Document:

ex_10_01

Exhibit 10.01

AMENDMENT No. 1 dated as of May 10, 2013 (this “Amendment”), to the Credit Agreement dated as of November 22, 2011 (the “Credit Agreement”), among SHUTTERFLY, INC., a Delaware corporation (the “Borrower”), the LENDERS party thereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent, Swing Line Lender and Issuing Bank.
The Borrower has requested certain amendments to the Credit Agreement to permit it to issue up to $300 million aggregate principal amount of Convertible Notes (as defined below) and to enter into a related Permitted Convertible Notes Call Transaction (as defined below). The undersigned Lenders, constituting the Required Lenders, are willing to agree to such amendments on the terms and subject to the conditions set forth herein.
Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.  Defined Terms.  Capitalized terms used but not otherwise defined herein, including in the recitals hereto, have the meanings assigned to them in the Credit Agreement.
SECTION 2.  Amendments to Section 1.01.  Section 1.01 of the Restated Credit Agreement is hereby amended as follows:
(a)  The following new defined terms are added in appropriate alphabetical order:
“Consolidated Senior Secured Indebtedness” means, at any date, (a) the amount of Consolidated Total Indebtedness minus (b) the amount of Consolidated Total Indebtedness consisting of Indebtedness that is not (i) secured by any Lien on any assets of the Borrower or any Subsidiary or (ii) Guaranteed by any Subsidiary that is not a Subsidiary Loan Party.  Consolidated Senior Secured Indebtedness shall include the Indebtedness under this Agreement. 
“Convertible Notes” means Indebtedness of the Borrower that is convertible into common stock of the Borrower (and cash in lieu of fractional shares) and/or cash (in an amount determined by reference to the price of such common stock).
“Net Convertible Notes Proceeds” means (a) the cash proceeds received by the Borrower from the sale of Convertible Notes, net of (b) the sum of (i) the net amounts paid in connection with the establishment of any related Permitted Convertible Notes Call Transaction and (ii) all fees and out‐of‐pocket expenses paid by the Borrower in connection with the transactions referred to in the preceding clauses (a) and (b)(i).
“Permitted Bond Hedge Transaction” means any call or capped call option (or substantively equivalent derivative transaction) on the Borrower’s common stock purchased by the Borrower in connection with the issuance of any Convertible Notes; provided that the purchase price for such Permitted Bond Hedge Transaction, less the proceeds received by the Borrower from the sale of any related Permitted Warrant Transaction, does not exceed the net proceeds received by the Borrower from the sale of such Convertible Notes issued in connection with the Permitted Bond Hedge Transaction.
“Permitted Convertible Notes Call Transaction” means any Permitted Bond Hedge Transaction and any Permitted Warrant Transaction.

2

“Permitted Warrant Transaction” means any call option, warrant or right to purchase (or substantively equivalent derivative transaction) on the Borrower’s common stock sold by the Borrower substantially concurrently with any purchase by the Borrower of a related Permitted Bond Hedge Transaction.   
“Senior Secured Leverage Ratio” means, on any date, the ratio of (a) Consolidated Senior Secured Indebtedness as of such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower ended on or most recently prior to such date. 
(b)  The defined term “Consolidated Interest Expense” is hereby amended by adding the following immediately before the comma at the end of clause (a) thereof:
“(but excluding non-cash interest expense attributable to Convertible Notes under ASC 470-20 or any successor accounting pronouncement)”.
(c)  The defined term “Equity Interests” is hereby amended by adding the following proviso immediately before the period at the end thereof:
“; provided, however, that the Convertible Notes shall not constitute Equity Interests of the Borrower”.
(d)  The defined term “Hedging Agreement” is hereby amended by adding “or any Permitted Convertible Notes Call Transaction” after the word “Subsidiaries” in the last line thereof.
(e)  The parenthetical in clause (d) of the defined term “Indebtedness” is hereby amended by redesignating subclause (iii) thereof as subclause (iv) and inserting the following new clause (iii):
“(iii) for the avoidance of doubt, financing, construction or other similar liabilities arising pursuant to of EITF 97-10 (ASC 840) or any successor accounting pronouncement and not reflecting any obligation to any other Person”;
(f)  The defined term “LIBO Rate” is amended to read as follows:
““LIBO Rate” means, with respect to any Eurocurrency Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page on such screen) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits in the London interbank market with a maturity comparable to such Interest Period.  In the event that such rate does not appear on such page (or on any successor or substitute page), the “LIBO Rate” shall be determined by reference to such other publicly available service displaying interest rates for dollar deposits in the London interbank market as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period”
(g)  The defined term “Permitted Acquisition” is hereby amended as follows:
(i)      by inserting, at the beginning of subclause (v)(D), the words “in the case of a purchase or acquisition involving total consideration in excess of $25,000,000,”; and

3

(ii)  by restating the parenthetical at the end of subclause (v)(B) of the second proviso therein to read as follows:
“(assuming, for purposes of Section 6.11, (x) that the maximum Leverage Ratio then permitted under such Section is .25% lower than the ratio at the time applicable under such Section and (y) that the maximum Senior Secured Leverage Ratio then permitted under such Section is .25% lower than the ratio at the time applicable under such Section)”.
(h)  The defined term “Permitted Unsecured Indebtedness” is hereby amended by replacing the parenthetical at the end thereof to read as follows:
“(assuming for purposes of Section 6.11, that the maximum Leverage Ratio then permitted under clause (a) of such Section is .25% lower than the ratio at the time applicable under such clause)”.
SECTION 3.  Amendment to Section 6.01. Section 6.01 of the Credit Agreement is hereby amended as follows:
(a)  by amending clause (a)(vii) thereof to read in its entirety as follows:
“(vii) Indebtedness owed in respect of any obligations (including, without limitation, overdrafts and related liabilities) arising from treasury, depository and cash management services or in connection with any automated clearing-house transfers of funds (including deposit accounts, overnight draft, credit cards, debit cards, p-cards (including purchasing cards and commercial cards), funds transfer, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services); provided that such Indebtedness shall be repaid in full within five Business Days of the due date or settlement date thereof, whichever is later;”; and
(b)  by (i) deleting the word “and” at the end of clause (a)(xi) thereof, (ii) redesignating clause (a)(xii) thereof as clause (a)(xiii) and (iii) adding immediately after the end of clause (a)(xi) thereof the following new clause (a)(xii):
“(xii) up to $300,000,000 aggregate principal amount of Convertible Notes satisfying the definition of Permitted Unsecured Indebtedness at any time outstanding and Refinancing Indebtedness in respect thereof; and”
           SECTION 4.  Amendment to Section 6.04. Section 6.04 of the Credit Agreement is hereby amended as follows:
(a)  by amending clause (m) thereof to read in its entirety as follows:
“(m) Specified Foreign Acquisitions; provided that the sum of (i) the aggregate consideration paid (whether consisting of cash or other assets and including the aggregate amount of any Indebtedness or other obligations assumed, but excluding consideration in the form of Equity Interests of the Borrower that do not constitute Disqualified Equity Interests) for all such Specified Foreign Acquisitions, (ii) the aggregate outstanding amount of Investments in Foreign Subsidiaries pursuant to clauses (c), (d) and (e) of this Section 6.04 and (iii) the aggregate outstanding amount of Investments in Joint Ventures pursuant to clause (n) of this Section 6.04, shall not exceed the greater of (x) 15% of Consolidated Total Assets and (y) $150,000,000 (as reduced by any deemed utilization of such basket provided for in the definition of “Permitted Acquisition”);”; and

4

(b)  by (i) deleting the word “and” at the end of clause (n) thereof, (ii) redesignating clause (o) thereof as clause (p) and (iii) adding immediately after the end of clause (n) thereof the following new clause (o):
“(o) any Permitted Convertible Notes Call Transaction, to the extent it constitutes an Investment; and”
           SECTION 5.  Amendment to Section 6.08. Section 6.08 of the Credit Agreement is hereby amended as follows:
(a)  by replacing the parenthetical at the end of subclause (a)(vii)(A)(2) thereof with the following:
“(and for purposes of determining such compliance, the maximum Leverage Ratio then permitted under such Section shall be assumed to be 2.50 to 1.00; provided, that such assumption shall not apply in the case of (x) Restricted Payments made with the Net Convertible Notes Proceeds within one year of receipt thereof by the Borrower, or (y) the settlement of the Convertible Notes for cash upon the conversion thereof))”;
(b)  by (i) replacing the word “and” at the end of clause (a)(vii) thereof with a comma, (ii) redesignating clause (viii) thereof as clause (ix) and inserting the following new clause (viii): 
“(viii) (A) any payments in connection with the establishment of a Permitted Bond Hedge Transaction and (B) the settlement of any related Permitted Warrant Transaction (1) by delivery of shares of the Borrower’s common stock upon settlement thereof or (2) by (x) set-off against the related Permitted Bond Hedge Transaction or (y) payment of an early termination amount thereof upon any early termination thereof in common stock or, in the case of a nationalization, insolvency, merger event (as a result of which holders of the Borrower’s common stock are entitled to receive cash or other consideration (other than the Borrower’s common stock) for their shares of the Borrower’s common stock) or similar transaction with respect to the Borrower or the common stock of the Borrower, cash and/or other property; and”;
(c) by replacing “$20,000,000” in redesignated clause (a)(ix) thereof with “$60,000,000”;
(d)  by replacing the parenthetical at the end of subclause (b)(vi)(A)(2) thereof with the following:
(e)  “(and for purposes of determining such compliance, the maximum Leverage Ratio then permitted under such Section shall be assumed to be 2.50 to 1.00; provided, that such assumption shall not apply in the case of (x) payments made with the Net Convertible Notes Proceeds and (y) cash settlement payments made upon the conversion of the Convertible Notes in accordance with their terms)”; and
(f)  by replacing “$20,000,000” in clause (b)(vii) thereof with “$60,000,000” and changing the reference in such clause to “6.08(a)(viii)” to “6.08(a)(ix)”; and
(g)  by (i) replacing the period at the end of clause (a)(xi) thereof with a comma and (ii) inserting the following new clause (x) at the end thereof: 
“and (x) the entry into any Permitted Warrant Transaction that provides for settlement by delivery of cash and/or other property as the result of a nationalization, insolvency, 

5

merger event (as a result of which holders of the Borrower’s common stock are entitled to receive cash or other consideration (other than the Borrower’s common stock) for their shares of the Borrower’s common stock) or similar transaction with respect to the Borrower or the common stock of the Borrower.”
           SECTION 6.  Amendment to Section 6.11. Section 6.11 of the Credit Agreement is amended to read as follows:
“Section 6.11.  Leverage Ratios.  (a) The Borrower will not permit the Leverage Ratio at any time to exceed 3.50 to 1.00.
(b) The Borrower will not permit the Senior Secured Leverage Ratio at any time to exceed 1.60 to 1.00.”
           SECTION 7.  Amendment to Article VII. Clause (g) of Article VII of the Credit Agreement is amended to add the following at the end thereof:
“or the satisfaction of a condition to conversion of any Convertible Notes permitted to be incurred under this Agreement or any settlement of any such conversion permitted hereunder”.
           SECTION 8.  Representations and Warranties.  The Borrower represents and warrants to the Administrative Agent, the Lenders and the Issuing Bank that:
(a)  this Amendment has been duly authorized and duly and validly executed by the Borrower and each of (i) this Amendment and (ii) the Credit Agreement, as amended hereby, constitutes the legal, valid, and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency and other similar laws affecting creditor’s rights generally;
(b)  all representation and warranties of the Loan Parties contained in the Loan Documents are true and correct in all material respects as of the date hereof (other than representations and warranties expressly made only as of an earlier date, which representations are true and correct in all material respects as of such earlier date); and
(c)  no Default has occurred and is continuing on the date hereof.
           SECTION 9.  Effectiveness.  The amendments set forth in Sections 2 through 7 shall become effective on the first date (the “Amendment Effective Date”) on which each the following conditions shall have been satisfied:
(a)  the Administrative Agent shall have received duly executed counterparts hereof that, when taken together, bear the authorized signatures of the Borrower, the Administrative Agent and the Required Lenders;
(b)  the Administrative Agent shall have received a certificate of the chief financial officer of the Borrower, dated the Amendment Effective Date, certifying that the representations and warranties set forth in Section 8 are true and correct on and as of the Amendment Effective Date; 
(c)  the Administrative Agent shall have received the fees payable under Section 10 and all other amounts due and payable to it on or prior to the Amendment Effective Date, including the reimbursement or payment of all out-of-pocket expenses (including the 

6

reasonable fees, charges and disbursements of Cravath, Swaine & Moore LLP) incurred in connection with this Amendment; and
(d)  The Administrative Agent shall have received a Reaffirmation Agreement, in form and substance satisfactory to the Administrative Agent and executed by each Subsidiary Loan Party, under which each such Subsidiary Loan Party consents to this Amendment and reaffirms its obligations and grants of security interests under the Security Documents.
           SECTION 10.  Amendment Fee.  The Borrower agrees to pay to the Administrative Agent on the Amendment Effective Date, for the account of each Lender that executes and delivers a counterpart of this Amendment at or prior to 5:00 p.m., New York time, on May 8, 2013, in immediately available funds, an amendment fee equal to 0.05% of the Commitment of such Lender, whether used or unused, on the Amendment Effective Date.
           SECTION 11.  Effect of Amendment.  Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Administrative Agent, the Lenders or the Issuing Bank under any Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in any Loan Document (including, for the avoidance of doubt, any guarantee or indemnity obligations of the Loan Parties under the Security Documents), all of which are ratified and affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in any Loan Document in similar or different circumstances.  This Amendment shall apply and be effective only with respect to the provisions in the Credit Agreement specifically referred to herein.  This Amendment shall constitute a Loan Document for all purposes under the Credit Agreement and the other Loan Documents.  On and after the Amendment Effective Date, any reference to the Credit Agreement contained in any Loan Document shall mean the Credit Agreement as amended hereby.
           SECTION 12.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
           SECTION 13.  Counterparts.  This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Amendment by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment.
           SECTION 14.  Headings. The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
[Signature pages follow.]

        

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

	by

	 
	/s/ Brian M. Regan

	 
	Name:   Brian M. Regan

	 
	Title:   Chief Financial Officer

        

	
		
	JPMORGAN CHASE BANK, N.A., as Lender, Issuing Bank and Swingline Lender,  and as Administrative Agent,

	by
	

	 
	/s/ Alex Rogin

	 
	Name: Alex Rogin
Title: Vice PresidentUnassociated Document

Exhibit 10.1

Execution Version

WAIVER AND THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS WAIVER AND THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is executed and delivered as of February 18, 2013, by and among CONTINENTAL COMMERCIAL PRODUCTS, LLC, a Delaware limited liability company (“Continental”), CCP CANADA INC. (formerly known as Glit/Gemtex, Ltd.), a corporation formed under the laws of the Province of Ontario (“CCP Canada”), 3254018 NOVA SCOTIA LIMITED, a company formed under the laws of the Province of Nova Scotia (“Nova Scotia Limited”; Nova Scotia Limited, Continental and CCP Canada collectively, the “Borrowers”), KATY INDUSTRIES, INC., a Delaware corporation (“Holdings”), as a Loan Party, and THE PRIVATEBANK AND TRUST COMPANY (the “Lender”).

RECITALS

A.           The Borrowers, the other Loan Party, and Lender entered into a Loan and Security Agreement dated as of September 30, 2011 (as the same has been amended, is amended hereby and may further be amended, restated, supplemented or otherwise modified or extended from time to time, the “Loan Agreement”), pursuant to the terms of which the Lenders agreed to make certain loans and other financial accommodations to Borrowers subject to the terms and conditions thereof.

B.           The Borrowers and the other Loan Party have requested that Lender (i) waive the Designated Defaults (as defined below) and (ii) amend the Loan Agreement in certain respects.

C.           Subject to satisfaction of the conditions set forth herein, Lender is willing to accommodate such requests subject to the terms and conditions set forth in this Amendment.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrowers, the other Loan Party and the Lender agree as follows:

1.           Defined Terms.  Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to such terms in the Loan Agreement, as amended hereby.

2.           Waiver.  As of the date hereof, (a) an Event of Default has occurred and is continuing under Section 15.2 of the Loan Agreement as a result of the Loan Parties’ failure to comply with (i) Section 14.1 of the Loan Agreement for the trailing 12 month period ended on October 26, 2012 and (ii)  Section 14.2 of the Loan Agreement for the trailing twelve (12) month period ended on November 23, 2012 as required by Section 14.2 of the Loan Agreement and (b) an Event of Default has occurred and is continuing under Section 15.2 of the Loan Agreement as a result of the Loan Parties’ failure to notify Lender of the change of CCP Canada’s name within 10 days of such change as required by Section 12.2.4 of the Loan Agreement (each Event of Default described in the foregoing clauses (a) and (b), a “Prior Default” and collectively, the “Prior Defaults”).  Effective as of the date hereof, upon satisfaction of the conditions precedent set forth in Section 5 of this Amendment, Lender hereby waives the Prior Defaults and other Events of Default which may exist as of the date hereof solely as a result of the existence of the Prior Defaults (such Events of Default, together with the Prior Defaults, the “Designated Defaults”).

3.           Conditional Waiver.  As of the date hereof, an Event of Default has occurred and is continuing under Section 15.2 of the Loan Agreement as a result of the Loan Parties’ and their respective Inactive Subsidiaries’ failure to comply with Sections 11 and 13 of the Loan Agreement (the “Specified Default”).  Upon (a) satisfaction of the conditions precedent set forth in Section 5 of this Amendment and (b) the Loan Parties delivery to Lender of an executed subordination agreement, in form and substance acceptable to Lender in its sole discretion, no later than February 28, 2013, Lender hereby waives the Specified Default and other Events of Default which may exist as of the date hereof solely as a result of the existence of the Specified Default (such Events of Default, together with the Specified Default, the “Existing Defaults”).

 

  

  

  

 

4.           Amendments to Loan Agreement.  On the Third Amendment Effective Date (as defined herein), and in reliance upon the representations and warranties of the Loan Parties set forth in the Loan Documents and in this Amendment, the Loan Agreement is hereby amended as follows:

(a)           Notwithstanding anything in the Loan Agreement to the contrary, effective as of the Third Amendment Effective Date, Lender shall have the right, at Borrowers’ expense, to engage appraisers from time to time in its sole discretion to conduct appraisals of the Loan Parties’ Inventory and Equipment.

(b)           Section 1.1 of the Loan Agreement is hereby amended by adding thereto the following defined terms and their respective definitions in the correct alphabetical order:

“Winddown Expenditures” shall mean the aggregate amount of cash charges and expenditures of the Borrowers and their Subsidiaries related to (i) the sale, dissolution, winddown or severance costs, as applicable, of Holdings (solely with respect to severance costs), certain assets of CCP Canada and the “Container” and “Glit” divisions of Continental and (ii) expenses incurred by Holdings’ Subsidiaries commonly referred to as “Small books” minus, the escrowed funds received in cash by the Borrowers after the Third Amendment Effective Date from the Disco Sale minus, the aggregate net cash proceeds received by Borrowers in accordance with Section 12.17 in connection with the sale of the “Glit” and “Brillo” fixed assets and equipment.

“Third Amendment” shall mean that certain Waiver and Third Amendment to Loan and Security Agreement dated as of the Third Amendment Effective Date by and among the Borrowers, the other Loan Parties party thereto and Lender.

“Third Amendment Effective Date” shall mean February 18, 2013.

(c)           Section 1.1 of the Loan Agreement is hereby further amended by substituting the definition of the terms as set forth below in lieu of the current version of such definitions contained in Section 1.1 of the Loan Agreement:

“Applicable Margin” shall mean (i) 1.50% with respect to Loans and (ii) 0.50% (the “Unused Line Fee Applicable Margin”) with respect to the unused line fee described in Section 4.3.3, in each case, as in effect from time to time, as applicable.

“EBITDA shall mean, with respect to any period, net income after taxes for such period (excluding any after-tax gains or losses on the sale of assets (other than the sale of Inventory in the ordinary course of business), solely to the extent attributable to the divisions of Holdings comprised of St. Louis Plastics, Wilen, Katy Corporate, Holdings’ Subsidiaries commonly referred to as “Small books” and the Toronto Warehouse of CCP Canada (other than any Inactive Subsidiaries (subject to the penultimate sentence in the definition thereof)), plus interest expense, income tax expense, depreciation and amortization for such period, plus Management Fees which have been expensed (but not paid) in such period, plus any non-recurring costs, expenses and losses deducted in the determination of net income and actually incurred during the Fiscal Year ending December 31, 2013 in connection with severance and restructuring, up to an aggregate amount not to exceed $400,000 for the Fiscal Year ending December 31, 2013, plus, solely for purposes of calculating EBITDA for any period prior to September 30, 2013, losses attributable to Holdings’ Subsidiaries commonly referred to as “Small books” and actually deducted in the determination of net income for such period, minus, deferred revenue from the Disco Sale to the extent included in the determination of net income, plus or minus any other non-cash charges or gains which have been subtracted or added in calculating net income after taxes for such period, all on a consolidated basis.”

  

-2-

  

 

“Revolving Loan Commitment shall mean (i) an amount equal to Sixteen Million and No/100 Dollars ($16,000,000) until March 15, 2013 and (ii) thereafter, an amount equal to Fifteen Million and No/100 Dollars ($15,000,000).”

(d)           The definition of “Inactive Subsidiaries” set forth in Section 1.1 of the Loan Agreement is hereby amended by adding the following language as the last sentence thereof:

“Further notwithstanding the foregoing and for the avoidance of doubt, solely for the purposes of calculating EBITDA and determining compliance with the financial covenants set forth in Section 14, Holdings’ Subsidiaries commonly referred to as ”Small books” shall not at any time be deemed Inactive Subsidiaries.”

(e)           Clauses (ii) and (v) of the definition of “Revolving Loan Availability” set forth in Section 1.1 of the Loan Agreement are hereby amended by deleting them in their entirety and substituting the following language as new clauses (ii) and (v), respectively, in lieu thereof:

“(ii) (x) up to fifty-five percent (55%) of the lower of cost or market value of Borrowers’ Eligible Inventory, or, following a new appraisal by an appraiser reasonably acceptable to Lender or with the consent of the Lender in its sole discretion, (y) the lesser of (A) sixty-five percent (65%) of the lower of the cost of market value of Borrowers’ Eligible Inventory and (B) eighty-five percent (85%) of the appraised net orderly liquidation value (as determined by an appraiser reasonably acceptable to Lender) of Borrowers’ Eligible Inventory (provided, that the aggregate principal amount of all advances to Borrowers  with respect to this clause (ii) shall not exceed (x) $9,500,000 at any time on or prior to March 31, 2013 and (y) $8,500,000 at any time after March 31, 2013); plus”

“(v) $1,282,000, which amount shall be automatically increased by $100,000 on February 4, 2013 and on the first day of each seven (7) day period immediately thereafter (for example, such amount shall be increased to $1,382,000 on February 4, 2013 and $1,482,000 on February 11, 2013); provided, that the Lender may reduce the aggregate amount deducted in the calculation of “Revolving Loan Availability” pursuant to this clause (v) at any time in its sole discretion; minus”

(f)           The last sentence of Section 2.5.2(a) of the Loan Agreement is hereby amended by deleting it in its entirety and substituting the following language in lieu thereof:

“Notwithstanding the foregoing, effective as of the Third Amendment Effective Date no borrowing shall be made as a LIBOR Loan.”

 

  

-3-

  

 

(g)           The second proviso to Section 2.5.3(a) of the Loan Agreement is hereby amended by deleting it in its entirety and substituting the following language in lieu thereof:

“provided, further, effective as of the Third Amendment Effective Date, no Loans shall be converted into LIBOR Loans.”

(h)           The last sentence of Section 2.1(c) of the Loan Agreement is hereby amended by deleting it in its entirety and substituting the following language in lieu thereof:

“Notwithstanding the foregoing, (i) effective as of the First Amendment Effective Date, the Lender shall not have any obligation to make Capital Expenditure Loans and (ii) effective as of the Third Amendment Effective Date, immediately upon the repayment in full of the outstanding aggregate balance of all Capital Expenditure Loans pursuant to Section 12.16 hereof, the CapEx Sublimit shall be automatically reduced to Zero and No/100 Dollars ($0.00).”

 

(i)           Section 4.1 of the Loan Agreement is hereby amended by deleting it in its entirety and substituting the following language in lieu thereof:

“4.1  Interest Rate.

Subject to the terms and conditions set forth below, the Loans shall bear interest at the per annum rate of interest set forth in subsection (a) or (b) below:

(a)           In the case of any Loan, a per annum rate equal to the sum of the Applicable Margin plus the Prime Rate in effect from time to time, payable on the first Business Day of each month in arrears for interest through the last day of the prior month.  Said rate of interest shall increase or decrease by an amount equal to each increase or decrease in the Prime Rate effective on the effective date of each such change in the Prime Rate.

(b)           Upon the occurrence and during the continuance of an Event of Default and during the continuance thereof, unless the Lender otherwise consents, the Loans shall bear interest at the rate of two percent (2.0%) per annum in excess of the interest rate otherwise payable thereon, which interest shall be payable on demand.  All interest shall be calculated on the basis of a 360 day year.”

(j)           Section 4.3.4 of the Loan Agreement is hereby amended by deleting it in its entirety and substituting the following language in lieu thereof:

“Collateral Monitoring Fee:  Borrowers shall pay to Lender a monthly Collateral Monitoring Fee of Two Thousand Five Hundred Dollars ($2,500), which fee shall be fully earned by Lender on the first day of each month and payable monthly in arrears on the first Business Day of each month, commencing on February 1, 2013, with respect to all activity through the last day of the prior month and on the first day of each calendar month thereafter.”

(k)           Section 9.1 of the Loan Agreement is hereby amended by adding the following language as the last sentence thereof:

 

“On February 20, 2013 (and on the last day of each seven (7) day period ending thereafter, or, if such day is not a Business Day, on the next Business Day), Borrowers shall deliver to Lender an analysis of Borrowers’ cash flow for the thirteen (13) week period beginning on the Friday immediately preceding the date such analysis is delivered.”

  

-4-

  

 

(l)           Clause (a) of Section 12.13 of the Loan Agreement is hereby amended by deleting it in its entirety and substituting the following language in lieu thereof:

“(a) the execution and delivery of guaranties, security agreements, pledge agreements, mortgages, deeds of trust, collateral assignments of leases, financing statements and other documents, and the filing or recording of any of the foregoing and”

(m)           Section 12 of the Loan Agreement is hereby amended by adding the following as new Sections 12.15, 12.16 and 12.17, respectively:

“12.15  Other Financial Deliverables.

The Loan Parties hereby acknowledge and confirm that prior to the Third Amendment Effective Date the Loan Parties have independently engaged Kugman Partners, Inc. to (a) assist the Loan Parties in reviewing and assessing their business and (b) prepare and/or deliver to the Loan Parties certain reviews, memos, reports and analyses in connection with such review and assessment, including, without limitation, (i) an analysis of the $1,500,000 overhead cost reduction plan presented by management of the Borrowers to Lender on or prior to the Third Amendment Effective Date, (ii) a review of the budget for the Fiscal Year ending December 31, 2013, (iii) an analysis of Borrowers projected cash, winddown and severance expenses for the Fiscal Years ending December 31, 2013 and December 31, 2014 and (iv) an analysis of the impact of potential wage increases or union work stoppages in the Fiscal Year ending December 31, 2013 (the items described in the foregoing clause (b) collectively, the “Kugman Deliverables”).  No later than February 20, 2013, Borrowers shall promptly deliver, or cause to be delivered, to Lender (i) an analysis of Borrowers’ cash flow for the thirteen (13) week period beginning on the Friday immediately preceding the date such analysis is delivered and (ii) the Kugman Deliverables.”

“12.16  Sale of “Glit” Division.

(a) No later than March 8, 2013, Borrowers shall engage an auctioneer or auction firm reasonably acceptable to Lender to sell all or a significant portion of the assets of the “Glit” division of Continental to one or more third-party purchasers (the “Glit Asset Sale”); and

(b) concurrently with the consummation of the Glit Asset Sale, Borrowers shall pay, or cause to be paid, the net cash proceeds of the Glit Asset Sale to Lender for application to the outstanding aggregate balance of all Capital Expenditure Loans outstanding on the date on which the Glit Asset Sale is consummated and such other amounts as necessary to repay in full the outstanding aggregate balance of all Capital Expenditure Loans outstanding on the date on which the Glit Asset Sale is consummated; provided, that the remaining balance of any such net cash proceeds after such repayment in full of the Capital Expenditure Loans shall then be applied to repay any outstanding Revolving Loans on such date.”

“12.17  Net Cash Proceeds from “Glit” and “Brillo” Sales.

The aggregate net cash proceeds received by Borrowers from the sale of the “Glit” and “Brillo” fixed assets and equipment plus, the aggregate amount of escrowed funds received in cash by the Borrowers after the Third Amendment Effective Date from the Disco Sale shall be an amount equal to at least $1,575,000.”

 

  

-5-

  

(n)           Section 13.13 of the Loan Agreement is hereby deleted it in its entirety.

(o)           Section 14.1 of the Loan Agreement is hereby amended by deleting it in its entirety and substituting the following language as a new Section 14.1:

“14.1  Minimum EBITDA.

Effective as of the Third Amendment Effective Date, Borrowers shall not permit EBITDA for the periods as set forth below to be less than the minimum amount set forth in the table below opposite such period:

 

	
Period

	 	
Minimum EBITDA

	
Month ended December 31, 2012

	 	
$(200,000)

	
Two (2) month period ending January 31, 2013

	 	
$(400,000)

	
Three (3) month period ending February 28, 2013

	 	
$(500,000)”

(p)           Section 14.2 of the Loan Agreement is hereby amended by deleting it in its entirety and substituting the following language as a new Section 14.2:

“14.2  Fixed Charge Coverage.

Borrowers shall not permit the ratio of EBITDA to Fixed Charges for the periods as set forth below to be less than the ratio set forth in the table below opposite such period:

 

	
Period

	 	
Minimum Fixed Charge Coverage

	
Two (2) month period ending March 31, 2013

	 	
1.10:1.00

	
Three (3) month period ending April 30, 2013

	 	
1.10:1.00

	
Four (4) month period ending May 31, 2013

	 	
1.10:1.00

	
Five (5) month period ending June 30, 2013

	 	
1.10:1.00

	
Six (6) month period ending July 31, 2013

	 	
1.10:1.00

	
Seven (7) month period ending August 31, 2013

	 	
1.10:1.00

	
Eight (8) month period ending September 30, 2013

	 	
1.10:1.00

	
Nine (9) month period ending October 31, 2013

	 	
1.10:1.00

	
Ten (10) month period ending November 30, 2013

	 	
1.10:1.00

	
Eleven (11) month period ending December 31, 2013

	 	
1.20:1.00

	
Twelve (12) month period ending January 31, 2014 and the trailing twelve (12) month period ending on the last day of each calendar month thereafter

	 	
1.20:1.00”

 

(q)           Section 14.3 of the Loan Agreement is hereby amended by deleting it in its entirety and substituting the following language as a new Section 14.3:

  

-6-

  

 

“14.3  Maximum Winddown Expenditures.

Borrowers shall not permit the aggregate amount of Winddown Expenditures made by the Borrowers and their Subsidiaries to exceed the applicable amount set forth below for each period set forth below:

 

	
Period

	 	
Maximum Winddown Expenditures

	
Calendar year ending December 31, 2013

	 	
$1,400,000

	
Calendar year ending December 31, 2014

	 	
$800,000

Notwithstanding any other provision herein, effective as of the Third Amendment Effective Date, the Loan Parties shall be permitted to make payments to Holdings’ Subsidiaries commonly referred to as “Small books” to fund permitted Winddown Expenditures, in any manner, in an aggregate amount not to exceed $550,000 in each calendar year.”

(r)           Exhibit A to the Loan Agreement is hereby amended by deleting paragraph 6 thereof in its entirety.

5.           Conditions to Effectiveness of Amendment.  The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:

(a)           delivery to Lender of this Amendment executed by each Loan Party and Lender.

(b)           delivery to Lender of such other documents reasonably requested by Lender.

(c)           The Borrowers shall have paid to Lender, a fully-earned, non-refundable closing fee of $37,500 on the date hereof.

(d)           No Default or Event of Default (other than the Designated Defaults and Existing Defaults) shall exist both before and after giving effect to this Amendment.

(e)           The representations and warranties contained in Section 6 hereof shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein).

6.           Representations and Warranties.  To induce the Agent and the Lenders to execute this Amendment, each Loan Party represents and warrants to the Lender as follows:

(a)           such Loan Party has all requisite power and authority to execute, deliver and perform this Amendment;

(b)           This Amendment and the Loan Agreement constitute legal, valid and binding obligations of such Loan Party, enforceable against such Loan Party in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally;

(c)           The representations and warranties of each Loan Party in the Loan Agreement and the other Loan Documents are true and correct in all material respects (without duplication of any materiality qualifiers contained therein) as of the date hereof (except for representations and warranties that expressly relate to an earlier date which must be true and correct in all material respects (without duplication of any materiality qualifiers contained therein) as of such earlier date); and

  

-7-

  

 

(d)           no Default or Event of Default (other than the Designated Defaults and Existing Defaults) exists.

7.           Affirmation; Release of Claims.  Except as expressly amended hereby, the Loan Agreement is and shall continue in full force and effect and each Loan Party hereby fully ratifies and reaffirms each Loan Document to which it is a party.  Reference in any of this Amendment, the Loan Agreement and any other Loan Document to the Loan Agreement shall be a reference to the Loan Agreement as amended hereby and as further amended, restated, supplemented or extended from time to time.  This Amendment shall constitute a Loan Document for purposes of the Loan Agreement and the other Loan Documents.  Except as expressly set forth herein, nothing contained herein shall be deemed to constitute a waiver of compliance with any term or condition contained in the Loan Agreement or any of the other Loan Documents or constitute a course of conduct or dealing among the parties.  Except as expressly stated herein, Lender reserves all rights, privileges and remedies under the Loan Documents.  Except as amended hereby, the Loan Agreement and other Loan Documents remain unmodified and in full force and effect.  In consideration of the Lender’s agreements contained in this Amendment, each Loan Party hereby irrevocably releases and forever discharge the Lender and its affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all claims, suits, causes of action, investigations, proceedings, allegations, assertions or demands, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which such Loan Party ever had or now has against Lender or any other Released Person which relates, directly or indirectly, to any acts or omissions of Lender or any other Released Person relating to the Loan Agreement or any other Loan Document on or prior to the date hereof.

8.           Counterparts; Electronic Signature.  This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered, shall be deemed an original, but all of which counterparts together shall constitute but one agreement.  Delivery of an executed signature page of this Amendment by facsimile transmission or emailed “.pdf” file or other similar file format shall be as effective as delivery of a manually executed counterpart hereof.

9.           Headings.  The headings and captions of this Amendment are for convenience of reference only, and shall not govern the interpretation of any of the provisions of this Amendment.

10.           Further Assurances.  Each Loan Party agrees to execute and deliver in form and substance satisfactory to Lender such further documents, instruments, amendments, financing statements and to take such further action, as may be necessary from time to time to perfect and maintain the liens and security interests created by the Loan Documents.

11.           APPLICABLE LAW.  THIS AMENDMENT SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK AS TO INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS.

[Signature Pages Follow]

  

-8-

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above.

	  	
BORROWERS:

	 
	  	
CONTINENTAL COMMERCIAL PRODUCTS, LLC, a Delaware limited liability company

	 	 
	  	
By:

	
/s / James W. Shaffer

	 
	  	
Name:

	
James W. Shaffer

	 
	  	
Title:

	
Vice President and CFO

	 
	  	  	  	 
	  	
CCP CANADA INC. (formerly known as Glit/Gemtex, Ltd.), a corporation formed under the laws of the Province of Ontario

	 	 
	  	
By

	
/s / James W. Shaffer

	 
	  	
Name:

	
James W. Shaffer

	 
	  	
Title:

	
Vice President and CFO

	 
	  	  	  	 
	  	
3254018 NOVA SCOTIA LIMITED, a company formed under the laws of the Province of Nova Scotia

	 	 
	  	
By:

	
/s / James W. Shaffer

	 
	  	
Name:

	
James W. Shaffer

	 
	  	
Title:

	
Vice President and CFO

	 
	  	  	  	 
	  	  	  	 
	  	
OTHER LOAN PARTY:

	  	  	  	 
	  	
KATY INDUSTRIES, INC., a Delaware corporation

	 	 
	  	
By:

	
/s / James W. Shaffer

	 
	  	
Name:

	
James W. Shaffer

	 
	  	
Title:

	
Vice President and CFO

	 

Signature Page to Waiver and Third Amendment to Loan and Security Agreement

  

  

  

 

	  	
THE PRIVATEBANK AND TRUST COMPANY, as Lender

	 
	  	  	  	 
	  	  	  	 
	  	
By:

	/s/ Douglas C. Colletti	 
	  	
Name:

	Douglas C. Colletti	 
	  	
Title:

	MD	 

 

Signature Page to Waiver and Third Amendment to Loan and Security Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00217-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00217-of-00352.parquet"}]]