EXHIBIT 10.1

 

Amendment No. 4

to Credit Agreement

 

This Amendment No. 4 to Credit Agreement is dated as of April 12, 2013, and is
between CTI Industries Corporation, an Illinois corporation (the “Borrower”);
CTI Helium, Inc., an Illinois corporation 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 (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.          Limited Waiver. (a) The Borrower has informed the Bank (1) that the
Borrower’s Senior Leverage Ratio as of the last day of the fiscal quarter ending
December 31, 2012, and as of the last day of the fiscal quarter ending March 31,
2013, was or is expected to be, in each case, greater than 3.00 to 1.00, the
maximum permitted level for that ratio set forth in section 8.23(a) of the
Credit Agreement; and (2) that the Borrower’s Total Leverage Ratio as of the
last day of the fiscal quarter ending December 31, 2012, and as of the last day
of the fiscal quarter ending March 31, 2013, was or is expected to be, in each
case, greater than 4.60 to 1.00, the maximum permitted level for that ratio set
forth in section 8.23(b) of the Credit Agreement. The Borrower acknowledges that
an Event of Default has occurred and is continuing or would occur as a result of
each such financial-covenant violation (the “Subject Event of Default”). The
Borrower further acknowledges that each Subject Event of Default entitles the
Bank to exercise its rights and remedies under the Credit Agreement, applicable
law, or otherwise. The Borrower has therefore requested that the Bank waive each
Subject Event of Default. The Borrower acknowledges that but for the terms of
this agreement all obligations under the Credit Agreement and each of the other
Loan Documents would be immediately due and payable upon the occurrence of any
Subject Event of Default. In addition, the Borrower acknowledges that the Bank
has incurred reasonable attorneys’ fees in connection with the Subject Event of
Default and that those costs, fees, and expenses are recoverable by the Bank
under the Credit Agreement.

 

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(b)          The Bank hereby waives each Subject Event of Default and the Bank’s
remedies under the Credit Agreement with respect to each Subject Event of
Default. This limited waiver is to be narrowly construed. Except as provided in
this agreement, this limited waiver neither extends to any other violations
under, or default of, the Credit Agreement nor prejudices any rights or remedies
that the Bank might have or be entitled to with respect to any such other
violations or defaults.

 

3.          Amendments to Credit Agreement. (a) The definition of “EBITDA” in
section 5.1 of the Credit Agreement is hereby amended to read in its entirety as
follows:

 

“           “EBITDA” means, with reference to any period, (a) Net Income of the
Borrower and its Subsidiaries, on a consolidated basis, for such period minus
(b) amounts added in arriving at such Net Income for such period in respect of
exchange-rate gains during such period plus (c) all amounts deducted in arriving
at such Net Income for such period in respect of (i) Interest Expense for such
period, (ii) federal, state, and local income taxes for such period, (iii) all
amounts properly charged for depreciation of fixed assets and amortization of
intangible assets during such period, and (iv) exchange-rate losses during such
period.”

 

(b)          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, “Total Funded Debt” does not include any Excluded Flexo VIE Debt or
the Subordinated Debt owing to John H. Schwan and Stephen M. Merrick described
in Section 8.7(f).”

 

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(c)          Section 8.23(a) of the Credit Agreement is hereby amended to read
in its entirety as follows:

 

“              (a)          Senior Leverage Ratio. As of the last day of each
fiscal quarter of the Borrower (commencing June 30, 2010), the Borrower shall
not permit the Senior Leverage Ratio for the four fiscal quarters of the
Borrower then ended to be more than the amount set forth below for such fiscal
quarter:

 

Fiscal Quarter Ending   Level               March 31, 2010, June 30, 2010,
September 30, 2010, and
December 31, 2010   3.50 to 1.00               March 31, 2011, and
June 30, 2011   3.25 to 1.00               September 30, 2011   3.00 to 1.00    
          December 31, 2011,
March 31, 2012, June 30, 2012,
and September 30, 2012   3.25 to 1.00               December 31, 2012, and
March 31, 2013   3.00 to 1.00               June 30, 2013, and
September 30, 2013   3.25 to 1.00               December 31, 2013   3.00 to 1.00
              March 31, 2014   2.75 to 1.00               June 30, 2014, and
each fiscal quarter thereafter   2.50 to 1.00   ”

 

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(d)          Section 8.23(b) of the Credit Agreement is hereby amended to read
in its entirety as follows:

 

“             (b)          Total Leverage Ratio. As of the last day of each
fiscal quarter of the Borrower (commencing June 30, 2012), the Borrower shall
not permit the Total Leverage Ratio for the four fiscal quarters of the Borrower
then ended to be more than the amount set forth below for such fiscal quarter:

 

Fiscal Quarter Ending   Level               June 30, 2012   5.25 to 1.00        
      September 30, 2012   4.85 to 1.00               December 31, 2012, and
March 31, 2013   4.60 to 1.00               June 30, 2013, and
September 30, 2013   5.00 to 1.00               December 31, 2013   4.50 to 1.00
              March 31, 2014   4.25 to 1.00               June 30, 2014, and
each fiscal quarter thereafter   4.10 to 1.00   ”

 

4.          Fee. As consideration for the limited waiver and 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 $20,000, 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.

 

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5.          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;

 

(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.

 

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

 

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(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;

 

(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, other than
in respect of the Subject Events of Default; 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, other than the Subject Events of Default.

 

7.          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;

 

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(B)a copy of an amendment to the BMO Mezzanine NWPA and each of the other
documents required to be delivered in accordance with section 6 of that
amendment, each duly executed by all applicable Persons;

 

(C)a copy of an amendment and restatement of the Subordination Agreement
described in clause (iv) of section 7.2(a) of the Credit Agreement, duly
executed by all applicable Persons;

 

(D)a copy of each replacement Subordinated Debt Document subject to the amended
and restated subordination agreement described in clause (1)(C) of this
section 7, each duly executed by all applicable Persons; and

 

(E)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 4; and

 

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

 

8.          Post-Closing Matters. (a) The Borrower shall deliver to the Bank
within 15 days after the date of this agreement (or any later date to which the
Bank agrees in writing) a lien-waiver agreement, in form and substance
satisfactory to the Bank, from the landlord of the Borrower’s leased premises at
800 N. Church Street, Lake Zurich, Illinois.

 

(b)          The Borrower hereby acknowledges (1) that default in the observance
or performance of the covenant set forth in section 8(a) will constitute an
Event of Default under the Credit Agreement; and (2) that no grace or cure
period will apply in respect of any such default in the observance or
performance of any such covenant.

 

9.          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.

 

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(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.

 

(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.

 

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(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.

 

[Signature pages follow]

  

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The parties are signing this Amendment No. 4 to Credit Agreement as of the date
stated in the introductory clause.

 

  CTI Industries Corporation         By:     Name:     Title:           CTI
Helium, Inc.         By:     Name:     Title:           BMO Harris BANK N.A.    
    By:     Name:     Title:  

 

Signature page to Amendment No. 4 to Credit Agreement