EXHIBIT 10.1
KATY INDUSTRIES, INC.
FIRST AMENDMENT AND WAIVER
TO CREDIT AGREEMENT
This FIRST AMENDMENT AND WAIVER TO CREDIT AGREEMENT (this "Amendment")
is dated as of September 27, 2001 and entered into by and among KATY INDUSTRIES,
INC., a Delaware corporation ("Company"), THE FINANCIAL INSTITUTIONS LISTED ON
THE SIGNATURE PAGES HEREOF (each individually referred to herein as a "Lender"
and collectively as "Lenders"), BANKERS TRUST COMPANY ("BTCo"), as agent for
Lenders (in such capacity, "Agent"), and for purposes of Section 4 hereof, the
Credit Support Parties (as defined in Section 4 hereof) listed on the signature
pages hereof, and is made with reference to that certain Credit Agreement dated
as of June 28, 2001 (the "Credit Agreement"), by and among Company, Lenders and
Agent. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Company has requested that Lenders amend the Credit Agreement
to either waive or amend certain requirements of Company and its Subsidiaries
with respect to certain of the Deposit Accounts of Loan Parties:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. AMENDMENTS TO THE CREDIT AGREEMENT
A. Subsection 2.10A of the Credit Agreement is hereby amended by (i)
deleting the reference to "30 days" appearing in subsections
2.10A(iii)(c)(1)(II) and 2.10A(iii)(d) and substituting in each case therefor
"150 days", and (ii) adding at the end of subsection 2.10A of the Credit
Agreement the following:
"provided, that notwithstanding anything to the contrary set forth in this
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Agreement, (x) neither the 30 day extension grantable by Agent pursuant to
subsection 6.12 nor the 30 day grace period under subsection 8.5 hereof
shall be applicable to the requirements set forth in subsections
2.10A(iii)(c)(1)(II) and 2.10A(iii)(d), and (y) an extension of the date by
which the requirements of subsection 2.10A(iii)(c)(1)(II) are to be
fulfilled shall not be deemed to be a waiver of any eligibility
requirements for any Inventory or Accounts Receivable, including without
limitation the eligibility requirements set forth in clause (ii)(2) of the
proviso of each of the definitions of 'Eligible U.K. Accounts Receivable'
and 'Eligible U.K. Inventory.'"
B. Subsection 6.1 of the Credit Agreement is hereby amended by (i)
deleting the "and" appearing at the end of clause (xix) thereof, (ii) deleting
the "." appearing at the end of clause (xx) thereof and substituting "; and"
therefor, and (iii) adding the following clause at the end thereof:
"(xxi) Historical Information: (x) by October 25, 2001 historical
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information regarding the preferential creditors of the U.K. division of
Contico for the twelve month period ended September 30, 2001 in such format
and detail as are satisfactory to Agent and thereafter (y) within 30 days
after the end of each Fiscal Quarter historical information regarding the
preferential creditors of the U.K. division of Contico for the twelve month
period then ended in such format and detail as are satisfactory to Agent."
C. Subsection 6.10F. of the Credit Agreement is hereby amended by
deleting in its entirety and substituting the following in lieu thereof:
"(i) Within 120 days of the Closing Date, Company shall deliver to Agent an
appraisal of the Inventory of the U.K. division of Contico in form and
substance satisfactory to Agent; provided, that notwithstanding anything to
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the contrary set forth in this Agreement, the 30 day grace period under
subsection 8.5 hereof shall not be applicable to the requirements set forth
in this subsection 6.10F(i), and (ii) within 60 days of the Closing Date,
Company shall deliver to Agent a collateral examination report of the
Inventory and Accounts of the U.K. division of Contico in form and
substance satisfactory to Agent."
D. Subsection 6.12 of the Credit Agreement is hereby amended by
adding the following paragraph at the end thereof:
"Notwithstanding subsection 2.10 or the foregoing paragraph of this
subsection 6.12, Company shall not be obligated to enter into a Blocked
Account Agreement (or for the Deposit Accounts described in clause (vii)
below, Company shall be given an extension to enter into a Blocked Account
Agreement) with respect to the following Deposit Accounts: 1178 maintained
with First Community Credit Union, 942-901-9522 maintained with Fleet Bank,
271050-30011 maintained with Bank of America, 1005039241 maintained with
Firstar, 169-0504400 maintained with Firstar of Northwest County, 1036-
5617-9787 maintained with US Bank, 103656179779 maintained with US Bank,
0032-5164-6420 maintained with Bank of America, 000-880-4 maintained with
First State Bank, 600-361798 maintained with First State Bank, 1067977
maintained with Tri Counties Bank, 91524 maintained with Amcore Bank,
328270020683 maintained with Key Bank, 5216433779 BB&T North Carolina,
137480 maintained with Darby Bank & Trust, 137499 maintained with Darby
Bank & Trust, 021-844-2366 maintained with Fulton Bank, 3500720218
maintained with Firstar, 100-1108677 maintained with Firstar, 5590034673
maintained with LaSalle Bank, 5590034707 maintained with LaSalle Bank,
5590034715 maintained with LaSalle Bank, 5590034616 maintained with LaSalle
Bank, 6000203892 maintained with Key Bank, 5590034541 maintained with
LaSalle Bank, 5590034574 maintained with LaSalle Bank, 3500720143
maintained with LaSalle Bank, 5590034673 maintained with LaSalle Bank,
5800283029 maintained with LaSalle Bank, 5590034582 maintained with LaSalle
Bank, 5590034566 maintained with LaSalle Bank, 5590034590 maintained with
LaSalle Bank, 5590034608 maintained with LaSalle Bank, 5590034624
maintained with LaSalle
Bank, 5590034632 maintained with LaSalle Bank, 5590034640 maintained with
LaSalle Bank, 5590020185 maintained with LaSalle Bank, 5590034657
maintained with LaSalle Bank, 5800283078 maintained with LaSalle Bank,
5590034699 maintained with LaSalle Bank, 5800285719 maintained with LaSalle
Bank, 5800285701 maintained with LaSalle Bank, 5899285859 maintained with
LaSalle Bank, 5800285693 maintained by LaSalle Bank, 021-844-2358 with
Fulton Bank and 021-844-2374 maintained with Fulton Bank; provided, that
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Company shall, and shall cause each of its Subsidiaries to, comply with
each of the following requirements at all times:
(i) Company shall, and shall cause its Subsidiaries to,
maintain Deposit Account Box 1178 solely as a safety deposit account
and such Deposit Account shall not at any time receive or hold any
monies;
(ii) Company shall, and shall cause its Subsidiaries to,
permit deposits into Deposit Account Nos. 942-901-9522, 5590034616 and
5590034715, which deposits shall be solely comprised of insurance
proceeds payable to the employees of the Company and its Subsidiaries
under health insurance policies;
(iii) Company shall not, and shall not permit its
Subsidiaries to, permit the outstanding balance of Deposit Accounts
No. 137480, and 91524 to exceed $10,000 at any time;
(iv) Company shall not, and shall not permit its
Subsidiaries to, permit the outstanding balance of Deposit Accounts
Nos. 271050-30011, 1005039241, 600-361798 and 169-0504400 to exceed
$5,000 at any time;
(v) Company shall, and shall cause its Subsidiaries, to
(i) prevent any deposits from being made into Deposit Account Nos.
1036-5617-9787 and 103656179779 any time after October 15, 2001 and
(ii) close such Deposit Accounts by no later than November 30, 2001
and provide Agent with satisfactory evidence of same on or before such
date;
(vi) Company shall not, and shall not permit its
Subsidiaries to, permit (A) Deposit Account No. 6000203892 to receive
deposits from any Loan Party or any other Person other than any
deposit to be used solely by the applicable Loan Party for payments
required to be made by such Loan Party under such Loan Party's pension
plans within 30 days of such deposit or (B) the outstanding balance of
such Deposit Account to exceed $100,000 at any time;
(vii) Company shall and shall cause its Subsidiaries to
enter into a Blocked Account Agreement with respect to Deposit Account
Nos. 021-844-2358, 5590034541, 5590034574, 3500720143, 5590034673,
5800283029, 5590034582, 5590034566, 5590034590, 5590034608,
5590034624, 5590034632, 5590034640, 5590020185, 5590034657,
5800283078, 000-880-
4, 5216433779, 137499, 021-844-2366, 3500720218, 328270020683,
5590034673, 0032-5164-6420, 1067977, 5590034707, 5590034699,
5800285719, 5800285701, 5800285859, 5800285693 and 100-1108677 with
the applicable financial institutions within 150 days of the Closing
Date; provided that so long as any such Deposit Account is a
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disbursement Deposit Account, the Blocked Account Agreement with
respect to such Deposit Account shall not require an automatic daily
transfer to the BTCo Account but shall give "control" of such Deposit
Account to Agent (as such term is defined in Revised Article 9) and
(viii) Company shall not, and shall not permit its
Subsidiaries to, permit (A) Deposit Account No. 021-844-2374 to
receive deposits from any Loan Party or any other Person other than
any deposit to be used solely by the applicable Loan Party for the
payment of withholding and other payroll taxes owed by such Loan Party
to either state or federal government within 30 days of such deposit
or (B) the outstanding balance of such Deposit Account to exceed
$200,000.00 at any time."
E. Subsection 7.17 of the Credit Agreement is hereby amended by
deleting in its entirety and substituting the following in lieu thereof:
"Except as permitted in subsection 2.10A(iii) and the second paragraph
of subsection 6.12, Company shall not, and shall not permit any of its
Domestic Subsidiaries to, maintain any Deposit Account which is not a Lock
Box Account or a Concentration Account or a disbursement account under the
exclusive dominion and control of Agent. Except as permitted in subsection
2.10A(iii), Company shall not permit Woods or Glit to maintain any Deposit
Account which is not a Lock Box Account or which is not subject to a
Blocked Account Agreement."
F. Subsection 8.3 of the Credit Agreement is hereby amended by
deleting in its entirety and substituting the following in lieu thereof:
"Failure of Company to perform or comply with any term or condition
contained in subsections 2.5 or 6.2 or Section 7 or the second paragraph of
subsection 6.12 of this Agreement or failure of Holdings to perform or
comply with any term or condition contained in subsection 10(a) or Section
11 of the Holdings Guaranty."
Section 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "First Amendment
Effective Date"):
A. On or before the First Amendment Effective Date, Company shall
deliver to Lenders (or to Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel) the following, each,
unless otherwise noted, dated the First Amendment Effective Date:
(i) Officer's Certificates of Company, dated a recent date prior to
the First Amendment Effective Date, certifying that (a) there has been no
change in any of the Loan Parties' Organizational Documents from the date
of the Credit Agreement, and (b) the resolutions adopted by the Board of
Directors of Company approving and authorizing the execution, delivery, and
performance of this Amendment are in full force and effect without
modification or amendment;
(ii) Signature and incumbency certificates of the officers of Company
executing this Amendment; and
(iii) Ten (10) executed copies of this Amendment executed by Company
and each Credit Support Party.
B. On or before the First Amendment Effective Date, Requisite
Lenders shall deliver to Agent copies of this Amendment executed by Requisite
Lenders.
Section 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. Corporate Power and Authority. Each Loan Party has all requisite
corporate or other entity power and authority to enter into this Amendment and
to carry out the transactions contemplated by, and perform its obligations
under, the Credit Agreement as amended by this Amendment (the "Amended
Agreement").
B. Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate or other entity action on the part of each Loan
Party.
C. No Conflict. The execution, delivery and performance by each
Loan Party of this Amendment and the performance by such Loan Party of the
Amended Agreement do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to the Loan Parties, the
Organizational Documents of the Loan Parties or any order, judgment or decree of
any court or other Government Authority binding on the Loan Parties, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of the Loan Parties,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of Loan Parties (other than Liens created under any of
the Loan Documents in favor of Agent on behalf of Lenders), or (iv) require any
approval of members or stockholders or any approval or consent of any Person
under any Contractual Obligation of the Loan Parties, except for such approvals
or consents which will be obtained on or before the First Amendment Effective
Date and disclosed in writing to Lenders.
D. Governmental Consents. The execution, delivery and performance
by the Loan Parties of this Amendment and the performance by Loan Parties of the
Amended Agreement do not and will not require any Governmental Authorization.
E. Binding Obligation. This Amendment has been duly executed and
delivered by the Loan Parties and this Amendment and the Amended Agreement are
the legally valid and binding obligations of the Loan Parties, enforceable
against the Loan Parties in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
F. Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the First Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
G. Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
Section 4. ACKNOWLEDGEMENT AND CONSENT
Holdings and each of the Subsidiary Guarantors is a party to certain
of the Holdings Guaranty and Subsidiary Guaranty and the Collateral Documents
and Company is a party to certain of the Collateral Documents. Company,
Holdings and each of the Subsidiary Guarantors are collectively referred to
herein as the "Credit Support Parties," and the Guaranties and Collateral
Documents are collectively referred to herein as the "Credit Support Documents."
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement effected pursuant to this Amendment. Each
Credit Support Party hereby confirms that each Credit Support Document to which
it is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible the payment and performance of all "Obligations," "Guarantied
Obligations" and "Secured Obligations," as the case may be (in each case as such
terms are defined in the applicable Credit Support Document), including without
limitation the payment and performance of all such "Obligations," "Guarantied
Obligations" or "Secured Obligations," as the case may be, in respect of the
Obligations of Company now or hereafter existing under or in respect of the
Amended Agreement and the Notes defined therein.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the First
Amendment Effective Date to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true, correct and complete in
all material respects on and as of such earlier date.
Each Credit Support Party (other than Company) acknowledges and agrees
that (i) notwithstanding the conditions to effectiveness set forth in this
Amendment, such Credit Support Party is not required by the terms of the Credit
Agreement or any other Loan Document to consent to the amendments to the Credit
Agreement effected pursuant to this Amendment, and (ii) nothing in the Credit
Agreement, this Amendment or any other Loan Document shall be deemed to require
the consent of such Credit Support Party to any future amendments to the Credit
Agreement.
Section 5. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(i) On and after the First Amendment Effective Date, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Credit Agreement, and
each reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. Fees and Expenses. Company acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Company.
C. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD
REQUIRE APPLICATION OF ANOTHER LAW.
E. Funding and Payment Office Change and Notice Address under each
of the Loan Documents. Agent hereby notifies Company and each Lender that (i)
the Funding and Payment Office shall be, until further notice, the office of
Agent located at 40 Kingsbridge Road, Piscataway, New Jersey 08854 and (ii) its
notice address under each of the Loan Documents shall be Bankers Trust Company,
40 Kingsbridge Road, Piscataway, New Jersey 08854, Attention: Sam Cardone.
F. Counterparts; Effectiveness. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Section 1 hereof, the effectiveness of which is governed by
Section 2 hereof) shall become effective upon the execution of a counterpart
hereof by Company and Requisite Lenders and each of the Credit Support Parties
and receipt by Company and Agent of written or telephonic notification of such
execution and authorization of delivery thereof.
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