-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FBhwo8PuXRiRBvrTNFO89hPrjuU7WXAQHltITtbgks4KQ2wxKaJDZc1jxNZ3buCo 7YwdXufKF1+fctvR8rxDCw== 0001169232-05-001971.txt : 20050401 0001169232-05-001971.hdr.sgml : 20050401 20050401094232 ACCESSION NUMBER: 0001169232-05-001971 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050329 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050401 DATE AS OF CHANGE: 20050401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KATY INDUSTRIES INC CENTRAL INDEX KEY: 0000054681 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 751277589 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05558 FILM NUMBER: 05723079 BUSINESS ADDRESS: STREET 1: 765 STRAITS TURNPIKE STREET 2: SUITE 2000 CITY: MIDDLEBURY STATE: CT ZIP: 06762 BUSINESS PHONE: 2035980397 MAIL ADDRESS: STREET 1: 765 STRAITS TURNPIKE STREET 2: SUITE 2000 CITY: MIDDLEBURY STATE: CT ZIP: 06762 8-K 1 d63226_8k.txt CURRENT REPORT ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 8-K --------------- CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 29, 2005 KATY INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 001-05558 75--1277589 (State of Incorporation) (Commission File Number) (IRS Employer Identification No.) 765 Straits Turnpike, Suite 2000 Middlebury, Connecticut 06762 (Address of principal executive offices) (Zip Code) (203) 598-0397 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act ================================================================================ Item 1.01 Entry into a Material Definitive Agreement. Katy Industries Inc. (the "Company") entered into the Second Amendment to Amended and Restated Loan Agreement dated as of March 29, 2005 with Fleet Capital Corporation. The Company obtained this amendment in anticipation of not achieving the minimum Fixed Charge Coverage Ratio or exceeding the maximum Consolidated Leverage Ratio as of the end of the first, second and third quarters of 2005. The amendment applies only to the first three quarters of 2005 and the covenants return to their original levels for the fourth quarter of 2005. Specifically, the amendment eliminates the Fixed Charge Coverage Ratio, increases the maximum Consolidated Leverage Ratio, establishes a Minimum Consolidated EBITDA (on a latest twelve months basis) for each of the periods and also establishes a Minimum Availability (the eligible collateral base less outstanding borrowings and letters of credit) on each day within the nine-month period. Subsequent to the amendment's effective date, the Company determined that it would not meet its amended financial covenants. The Company is in discussions with its lenders to obtain a further amendment to its credit agreement which is expected to allow for the Company to achieve future compliance based on its current forecast of future operating results. The Company may also pursue additional sources of capital, if necessary. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. Exhibit 10.1 Second Amendment to Amended and Restated Loan Agreement dated March 29, 2005 with Fleet Capital Corporation. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. KATY INDUSTRIES, INC. (Registrant) By: /s/ Amir Rosenthal ---------------------------------------- Amir Rosenthal Vice President, Chief Financial Officer, General Counsel and Secretary Date: April 1, 2005 Exhibits Exhibit No. Description - ----------- ----------- 10.1 Second Amendment to Amended and Restated Loan Agreement dated March 29, 2005 with Fleet Capital Corporation. EX-10.1 2 d63226_ex10-1.txt AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT Exhibit 10.1 Execution Copy SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT ("Second Amendment") is made as of this 29th day of March, 2005, by and among FLEET CAPITAL CORPORATION ("Fleet"), a Rhode Island corporation with an office at One South Wacker Drive, Suite 3400, Chicago, Illinois 60606, individually as a Lender and as Agent ("Agent") for itself and any other financial institution which is or becomes a party hereto (each such financial institution, including Fleet, is referred to hereinafter individually as a "Lender" and collectively as the "Lenders"), the CANADIAN PARTICIPANTS party hereto, the U.K. PARTICIPANTS party hereto, FLEET CAPITAL GLOBAL FINANCE, INC., individually as a Lender and as Canadian Agent ("Canadian Agent"), BANK OF AMERICA, N.A., London branch (as successor-in-interest to Fleet National Bank, London branch, trading as FleetBoston Financial), individually as a Lender and as U.K. Agent ("U.K. Agent"), WELLS FARGO FOOTHILL, LLC, as Syndication Agent, LASALLE BANK NATIONAL ASSOCIATION, as Documentation Agent, the LENDERS, KATY INDUSTRIES, INC., a Delaware corporation, with its chief executive office and principal place of business at 765 Straits Turnpike, Suite 2000, Middlebury, Connecticut 06762 ("Katy" or "U.S. Borrower"), WOODS INDUSTRIES (CANADA) INC., a Canadian corporation with its chief executive office and principal place of business at 375 Kennedy Road, Scarborough, Ontario M1K 2A3 ("Woods Canada" or "Canadian Borrower") and CEH LIMITED ("CEH" or "U.K. Borrower"), a private limited company incorporated under the laws of England and Wales and registered with Company No. 4992300 whose registered office is Cardrew Way, Redruth Cornwall, TR15 1ST, England. Katy, Woods Canada and CEH are sometimes hereinafter referred to individually as a "Borrower" and collectively as "Borrowers." W I T N E S S E T H: - - - - - - - - - - WHEREAS, Agent, Lenders, Canadian Participants, U.K. Participants, Canadian Agent, U.K. Agent and Borrowers entered into a certain Amended and Restated Loan Agreement dated as of April 20, 2004 as amended by a certain First Amendment to Amended and Restated Loan Agreement dated June 29, 2004 by and among Agents, Lenders and Borrowers (said Loan Agreement, as so amended, is hereinafter referred to as the "Loan Agreement"); and WHEREAS, Borrowers desire to amend and modify certain provisions of the Loan Agreement pursuant to the terms and conditions hereof; WHEREAS, subject to the terms and conditions hereof, Agent, Lenders, Canadian Participants, U.K. Participants, U.K. Agent and Canadian Agent are willing to so amend and modify the Loan Agreement; and NOW THEREFORE, in consideration of the premises, the mutual covenants and agreements herein contained, and any extension of credit heretofore, now or hereafter made by Agent and Lenders to Borrowers, the parties hereto hereby agree as follows: 1. Definitions. All capitalized terms used herein without definition shall have the meanings given to them in the Loan Agreement. 2. Financial Covenants. Upon the Second Amendment Effective Date, Exhibit 7.3 attached to the Loan Agreement shall be deemed deleted and Exhibit 7.3 attached hereto and incorporated herein shall be inserted in its stead. 3. Amendment Fee. In order to induce Agent and Lenders to enter into this Second Amendment, Borrowers agree to pay to each Lender that is a signatory hereto and has consented to the provisions contained herein an amendment fee equal to, in the aggregate, $137,500. Such fee shall be paid to Agent for the ratable benefit of each Lender that is a signatory hereto. Each such Lenders ratable share shall be equal to (x) the sum of such Lender's U.S. Revolving Loan Commitment plus the principal amount of such Lender's Term Loan divided by (y) the sum of all Lenders', who are signatories hereto, Revolving Loan Commitments plus the principal amount of all such Lenders' Term Loans. Such amendment fee shall be deemed fully earned and non-refundable on the Second Amendment Effective Date. 4. Condition Precedent. This Second Amendment shall become effective upon satisfaction of each of the following conditions: (i) Borrowers, Agents and majority Lenders shall have executed and delivered to each other this Second Amendment; and (ii) Borrowers shall have paid to Agent for the ratable benefit of each Lender that is a signatory hereto, the amendment fee referred to in Section 3 above. (iii) The date on which each of the foregoing conditions precedent is satisfied shall be referred to as the "Second Amendment Effective Date." 5. Continuing Effect. Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect. 6. Governing Law. This Second Amendment and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflicts of laws. 7. Counterparts. This Second Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement. (Signature Page Follows) 2 (Signature Page to Second Amendment to Loan Agreement) IN WITNESS WHEREOF, this Second Amendment has been duly executed on the day and year specified at the beginning of this Second Amendment. KATY INDUSTRIES, INC. By: /s/ Amir Rosenthal ------------------------------------- Name: Amir Rosenthal Title: Vice President and CFO CEH LIMITED By: /s/ C. Michael Jacobi ------------------------------------- Name: C. Michael Jacobi Title: Director and By: /s/ Christopher W. Anderson ------------------------------------- Name: Christopher W. Anderson Title: Director WOODS INDUSTRIES (CANADA) INC. By: /s/ Amir Rosenthal ------------------------------------- Name: Amir Rosenthal Title: Secretary FLEET CAPITAL CORPORATION, as Agent and as a Lender By: /s/ Jason Riley ------------------------------------- Name: Jason Riley Title: VP WELLS FARGO FOOTHILL LLC, as Syndication Agent and Lender By: /s/ Lan Wong ------------------------------------- Name: Lan Wong Title: Vice-President LASALLE BANK NATIONAL ASSOCIATION, as Documentation Agent and as a Lender By: /s/ Stephanie Kline ------------------------------------- Name: Stephanie Kline Title: Vice President UPS CAPITAL CORPORATION, as a Lender By: /s/ John P. Holloway ------------------------------------- Name: John P. Holloway Title: Director of Portfolio Management BANK OF AMERICA, N.A., London branch, as U.K. Agent and U.K. Lender By: ------------------------------------- Name: ------------------------------ Title: ----------------------------- FLEET CAPITAL GLOBAL FINANCE, INC., as Canadian Agent and Canadian Lender By: /s/ Mark Adkins ------------------------------------- Name: Mark Adkins Title: Vice President Accepted and Agreed to this 29th day of March, 2005. GUARANTORS: KKTY HOLDING COMPANY, L.L.C. By: /s/ Christopher W. Anderson ------------------------------------- Name: Christopher W. Anderson Title: Authorized Manager AMERICAN GAGE & MACHINE CO. By: /s/ Amir Rosenthal ------------------------------------- Name: Amir Rosenthal Title: Vice President and Secretary CONTINENTAL COMMERCIAL PRODUCTS, LLC By: /s/ Amir Rosenthal ------------------------------------- Name: Amir Rosenthal Title: Secretary PTR MACHINE CORP. By: /s/ Amir Rosenthal ------------------------------------- Name: Amir Rosenthal Title: Secretary SAVANNAH ENERGY SYSTEMS COMPANY By: /s/ Amir Rosenthal ------------------------------------- Name: Amir Rosenthal Title: Authorized Officer and Secretary WOODS INDUSTRIES, INC. By: /s/ Amir Rosenthal ------------------------------------- Name: Amir Rosenthal Title: Secretary EXHIBIT 7.3 FINANCIAL COVENANTS DEFINITIONS Consolidated EBITDA - for any period, the sum, without duplication, of the amounts for such period of (i) Consolidated Net Income, (ii) interest expense, (iii) provisions for taxes based on income, (iv) total depreciation expense, (v) total amortization expense, (vi) all unusual expenses and all other non-capitalized restructuring expenses (including costs and expenses attributable to employee severance obligations and facility consolidation costs) for such period to the extent not disallowed by Agent in its sole discretion, (vii) any payment of or accrual for the Management Fee under the Management Agreement, (viii) all other payments made to K&C and its Affiliates during such period for expenses incurred on behalf of Parent, Katy or any of their respective Subsidiaries pursuant to Kohlberg Agreements, (ix) any non-cash expense incurred with respect to Katy's stock appreciation rights plan ("SAR") and (x) any non-cash expense with respect to changes in market value of any options to purchase Katy's Common Stock and (xi) other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period), but only, in the case of clauses (ii)-(xi), to the extent deducted in the calculation of Consolidated Net Income less other non-cash items added in the calculation of Consolidated Net Income (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period), all of the foregoing as determined on a consolidated basis for Katy and its Subsidiaries in conformity with GAAP; provided that there shall be subtracted from the sum of items (i) through (xi) above the amount of any cash expenditure made within the applicable period pursuant to the SAR, to the extent that the amount of such cash expenditure was expensed or will be expensed against a prior or future period's Consolidated Net Income; provided, further, that (a) in the event any Loan Party makes an acquisition of any Person or any division or any business unit permitted hereunder or consented to by Majority Lenders during such period, if Katy provides Agent and Lenders financial statements with respect to the business so acquired (which financial statements shall have been audited by one of the "Big 4" accounting firms or another nationally recognized accounting firm reasonably satisfactory to Agent or financial statements otherwise satisfactory to Agent) reasonably satisfactory to Majority Lenders, Consolidated EBITDA for such period shall be calculated on a pro forma basis, taking into account the elimination of non-recurring expenses, based on the results of such acquired Person or acquired assets as if such acquisition had occurred on the first day of such period, and (b) in the event any Loan Party makes a Permitted Disposition (or any other disposition of any Person or any division or any business unit permitted hereunder or consented to by the Majority Lenders) during such period, Consolidated EBITDA for such period shall be calculated on a pro forma basis, based on the results of such disposed Person or disposed assets as if such Permitted Disposition (or such other disposition) had occurred on the first day of such period. Consolidated Fixed Charges, with respect to any period, the sum of: (i) scheduled principal payments required to be made during such period in respect to Indebtedness for Money Borrowed (including the principal portion of Capitalized Lease Obligations), plus (ii) Consolidated Interest Expense payable in cash for such period, all as determined for Borrowers and their Subsidiaries on a Consolidated basis and in accordance with GAAP. Exhibit 7.3 - Page 1 Consolidated Interest Expense - for any period, total interest expense of Katy and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Katy and its Subsidiaries, including, without limitation, net costs under Interest Rate Agreements, but excluding, however, (i) any amounts referred to in the Fee Letter or amortization thereof, (ii) any deferred financing fees or amortization thereof, (iii) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (iv) unused line charges, (v) non-cash charges included in interest expense other than in clauses (i) and (ii) and (vi) to the extent included in interest expense, costs associated with the unsuccessful second lien financing abandoned prior to the Closing Date. Consolidated Leverage Ratio, as at any date, the ratio of (a) Consolidated Total Debt as at such date minus contingent reimbursement obligations with respect to letters of credit or guaranties of letters of credit to (b) Consolidated EBITDA for the consecutive four fiscal quarters ending on the last day of the most recently ended fiscal quarter. Consolidated Net Income, for any period, the net income (or loss) of Katy on a Consolidated basis for such period taken as a single accounting period determined in conformity with GAAP; provided that there shall be excluded (i) the income (or loss) of any Person (other than a Subsidiary of Katy) in which any other Person (other than Katy or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to Katy or any of its Subsidiaries by such Person during such period, (ii) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Katy or is merged into or consolidated with Katy or any of its Subsidiaries or that Person's assets are acquired by Katy or any of its Subsidiaries, (iii) the income of any Subsidiary of Katy to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (iv) any after-tax gains or losses attributable to Asset Sales or returned surplus assets of any Pension Plan, (v) any LIFO reserves of CCP to the extent such LIFO reserves decrease or increase net income of CCP, and (vii) (to the extent not included in clauses (i) through (v) above) any net extraordinary gains or net extraordinary losses. Consolidated Total Debt means, as at any date of determination, the aggregate stated balance sheet amount (which shall not include the face amount of undrawn Letters of Credit) of all Money Borrowed of Katy and its Subsidiaries on the last day of the most recently ended fiscal quarter, determined on a Consolidated basis in accordance with GAAP. Fixed Charge Coverage Ratio, with respect to any period, the ratio of (i) Consolidated EBITDA for such period minus the sum of (a) any income taxes paid in cash during such period and restructuring payments made in cash after the Closing Date during such period plus (b) non-financed Capital Expenditures during such period, to (ii) Consolidated Fixed Charges for such period, all as determined for Borrowers and their Subsidiaries on a Consolidated basis and in accordance with GAAP. Exhibit 7.3 - Page 2 A. Fixed Charge Coverage Ratio. Katy shall not permit the Fixed Charge Coverage Ratio for any period set forth below to be less than the ratio set forth below opposite such period: Period Ratio ------ ----- Four Fiscal Quarters Ending December 31, 2005 and each March 31, June 30, September 30 and December 31 thereafter 1.10 to 1 B. Consolidated Leverage Ratio. Katy shall not permit the Consolidated Leverage Ratio as of any date set forth below to be more than the amount set forth below opposite such date: Period Ratio ------ ----- Four Fiscal Quarters Ending March 31, 2005 4.00 to 1 Four Fiscal Quarters Ending June 30, 2005 3.75 to 1 Four Fiscal Quarters Ending September 30, 2005 3.75 to 1 Four Fiscal Quarters Ending December 31, 2005 and each March 31, June 30, September 30 and December 31 thereafter 3.00 to 1 C. Minimum Consolidated EBITDA. Katy shall achieve Consolidated EBITDA for each of the fiscal periods listed below equal to or greater than the amount set forth opposite such period in the following schedule: Minimum Consolidated Fiscal Period EBITDA ------------- ------ Four Fiscal Quarters Ending March 31, 2005 $20,700,000 Four Fiscal Quarters Ending June 30, 2005 $22,000,000 Four Fiscal Quarters Ending September 30, 2005 $22,000,000 Exhibit 7.3 - Page 3 D. Minimum Aggregate Availability. Katy shall maintain, on each day within each of the fiscal periods listed below, Aggregate Availability in an amount equal to or greater than the amount set forth opposite such fiscal period in the following schedule: Minimum Aggregate ----------------- Fiscal Period Availability ------------- ------------ January 1, 2005 to March 31, 2005 $15,000,000 April 1, 2005 to June 30, 2005 $5,800,000 July 1, 2005 to September 30, 2005 $8,500,000 Exhibit 7.3 - Page 4 -----END PRIVACY-ENHANCED MESSAGE-----