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Exhibit 10.18

 
SECOND AMENDMENT TO REVOLVING
CREDIT, TERM LOAN AND SECURITY AGREEMENT
 
This Second Amendment to Revolving Credit, Term Loan and Security Agreement (the
“Amendment”) is made as of this 4th day of February, 2011, by and among
CONTINENTAL COMMERCIAL PRODUCTS, LLC, a limited liability company organized
under the laws of the State of Delaware (“Continental”), and GLIT / GEMTEX,
LTD., a corporation organized under the laws of the Province of Ontario
(“Glit/Gemtex”, and together with Continental, collectively the “Borrowers” and
each a “Borrower), KATY INDUSTRIES, INC., a corporation organized under the laws
of the State of Delaware (“Katy” or the “Guarantor”) the financial institutions
which are now or which hereafter become a party to such Agreement (collectively,
the “Lenders”) and PNC Bank, National Association (“PNC”), as agent for the
Lenders (PNC, in such capacity, the “Agent”).
 
 
BACKGROUND
 
A. On May 26, 2010, Borrowers, Guarantor, Lenders and Agent entered into a
certain Revolving Credit, Term Loan and Security Agreement to reflect certain
financing arrangements  among the parties thereto (as the same has been or may
be amended, modified, renewed, extended, replaced or substituted from time to
time, the “Loan Agreement”).  The Loan Agreement and all other documents
executed in connection therewith are collectively referred to as the “Existing
Financing Agreements.”  All capitalized terms not otherwise defined herein shall
have the meaning ascribed to them in the Loan Agreement.
 
B. Borrowers have requested and the Agent and the Lenders have agreed to amend
certain terms and provisions contained in the Loan Agreement, on the terms and
subject to the satisfaction of the conditions contained in this Amendment.
 
NOW THEREFORE, with the foregoing background hereinafter deemed incorporated by
reference herein and made part hereof, the parties hereto, intending to be
legally bound, promise and agree as follows:
 
1. Section One.   Amendment to Section 1.2 of Loan Agreement.  Effective as of
February 4, 2011, Section 1.2 of the Loan Agreement is hereby amended by
deleting the term Availability Block in its entirety, and by substituting the
following in lieu thereof:
 
“Availability Block” shall mean the sum of (i) $1,050,000 through and including
February 11, 2011 and (ii) $1,500,000 on and after February 12, 2011, which
amount shall be reduced to zero (-0-) on the date upon which the outstanding
principal balance of Term Loan A shall have been reduced by the aggregate sum of
$1,500,000 pursuant to the application by the Agent against such principal
balance, as and when received by the Agent, of (a) regularly scheduled payments
of principal of Term Loan A made under Section 2.4(a) hereof and (b) mandatory
prepayments of principal of Term Loan A made under Section 2.21(b) hereof.
 
 
 

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2. Section Two.  Representations and Warranties.  Each Borrower hereby:
 
(a) reaffirms all representations and warranties made to Agent and Lenders under
the Agreement and all of the other Existing Financing Agreements and confirms
that all are true and correct in all material respects as of the date hereof, in
each case other than representations and warranties that relate to a specific
date;
 
(b) reaffirms all of the covenants contained in the Loan Agreement and covenants
to abide thereby until all Advances, Obligations and other liabilities of
Borrowers to Agent and Lenders, of whatever nature and whenever incurred, are
satisfied and/or released by Agent and Lenders;
 
(c) except as previously disclosed to the Agent with regard to the violation of
certain financial covenants, represents and warrants that no Default or Event of
Default has occurred and is continuing under any of the Existing Financing
Agreements;
 
(d) represents and warrants that no Material Adverse Effect has occurred since
May 26, 2010;
 
(e) represents and warrants that it has the authority and legal right to
execute, deliver and carry out the terms of this Amendment, that such actions
were duly authorized by all necessary corporate or company action and that the
officers executing this Amendment on its behalf were similarly authorized and
empowered, and that this Amendment does not contravene any provisions of its
Articles of Incorporation or Certificate of Formation, as applicable and Bylaws
or Operating Agreement, as applicable, or of any contract or agreement to which
it is a party or by which any of its properties are bound; and
 
(f) represents and warrants that this Amendment and all assignments,
instruments, documents, and agreements executed and delivered in connection
herewith, are valid, binding and enforceable in accordance with their respective
terms.
 
3. Section Three.  Continuing Engagement of Aurora. Borrowers covenant and agree
that until such time as a Capital Event, as hereinafter defined, shall have been
consummated on terms and conditions reasonably satisfactory to the Lenders and
the Agent, Borrowers shall continue to engage the services of the consulting
firm of Aurora Management Partners, Inc to assist the Borrowers in an analysis
of their cash projections, planned cost reductions and revenue improvements and
additional capital needs, pursuant to the agreement between Katy and such
consulting firm, dated January 10, 2011. The term Capital Event shall have the
meaning ascribed to such term in that certain First Amendment to the Loan
Agreement, dated as of January 18, 2011 (the “First Amendment”). The Borrowers
and Katy acknowledge and confirm their agreement that a breach or violation of
the terms contained in this Section Three shall constitute an Event of Default.
 
4. Section Four. Conditions Precedent/Effectiveness Conditions.  This Amendment
shall be effective upon the Agent’s receipt of a duly executed counterpart of
this Amendment.
 
5. Section Five.  Payment of Expenses.  Borrowers shall pay or reimburse Agent
for its reasonable attorneys’ fees and expenses in connection with the
preparation, negotiation and execution of this Amendment and the documents
provided for herein or related hereto.
 
 
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6. Section Six.  Reaffirmation of Existing Financing Agreements.  Except as
modified by the terms hereof, all of the terms and conditions of the Loan
Agreement, as amended, and all other of the Existing Financing Agreements are
hereby reaffirmed and shall continue in full force and effect as therein
written.
 
7. Section Seven.  Release.  Each Borrower and Katy hereby waives and releases
and forever discharges Agent and Lenders, and the officers, directors,
attorneys, agents and employees of each, from any liability, damage, claim, loss
or expense of any kind originating in whole or in part on or before the date of
this Amendment that such Borrower or Katy may now have against Agent or Lenders
or any of them arising out of or relating to the Obligations, this Amendment,
the Credit Agreement or the Other Documents.
 
8. Modification of First Amendment.  Borrowers and Katy have requested and
Lenders and Agent have agreed, as an accommodation, to extend by approximately
two (2) weeks the deadlines by which Borrowers must deliver to Agent and Lenders
(a) a binding commitment or letter of intent in respect of a Capital
Contribution or Sale Event (as such terms are defined in the First Amendment)
and (b) substantially final drafts of all material documents, instruments and
agreements to be executed or delivered in connection with such Capital
Contribution or Sale Event.  Accordingly, Section Two (b) of the First Amendment
is modified by deleting the dates February 28, 2011 and March 31, 2011, which
appear in clause (i) and clause (ii) thereof, respectively, and by substituting
in lieu thereof the dates March 15, 2011 and April 15, 2011, respectively.
 
9. Section Nine.  Miscellaneous.
 
(a) No rights are intended to be created hereunder for the benefit of any third
party donee, creditor, or incidental beneficiary.
 
(b) The headings of any paragraph of this Amendment are for convenience only and
shall not be used to interpret any provision hereof.
 
(c) No modification hereof or any agreement referred to herein shall be binding
or enforceable unless in writing and signed on behalf of the party against whom
enforcement is sought.
 
(d) The terms and conditions of this Amendment shall be governed by the laws of
the State of New York.
 
(e) This Amendment may be executed in any number of counterparts and by
facsimile, each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.  Delivery by facsimile or electronic transmission shall bind the
parties hereto.
 
(f) Kohlberg & Company, L.L.C., a Delaware limited liability company, although
not a party to this Amendment, has signed below to indicate its acknowledgement
of this Amendment and its agreement with the terms hereof.
 

 
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
 

 
 
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered by their duly authorized officers as of the date first above written.

Confirmed:
 
KOHLBERG & COMPANY, L.L.C
 
By:  /s/ Christopher W. Anderson
Name: Christopher W. Anderson
Title: Partner
CONTINENTAL COMMERCIAL PRODUCTS, LLC
 
By:  /s/ James W. Shaffer
Name: James W. Shaffer
Title: VP-CFO
 
GLIT / GEMTEX, LTD.
 
By:  /s/ James W. Shaffer
Name: James W. Shaffer
Title: VP-CFO
 
 
KATY INDUSTRIES, INC.
a Delaware corporation
 
By:  /s/ James W. Shaffer
Name: James W. Shaffer
Title: VP-CFO
 
 
PNC BANK NATIONAL ASSOCIATION, as Lender and as Agent
 
By:  /s/ Glenn D. Kreutzer
Name: Glenn D. Kreutzer
Title: Vice President
 
 
PNC BANK, CANADA BRANCH, as Lender
 
By:  /s/ Geoff Hiscock
Name: Geoff Hiscock
Title: Vice President
 
 

[SIGNATURE PAGE TO SECOND AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND SECURITY
AGREEMENT]
S-1
 
 

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