Item 1.01 Entry into a Material Definitive Agreement.
On April 3, 2017, Katy Industries, Inc. (the Company), Continental Commercial Products, LLC (CCP), FTW Holdings, Inc. (FTW Holdings), Fort Wayne Plastics, Inc. (Fort Wayne and, together with the Company, CCP, and FTW Holdings, the Borrowers, and each, a Borrower) entered into the Sixth Amendment (the Sixth Amendment) to the Second Lien Credit and Security Agreement, dated as of April 7, 2015 (as amended from time to time, the VPC Credit Agreement), among the Borrowers, Victory Park Management, LLC, in its capacity as administrative agent and collateral agent (the Agent), and the lenders party to the Sixth Amendment (the Lenders).
The Sixth Amendment provides for, among other things (i) the incurrence by the Borrowers of additional debt in the amount of $1 million under the VPC Credit Agreement and (ii) the use of the proceeds of such additional debt to provide incremental liquidity to the Borrowers by reducing the outstanding balance under the revolving credit facility of the Borrowers under the Credit and Security Agreement, dated as of November 16, 2016 (as amended from time to time, the Encina Credit Agreement), among the Borrowers, certain affiliates of the Borrowers, Encina Business Credit SPV, LLC, as agent and swing line lender (Encina), and the lenders party to the Encina Credit Agreement.
In connection with the Sixth Amendment, on April 3, 2017, CCP entered into a consent and acknowledgement (the Consent and Acknowledgement) with Encina. Encina (i) consented to the Borrowers incurring additional indebtedness pursuant to the terms and conditions of the Sixth Amendment and (ii) agreed that the proceeds of the additional indebtedness pursuant to the Sixth Amendment, upon remittance to and receipt by Encina, shall be applied by Encina to reduce outstandings under the Revolving Credit Facility (as defined in the Encina Credit Agreement) in accordance with Section 2.05(b)(vi) of the Encina Credit Agreement to provide, dollar-for-dollar, the Borrowers with incremental liquidity. Encina also agreed to grant Borrower an extension of delivery for the business plan until April 7, 2017. Failure of Borrowers to deliver the business plan prior to April 7, 2017 shall constitute an immediate event of default under the Encina Credit Agreement.
The foregoing descriptions of the Sixth Amendment and Consent and Acknowledgement do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Sixth Amendment and Consent and Acknowledgement, a copy of each which is filed as Exhibit 10.1 and 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.