Exhibit 10.1
Execution Copy
SECOND AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT ("Second
Amendment") is made as of this 29th day of March, 2005, by and among FLEET
CAPITAL CORPORATION ("Fleet"), a Rhode Island corporation with an office at Xxx
Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, individually as a
Lender and as Agent ("Agent") for itself and any other financial institution
which is or becomes a party hereto (each such financial institution, including
Fleet, is referred to hereinafter individually as a "Lender" and collectively as
the "Lenders"), the CANADIAN PARTICIPANTS party hereto, the U.K. PARTICIPANTS
party hereto, FLEET CAPITAL GLOBAL FINANCE, INC., individually as a Lender and
as Canadian Agent ("Canadian Agent"), BANK OF AMERICA, N.A., London branch (as
successor-in-interest to Fleet National Bank, London branch, trading as
FleetBoston Financial), individually as a Lender and as U.K. Agent ("U.K.
Agent"), XXXXX FARGO FOOTHILL, LLC, as Syndication Agent, LASALLE BANK NATIONAL
ASSOCIATION, as Documentation Agent, the LENDERS, KATY INDUSTRIES, INC., a
Delaware corporation, with its chief executive office and principal place of
business at 000 Xxxxxxx Xxxxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxxxxx 00000
("Katy" or "U.S. Borrower"), XXXXX INDUSTRIES (CANADA) INC., a Canadian
corporation with its chief executive office and principal place of business at
000 Xxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxx X0X 0X0 ("Xxxxx Canada" or "Canadian
Borrower") and CEH LIMITED ("CEH" or "U.K. Borrower"), a private limited company
incorporated under the laws of England and Wales and registered with Company No.
4992300 whose registered office is Xxxxxxx Xxx, Xxxxxxx Xxxxxxxx, XX00 0XX,
Xxxxxxx. Katy, Xxxxx Canada and CEH are sometimes hereinafter referred to
individually as a "Borrower" and collectively as "Borrowers."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Agent, Lenders, Canadian Participants, U.K. Participants,
Canadian Agent, U.K. Agent and Borrowers entered into a certain Amended and
Restated Loan Agreement dated as of April 20, 2004 as amended by a certain First
Amendment to Amended and Restated Loan Agreement dated June 29, 2004 by and
among Agents, Lenders and Borrowers (said Loan Agreement, as so amended, is
hereinafter referred to as the "Loan Agreement"); and
WHEREAS, Borrowers desire to amend and modify certain provisions of the
Loan Agreement pursuant to the terms and conditions hereof;
WHEREAS, subject to the terms and conditions hereof, Agent, Lenders,
Canadian Participants, U.K. Participants, U.K. Agent and Canadian Agent are
willing to so amend and modify the Loan Agreement; and
NOW THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained, and any extension of credit heretofore, now or
hereafter made by Agent and Lenders to Borrowers, the parties hereto hereby
agree as follows:
1. Definitions. All capitalized terms used herein without definition shall
have the meanings given to them in the Loan Agreement.
2. Financial Covenants. Upon the Second Amendment Effective Date, Exhibit 7.3
attached to the Loan Agreement shall be deemed deleted and Exhibit 7.3
attached hereto and incorporated herein shall be inserted in its stead.
3. Amendment Fee. In order to induce Agent and Lenders to enter into this
Second Amendment, Borrowers agree to pay to each Lender that is a
signatory hereto and has consented to the provisions contained herein an
amendment fee equal to, in the aggregate, $137,500. Such fee shall be paid
to Agent for the ratable benefit of each Lender that is a signatory
hereto. Each such Lenders ratable share shall be equal to (x) the sum of
such Lender's U.S. Revolving Loan Commitment plus the principal amount of
such Lender's Term Loan divided by (y) the sum of all Lenders', who are
signatories hereto, Revolving Loan Commitments plus the principal amount
of all such Lenders' Term Loans. Such amendment fee shall be deemed fully
earned and non-refundable on the Second Amendment Effective Date.
4. Condition Precedent. This Second Amendment shall become effective upon
satisfaction of each of the following conditions:
(i) Borrowers, Agents and majority Lenders shall have executed and
delivered to each other this Second Amendment; and
(ii) Borrowers shall have paid to Agent for the ratable benefit of
each Lender that is a signatory hereto, the amendment fee referred
to in Section 3 above.
(iii) The date on which each of the foregoing conditions precedent
is satisfied shall be referred to as the "Second Amendment Effective
Date."
5. Continuing Effect. Except as otherwise specifically set out herein, the
provisions of the Loan Agreement shall remain in full force and effect.
6. Governing Law. This Second Amendment and the obligations arising hereunder
shall be governed by, and construed and enforced in accordance with, the
laws of the State of Illinois applicable to contracts made and performed
in such state, without regard to the principles thereof regarding
conflicts of laws.
7. Counterparts. This Second Amendment may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
(Signature Page Follows)
2
(Signature Page to Second Amendment to Loan Agreement)
IN WITNESS WHEREOF, this Second Amendment has been duly executed on the
day and year specified at the beginning of this Second Amendment.
KATY INDUSTRIES, INC.
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President and CFO
CEH LIMITED
By: /s/ C. Xxxxxxx Xxxxxx
-------------------------------------
Name: C. Xxxxxxx Xxxxxx
Title: Director
and
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Director
XXXXX INDUSTRIES (CANADA) INC.
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Secretary
FLEET CAPITAL CORPORATION,
as Agent and as a Lender
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: XX
XXXXX FARGO FOOTHILL LLC,
as Syndication Agent and Lender
By: /s/ Xxx Xxxx
-------------------------------------
Name: Xxx Xxxx
Title: Vice-President
LASALLE BANK NATIONAL ASSOCIATION,
as Documentation Agent and as a Lender
By: /s/ Xxxxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Vice President
UPS CAPITAL CORPORATION, as a Lender
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Director of Portfolio Management
BANK OF AMERICA, N.A., London branch,
as U.K. Agent and U.K. Lender
By:
-------------------------------------
Name:
------------------------------
Title:
-----------------------------
FLEET CAPITAL GLOBAL FINANCE, INC.,
as Canadian Agent and Canadian Lender
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
Accepted and Agreed to this 29th day of March, 2005.
GUARANTORS:
KKTY HOLDING COMPANY, L.L.C.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Authorized Manager
AMERICAN GAGE & MACHINE CO.
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President and Secretary
CONTINENTAL COMMERCIAL PRODUCTS, LLC
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Secretary
PTR MACHINE CORP.
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Secretary
SAVANNAH ENERGY SYSTEMS COMPANY
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Authorized Officer and Secretary
XXXXX INDUSTRIES, INC.
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Secretary
EXHIBIT 7.3
FINANCIAL COVENANTS
DEFINITIONS
Consolidated EBITDA - for any period, the sum, without duplication,
of the amounts for such period of (i) Consolidated Net Income, (ii) interest
expense, (iii) provisions for taxes based on income, (iv) total depreciation
expense, (v) total amortization expense, (vi) all unusual expenses and all other
non-capitalized restructuring expenses (including costs and expenses
attributable to employee severance obligations and facility consolidation costs)
for such period to the extent not disallowed by Agent in its sole discretion,
(vii) any payment of or accrual for the Management Fee under the Management
Agreement, (viii) all other payments made to K&C and its Affiliates during such
period for expenses incurred on behalf of Parent, Katy or any of their
respective Subsidiaries pursuant to Kohlberg Agreements, (ix) any non-cash
expense incurred with respect to Katy's stock appreciation rights plan ("SAR")
and (x) any non-cash expense with respect to changes in market value of any
options to purchase Katy's Common Stock and (xi) other non-cash items (other
than any such non-cash item to the extent that it represents an accrual of or
reserve for cash expenditures in any future period), but only, in the case of
clauses (ii)-(xi), to the extent deducted in the calculation of Consolidated Net
Income less other non-cash items added in the calculation of Consolidated Net
Income (other than any such non-cash item to the extent that it will result in
the receipt of cash payments in any future period), all of the foregoing as
determined on a consolidated basis for Katy and its Subsidiaries in conformity
with GAAP; provided that there shall be subtracted from the sum of items (i)
through (xi) above the amount of any cash expenditure made within the applicable
period pursuant to the SAR, to the extent that the amount of such cash
expenditure was expensed or will be expensed against a prior or future period's
Consolidated Net Income; provided, further, that (a) in the event any Loan Party
makes an acquisition of any Person or any division or any business unit
permitted hereunder or consented to by Majority Lenders during such period, if
Katy provides Agent and Lenders financial statements with respect to the
business so acquired (which financial statements shall have been audited by one
of the "Big 4" accounting firms or another nationally recognized accounting firm
reasonably satisfactory to Agent or financial statements otherwise satisfactory
to Agent) reasonably satisfactory to Majority Lenders, Consolidated EBITDA for
such period shall be calculated on a pro forma basis, taking into account the
elimination of non-recurring expenses, based on the results of such acquired
Person or acquired assets as if such acquisition had occurred on the first day
of such period, and (b) in the event any Loan Party makes a Permitted
Disposition (or any other disposition of any Person or any division or any
business unit permitted hereunder or consented to by the Majority Lenders)
during such period, Consolidated EBITDA for such period shall be calculated on a
pro forma basis, based on the results of such disposed Person or disposed assets
as if such Permitted Disposition (or such other disposition) had occurred on the
first day of such period.
Consolidated Fixed Charges, with respect to any period, the sum of:
(i) scheduled principal payments required to be made during such period in
respect to Indebtedness for Money Borrowed (including the principal portion of
Capitalized Lease Obligations), plus (ii) Consolidated Interest Expense payable
in cash for such period, all as determined for Borrowers and their Subsidiaries
on a Consolidated basis and in accordance with GAAP.
Exhibit 7.3 - Page 1
Consolidated Interest Expense - for any period, total interest
expense of Katy and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of Katy and its Subsidiaries, including, without
limitation, net costs under Interest Rate Agreements, but excluding, however,
(i) any amounts referred to in the Fee Letter or amortization thereof, (ii) any
deferred financing fees or amortization thereof, (iii) commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, (iv) unused line charges, (v) non-cash charges included in
interest expense other than in clauses (i) and (ii) and (vi) to the extent
included in interest expense, costs associated with the unsuccessful second lien
financing abandoned prior to the Closing Date.
Consolidated Leverage Ratio, as at any date, the ratio of (a)
Consolidated Total Debt as at such date minus contingent reimbursement
obligations with respect to letters of credit or guaranties of letters of credit
to (b) Consolidated EBITDA for the consecutive four fiscal quarters ending on
the last day of the most recently ended fiscal quarter.
Consolidated Net Income, for any period, the net income (or loss) of
Katy on a Consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP; provided that there shall be excluded (i)
the income (or loss) of any Person (other than a Subsidiary of Katy) in which
any other Person (other than Katy or any of its Subsidiaries) has a joint
interest, except to the extent of the amount of dividends or other distributions
actually paid to Katy or any of its Subsidiaries by such Person during such
period, (ii) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary of Katy or is merged into or consolidated with Katy or any
of its Subsidiaries or that Person's assets are acquired by Katy or any of its
Subsidiaries, (iii) the income of any Subsidiary of Katy to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (iv) any after-tax gains
or losses attributable to Asset Sales or returned surplus assets of any Pension
Plan, (v) any LIFO reserves of CCP to the extent such LIFO reserves decrease or
increase net income of CCP, and (vii) (to the extent not included in clauses (i)
through (v) above) any net extraordinary gains or net extraordinary losses.
Consolidated Total Debt means, as at any date of determination, the
aggregate stated balance sheet amount (which shall not include the face amount
of undrawn Letters of Credit) of all Money Borrowed of Katy and its Subsidiaries
on the last day of the most recently ended fiscal quarter, determined on a
Consolidated basis in accordance with GAAP.
Fixed Charge Coverage Ratio, with respect to any period, the ratio
of (i) Consolidated EBITDA for such period minus the sum of (a) any income taxes
paid in cash during such period and restructuring payments made in cash after
the Closing Date during such period plus (b) non-financed Capital Expenditures
during such period, to (ii) Consolidated Fixed Charges for such period, all as
determined for Borrowers and their Subsidiaries on a Consolidated basis and in
accordance with GAAP.
Exhibit 7.3 - Page 2
A. Fixed Charge Coverage Ratio. Katy shall not permit the Fixed
Charge Coverage Ratio for any period set forth below to be less than the ratio
set forth below opposite such period:
Period Ratio
------ -----
Four Fiscal Quarters Ending December 31, 2005
and each March 31, June 30, September 30 and
December 31 thereafter 1.10 to 1
B. Consolidated Leverage Ratio. Katy shall not permit the
Consolidated Leverage Ratio as of any date set forth below to be more than the
amount set forth below opposite such date:
Period Ratio
------ -----
Four Fiscal Quarters Ending March 31, 2005 4.00 to 1
Four Fiscal Quarters Ending June 30, 2005 3.75 to 1
Four Fiscal Quarters Ending September 30, 2005 3.75 to 1
Four Fiscal Quarters Ending December 31, 2005
and each March 31, June 30, September 30 and
December 31 thereafter 3.00 to 1
C. Minimum Consolidated EBITDA. Katy shall achieve Consolidated
EBITDA for each of the fiscal periods listed below equal to or greater than the
amount set forth opposite such period in the following schedule:
Minimum Consolidated
Fiscal Period EBITDA
------------- ------
Four Fiscal Quarters Ending March 31, 2005 $20,700,000
Four Fiscal Quarters Ending June 30, 2005 $22,000,000
Four Fiscal Quarters Ending September 30, 2005 $22,000,000
Exhibit 7.3 - Page 3
D. Minimum Aggregate Availability. Katy shall maintain, on each day
within each of the fiscal periods listed below, Aggregate Availability in an
amount equal to or greater than the amount set forth opposite such fiscal period
in the following schedule:
Minimum Aggregate
-----------------
Fiscal Period Availability
------------- ------------
January 1, 2005 to March 31, 2005 $15,000,000
April 1, 2005 to June 30, 2005 $5,800,000
July 1, 2005 to September 30, 2005 $8,500,000
Exhibit 7.3 - Page 4
