee policy or policies of title insurance
or a binder or binders issued by a title insurance company reasonably
satisfactory to the Agent insuring or undertaking to insure, in the case of a
binder, that the applicable Mortgages create and constitute valid Liens against
such Mortgaged Property in favor of the Agent, subject only to exceptions
reasonably acceptable to the Agent and the Required Banks, with such
endorsements and affirmative insurance as the Agent or the Required Banks may
reasonably request;
(vi) evidence that the Agent has been named as loss payee under all
policies of casualty insurance, and as additional insured under all policies of
liability insurance, required by the Collateral Documents;
(vii) proof of payment of all title insurance premiums, documentary
stamp or intangible taxes, recording fees and mortgage taxes payable in
connection with the recording of the Mortgages or the issuance of the title
insurance policies, including sums, if any, due in connection with any future
advances which may be in the form of disbursement instructions and associated
payoff letters approved by the relevant title insurers and the Agent; and
(viii) all certificates and instruments representing the Pledged
Collateral, and such stock transfer powers executed in blank as the Agent may
specify;
(ix) to the extent requested by the Agent, a copy of a certification
by a registered land surveyor or other engineer reasonably satisfactory to the
Agent that the Mortgaged Property (other than any Mortgaged Property
constituting a leasehold interest) is not located in a "Special Flood Hazard
Area";
(e) Resolutions; Incumbency.
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(i) Copies of the resolutions of the board of directors of each
Person party to any Collateral Document authorizing the transactions
contemplated thereby, certified as of the Perfection Date by the Secretary or an
Assistant Secretary of such Person; and
(ii) A certificate of the Secretary or Assistant Secretary of each
Person party to any Collateral Document certifying the names and true signatures
of the officers of such Person authorized to execute, deliver and perform, as
applicable, the Collateral Documents to be delivered by it;
(f) Organization Documents; Good Standing.
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(i) the articles or certificate of incorporation and the bylaws, or
operating agreement or partnership agreement, as applicable, of each Person
party to any Collateral Document as in effect on the Perfection Date, certified
by the Secretary or Assistant Secretary of such Person, as of the Perfection
Date; and
(ii) a good standing and tax good standing certificate for each
Person party to any Collateral Document, issued by the Secretary of State (or
similar, applicable Governmental Authority) of its state of incorporation or
organization and each state where such Person is qualified to do business as a
foreign corporation or partnership as of a date reasonably close to the
Perfection Date;
(g) Legal Opinions. An opinion of Schiff Hardin & Waite, counsel to the
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Company and each Subsidiary of the Company party to any Loan Document, together
with an opinion of any other law firm acceptable to the Bank as shall be
necessary to render an opinion or opinions covering the matters set forth in
Exhibit H attached to the Credit Agreement, addressed to the Agent and the
Banks;
(h) Payment of Fees. Evidence of payment by the Company of all accrued
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and unpaid fees, costs and expenses to the extent then due and payable on the
Effective Date, together with reasonable Attorney Costs of the Agent to the
extent invoiced prior to or on the Effective Date, plus such additional amounts
of reasonable Attorney Costs as shall constitute the Agent's reasonable estimate
of Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude final
settling of accounts between the Company and the Agent); including any such
costs, fees and expenses arising under or referenced in Section 11.4 of the
Credit Agreement and 7(g) hereof;
(i) Certificate. A certificate signed by a Responsible Officer, dated as
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of the Effective Date, stating that:
(i) the representations and warranties made pursuant to Section 4
hereof are true and correct on and as of such date, as though made on and as of
such date (unless specifically stated to be made as of an earlier date); and
(ii) no Default or Event of Default exists;
(j) Other Documents. Such other approvals, opinions, documents or
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materials as the Agent or the Required Banks may reasonably request.
6. Reservation of Rights. The Company acknowledges and agrees that neither
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the execution and delivery by the Agent and the Banks of this Waiver and
Amendment shall be deemed (i) to create a course of dealing or otherwise
obligate the Agent or the Banks to forbear or execute similar waivers under the
same or similar circumstances in the future, or (ii) to waive, relinquish or
impair any right of the Agent or the Banks to receive any indemnity or similar
payment from any person or entity as a result of any matter arising from or
relating to the defaults waived hereunder.
7. Miscellaneous.
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(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and effect
and all references therein to such Credit Agreement shall henceforth refer to
the Credit Agreement as amended by this Waiver and Amendment. This Waiver and
Amendment shall be deemed incorporated into, and a part of, the Credit
Agreement.
(b) This Waiver and Amendment shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with this
Waiver and Amendment.
(c) This Waiver and Amendment shall be governed by and construed in
accordance with the law of the State of New York.
(d) This Waiver and Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
(e) This Waiver and Amendment, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with reference
to the matters discussed herein and therein. This Waiver and Amendment
supersedes all prior drafts and communications with respect thereto. This Waiver
and Amendment may not be amended except in accordance with the provisions of
Section 11.1 of the Credit Agreement.
(f) If any term or provision of this Waiver and Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Waiver and
Amendment or the Credit Agreement, respectively.
(g) Company covenants to pay to or reimburse the Agent, upon demand, for
all costs and expenses (including allocated costs of in-house counsel) incurred
in connection with the development, preparation, negotiation, execution and
delivery of this Waiver and Amendment and the administration of the existing
defaults, including without limitation appraisal, audit, search and filing fees
incurred in connection therewith.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
KATY INDUSTRIES, INC.
By:________________________________
Name:
Title:
BANK OF AMERICA, N.A., as Agent and
as a Bank
By:________________________________
Name:
Title:
LASALLE BANK NATIONAL ASSOCIATION,
as Managing Agent and a Bank
By:________________________________
Name:
Title:
KEYBANK NATIONAL ASSOCIATION,
as a Bank
By:________________________________
Name:
Title:
FIRSTSTAR BANK, N.A., as a Bank
By:________________________________
Name:
Title:
THE NORTHERN TRUST COMPANY,
as a Bank
By:________________________________
Name:
Title:
WELLS FARGO BANK, N.A., as a Bank
By:________________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as a Bank
By:________________________________
Name:
Title:
UNION PLANTERS BANK, N.A.,
as a Bank
By:________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
as a Bank
By:________________________________
Name:
Title:
GUARANTOR ACKNOWLEDGMENT
AND CONSENT
The undersigned, each a Guarantor with respect to the Company's obligations
to the Agent and the Banks under the Credit Agreement, each hereby (i)
acknowledge and consent to the execution, delivery and performance by Company of
the foregoing Waiver and Fourth Amendment to Credit Agreement ("Waiver and
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Amendment"), (ii) agrees that Paragraph 18 of its respective guaranty shall be
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amended to read as follows:
"18. (a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
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HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS GUARANTY OR ANY DOCUMENT RELATED HERETO OR THERETO. THE GUARANTOR
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW."
and (iii) reaffirms and agrees that the respective guaranty to which the
undersigned is party and all other documents and agreements executed and
delivered by the undersigned to the Agent and the Banks in connection with the
Credit Agreement are, with the amendment set forth above, in full force and
effect, without defense, offset or counterclaim. (Capitalized terms used herein
have the meanings specified in the Waiver and Amendment.)
IN WITNESS WHEREOF, each Guarantor hereto has caused its duly authorized
officers to execute and deliver this acknowledgement and consent as of March
___, 2001.
Aetna Liquidating Company,
as Guarantor
By:___________________________________
Name:
Title:
American Gage & Machine Company,
as Guarantor
By:___________________________________
Name:
Title:
Bach Simpson, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
Chatham Resource Recovery Systems,
Inc., as Guarantor
By:___________________________________
Name:
Title:
Duckback Products, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
Fulton Iron Works Company,
as Guarantor
By:___________________________________
Name:
Title:
GC/Waldom Electronics, Inc. (formerly
known as GC Thorsen, Inc.), as Guarantor
By:___________________________________
Name:
Title:
Glit/DISCO, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
Glit/Gemtex, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
Hallmark Holdings, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
Hamilton Precision Metals, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
Katy International, Inc. (formerly named
HMO, Inc.), as Guarantor
By:___________________________________
Name:
Title:
Katy-Seghers, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
K-S Energy Corp.,
as Guarantor
By:___________________________________
Name:
Title:
Panhandle Industrial Company, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
PTR Machine Corp. (formerly known as
Peters Machinery Company), as Guarantor
By:___________________________________
Name:
Title:
Savannah Energy Systems Company,
as Guarantor
By:___________________________________
Name:
Title:
Wilen Products, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
W.J. Smith Wood Preserving Company,
as Guarantor
By:___________________________________
Name:
Title:
Woods Industries, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
WP Liquidating Corp.,
as Guarantor
By:___________________________________
Name:
Title:
HPMNC, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
HPM of Pennsylvania, Inc.,
as Guarantor
By:___________________________________
Name:
Title:
Hamilton Metals, L.P.,
as Guarantor
By:___________________________________
Name:
Title:
Schedule 6.22
(Mortgages)
Santa Fe Springs, California
Winters, Texas
Rockford, Illinois
Wrens, Georgia
Lancaster, Pennsylvania
Pineville, North Carolina
Schedule 6.16(PD)
(Subsidiaries and Minority Investments)
Part A - Subsidiaries
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Aetna Liquidating Company
AGM Industries, Inc
All Risk Management Services, Inc.
American Gage & Machine Company
Ashford Holding Corp.
Ashford Reinsurance Intermediaries Corp
Bach Simpson, Inc.
Bluff City Building Corp.
Capacity Managers International, Inc. (NY)
Capacity Managers International, Inc. (PA)
Chatham Resource Recovery Systems, Inc.
Consolidated Pool Mart, Inc.
Contico International, L.L.C.
Contico Manufacturing, Ltd.
Contico Manufacturing (Ireland), Ltd.
Duckback Products, Inc.
E-R Liquidating Company, Inc.
Fulton Iron Works Company
GC/Waldom Electronics, Inc.
GFD Corporation
Glit United Kingdom, Ltd.
Glit, Inc.
Glit/Disco, Inc.
Glit/Gemtex, Inc.
Glit/Gemtex, Ltd.
Hallmark Holdings, Inc.
Hamilton Precision Metals, Inc.
HPMNC, Inc.
HPM of Pennsylvania, Inc.
Hamilton Metals, L.P.
Hermann Lowenstein, Inc.
JEI Liquidating, Inc.
K-S Energy Corp.
Katy-Seghers, Inc.
Katy-Teweh Petroleum Company
Katy International, Inc.
Katy International, Inc. f/k/a HMO, Inc.
Katy Industries, Inc.
Katy Oil Company of Indonesia
LaBour Holdings, Ltd.
Microtron Abrasives, Inc.
Panhandle Industrial Company, Inc.
Primary Coatings, Inc.
PTR Machinery Corp.
Process Metals Company
Savannah Energy Construction Company, Inc.
Savannah Energy Systems Company
Simpson Electric Building Company
Spiral Step-Tool Company
Sterling-Salem Corporation
Thorsen Tools, Inc.
Trans-Continental Leathers, Inc.
Wabash Holding Corp.
W.J. Smith Wood Preserving Company
WP Liquidating Corp.
Wilen Products, Inc.
Woods Industries, Inc.
Woods Industries (Canada), Inc.
Part B - Investments in Unconsolidated Subsidiaries
- ---------------------------------------------------
Sahlman Holding Company, Inc., f/k/a Bee Gee Holding Company, Inc. - 43%
interest
Part C - Immaterial Subsidiaries
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AGM Industries, Inc $0
All Risk Management Services, Inc. $0
Ashford Holding Corp. $0
Ashford Reinsurance Intermediaries Corp $0
Bach Simpson, Inc. $0
Bluff City Building Corp. $0
Capacity Managers International, Inc. (NY) $0
Capacity Managers International, Inc. (PA) $0
Consolidated Pool Mart, Inc. $0
Contico Manufacturing (Ireland), Ltd. $0
E-R Liquidating Company, Inc. $0
GFD Corporation $0
Glit United Kingdom, Ltd. $0
Glit, Inc. $0
Hermann Lowenstein, Inc. $0
JEI Liquidating, Inc. $0
Katy International, Inc. f/k/a HMO, Inc. $0
Katy-Teweh Petroleum Company $0
LaBour Holdings, Ltd. $0
Microtron Abrasives, Inc. $0
Primary Coatings, Inc. $0
Process Metals Company $0
Savannah Energy Construction Company, Inc. $0
Simpson Electric Building Company $0
Spiral Step-Tool Company $0
Sterling-Salem Corporation $0
Trans-Continental Leathers, Inc. $0
Wabash Holding Corp. $0
W.J. Smith Wood Preserving Company $247,163
WP Liquidating Corp. $0
Schedule 6.22
(Filing Locations)
Aetna Liquidating Company
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Delaware
Colorado
American Gage & Machine Company
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Illinois
Indiana
Colorado
Chatham Resource Recovery Systems, Inc.
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Chatham County, Georgia
Colorado
Contico International, L.L.C.
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California
Texas
Missouri (Central)
St. Louis County, Missouri
Wabash Holding Corp.
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Indiana
Colorado
Duckback Products, Inc.
-----------------------
California
Fulton Iron Works Company
-------------------------
Delaware
Colorado
GC/Waldom Electronics, Inc.
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California
Illinois
Glit/DISCO, Inc.
----------------
California
Henry County, Georgia
Texas
Glit/Gemtex, Inc.
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New York (Central)
Erie County, New York
Hallmark Holdings, Inc.
-----------------------
California
Florida
Jefferson County, Georgia
Massachusetts (Central)
Lawrence City Clerk, Massachusetts
North Carolina (Central)
Mecklenburg County, North Carolina
South Carolina
Hamilton Precision Metals, Inc.
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Pennsylvania (Central)
Lancaster County Prothonotary, Pennsylvania
Utah
Colorado
HPMNC, Inc.
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Delaware
Pennsylvania (Central)
Lancaster County Prothonotary, Pennsylvania
HPM Pennsylvania, Inc.
----------------------
Pennsylvania (Central)
Lancaster County Prothonotary, Pennsylvania
Hamilton Metals, L.P.
---------------------
Pennsylvania
Lancaster County Prothonotary, Pennsylvania
K-S Energy Corp.
----------------
Chatham County, Georgia
Colorado
Katy-Seghers, Inc.
------------------
Delaware
Colorado
Katy International, Inc.
------------------------
Delaware
Colorado
Katy Industries, Inc.
---------------------
Colorado
Panhandle Industrial Company, Inc.
----------------------------------
Delaware
Colorado
PTR Machine Corp.
-----------------
Illinois
Colorado
Savannah Energy Systems Company
--------------------------------
Chatham County, Georgia
Thorsen Tools, Inc.
-------------------
Delaware
Indiana
Wilen Products, Inc.
--------------------
Arizona
Fulton County, Georgia
Woods Industries, Inc.
----------------------
Delaware
Indiana