Document:

Exhibit
10.1

 

Execution
Version

 

FIRST AMENDMENT TO CREDIT
AGREEMENT

 

THIS
FIRST AMENDMENT TO CREDIT AGREEMENT (the “Amendment”), dated as of November
18, 2009, is entered into by and among CONTINENTAL MATERIALS CORPORATION, a
Delaware corporation (the “Company”), the financial institutions that
are or may from time to time become parties to the Credit Agreement referenced
below (together with their respective successors and assigns, the “Lenders”
and each, a “Lender”) and THE PRIVATEBANK AND TRUST COMPANY, an Illinois
state chartered bank as Administrative Agent for each Lender (the “Administrative
Agent”).  Capitalized terms used herein and not otherwise
defined shall have the meanings given to such terms in the Credit Agreement
referenced below.

 

WHEREAS,
the Lender previously made available to the Company a credit facility pursuant
to the terms and conditions of that certain Credit Agreement, dated as of April
16, 2009, by and among the Company, the Lender and the Administrative Agent (as
amended, restated or supplemented from time to time, the “Credit Agreement”);

 

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

 

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

 

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

 

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

 

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

 

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

 

1

 

A.                                   Section 1.1.  Section 1.1 of the Credit Agreement is
hereby amended as follows:

 

(1)                                  The definition
of “Adjusted EBITDA” is hereby deleted in its entirety and replaced with
the following:

 

“Adjusted EBITDA means EBITDA for the
applicable Computation Period plus any gains from Asset Dispositions,
any extraordinary gains and any gains from discontinued operations (in each
case, any gains shall be net of all costs and expenses incurred in connection
therewith and such gains shall only be included to the extent such gains were
subtracted in the calculation of EBITDA). 
Notwithstanding anything to the contrary contained in this Agreement or
any other Loan Document, the calculation of Adjusted EBITDA shall exclude the
operating results of discontinued operations (profit or loss).”

 

(2)                                  The inventory
cap (originally set at $10,000,000) contained in the definition of “Borrowing
Base” is hereby reduced to $7,500,000.

 

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

 

(4)                                  The definition
of “Revolving Commitment” is hereby deleted in its entirety and replaced
with the following:

 

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

 

B.                                     Section 11.13.1.  Section 11.13.1 (Minimum Adjusted
EBITDA) of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:

 

“11.13.1      Minimum
Adjusted EBITDA.  Not permit
Adjusted EBITDA for any Computation Period to be less than the applicable
amount set forth below for such Computation Period:

 

	
  Computation

  Period Ending

  	
   

  	
  Adjusted EBITDA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  8,150,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  4,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  3,250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  5,250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2010 and each Fiscal Quarter end
  thereafter

  	
   

  	
  $

  	
  6,500,000

  	
  ”

  

 

2

 

C.                                     Section 11.13.2.  Section 11.13.2 (Minimum Fixed Charge
Coverage Ratio) of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:

 

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

 

Section 3.  Waiver.  It is hereby agreed and understood that,
subject to the complete fulfillment and performance of the conditions precedent
set forth in Section 6 of this Amendment, the Lender hereby waives the
Existing Covenant Default and all of its rights and remedies with respect to
the Existing Covenant Default.  The
waiver hereunder will not in any way operate as (i) an amendment or
modification of the Credit Agreement or any related agreement, (ii) a waiver of
repayment by the Company of any portion of the outstanding Obligations under
the Credit Agreement, or (iii) a waiver of, or consent with respect to, any
existing or future Event of Default, or a waiver or abandonment to any right or
remedy available to the Lender with respect to any such Event of Default, all
of which rights are reserved.

 

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

 

Section 5.  Amendment
of the Loan Documents.  It is hereby
agreed and understood by the Lender and the Company that, subject to the
complete fulfillment and performance of the conditions precedent set forth in Section
6 of this Amendment and effective as of the effective date of this
Amendment, each reference to the Credit Agreement, the Revolving Loan, the Term
Loan, the Revolving Loan Note, the Term Loan Note, and/or any other defined
terms or any Loan Documents in any Loan Documents shall be deemed to be a
reference to any such defined terms or such agreements as such terms or
agreements are amended or modified by this Amendment.  Any breach of any representation, warranty,
covenant or agreement contained in 

 

3

 

this Amendment shall be deemed to be an Event of Default for all
purposes of the Credit Agreement.

 

Section 6.  Conditions
Precedent.  The effectiveness of this
Amendment and the obligations of the Lender hereunder are subject to the
satisfaction, or waiver by the Lender, of the following conditions precedent on
or before the date hereof (unless otherwise provided or agreed to by the
Lender) in addition to the conditions precedent specified in Section 12.2
of the Credit Agreement:

 

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

 

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

 

C.                                     The following
statements shall be true and correct and the Company, by executing and
delivering this Amendment to the Lender and the Administrative Agent, hereby
certifies that the following statements are true and correct as of the date
hereof:

 

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

 

(2)                                  The
representations and warranties of the Company set forth in the Credit Agreement
and the other Loan Documents (as amended by this Amendment) are true and
correct in all respects on and as of the date of this Amendment with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date, and no
Unmatured Event of Default or Event of Default (other than the Existing
Covenant Default waived in this Amendment) has occurred and is continuing; and

 

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

 

4

 

Amendment or the Other
Documents which have not been obtained and delivered to the Lender.

 

Section 7.  Miscellaneous.

 

A.                                   Except as
expressly amended and modified by this Amendment, the Credit Agreement and the
other Loan Documents are and shall continue to be in full force and effect in
accordance with the terms thereof.

 

B.                                     This Amendment
may be executed by the parties hereto in counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.

 

C.                                     This Amendment
shall be construed in accordance with and governed by the internal laws, and
not the laws of conflict, of the State of Illinois.

 

D.                                    The headings
contained in this Amendment are for ease of reference only and shall not be
considered in construing this Amendment.

 

[SIGNATURE PAGES FOLLOW]

 

5

 

IN
WITNESS WHEREOF, the parties hereto have caused this First Amendment to Credit
Agreement to be duly executed as of the day and year first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL MATERIALS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Joseph J Sum

  
	
   

  	
   

  	
  Joseph J. Sum

  
	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE
  AGENT AND LENDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE PRIVATEBANK AND TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Steven M. Cohen

  
	
   

  	
   

  	
  Steven M. Cohen

  
	
   

  	
   

  	
  Managing Director & Senior Vice President

  

 

6

 

ACKNOWLEDGMENT, AGREEMENT,
CONSENT 

AND REAFFIRMATION OF LOAN PARTIES

 

Each
of the undersigned Loan Parties, for good and valuable consideration, receipt
of which is hereby acknowledged:  (a) hereby
acknowledges receipt of a copy of the foregoing Amendment, acknowledges that
such Loan Party has read and reviewed the terms thereof, and acknowledges that
such Loan Party has been afforded an adequate opportunity to have the foregoing
Amendment reviewed by such Loan Party’s counsel; (b) hereby consents to the
terms and conditions of the foregoing Amendment; and (c) hereby acknowledges
and agrees that such Loan Party’s duties, obligations and liabilities to the
Administrative Agent and/or the Lender under the Guaranty and Collateral
Agreement shall be continuing and shall remain in full force and effect against
such Loan Party irrespective of the amendments to the Credit Agreement
contained in the foregoing Amendment or any other amendments or modifications
to any of the other Loan Documents.

 

In addition to the foregoing, each of the undersigned
Loan Parties (i) hereby ratifies, reaffirms and confirms its pledge,
hypothecation, and grant of a continuing lien and first priority security
interest in favor of the Administrative Agent in all of the assets of such Loan
Party pledged to the Administrative Agent under the Guaranty and Collateral
Agreement (subject to the terms and conditions set forth therein), and (ii) hereby
acknowledges that such pledge shall continue in full force and effect securing
the Secured Obligations under and as defined in the Guaranty and Collateral
Agreement notwithstanding the execution and delivery of the foregoing
Amendment.

 

IN
WITNESS WHEREOF, each of the undersigned Loan Parties has duly executed this
Acknowledgment, Agreement, Consent and Reaffirmation of Loan Parties to the
First Amendment to Credit Agreement as of November 18, 2009.

 

	
   

  	
  MCKINNEY DOOR AND HARDWARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Joseph J Sum

  
	
   

  	
   

  	
  Joseph J. Sum

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  TRANSIT MIX CONCRETE CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Joseph J Sum

  
	
   

  	
   

  	
  Joseph J. Sum

  
	
   

  	
   

  	
  Treasurer

  

 

7

 

	
   

  	
  TRANSIT MIX OF PUEBLO, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Joseph J Sum

  
	
   

  	
   

  	
  Joseph J. Sum

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  WILLIAMS
  FURNACE CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Joseph J Sum

  
	
   

  	
   

  	
  Joseph
  J. Sum

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  PHOENIX
  MANUFACTURING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph J Sum

  
	
   

  	
   

  	
  Joseph
  J. Sum

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  CASTLE
  CONCRETE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph J Sum

  
	
   

  	
   

  	
  Joseph
  J. Sum

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  EDENS
  INDUSTRIAL PARK INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph J Sum

  
	
   

  	
   

  	
  Joseph
  J. Sum

  
	
   

  	
   

  	
  Treasurer

  

 

8Exhibit 10.2

 

Execution
Version

 

WAIVER AND SECOND
AMENDMENT TO CREDIT AGREEMENT

 

THIS
WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”),
dated as of April 15, 2010, is entered into by and among CONTINENTAL MATERIALS
CORPORATION, a Delaware corporation (the “Company”), the financial
institutions that are or may from time to time become parties to the Credit
Agreement referenced below (together with their respective successors and
assigns, the “Lenders” and each, a “Lender”) and THE PRIVATEBANK
AND TRUST COMPANY, an Illinois state chartered bank as Administrative
Agent for each Lender (the “Administrative Agent”).  Capitalized terms used herein and not otherwise
defined shall have the meanings given to such terms in the Credit Agreement
referenced below.

 

WHEREAS,
the Lender previously made available to the Company a credit facility pursuant
to the terms and conditions of that certain Credit Agreement, dated as of April
16, 2009, by and among the Company, the Lender and the Administrative Agent, as
amended by that certain First Amendment to Credit Agreement, dated as of November
18, 2009, by and among the Company, the Lender and the Administrative Agent
(the “First Amendment”) (as further amended, restated or supplemented
from time to time, the “Credit Agreement”);

 

WHEREAS,
pursuant to the Credit Agreement, the Lender previously (i) made available to
the Company a revolving credit facility in the amount of $20,000,000 (reduced
to $15,000,000 pursuant to the First Amendment), and (ii) funded a term loan in
the original principal amount of $10,000,000;

 

WHEREAS,
the parties to this Amendment desire to amend the Credit Agreement to, among
other things, (i) reduce the Revolving Commitment to $13,500,000 from and after
October 1, 2010, (ii) shorten the maturity date of the Revolving Loan and Term
Loan to August 1, 2011, (iii) modify certain financial covenants, eliminate
certain financial covenants and eliminate the requirement to test the financial
covenants on April 3, 2010, (iv) modify the definition of Borrowing Base to
reduce the inventory cap from $7,500,000 to $6,750,000, (v) modify the pricing
applicable to the Revolving Loan and Term Loan, and (vi) modify the definition
of Eligible Accounts to exclude any Dating Program Accounts that are more than
sixty (60) days past due, in each case, all on the terms and conditions set
forth herein; and

 

WHEREAS,
as of the date of this Amendment, there exist Events of Default under and as
defined in the Credit Agreement as a result of the Company’s failure to comply
with the minimum Adjusted EBITDA requirement in Section 11.13.1 of the
Credit Agreement and the Fixed Charge Coverage Ratio requirement in Section 11.13.2
of the Credit Agreement, in each case, for the period ended January 2, 2010
(the “Existing Covenant Defaults”).

 

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

 

1

 

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

 

Section 2.  Amendment of the Credit Agreement.  It is hereby agreed and understood that,
subject to the complete fulfillment and performance of the conditions precedent
set forth in Section 7 of this Amendment, the Credit Agreement is hereby
amended and modified as follows:

 

A.                                   Section 1.1.  Section 1.1 of the Credit Agreement is
hereby amended as follows:

 

(1)                                  The definition
of “Applicable Margin” is hereby deleted in its entirety and replaced
with the following (and Annex C of the Credit Agreement is hereby
eliminated):

 

“Applicable Margin
means, for any day, the rate per annum set forth below, it being understood
that the Applicable Margin for (i) LIBOR Loans shall be the percentage set
forth under the column “LIBOR Margin”, (ii) Base Rate Loans shall be the
percentage set forth under the column “Base Rate Margin”, (iii) the Non-Use Fee
Rate shall be the percentage set forth under the column “Non-Use Fee Rate” and (iv)
the L/C Fee shall be the percentage set forth under the column “L/C Fee Rate”:

 

	
  Revolving Loan and

  Term Loan

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIBOR

  Margin

  	
   

  	
  Base Rate

  Margin

  	
   

  	
  Non-Use

  Fee Rate

  	
   

  	
  L/C Fee

  Rate

  	
   

  
	
  4.0

  	
  %

  	
  1.75

  	
  %

  	
  0.375

  	
  %

  	
  1.50

  	
  %”

  

 

(2)                                  The inventory
cap (currently set at $7,500,000) contained in the definition of “Borrowing
Base” is hereby reduced to $6,750,000.

 

(3)                                  The definition
of “Computation Period” is hereby deleted in its entirety and replaced
with the following:

 

“Computation
Period means (a) with respect to each financial covenant contained in Section
11.13 (other than the minimum Adjusted EBITDA covenant contained in Section
11.13.1), each period of four consecutive Fiscal Quarters ending on the
last day of a Fiscal Quarter, and (b) with respect to the minimum Adjusted
EBITDA covenant contained in Section 11.13.1, each period of three
consecutive months ending on the last day of a Fiscal Quarter, commencing with
the Fiscal Quarter ending July 3, 2010.”

 

2

 

(4)                                  Clause (k) of
the definition of “Eligible Account” is hereby deleted in its entirety
and replaced with the following:

 

“(k)                            such Account is
evidenced by an invoice delivered to the related Account Debtor and is not more
than (i) sixty (60) days past the due date thereof as reflected in the original
invoice therefor, or (ii) one-hundred (120) days past the original invoice date
therefor (provided, however, the requirement set forth in item (ii) of
this clause (k) shall not apply to the Dating Program Accounts to the extent
the applicable Account Debtors are in compliance with the terms and conditions
of the Dating Program with respect to the applicable Dating Program Accounts
and a Senior Officer certifies in the applicable Borrowing Base Certificate
that to his or her knowledge such Account Debtors are in compliance with the
Dating Program and that such Dating Program Accounts (including any portion
thereof) are not more than sixty (60) days past due);”

 

(5)                                  The definition
of “Revolving Commitment” is hereby deleted in its entirety and replaced
with the following:

 

“Revolving Commitment means (a) $15,000,000 at
all times prior to October 1, 2010, and (b) $13,500,000 at all times from and
after October 1, 2010, as reduced from time to time pursuant to Section 6.1.”

 

(6)                                  The definition
of “Term Loan Maturity Date” is hereby deleted in its entirety and
replaced with the following:

 

“Term Loan Maturity Date means the earlier of (a)
August 1, 2011 or (b) the Termination Date.”

 

(7)                                  The definition
of “Termination Date” is hereby deleted in its entirety and replaced
with the following:

 

“Termination Date means the earlier to occur of
(a) August 1, 2011 or (b) such other date on which the Commitments terminate
pursuant to Section 6 or Section 13.”

 

B.                                     Section 11.13.1.  Section 11.13.1 (Minimum Adjusted
EBITDA) of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:

 

“11.13.1      Minimum
Adjusted EBITDA.  Not permit
Adjusted EBITDA for any Computation Period to be less than the applicable
amount set forth below for such Computation Period:

 

3

 

	
  Computation

  Period Ending

  	
   

  	
  Adjusted EBITDA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  July 3, 2010

  	
   

  	
  $

  	
  2,100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  October 2, 2010

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  January 1, 2011

  	
   

  	
  $

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 2, 2011

  	
   

  	
  $

  	
  (600,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  July 2, 2011

  	
   

  	
  $

  	
  2,100,000

  	
  ”

  

 

C.                                     Section 11.13.2.  Section 11.13.2 (Minimum Fixed Charge
Coverage Ratio) of the Credit Agreement is hereby deleted in its entirety and
replaced with the following (and such financial covenant is hereby removed from
the Credit Agreement):

 

“11.13.2      [Intentionally Deleted].”

 

D.                                    Section 11.13.4.  Section 11.13.4 (Maximum Adjusted
Total Cash Flow Leverage) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following (and such financial covenant is hereby
removed from the Credit Agreement):

 

“11.13.4      [Intentionally Deleted].”

 

E.                                      Sections
11.13.3 and 11.13.5. 
Notwithstanding the test dates set forth in Section 11.13.3
(Minimum Tangible Net Worth) and Section 11.13.5 (Capital Expenditures),
such financial covenants shall not be tested for the Computation Period ended April
3, 2010, it being agreed that the next test date for both such financial
covenants after April 3, 2010 shall be July 3, 2010.  Other than eliminating the April 3, 2010 test
date for both such financial covenants, the requirements and test dates for
such financial covenants shall continue in full force and affect.

 

Section 3.  Borrowing
Base.  The Company acknowledges and
agrees that, as provided in the most recent field audit report, effective as of
the date hereof, the following reserves will be implemented in respect of the
Eligible Inventory component of the Borrowing Base:  (i) a reserve for slow-moving Inventory in
the amount of $3,115,000, and (ii) a test count reserve equal to seven percent
(7.0%) of the Eligible Inventory of Williams Furnace.  As a condition to the effectiveness of this
Amendment, the Company will deliver a pro forma Borrowing Base Certificate
setting forth the Borrowing Base as of April 3, 2010 (giving effect to the
modifications and the reserves set forth in this Amendment).  Notwithstanding anything to the contrary
contained herein, the Administrative Agent shall not be restricted from
implementing additional reserves or increasing any reserves with respect to the
Borrowing Base, which the Administrative Agent deems necessary in its reasonable
discretion.

 

4

 

Section 4.  Waiver.  It is hereby agreed and understood that,
subject to the complete fulfillment and performance of the conditions precedent
set forth in Section 7 of this Amendment, the Administrative Agent and
each Lender hereby waives the Existing Covenant Defaults and all of their
respective rights and remedies with respect to the Existing Covenant
Defaults.  The waiver hereunder will not
in any way operate as (i) an amendment or modification of the Credit Agreement
or any related agreement, (ii) a waiver of repayment by the Company of any
portion of the outstanding Obligations under the Credit Agreement, or (iii) a
waiver of, or consent with respect to, any existing or future Event of Default,
or a waiver or abandonment to any right or remedy available to the Lender with
respect to any such Event of Default, all of which rights are reserved.

 

Section 5.  Revolving Loan Note and Term Loan Note.  It is hereby agreed and understood that the Revolving
Loan Note and the Term Loan Note remain in full force and effect and that the
Obligations evidenced thereby remain due and payable on the terms set forth
therein and in the Credit Agreement (as modified by this Amendment).

 

Section 6.  Amendment
of the Loan Documents.  It is hereby
agreed and understood by the Administrative Agent, each Lender and the Company
that, subject to the complete fulfillment and performance of the conditions
precedent set forth in Section 7 of this Amendment and effective as of
the effective date of this Amendment, each reference to the Credit Agreement,
the Revolving Loan, the Term Loan, the Revolving Loan Note, the Term Loan Note,
and/or any other defined terms or any Loan Documents in any Loan Documents
shall be deemed to be a reference to any such defined terms or such agreements
as such terms or agreements are amended or modified by this Amendment.  Any breach of any representation, warranty,
covenant or agreement contained in this Amendment shall be deemed to be an Event
of Default for all purposes of the Credit Agreement.

 

Section 7.  Conditions
Precedent.  The effectiveness of this
Amendment and the obligations of the Administrative Agent and each Lender
hereunder are subject to the satisfaction, or waiver by the Administrative
Agent, of the following conditions precedent on or before the date hereof
(unless otherwise provided or agreed to by the Administrative Agent) in
addition to the conditions precedent specified in Section 12.2 of the
Credit Agreement:

 

A.                                   The Company
shall have (i) paid to the Administrative Agent, for its benefit and the
ratable benefit of each Lender, a waiver and amendment fee of $20,000, and (ii)
paid and/or reimbursed all reasonable fees, costs and expenses relating to this
Amendment and owed to the Lender pursuant to the Credit Agreement in connection
with this Amendment.

 

B.                                     The Company
shall have delivered, or caused to be delivered, original fully completed,
dated and executed originals of (i) this Amendment, (ii) a pro forma Borrowing
Base Certificate setting forth the Borrowing Base as of April 3, 2010 (giving
effect to the modifications and the reserves set forth in this Amendment), and (iii)
such other certificates, instruments, agreements or documents as the
Administrative Agent may reasonably request (each of the foregoing
certificates, instruments, agreements and documents described in this Section
7(B) (other than this Amendment) which constitute Loan Documents are
hereinafter referred to collectively as the “Other Documents”).

 

5

 

C.                                     The following
statements shall be true and correct and the Company, by executing and
delivering this Amendment to the Lender and the Administrative Agent, hereby
certifies that the following statements are true and correct as of the date
hereof:

 

(1)                                  Other than as
expressly contemplated by this Amendment, since the date of the most recent
financial statements furnished by the Company to the Administrative Agent
(which financial statements were true and correct in all material respects and
otherwise conformed to the requirements set forth in the Credit Agreement for
such financial statements), there shall have been no change which has had or
will have a material adverse effect on the business, operations, properties or
financial condition of the Loan Parties taken as a whole;

 

(2)                                  The
representations and warranties of the Company set forth in the Credit Agreement
and the other Loan Documents (as amended by this Amendment) are true and
correct in all respects on and as of the date of this Amendment with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date, and no
Unmatured Event of Default or Event of Default (other than the Existing
Covenant Defaults waived in this Amendment) has occurred and is continuing; and

 

(3)                                  No consents,
licenses or approvals are required in connection with the execution, delivery
and performance by the Company of this Amendment or the Other Documents or the
validity or enforceability against the Company of this Amendment or the Other
Documents which have not been obtained and delivered to the Lender.

 

Section 8.  Miscellaneous.

 

A.                                   Except as
expressly amended and modified by this Amendment, the Credit Agreement and the
other Loan Documents are and shall continue to be in full force and effect in
accordance with the terms thereof.

 

B.                                     This Amendment
may be executed by the parties hereto in counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.

 

C.                                     This Amendment
shall be construed in accordance with and governed by the internal laws, and
not the laws of conflict, of the State of Illinois.

 

D.                                    The headings
contained in this Amendment are for ease of reference only and shall not be
considered in construing this Amendment.

 

[SIGNATURE PAGES FOLLOW]

 

6

 

IN
WITNESS WHEREOF, the parties hereto have caused this Waiver and Second
Amendment to Credit Agreement to be duly executed as of the day and year first
above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL MATERIALS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Joseph J. Sum

  
	
   

  	
   

  	
  Joseph J. Sum

  
	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE
  AGENT AND LENDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE PRIVATEBANK AND TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Steven M. Cohen

  
	
   

  	
   

  	
  Steven M. Cohen

  
	
   

  	
   

  	
  Managing Director & Senior Vice President

  

 

7

 

ACKNOWLEDGMENT, AGREEMENT,
CONSENT 

AND REAFFIRMATION OF LOAN PARTIES

 

Each
of the undersigned Loan Parties, for good and valuable consideration, receipt
of which is hereby acknowledged:  (a) hereby
acknowledges receipt of a copy of the foregoing Amendment, acknowledges that
such Loan Party has read and reviewed the terms thereof, and acknowledges that
such Loan Party has been afforded an adequate opportunity to have the foregoing
Amendment reviewed by such Loan Party’s counsel; (b) hereby consents to the
terms and conditions of the foregoing Amendment; and (c) hereby acknowledges
and agrees that such Loan Party’s duties, obligations and liabilities to the
Administrative Agent and/or the Lender under the Guaranty and Collateral
Agreement shall be continuing and shall remain in full force and effect against
such Loan Party irrespective of the amendments to the Credit Agreement
contained in the foregoing Amendment or any other amendments or modifications
to any of the other Loan Documents.

 

In addition to the foregoing, each of the undersigned
Loan Parties (i) hereby ratifies, reaffirms and confirms its pledge,
hypothecation, and grant of a continuing lien and first priority security
interest in favor of the Administrative Agent in all of the assets of such Loan
Party pledged to the Administrative Agent under the Guaranty and Collateral
Agreement (subject to the terms and conditions set forth therein), and (ii) hereby
acknowledges that such pledge shall continue in full force and effect securing
the Secured Obligations under and as defined in the Guaranty and Collateral
Agreement notwithstanding the execution and delivery of the foregoing
Amendment.

 

IN
WITNESS WHEREOF, each of the undersigned Loan Parties has duly executed this
Acknowledgment, Agreement, Consent and Reaffirmation of Loan Parties to the
Waiver and Second Amendment to Credit Agreement as of April 15, 2010.

 

	
   

  	
  MCKINNEY DOOR AND HARDWARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph J. Sum

  
	
   

  	
   

  	
  Joseph J. Sum

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  TRANSIT MIX CONCRETE CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph J. Sum

  
	
   

  	
   

  	
  Joseph J. Sum

  
	
   

  	
   

  	
  Treasurer

  

 

8

 

	
   

  	
  TRANSIT MIX OF PUEBLO, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph J. Sum

  
	
   

  	
   

  	
  Joseph J. Sum

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  WILLIAMS
  FURNACE CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph J. Sum

  
	
   

  	
   

  	
  Joseph
  J. Sum

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  PHOENIX
  MANUFACTURING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph J. Sum

  
	
   

  	
   

  	
  Joseph
  J. Sum

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  CASTLE
  CONCRETE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph J. Sum

  
	
   

  	
   

  	
  Joseph
  J. Sum

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  EDENS
  INDUSTRIAL PARK INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph J. Sum

  
	
   

  	
   

  	
  Joseph
  J. Sum

  
	
   

  	
   

  	
  Treasurer

  

 

9

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