LOAN MODIFICATION AGREEMENT
THIS LOAN MODIFICATION AGREEMENT ("Agreement") is made effective as of
the 3rd day of April, 2000, by and among TOWER TECH, INC., an Oklahoma
corporation, (the "Borrower"); XXXXXX X. XXXXXX, an individual (the
"Guarantor"), and PEOPLE FIRST BANK, an Oklahoma state banking corporation
("Bank").
RECITALS
A. Borrower is indebted to Bank pursuant to that certain promissory
note dated April 23, 1999 in the original principal amount of $6,500,000.00 (the
"Note") executed and delivered in connection with that certain Amended and
Restated Loan Agreement of even date with the Note by and between the Borrower,
Guarantor and the Bank (the "Loan Agreement"). The Note is secured by, among
other things, that certain Security Agreement executed by Borrower in favor of
Bank and dated of even date with the Note (the "Security Agreement") the
guarantee of the Guarantor of even date with the Note (the "Guaranty"). The Loan
Agreement, Note, Security Agreement, Guaranty and all other written documents
executed in connection therewith, together with any written renewals,
modifications and/or extensions thereof are collectively referred to as the
"Loan Documents". Words and phrases not otherwise defined herein shall have the
meaning given in the Loan Agreement.
B. Borrower and Guarantor acknowledge that, as of the effective date
hereof, the indebtedness evidenced by the Note is due and owing to the Bank
without right of setoff. Borrower and Guarantor have requested that Bank extend
the time of repayment of all obligations under the Loan Documents, including,
without limitation the Note, until June 1, 2000, in reliance upon the covenants,
representations, and warranties of Borrower and Guarantor herein and for other
good and valuable consideration.
AGREEMENT
For and in consideration of the mutual covenants contained herein, Ten
Dollars ($10.00), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower, Guarantor, and Bank
agree as follows:
1. Recitals. The foregoing recitals are confirmed by the parties as true
and correct and are incorporated herein by reference. The recitals are a
substantive, contractual part of this Agreement.
2. No Waiver. The execution, delivery and performance of this Agreement by
Bank and the acceptance by Bank of performance of Borrower and Guarantor
hereunder (a) shall not constitute a novation of the Loan Documents as it is the
intent of the parties to modify the Loan Documents as expressly set out herein,
and (b) except as expressly provided in this Agreement, shall be without
prejudice to, and is not a waiver or release of, Bank's rights at any time in
the future to exercise any and all rights conferred upon Bank by the Loan
Documents or otherwise at law or in equity, including but not limited to the
right to accelerate the Note, if not already accelerated, and to institute
collection proceedings against Borrower and/or Guarantor and/or any night
against any other person or entity not a party to this Agreement. Similarly, by
the execution, delivery, and performance of this Agreement by Borrower and
Guarantor, jointly and severally, waive any and all claims now or hereafter
arising from or related to the Bank's exercise of any rights or remedies under
the Loan Documents. The Bank waives all defaults of the Loan Agreement that
occurred prior to the date of this Agreement, and further waives its right to
accelerate the Note for defaults occurring prior to the date hereof.
3. Acknow1edement of Amounts Due and Maturity Date. Bank and Borrower
acknowledge that (a) the outstanding balance of the Note as of the date first
hereinabove stated is $5,088,160.00 in unpaid principal (the "Note Balance"),
and $52,997.46 in accrued, unpaid interest. Borrower and Guarantor waive any and
all rights to notice of payment default or any other default, protest and notice
of protest, dishonor, diligence in collecting and the bringing of suit against
any party, notice of intention to accelerate, notice of acceleration, demand for
payment and any other notices whatsoever regarding the Note or the other Loan
Documents, and further waive any claims that any notices previously given are
insufficient for any reason. All obligations under the Loan Documents,
including, without limitation the Note, shall be due and payable in fill on June
1, 2000.
4. Advances. Borrower acknowledges and agrees that it shall not be entitled
to, nor shall Borrower request, any additional advances under the Note which
would cause the principal balance thereunder to exceed the lesser of the Note
Balance or the Borrowing Base; provided, however, in the event the Note Balance
is reduced by the payment thereof, and there otherwise exists no Default under
the Loan Documents, Borrower may request, and Bank will honor, additional
advances under the Note to the extent the same, when added to the then
outstanding principal balance of the Note, will not exceed the lesser of the
Note Balance or Borrowing Base.
5. Eligible Receivable. The definition of Eligible Receivable at Section
1.2.17 of the Loan Agreement is amended to delete the last sentence thereof and
add in its place the following: "At any particular date, the Eligible
Receivables shall be the sum of the unpaid principal balance of all of the
accounts receivable, as defined above; provided, however, that Receivables from
any one account debtor shall not exceed 20% of the Eligible Receivables, unless
otherwise approved in writing by the Bank; provided further, that this 20%
limitation shall not apply to the accounts receivable owed to the Borrower from
Cinergy Corp., with its offices at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Ohio."
6. Borrowing Base Certificate. On Tuesday of each week hereafter (as
limited by Section 4 herein), Borrower shall provide the Bank with a Borrowing
Base Certificate and Compliance Statement, in the form attached as Exhibit "E"
to the Loan Agreement using Borrower's best estimates, and methodologies
adequately described to and approved by Bank and consistently applied by
Borrower, and on or before ten (10) days after the end of each month hereafter,
Borrower shall provide the Bank with a Borrowing Base Certificate and Compliance
Statement, in the form attached as Exhibit "E" to the Loan Agreement, certified
by an officer of Borrower as true and correct.
7. Sales Detail Report. The Borrower agrees to provide Bank, on or before
Tuesday of each week, the Borrower's weekly sales detail report in the same form
as such report is currently being prepared by Borrower.
8. Net Worth Covenant. Section 6.10.1 is hereby amended to provide that
Borrower's minimum Tangible Net Worth shall be at least $1,400,000.00 at all
times during the term of this Agreement.
9. Subordinated Debt. Notwithstanding the provisions of Section 7.10 of the
Loan Agreement, during the term of this Agreement, Borrower agrees that it will
not make any payment of interest or principal due under any of it subordinated
debentures.
10. Condition Precedent to Bank's Performance. Notwithstanding anything
contained in this Agreement to the contrary, the Bank shall not be obligated to
further perform or honor its agreements hereunder unless Bank receives funds
from Borrower in the approximate amount of $1,481,000.00, on or before April 7,
2000, in connection with contract number 101550, dated March 31, 2000 between
Borrower and Cinergy Corp.
11. Representations and Warranties. In order to induce Bank to execute,
deliver, and perform this Agreement, Borrower and Guarantor warrant and
represent to Bank that:
(a) this Agreement is not being made or entered into with the actual intent to
hinder, delay, or defraud any entity or person, and Guarantor is solvent
and is not bankrupt, and attached hereto as Exhibit "A" are the Borrower's
February 28, 2000 financial statements which are true and correct in all
material respects;
(b) this Agreement is not intended by the parties to be a novation of the Loan
Documents and, except as expressly modified herein, all terms, conditions,
rights and obligations as set out in the Loan Documents are hereby
reaffirmed and shall otherwise remain in full force and effect as
originally written and agreed;
(c) no action or proceeding, including, without limitation, a voluntary or
involuntary petition for bankruptcy under any chapter of the Federal
Bankruptcy Code, has been instituted by or against Borrower or Guarantor;
(d) all information provided by Borrower and Guarantor to Bank prior to the
date hereof, including, without limitation, all financial statements,
balance sheets, and cash flow statements, was, at the date of delivery, and
is, as of the date hereof true and correct in all respects. Borrower and
Guarantor recognize and acknowledge that Bank is entering into this
Agreement based in part on the financial information provided to Bank by
each of them and that the truth and correctness of that financial
information is a material inducement to Bank in entering into this
Agreement. During the term of this Agreement, Borrower and Guarantor agree
to advise Bank promptly in writing of any and all new information, facts,
or occurrences which would in any way materially supplement, contradict, or
affect any financial statements, balance sheets, cash flow statements, or
similar items furnished to Bank. Bank waives any default based on
projections provided to the Bank prior to the date hereof which may have
been inaccurate.
12. Default. Bank shall be entitled to pursue each and every remedy
hereunder and under the Loan Documents, at Bank's sole option, upon the
occurrence of any of the following:
(a) Borrower and/or Guarantor, files a petition for bankruptcy under any
chapter of the Federal Bankruptcy Code or takes advantage of any other
debtor relief law, or an involuntary petition for bankruptcy under any
chapter of the Federal Bankruptcy Code is filed against Borrower and/or any
Guarantor, or any other judicial action is taken with respect to Borrower
and/or any Guarantor by any creditor;
(b) Bank discovers that any representation or warranty made herein by Borrower
or Guarantor was or is untrue, incorrect or misleading in any material
respect;
(c) Borrower or Guarantor breaches or defaults in performance of any covenant
or agreement contained in this Agreement, or the Loan Documents.
13. Waiver of Claims. Borrower and Guarantor warrant and represent to Bank
that the Note is not subject to any credits, charges, claims, or rights of
offset or deduction of any kind or character whatsoever; and Borrower and
Guarantor release and discharge Bank from any and all claims and causes of
action, whether known or unknown and whether now existing or hereafter arising,
including without limitation, any usury claims, that have at any time been
owned, or that are hereafter owned, in tort or in contract by Borrower or
Guarantor and that arise out of any one or more circumstances or events that
occurred prior to the date of this Agreement.
14. Expenses. The Borrower and Guarantor jointly and severally covenant and
agree to pay all costs and expense required to satisfy the conditions of this
Agreement or incurred by reason of Borrower's default hereunder.
15. Miscellaneous.
(a) Any future waiver, alteration, amendment or modification of any of the
provisions of the Loan Documents or this Agreement shall not be valid or
enforceable unless in writing and signed by all parties. Moreover, any
delay by Bank in enforcing its rights after an event of default shall not
be a release or waiver of the event of default and shall not be relied upon
by the Borrower or the Guarantor as a release or waiver of the default.
(b) This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors, legal
representatives, and assigns.
(c) The headings of paragraphs in this Agreement are for convenience of
reference only and shall not in any way affect the interpretation or
construction of this Agreement.
(d) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF OKLAHOMA AND
FEDERAL LAW, AS APPLICABLE. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT
AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR ORAL OR WRITTEN, Contemporaneous, OR
SUBSEQUENT ORAL AGREEMENTS AMONG THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
(e) This Loan Modification Agreement shall not constitute a binding agreement
unless duly executed by the Borrower and Guarantor, without any
modifications thereto, and returned to Bank not later than 4:00 p.m., April
11, 2000, at which time this Loan Modification Agreement shall
automatically become null and void unless accepted by Borrower and
Guarantor as required in this paragraph.
Executed on the date first set forth above.
Borrower:
TOWER TECH, INC., an Oklahoma corporation
By: ss/XXXXXX X. XXXXXX
_________________________
Printed Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
Guarantor:
ss/XXXXXX X. XXXXXX
_________________________
An individual
Bank:
PEOPLE FIRST BANK
By: ss/XXXXX X. XXXXXXXXXXX
Printed Name: Xxxxx X. Xxxxxxxxxxx
Title: Executive Vice President
TOWER TECH, INC.
Proforma Quarterly Balance Sheets
(Confidential - Unaudited For Internal Use of Management Only)
EXHIBIT A
Actual
February 2000
Assets
Current assets:
Cash $ 139,307
Accounts receivable, net 2,937,201
Notes receivable 107,083
Inventory 7,591,997
Costs in excess of costs and estimated earnings
uncompleted contracts (299,370)
Restricted assets 157,595
Prepaid expenses and other 221,847
------------
Total current assets 10,855,659
Property and equipment, net 19,713,372
Notes receivable, noncurrent 503,086
Deferred tax asset 3,813,324
Deferred tax asset reserve (3,813,324)
Other 732,176
------------
$31,804,294
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $7,067,020
Accrued liabilities 1,042,253
Interest payable 528,133
Customer deposits 590,540
------------
9,228,845
Notes payable 21,495,416
Borrowing base 5,025,945
New credit facility committed
New tooling credit facility NEEDED
New credit facility NEEDED
Stockholders' equity:
Common stock 3,577
Capital in excess of par 8,278,561
Retained earnings (deficit) (8,415,726)
Deferred tax asset reserve (3,813,324)
------------
(3,946,912)
$31,804,294
These statements are subject to certain risks, uncertainties and assumptions.
should one or more of these risks or uncertainties occur, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated. estimated or projected.
TOWER TECH, INC.
Proforma Quarterly Statements of Operations
(Confidential Unaudited For Internal Use of Management Only)
Actual 1st Quarter
Revenues:
Tower sales $2,237,776
Tower sales - rental\custom towers 419,827
Concrete tower construction 302,799
Plastics parts mfg. & design; TQFX 2,313
Other tower revenue 59,764
--------------
Total tower revenue 3,022,481
Other operating revenue 64,079
License fees 0
--------------
Total revenues 3,086,560
------------
Costs and expenses:
Cost of good sold and constructed 3,055,432
General and administrative 447,830
Selling expenses 217,417
Research and development 76,121
--------------
Total costs and expenses 3,796,800
------------
Income (loss) from operations (710,240)
Other income (expense):
Interest, net (691,956)
Gain (loss) on sale of assets 0
---------------
Total other income (expense) (691,956)
-------------
Income (loss) before income taxes (1,402,196)
Income tax (expense) benefit 560,678
Income tax (expense) benefit, reserved (560,878)
-------------
Net income (loss) ($1,402,196)
===========
Weighted average shares outstanding - primary 3,5716,311
===========
Net income per common share - primary ($0.39)
===============
These statements are subject to certain risks, uncertainties and assumptions.
should one or more of these risks or uncertainties occur, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected.
TOWER TECII, INC.
Proforma Quarterly Statements of Cash Flows
(Confidential - Unaudited For Internal Use of Management Only)
Actual
1st Quarter
Cash flows from operating activities:
Net income (loss) (1,402,195)
Adjustments to reconcile net income (loss) to net
Cash (used) provided by operating activities:
Depreciation and amortization 330,000
Sale of sale of assets
(Increase) decrease in deferred taxes 0
(Increase) decrease in accounts receivable (82,279)
(Increase) decrease in notes receivable 1,407,438
(Increase) decrease in inventory (144,071)
(Increase) decrease in costs in excess of costs
and estimated earnings on uncompleted contracts
(Increase) decrease in restricted assets
(Increase) decrease in prepaid expenses
(Increase) decrease in other assets 68,577
Increase (decrease) in accounts payable (85,594)
Increase (decrease) in accrued liabilities (27,544)
Increase (decrease) in deposits
Increase (decrease) in interest payable 22,818
-------------
Net cash provided (used) by operating activities 652,980
------------
Cash flows from investing activities:
(Increase) decrease in property and equipment (1,303,045)
Proceeds from sale of assets
(Increase) decrease in notes rec. non-current 0
------------
Net cash provided (used) by investing activities (1,303,945)
-----------
Cash flows from financing activities:
Net change in debt 1,009,701
Scheduled note repayments (471,327)
-----------
Net cash provided (used) by financing activities 538,374
----------
Net increase (decrease) in cash (112,589)
Cash at beginning of period 251,895
----------
Cash at end of period $ 139,307
==========
These statements are subject to certain risks, uncertainties and assumptions.
should one or more of these risks or uncertainties occur, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected.
