Exhibit 10.1


 


FIRST AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AND TERM 

LOAN AGREEMENT


 


This First Amendment to Amended and Restated Revolving Credit and Term
Loan Agreement (this “First Amendment”) is made and entered into as of the 12th
day of August, 2008, by and among Continental Materials Corporation, a Delaware
corporation (“Borrower”), LaSalle Bank National Association, a national banking
association, as administrative agent and as a lender (LaSalle in its capacity
as administrative agent referred to in this Agreement as “Agent” and in its
capacity as a lender as “LaSalle”) and Fifth Third Bank (Chicago), a Michigan
banking corporation, as a lender (“Fifth Third”) (LaSalle and Fifth Third are
each referred to individually in this First Amendment as a “Lender” and
collectively as the “Lenders”).


 


W I T N E S S E T H:


 


WHEREAS, prior hereto, Lenders provided certain
loans, extensions of credit and other financial accommodations to Borrower
pursuant to (a) that certain Amended and Restated Revolving Credit and
Term Loan Agreement dated as of March 28, 2008, by and among Lenders,
Borrower and Agent (the “Credit Agreement”), and (b) the other documents,
agreements and instruments referenced in the Credit Agreement or executed and
delivered pursuant thereto;


 


WHEREAS, Borrower desires Lenders to (a) waive
certain Events of Default arising from financial covenant violations; (b) modify
certain financial covenants; (c) modify the principal payments on the Term
loan; and (d) increase the Commitment – Revolving Credit (collectively,
the “Additional Financial Accommodations”); and


 


WHEREAS, Lenders are willing to provide the
Additional Financial Accommodations, but solely on the terms and subject to the
provisions set forth in this First Amendment and the other agreements,
documents and instruments referenced herein or executed and delivered pursuant
hereto.


 


NOW, THEREFORE, in consideration of the foregoing, the
mutual promises and understandings of the parties hereto set forth herein, and
other good and valuable consideration, the receipt and sufficiency of such
consideration is hereby acknowledged, the parties hereto hereby agree as set
forth in this First Amendment.


 


I.              Definitions:


 


A.            Use of Defined Terms. 
Except as expressly set forth in this First Amendment, all terms which
have an initial capital letter where not required by the rules of grammar
are defined in the Credit Agreement, or, if not defined in the Credit
Agreement, in the “Collateral Agreement” (as defined below).


 


B.            Amended Definitions.  Effective
as of the date of this First Amendment, Section 1.1 of the Credit
Agreement is hereby amended by deleting the definitions of “Applicable LIBOR
Margin”, “Applicable Prime Rate Margin” and “Commitment – Revolving Credit” and
substituting therefor the following, respectively:


 


“Applicable
LIBOR Margin” for purposes of determining the interest rate on a Revolving
LIBOR Loan and a Term LIBOR Loan, shall mean (a) from August 12,
2008, through the day immediately prior to the first quarterly adjustment pursuant
to this definition, 3.00% (the “Initial LIBOR Margin”); and (b) the
Initial LIBOR Margin as modified by quarterly adjustments (such adjusted
Initial LIBOR Margin, the “Applicable LIBOR Margin”) determined based
upon the ratio of Borrower’s consolidated Funded Debt (measured on the date of
the calculation) to EBITDA (calculated on a rolling four quarters basis) as
follows:


 

















 


	
  If Funded Debt to EBITDA is:

  	
   

  	
  Applicable LIBOR Margin is:

  	
   

  
	
  Greater than or equal
  to 3.0 to 1.0

  	
   

  	
  3.00

  	
  %

  
	
  Less than 3.0 to 1.0
  and greater than or equal to 2.50 to 1.0

  	
   

  	
  2.25

  	
  %

  
	
  Less than 2.50 to 1.0
  and greater than or equal to 2.00 to 1.0

  	
   

  	
  2.00

  	
  %

  
	
  Less than 2.00 to 1.0
  and greater than or equal to 1.5 to 1.0

  	
   

  	
  1.75

  	
  %

  
	
  Less than 1.50 to 1.0

  	
   

  	
  1.50

  	
  %

  



 


Not later than
twenty (20) days after the Agent’s receipt of the quarterly (for each of the
first three (3) fiscal quarters of each fiscal year) and year-end
financial statements required by Sections 6.2(a) and (b) hereof for
each of Borrower’s fiscal quarters beginning with the fiscal quarter ending June 28,
2008, accompanied by a certificate of the chief accounting officer or Treasurer
of Borrower reflecting the ratio of Borrower’s Funded Debt to EBITDA for the
period of the four fiscal quarters ending on the same date, Agent will determine
whether such financial information indicates that the change in the ratio would
justify a change in the Applicable LIBOR Margin.  Any change in the Applicable LIBOR Margin,
and in the rate of interest applicable to LIBOR Loans resulting therefrom, shall
be effective as of the first day of the month after the Agent receives the
quarterly (for each of the first three (3) fiscal quarters of each fiscal
year) and year-end financial statements required by Section 6.2(a) and
(b) hereof for each of Borrower’s fiscal quarters, accompanied by a
certificate of the chief accounting officer or Treasurer of Borrower reflecting
the ratio of Borrower’s Funded Debt to EBITDA for the period of the four fiscal
quarters ending on the same date.  Such
new Applicable LIBOR Margin shall continue in effect until the effectiveness of
the next re-determination thereof. Any determination by Agent of the ratio of
Borrower’s Funded Debt to EBITDA shall be conclusive and binding upon Borrower
and the Lenders provided that it has been made reasonably and in good faith,
absent manifest error. If Borrower fails to timely submit the quarterly
financial statements and certificate referred to above, the rate of interest
applicable to LIBOR Loans as of the next determination date of the Applicable
LIBOR Margin shall be determined and based upon the Default Rate.  Agent shall notify Lenders and Borrower of
any changes in the Applicable LIBOR Margin within five business days of
determining any such change; provided, however, such notice shall not be a
pre-condition to the effectiveness of any change in the Applicable LIBOR Margin
nor shall Agent’s failure to provide such notice be deemed a default by Agent
under this Agreement or give rise to any rights or remedies in favor of
Borrower.


 


“Applicable
Prime Rate Margin” for purposes of determining the interest rate on a
Revolving Prime Rate Loan and a Term Prime Rate Loan, shall mean (a) from August 12,
2008, through the day immediately prior to the first quarterly adjustment
pursuant to this definition, 1.00% (the “Initial Prime Rate Margin”);
and (b) the Initial Prime Rate Margin as modified by quarterly adjustments
(such adjusted Initial Prime Rate Margin, the “Applicable Prime Rate Margin”)
determined based upon the ratio of Borrower’s consolidated Funded Debt
(measured on the date of the calculation) to EBITDA (calculated on a rolling
four quarters basis) as follows:


 


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  If Funded Debt to EBITDA is:

  	
   

  	
  Applicable Prime Rate Margin is:

  	
   

  
	
  Greater than or equal
  to 3.0 to 1.0

  	
   

  	
  1.00

  	
  %

  
	
  Less than 3.0 to 1.0
  and greater than or equal to 2.50 to 1.0

  	
   

  	
  0.25

  	
  %

  
	
  Less than 2.50 to 1.0
  and greater than or equal to 2.00 to 1.0

  	
   

  	
  0

  	
  %

  
	
  Less than 2.00 to 1.0
  and greater than or equal to 1.5 to 1.0

  	
   

  	
  0

  	
  %

  
	
  Less than 1.50 to 1.0

  	
   

  	
  0

  	
  %

  



 


Not later than
twenty (20) days after the Agent’s receipt of the quarterly (for each of the
first three (3) fiscal quarters of each fiscal year) and year-end
financial statements required by Section 6.2(a) and (b) hereof
for each of Borrower’s fiscal quarters beginning with the fiscal quarter ending
June 28, 2008, accompanied by a certificate of the chief accounting
officer or Treasurer of Borrower reflecting the ratio of Borrower’s Funded Debt
to EBITDA for the period of the four fiscal quarters ending on the same date,
Agent will determine whether such financial information indicates that the
change in the ratio would justify a change in the Applicable Prime Rate Margin.
Any change in the Applicable Prime Rate Margin, and in the rate of interest
applicable to Prime Rate Loans resulting therefrom, shall be effective as of
the first day of the month after the Agent receives the quarterly (for each of
the first three (3) fiscal quarters of each fiscal year) and year-end
financial statements required by Sections 6.2(a) and (b) hereof for
each of Borrower’s fiscal quarters, accompanied by a certificate of the chief
accounting officer or Treasurer of Borrower reflecting the ratio of Borrower’s
Funded Debt to EBITDA for the period of the four fiscal quarters ending on the
same date.  Such new Applicable Prime
Rate Margin shall continue in effect until the effectiveness of the next
re-determination thereof. Any determination by Agent of the ratio of Borrower’s
Funded Debt to EBITDA shall be conclusive and binding upon Borrower and the
Lenders provided that it has been made reasonably and in good faith, absent
manifest error. If Borrower fails to timely submit the quarterly financial
statements and certificate referred to above, the rate of interest applicable
to Prime Rate Loans as of the date such statements and certificate are due
shall be determined and based upon the Default Rate.  Agent shall notify Lenders and Borrower of
any changes in the Applicable Prime Rate Margin within five business days of
determining such change; provided, however, such notice shall not be a
pre-condition to the effectiveness of any change in the Applicable Prime Rate
Margin nor shall Agent’s failure to provide such notice be deemed a default by
Agent under this Agreement or give rise to any rights or remedies in favor of
Borrower.


 


“Commitment –
Revolving Credit” shall mean each such amount set forth below across from
the name of each Lender:


 


a.             From March 28, 2008 through December 31,
2008:


 


	
  Lender

  	
   

  	
  Amount

  	
   

  
	
  LaSalle

  	
   

  	
  $

  	
  10,800,000

  	
   

  
	
  Fifth Third

  	
   

  	
  $

  	
  7,200,000

  	
   

  



 


b.             From January 1, 2009 to the Termination Date:


 


	
  Lender

  	
   

  	
  Amount

  	
   

  
	
  LaSalle

  	
   

  	
  $

  	
  9,000,000

  	
   

  
	
  Fifth Third

  	
   

  	
  $

  	
  6,000,000

  	
   

  



 


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C.            New Definition.  Effective as
of the date of this First Amendment, Section 1.1 of the Loan Agreement is
hereby amended by adding the following new definition thereto in the
appropriate alphabetical order:


 


“Collateral
Agreement” shall mean that certain Collateral Agreement of even date herewith
by and among Borrower, each Subsidiary and Agent, as amended or restated from
time to time.


 


II.            Amendment to Credit Agreement. 
Effective as of the date of this First Amendment, the Credit Agreement
is hereby amended as follows:


 


A.            Section 2.5 of the Credit Agreement is hereby
amended by deleting Section 2.5 of the Credit Agreement in its entirety
and substituting the following therefor:


 


“SECTION 2.5       TERM LOAN PAYMENTS.


 


The Term Loan
shall be evidenced by term notes (collectively the “Term Note”), substantially
in the form of Exhibit B, with appropriate insertions, dated as of March 28,
2008, payable to the order of each Lender, in the current principal amount of
each Lender’s Pro Rata Share of the Term Loan. 
Borrower shall pay the principal amount of the Term Loan in thirteen
(13) quarterly principal payments as follows: (a) two (2) quarterly
payments in the amount of $600,000 each, due on March 31, 2008, and June 30,
2008, (b) ten (10) quarterly payments in the amount of $414,286 each,
due on the last day of each calendar quarter beginning September 30, 2008
and continuing through and including December 31, 2010, and (c) a
final payment of all outstanding Term Loan indebtedness on March 31, 2011.”


 


B.            Section 5.5 of the Credit Agreement is hereby amended
by deleting Section 5.5 of the Credit Agreement in its entirety and
substituting the following therefor:


 


“SECTION 5.5       LIENS.


 


None of the assets
of Borrower or any Subsidiary are subject to any mortgage, pledge, title
retention lien, or other lien, encumbrance or security interest, except for: (a) current
taxes not delinquent or taxes being contested in good faith and by appropriate
proceedings; (b) liens arising in the ordinary course of business for sums
not due or sums being contested in good faith and by appropriate proceedings,
but not involving any deposits or advances or borrowed money or the deferred
purchase price of property or services; (c) liens existing on the date
hereof as listed in Exhibit F hereto; and (d) liens in favor of the
Agent for the benefit of the Lenders.”


 


C.            Financial Covenants.  Section 6.4
of the Credit Agreement is hereby amended by deleting Section 6.4 of the
Credit Agreement in its entirety and substituting the following therefor:


 


“SECTION 6.4       FINANCIAL REQUIREMENTS.


 


Unless at any time
all Lenders shall otherwise expressly consent in writing, until all of the
obligations of Borrower under this Agreement and the Notes are fully paid and
performed, Borrower shall:


 


(a)           Fixed Charge Coverage Ratio. 
Not permit Borrower’s consolidated Fixed Charge Coverage Ratio to be
less than 1.0 to 1.0 for the twelve (12) month Measurement Period ending January 3,
2009, or for any twelve (12) month Measurement Period ending as of the end of
each fiscal quarter thereafter.  Borrower’s
Fixed Charge Coverage Ratio shall not be tested for the Measurement Period
ending September 27, 2008;


 


(b)           Current Ratio.  Not permit
the ratio of Borrower’s consolidated current assets to current liabilities
determined as of the end of each fiscal quarter of Borrower’s fiscal year, to
be less than 1.50:1.0;


 


4

















 


(c)           Tangible Net Worth.  Not permit
Borrower’s consolidated Tangible Net Worth, determined as of the end of each
fiscal quarter of Borrower’s fiscal year, to be less than $34,641,000 plus
fifty percent (50%) of Borrower’s cumulative consolidated net income
(disregarding cumulative consolidated net loss) for all periods subsequent to December 29,
2007;


 


(d)           Leverage Ratio.  Not permit
Borrower’s ratio of (i) consolidated Funded Debt as of the end of each
fiscal quarter of Borrower’s fiscal year, to (ii) consolidated EBITDA for
the Measurement Period ending as of the last day of such quarter calculated on
a rolling four (4) quarters basis, to exceed (i) 4.0 to 1.0 as of March [31],
2009 or June [30], 2009, or (ii) 2.5 to 1.0 as of September [30],
2009, or as of the end of any fiscal quarter thereafter.  Borrower’s leverage ratio shall not be tested
for the fiscal quarters ending September 27, 2008 or January 3, 2009;
and


 


(e)           Quarterly EBITDA.  Not permit
Borrower’s consolidated EBITDA, calculated for the three (3) month fiscal
quarter ending September 27, 2008, to be less than $1,700,000.”


 


D.            Field Examination. 
Borrower and its Subsidiaries will fully cooperate with Agent and any of
its agents in performing one or more field examinations of Borrower and its
Subsidiaries from time to time.  All
costs, fees and expenses charged or incurred by Agent in connection therewith
shall be paid by Borrower upon demand by Agent.


 


E.             Exhibit “F”. 
The Loan Agreement is hereby amended by deleting Exhibit “F”
attached thereto in its entirety and substituting therefor Exhibit “F”
attached to this First Amendment.


 


III.           Conditions Precedent. Lenders’ obligation to provide the Additional
Financial Accommodations to Borrower is subject to the full and timely
performance of the following covenants prior to or contemporaneously with the
execution of this First Amendment:


 


A.            Borrower executing and delivering, or
causing to be executed and delivered to Agent and Lenders, the following
documents, each of which shall be in form and substance acceptable to Agent and
Lenders:


 


	
  (i)

  	
  A fully executed
  original of a Company General Certificate executed and delivered by Borrower
  to Agent and Lenders;

  
	
   

  	
   

  
	
  (ii)

  	
  A fully executed
  original Reaffirmation of Guaranties executed and delivered to Agent and
  Lenders by each of the Borrower’s Subsidiaries that executed the Subsidiary
  Guaranties;

  
	
   

  	
   

  
	
  (iii)

  	
  A fully executed
  Collateral Agreement executed and delivered by Borrowers and each of
  Borrower’s Subsidiaries to Agent; and

  
	
   

  	
   

  
	
  (iv)

  	
  such other
  agreements, documents and instruments as Agent or Lenders may reasonably
  request;

  



 


B.            No Event of Default or Unmatured Event of
Default exists under the Credit Agreement, as amended by this First Amendment,
or the other Loan Documents;


 


C.            No claims, litigation, arbitration
proceedings or governmental proceedings not disclosed in writing to Agent prior
to the date hereof shall be pending or known to be threatened against Borrower
and no known material development not so disclosed shall have occurred in any
claims, litigation, arbitration proceedings or governmental proceedings so
disclosed which in the opinion of Agent is likely to materially and adversely
affect the financial position or business of Borrower or the capability of
Borrower to pay its obligations and liabilities to Lenders; and


 


D.            There shall have been no material or
adverse change in the business, financial condition or results of operations
since the date of Borrower’s most recently delivered financial statements to
Agent and Lenders.


 


5

















 


IV.           Waiver
of Defaults.  Borrower hereby acknowledges and agrees
that Borrower has failed to satisfy the EBITDA covenant set forth in Section 6.4(e) of
the Loan Agreement as of June 28, 2008, and the leverage ratio covenant
set forth in Section 6.4(d) of the Loan Agreement for the period
ending June 28, 2008 (collectively the “Existing Defaults”).  Borrower hereby represents and warrants to
the Agent and the Lenders that no Unmatured Event of Default or Event of
Default exists as of the date of this First Amendment, other than the Existing
Defaults.  The Agent and the Lenders
hereby waive the Existing Defaults; provided that such waiver shall not be or
be deemed to be a waiver of any other Events of Default, whether now existing
or hereafter arising or occurring, including, without limitation, any other
Events of Default arising under Section 6.4 of the Loan Agreement.


 


V.            Conflict.  If, and to the extent, the terms and
provisions of this First Amendment contradict or conflict with the terms and
provisions of the Credit Agreement, the terms and provisions of this First
Amendment shall govern and control; provided, however, to the extent the terms
and provisions of this First Amendment do not contradict or conflict with the
terms and provisions of the Credit Agreement, the Credit Agreement, as amended
by this First Amendment, shall remain in and have its intended full force and
effect, and Lenders, Borrower and the Agent hereby affirm, confirm and ratify
the same.


 


VI.           Severability.  Wherever
possible, each provision of this First Amendment shall be interpreted in such
manner as to be valid and enforceable under applicable law, but if any
provision of this First Amendment is held to be invalid or unenforceable by a
court of competent jurisdiction, such provision shall be severed herefrom and
such invalidity or unenforceability shall not affect any other provision of
this First Amendment, the balance of which shall remain in and have its
intended full force and effect. 
Provided, however, if such provision may be modified so as to be valid
and enforceable as a matter of law, such provision shall be deemed to be
modified so as to be valid and enforceable to the maximum extent permitted by
law.


 


VII.          Reaffirmation.  As of the date of this First
Amendment, Borrower hereby reaffirms and remakes all of its representations,
warranties, covenants, duties, obligations and liabilities contained in the
Credit Agreement, as amended hereby.


 


VIII.        Fees, Costs and Expenses.


 


A.            Contemporaneously herewith, Borrower
shall pay to Agent, for the ratable benefit of the Lenders based upon each such
Lender’s Pro Rata Share, a fully earned, non-refundable waiver and amendment
fee in the amount of $50,000.


 


B.            Borrower agrees to pay, upon demand, all
fees, costs and expenses of Lenders, including, but not limited to, reasonable
attorneys’ fees, in connection with the preparation, execution, delivery and
administration of this First Amendment and the other agreements, documents and
instruments executed and delivered in connection herewith or pursuant hereto.


 


IX.           Choice of Law.  This First Amendment shall be
governed by and construed in accordance with the laws of the State of Illinois,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law as to all matters, including matters of validity,
construction, effect, performance and remedies.


 


X.            Agent Collateral Matters. 
The Lenders irrevocably authorize the Agent, at its option and in its
discretion, to (a) release any Lien or guaranty granted to or held by the
Agent under any Loan Document (i) upon termination of the Commitment –
Revolving Credit and payment in full of all Loans and all other Obligations of
the Borrower hereunder and the expiration or termination of all Letters of
Credit; (ii) constituting property sold or to be sold or disposed of as
part of or in connection with any disposition permitted hereunder; or (iii) if
approved, authorized or ratified in writing by the Lenders; or (b) to
subordinate its interest in any Collateral to any holder of a Lien on such
Collateral if approved, authorized or ratified by the Lenders.  Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent’s authority to release, or
subordinate its interest in, particular types or items of
Collateral pursuant to this X.


 


6

















 


XI.           Waiver
and Release.  IN CONSIDERATION OF AGENT’S AND EACH LENDER’S
EXECUTION AND DELIVERY OF THIS FIRST AMENDMENT, BORROWER HEREBY, INDIVIDUALLY
AND COLLECTIVELY, WAIVES, RELEASES AND FOREVER DISCHARGES AGENT, EACH LENDER
AND THEIR PREDECESSORS, PARENTS, SUBSIDIARIES, AFFILIATES, AGENTS, EMPLOYEES,
OFFICERS, DIRECTORS, SHAREHOLDERS, ATTORNEYS, LEGAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS, AND EACH OF THEM, OF AND FROM ANY AND ALL CLAIMS, DEMANDS,
COUNTERCLAIMS, SET-OFFS, DEFENSES, DEBTS, OBLIGATIONS, COSTS, EXPENSES,
ACTIONS, CAUSES OF ACTION AND DAMAGES OF EVERY KIND, NATURE AND DESCRIPTION
WHATSOEVER, KNOWN OR UNKNOWN, FORESEEABLE OR UNFORESEEABLE, LIQUIDATED OR
UNLIQUIDATED, AND INSURED OR UNINSURED, WHICH BORROWER AND/OR ANY SUBSIDIARY
HERETOFORE, NOW AND FROM TIME TO TIME HEREAFTER OWNS, HOLDS OR HAS BY REASON OF
ANY MATTER, CAUSE OR THING WHATSOEVER, ARISING ON OR BEFORE THE DATE OF THIS
FIRST AMENDMENT FROM, RELATING TO OR IN CONNECTION WITH THE LOAN DOCUMENTS, THE
LOANS OR ANY OTHER OBLIGATIONS OF BORROWER TO AGENT AND LENDERS.


 


[Remainder of Page Intentionally Left Blank]


 


7

















 


IN
WITNESS WHEREOF,
Lenders, Borrower and Agent have caused this First Amendment to be executed and
delivered by their duly authorized officers as of the date first set forth
above.


 


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  CONTINENTAL MATERIALS
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Joseph J. Sum, Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  LASALLE BANK NATIONAL
  ASSOCIATION,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  as Agent and a Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  FIFTH THIRD BANK (CHICAGO),

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  



 


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