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Exhibit 10.3(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 $500,000.00 pursuant to the Loan Commitment, ("COMMITMENT") dated June
30, 1995 and the Loan Agreement, dated June 30, 1995 ("AGREEMENT")
(collectively, "LOAN AGREEMENT"), and evidenced by the 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, 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, 1996, to June 29, 1997. 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 Commitment expiration date is hereby changed to from
June 30, 1996, to June 29, 1997.
2.1.3 Section 4 of the Agreement is hereby deleted in its
entirety and replaced with the following:
4. Net Worth. A minimum tangible net worth of
$6,100,000.00 and a minimum owner's equity shall be
maintained of 21%, where Owner's Equity" "Owner's
Equity Percentage" shall mean the results obtained by
dividing (A) tangible Net Worth (as herein defined)
by (B) Borrower's Total Assets on a six month
average.
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2.1.4 Section 5 of the Agreement is hereby deleted in its entirety
and replaced with the following:
5. Net Working Capital. While the loan is outstanding, current
assets shall be maintained in excess of current liabilities by
$4,900,000.00 and a current ratio of 1.25:1.0 shall be
maintained and calculated by dividing current assets by
current liabilities after deducting short term advances to
shareholders. The outstanding balance on the $6,500,000.00
Revolving Line of Credit will be considered to be a current
liability for the purpose of calculating both "Net Working
Capital and "Current Ratio".
2.1.5 Section 12 of the Agreement is hereby deleted in its entirety
and replaced with the following:
12. Financial Statements. Borrower shall furnish Bank: (i) as
soon as available and in any event within one hundred fifty
(150) days after the end of each fiscal year of Borrower,
financial statements which accurately reflect Borrower's
assets, liabilities and net worth as of the end of the fiscal
year and profit and loss statements for the fiscal year with
the following certification requirement: Independent certified
public financial statements, (ii) as soon as available and in
any event within sixty (60) days after the end of each monthly
period, financial reports of Borrower which accurately reflect
Borrower's assets, liabilities and net worth as of the end of
the period, and with the following certification requirement:
Borrower prepared, and (iii) as soon as available and in any
event within thirty (30) days of filing, a copy of Borrower's
federal income tax return(s) for each year, together with all
schedules and other documents filed with such returns.
Borrower shall furnish such other information as Bank may
reasonably require from time to time.
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 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.
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.
2.1.3 The Commitment is hereby modified to add Sections 3, 4, 5, 6,
7, and 8 as follows:
3. Definitions. The Loan Commitment and this Addendum are hereinafter referred
to as the "Agreement". As used herein, the following terms shall have the
following meanings:
"Advance" means an advance by BANK to DEBTOR hereunder.
"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 DEBTOR 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.
"Loan Documents" means this Agreement, the Note, the Letter of Credit Agreements
executed and delivered by DEBTOR in connection with Letters of Credit from time
to time, and any other agreements, documents, or instruments from time to time
evidencing, guarantying, securing, or otherwise relating to the Note, as they
may be amended, modified, extended, renewed, or supplemented from time to time.
"Reimbursement Amount" means the amount DEBTOR 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 DEBTOR 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
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without notice to DEBTOR and may have a different number of days for commercial
letters of credit and standby letters of credit.
4. Letters of Credit.
4.1 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 DEBTOR, provided that as to each
requested Letter of Credit DEBTOR 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.
4.2 Issuance Procedure. To obtain a Letter of Credit, DEBTOR 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.
4.3 Reimbursement of BANK for Payment of Drafts Drawn or Drawn and
Accepted Under Letters of Credit. The obligation of DEBTOR 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 DEBTOR 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 DEBTOR
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 DEBTOR
does not communicate to BANK its election within two Business Days after
notification by BANK of payment of the draft or acceptance, DEBTOR 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, DEBTOR 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 DEBTOR is to pay the Reimbursement Amount pursuant to the Letter of
Credit Agreement, DEBTOR 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 DEBTOR fails to pay the Reimbursement Amount and accrued
interest thereon within five (5) days after notification by BANK to DEBTOR 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 DEBTOR 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 DEBTOR, BANK, in its absolute and sole discretion and
without notice to DEBTOR 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.
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5. 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 DEBTOR to request Letters of Credit and Advances, to execute and deliver
Letter of Credit Agreements on behalf of DEBTOR, and to direct disposition of
the proceeds of Advances until written notice of the revocation of such
authority is received from DEBTOR by BANK and BANK has had a reasonable time to
act upon such notice. BANK shall have no duty to monitor for DEBTOR or to report
to DEBTOR the use of Letters or Credit or proceeds of Advances. Advances shall
be disbursed by BANK in the manner agreed upon by BANK and DEBTOR from time to
time.
6. 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 amount of the
Commitment, provided, that if such sum at any time exceeds such amount, DEBTOR,
without notice or demand, shall immediately make a payment to BANK in an amount
equal to the sum of (A) such excess and (B) accrued and unpaid interest thereon.
7. Collateral Upon Event of Default. Upon an event of default and demand by BANK
in its absolute and sole discretion, DEBTOR shall immediately deliver to BANK as
security for all Obligations 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. DEBTOR hereby grants to BANK a
security interest in all such funds delivered to BANK to secure payment and
performance of the Obligations.
8. 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
DEBTOR 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 DEBTOR 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.
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.
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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.
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.
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.
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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
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
