EXHIBIT 10.1

 

Amendment No. 10
to Credit Agreement

 

This Amendment No. 10 to Credit Agreement is dated as of July 28, 2017, but
effective as of July 18, 2017, and is between CTI Industries Corporation, an
Illinois corporation (the “Borrower”); CTI Supply, Inc., an Illinois corporation
f/k/a CTI Helium, Inc., and a Wholly-Owned Subsidiary of the Borrower, in its
capacity as a guarantor (the “Subsidiary Guarantor”); and BMO Harris Bank N.A.,
a national banking association, successor to Harris N.A. (the “Bank”).

 

The Borrower and the Bank entered into a Credit Agreement dated as of April 29,
2010 (as amended, modified, or supplemented before the effective date of this
agreement, the “Credit Agreement”), under which the Bank has extended certain
credit facilities to the Borrower.

 

In connection with the Credit Agreement, the Subsidiary Guarantor entered into a
Guaranty dated as of April 29, 2010 (the “Subsidiary Guaranty”), under which,
among other things, the Subsidiary Guarantor guarantees the prompt and complete
payment and performance of the Obligations.

 

The parties now desire to amend the Credit Agreement in certain respects.

 

The parties therefore agree as follows:

 

1.          Definitions. Defined terms used but not defined in this agreement
are as defined in the Credit Agreement.

 

2.          Amendments to Credit Agreement. (a) The definition of “Mortgage Loan
Final Maturity Date” in section 5.1 of the Credit Agreement is hereby amended to
read in its entirety as follows:

 

“ “Mortgage Loan Final Maturity Date” means October 18, 2017, or such earlier
date on which the Mortgage Loan is declared to be or becomes due pursuant to
Section 9.2 or 9.3 hereof.”

 

(b)          The definition of “Revolving Credit Termination Date” in
section 5.1 of the Credit Agreement is hereby amended to read in its entirety as
follows:

 

“ “Revolving Credit Termination Date” means October 18, 2017, or such earlier
date on which the Revolving Credit Commitment is terminated in whole pursuant to
Section 3.4, 9.2, or 9.3 hereof.”

 

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(c)          The definition of “Total Funded Debt” in section 5.1 of the Credit
Agreement is hereby amended to read in its entirety as follows:

 

“ “Total Funded Debt” means, at any time the same is to be determined, the
aggregate of all Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries, on a consolidated basis, at such time, plus all Indebtedness for
Borrowed Money of any other person or entity which is directly or indirectly
guaranteed by the Borrower or any of its Subsidiaries or which the Borrower or
any of its Subsidiaries has agreed (contingently or otherwise) to purchase or
otherwise acquire or in respect of which the Borrower or any of its Subsidiaries
has otherwise assured a creditor against loss. For purposes of this Agreement,
(a) “Total Funded Debt” includes (i) the 2016 CTI–Merrick Debt and the
2016 CTI–Schwan Debt, and (ii) subject to clause (b)(iii) below, the
BMO Mezzanine Debt, but (b) “Total Funded Debt” does not include (i) any
Excluded VIE Debt, (ii) the Subordinated Debt owing to John H. Schwan and
Stephen M. Merrick described in Section 8.7(f), or (iii) the BMO Mezzanine Debt,
if any, evidenced by the BMO Mezzanine Warrant Conversion Note.”

 

(d)          Section 5.1 of the Credit Agreement is hereby further amended by
inserting each of the following new definitions in the appropriate alphabetical
order:

 

“         “2017 Extension Period” means the period from and including the
Amendment No. 10 Effective Date through and including the later of the Mortgage
Loan Final Maturity Date and the Revolving Credit Termination Date.

 

“Amendment No. 10” means an Amendment No. 10 to Credit Agreement dated as of
July 28, 2017, but effective as of July 18, 2017, between the Borrower,
CTI Helium, and the Bank.

 

“Amendment No. 10 Consent and Acknowledgment” means the consent and
acknowledgment described in clause (1)(C) of Section 6 of Amendment No. 10
(which consent and acknowledgment is the “Side Letter” under and as defined in
the BMO Mezzanine NWPA, as in effect on the Amendment No. 10 Effective Date).

 

“Amendment No. 10 Effective Date” means July 18, 2017, which is the effective
date of Amendment No. 10.

 

“BMO Mezzanine Warrant” means the “Warrant” (as defined in the BMO Mezzanine
NWPA, as in effect on the Amendment No. 10 Effective Date).

 

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“BMO Mezzanine Warrant Conversion Note” means a promissory note issued to
BMO Private Equity by the Borrower in connection with a conversion after the
Amendment No. 10 Effective Date of the BMO Mezzanine Warrant effected in
accordance with (and as more particularly described in) the Amendment No. 10
Consent and Acknowledgment and the Warrant, as deemed modified by the Amendment
No. 10 Consent and Acknowledgment.”

 

(e)          Clause (e) of section 8.7 of the Credit Agreement is hereby amended
to read in its entirety as follows:

 

“              (e)          (i) the BMO Mezzanine Debt (other than the
BMO Mezzanine Debt, if any, evidenced by the BMO Mezzanine Warrant Conversion
Note), in an aggregate principal amount not to exceed $5,000,000 as of the Third
Amendment Date, as reduced by permitted payments thereon, and provided that such
BMO Mezzanine Debt shall be Subordinated Debt; and (ii) the BMO Mezzanine Debt,
if any, evidenced by the BMO Mezzanine Warrant Conversion Note, in an aggregate
principal amount not to exceed the original principal amount of the
BMO Mezzanine Warrant Conversion Note as of the date that the BMO Mezzanine
Warrant Conversion Note is issued, as reduced by permitted payments thereon, and
provided that such BMO Mezzanine Debt shall be Subordinated Debt;”

 

(f)          Section 8.24 of the Credit Agreement is hereby amended to read in
its entirety as follows:

 

“Section 8.24         2017 Extension Period; Engagement of Financial Consultant.

 

(a)          The Borrower shall engage, for the duration of the 2017 Extension
Period (or any shorter period approved in writing by the Bank), at the
Borrower’s expense, an independent consultant of recognized standing selected by
the Borrower and reasonably acceptable to the Bank (the “Financial Consultant”)
to provide business financial planning and other advisory services to the
Borrower and its Subsidiaries.

 

(b)          Without limitation, duplication, or derogation of Section 8.5
hereof, during the 2017 Extension Period the Borrower shall, and shall cause
each Subsidiary to, furnish to the Bank and its duly authorized representatives
such information respecting the business and financial condition of the Borrower
and its Subsidiaries as the Bank may reasonably request; and without any
request, shall furnish to the Bank:

 

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(i)          as soon as available, and in any event no later than July 20, 2017
(or any later date approved in writing by the Bank), an engagement letter, in
form and substance (including scope of work) reasonably satisfactory to the
Bank, with respect to the engagement by the Borrower of the Financial
Consultant, duly executed by the Borrower and the Financial Consultant;

 

(ii)         as soon as available, and in any event no later than July 31, 2017
(or any later date approved in writing by the Bank), a report, in reasonable
detail and in form reasonably satisfactory to the Bank, either prepared by the
Financial Consultant or prepared by the Borrower and verified by the Financial
Consultant, and in any event certified to by the Borrower’s chief financial
officer or such other officer acceptable to the Bank, showing analyses of the
following with respect to the Borrower and its Subsidiaries: (A) revenue and
profitability by customer and product line; (B) expense-reduction and
margin-improvement initiatives; and (C) working-capital improvements;

 

(iii)        as soon as available, and in any event no later than July 31, 2017
(or any later date approved in writing by the Bank), and thereafter as soon as
available and in any event by the first Business Day of each week (unless
otherwise approved in writing by the Bank), a 13-week cash flow forecast, in
reasonable detail and in form reasonably satisfactory to the Bank, showing
projected cash receipts and cash disbursements (including referencing line item
sources and uses of cash) of the Borrower and its Subsidiaries over the
immediately succeeding 13-week period, together with a reconciliation of actual
cash receipts and cash disbursements of the Borrower and its Subsidiaries from
the prior week against the then-current forecast of the Borrowers and its
Subsidiaries (and showing any deviations on a cumulative basis and providing a
written explanation of the variances), either prepared by the Financial
Consultant or prepared by the Borrower and verified by the Financial
Consultants, and in any event certified to by the Borrower’s chief financial
officer or such other officer acceptable to the Bank;

 

(iv)        as soon as available, and in any event by the first Business Day of
each week (or any later date approved in writing by the Bank), an accounts
receivable and accounts payable aging, prepared by the Borrower and certified to
by its chief financial officer or such other officer acceptable to the Bank;

 

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(v)         as soon as available, and in any event no later than August 15, 2017
(or any later date approved in writing by the Bank), a copy of the Borrower’s
strategic plan to address before the end of the 2017 Extension Period the
pending maturities of the Loans and the BMO Mezzanine Debt, such strategic plan
to be in reasonable detail prepared by the Borrower and in form reasonably
satisfactory to the Bank;

 

(vi)        as soon as available, and in any event no later than August 31, 2017
(or any later date approved in writing by the Bank), evidence, in form and
substance satisfactory to the Bank, of the Borrower’s having taken action
satisfactory to the Bank to implement and effect the strategic plan described in
clause (v) above; and

 

(vii)       as soon as available, and in any event no later than September 15,
2017 (or any later date approved in writing by the Bank), a collateral
checklist, a perfection certificate, and updated schedules to this Agreement,
each in reasonable detail and in form and substance reasonably satisfactory to
the Bank.

 

(c)          The Borrower shall cause the management of the Borrower and its
Subsidiaries to meet with the Financial Consultant and the Bank, in person or by
telephone, at such reasonable times and reasonable intervals as the Borrower may
determine, but at least once per week by telephone during the
2017 Extension Period (or less frequently as approved in writing by the Bank).”

 

(g)          Exhibit E to the Credit Agreement is hereby amended to read in its
entirety as set forth in Exhibit E to this agreement.

 

3.          Fee. As consideration for the amendments to the Credit Agreement to
be effected by this agreement, the Borrower shall pay to the Bank a fee in the
amount of $7,500, which fee is fully earned upon the execution of this agreement
by the Bank, due and payable upon the execution and delivery of this agreement
by the Borrower to the Bank, and nonrefundable once paid.

 

4.          Reaffirmation of Subsidiary Guaranty. The Subsidiary Guarantor
hereby expressly does each of the following:

 

(1)         consents to the execution by the Borrower and the Bank of this
agreement;

 

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(2)         acknowledges that the “Indebtedness” (as defined in the Subsidiary
Guaranty) includes all of the “Obligations” under and as defined in the Credit
Agreement, as amended from time to time (including as amended by this
agreement);

 

(3)         acknowledges that the Subsidiary Guarantor does not have any
set-off, defense, or counterclaim to the payment or performance of any of the
obligations of the Borrower under the Credit Agreement or the Subsidiary
Guarantor under the Subsidiary Guaranty;

 

(4)         reaffirms, assumes, and binds itself in all respects to all of the
obligations, liabilities, duties, covenants, terms, and conditions contained in
the Subsidiary Guaranty;

 

(5)         agrees that all such obligations and liabilities under the
Subsidiary Guaranty continue in full force and that the execution and delivery
of this agreement to, and its acceptance by, the Bank will not in any manner
whatsoever do any of the following:

 

(A)         impair or affect the liability of the Subsidiary Guarantor to the
Bank under the Subsidiary Guaranty;

 

(B)         prejudice, waive, or be construed to impair, affect, prejudice, or
waive the rights and abilities of the Bank at law, in equity, or by statute
against the Subsidiary Guarantor pursuant to the Subsidiary Guaranty; or

 

(C)         release or discharge, or be construed to release or discharge, any
of the obligations and liabilities owing to the Bank by the Subsidiary Guarantor
under the Subsidiary Guaranty; and

 

(6)         represents and warrants that each of the representations and
warranties made by the Subsidiary Guarantor in any of the documents executed in
connection with the Loans remain true and correct as of the date of this
agreement.

 

5.          Representations and Warranties. To induce the Bank to enter into
this agreement, the Borrower hereby represents to the Bank as follows:

 

(1)         that the Borrower is duly authorized to execute and deliver this
agreement and is and will continue to be duly authorized to borrow monies under
the Credit Agreement, as amended by this agreement, and to perform its
obligations under the Credit Agreement, as amended by this agreement;

 

(2)         that the execution and delivery of this agreement and the
performance by the Borrower of its obligations under the Credit Agreement, as
amended by this agreement, do not and will not conflict with any provision of
law or of the articles of organization or operating agreement of the Borrower or
of any agreement binding upon the Borrower;

 

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(3)         that the Credit Agreement, as amended by this agreement, is a legal,
valid, and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms, except as enforceability might be limited by
bankruptcy, insolvency, or other similar laws of general application affecting
the enforcement of creditors’ rights or by general principles of equity limiting
the availability of equitable remedies;

 

(4)         that the representation and warranties set forth in section 6 of the
Credit Agreement, as amended by this agreement, are true and correct with the
same effect as if those representations and warranties had been made on the date
hereof, except that all references to the financial statements mean the
financial statements most recently delivered to the Bank and except for changes
specifically permitted under the Credit Agreement, as amended by this agreement;

 

(5)         that the Borrower has complied with and is in compliance with all of
the covenants set forth in the Credit Agreement, as amended by this agreement,
including the covenants stated in section 8 of the Credit Agreement; and

 

(6)         that as of the date of this agreement no Default and no Event of
Default under section 10 of the Credit Agreement, as amended by this agreement,
has occurred or is continuing.

 

6.          Conditions. The effectiveness of this agreement is subject to
satisfaction of the following conditions:

 

(1)         that the Bank has received the following:

 

(A)         a copy of this agreement, duly executed by the parties;

 

(B)         a copy of an amendment to the BMO Mezzanine NWPA and each of the
other documents required to be delivered in accordance with that amendment, each
in form and substance satisfactory to the Bank and duly executed by all
applicable Persons;

 

(C)         a consent and acknowledgment (including under the subordination and
intercreditor agreement in respect of the BMO Mezzanine Debt), in form and
substance satisfactory to the Bank, duly executed by all applicable Persons; and

 

(D)         all other documents, certificates, resolutions, and opinions of
counsel as the Bank requests;

 

(2)         that the Borrower has paid, and the Bank has received, the fee
described in section 3; and

 

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(3)         that all legal matters incident to the execution and delivery of
this agreement are satisfactory to the Bank and its counsel.

 

7.          General. (a) This agreement and the rights and duties of the parties
hereto are governed by, and are to be construed in accordance with, the internal
laws of State of Illinois without regard to principles of conflicts of laws.
Wherever possible each provision of the Credit Agreement and this agreement is
to be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of the Credit Agreement and this agreement is
prohibited by or invalid under any such law, that provision will be deemed
ineffective to the extent of that prohibition or invalidity, without
invalidating the remainder of that provision or the remaining provisions of the
Credit Agreement and this agreement.

 

(b)          This agreement is a Loan Document.

 

(c)          This agreement binds each party and their respective successors and
assigns, and this agreement inures to the benefit of each party and the
successors and assigns of the Bank.

 

(d)          Except as specifically modified or amended by the terms of this
agreement, the terms and provisions of the Credit Agreement, the Subsidiary
Guaranty, and the other Loan Documents are incorporated by reference herein and
in all respects continue in full force and effect. The Borrower, by execution of
this agreement, hereby reaffirms, assumes, and binds itself to all of the
obligations, duties, rights, covenants, terms, and conditions contained in the
Credit Agreement and the other Loan Documents to which it is a party.

 

(e)          Each reference in the Credit Agreement to “this Agreement,”
“hereunder,” “hereof,” or words of like import, and each reference to the Credit
Agreement in any and all instruments or documents delivered in connection
therewith, are deemed to refer to the Credit Agreement, as amended by this
agreement.

 

(f)          The Borrower shall pay all costs and expenses in connection with
the preparation of this agreement and other related loan documents, including,
without limitation, reasonable attorneys’ fees and time charges of attorneys who
are employees of the Bank or any affiliate or parent of the Bank. The Borrower
shall pay any and all stamp and other taxes, UCC search fees, filing fees, and
other costs and expenses in connection with the execution and delivery of this
agreement and the other instruments and documents to be delivered hereunder, and
agrees to save the Bank harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such costs
and expenses.

 

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(g)          The Borrower hereby waives and releases any and all current
existing claims, counterclaims, defenses, or set-offs of every kind and nature
which it has or might have against the Bank arising out of, pursuant to, or
pertaining in any way to the Credit Agreement, any and all documents and
instruments in connection with or relating to the foregoing, or this agreement.
The Borrower hereby further covenants and agrees not to sue the Bank or assert
any claims, defenses, demands, actions, or liabilities against the Bank arising
out of, pursuant to, or pertaining in any way to the Credit Agreement, any and
all documents and instruments in connection with or relating to the foregoing,
or this agreement.

 

(h)          The parties may sign this agreement in several counterparts, each
of which will be deemed an original but all of which together will constitute
one instrument. Receipt of an executed signature page to this agreement by
facsimile or other electronic transmission will constitute effective delivery of
that executed signature page. Electronic records of executed Loan Documents
(including this agreement) maintained by the Bank will be deemed to be
originals.

 

[Signature pages follow]

 

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The parties are signing this Amendment No. 10 to Credit Agreement effective as
of the effective date stated in the introductory clause.

 

  CTI Industries Corporation         By: /s/ John H. Schwan   Name: John H.
Schwan   Title: Chairman/CEO         CTI Supply, Inc. (f/k/a CTI Helium, Inc.)  
      By: /s/ John H. Schwan   Name: John H. Schwan   Title: Vice President    
    BMO Harris BANK N.A.         By: /s/ Lauren M. Buysse   Name: Lauren M.
Buysse   Title: Vice President

 

Signature page to Amendment No. 10 to Credit Agreement

 

 

 

 

Exhibit E

 

Applicable Rate

 

Level  Senior
Leverage Ratio  LIBOR
Margin  Base Rate
Margin  Commitment
Fee  Letter of
Credit Fee  I   Greater than or equal to
3.00 to 1.00   3.50%   1.00%   0.25%   2.50%  II   Less than 3.00 to 1.00
but greater than
2.00 to 1.00   3.25%   0.75%   0.25%   2.25%  III   Less than or equal to
2.00 to 1.00   3.00%   0.50%   0.25%   2.00%