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EXHIBIT 10.43
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered
into as of the 20th day of November, 2000, by and among the banks listed on the
signature pages hereof (the "Lenders"), KEVCO, INC., a Texas corporation (the
"Borrower"), and BANK OF AMERICA, N.A., formerly known as NationsBank, N.A., as
administrative agent for the Lenders (the "Administrative Agent"), to the extent
and in the manner provided for in the Credit Agreement (defined below and herein
so called).
BACKGROUND
(a) The Lenders, the Borrower, and the Administrative Agent
are parties to that certain Third Amended and Restated Credit Agreement
dated as of July 14, 1999 (as amended through the date hereof and as
may be further amended, extended, renewed, or restated from time to
time, the "Credit Agreement"; terms defined in the Credit Agreement and
not otherwise defined herein shall be used herein as defined in the
Credit Agreement).
(b) The Borrower has requested an amendment to certain
financial covenants under the Credit Agreement, and the Administrative
Agent and the Lenders have agreed to such amendment, subject to the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the parties
hereto covenant and agree as follows:
1. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement is hereby
amended as follows:
(a) Section 1.1 is amended by amending and restating in its
entirety the definition of "Applicable Base Rate Margin" as follows:
"Applicable Base Rate Margin" means, with respect to
Revolving Credit Advances and Facility A Term Loan Advances,
2.00%, per annum, and with respect to Facility B Term Loan
Advances, 2.50%, per annum; provided that if the Borrower
fails to make the mandatory prepayment required under Section
2.5(h) hereof on or before March 8, 2001, the Applicable Base
Rate Margin with respect to the Term Loan Advances shall be
immediately increased, without notice, by an additional 0.25%.
(b) Section 1.1 is amended by amending and restating in its
entirety the definition of "Applicable LIBOR Rate Margin" as follows:
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"Applicable LIBOR Rate Margin" means, with respect to
Revolving Credit Advances and Facility A Term Loan Advances,
3.50%, per annum, and with respect to Facility B Term Loan
Advances, 4.00%, per annum; provided that if the Borrower
fails to make the mandatory prepayment required under Section
2.5(h) hereof on or before March 8, 2001, the Applicable LIBOR
Rate Margin with respect to the Term Loan Advances shall be
immediately increased, without notice, by an additional 0.25%.
(c) Section 1.1 is amended by amending and restating in its
entirety the definition of "Permitted Assets Sales" as follows:
"Permitted Asset Sales" means (a) the sale of
inventory in the ordinary course of business, (b) the sale or
discount of accounts receivable arising in the ordinary course
of business in connection with the compromise or collection
thereof, (c) subject to the other terms and provisions hereof,
leases or subleases (or assignments of leases or subleases) or
licenses or sublicenses (or assignments of licenses or
sublicenses) of any assets in the ordinary course of business
and (d) the sale or other disposition of Cash Equivalents in
the ordinary course of business.
(d) Section 1.1 is amended by inserting the following
definitions in the appropriate alphabetical order, as follows:
"Eligible Accounts" shall mean, at any time, all
accounts (as such term is defined in the UCC) of the Borrower
and its Subsidiaries created in the ordinary course of
business, less any and all rebates and discounts, that satisfy
the following conditions:
(a) The account complies with all applicable laws,
rules, and regulations, including, without limitation, usury
laws, the Federal Truth in Lending Act, and Regulation Z of
the Board of Governors of the Federal Reserve System;
(b) The account has not been outstanding for more
than ninety (90) days past the original date of invoice;
(c) The account was created in connection with (i)
the sale of goods in the ordinary course of business and such
sale has been consummated and such goods have been shipped, or
(ii) the performance of services in the ordinary course of
business and such services have been completed and accepted by
the account debtor;
(d) The account arises from an enforceable contract,
the performance of which has been completed;
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(e) The account does not arise from the sale of any
good that is on a bill-and-hold, guaranteed sale,
sale-or-return, sale on approval, consignment, or any other
repurchase or return basis;
(f) The Borrower or its Subsidiary has good and
indefeasible title to the account and the account is not
subject to any Lien except Liens in favor of the
Administrative Agent;
(g) The account does not arise out of a contract with
or order from, an account debtor that, by its terms, prohibits
or makes void or unenforceable the grant of a security
interest to the Administrative Agent in and to such account;
(h) The account is not subject to any setoff,
counterclaim, defense, dispute, recoupment, or adjustment
other than normal discounts for prompt payment;
(i) The account debtor is not insolvent or the
subject of any bankruptcy or insolvency proceeding and has not
made an assignment for the benefit of creditors, suspended
normal business operations, dissolved, liquidated, terminated
its existence, ceased to pay its debts as they become due, or
suffered a receiver or trustee to be appointed for any of its
assets or affairs;
(j) The account is not evidenced by chattel paper or
an instrument, unless all steps necessary to perfect the
Administrative Agent's Lien thereon have been taken;
(k) No default exists under the account by any party
thereto;
(l) The account debtor has not returned or refused to
retain, or otherwise notified the Borrower or any Subsidiary
of any dispute concerning, or claimed nonconformity of, any of
the goods from the sale of which the account arose, but only
to the extent of the amount represented by the goods returned,
refused, disputed or claimed to be non-conforming;
(m) The account is not owed by an Affiliate of the
Borrower;
(n) The account is payable in Dollars by the account
debtor;
(o) The account shall be ineligible if the account
debtor is domiciled in any country other than the United
States of America or
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Canada, provided that such accounts owing by accounts debtors
domiciled in Canada shall not at any time exceed $100,000;
(p) The account shall be ineligible if more than five
percent (5%) of the aggregate balances then outstanding on
accounts owed by such account debtor and its Affiliates to the
Borrower and its Subsidiaries are more than ninety (90) days
past due from the dates of their original invoices, and to the
extent that the accounts owed by an account debtor and its
Affiliates to the Borrower and its Subsidiaries exceed seven
and one-half percent (7 1/2%) of the aggregate accounts then
owing to the Borrower and its Subsidiaries the amount of such
excess shall be ineligible; and
(q) The account shall be ineligible if the account
debtor is the United States of America or any department,
agency, or instrumentality thereof, and the Federal Assignment
of Claims Act of 1940, as amended, shall not have been
complied with.
The amount of the Eligible Accounts owed by an account debtor
shall be reduced by the amount of all "contra accounts" and
other obligations owed by the Borrower and its Subsidiaries to
such account debtor.
"Eligible Inventory" shall mean, at any time, all
inventory of raw materials and finished goods (but excluding
work in process) then owned by (and in the possession or under
the control of) the Borrower or its Subsidiaries and held for
sale or disposition in the ordinary course, in which the
Administrative Agent has a perfected, first priority security
interest, valued at the lower of actual cost or fair market
value. Eligible Inventory shall not include (a) inventory that
has been shipped or delivered to a customer on consignment, a
sale-or-return basis, or on the basis of any similar
understanding, (b) inventory with respect to which a claim
exists disputing title to or right to possession of such
inventory, and (c) inventory that is not in good condition or
does not comply with any applicable law, rule, or regulation
or any standard imposed by any governmental authority with
respect to its manufacture, use, or sale.
"Revolving Credit Borrowing Base" shall mean, at any
time, the lesser of (a) $5,000,000, or (b) the sum of (i) 75%
of Eligible Accounts (net of gross trade payables less
agreed-upon float and the face amount of Letters of Credit
which secure trade payables), plus (ii) 55% of Eligible
Inventory, each as shown on the most recent Revolving Credit
Borrowing Base Report delivered to Administrative Agent under
Section 6.9 hereof.
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"Revolving Credit Borrowing Base Report" means a
report, certified and signed by an Authorized Signatory, in
substantially the form of Exhibit E, appropriately completed.
"Scheduled Asset Sales" means those asset sales
described on Exhibit F hereto.
"Third Amendment Effective Date" means November 20,
2000.
(e) Section 2.1 is amended by entirely amending clause (a)(i)
thereof as follows:
(i) the principal amount of all outstanding Revolving
Credit Advances and Reimbursement Obligations exceed the
lesser of (A) the Revolving Credit Borrowing Base, or (B) the
Revolving Credit Commitment,
(f) Section 2.3 is amended by entirely amending clause (a)(ii)
thereof as follows:
(ii) Interest on the Base Rate Advances shall be
computed on the basis of a year of 365 or 366 days, as
applicable, for the number of days actually elapsed, and shall
be payable in arrears on each Monthly Date and on the
Revolving Commitment Maturity Date, the Facility A Term Loan
Maturity Date or the Facility B Term Loan Maturity Date, as
appropriate.
(g) Section 2.3 is amended by entirely amending clause (b)(ii)
thereof as follows:
(ii) Subject to Section 11.9 hereof, interest on each
LIBOR Advance shall be computed on the basis of a 360-day year
for the actual number of days elapsed, and shall be payable in
arrears on the applicable Payment Date and on the Revolving
Commitment Maturity Date, the Facility A Term Loan Maturity
Date and the Facility B Term Loan Maturity Date, as
appropriate; provided, however, that if the Interest Period
for such Advance exceeds one month, interest shall be due and
payable in arrears on each one-month anniversary of the
commencement of such Interest Period during such Interest
Period.
(h) Section 2.4 is amended by entirely amending the first
sentence thereof as follows:
Subject to Section 11.9 hereof, the Borrower agrees to pay to
the Administrative Agent, for the ratable account of the
Lenders, a commitment fee (the "Revolving Commitment Fee") on
the daily average Unused Portion at the rate of 0.500% per
annum.
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(i) Section 2.5 is amended by deleting the first sentence of
clause (b)(ii) thereof and replacing it with the following:
(ii) At any time when the limitation in Section 2.1(a)(i) is
exceeded, whether because the Revolving Credit Commitment has
been fully or partially terminated, canceled or reduced or for
any other reason, Borrower shall promptly prepay applicable
outstanding Revolving Credit Advances in an amount necessary
to reduce the sum of outstanding Revolving Credit Advances and
Reimbursement Obligations to an amount less than or equal to
the lesser of (A) the Revolving Credit Borrowing Base, or (B)
the Revolving Credit Commitment. At any time when the
limitation in Section 2.1(a)(ii)(A) is exceeded, whether
because the Revolving Credit Commitment has been fully or
partially terminated, canceled or reduced or for any other
reason, Borrower shall promptly prepay applicable outstanding
Revolving Credit Advances in an amount necessary to reduce the
sum of outstanding Revolving Credit Advances and Reimbursement
Obligations to an amount less than or equal to the Revolving
Credit Commitment.
(j) Section 2.5(c) is amended entirely, as follows:
(c) Prepayments from Sales of Assets.
(i) Concurrently with the receipt of Net Cash
Proceeds in excess of an aggregate amount equal to $500,000
from the sale or disposition by the Borrower or any of its
Subsidiaries of any assets (including the Capital Stock of any
Subsidiary) sold or disposed of (other than Permitted Asset
Sales) at any time, the Borrower shall prepay the Term Loan
Advances in a principal amount equal to (A) 100% of such Net
Cash Proceeds from asset sales other than Scheduled Asset
Sales and (B) 80% of such Net Cash Proceeds from Scheduled
Asset Sales.
(ii) [Intentionally deleted].
(iii) [Intentionally deleted].
(iv) Any prepayment made under this Section 2.5(c)
shall (A) include accrued but unpaid interest to the date of
such prepayment on the principal amount prepaid, (B) not be
subject to the notice and minimum payment provisions of this
Section 2.5; provided, however, the Borrower shall be required
to reimburse each Lender for any loss, cost or expense
incurred by such Lender in connection with any such prepayment
as set forth in Section 2.9 hereof if any prepayment results
in a LIBOR Advance being paid on a day other than the last day
of an Interest Period for such LIBOR
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Advance, and (C) be applied first to Base Rate Advances, if
any, and then to LIBOR Advances.
(v) (A) [Intentionally deleted].
(B) Any prepayment made under this Section 2.5(c)
shall be applied (A) to all of the unpaid scheduled
installment payments of the Facility A Term Loan Advances, in
inverse order of maturity, at all times until Borrower has
made prepayments under this Section 2.5(c) equal to
$3,750,000, in the aggregate, and (B) at any time after
Borrower has made prepayments under this Section 2.5(c) equal
to $3,750,000, in the aggregate, to all of the unpaid
scheduled installment payments of the Facility A Term Loan
Advances and the Facility B Term Loan Advances, in inverse
order of maturity, pro rata based upon the respective
principal amounts of the Facility A Term Loan Advances and
Facility B Term Loan Advances outstanding at the time of such
prepayment (provided, however, if at any time that there are
no Facility A Term Loan Advances and Facility B Term Loan
Advances outstanding, 100% of any such prepayment shall be
applied to repay outstanding Revolving Credit Advances but not
to permanently reduce the Revolving Credit Commitment).
(k) A new Section 2.5(h) is added immediately following
Section 2.5(g), as follows:
(h) Additional Mandatory Prepayment of Term Loan
Advances. If the aggregate amount of prepayments made under
Section 2.5(c) prior to March 8, 2001, is less than
$15,000,000, the Borrower shall, on March 8, 2001, prepay the
Term Loan Advances in a principal amount equal to the
difference between $15,000,000 and the actual amount prepaid
under Section 2.5(c) prior to March 8, 2001. Such prepayment
shall be applied to the Term Loan Advances in accordance with
Section 2.5(c) as if made with Net Cash Proceeds from asset
sales.
(l) Section 2.6(b) is entirely amended, as follows:
(b) Mandatory Reduction. (i) On the Revolving
Commitment Maturity Date, the Revolving Credit Commitment
shall automatically reduce to zero.
(ii) The Revolving Credit Commitment shall be
permanently reduced by the amount of any prepayment of
Revolving Credit Advances pursuant to Sections 2.5(e) and (f)
hereof.
(iii) The Revolving Credit Commitment shall be
permanently reduced by the amount of $10,000,000 upon the
earlier
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of (A) March 8, 2001, or (B) the date upon which the Borrower
makes a prepayment under Section 2.5(c) which causes the
aggregate amount of all prepayments made under Section 2.5(c)
to equal or exceed $15,000,000.
(m) Section 2.16(a)(i) is entirely amended, as follows:
(i) $7,500,000 (the "Letter of Credit Facility") and
(n) Section 6.9 is entirely amended, as follows:
Section 6.9 Revolving Credit Borrowing Base Reports.
(a)Within 15 days after the end of each month, a Revolving
Credit Borrowing Base Report as of the end of such month, (b)
within 30 days after the end of each month, a Borrowing Base
Report as of the end of such month, and (c) on or before the
30th day of each month, a Revolving Credit Borrowing Base
Report as of the 15th day of the then current month. In
addition to the monthly Borrowing Base Report and Revolving
Credit Borrowing Base Report required to be delivered
hereunder, the Borrower may provide the Lenders with a
Borrowing Base Report or Revolving Credit Borrowing Base
Report, as the case may be, reflecting information as of any
date subsequent to the previously required Borrowing Base
Report or Revolving Credit Borrowing Base Report, as the case
may be, and the Borrowing Base or Revolving Credit Borrowing
Base, as the case may be, reflected in such updated Borrowing
Base Report or Revolving Credit Borrowing Base Report, as the
case may be, shall be effective until the Borrower delivers
another Borrowing Base Report, or Revolving Credit Borrowing
Base Report, as the case may be. Each Revolving Credit
Borrowing Base Report shall be accompanied by an accounts
receivable aging.
(o) A new Section 6.11 is hereby added immediately following
Section 6.10, as follows:
Section 6.11 Business Plan and Reports. Within
fifteen (15) days after the end of each month, commencing with
the month ending November 30, 2000, a detailed report
regarding the Borrower's progress with respect to the matters
addressed in its comprehensive business plan delivered to
Lenders on or before December 15, 2000, pursuant to the terms
of the Third Amendment to Credit Agreement dated as of
November 20, 2000, such report to be in form and detail
acceptable to the Administrative Agent.
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(p) Section 7.5 is entirely amended, as follows:
Section 7.5 Sale of Assets. The Borrower shall not,
and shall not permit any of its Subsidiaries to, sell, lease,
abandon, transfer or otherwise dispose of assets in an
aggregate amount effective on and after November 20, 2000, in
excess of $500,000, except for the following, so long as no
Default exists immediately prior to or after the contemplated
transaction: (i) Permitted Asset Sales, so long as the
consideration received by the Borrower and its Subsidiaries in
connection with such transaction is greater than or equal to
the fair market value of such assets as determined in good
faith by Borrower; (ii) asset sales other than Scheduled Asset
Sales consented to in writing by the Determining Lenders, the
Net Cash Proceeds of which are subject to Section 2.5(c)
hereof; (iii) transfers resulting from any casualty or
condemnation of property or assets; (iv) intercompany sales or
transfers of assets among Subsidiaries made in the ordinary
course of business; and (v) Scheduled Asset Sales.
(q) Sections 7.10, 7.11 and 7.12 are each entirely amended, as
follows:
Section 7.10 [Intentionally Omitted]
Section 7.11 [Intentionally Omitted]
Section 7.12 [Intentionally Omitted]
(r) Section 8.1(c) is amended entirely, as follows:
(c) The Borrower or any of its Subsidiaries shall
default in the performance or observance of any agreement or
covenant contained in (i) Section 5.1 or Article 7 hereof,
provided that the Borrower's failure to comply with Section
7.11 of this Agreement with respect to fiscal quarters ending
on or before December 31, 2000, shall only constitute an Event
of Default if such noncompliance shall occur in two
consecutive fiscal quarters, or (ii) on and after the Third
Amendment Effective Date, Sections 6.1, 6.2, 6.3, 6.7, 6.9, or
6.11;
(s) New Exhibits E and F are added to the Credit Agreement in
the form of, and all references in the Credit Agreement to Exhibits E
and F are hereby deemed to be references to, the attached Exhibits E
and F.
2. EFFECTIVENESS OF CERTAIN AMENDMENTS. Notwithstanding any other
provision herein to the contrary, the amendments described in Section 1(q) above
shall be effective as of September 30, 2000, and shall terminate automatically
without any action by the Administrative Agent, the Lenders or any other Person
and be of no further force or effect upon the earliest to occur
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of (a) October 1, 2001, or (b) the occurrence of an Event of Default (such
period of effectiveness being referred to herein as the "Covenant Amendment
Period"). The parties hereto acknowledge and agree that upon termination of the
Covenant Amendment Period, the financial covenants amended by Section 1(q)
hereof shall be reinstated in their entirety as if never amended hereby, and an
Event of Default will then exist under the Credit Agreement unless a further
agreement has been entered into among the necessary Persons.
3. MINIMUM EBITDA COVENANT. During the Covenant Amendment Period, the
Borrower will not permit EBITDA (exclusive of up to $3,595,000 in restructuring
charges incurred in the fourth quarter of fiscal year 2000) for the periods set
forth below to be less than the amount set forth opposite each such period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
1 month ended 10/31/00 $(1,000,000)
2 months ended 11/30/00 $(2,000,000)
3 months ended 12/31/00 $(3,000,000)
4 months ended 1/31/01 $(3,500,000)
5 months ended 2/28/01 $(3,483,000)
6 months ended 3/31/01 $(3,156,000)
7 months ended 4/30/01 $(2,567,000)
8 months ended 5/31/01 $(2,077,000)
9 months ended 6/30/01 $(1,437,000)
10 months ended 7/31/01 $(994,000)
11 months ended 8/31/01 $(384,000)
12 months ended 9/30/01 $256,000
</TABLE>
The required minimum cumulative EBITDA may be adjusted upon terms satisfactory
to Borrower and Determining Lenders from time to time as a result of asset
sales.
4. MINIMUM TRADE PAYABLES COVENANT. During the Covenant Amendment
Period, the Borrower will not permit outstanding trade payables of the Borrower
and its Subsidiaries for the periods set forth below to be less than the amount
set forth opposite each such period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Month ended 10/31/00 $31,705,000
Month ended 11/30/00 $27,935,000
Month ended 12/31/00 $27,430,000
Month ended 1/31/01 $22,825,000
Month ended 2/28/01 $24,860,000
7 months ended 9/30/01 $27,490,000
</TABLE>
The required minimum trade payables outstanding may be adjusted upon terms
satisfactory to Borrower and Determining Lenders from time to time as a result
of asset sales.
5. ADDITIONAL EVENT OF DEFAULT. It will be an Event of Default if the
Borrower shall fail, on or before December 15, 2000, to deliver to Lenders a
comprehensive business
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plan, acceptable as to scope to the Administrative Agent and its counsel and
financial consultants, including, without limitation, separate financial
projections for the divisions of the Borrower and its Subsidiaries.
6. AMENDMENT FEE. The Borrower shall pay to the Administrative Agent,
for the pro rata account of each Lender, an amendment fee equal to $100,000 (the
"Amendment Fee"). Such Amendment Fee shall be allocated to each Lender pro rata,
based on the sum of (a) such Lender's Revolving Credit Specified Percentage
multiplied by $5,000,000 plus (b) the total outstanding principal amount of all
Term Loan Advances owed to such Lender as of the date of this Amendment. Such
amendment fee shall be earned and payable as of the date of this Amendment in
immediately available funds.
7. ACKNOWLEDGMENT OF THE BORROWER. The Borrower acknowledges and agrees
that the Lenders executing this Amendment have done so in their sole discretion
and without any obligation.
8. SUBSIDIARIES ACKNOWLEDGMENT. By signing below, each of the
Subsidiaries which has executed a Subsidiary Guaranty (a) consents and agrees to
the execution and delivery of this Amendment, (b) ratifies and confirms its
obligations under its Subsidiary Guaranty, (c) acknowledges and agrees that its
obligations under its Subsidiary Guaranty are not released, diminished,
impaired, reduced, or otherwise adversely affected by this Amendment, and (d)
acknowledges and agrees that it has no claims or offsets against, or defenses or
counterclaims to, its Subsidiary Guaranty.
9. RELEASE.
(a) The Borrower and each Subsidiary Guarantor hereby
unconditionally and irrevocably remises, acquits, and fully and forever
releases and discharges the Administrative Agent and the Lenders and
all respective affiliates and subsidiaries of the Administrative Agent
and the Lenders, their respective officers, servants, employees,
agents, attorneys, principals, directors and shareholders, and their
respective heirs, legal representatives, successors and assigns
(collectively, the "Released Lender Parties") from any and all claims,
demands, causes of action, obligations, remedies, suits, damages and
liabilities (collectively, the "Borrower Claims") of any nature
whatsoever, whether now known, suspected or claimed, whether arising
under common law, in equity or under statute, which the Borrower or any
Guarantor ever had or now has against the Released Lender Parties which
may have arisen at any time on or prior to the date of this Amendment
and which were in any manner related to any of the Loan Documents or
the enforcement or attempted enforcement by the Administrative Agent or
the Lenders of rights, remedies or recourses related thereto.
(b) The Borrower and each Subsidiary Guarantor covenants and
agrees never to commence, voluntarily aid in any way, prosecute or
cause to be commenced or prosecuted against any of the Released Lender
Parties any action or other proceeding based upon any of the Borrower
Claims which may have arisen at any time on or prior to the date of
this Amendment and were in any manner related to any of the Loan
Documents.
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(c) The agreements of the Borrower and each Guarantor set
forth in this Section 9 shall survive termination of this Amendment and
the other Loan Documents.
10. REPRESENTATIONS AND WARRANTIES TRUE, NO EVENT OF DEFAULT. By its
execution and delivery hereof, the Borrower represents and warrants to the
Lenders that, as of the date hereof:
(a) after giving effect to this Amendment, the representations
and warranties contained in the Credit Agreement and the other Loan
Documents are true and correct in all material respects on and as of
the date hereof as made on and as of such date, except for any
representations and warranties made as of a specific date, which shall
be true and correct in all material respects as of such specific date;
and
(b) after giving effect to this Amendment, no event has
occurred and is continuing which constitutes a Default or an Event of
Default.
11. CONDITIONS OF EFFECTIVENESS. This Amendment shall not be effective
until each of the following conditions precedent shall have been satisfied:
(a) All reasonable out-of-pocket fees and expenses in
connection with the Loan Documents, including this Amendment, including
legal and other professional fees and expenses incurred on or prior to
the date of this Amendment by the Administrative Agent, including,
without limitation, the fees and expenses of Winstead Sechrest & Minick
P.C. and Arthur Andersen L.L.P., shall have been paid; and
(b) The Administrative Agent shall have received such
documents, certificates and instruments as the Administrative Agent
shall reasonably require; and
(c) The Administrative Agent shall have received for the
account of the Lenders the Amendment Fee described in Section 6 of this
Amendment.
12. REFERENCE TO CREDIT AGREEMENT. Upon the effectiveness of this
Amendment, each reference in the Credit Agreement to "this Agreement,"
"hereunder," or words of like import shall mean and be a reference to the Credit
Agreement, as affected and amended by this Amendment.
13. COUNTERPARTS; EXECUTION VIA FACSIMILE. This Amendment may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This
Amendment may be validly executed and delivered by facsimile or other electronic
transmission.
14. GOVERNING LAW: BINDING EFFECT. This Amendment shall be governed by
and construed in accordance with the laws of the State of Texas and shall be
binding upon the Borrower, the Administrative Agent, each Lender and their
respective successors and assigns.
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15. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
16. LOAN DOCUMENT. This Amendment is a Loan Document and is subject to
all provisions of the Credit Agreement applicable to Loan Documents, all of
which are incorporated in this Amendment by reference the same as if set forth
in this Amendment verbatim.
17. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
the date first above written.
KEVCO, INC.
By:
--------------------------------
Joseph P. Tomczak
Executive Vice President and
Chief Financial Officer
BANK OF AMERICA, N.A., formerly
known as NationsBank, N.A., as
Administrative Agent and as a
Lender
By:
--------------------------------
Mike V. Colon
Vice President
NATIONAL CITY BANK OF KENTUCKY
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
GUARANTY FEDERAL BANK, F.S.B.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE> 15
WELLS FARGO BANK, N.A.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc., as
its Investment Manager
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
ARCHIMEDES FUNDING, L.L.C.
By: ING Capital Advisors, Inc., as
Collateral Manager
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
ALLIANCE CAPITAL FUNDING, L.L.C.
By: Alliance Capital Management,
L.P., as Manager on behalf of
ALLIANCE CAPITAL FUNDING,
L.L.C.
By: ALLIANCE CAPITAL MANAGEMENT
CORPORATION
General Partner of Alliance
Capital Management, L.P.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE> 16
BANK ONE, TEXAS, N.A.
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
PAM CAPITAL FUNDING LP
By: Highland Capital Management, L.P.,
as Collateral Manager
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
ML CBO IV (CAYMAN) LTD.
By: Highland Capital Management, L.P., as
Collateral Manager
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
ACKNOWLEDGED AND AGREED:
KEVCO MANAGEMENT, INC.
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 17
KEVCO HOLDING, INC.
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
KEVCO GP, INC.
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
KEVCO COMPONENTS, INC.
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
DCM DELAWARE, INC.
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
KEVCO MANUFACTURING, L.P.
By: KEVCO GP, INC., its General Partner
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 18
KEVCO DISTRIBUTION, L.P.
By: KEVCO GP, INC., its General Partner
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 19
EXHIBIT E
REVOLVING CREDIT BORROWING BASE REPORT
ADMINISTRATIVE AGENT: Bank of America, N.A. DATE:
-------------
BORROWER: Kevco, Inc.
This Revolving Credit Borrowing Base Report, prepared as of , is executed
and delivered by Borrower pursuant to that certain Third Amended and Restated
Credit Agreement dated as of July 14, 1999 among the Borrower, each of the banks
or other lending institutions which is or may from time to time become a
signatory thereto and any successors or permitted assigns thereof ("Lenders")
and Administrative Agent (as amended, supplemented or modified from time to
time, the "Credit Agreement"). All terms used herein shall have the meanings
assigned to them in the Credit Agreement.
Borrower represents and warrants to Administrative Agent that all
information contained herein is true, correct, and complete, and that the total
Eligible Accounts and total Eligible Inventory referred to below represent the
Eligible Accounts and Eligible Inventory that qualify for purposes of
determining the Revolving Credit Borrowing Base under the Credit Agreement.
ELIGIBLE ACCOUNTS:
1. Accounts (less any and all rebates and discounts)
(ending balance for period ended __________, 20__) ........$ ______________
2. Less: Ineligible Accounts (determined pursuant to the
definition of Eligible Accounts in the Credit
Agreement), including, without duplication:
(a) Accounts not paid within 90 days of original
invoice date .........................................$ ______________
(b) Accounts subject to any setoff, counterclaim,
defense, dispute, recoupment, or adjustment other
than normal discounts for prompt payment .............$ ______________
(c) Accounts on which the account debtor is not
domiciled in the United States or Canada .............$ ______________
(d) Total accounts on which the account debtor is
domiciled in Canada less $100,000 (leave blank if
less than zero) ......................................$ ______________
(e) Accounts not arising out of (i) the sale of goods
in the ordinary course of business which has been
consummated and such goods have been shipped, or
(ii) the performance of services in the ordinary
course of business which have been completed and
accepted by the account debtor .......................$ ______________
(f) Accounts from the sale of any good that is on a
bill-and-hold, guaranteed sale, sale-or-return,
sale on approval, consignment, or any other
repurchase or return basis. ..........................$ ______________
(g) Accounts owed by each account debtor with over 5%
of the balances owed by such account debtor and
its Affiliates outstanding and payable for more
than 90 days past the original invoice date ..........$ ______________
(h) Accounts not payable in Dollars ......................$ ______________
(i) Accounts owed by the United States or any other
government for which the Federal Assignment of
Claims Act of 1940, as amended, or other
applicable law (other than the Uniform Commercial
Code) has not been complied with .....................$ ______________
(j) Accounts owed by account debtor that is insolvent,
or is the subject any bankruptcy or insolvency
proceeding or has made an assignment for the
benefit of creditors, suspended normal business
operations, dissolved, liquidated, terminated its
existence, ceased to pay its debts as they become
due, or suffered a receiver or trustee to be
appointed for any of its assets or affairs ...........$ ______________
(k) Accounts that do not comply with all applicable
laws, rules, and regulations, including, without
limitation, usury laws, the Federal Truth in
Lending Act, and Regulation Z of the Board of
Governors of the Federal Reserve System. .............$ ______________
(l) Accounts not arising from an enforceable contract,
the performance of which has been completed ..........$ ______________
(m) Accounts evidenced by instruments or chattel paper
with respect to which all steps necessary to
perfect the Administrative Agent's Lien thereon
have not been taken ..................................$ ______________
(n) Accounts with respect to which a default exists ......$ ______________
(o) Accounts with respect to which the account debtor
has returned or refused to retain, or otherwise
notified the Borrower or the applicable Subsidiary
of any dispute concerning, or claimed
nonconformity of, any of the goods from the sale
of which the account arose, but only to the extent
of the amount represented by the goods returned,
refused, disputed or claimed to be non-conforming ....$ ______________
<PAGE> 20
(p) Accounts arising out of a contract with or order
from, an account debtor that, by its terms,
prohibits or makes void or unenforceable the grant
of a security interest to the Administrative Agent
in and to such account ...............................$ ______________
(q) Accounts to which the Borrower or the applicable
Subsidiary does not have good and indefeasible
title or which is subject to any Lien except Liens
in favor of the Administrative Agent .................$ ______________
(r) Accounts owed by an Affiliate of the Borrower ........$ ______________
(s) With respect to any account debtor, the amount by
which the amount of all accounts owed by such
account debtor and its Affiliates to Borrower or
any of its Subsidiaries exceeds 7-1/2% of the
aggregate amount of all accounts owed to Borrower
or any of its Subsidiaries ...........................$ ______________
(t) "Contra accounts" and other obligations owed by
the Borrower and its Subsidiaries to account
debtors ..............................................$ ______________
3. Gross trade payables ......................................$ ______________
4. Agreed-upon float .........................................$ ______________
5. Face amount of Letters of Credit which secure trade
payables ..................................................$ ______________
6. Line 3 minus Line 4 minus Line 5 ..........................$ ______________
7. Total Ineligible Accounts (sum of Lines 2(a)-(t) plus
Line 6) ...................................................$ ______________
8. Total Eligible Accounts (Line 1 minus Line 7) .............$ ______________
ELIGIBLE INVENTORY:
9. Total Inventory (valued at lesser of actual cost or
fair market value) ........................................$ ______________
10. Less: Ineligible Inventory (determined pursuant to the
definition of Eligible Inventory in the Credit
Agreement, without duplication)
(a) Inventory not with respect to which a claim exists
disputing title to or right to possession of such
inventory ............................................$ ______________
(b) Work-in-process inventory ............................$ ______________
(c) Inventory shipped or delivered on consignment,
sale or return, or similar terms .....................$ ______________
(d) Inventory that is not in good condition or does
not comply with any applicable law, rule, or
regulation or any standard imposed by any
governmental authority with respect to its
manufacture, use, or sale ............................$ ______________
(e) Inventory that is not owned by and in the
possession or under the control of Borrower or one
of its Subsidiaries and held for sale or
disposition in the ordinary course ...................$ ______________
(f) Inventory in which the Administrative Agent does
not have a perfected, first priority security
interest .............................................$ ______________
11. Total Ineligible Inventory (sum of Lines 10(a)-(f)) .......$ ______________
12. Total Eligible Inventory (Line 9 minus Line 11) ...........$ ______________
BORROWING BASE:
13. Total Eligible Accounts (Line 8) ..........................$ ______________
14. Total Eligible Inventory (Line 12) ........................$ ______________
15. 75% of Line 13 ............................................$ ______________
16. 55% of Line 14 ............................................$ ______________
17. Borrowing Base: Sum of Line 15 plus Line 16 ...............$ ______________
18. Outstanding Revolving Loans ...............................$ ______________
19. Available Credit Amount or amount to be paid if
negative [(the lesser of $17,500,000 or Line 17) minus
Line 18] ..................................................$ ______________
Borrower further represents and warrants to Administrative Agent and
Lenders that the representations and warranties contained in Article 4 of the
Credit Agreement are true and correct on and as of the date of this Revolving
Credit Borrowing Base Report as if made on and as of the date hereof, and that
no Material Adverse Effect, Default, or Event of Default exists.
Date: KEVCO, INC.
-------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE> 21
THIRD AMENDMENT TO CREDIT AGREEMENT
EXHIBIT F
SCHEDULED ASSET SALES
<TABLE>
<CAPTION>
APPRAISED
SQUARE VALUE
DIVISION LOCATION FEET (in thousands)
---------------------- ------------------------------ ------------- ---------------------
<S> <C> <C> <C>
Distribution Bear Creek, Ala. 90,000 $ 819
Distribution Douglas, Ga. 72,000 750
Distribution Elkhart, In.
27217 CR6 W 54,500 660
27200 D.I. Drive 25,200 500
27256 D.I. Drive 15,000 300
21861 Protecta Drive 64,000 1,010
2200 Industrial Parkway 84,000 1,450
Wood Spruce Pine, Ala. 26,400 170
------- ------
Totals 431,100 $5,659
</TABLE>
