Document:

Ex. 10.2

    Exhibit
      10.2

     

    ASSET
      PURCHASE AGREEMENT

     

    THIS
      ASSET PURCHASE AGREEMENT (“Agreement”) is entered into as of June 1, 2005, by
      and between G.K. Gymnastics, Inc. a Colorado corporation (“Seller”), and U.S.A.
      Connection, Inc., a Colorado Corporation (“Buyer”).

     

    R
      E C I T A L S

     

    Seller
      wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the Assets
      (as defined in Section 1), subject to and upon the terms and conditions
      hereinafter set forth.

     

    A
      G R E E M E N T

     

    It
      is
      agreed as follows:

     

    1. Sale
      and Purchase of Assets.
      Subject
      to and upon the terms and conditions set forth herein, Seller agrees to sell,
      assign, convey, transfer and deliver (“Transfer”) to Buyer and Buyer agrees to
      purchase from Seller, on the Closing Date (as defined in Section 10), the
      following assets (“Assets”):

     

    (a) All
      items
      of inventory, including, but not limited to goods for sale, supplies and
      inventory of equipment held for rental to customers, kits, and spare
      parts;

     

    (b) The
      right
      to use the name “Action Fashions” and all intangible rights thereto and all
      trade secrets, know how, customer lists, inventions and other intangible
      property used in the business of Seller; and

     

    (c) All
      computer printouts, software, databases and related items, copies of books
      and
      records and files related to the business of Seller and any of the
      Assets.

     

    Buyer
      acknowledges that the Assets do not include any cash, cash equivalents, accounts
      receivable or tax or other refunds due to Seller.

     

    2. Consideration.

     

    (a) In
      consideration of the Assets to be transferred by Seller, Buyer shall deliver
      to
      Seller a promissory note in the amount of $19,000 on the Closing
      Date.

     

    (b) The
      parties agree that the total consideration paid by Buyer shall be allocated
      among the Assets as follows: $19,000 shall be allocated towards the purchase
      of
      the inventory for sale.

     

    3. No
      Assumption of Indebtedness; Payment of Sales Tax.

     

    (a) Buyer
      is
      not assuming any liabilities or indebtedness of Seller in connection with the
      transactions contemplated hereby and shall have no liability for any such
      liabilities or indebtedness by reason of this Agreement or the transactions
      contemplated hereby.

     

    (b) Buyer
      shall be responsible for all sales and use taxes due with respect to this
      Agreement.

     

    4. Bulk
      Sales Law Compliance;Instruments of Transfer, Etc.

     

    (a) Buyer
      shall have given notice in compliance with the Colorado Commercial Code if
      required. Seller shall furnish to Buyer all information necessary to prepare
      the
      notice, including the names and business addresses used by Seller within the
      last three (3) years and the location of all of the assets to be transferred
      under this Agreement at least fifteen (15) business days before the Closing
      Date.

     

    (b) Seller
      shall deliver to Buyer on the Closing Date and thereafter upon Buyer’s request
      such bills of sale, assignments and other good and sufficient instruments of
      Transfer in form and substance satisfactory to Buyer and its counsel as are
      necessary to effectively Transfer all of Seller’s right, title and interest in
      the Assets to Buyer. At any time after the Closing Date, Seller shall execute,
      acknowledge and deliver to Buyer any further documents, assurances or other
      matters, and will take any other action consistent with the terms of this
      Agreement that may reasonably be requested by Buyer and as are necessary or
      desirable to carry out the purpose of this Agreement.

     

    5. Representations
      and Warranties of Seller.
      Seller
      represents, warrants and covenants to Buyer as of the date hereof and as of
      the
      Closing Date as follows:

     

    5.1 Corporate
      Organization.
      Seller
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Colorado.

     

    5.2 Power
      and Authority.
      Seller
      has all corporate power and authority to enter into and to carry out all of
      the
      terms of this Agreement and all other documents executed and delivered in
      connection herewith, including, but not limited to, those instruments of
      Transfer described in Section 4 of this Agreement (collectively “Documents”).
      All corporate action on the part of Seller, its officers, directors and
      shareholders necessary for the authorization, execution, delivery and
      performance of the Documents by Seller has been taken and no further corporate
      or other authorization on the part of Seller is required to consummate the
      transactions provided for in the Documents. When executed and delivered by
      Seller, the Documents shall constitute the valid and legally binding obligations
      of Seller enforceable in accordance with their respective terms. Neither the
      execution, delivery nor performance of the Documents by Seller shall (i) violate
      or result in a breach of any provisions of Seller’s articles of incorporation or
      bylaws, (ii) constitute a default or result in a breach of any contract or
      agreement to which it is a party or its assets or properties are bound, or
      (iii)
      violate any order, writ, injunction, decree, judgment or other restriction
      of
      any court, administrative agency or governmental body.

     

    5.3 Title
      to Assets.
      Seller
      has and will Transfer to Buyer good and marketable title to the Assets, free
      and
      clear of all mortgages, pledges, security interests, liens, claims, charges,
      restrictions and encumbrances.

     

    5.4 Inventory.
      The
      inventory, including the inventory of rental equipment on Schedule 5.4 hereto
      is
      of merchantable quality, free of defects and salable (or usable) in the ordinary
      course of business of Seller.

     

    5.5 Furniture
      and Equipment.
      All of
      the items of furniture and equipment set forth on the Schedule 5.5 hereto are
      suitable for the purpose or purposes for which it is being used and is in such
      good and proper condition and repair as to permit the continued use by Buyer
      in
      accordance with its intended purpose.

     

    5.6 Lease.
      None.

     

    5.7 Liabilities.
      Seller
      is paying and will pay all of its liabilities, debts and obligations outstanding
      as of the Closing Date.

     

    5.8 No
      Governmental or Other Proceeding or Litigation.
      No
      order of any court or administrative agency is in effect which restrains or
      prohibits the transactions contemplated hereby, and no suit, action,
      investigation, inquiry or proceeding by any governmental body or other person,
      or legal or administrative proceeding has been instituted or threatened which
      questions the validity or legality of the transactions contemplated hereby.
      There are no actions or proceedings pending or threatened arising out of or
      related to the Assets. There is no voluntary action or proceeding affecting
      the
      Assets pending or the commencement of which is contemplated by Seller, and
      to
      the best knowledge of Seller there is no involuntary action or proceeding
      pending or the commencement of which is threatened or contemplated affecting
      the
      Assets against Seller, under any federal, state or local bankruptcy, insolvency,
      reorganization, receivership, attachment or other similar law.

     

    5.9 Approvals
      and Consents.
      There
      are no permits, consents or approvals of public authorities, federal, state
      or
      local, or of any third party necessary for the consummation of the transactions
      contemplated hereby.

     

    5.10 Financial
      Statements.
      Seller
      has delivered to Buyer the unaudited financial statements of Seller and such
      financial statements are complete and correct, and fairly and accurately
      presents the financial position of Seller as of the date or periods
      indicated.

     

    5.11 Absence
      of Undisclosed Liabilities.
      Except
      as previously disclosed to Buyer in writing, Seller has no material liabilities
      or material obligations of any nature, whether accrued, absolute, contingent
      or
      otherwise, and whether due or to become due, which are not reflected in the
      Seller Balance Sheet. There is no fact known to Seller which materially
      adversely affects or in the future is likely to materially adversely affect
      the
      businesses, properties, the Assets or operations of Seller which has not been
      set forth in the Seller Balance Sheet or previously disclosed to Buyer in
      writing.

     

    5.12 Survival
      of Representations and Warranties.
      The
      representations and warranties of Seller made herein shall not be affected
      by
      any information furnished to or investigations made by Buyer, or any of its
      employees or representatives in connection with the subject matter of this
      Agreement and shall survive the execution and delivery of this Agreement and
      the
      consummation of the transactions contemplated hereby for a period commencing
      with the date hereof and expiring on December 31, 2005.

     

    6. Representations
      and Warranties of Buyer.
      Buyer
      represents, warrants and covenants to Seller as of the date hereof and as of
      the
      Closing Date as follows:

     

    6.1 Organization.
      Buyer
      is a Colorado Corporation validly existing and in good standing under the laws
      of the State of Colorado.

     

    6.2 Power
      and Authority.
      Buyer
      has all requisite partnership power and authority to enter into and to carry
      out
      all of the terms of this Agreement and the other Documents executed and
      delivered in connection herewith. All corporate action on the part of Buyer
      and
      its partners necessary for the authorization, execution, delivery and
      performance of the Documents by Buyer has been taken and no further
      authorization on the part of Buyer is required to consummate the transactions
      provided for in the Documents. When executed and delivered by Buyer, the
      Documents shall constitute the valid and legally binding obligations of Buyer
      enforceable in accordance with their respective terms.

     

    6.3 Survival
      of Representations and Warranties.
      The
      representations and warranties of Buyer made herein shall not be affected by
      any
      information furnished to or investigations made by Seller, or any of its
      employees or representatives in connection with the subject matter of this
      Agreement and shall survive the execution and delivery of this Agreement and
      the
      consummation of the transactions contemplated hereby for a period commencing
      with the date hereof and expiring on December 31, 2005.

     

    7. Certain
      Additional Understandings and Agreements.

     

    7.1 [Intentionally
      Omitted]

     

    7.2 Assignment
      and Amendment to Lease.
      None.

     

    7.3 Prorations.
      None.

     

    7.4 Agreement
      to Perform Necessary Acts.
      Each
      party agrees to perform any further acts and execute and deliver any documents
      which may be reasonably necessary to carry out the provisions and purposes
      of
      this Agreement, including, but not limited to, the relinquishment or changing
      of
      Seller’s dba to “Deep Six Enterprises” or a similar name.

     

    7.5 Notification
      of Creditors.
      On the
      Closing Date, Buyer shall notify the creditors listed on Schedule 7.6 that
      Seller is not responsible for goods ordered by Buyer after the Closing
      Date.

     

    8. Conditions
      to Buyer’s Obligations.
      Buyer’s
      obligations hereunder are subject to the fulfillment, on or before the Closing
      Date, of the following conditions (any of which may be waived in writing by
      Buyer):

     

    8.1 Representations
      and Warranties.
      The
      representations and warranties of Seller contained herein shall have been true
      and correct in all material respects as of the Closing Date.

     

    8.2 Performance
      of Covenants.
      Seller
      shall have performed and complied in all material respects with all covenants,
      agreements, terms and conditions and executed all documents required by this
      Agreement to be performed, complied with or executed by it prior to or on the
      Closing Date.

     

    8.3 Instruments
      of Transfer.
      Seller
      shall have delivered to Buyer a bill of sale for the Assets and such other
      good
      and sufficient instruments of Transfer in form and substance satisfactory to
      Buyer and its counsel as shall be necessary to effectively Transfer all of
      the
      Seller’s right, title and interest in the Assets to Buyer.

     

    8.4 No
      Governmental or Other Proceeding or Litigation.
      No
      order of any court or administrative agency shall be in effect which restrains
      or prohibits the transactions contemplated hereby, and no suit, action,
      investigation, inquiry or proceeding by any governmental body or other person
      or
      legal or administrative proceeding shall have been instituted or threatened
      which questions the validity or legality of the transactions contemplated
      hereby.

     

    8.5 Bulk
      Sale Compliance.
      The
      Notice to Creditors of Bulk Sale shall have been published and all requirements
      of the California Commercial Code relating to “Bulk Sales” shall have been
      complied with by the parties.

     

    8.6 [Intentionally
      Omitted]

     

    8.7 Approval
      and Consents.
      All
      permits, consents or approvals of applications to public authorities, federal,
      state or local, and all approvals of any third persons, the granting of which
      are necessary for the consummation of the transactions contemplated hereby
      shall
      have been obtained.

     

    9. Conditions
      to Seller’s Obligations.
      Seller’s obligations hereunder are subject to the fulfillment, on or before the
      Closing Date, of the following conditions (any of which may be waived in writing
      by Seller):

     

    9.1 Representations
      and Warranties.
      The
      representations and warranties of Buyer contained herein shall have been true
      and correct in all material respects as of the Closing Date.

     

    9.2 Performance
      of Covenants.
      Buyer
      shall have performed and complied in all material respects with all covenants,
      agreements, terms and conditions and executed all documents required by this
      Agreement to be performed, complied with or executed by it prior to or on the
      Closing Date.

     

    10. Closing.
      The
      closing of the sale and purchase of the Assets and the other transactions
      contemplated by this Agreement shall take place at the offices of Seller
      (“Closing Date”).

     

    11. Indemnification
      by Seller.

     

    11.1 General.
      Seller
      agrees to indemnify, defend and hold harmless Buyer against and in respect
      of
      any and all claims, demands, losses, costs, expenses, liabilities and damages,
      including interest, penalties, and reasonable attorneys’ fees, that Buyer shall
      incur or suffer which: (i) arise, result from or relate to any material
      inaccuracy in or material breach or nonfulfillment of any of the
      representations, warranties, covenants or agreements made by Seller in this
      Agreement, the schedules and exhibits hereto or in any other Document furnished
      to such party under this Agreement; and (ii) any liability of Seller or Seller’s
      business arising out of events occurring, products or services sold or any
      activities of Seller prior to the Closing Date whenever such liabilities may
      arise.

     

    11.2 Procedures;
      Rights to Separate Counsel.
      In the
      event Buyer receives a complaint, claim or other notice of any loss, claim
      or
      damage, liability or action, giving rise to a claim for indemnification under
      this Section 11, Buyer shall promptly notify the Seller of such complaint,
      notice, claim or action, and Seller shall have the right to investigate and
      defend any such loss, claim, damage, liability or action. Buyer shall have
      the
      right to employ separate counsel in any such action and to participate in the
      defense thereof but the fees and expenses of such counsel shall not be at the
      expense of Seller, unless Seller fails to promptly defend, in which case the
      fees and expenses of such separate counsel shall be borne by Seller. In no
      event
      shall Seller be obligated to indemnify Buyer for any settlement of any claim
      or
      action effected without Seller’s prior written consent.

     

    12. General.

     

    12.1 Notices.
      All
      notices and other communications hereunder shall be in writing and shall be
      deemed to have been given when delivered personally or, if mailed, three (3)
      business days after having been mailed by registered or certified mail with
      return receipt requested, postage prepaid, addressed:

     

    (a) If
      to
      Buyer: U.S.A.
      Connections, Inc.

    PO
      Box
      235472

    Encinitas,
      CA 92024  

    

    (b) If
      to
      Seller: G.K.
      Gymnastics, Inc.

    2026
      Lowe

    Fort
      Collins, CO 80525 

    

    or
      at
      such other address as shall have been furnished to the other in writing.

    

    12.2 Successors
      and Assigns.
      Neither
      this Agreement nor the rights or obligations of Seller under this Agreement
      shall be assignable without the written consent of Buyer and any such purported
      assignment without the written consent of Buyer shall be void and with effect.
      Except as otherwise provided herein, this Agreement and all covenants and
      agreements contained herein shall be binding upon and inure to the benefit
      of
      the parties hereto, their respective successors, representatives and
      assigns.

    

    12.3 Arbitration.
      Any
      controversy or claim arising out of or relating to this Agreement or the breach
      hereof, except as stated below, shall be settled by arbitration in accordance
      with the rules of the American Arbitration Association then in effect. The
      decision of the arbitrator shall, except for mistakes of law, be final and
      binding upon the parties hereto, and judgment upon the award rendered by the
      arbitrator, which shall, in the case of damages, be limited to actual damages
      proven in the arbitration, may be entered in any court having jurisdiction
      thereof.

    

    There
      shall be a single arbitrator who shall be an existing or former judge of a
      court
      of record within the United States or an attorney in good standing admitted
      to
      practice for a period of at least ten (10) years within the United States.
      No
      arbitration shall involve parties other than the parties hereto and their
      respective successors and assigns or be in any respect binding with respect
      to
      any such other parties. The situs of the arbitration will be in the State of
      Colorado.

    

    The
      parties to any arbitration arising hereunder shall have the right to take
      depositions and to obtain discovery regarding the subject matter of the
      arbitration and to use and exercise all of the same rights, remedies and
      procedures, and be subject to all of the same duties, liabilities, and
      obligations in the arbitration with respect to the subject matter thereof,
      as if
      the subject matter of the arbitration were pending in a civil action before
      a
      court of highest jurisdiction in the state where the arbitration is held. The
      arbitrator shall have the power to enforce said discovery by imposition of
      same
      terms, conditions, consequences, liabilities, sanctions and penalties as can
      be
      or maybe imposed in like circumstances in a civil action by a court of highest
      jurisdiction of the state in which the arbitration is held, except the power
      to
      order the arrest or imprisonment of a person.

    

    If
      any
      party commences an action, either arbitration or court proceedings, against
      any
      other party arising out of or in connection with this Agreement, the prevailing
      party or parties shall be entitled from the losing party or parties, both
      attorney’s fees and costs of the arbitration and/or suit as part of the judgment
      rendered.

     

    12.4 Attorneys’
      Fees.
      If any
      legal action or any mutually agreed upon arbitration or other proceeding is
      brought for the enforcement of this Agreement or because of an alleged dispute,
      breach, default or misrepresentation in connection with any of the provisions
      of
      this Agreement, the successful or prevailing party shall be entitled to recover
      reasonable attorneys’ fees and other costs incurred in that action or
      proceeding, in addition to any other relief to which it may be
      entitled.

     

    12.5 Entire
      Agreement.
      This
      Agreement embodies the entire agreement and understanding among the parties
      hereto with respect to the subject matter hereof.

     

    12.6 Modification.
      This
      Agreement may be changed, waived, discharged or terminated only by an instrument
      in writing signed by the party against which enforcement of such change, waiver,
      discharge or termination is sought.

     

    12.7 Governing
      Law.
      This
      Agreement shall be construed in accordance with and governed by the laws of
      the
      State of Colorado.

     

    12.8 Counterparts.
      This
      Agreement may be executed in several counterparts, each of which is an original
      but all of which shall constitute one and the same instrument.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    IN
      WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
      on
      the day and year first hereinabove written.

     

    “BUYER”

     

    U.S.A.
      Connections, Inc.

    a
      Colorado corporation

    

    

    __________________________________________

    By:
      

    Its:
      

    

    

    

    “SELLER”

    

    G.K.
      Gymnastics, Inc.

    a
      Colorado corporation

    

    

    __________________________________________

    By:
      

    Its:Eighth Amendment to Amended and Restated Loan Agreement dated March 8, 2007

     

    Exhibit
      10.1

     

    EIGHTH
      AMENDMENT

     

    TO
      AMENDED And restated LOAN AGREEMENT

     

    THIS
      EIGHTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
      (“Eighth
      Amendment”) is made as of this 8th day of March, 2007, by and among BANK
      OF AMERICA, N.A.
      (“Bank
      of America”) (as successor-in-interest to Fleet Capital Corporation), with an
      office at One South Wacker Drive, Suite 3400, Chicago, Illinois 60606,
      individually as a Lender and as Agent (“Agent”) for itself and any other
      financial institution which is or becomes a party hereto (each such financial
      institution, including Fleet, is referred to hereinafter individually as a
      “Lender” and collectively as the “Lenders”), the CANADIAN
      PARTICIPANTS party
      hereto, the U.K.
      PARTICIPANTS party
      hereto, BANK
      OF AMERICA, N.A.
      (acting
      through its Canada branch) (“Canadian Agent”), BANK
      OF AMERICA, N.A.,
      London
      branch (as successor-in-interest to Fleet National Bank, London branch, trading
      as FleetBoston Financial), individually as a Lender and as U.K. Agent (“U.K.
      Agent”), WELLS
      FARGO FOOTHILL, LLC,
      as
      Syndication Agent, LASALLE
      BANK NATIONAL ASSOCIATION,
      as
      Documentation Agent, the LENDERS, KATY
      INDUSTRIES, INC.,
      a
      Delaware corporation, with its chief executive office and principal place of
      business at 2461 South Clark Street, Suite 630, Arlington, Virginia 22202
      (“Katy” or “U.S. Borrower”), WOODS
      INDUSTRIES (CANADA) INC.,
      a
      Canadian corporation with its chief executive office and principal place of
      business at 375 Kennedy Road, Scarborough, Ontario M1K 2A3 (“Woods Canada” or
“Canadian Borrower”), CEH
      LIMITED (“CEH”),
      a private limited company incorporated under the laws of England and Wales
      and
      registered with Company No. 4992300 whose registered office is Cardew Way,
      Redruth Cornwall, TR15 1ST, England and CONTICO
      MANUFACTURING LIMITED (“CML”
      and together with CEH, collectively, “U.K. Borrower”), a private limited company
      incorporated under the laws of England and Wales and registered with Company
      No.
      1338772 whose registered office is Cardew Way, Redruth Cornwall, TR15 1ST,
      England. Katy, Woods Canada, CEH and CML are sometimes hereinafter referred
      to
      individually as a “Borrower” and collectively as “Borrowers.”

     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      Agent, Lenders, Canadian Participants, U.K. Participants, Canadian Agent, U.K.
      Agent and Borrowers (other than CML) entered into a certain Amended and Restated
      Loan Agreement dated as of April 20, 2004, as amended by a certain First
      Amendment to Amended and Restated Loan Agreement dated June 29, 2004 by and
      among Agents, Lenders and Borrowers (other than CML), by a certain Second
      Amendment to Amended and Restated Loan and Security Agreement dated March 29,
      2005 by and among Agents, Lenders and Borrowers (other than CML), by a certain
      Third Amendment to Amended and Restated Loan and Security Agreement dated April
      13, 2005 by and among Agents, Lenders and Borrowers (other than CML), by a
      certain Fourth Amendment to Amended and Restated Loan and Security Agreement
      dated June 8, 2005 by and among Agents, Lenders and Borrowers (other than CML),
      by a certain Fifth Amendment to Amended and Restated Loan Agreement dated as
      of
      August 4, 2005 by and among Agent, Lenders and Borrowers (other than CML),
      and
      by a certain Sixth Amendment to Amended and Restated Loan Agreement dated March
      9, 2006 by and among Agents, Lenders and Borrowers (other than CML) and by
      a
      certain Seventh Amendment to Amended and Restated Loan and Security Agreement
      dated November 28, 2006 by and among Agents, Lenders and Borrowers (said Loan
      Agreement, as so amended, is hereinafter referred to as the “Loan Agreement”);
      and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
      Borrowers desire to amend and modify certain provisions of the Loan Agreement
      pursuant to the terms and conditions hereof;

     

    WHEREAS,
      subject to the terms and conditions hereof, Agent, Lenders, Canadian
      Participants, U.K. Participants, U.K. Agent and Canadian Agent are willing
      to so
      amend and modify the Loan Agreement; and

     

    NOW
      THEREFORE, in consideration of the premises, the mutual covenants and agreements
      herein contained, and any extension of credit heretofore, now or hereafter
      made
      by Agent and Lenders to Borrowers, the parties hereto hereby agree as
      follows:

     

    
      	1.  	
              Definitions.
                All capitalized terms used herein without definition shall have the
                meanings given to them in the Loan
                Agreement.

            

    

     

    
      	2.  	
              Amended
                Definitions.
                On the Eighth Amendment Effective Date, the definitions of “Availability
                Block” and “U.S. Borrowing Base” are hereby deleted and the following is
                inserted in their stead.

            

    

     

    “Availability
      Block
      - Five
      Million Dollars ($5,000,000) during the first three calendar quarters of each
      calendar year and Seven Million Five Hundred Thousand Dollars ($7,500,000)
      during the fourth calendar quarter of each calendar year.

     

    *
      *
      *

     

    U.S.
      Borrowing Base
      - as at
      any date of determination thereof, an amount equal to the lesser
      of:

     

    
      	 	
              (i)

            	
              the
                U.S. Revolving Loan Commitment, or

            

    

     

    
      	 	
              (ii)

            	
              an
                amount equal to:

            

    

     

    (a) 85%
      of
      the net amount of Eligible Accounts of U.S. Loan Parties (as defined below)
      outstanding at such date; plus

     

    (b) the
      lesser of (1) $60,000,000 or (2) 85% of the value of the Net Orderly Liquidation
      Value of Eligible Inventory of U.S. Loan Parties at such date; plus

     

    (c) to
      the
      extent not included in the U.K. Borrowing Base or the Canadian Borrowing Base
      as
      evidenced by a Borrowing Base Certificate, 85% of the net amount of Eligible
      Accounts of U.K. Loan Parties (other than CML) outstanding at such date;
      plus

     

    (d) to
      the
      extent not included in the U.K. Borrowing Base or the Canadian Borrowing Base
      as
      evidenced by a Borrowing Base Certificate, the lesser of (1) $6,000,000 or
      (2)
      85% of the Net Orderly Liquidation Value of Eligible Inventory of U.K. Loan
      Parties (other than CML) at such date; minus

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e) the
      sum
      of (1) the Hedge Reserve applicable to U.S. Loan Parties, (2) Dilution Reserves
      applicable to U.S. Loan Parties, (3) Rent Reserves applicable to U.S. Loan
      Parties, (4) the Revolving Loan Repayment Reserve applicable to U.S. Loan
      Parties, (5) the PAYE Reserve (to the extent Eligible Accounts and Eligible
      Inventory of U.K. Loan Parties (other than CML) are included in the U.S.
      Borrowing Base), (6) the aggregate amount of other reserves applicable to U.S.
      Loan Parties, if any, established by Agent in the exercise of its Permitted
      Discretion against Eligible Accounts and Eligible Inventory and (7) the
      Availability Block.”

     

    provided
      that Agent, in the exercise of its Permitted Discretion, may (a) increase or
      decrease reserves against Eligible Accounts Receivable and Eligible Inventory
      and (b) reduce the advance rates provided in this definition, or restore
      such advance rates to any level equal to or below the advance rates in effect
      as
      of the Closing Date.

     

    For
      purposes hereof, (1) the net amount of Eligible Accounts at any time shall
      be
      the face amount of such Eligible Accounts, less any and all returns, rebates,
      discounts (which may, at Agent’s option, be calculated on shortest terms),
      credits allowance or excise taxes of any nature at any time issued, owing,
      claimed by Account Debtors, granted, outstanding or payable in connection with
      such accounts at such time and (2) the amount of Eligible Inventory shall be
      determined on a first-in, first-out, lower of cost or market basis in accordance
      with GAAP, with costs adjusted for differences between standard and actual
      costs.”

     

    
      	3.  	
              Revolving
                Loan Commitments.
                As of the Eighth Amendment Effective Date, the aggregate amount of
                Revolving Loan Commitments shall be reduced from Ninety Million Dollars
                ($90,000,000) to Eighty Million Dollars ($80,000,000) and each Lender’s
                Revolving Loan Commitment shall be correspondingly reduced pro rata
                to the
                amount set forth below such Lender’s signature on the signature page to
                this Eighth Amendment. Agents and Lenders hereby waive any required
                notice
                before any such reduction in the Revolving Loan Commitments become
                effective.

            

    

     

    
      	4.  	
              Financial
                Covenants.
                Upon the Eighth Amendment Effective Date, Exhibit
                7.3
                attached to the Loan Agreement shall be deemed deleted and Exhibit
                7.3
                attached hereto and incorporated herein shall be inserted in its
                stead.

            

    

     

    
      	5.  	
              Amendment
                Fee.
                In order to induce Agent and Lenders to enter into this Eighth Amendment,
                Borrowers agree to pay to Agent for the ratable benefit of U.S. Lenders
                an
                amendment fee in the amount of $116,250. Said fee shall be due and
                payable
                and shall be deemed fully earned and non-refundable on the Eighth
                Amendment Effective Date.

            

    

     

    
      	6.  	
              Condition
                Precedent.
                This Eighth Amendment shall become effective
                upon:

            

    

     

    (x) the
      execution and delivery of this Eighth Amendment by each of Borrowers, Agents
      and
      Lenders; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (y) Borrower
      shall have paid to Agent the amendment fee referred to in Section 5 of the
      Eighth Amendment.

     

    The
      date
      on which such condition precedent is satisfied shall be referred to as the
      “Eighth Amendment Effective Date.”

     

    
      	7.  	
              Continuing
                Effect.
                Except as otherwise specifically set out herein, the provisions of
                the
                Loan Agreement shall remain in full force and
                effect.

            

    

     

    
      	8.  	
              Governing
                Law.
                This Eighth Amendment and the obligations arising hereunder shall
                be
                governed by, and construed and enforced in accordance with, the laws
                of
                the State of Illinois applicable to contracts made and performed
                in such
                state, without regard to the principles thereof regarding conflicts
                of
                laws.

            

    

     

    
      	9.  	
              Counterparts.
                This Eighth Amendment may be executed in any number of separate
                counterparts, each of which shall, collectively and separately, constitute
                one agreement.

            

    

     

    (Signature
      Page Follows)

     

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    (Signature
      Page to Eighth Amendment to

    Amended
      and Restated Loan and Security Agreement)

     

    IN
      WITNESS WHEREOF,
      this
      Eighth Amendment has been duly executed on the day and year specified at the
      beginning of this Eighth Amendment.

     

    

    
      	 	
              KATY
                INDUSTRIES, INC.

               

              By:
                /s/ Amir Rosenthal

              Name:
                Amir Rosenthal

              Title:
                Vice President and CFO

               

            

    

    

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    

    (Signature
      Page to Eighth Amendment to

    Amended
      and Restated Loan and Security Agreement)

     

    

    
      	 	
              CEH
                LIMITED

               

              By:
                /s/ Christopher W. Anderson

              Name:
                Christopher W. Anderson

              Title:
                Authorized Manager

               

              and

               

              By:
                /s/ Christopher Lacovara

              Name:
                Christopher Lacovara

              Title:
                Authorized Manager

               

            
	 	
              CONTICO
                MANUFACTURING LIMITED

               

              By:
                /s/ Christopher W. Anderson

              Name:
                Christopher W. Anderson

              Title:
                Authorized Manager

               

              and

               

              By:
                /s/ Christopher Lacovara

              Name:
                Christopher Lacovara

              Title:
                Authorized Manager

               

            

    

    

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    

    (Signature
      Page to Eighth Amendment to

    Amended
      and Restated Loan and Security Agreement)

     

    

    
      	 	
              WOODS
                INDUSTRIES (CANADA) INC.

               

              By:
                /s/ Amir Rosenthal

              Name:
                Amir Rosenthal

              Title:
                Secretary

               

            

    

    

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    

    (Signature
      Page to Eighth Amendment to

    Amended
      and Restated Loan and Security Agreement)

     

    

    
      	 	
              BANK
                OF AMERICA, N.A.,

               

              as
                predecessor-in-interest to Fleet Capital Corporation,

              as
                Agent and as a Lender

               

              By:
                /s/ Jason Riley

              Name:
                Jason Riley

              Title:
                Vice President

               

              Revolving
                Loan Commitment: $32,727,200

              (40.909%)

               

            

    

    

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    

    (Signature
      Page to Eighth Amendment to

    Amended
      and Restated Loan and Security Agreement)

     

    

    
      	 	
              WELLS
                FARGO FOOTHILL LLC,
                

              as
                Syndication Agent and Lender

               

              By:
                /s/ Yelena Kravchuk

              Name:
                Yelena Kravchuk

              Title:
                Assistant Vice President

               

              Revolving
                Loan Commitment: $21,818,400

              (27.273%)

            

    

    

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    

    (Signature
      Page to Eighth Amendment to

    Amended
      and Restated Loan and Security Agreement)

     

    

    
      	 	
              LASALLE
                BANK NATIONAL ASSOCIATION,
                

              as
                Documentation Agent and as a Lender

               

              By:
                /s/ Mark Mital

              Name:
                Mark Mital

              Title:
                Senior Vice President

               

              Revolving
                Loan Commitment: $18,181,600

              (22.727%)

            

    

    

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    

    (Signature
      Page to Eighth Amendment to

    to
      Amended and Restated Loan and Security Agreement)

     

    

    
      	 	
              UPS
                CAPITAL CORPORATION,
                as a Lender

               

              By:
                /s/ John P. Holloway

              Name:
                John P. Holloway

              Title:
                Director of Portfolio Management

               

              Revolving
                Loan Commitment: $7,272,800

              (9.091%)

            

    

    

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    

    (Signature
      Page to Eighth Amendment to

    Amended
      and Restated Loan and Security Agreement)

     

    

    
      	 	
              BANK
                OF AMERICA, N.A.,
                London branch, 

              as
                U.K. Agent and U.K. Lender

               

              By:
                /s/ Justin Charles Van Ast

              Name:
                Justin Charles Van Ast

              Title:
                Vice President

               

            

    

    

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    

    (Signature
      Page to Eighth Amendment to

    Amended
      and Restated Loan and Security Agreement)

     

    

    
      	 	
              BANK
                OF AMERICA, N.A.
                (acting through

              it
                Canada branch), as Canadian Agent and

              Canadian
                Lender

               

              By:
                /s/ Nelson Lam

              Name:
                Nelson Lam

              Title:
                Vice President

               

            

    

    

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    (Signature
      Page to Eighth Amendment to

    Amended
      and Restated Loan and Security Agreement)

     

    

     

    Accepted
      and Agreed to this 8th day of March, 2007.

     

    

     

    
      	
              GUARANTORS:

               

              KKTY
                HOLDING COMPANY, L.L.C.

               

              By:
                /s/ Christopher W. Anderson

              Name:
                Christopher W. Anderson

              Title:
                Authorized Manager

            
	
               

              AMERICAN
                GAGE& MACHINE CO.

               

              By:
                /s/ Amir Rosenthal

              Name:
                Amir Rosenthal

              Title:
                Secretary

            
	
               

              CONTINENTAL
                COMMERCIAL PRODUCTS, LLC

               

              By:
                /s/ Amir Rosenthal

              Name:
                Amir Rosenthal

              Title:
                Secretary

            
	
               

              PTR
                MACHINE CORP.

               

              By:
                /s/ Amir Rosenthal

              Name:
                Amir Rosenthal

              Title:
                Secretary

            
	
               

              SAVANNAH
                ENERGY SYSTEMS COMPANY

               

              By:
                /s/ Amir Rosenthal

              Name:
                Amir Rosenthal

              Title:
                Secretary

            
	
               

              WOODS
                INDUSTRIES, INC.

               

              By:
                /s/ Amir Rosenthal

              Name:
                Amir Rosenthal

              Title:
                Secretary

            

    

    

    
      
        
          
            	 	 	 

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT 7.3

     

    FINANCIAL
      COVENANTS

     

    DEFINITIONS

     

    Consolidated
      EBITDA
      - for
      any period, the sum, without duplication, of the amounts for such period of
      (i)
      Consolidated Net Income, (ii) interest expense, (iii) provisions for taxes
      based
      on income, (iv) total depreciation expense, (v) total amortization expense,
      (vi)
      all unusual expenses and all other non-capitalized restructuring expenses
      (including costs and expenses attributable to employee severance obligations
      and
      facility consolidation costs) for such period to the extent not disallowed
      by
      Agent in its sole discretion, (vii) any payment of or accrual for the Management
      Fee under the Management Agreement, (viii) all other payments made to K&C
      and its Affiliates during such period for expenses incurred on behalf of Parent,
      Katy or any of their respective Subsidiaries pursuant to Kohlberg Agreements,
      (ix) any non-cash expense incurred with respect to Katy’s stock appreciation
      rights plan (“SAR”) and (x) any non-cash expense with respect to changes in
      market value of any options to purchase Katy’s Common Stock and (xi) other
      non-cash items (other than any such non-cash item to the extent that it
      represents an accrual of or reserve for cash expenditures in any future period),
      but only, in the case of clauses (ii)-(xi), to the extent deducted in the
      calculation of Consolidated Net Income less other non-cash items added in the
      calculation of Consolidated Net Income (other than any such non-cash item to
      the
      extent that it will result in the receipt of cash payments in any future
      period), all of the foregoing as determined on a consolidated basis for Katy
      and
      its Subsidiaries in conformity with GAAP; provided that there shall be
      subtracted from the sum of items (i) through (xi) above (x)
      the
      amount of any cash expenditure made within the applicable period pursuant to
      the
      SAR, to the extent that the amount of such cash expenditure was expensed or
      will
      be expensed against a prior or future period’s Consolidated Net Income and (y)
      the amount of cash expenditure incurred in connection with the reduction of
      any
      restructuring or similar reserve, unless such amount was already charged against
      Consolidated Net Income for the applicable period (for fiscal periods ending
      prior to December 31, 2006, said amount shall be deemed to be $175,000 per
      fiscal quarter); provided, further, that (a) in the event any Loan Party makes
      an acquisition of any Person or any division or any business unit permitted
      hereunder or consented to by Majority Lenders during such period, if Katy
      provides Agent and Lenders financial statements with respect to the business
      so
      acquired (which financial statements shall have been audited by one of the
“Big
      4” accounting firms or another nationally recognized accounting firm reasonably
      satisfactory to Agent or financial statements otherwise satisfactory to Agent)
      reasonably satisfactory to Majority Lenders, Consolidated EBITDA for such period
      shall be calculated on a pro forma basis, taking into account the elimination
      of
      non-recurring expenses, based on the results of such acquired Person or acquired
      assets as if such acquisition had occurred on the first day of such period,
      and
      (b) in the event any Loan Party makes a Permitted Disposition (or any other
      disposition of any Person or any division or any business unit permitted
      hereunder or consented to by the Majority Lenders) during such period,
      Consolidated EBITDA for such period shall be calculated on a pro forma basis,
      based on the results of such disposed Person or disposed assets as if such
      Permitted Disposition (or such other disposition) had occurred on the first
      day
      of such period.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Consolidated
      Fixed Charges,
      with
      respect to any period, the sum of: (i) scheduled principal payments required
      to
      be made during such period in respect to Indebtedness for Money Borrowed
      (including the principal portion of Capitalized Lease Obligations), plus (ii)
      Consolidated Interest Expense payable in cash for such period, all as determined
      for Borrowers and their Subsidiaries on a Consolidated basis and in accordance
      with GAAP. For fiscal periods ending on or prior to December 31, 2006,
      scheduled principal payments with respect to the Term Loan shall be deemed
      to be
      $375,000 per fiscal quarter.

     

    Consolidated
      Interest Expense-
      for any
      period, total interest expense of Katy and its Subsidiaries on a consolidated
      basis with respect to all outstanding Indebtedness for Money Borrowed of Katy
      and its Subsidiaries, including, without limitation, net costs under Interest
      Rate Agreements, but excluding, however, (i) any amounts referred to in the
      Fee Letter or amortization thereof, (ii) any deferred financing fees or
      amortization thereof, (iii) commissions, discounts and other fees and
      charges owed with respect to letters of credit and bankers’ acceptance
      financing, (iv) unused line charges, (v) non-cash charges included in
      interest expense other than in clauses (i) and (ii) and (vi) to the
      extent included in interest expense, costs associated with the unsuccessful
      second lien financing abandoned prior to the Closing Date. For fiscal periods
      ending on or prior to December 31, 2006, interest expense shall be deemed
      to be $950,000 per fiscal quarter.

     

    Consolidated
      Leverage Ratio,
      as at
      any date, the ratio of (a) Consolidated Total Debt as at such date minus
      contingent reimbursement obligations with respect to letters of credit or
      guaranties of letters of credit to (b) Consolidated EBITDA for the consecutive
      four fiscal quarters ending on the last day of the most recently ended fiscal
      quarter.

     

    Consolidated
      Net Income,
      for any
      period, the net income (or loss) of Katy on a Consolidated basis for such period
      taken as a single accounting period determined in conformity with GAAP; provided
      that there shall be excluded (i) the income (or loss) of any Person (other
      than
      a Subsidiary of Katy) in which any other Person (other than Katy or any of
      its
      Subsidiaries) has a joint interest, except to the extent of the amount of
      dividends or other distributions actually paid to Katy or any of its
      Subsidiaries by such Person during such period, (ii) the income (or loss) of
      any
      Person accrued prior to the date it becomes a Subsidiary of Katy or is merged
      into or consolidated with Katy or any of its Subsidiaries or that Person’s
      assets are acquired by Katy or any of its Subsidiaries, (iii) the income of
      any
      Subsidiary of Katy to the extent that the declaration or payment of dividends
      or
      similar distributions by that Subsidiary of that income is not at the time
      permitted by operation of the terms of its charter or any agreement, instrument,
      judgment, decree, order, statute, rule or governmental regulation applicable
      to
      that Subsidiary, (iv) any after-tax gains or losses attributable to Asset Sales
      or returned surplus assets of any Pension Plan, (v) any LIFO reserves of CCP
      to
      the extent such LIFO reserves decrease or increase net income of CCP, and
      (vii)(to the extent not included in clauses (i) through (v) above) any net
      extraordinary gains or net extraordinary losses.

     

    Consolidated
      Total Debt means,
      as
      at any date of determination, the aggregate stated balance sheet amount (which
      shall not include the face amount of undrawn letter of credit) of all Money
      Borrowed of Katy and its Subsidiaries on the last day of the most recently
      ended
      fiscal quarter, determined on a Consolidated basis in accordance with
      GAAP.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Fixed
      Charge Coverage Ratio,
      with
      respect to any period, the ratio of (i) Consolidated EBITDA for such period
      minus
      the sum
      of (a) any income taxes paid in cash during such period plus (b) non-financed
      Capital Expenditures during such period, to (ii) Consolidated Fixed Charges
      for
      such period, all as determined for Borrowers and their Subsidiaries on a
      Consolidated basis and in accordance with GAAP. In the event Consolidated EBITDA
      is adjusted on a pro forma basis as provided in the definition thereof as a
      result of a permitted acquisition or Permitted Disposition, Consolidated Fixed
      Charges, income taxes and Capital Expenditures shall also be appropriately
      adjusted in a manner satisfactory to Agent in its Permitted Discretion on a
      pro
      forma basis to reflect changes resulting from such transaction as if all such
      events had occurred on the first day of such period.

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