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EXHIBIT 10.11
FIRST AMENDMENT TO THIRD
AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT
AGREEMENT (the "Amendment") is made and entered into effective the 15th day of
May, 1998, by and between KBK FINANCIAL, INC., a Delaware corporation (herein
called "Borrower"); BANK ONE, TEXAS, N.A., a national banking association, as
Agent for itself and the other Lenders (in such capacity, the "Agent"), XXXXX
FARGO BANK (TEXAS), N.A., a national banking association (successor in interest
to First Interstate Bank of Texas, N.A., a national banking association); FLEET
BANK, N.A., a national banking association, XXXXXXX BANK AND TRUST, N.A., a
national banking association; and BANK OF AMERICA TEXAS, N.A., a national
banking association (collectively, "Lenders"), in connection with the credit
facility more fully described in the Third Amended and Restated Credit
Agreement, as amended by this Amendment (collectively, the "Credit Facility").
R E C I T A L S:
WHEREAS, Borrower and Lenders entered into a Third Amended and Restated
Loan Agreement dated August 21, 1997 (which, as the same may be amended from
time to time, is herein called the "Loan Agreement"); the terms defined unless
otherwise defined herein; and
WHEREAS, Borrower and Lender desire to amend certain terms and
provisions of the Loan Agreement to (i) permit the extension of the maturity
date of the Revolving Credit Notes (Over-Advance); (ii) permit the execution of
Revolving Credit Notes (Bridge Loan) aggregating $5,000,000.00 to the Lenders;
and (iii) amend certain terms and provisions of the Loan Agreement.
A G R E E M E N T:
1. Amendments to the Loan Agreement. The Loan Agreement is, effective
the date hereof, and subject to the satisfaction of the conditions precedent set
forth in Section 2 hereof, hereby amended as follows:
(a) Section 1, Credit Facility, Paragraph B(c), is hereby amended by
deleting the reference to the Over-Advance Maturity Date of "AUGUST 19,
1998 [364 DAYS FROM CLOSING]" and substituting "MAY 14, 1999" therefor.
(b) Section 1, Credit Facility. An additional Paragraph C entitled
"Bridge Notes," is hereby added as follows:
"C. Bridge Notes.
(a) Bridge Notes: Borrower's obligation to repay the
portion of the indebtedness advanced by the Lenders under the
Credit Facility (the "Bridge Credit Facility") shall be
evidenced by its execution of a promissory note (the "Bank One
Note") dated of even date herewith in the form attached hereto
as Exhibit "A-1", a promissory note (the "Xxxxx Fargo Note")
dated of even date herewith in the form
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attached hereto as Exhibit "A-2", a promissory note (the
"Bank of America Note") dated of even date herewith in the
form attached hereto as Exhibit "A-3", a promissory note (the
"Fleet Note") dated of even date herewith in the form attached
hereto as Exhibit "A-4" and a promissory note (the "Xxxxxxx
Note") dated of even date herewith in the form attached hereto
as Exhibit "A-5" (collectively, the "Bridge Notes").
(b) Maximum Bridge Credit Facility Availability;
Advance Procedure: $5,000,000.00, subject to the limitations
set forth in this Amendment, and the face amount of the
note(s) payable to each of the Lenders based on its pro-rata
participation interest to be distributed by each of the
Lenders. Borrower may request advances pursuant to the Bridge
Credit Facility from Agent by telephone at least one (1)
Business Day (as defined in the Loan Agreement) prior to the
requested date of advance for advances accruing interest at
the Prime Rate (as defined in the Loan Agreement). Agent shall
request each Lender to make available to Agent such Lender's
portion of the requested advance, as described in Section
10(k) of the Loan Agreement. Agent shall advance to Borrower
all funds delivered by the Lenders to Agent for the purpose of
funding such requested advance to Borrower.
(c) Term: Through October 15, 1998 (the "Bridge
Maturity Date").
(d) Rate: The Prime Rate (as defined in the Loan
Agreement) plus, one and one-quarter percent (1-1/4%) (the
"Index Rate"), not to exceed the maximum non-usurious rate
permitted by applicable law (the "Maximum Rate").
(e) Repayment Terms: Accrued and unpaid interest
shall be due and payable on the last day of each calendar
month with the balance of unpaid principal and accrued and
unpaid interest due and payable on the Bridge Maturity Date;
provided, however, Borrower shall apply the net proceeds
received by it from (i) the sale of any equity securities of
Borrower, or any warrant, option or other right to acquire any
equity securities of Borrower (and any proceeds resulting from
the exercise thereof), or (ii) the sale of any debt securities
of Borrower which are subordinate in right of payment to the
Bridge Notes, or any warrant, option or other right to acquire
such debt securities (and any proceeds resulting from the
exercise thereof), to the repayment of all amounts owing under
the Bridge Notes before such proceeds are used for any other
purpose(s). To the extent any such proceeds are insufficient
to repay the Bridge Notes in full, the foregoing covenant
shall continue in effect with respect to any proceeds received
from any such events until all amounts owing thereon have been
repaid in full.
(f) Purpose: To enable Borrower to finance certain
mezzanine loans.
(c) Section 2, Interest, is hereby amended by adding the following
Subparagraph (j):
"(j) The Bridge Notes shall accrue interest at
the rate set forth in Xxxxxxx 0(x)(x) xxxxxx."
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(x) Section 4, Reporting Requirements, Paragraph (b), Quarterly
Financial Statements, reference to "Exhibit 'D' annexed hereto" is
hereby replaced and substituted with Exhibit "D" attached to and made a
part of this Amendment.
(e) Xxxxxxx 0, Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxx (x), Current Committed
Amount, the reference to "Exhibit 'E' annexed hereto" is hereby
replaced and substituted with that Exhibit "E" attached to and made a
part of this Amendment.
(f) Section 5, Affirmative Covenants, Paragraph (d), Borrowing Base,
Subparagraph (2), is hereby amended by adding the following provisional
covenant at the end of Subparagraph (2):
"However, the ten percent (10%) limitation for the
Over-Advance Facility shall be eliminated until the Bridge
Maturity Date. In addition, until the Bridge Maturity Date,
loans to and accounts purchased from Xxxxxx Shipbuilding and
Xxxxxx Industries shall not be excluded from the Over-Advance
Borrowing Base because of non-compliance with Subsection (F)
of Section 5(e) below."
(g) Xxxxxxx 0, Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxx (x), Borrowing Base, is
hereby amended by adding the following Subparagraph (4) at the end of
Paragraph (d):
"(4) The borrowing base for the Bridge Facility (the
"Bridge Borrowing Base") shall be the sum of Borrower's
acceptable "mezzanine loans" as determined by the Agent, in
its sole discretion, not to exceed $5,000,000.00. If at any
time the amount outstanding under the Bridge Note is greater
than the Bridge Borrowing Base at such time, Borrower shall
immediately make a prepayment on the Bridge Note in an amount
to reduce the aggregate outstanding amounts thereof to an
amount not more than the Bridge Borrowing Base."
(h) Xxxxxxx 0, Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx (e), Indebtedness,
Subparagraph (ii), is hereby amended by deleting the reference to "(ii)
INCUR FUNDED DEBT SO LONG AS THE AGGREGATE OF ALL OUTSTANDING FUNDED
DEBT OF BORROWER AND GUARANTOR DOES NOT EXCEED $1,000,000.00," and
substituting "(ii) INCUR FUNDED DEBT SO LONG AS THE AGGREGATE OF ALL
OUTSTANDING FUNDED DEBT OF BORROWER AND GUARANTOR IS UNSECURED AND DOES
NOT EXCEED $5,000,000.00," therefor.
2. Conditions of Effectiveness. This Amendment shall become effective
when, and only when, Lender shall have received counterparts of this Amendment
executed by Borrower and Section 1 hereof shall become effective when, and only
when, Lender shall have additionally received all of the follow ing documents,
each document (unless otherwise indicated) being dated the date of receipt
thereof by Lender (which date shall be the same for all such documents), in form
and substance satisfactory to the Lender:
(a) $5,000,000.00 Bridge Note(s), on a pro-rata amount payable
to Lenders in accordance with their participation interest in the
Credit Facility;
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(b) A certificate of the Board of Directors of Borrower and
KBK Capital Corporation ("Guarantor") authorizing the execution,
delivery and performance of this Amendment, and the matters
contemplated hereby;
(c) Counterparts of the consent appended hereto (the "Consent
of Guarantor") executed by Guarantor;
(d) Fifth Amendment to Amended and Restated Accounts
Receivable and Inventory Security Agreement;
(e) The Current Commitment Letter stipulating amounts agreed
to by all Lenders;
(f) A loan commitment fee equal to $12,500.00; and
(g) Any and all other documentation as Lender may reasonably
require.
3. Representations and Warranties of Borrower. Borrower represents and
warrants as follows:
(a) Borrower is duly authorized and empowered to execute,
deliver and perform this Amendment and all other instruments referred
to or mentioned herein to which it is a party, and all action on its
part requisite for the due execution, delivery and the performance of
this Amendment has been duly and effectively taken. This Amendment,
when executed and delivered, will constitute valid and binding
obligations of Borrower enforceable in accordance with its terms. This
Amendment does not violate any provisions of Borrower's Articles of
Incorporation, By-Laws, or any contract, agreement, law or regulation
to which Borrower is subject, and does not require the consent or
approval of any regulatory authority or governmental body of the United
States or any state.
(b) The representations and warranties made by Borrower in the
Loan Agreement are true and correct as of the date of this Amendment.
(c) No event has occurred and is continuing which constitutes
an Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
4. Reference to and Effect on the Loan Documents.
(a) Upon the effectiveness of Section 1 hereof, on and after
the date hereof, each reference in the Loan Agreement to "this
Agreement", "hereunder", "hereof", "herein" or words of like import,
and each reference in the Security Documents shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended above, the Loan Agreement,
the Notes and the Security Documents shall remain in full force and
effect and are hereby ratified and confirmed. Without limiting the
generality of the foregoing, the Security Documents and all collateral
described therein do and shall continue to secure the payment of all
obligations of Borrower
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under the Loan Agreement and the Notes, as amended hereby and under
the other Security Documents.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of Lender under any of the
Security Documents, nor constitute a waiver of any provision of any of
the Security Documents.
5. Waiver. As additional consideration for the execution, delivery and
performance of this Amendment by the parties hereto and to induce Lender to
enter into this Amendment, Borrower warrants and represents to Lender that no
facts, events, statuses or conditions exist or have existed which,
either now or with the passage of time or giving of notice, or both, constitute
or will constitute a basis for any claim or cause of action against Lender or
any defense to (i) the payment of any obliga tions and indebtedness under the
Notes and/or the Security Documents or (ii) the performance of any of its
obligations with respect to the Notes and/or the Security Documents, and in the
event any such facts, events, statuses or conditions exist or have existed,
Borrower unconditionally and irrevocably waives any and all claims and causes of
action against Lender and any defenses to its payment and performance
obligations in respect to the Notes and the Security Documents.
6. Costs and Expenses. Borrower agrees to pay on demand all costs and
expenses of Lender in connection with the preparation, reproduction, execution
and delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses of
counsel for Lender. In addition, Borrower shall pay any and all fees payable or
determined to be payable in connection with the execution and delivery, filing
or recording of this Amendment and the other instruments and documents to be
delivered hereunder, and agrees to save Lender harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such fees.
7. Execution in Counterparts. 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 to be an original
and all of which taken together shall constitute but one and the same
instrument.
8. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Texas.
9. Final Agreement. THIS WRITTEN AMENDMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed in multiple counterparts, each of which is an original
instrument for all purposes, all as of the day and year first above written.
"BORROWER"
KBK FINANCIAL, INC.
By: /s/ XXXXXXX X. XXXXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
---------------------------------
Title: Vice President and Controller
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Address for Notice:
2200 City Center II
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxx X. XxXxx
Telephone No.: 817/000-0000
Telecopy No.: 817/258-6110
ACCEPTED AND AGREED TO:
BANK ONE, TEXAS, N.A.
By: /s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx, Senior Vice President
Address for Notice:
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
XXXXX FARGO BANK (TEXAS), N.A.
By: /s/ XXXX X. XXXXXXXX
----------------------------
Name: Xxxx X. Xxxxxxxx
--------------------------
Title: Vice President
-------------------------
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Address for Notice:
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Telephone No.: ________________
Telecopy No.: 817/347-0056
FLEET BANK, N.A.
By: /s/ XXXXXX X. XXX
----------------------------
Name: Xxxxxx X. Xxx
--------------------------
Title: Vice President
-------------------------
Address for Notice:
000 Xxxxx Xxxxxx
Mail Stop NYNYF16E
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
XXXXXXX BANK AND TRUST, N.A.
By: /s/ XXX X. XXXXXXX
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Xxx X. Xxxxxxx, Senior Vice President
Address for Notice:
000 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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XXXX XX XXXXXXX, XXXXX, N.A.
By: /s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx, Vice President
Address for Notice:
000 Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
GUARANTOR:
By execution hereof the undersigned Guarantor consents to the terms of
this Agreement including, without limitation, the obligations imposed pursuant
to Section 4 hereof and the waivers set forth in Section 5 hereof.
"Borrower"
KBK FINANCIAL, INC.
By: /s/ XXXXXXX X. XXXXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
---------------------------------
Title: Vice President and Controller
-------------------------------
Address for Notice:
2200 City Center II
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxx 00000
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CONSENT OF GUARANTOR
Dated Effective as of May 15, 1998
The undersigned, KBK CAPITAL CORPORATION, as the Guarantor referred to
in the foregoing Amendment to which this Consent is annexed (the "Amendment"),
hereby consents to the foregoing Amendment and hereby confirms to and agrees
with each Lender that (i) the guaranties in effect on the date hereof to which
Guarantor is a party are, and shall continue to be, in full force and effect and
is hereby confirmed and ratified in all respects except that, upon the
effectiveness of, and on and after the date of, the Amendment, all references in
the guaranties to the Loan Agreement, shall mean the Loan Documents, the
Security Documents and Notes, as modified, extended and amended by the
Amendment, and (ii) the guaranties do, and shall continue to, guarantee the
payment by the Borrower to each Lender of its obligations under the Loan
Agreement, the Loan Documents, the Security Documents and the Notes, as
modified, extended and amended by this Amendment, including, without limitation,
the $5,000,000.00 Bridge Note(s).
KBK FINANCIAL, INC.
By: /s/ XXXXXXX X. XXXXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
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Title: Vice President and Controller
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EXHIBIT "D"
[FORM OF]
COMPLIANCE CERTIFICATE
Financial Covenant Required Ratio/Amount Actual
------------------ --------------------- Ratio/Amount
------------
Tangible Net Worth $10,000,000.00
-----------
Ratio of Funded Debt to
Primary Capital Not greater than 3.00 to 1.00
-----------
Amount of other funded Not greater than $5,000,000
indebtedness -----------
Interest Coverage Ratio Not less than 1.50 to 1.00
-----------
I further certify to the Agent that (a) no default under the Agreement
is existing on the date of this certificate, and (b) the foregoing report is
true and correct as of the date hereof. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings given thereto in the
Agreement.
By:
---------------------------------
Name:
---------------------------------
Title: Authorized Financial
Officer of KBK Financial, Inc.
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EXHIBIT "E"
[FORM OF]
CURRENT COMMITMENT LETTER
May _____, 1998
KBK Financial, Inc.
2200 City Center II
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Re: First Amendment to Third Amended and Restated Loan Agreement
of even date herewith (the "Loan Agreement"), among KBK
Financial, Inc. ("Borrower"), Bank One, Texas, N.A., Xxxxx
Fargo Bank (Texas), N.A., Bank of America Texas, N.A., Overton
Bank & Trust, N.A., and Fleet Bank, N.A. (collectively, the
"Banks")
Gentlemen:
In accordance with Section 5(c) of the Loan Agreement, the Borrower has
requested and the Banks hereby agree that, effective this date, the Current
Committed Amount(s) allowable under the Credit Facility shall be as follows:
Current Committed Revolving Amount $40,000,000
Current Committed Over-Advance Amount $ 5,000,000
Current Committed Bridge Amount $ 5,000,000
All capitalized terms used herein which have been defined in the Loan Agreement
have been used in accordance with the definitions ascribed to them in the Loan
Agreement.
Yours very truly,
BANK ONE, TEXAS, N.A.,
By:
---------------------------------
Name:
--------------------------------
Title:
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XXXXX FARGO BANK (TEXAS),
N.A.
By: /s/ XXXX X. XXXXXXXX
---------------------------------
Name: Xxxx X. Xxxxxxxx
--------------------------------
Title: Vice President
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BANK OF AMERICA, TEXAS, N.A.
By: /s/ XXXXXX X. XXXXX
---------------------------------
Name: Xxxxxx X. Xxxxx
--------------------------------
Title: Vice President
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FLEET BANK, N.A.
By: /s/ XXXXXX X. XXX
---------------------------------
Name: Xxxxxx X. Xxx
--------------------------------
Title: Vice President
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XXXXXXX BANK & TRUST, N.A.
By: /s/ XXX X. XXXXXXX
---------------------------------
Name: Xxx X. Xxxxxxx
--------------------------------
Title: Senior Vice President
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ACKNOWLEDGED AND AGREED TO:
"BORROWER"
KBK FINANCIAL, INC.
By: /s/ XXXXXXX X. XXXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxxx
---------------------------------
Title: Vice President and Controller
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"GUARANTOR"
KBK CAPITAL CORPORATION
By:
---------------------------------
Name:
--------------------------------
Title:
--------------------------------
