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Exhibit 10.2(c)
MODIFICATION AGREEMENT
DATE: JUNE 30, 1996
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. 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".
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 The maturity date of the Loan and the Note is changed
from June 30, 1997, to June 30, 1998. On the maturity date Borrower shall pay to
Bank the unpaid principal, accrued and unpaid interest, and all other amounts
payable by Borrower under the Loan Documents as modified herein.
2.1.2 The reference to Expiration Date in Section 1.1 in
Section 13 of the Loan Agreement is changed from June 30, 1997, to June 30,
1998.
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2.1.3 The reference to Section 6.1(b)(i) and (ii) in Section
13 of the Loan Agreement are hereby deleted in their entirety and replaced with
the following:
6..1(b)(i) Statements due within one hundred fifty
(150) days of each fiscal year Certification
Requirements: Independent certified public accountant
satisfactory to Bank to audit financial statements
and deliver an unqualified opinion on the financial
statements.
6.1(b)(ii) Statements due within sixty (60) days of
each month Certification Requirements: Borrower
prepared financial statements
2.1.4 Section 6.1(b)(iv) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
(iv) within twenty (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 which states the total amount payable to
Borrower 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;
2.1.5 Section 6.1(b)(vi) of the Loan Agreement is hereby
deleted and replaced with the following:
(vi) As soon as available and in any event within
thirty (30) days of filing, Borrower shall deliver a
copy of Borrower's federal income tax return(s) for
each year, together with all schedules and other
documents filed with such returns.
2.1.6 Section 6.1(b) (vii) and (viii) of the Loan Agreement
are hereby deleted in their entirety and replaced with the following:
(vii) Borrower shall cause Guarantor, Xxxxx X. and
Xxxxx X. Xxxxxx, to furnish Bank: (A) annual updated
balance sheet in such form and with such
certifications as may be reasonable required by Bank,
and (B) a copy of such person's federal income tax
return for such calendar year, together with all
schedules and other documents filed with such return,
both by August 15th of each year.
(viii) Borrower shall cause Guarantor, Xxxxx X.
Xxxxxx, to furnish Bank: (A) annual updated balance
sheet in such form and with such certifications as
may be reasonably required by Bank, and (B) a copy of
such person's federal income tax return for such
calendar year, together with all schedules and other
documents filed with such return, both by August 15th
of each year.
2.1.7 Sections 6.1(d) (iii) and (iv) of the Loan Agreement are
hereby deleted in their entirety and replaced with the following:
(iii) a minimum current ratio, calculated by dividing
Borrower's Current Assets by Borrower's Current
Liabilities after deducting short term advances to
shareholders, shall be maintained at the ratio set
forth in Section 13 hereof. The outstanding balance
on the Revolving Line of Credit will be considered to
be a current liability for the purpose of calculating
"Current Ratio";
(iv) a minimum Working Capital shall be maintained in
the amount set forth in Section 13 hereof, where
"Working Capital" shall mean Borrower's Current
Assets less Borrower's Current Liabilities after
deducting short term advances to shareholders. The
outstanding balance on the Revolving Line of Credit
will be considered to be a current liability for the
purpose of calculating "Net Working Capital"; and
2.1.8 The reference to Sections 6.1(d)(i) (iii) and (iv) in
Section 13 of the Loan Agreement are hereby deleted in their entirety and
replaced with the following:
6.1 (d) (i) Minimum Tangible Net Worth: $6,100,000.00
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6.1 (d) (iii) Current Ratio 1.25:1.0
6.1 (d) (iv) Minimum Working Capital: $4,900,000.00
2.1.9 The Loan Agreement is hereby modified to add Sections
14, 15, 16, 17, 18 and 19 as follows:
14. Definitions. Capitalized terms used herein shall have the meanings set
forth in the RLC Loan Agreement and the following terms shall have the
following meanings:
"Commitment" means the agreement of BANK hereunder to issue Letters of Credit
pursuant to the terms and conditions in Letter of Credit Agreements and to make
Advances pursuant to the terms and conditions in the Agreement.
"Existing Letter(s) of Credit" means any and all letter(s) of credit issued by
BANK at the request of BORROWER prior to the date of this Agreement, as to which
letter(s) of credit the date that is the Standard Number of Days after the last
date for payment of drafts drawn or drawn and accepted thereunder is after the
date of this Agreement.
"Letter of Credit Agreement" means BANK's standard form Application and
Agreement for Commercial Letter of Credit, BANK's standard form Application for
Standby Letter of Credit and Standby Letter of Credit Agreement, or other
standard application and agreement for letters of credit in use by BANK from
time to time.
"Letters of Credit" means the letters of credit in BANK's standard form from
time to time issued pursuant to this Agreement and any Existing Letters of
Credit.
"Reimbursement Amount" means the amount BORROWER is obligated to pay to BANK
under a Letter of Credit Agreement in respect of a draft drawn or drawn and
accepted under the respective Letter of Credit, which amount shall be the amount
of the draft or acceptance and all costs, expenses, fees, and other amounts then
payable by BORROWER to BANK under the Letter of Credit Agreement.
"Standard Number of Days" means the standard number of days established by BANK
from time to time to allow for delivery to BANK of drafts drawn under letters of
credit issued by BANK and presented to financial institutions other than BANK
for delivery to BANK. BANK may change such number of days at any time and from
time to time in its absolute and sole discretion without notice to BORROWER and
may have a different number of days for commercial letters of credit and standby
letters of credit.
15. Letters of Credit.
15.1 Issuance of Letters of Credit. Subject to the terms and conditions
of this Agreement and the Letter of Credit Agreements and subject to the
policies, procedures, and requirements of BANK in effect from time to time for
issuance of Letters of Credit (including, without limitation, payment of letter
of credit fees), BANK agrees to issue, from time to time on or before the
scheduled Commitment expiration date set forth in the Agreement, Letters of
Credit upon request by and for the account of BORROWER , provided that as to
each requested Letter of Credit BORROWER has delivered to BANK a completed and
executed Letter of Credit Agreement, and provided further that the date that is
the Standard Number of Days after the last date for payment of drafts drawn or
drawn and accepted under a requested Letter of Credit is before the scheduled
Commitment expiration date set forth in the Agreement. Each reference in this
Agreement to "issue" or "issuance" or other forms of such words in relation to
Letters of Credit shall also include any extension or renewal of a Letter of
Credit. Upon occurrence of an Event of default, or any condition or event that
with notice, passage of time, or both would be an Event of default, BANK, in its
absolute and sole discretion and without notice, may suspend the commitment to
issue Letters of Credit. In addition, upon occurrence of an Event of default,
BANK, in its absolute and sole discretion and without notice, may terminate the
commitment to issue Letters of Credit.
15.2 Issuance Procedure. To obtain a Letter of Credit, BORROWER shall
complete and execute a Letter of Credit Agreement and submit it to the letter of
credit department of BANK. Upon receipt of a completed and executed Letter of
Credit Agreement, BANK will process the application in accordance with the
policies, procedures, and requirements of BANK then in effect. If the
application meets the requirements of BANK and is within the policies of BANK
then in effect, BANK will issue the requested Letter of Credit.
15.3 Reimbursement of BANK for Payment of Drafts Drawn or Drawn and
Accepted Under Letters of Credit. The obligation of BORROWER to reimburse BANK
for payment by BANK of drafts drawn or drawn and accepted under a Letter of
Credit shall be as provided in the respective Letter of Credit Agreement. BANK
will notify BORROWER of payment by BANK of a draft drawn or drawn and accepted
under a Letter of Credit and of the respective Reimbursement Amount and will
give BORROWER the election (i) to pay the Reimbursement Amount pursuant to the
respective Letter of Credit Agreement or (ii) to pay the Reimbursement Amount by
BANK making an Advance subject to the terms and conditions of this Agreement and
applying the proceeds of the Advance to pay the Reimbursement Amount. If
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BORROWER does not communicate to BANK its election within two Business Days
after notification by BANK of payment of the draft or acceptance, BORROWER shall
be deemed to have elected to pay the Reimbursement Amount by BANK making an
Advance hereunder, provided that if the terms and conditions in this Agreement
for an Advance hereunder are not satisfied, BORROWER shall be deemed to have
elected to pay the Reimbursement Amount pursuant to the Letter of Credit
Agreement. Each Advance to pay a Reimbursement Amount shall be dated the date
that BANK pays the respective draft or acceptance and shall accrue interest from
and after such date. If BORROWER is to pay the Reimbursement Amount pursuant to
the Letter of Credit Agreement, BORROWER shall also pay to BANK interest on the
Reimbursement Amount from and including the date BANK pays the respective draft
or acceptance at the rate per annum at which interest is then accruing under the
Line of Credit Note until the Reimbursement Amount and such interest are paid in
full, provided that if BORROWER fails to pay the Reimbursement Amount and
accrued interest thereon within five (5) days after notification by BANK to
BORROWER of payment of the respective draft or acceptance, interest thereafter
shall accrue at the interest rate applicable to past-due payments under the Line
of Credit Note. Such interest shall be computed on the basis of a 360-day year
and accrue on a daily basis for the actual number of days elapsed.
Notwithstanding the above, if BORROWER elects or is deemed to have elected to
pay the Reimbursement Amount pursuant to the Letter of Credit Agreement and
fails to pay the Reimbursement Amount and interest thereon within five (5) days
after notification by BANK to BORROWER , BANK, in its absolute and sole
discretion and without notice to BORROWER and regardless of whether the terms
and conditions in this Agreement for Advances are satisfied, may make an Advance
under this Agreement in the amount of the Reimbursement Amount and accrued
interest thereon and apply the proceeds of such Advance to pay the Reimbursement
Amount and accrued interest.
16. Letters of Credit and Advances. Letters of Credit may be issued by BANK at
the oral or written request of the respective person or persons designated in
the Agreement to request Advances. Such person or persons are hereby authorized
by BORROWER to request Letters of Credit and Advances, to execute and deliver
Letter of Credit Agreements on behalf of BORROWER , and to direct disposition of
the proceeds of Advances until written notice of the revocation of such
authority is received from BORROWER by BANK and BANK has had a reasonable time
to act upon such notice. BANK shall have no duty to monitor for BORROWER or to
report to BORROWER the use of Letters or Credit or proceeds of Advances.
Advances shall be disbursed by BANK in the manner agreed upon by BANK and
BORROWER from time to time.
17. Limit on Letters of Credit and Advances. Anything in the Loan Documents to
the contrary notwithstanding, the sum from time to time of (i) the aggregate
amount of outstanding and undrawn Letters of Credit, (ii) the aggregate amount
of outstanding and unpaid drafts drawn or drawn and accepted under Letters of
Credit, (iii) the aggregate amount of unpaid Reimbursement Amounts, and (iv) the
amount of outstanding and unpaid Advances shall not exceed the lesser of (A) the
Maximum Amount and (B) the Borrowing Base, provided, that if such sum at any
time exceeds the lesser of (A) and (B), BORROWER , without notice or demand,
shall immediately make a payment to BANK in an amount equal to the sum of (1)
such excess and (2) accrued and unpaid interest thereon.
18. Collateral Upon Event of Default. Upon an event of default and demand by
BANK in its absolute and sole discretion, BORROWER shall immediately deliver to
BANK, as security for all obligations of Borrower under the Loan Documents
(including, without limitation, the obligation to pay Reimbursement Amounts),
immediately available funds in an amount equal to the sum of (i) the aggregate
amount of outstanding and undrawn Letters of Credit, and (ii) the aggregate
amount of outstanding and unpaid drafts drawn or drawn and accepted under
Letters of Credit. BORROWER hereby grants to BANK a security interest in all
such funds delivered to BANK to secure payment and performance of said
obligations.
19. Conditions Precedent to Each Advance and Letter of Credit. BANK shall be
obligated to issue a Letter of Credit or make an Advance when requested by
BORROWER only if the representations and warranties by the Loan Parties in the
Loan Documents are accurate on and as of the date of this Agreement and on and
as of the date of issuance of the Letter of Credit or of making the Advance
before and after giving effect to the Letter of Credit or the Advance and the
application of the proceeds of the Advance. Delay or failure by BANK to insist
on satisfaction of any condition of issuance of a Letter of Credit or making an
Advance shall not be a waiver of such condition precedent or any other condition
precedent. If BORROWER is unable to satisfy any condition precedent of issuance
of a Letter of Credit or making an Advance, the issuance of the Letter of Credit
or the making of the Advance shall not preclude BANK from thereafter declaring
the condition or event causing such inability to be an event of default.
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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.
3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.
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.
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.
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.
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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).
5.3.3 A documentation fee of $300.00.
5.3.4 A commitment fee of $8,125.00.
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_______________________________________
Xxxxx X. Xxxxxx, Chairman
BANK ONE, ARIZONA, NA,
a national banking association
By_______________________________________
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.
______________________________________
Xxxxx X. Xxxxxx
______________________________________
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.
______________________________________
Xxxxx X. Xxxxxx
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