FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
EXHIBIT
10-11
FIRST
AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (the “Amendment”) is executed and
entered into this 28th day of June, 2006 by and between CTI Industries
Corporation, an Illinois corporation and CTI Helium, Inc. (collectively the
“Borrower”) and Charter One Bank, N.A., a national banking association (“Bank”)
and amends, as of the date hereof, the Loan and Security Agreement between
the
parties dated February 1, 2006 (the “Loan Agreement”). Capitalized terms used
herein without definition shall have the meanings ascribed to them in the Loan
Agreement.
For
and
in consideration of the mutual covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which
is
hereby acknowledged, the Loan Agreement is hereby amended as
follows:
1. In
Section
1.1
of the
Loan Agreement the definition for “Revolving Loan Excess Availability” shall be
deleted in its entirety.
2. The
definition of “Applicable Margin” in Section
1.1
Loan
Agreement shall be amended in it entirety to read as follows:
“Applicable
Margin”
shall
mean the rate per annum added to the Base Rate to determine the Revolving
Interest Rate, Term Interest Rate and Mortgage Rate, as determined by the ratio
of Senior Debt to consolidated EBITDA of the Borrower and its Subsidiaries
for
the twelve month period ending as of the end of the prior fiscal quarter,
effective as of any Interest Rate Change Date, as set forth below:
Ratio
of Senior Debt to EBITDA
|
Applicable
Margin
|
|||
Greater
than or equal to 4.50 to 1.00
|
1.00
|
%
|
||
Greater
than or equal to 4.00 to 1.00; less than 4.50 to 1.00
|
0.75
|
%
|
||
Greater
than or equal to 3.50 to 1.00; less than 4.00 to 1.00
|
0.50
|
%
|
||
Greater
than or equal to 2.75 to 1.00; less than 3.50 to 1.00
|
0.25
|
%
|
||
Less
than 2.75 to 1.00
|
0.00
|
%
|
3. The
definition of “Letter of Credit Rate” in Section
1.1
of the
Loan Agreement shall be amended in its entirety to read as follows:
“Letter
of Credit Rate”
shall
mean the per annum rate as determined by the ratio of the Senior Debt to the
consolidated EBITDA of the Borrower and its Subsidiaries for the twelve month
period ending as to the end of the fiscal quarter most recently ended at the
time of the issuance of a Letter of Credit, as set forth below:
Ratio
of Senior Debt to EBITDA
|
Letter
of Credit Rate
|
|||
Greater
than or equal to 4.00 to 1.00
|
2.25
|
%
|
||
Greater
than or equal to 3.50 to 1.00; less than 4.00 t0 1.00
|
2.00
|
%
|
||
Greater
than or equal to 2.75 to 1.00; less than 3.50 to 1.00
|
1.75
|
%
|
||
Greater
than or equal to 2.00 to 1.00; less than 2.75 to 1.00
|
1.50
|
%
|
||
Less
than 2.00 to 1.00
|
1.25
|
%
|
4. The
definition of “Non-Utilization Fee Rate” in Section
1.1
of the
Loan Agreement shall be amended in its entirety to read as follows:
“Non-Utilization
Fee Rate”
shall
mean the per annum rate as determined by the ratio of the Senior Debt to the
consolidated EBITDA of the Borrower and its Subsidiaries for the twelve month
period ending as of the end of the prior fiscal quarter, as set forth
below:
Ratio
of Senior Debt to EBITDA
|
Non-Utilization
Fee Rate
|
|||
Greater
than or equal to 4.00 to 1.00
|
0.25
|
%
|
||
Greater
than or equal to 2.75 to 1.00; less than 4.00 to 1.00
|
0.15
|
%
|
||
Less
than 2.75 to 1.00
|
0.10
|
%
|
5. Section
2.1(a)
of the
Loan Agreement shall be amended in its entirety to read as follows:
(a) Revolving
Loan Commitment.
Subject
to the terms and conditions of this Agreement and the other Loan Documents,
and
in reliance upon the representations and warranties of the Borrower set forth
herein and in the other Loan Documents, the Bank agrees to make such Revolving
Loans at such times as the Borrower may from time to time request until, but
not
including, the Revolving Loan Maturity Date, and in such amounts as the Borrower
may from time to time request, provided, however, that the aggregate principal
balance of all Revolving Loans outstanding at any time shall not exceed the
Revolving Loan Availability. Revolving Loans made by the Bank may be repaid
and,
subject to the terms and conditions hereof, borrowed again up to, but not
including the Revolving Loan Maturity Date unless the Revolving Loans are
otherwise accelerated, terminated or extended as provided in this Agreement.
The
Revolving Loans shall be used by the Borrower for the purposes of refinancing
existing indebtedness with Xxxx Xxxxxx Bank, funding working capital and for
general corporate purposes.
6. Section
2.1(c)(i)
of the
Loan Agreement shall be amended in its entirety to read as follows:
(i) Revolving
Loan Maturity Payments.
All
Revolving Loans hereunder shall be repaid by the Borrower on the Revolving
Loan
Maturity Date, unless payable sooner pursuant to the provisions of this
Agreement. In the event the aggregate outstanding principal balance of all
Revolving Loan Obligations hereunder exceeds the Revolving Loan Availability,
the Borrower shall, without notice or demand of any kind, immediately make
such
repayments of the Revolving Loans or take such other actions as are satisfactory
to the Bank as shall be necessary to eliminate such excess.
7. Section
10.3
of the
Loan Agreement shall be amended in its entirety to read as follows:
10.3 Senior
Debt to EBITDA.
As of
the end of each of its fiscal quarters set forth below, the Borrower and its
Subsidiaries shall maintain a ratio of (a) consolidated Senior Debt; to (b)
consolidated EBITDA for the twelve month period ending on the last day of such
fiscal quarter, plus,
for the
twelve month period ending on June 30, 2006 only, an add-back adjustment of
$388,000, plus
for the
twelve month period ending on September 30, 2006 only, an add-back adjustment
of
$194,000, of not greater than the following:
Computation
Period Ending
|
Senior
Debt to EBITDA
|
|||
June
30, 2006
|
3.75
to 1.00
|
|||
September
30, 2006
|
3.50
to 1.00
|
|||
December
31, 2006
|
3.25
to 1.00
|
|||
March
31, 2007
|
3.25
to 1.00
|
|||
June
30, 2007 and thereafter
|
3.00
to 1.00
|
8. Section
10.4
of the
Loan Agreement shall be amended in its entirety to read as follows:
10.4 Fixed
Charge Coverage.
As of
the end of each fiscal quarter, the Borrower and its Subsidiaries shall maintain
a ratio of (a) the total for the Computation Period (as defined below) ending
on
the last day of such fiscal quarter of EBITDA minus
the sum
of all income taxes paid in cash by the Borrower and its Subsidiaries and all
Capital Expenditures which are not financed with Funded Debt, to (b) the sum
for
such Computation Period of (i) Interest Charges plus
(ii)
required payments of principal of Borrower’s Funded Debt (including the Term
Loan and Mortgage Loan, but excluding the Revolving Loans) for such period,
of
not less than 1.15 to 1.00. The “Computation Period” as used herein shall mean
six months for the quarter ending June 30, 2006, nine months for the quarter
ending September 30, 2006 and twelve months thereafter.
9. In
order
to induce the Bank to execute and deliver this Amendment, the Borrower hereby
represents to the Bank: (a) that immediately after giving effect to this
Amendment, each of the representations and warranties by Borrower set forth
in
Section
7
of the
Loan Agreement (except those representations that relate expressly to an earlier
date) are and shall be true and correct; and (b) that Borrower is and shall
be
in full compliance with the terms of the Loan Agreement as so amended and that
no Event of Default shall be continuing or shall result after giving effect
to
this Amendment.
10. The
effectiveness of this Amendment is subject to satisfaction of all of the
following conditions:
(a) The
receipt by Bank of evidence satisfactory to it of the existence of the insurance
required to be maintained by Borrower pursuant to Section 8.6 of the Loan
Agreement, together with evidence that the Bank has been named as a lender’s
loss payee and as an additional insured on all related insurance
policies.
(b) The
payment by Borrower of all outstanding fees and costs of Bank relating to the
Loan Agreement and this Amendment, including all legal fees;
(c) The
receipt by Bank of a Reaffirmation of Guaranty from each of the Guarantors,
in
form and substance acceptable to the Bank;
(d) The
receipt by Bank of resolutions of the Board of Directors of the Borrower,
authorizing the execution of this Amendment; and
(e) The
receipt by Bank of such other certificates, schedules, information or documents
as Bank shall request.
11. To
the
extent the terms of this Amendment conflict with the terms of the Loan
Agreement, the terms hereof shall be controlling. Except as specifically amended
hereby, the Loan Agreement shall remain unchanged and in full force and effect.
The Loan Agreement, as amended hereby, and all rights and powers created thereby
and thereunder are in all respects ratified and confirmed. This Amendment may
be
executed in any number of counterparts and by different parties hereto on
separate counterparts and each such counterpart shall be deemed an original,
but
all such counterparts together shall constitute but one and the same Amendment.
This Amendment shall be binding upon and inure to the benefit of the Bank and
the Borrower, and their respective successors and assigns. This Amendment shall
be governed by and construed in accordance with the laws of the State of
Illinois.
IN
WITNESS WHEREOF the parties hereto have caused this Amendment to be duly
executed and delivered by their duly authorized officers as of the date first
set forth above.
CTI Helium, Inc. | CTI Industries Corporation | |||
By: | /s/ Xxxxxxx X. Xxxxxxx | By: | /s/ Xxxxxxx X. Xxxxxxx | |
Title:
Executive Vice President
|
Title: Executive Vice
President
|
Charter
One Bank, N.A.
By: | /s/ Xxxxx Xxxxxx | |
Title: Vice
President
|
[First
Amendment to Loan and Security Agreement]