**Exhibit10.1**

 

**ExecutionVersion**

 

**FIRST AMENDMENT TO CREDITAGREEMENT**

** **

THISFIRST AMENDMENT TO CREDIT AGREEMENT (the “Amendment”), dated as of November18, 2009, is entered into by and among CONTINENTAL MATERIALS CORPORATION, aDelaware corporation (the “Company”), the financial institutions thatare or may from time to time become parties to the Credit Agreement referencedbelow (together with their respective successors and assigns, the “Lenders”and each, a “Lender”) and THE PRIVATEBANK AND TRUST COMPANY, an Illinoisstate chartered bank as Administrative Agent for each Lender (the “AdministrativeAgent”).  Capitalized terms used herein and not otherwisedefined shall have the meanings given to such terms in the Credit Agreementreferenced below.

 

WHEREAS,the Lender previously made available to the Company a credit facility pursuantto the terms and conditions of that certain Credit Agreement, dated as of April16, 2009, by and among the Company, the Lender and the Administrative Agent (asamended, restated or supplemented from time to time, the “Credit Agreement”);

 

WHEREAS,pursuant to the Credit Agreement, the Lender previously (i) made available tothe Company a revolving credit facility in the amount of $20,000,000 and (ii) fundeda term loan in the original principal amount of $10,000,000;

 

WHEREAS,the parties to this Amendment desire to amend the Credit Agreement to, amongother things, (i) reduce the Revolving Commitment to $15,000,000, (ii) modifythe definition of Adjusted EBITDA to exclude the operating results ofdiscontinued operations (profit or loss), (iii) modify the definition ofBorrowing Base to reduce the inventory cap from $10,000,000 to $7,500,000, (iv)increase the Non-Use Fee Rate from 0.250% to 0.375%, (v) modify the minimumAdjusted EBITDA requirements, and (vi) modify the calculation of the FixedCharge Coverage Ratio for the Computation Period ending June 30, 2010, in eachcase, all on the terms and conditions set forth herein; and

 

WHEREAS,as of the date of this Amendment, there exists an Event of Default under and asdefined in the Credit Agreement as a result of the Company’s failure to complywith the minimum Adjusted EBITDA requirement in Section 13.1.1 of theCredit Agreement for the period ended September 30, 2009 (the “ExistingCovenant Default”).

 

NOW,THEREFORE, in consideration of the premises, to induce the Lender andAdministrative Agent to enter into this Amendment, and for other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, it is hereby agreed by the parties hereto as follows:

 

# Section 1.  Incorporation of Recitals.  The foregoing recitals are herebyincorporated into and made a part of this Amendment.

#  

# Section 2.  Amendment of the Credit Agreement.  It is hereby agreed and understood that,subject to the complete fulfillment and performance of the conditions precedentset forth in Section 6 of this Amendment, the Credit Agreement is herebyamended and modified as follows:

 

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## A.                                   Section 1.1.  Section 1.1 of the Credit Agreement ishereby amended as follows:

##  

### (1)                                  The definitionof “Adjusted EBITDA” is hereby deleted in its entirety and replaced withthe following:

###  

“Adjusted EBITDA means EBITDA for theapplicable Computation Period plus any gains from Asset Dispositions,any extraordinary gains and any gains from discontinued operations (in eachcase, any gains shall be net of all costs and expenses incurred in connectiontherewith and such gains shall only be included to the extent such gains weresubtracted in the calculation of EBITDA). Notwithstanding anything to the contrary contained in this Agreement orany other Loan Document, the calculation of Adjusted EBITDA shall exclude theoperating results of discontinued operations (profit or loss).”

 

### (2)                                  The inventorycap (originally set at $10,000,000) contained in the definition of “BorrowingBase” is hereby reduced to $7,500,000.

###  

### (3)                                  The Non-Use FeeRate (originally set at 0.250%) contained in the definition of “ApplicableMargin” is hereby deleted in its entirety and replaced with 0.375%.

###  

### (4)                                  The definitionof “Revolving Commitment” is hereby deleted in its entirety and replacedwith the following:

###  

“Revolving Commitment means $15,000,000, asreduced from time to time pursuant to Section 6.1.”

 

## B.                                     Section 11.13.1.  Section 11.13.1 (Minimum AdjustedEBITDA) of the Credit Agreement is hereby deleted in its entirety and replacedwith the following:

##  

### “11.13.1      MinimumAdjusted EBITDA.  Not permitAdjusted EBITDA for any Computation Period to be less than the applicableamount set forth below for such Computation Period:

 
| **Computation  Period Ending**                            | ** ** | **Adjusted EBITDA** | ** ** |
|-----------------------------------------------------------|------------|---------------------|------------|
|                                                      |       |                |       |
| June 30, 2009                                             |       | $                   | 7,500,000  |   |
|                                                      |       |                |       |
| September 30, 2009                                        |       | $                   | 8,150,000  |   |
|                                                      |       |                |       |
| December 31, 2009                                         |       | $                   | 4,500,000  |   |
|                                                      |       |                |       |
| March 31, 2010                                            |       | $                   | 4,000,000  |   |
|                                                      |       |                |       |
| June 30, 2010                                             |       | $                   | 3,250,000  |   |
|                                                      |       |                |       |
| September 30, 2010                                        |       | $                   | 5,250,000  |   |
|                                                      |       |                |       |
| December 31, 2010 and each Fiscal Quarter end  thereafter |       | $                   | 6,500,000  | ” |

 

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## C.                                     Section 11.13.2.  Section 11.13.2 (Minimum Fixed ChargeCoverage Ratio) of the Credit Agreement is hereby deleted in its entirety andreplaced with the following:

##  

## “11.13.2      Minimum Fixed ChargeCoverage Ratio.  Not permitthe Fixed Charge Coverage Ratio for any Computation Period to be less than 1.30to 1.00 for such Computation Period. Notwithstanding the foregoing, the Fixed Charge Coverage Ratio (and eachof the components thereof) for the Computation Period ending June 30, 2010 willbe calculated on a year-to-date basis (as opposed to a trailing twelve monthbasis).”

##  

# Section 3.  Waiver.  It is hereby agreed and understood that,subject to the complete fulfillment and performance of the conditions precedentset forth in Section 6 of this Amendment, the Lender hereby waives theExisting Covenant Default and all of its rights and remedies with respect tothe Existing Covenant Default.  Thewaiver hereunder will not in any way operate as (i) an amendment ormodification of the Credit Agreement or any related agreement, (ii) a waiver ofrepayment by the Company of any portion of the outstanding Obligations underthe Credit Agreement, or (iii) a waiver of, or consent with respect to, anyexisting or future Event of Default, or a waiver or abandonment to any right orremedy available to the Lender with respect to any such Event of Default, allof which rights are reserved.

#  

# Section 4.  Revolving Loan Note and Term Loan Note.  It is hereby agreed and understood that theRevolving Loan Note and the Term Loan Note remain in full force and effect andthat the Obligations evidenced thereby remain due and payable on the terms setforth therein and in the Credit Agreement, except that the face amount of theRevolving Loan Note shall be reduced from $20,000,000 to $15,000,000 upon the effectivenessof this Amendment.  The Revolving LoanNote shall be deemed amended to reflect such reduction upon the effectivenessof this Amendment.

#  

# Section 5.  Amendmentof the Loan Documents.  It is herebyagreed and understood by the Lender and the Company that, subject to thecomplete fulfillment and performance of the conditions precedent set forth in Section6 of this Amendment and effective as of the effective date of thisAmendment, each reference to the Credit Agreement, the Revolving Loan, the TermLoan, the Revolving Loan Note, the Term Loan Note, and/or any other definedterms or any Loan Documents in any Loan Documents shall be deemed to be areference to any such defined terms or such agreements as such terms oragreements are amended or modified by this Amendment.  Any breach of any representation, warranty,covenant or agreement contained in 

 

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#  

# this Amendment shall be deemed to be an Event of Default for allpurposes of the Credit Agreement.

#  

# Section 6.  ConditionsPrecedent.  The effectiveness of thisAmendment and the obligations of the Lender hereunder are subject to thesatisfaction, or waiver by the Lender, of the following conditions precedent onor before the date hereof (unless otherwise provided or agreed to by theLender) in addition to the conditions precedent specified in Section 12.2of the Credit Agreement:

#  

## A.                                   The Companyshall have (i) paid to the Lender a waiver and amendment fee of $20,000, and (ii)paid and/or reimbursed all reasonable fees, costs and expenses relating to thisAmendment and owed to the Lender pursuant to the Credit Agreement in connectionwith this Amendment.

##  

## B.                                     The Companyshall have delivered, or caused to be delivered, original fully completed,dated and executed originals of (i) this Amendment, and (ii) such othercertificates, instruments, agreements or documents as the Lender may reasonablyrequest (each of the foregoing certificates, instruments, agreements anddocuments described in this Section 6(B) (other than this Amendment)which constitute Loan Documents are hereinafter referred to collectively as the“Other Documents”).

##  

## C.                                     The followingstatements shall be true and correct and the Company, by executing anddelivering this Amendment to the Lender and the Administrative Agent, herebycertifies that the following statements are true and correct as of the datehereof:

##  

### (1)                                  Other than asexpressly contemplated by this Amendment, since the date of the most recentfinancial statements furnished by the Company to the Lender (which financialstatements were true and correct in all material respects and otherwiseconformed to the requirements set forth in the Credit Agreement for suchfinancial statements), there shall have been no change which has had or willhave a material adverse effect on the business, operations, properties,condition (financial or otherwise) or prospects of the Loan Parties taken as awhole;

###  

### (2)                                  Therepresentations and warranties of the Company set forth in the Credit Agreementand the other Loan Documents (as amended by this Amendment) are true andcorrect in all respects on and as of the date of this Amendment with the sameeffect as though made on and as of such date, except to the extent suchrepresentations and warranties expressly relate to an earlier date, and noUnmatured Event of Default or Event of Default (other than the ExistingCovenant Default waived in this Amendment) has occurred and is continuing; and

###  

### (3)                                  No consents,licenses or approvals are required in connection with the execution, deliveryand performance by the Company of this Amendment or the Other Documents or thevalidity or enforceability against the Company of this 

 

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### Amendment or the OtherDocuments which have not been obtained and delivered to the Lender.

###  

# Section 7.  Miscellaneous.

#  

## A.                                   Except asexpressly amended and modified by this Amendment, the Credit Agreement and theother Loan Documents are and shall continue to be in full force and effect inaccordance with the terms thereof.

##  

## B.                                     This Amendmentmay be executed by the parties hereto in counterparts, and all of suchcounterparts taken together shall be deemed to constitute one and the sameinstrument.

##  

## C.                                     This Amendmentshall be construed in accordance with and governed by the internal laws, andnot the laws of conflict, of the State of Illinois.

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## D.                                    The headingscontained in this Amendment are for ease of reference only and shall not beconsidered in construing this Amendment.

##  

## [SIGNATURE PAGES FOLLOW]

 

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INWITNESS WHEREOF, the parties hereto have caused this First Amendment to CreditAgreement to be duly executed as of the day and year first above written.

 
|   | **COMPANY:**                          |
|--------|---------------------------------------|
|   |                                  |
|   | CONTINENTAL MATERIALS CORPORATION     |
|   |                                  |
|   | By:                                   | /s/ Joseph J Sum |
|   |                                  | Joseph J. Sum |
|   |                                  | Chief  Financial Officer |
|   |                                  |   |
|   |                                  |   |
|   | **ADMINISTRATIVE  AGENT AND LENDER:** |
|   | ** **                            |
|   |                                  |
|   | THE PRIVATEBANK AND TRUST COMPANY     |
|   |                                  |
|   | By:                                   | /s/ Steven M. Cohen |
|   |                                  | Steven M. Cohen |
|   |                                  | Managing Director & Senior Vice President |

 

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**ACKNOWLEDGMENT, AGREEMENT,CONSENT**

**AND REAFFIRMATION OF LOAN PARTIES**

 

Eachof the undersigned Loan Parties, for good and valuable consideration, receiptof which is hereby acknowledged:  (a) herebyacknowledges receipt of a copy of the foregoing Amendment, acknowledges thatsuch Loan Party has read and reviewed the terms thereof, and acknowledges thatsuch Loan Party has been afforded an adequate opportunity to have the foregoingAmendment reviewed by such Loan Party’s counsel; (b) hereby consents to theterms and conditions of the foregoing Amendment; and (c) hereby acknowledgesand agrees that such Loan Party’s duties, obligations and liabilities to theAdministrative Agent and/or the Lender under the Guaranty and CollateralAgreement shall be continuing and shall remain in full force and effect againstsuch Loan Party irrespective of the amendments to the Credit Agreementcontained in the foregoing Amendment or any other amendments or modificationsto any of the other Loan Documents.

 

In addition to the foregoing, each of the undersignedLoan Parties (i) hereby ratifies, reaffirms and confirms its pledge,hypothecation, and grant of a continuing lien and first priority securityinterest in favor of the Administrative Agent in all of the assets of such LoanParty pledged to the Administrative Agent under the Guaranty and CollateralAgreement (subject to the terms and conditions set forth therein), and (ii) herebyacknowledges that such pledge shall continue in full force and effect securingthe Secured Obligations under and as defined in the Guaranty and CollateralAgreement notwithstanding the execution and delivery of the foregoingAmendment.

 

INWITNESS WHEREOF, each of the undersigned Loan Parties has duly executed thisAcknowledgment, Agreement, Consent and Reaffirmation of Loan Parties to theFirst Amendment to Credit Agreement as of November 18, 2009.

 
|   | MCKINNEY DOOR AND HARDWARE, INC. |
|--------|----------------------------------|
|   |                             |
|   |                             |
|   | By:                              | /s/ Joseph J Sum |
|   |                             | Joseph J. Sum |
|   |                             | Treasurer |
|   |                             |
|   | TRANSIT MIX CONCRETE CO.         |
|   |                             |
|   |                             |
|   | By:                              | /s/ Joseph J Sum |
|   |                             | Joseph J. Sum |
|   |                             | Treasurer |

 

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|   | TRANSIT MIX OF PUEBLO, INC.  |
|--------|------------------------------|
|   |                         |
|   |                         |
|   | By:                          | /s/ Joseph J Sum |
|   |                         | Joseph J. Sum |
|   |                         | Chief Financial Officer |
|   |                         |
|   | WILLIAMS  FURNACE CO.        |
|   |                         |
|   |                         |
|   | By:                          | /s/  Joseph J Sum |
|   |                         | Joseph  J. Sum |
|   |                         | Treasurer |
|   |                         |
|   | PHOENIX  MANUFACTURING, INC. |
|   |                         |
|   |                         |
|   | By:                          | /s/  Joseph J Sum |
|   |                         | Joseph  J. Sum |
|   |                         | Treasurer |
|   |                         |   |
|   | CASTLE  CONCRETE COMPANY     |
|   |                         |
|   |                         |
|   | By:                          | /s/  Joseph J Sum |
|   |                         | Joseph  J. Sum |
|   |                         | Treasurer |
|   |                         |   |
|   | EDENS  INDUSTRIAL PARK INC.  |
|   |                         |
|   |                         |
|   | By:                          | /s/  Joseph J Sum |
|   |                         | Joseph  J. Sum |
|   |                         | Treasurer |

 

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