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Ex. 10.2(f)
CLN# 7938640665/91
MODIFICATION AGREEMENT
DATE: MARCH 31, 1997
PARTIES: Borrower: XXXXXX STEEL COMPANY,
an Arizona corporation.
Bank: BANK ONE, ARIZONA, NA,
a national banking association
RECITALS:
A. Bank has extended to Borrower credit ("LOAN") in the principal amount
of $6,500,000.00 pursuant to the Revolving Line of Credit Loan Agreement
(Accounts Receivable and Inventory), dated June 30, 1995 ("LOAN AGREEMENT"), and
evidenced by the Revolving Line of Credit Note (Variable Rate), dated June 30,
1995 ("NOTE"). The unpaid principal of the Loan as of the date hereof is $0.00.
B. The Loan and/or guaranty of Loan is secured by, among other things, (i)
the Continuing Security Agreement Inventory, Receivables and Rights to Payment,
dated September 15, 1994, and (ii) the Security Agreement Consumer Goods,
Equipment and Farm Equipment, Including Titled Vehicles, dated September 15,
1994, both by Borrower for the benefit of Bank (the agreements, documents, and
instruments securing the Loan and the Note are referred to individually and
collectively as the ("SECURITY DOCUMENTS").
C. Bank and Borrower have executed and delivered previously the following
agreements ("MODIFICATIONS") modifying the terms of the Loan, the Note, the Loan
Agreement, and/or the Security Documents: Modification Agreement, dated June 30,
1996. (The Note, the Loan Agreement, the Security Documents, any arbitration
resolution, and all other agreements, documents, and instruments evidencing,
securing, or otherwise relating to the Loan, as modified in the Modifications,
are sometimes referred to individually and collectively as the "LOAN
DOCUMENTS". Hereinafter, "NOTE", "LOAN AGREEMENT", and "SECURITY DOCUMENTS"
shall mean such documents as modified in the Modifications.)
D. Borrower has requested that Bank modify the Loan and the Loan Documents
as provided herein. Bank is willing to so modify the Loan and the Loan
Documents, subject to the terms and conditions herein.
AGREEMENT:
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower and Bank agree as follows:
1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
2. MODIFICATION OF LOAN DOCUMENTS.
2.1 The Loan Documents are modified as follows:
2.1.1 Section 1.2 of the Loan Agreement is modified to read in its
entirety as follows:
1.2 ADVANCES. Subject to the terms and conditions hereof,
Advances of the Loan will be made in amounts not to exceed the
amount ("Borrowing Base") calculated in accordance with the formula
set forth in the Borrowing Base Certificate, attached hereto as
Exhibit A and by this reference incorporated herein. In calculating
the Borrowing Base, the percentage set forth in Section 13 hereof
of the amount of Total Eligible Accounts Receivable of Borrower and
B & K Steel Fabrications, Inc., an Arizona corporation ("B&K")
(collectively, "Entities"), and the percentage set forth in Section
13 hereof of the amount (determined on the basis of the lower of
cost or market value) of Total Eligible Inventory of the Entities
shall be used. "Eligible Account
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Receivable" is an amount owing to the Entities, as determined by Bank in
its sole and absolute discretion, which has arisen from the delivery and/or
shipment of products previously made and from services rendered for which
an invoice has been issued by one of the Entities to its customer
("Customer") (a) which amount is not subject to any offset, counterclaim or
defense asserted by the Customer, (b) which amount is subject to a
perfected security interest in favor of Bank and is not subject to any
other security interest, lien, claim or encumbrances, (c) which amount has
not remained unpaid for more than the number of days set forth in Section
13 after the date due under the terms of the related invoice, (d) where not
more than fifteen percent (15%) of the total amount owing from the Customer
has remained unpaid for more than the number of days set forth in Section
13 after the date due under the terms of the related invoice, (e) which
amount is not an uninsured amount owing from Customer located in a foreign
country and (f) which amount is not owing from the United States of America
or any agency, department or subdivision thereof, unless a properly
executed assignment of claims has been received by Bank. "Eligible
Inventory" is the inventory of the Entities (consisting of those items
within the categories set forth in Section 13), as determined by Bank in
its sole and absolute discretion, to be (a) in good condition and salable
in the ordinary course of the Entities' business, (b) owned by one of the
Entities free and clear of any mortgages, liens, security interests,
claims, encumbrances or rights of others, excepting only the security
interests in favor of Bank, (c) located at a location identified in a
Security Agreement (hereinafter defined), (d) subject to a perfected
security interest in favor of Bank, (e) not subject to any consignment to
any Customer and (f) not acquired by any of the Entities in or as part of a
bulk transfer of sale or assets unless one of the Entities has complied
with all applicable bulk sales or bulk transfer laws. Notwithstanding
anything in this paragraph to the contrary, Borrower shall be entitled to
Advances of the Loan of at least $1,000,000.00 regardless of the Borrowing
Base calculation.
2.1.2 Section 1.5 of the Loan Agreement is hereby modified to read in its
entirety as follows:
1.5 REMITTANCE ACCOUNT. If so indicated in Section 13 hereof, the
proceeds received by either of the Entities from its inventory and
collection of accounts receivable, which, pursuant to the Security
Agreements (hereinafter defined), are required to be transmitted to Bank,
shall be handled and administered by Bank in and through a remittance
account in accordance with the provisions of the Security Agreements.
2.1.3 Section 2.1 and 2.2 of the Loan Agreement are hereby modified to read in
their entirety as follows:
2.1 SECURITY AGREEMENTS. As security for the payment of the Note, the
Loan, and all other liabilities and obligations of Borrower to Bank, now
existing or hereafter created, Borrower shall grant and cause B&K to grant,
to Bank a security interest in all of the Entities' inventory, accounts
receivable, rights to payment and such other property ("Property"), as more
particularly described in one or more security agreements ("Security
Agreements") executed by the Entities and delivered to Bank in form and
substance satisfactory to Bank, in its sole and absolute discretion. The
Security Agreements shall grant to Bank a first and prior security interest
in and to the Property, except as otherwise expressly provided therein.
2.2 ADDITIONAL DOCUMENTS. Borrower shall execute and cause B&K to execute
from time to time upon the request of Bank, such financing statements or
other documents reasonably required by bank to perfect or continue Bank's
security interests described herein.
2.1.4 Section 3.1 of the Loan Agreement is hereby modified to read in its
entirety as follows:
3.1 CONDITIONS PRECEDENT TO ADVANCES. Bank shall have no obligation to
make any Advance until the conditions set forth in the following
subparagraphs and elsewhere herein have been satisfied at the expense of
Borrower, as determined by Bank in its sole and absolute discretion:
(a) Borrower shall have delivered to Bank, or caused B&K to have
delivered to Bank, in form and substance satisfactory to Bank, this
Agreement, the Note, the Security Agreements and such other documents,
instruments, financing statements, certificates and agreements as Bank
may reasonably request;
(b) If Borrower or B&K is a corporation or a partnership, Borrower
shall have delivered to Bank, and caused B&K to have delivered to
Bank, in form and substance satisfactory to Bank in its sole and
absolute discretion certified copies of resolutions of the Boards of
Directors of Borrower and B&K, authorizing Borrower and B&K to
execute, deliver, honor and perform the Loan Documents and to grant
the security interest in the Property as provided in the Security
Agreements and certifying the names and signatures of the officers or
partners, as the case may be, of Borrower and B&K authorized to sign
the Loan Documents;
(c) All of Bank's liens and security interest securing the Loan, shall
have been validly perfected;
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(d) No material adverse change shall have occurred in the
business or financial condition of Borrower or any guarantor
since the date of the latest financial statements given to
Bank by on behalf of Borrower or such guarantor;
(e) Each of the warranties and representations made by
Borrower and B&K in the Loan Documents shall be true and
correct as of the date of each Advance; and
(f) Borrower and B&K shall have kept and performed the various
covenants, obligations and agreements on its part to be kept
and performed under the Loan Documents and no Event of Default,
or act or event which with the giving of notice or the passage
of time, or both, would constitute an Event of Default
hereunder or under any of the other Loan Documents, shall have
occurred and be continuing.
2.1.5 Section 6.1(a) and (b)(i), (ii), (iii), (iv) and (v) of the
Loan Agreement are hereby modified to read in their entirety as follows:
6.1 COVENANTS. Until the payment in full of the Loan and until the
fulfillment of all of its obligations hereunder and under the other
Loan Documents, Borrower shall, and shall cause B & K to comply with
the following covenants:
(a) Books and Records. Borrower shall, and shall cause B & K, at all
times keep accurate and complete books, records and accounts of all
of Borrower's and B & K's business activities, prepared in
accordance with generally accepted accounting principles
consistently applied, and Borrower shall, and shall cause B & K to
permit Bank, or any persons designated by Bank, at any reasonable
time, to inspect, audit and examine such books, records and accounts
and to make copies or extracts thereof;
(b) Statements and Reports. Borrower shall furnish or cause to be
furnished to Bank:
(i) within the number of days set forth in Section 13 hereof
after the end of each fiscal year of the Entities, consolidated
financial statements of the Entities, which shall include a
balance sheet, an income statement showing the results of
operations for such a fiscal year and a change in financial
position statement for such fiscal year, together, in each case,
with the comparable figures for the immediately preceding fiscal
year, all in reasonable detail and prepared in accordance with
generally accepted accounting principles, consistently applied,
which statements shall contain the certification requirements
set forth in Section 13 hereof;
(ii) within the number of days set forth in Section 13 hereof
after the end of each of the fiscal periods of the Entities set
forth in Section 13 hereof, consolidated financial reports of
the Entities, which shall include a balance sheet, an income
statement showing the results of operations for such fiscal
period and a change in financial position statement for such
fiscal period, together, in each case, with the comparable
figures for the immediately preceding corresponding fiscal
period, all in reasonable detail and prepared in accordance with
generally accepted accounting principles, consistently applied,
and containing the certifications required pursuant to Section
13 hereof;
(iii) with each such set of financial statements, a certificate
prepared as at the end of the period covered by such financial
statements, showing the computation as of such date of each of
the financial covenants contained in Section 6.1(d);
(iv) within twenty five (25) days after the end of each month a
Borrowing Base Certificate in the form attached hereto as
Exhibit A, to which shall be attached the following reports:
(A) An aging and listing of all accounts receivable
prepared in accordance with generally accepted accounting
principles which itemizes each account debtor by name and
addresses and which states the total amount payable to the
Entities and contains a breakdown indicating future amounts
due and when due, current amounts due, amounts thirty (30)
days past due, sixty (60) days past due, and ninety (90) or
more days past due, and reflecting any credit adjustments,
returns and allowances;
(B) An aging and listing of all accounts payable-trade
prepared in a similar manner;
(C) A complete and detailed description of all inventory
containing a breakdown into the categories referenced in
Section 1.2 hereof and set forth in Section 13 hereof;
(v) promptly, from time to time, upon request of Bank, such
other information concerning the financial condition, business
and affairs of the Entities as shall be reasonably requested by
bank;
2.2 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Borrower shall fail to comply
with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein is materially incomplete, incorrect, or misleading
as of the date hereof.
2.3 Each reference in the Loan Documents to any of the Loan Documents
shall be a reference to such document as modified herein.
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3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.
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The Loan Documents are ratified and affirmed by Borrower and shall remain in
full force and effect as modified herein. Any property or rights to or interests
in property granted as security in the Loan Documents shall remain as security
for the Loan and the obligations of Borrower in the Loan Documents.
4. BORROWER REPRESENTATIONS AND WARRANTIES.
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Borrower represents and warrants to Bank:
4.1 No default or event of default under any of the Loan Documents
as modified herein, nor any event, that, with the giving of notice or the
passage of time or both, would be a default or an event of default under the
Loan Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to Bank in connection with the Loan from the most recent financial
statement received by Bank.
4.3 Each and all representations and warranties of Borrower in the
Loan Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs
with respect to the Loan or the Loan Documents as modified herein.
4.5 The Loan Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified
herein. The execution and delivery of this Agreement and the performance of the
Loan Documents as modified herein have been duly authorized by all requisite
action by or on behalf of Borrower. This Agreement has been duly executed and
delivered on behalf of Borrower.
5. BORROWER COVENANTS.
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Borrower covenants with Bank:
5.1 Borrower shall execute, deliver, and provide to Bank such
additional agreements, documents, and instruments as reasonably required by
Bank to effectuate the intent of this Agreement.
5.2 Borrower fully, finally, and forever releases and discharges
Bank and its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations, and suits, of whatever kind or nature, in
law or equity of Borrower, whether now known or unknown to Borrower, (i) in
respect of the Loan, the Loan Documents, or the actions or omissions of Bank in
respect of the Loan or the Loan Documents and (ii) arising from events
occurring prior to the date of this Agreement.
5.3 Contemporaneously with the execution and delivery of this
Agreement, Borrower has paid to Bank:
5.3.1 All accrued and unpaid interest under the Note and all
amounts, other than interest and principal, due and payable by Borrower under
the Loan Documents as of the date hereof.
5.3.2 All the internal and external costs and expenses
incurred by Bank in connection with this Agreement (including, without
limitation, inside and outside attorneys, title, filing, and recording costs,
expenses, and fees).
5.4 Contemporaneously with the execution and delivery of this
Agreement, Borrower has executed and delivered, or caused to be executed and
delivered, to Bank, as additional security for the Loan and the Note, (i) the
Continuing Security Agreement Inventory, Receivables and Rights to Payment, and
(ii) the Security Agreement Consumer Goods, Equipment and Farm Equipment,
including Titled Vehicles, both dated of even date herewith ("Security
Agreements"), both by B&K for the benefit of Bank. As used in this Agreement,
"LOAN DOCUMENTS" shall include the Security Agreements.
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5.5 Contemporaneously with the execution and delivery of this
Agreement, Borrower has caused to be executed and delivered to Bank the
Continuing Guaranty, dated of even date herewith, by B&K, for the benefit of
Bank.
6. EXECUTION AND DELIVERY OF AGREEMENT BY BANK.
Bank shall not be bound by this Agreement until (i) Bank has executed and
delivered this Agreement, (ii) Borrower has performed all of the obligations of
Borrower under this Agreement to be performed contemporaneously with the
execution and delivery of this Agreement, (iii) if required by Bank, Borrower
and any guarantor(s) of the Loan have executed and delivered to Bank an
arbitration resolution, and (iv) each guarantor of the Loan has executed the
Consent of Guarantor(s) below.
7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
The Loan Documents as modified herein contain the complete understanding and
agreement of Borrower and Bank in respect of the Loan and supersede all prior
representations, warranties, agreements, arrangements, understandings, and
negotiations. No provision of the Loan Documents as modified herein may be
changed, discharged, supplemented, terminated, or waived except in a writing
signed by the parties thereto.
8. BINDING EFFECT.
The Loan Documents as modified herein shall be binding upon and shall inure to
the benefit of Borrower and Bank and their respective successors and assigns.
9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Arizona, without giving effect to conflicts of law principles.
10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
DATED as of the date first above stated.
XXXXXX STEEL COMPANY,
an Arizona corporation
By /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Chairman
BANK ONE, ARIZONA, NA,
a national banking association
By /s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx, Vice President
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CONSENT OF GUARANTOR(S)
The undersigned (i) consent to the modification of the Loan Documents and all
other matters in the foregoing Agreement, (ii) reaffirm the Continuing
Guaranty, dated June 30, 1995 and any other agreements, documents and
instruments securing or otherwise relating thereto ("Guarantor Documents"),
(iii) acknowledge that the Guarantor Documents continue in full force and
effect, remain unchanged, except as specifically modified hereby, and are
valid, binding and enforceable in accordance with their respective terms, (iv)
agree that all references, if any, in the Guarantor Documents to any of the
Loan Documents are modified to refer to those documents as modified by the
Agreement, and (v) agree to be bound by the release of Bank set forth in the
Agreement.
Dated as of the date of the Agreement.
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
CONSENT OF GUARANTOR(S)
The undersigned (i) consent to the modification of the Loan Documents and all
other matters in the foregoing Agreement, (ii) reaffirm the Continuing
Guaranty, dated June 30, 1995 and any other agreements, documents and
instruments securing or otherwise relating thereto ("Guarantor Documents"),
(iii) acknowledge that the Guarantor Documents continue in full force and
effect, remain unchanged, except as specifically modified hereby, and are
valid, binding and enforceable in accordance with their respective terms, (iv)
agree that all references, if any, in the Guarantor Documents to any of the
Loan Documents are modified to refer to those documents as modified by the
Agreement, and (v) agree to be bound by the release of Bank set forth in the
Agreement.
Dated as of the date of the Agreement.
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
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EXHIBIT "A"
XXXXXX STEEL COMPANY
BORROWING BASE
1. Total Contract A/R $____________
2. Less: over 90 $____________
3. Less: Retention $____________
4. Less: Other Ineligibles $____________
5. Net Contract Accounts Receivable as of ____________ $____________
LESS THE SUM OF THE FOLLOWING IF NEGATIVE (DO NO ADD IF POSITIVE)
6. Total Gross Inventory $____________
7. Less: Accts Payable/Book overdraft $____________
8. Less: Xxxxxxxx in excess of cost $____________
9. Plus: Cost in excess of xxxxxxxx $____________
10. Plus: Unbilled $____________
11. Total Cost as of ____________ $____________
12. Times Advance Factor x 75%
13. Borrowing Potential $____________
(or $1,000,000.00, whichever is greater)
14. Net Loan Outstanding Month Ending____________ $____________
15. Outstanding LOC's $____________
16. Available Advance Ln #13 + (Ln #13 - Ln #14) - Ln #15. $____________
(Advance available on RLC not to exceed $6,500M)
XXXXXX STEEL COMPANY
By___________________________
Its__________________________
