EXHIBIT 10(19)
Sixth Amendment to Business Loan Agreement
between Registrant and Bank of America, Texas, N.A., dated February 3, 1999
SIXTH AMENDMENT TO BUSINESS LOAN AGREEMENT
(RECEIVABLES AND INVENTORY)
This SIXTH AMENDMENT TO BUSINESS LOAN AGREEMENT (RECEIVABLES AND INVENTORY)
(this "Amendment") is executed and entered into on August __, 1999, by and
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between Bank of America, N.A. (successor by merger to Bank of America, Texas,
N.A., the "Bank") and Aztec Manufacturing Co. (the "Borrower").
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RECITALS:
A. The Borrower and the Bank are parties to that certain Business Loan
Agreement (Receivables and Inventory) dated as of June 28, 1996 (as amended and
as the same may be further amended, renewed, extended, restated, or otherwise
modified from time to time, the "Loan Agreement") pursuant to which the Bank
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agreed to provide to the Borrower a secured revolving credit facility and a
secured term loan facility.
B. The indebtedness of the Borrower to the Bank pursuant to the Loan
Agreement is secured by liens on the Borrower's property as described in that
certain Security Agreement: Receivables, Inventory and Equipment (Borrower);
C. Each subsidiary of the Borrower is a Pledging Party and a Guarantor
under the terms of the Loan Agreement.
D. The Borrower has requested that the Bank provide additional loans to
the Borrower as set forth herein and amend certain provisions of the Loan
Agreement, and, subject to satisfaction of the conditions set forth herein, the
Bank is willing to make such additional loans available to the Borrower and
amend the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
Definitions
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Section 1.1 Definitions. Unless otherwise defined in this Amendment, each
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capitalized term used in this Amendment has the meaning given to such term in
the Loan Agreement (as amended by this Amendment).
ARTICLE 2
Amendments
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Section 2.1 Amendment to subsection 1.1(a) of the Loan Agreement.
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Effective as of the date hereof, subsection 1.1(a) of the Loan Agreement is
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hereby amended and restated to read in its entirety as follows:
(a) Twenty-Two Million Dollars ($22,000,000.00), or
Section 2.2 Amendment to Section 1.4 of the Loan Agreement. Effective as
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of the date hereof, Section 1.4 of the Loan Agreement is hereby amended and
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restated to read in its entirety as follows:
1.4 "Pledging Party" means the Borrower and each subsidiary of the
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Borrower who is party to a security agreement in favor of the Bank pledging
to the Bank such subsidiary's accounts, inventory, equipment, and other
related assets; provided, however, that Pledging Party shall also mean and
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include CGIT Westboro, Inc. ("CGIT") from and after the date of the
acquisition of CGIT by the Borrower, CGIT to execute and deliver to the
Bank a guaranty, security agreement, financing statements and such other
documents (including, without limitation, an officer's certificate as to
CGIT's charter documents, resolutions and authorized signatures) required
by the Bank to create and perfect a security interest in CGIT's accounts,
inventory, equipment, and other related assets within ninety (90) days of
the Borrower's acquisition of CGIT.
Section 2.3 Amendment to Section 2.14 of the Loan Agreement. Effective as
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of the date hereof, Section 2.14 of the Loan Agreement is hereby amended and
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restated to read in its entirety as follows:
2.14 Libor Rate. The Borrower may elect to have all or portions of
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the principal balance of the loans bear interest at a rate equal to the
lesser of (i) the Maximum Rate or (ii) the Libor Rate plus (i) the
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Applicable Libor Margin (as determined as provided in clause (j) below)
with respect to the Line of Credit or (ii) one and one-quarter percent
(1.25%) with respect to the Term Loans (the "Eurodollar Rate"), subject to
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the following requirements:
(a) The interest period during which the Eurodollar Rate will
be in effect will be (i) 1, 2, 3, or 6 months with respect to the Line
of Credit or (ii) 1, 2, 3, 6, or 12 months with respect to the Term
Loans. The last day of the interest period will be determined by the
Bank using the practices of the London interbank market.
(b) Each Eurodollar Rate portion under a loan will be for an
amount not less than Five Hundred Thousand Dollars ($500,000.00) or an
integral multiple thereof.
(c) The Borrower shall irrevocably request a Eurodollar Rate
portion no later than 11:00 a.m. Dallas, Texas time two (2) banking
days before the commencement of the interest period.
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(d) The "LIBOR Rate" means the interest rate determined by the
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following formula, rounded upward to the nearest 1/100 of one percent.
(All amounts in the calculation will be determined by the Bank as of the
first day of the interest period.)
LIBOR Rate = London Rate
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(1.00 - Reserve Percentage)
Where,
(i) "London Rate" means the interest rate (rounded upward to the
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nearest 1/16th of one percent) at which the Bank's London Branch,
London, Great Britain, would offer U.S. dollar deposits for the
applicable interest period to other major banks in the London
interbank market at approximately 11:00 a.m. London time two (2)
banking days prior to the commencement of the interest period.
(ii) "Reserve Percentage" means the total of the maximum reserve
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percentages for determining the reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in Federal Reserve Board Regulation D, rounded upward to the
nearest 1/100 of one percent. The percentage will be expressed as a
decimal, and will include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
(e) The Borrower may not elect an Eurodollar Rate with respect to any
portion of the principal balance of any loan which is scheduled to be
repaid before the last day of the applicable interest period.
(f) Any portion of the principal balance of a loan already bearing
interest at the Eurodollar Rate will not be converted to a different rate
during its interest period.
(g) Each prepayment of an Eurodollar Rate portion will be accompanied
by the amount of accrued interest on the amount prepaid, and a prepayment
fee equal to the amount (if any) by which
(i) the additional interest which would have been payable on the
amount prepaid had it not been paid until the last day of the interest
period, exceeds
(ii) the interest which would have been recoverable by the Bank
by placing the amount prepaid on deposit in the London interbank
market for a period starting on the date on which it was prepaid and
ending on the last day of the interest period for such portion.
(h) The Bank will have no obligation to accept an election for an
Eurodollar Rate portion if any of the following described events has
occurred and is continuing:
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(i) Dollar deposits in the principal amount, and for periods
equal to the interest period, of an Eurodollar Rate portion are not
available in the London interbank market; or
(ii) The Eurodollar Rate does not accurately reflect the cost of
an Eurodollar Rate portion.
(i) If at any time during any applicable interest period the
Eurodollar Rate shall exceed the Maximum Rate and thereafter the Eurodollar
Rate shall become less than the Maximum Rate, the rate of interest payable
shall be the Maximum Rate until the Bank shall have received the amount of
interest it otherwise would have received if the interest payable had not
been limited by the Maximum Rate during the period of time the Eurodollar
Rate exceeded the Maximum Rate.
(j) Prior to receipt of the Compliance Certificate to be delivered
with the Borrower's financial statements for the fiscal quarter ending
September 30, 1999, the margin over the Libor Rate for the Line of Credit
shall be _____ percent (____%); thereafter, the "Applicable Libor Margin"
shall be determined in accordance with the following table:
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RATIO OF TOTAL
LIABILITIES TO
TANGIBLE NET LIBOR RATE
WORTH MARGIN
Less than 1.25 to 1.00 0.875%
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Greater than or equal to 1.00%
1.25 to 1.00 but less
than 2.01 to 1.00
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Greater than or equal to 1.125%
2.01 to 1.00 but less
than 2.76 to 1.00
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Greater than or equal to 1.25%
2.76 to 1.00
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Upon delivery of the Compliance Certificate pursuant to subsection
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8.2(g) after the end of each fiscal quarter commencing with such Compliance
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Certificate delivered for the fiscal quarter ending December 31, 1999, the
Applicable Libor Margin shall automatically be adjusted to the rate
corresponding to the Ratio of Total Liabilities to Tangible Net Worth of
Borrower set forth in the table above, such automatic adjustment to take
effect prospectively the third Business Day after receipt by the Bank of
the Compliance Certificate (the "Adjustment Date"). If Borrower fails to
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deliver such Compliance Certificate with respect to any fiscal quarter
which sets forth such ratio within the period of time required by
subsection 8.2(g), the
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Applicable Libor Margin shall automatically be adjusted to one and one
quarter percent (1.25%) per annum. The automatic adjustments provided
for in the preceding sentence shall take effect on the last day that
the Compliance Certificate was required to be delivered and shall
remain in effect until subsequently adjusted in accordance herewith
upon the delivery of such Compliance Certificate.
Section 2.4 Amendment to Section 4.2 of the Loan Agreement. Effective as
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of the date hereof, Section 4.2 of the Loan Agreement is hereby amended and
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restated to read in its entirety as follows:
4.2 Personal Property Supporting Guaranty. The obligations of
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Aztec Industries, Inc., Aztec Industries, Inc. - Xxxx Point, Automatic
Processing, Incorporated, The Xxxxxxx Company, Inc., Gulf Coast
Galvanizing, Inc., Arkgalv, Inc., Arbor-Xxxxxxx, Inc., Aztec Group Company,
Aztec Holdings, Inc., Aztec Manufacturing Partnership, Ltd., Aztec
Manufacturing-Xxxxxx Partnership, Ltd., Rig-A-Lite Partnership, Ltd.,
Xxxxxxxx Industries, Inc., Arizona Galvanizing, Inc., Xxxxxx Galvanizing,
Inc., International Galvanizers Partnership, Ltd., and Drilling Rig
Electrical Systems Partnership, Ltd. (collectively, the "Guarantors") to
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the Bank will be secured by all equipment, fixtures, inventory, accounts,
receivables and related assets the Guarantors now own or will own in the
future, as further defined in the security agreement executed by the
Guarantors; provided that the term "Guarantors" shall include CGIT upon its
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execution of a guaranty within ninety (90) days of the acquisition of CGIT
by the Borrower as provided by Section 1.4 of this Agreement.
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Section 2.5 Amendment to Section 8.1 of the Loan Agreement. Effective as
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of the date hereof, Section 8.1 of the Loan Agreement is hereby amended and
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restated to read in its entirety as follows:
8.1 Use of Proceeds. To use the proceeds of the Line of Credit
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only for the general working capital needs of the Borrower and its
subsidiaries and to finance acquisitions permitted hereby, including,
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without limitation, the acquisition of CGIT.
Section 2.6 Amendment to Section 8.4 of the Loan Agreement. Effective as
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of the date hereof, Section 8.4 of the Loan Agreement is hereby amended and
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restated to read in its entirety as follows:
8.4 Tangible Net Worth. To maintain on a consolidated basis
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Tangible Net Worth equal to at least Eleven Million Dollars ($11,000,000,
plus fifty percent (50%) of the Borrower's positive net income for each
fiscal quarter of the Borrower ending after June 30, 1999 (no reductions to
be made for any losses). As used herein, the term "Tangible Net Worth"
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means the gross book value of the Borrower's assets (excluding goodwill,
patents, trademarks, trade names, organization expense, treasury stock,
unamortized debt discount and expense, deferred research and development
costs, deferred marketing expenses, and other like intangibles, and monies
due from affiliates, officers, directors or shareholders of the Borrower)
less total liabilities, including but not limited to accrued and deferred
income taxes, and any reserves against assets.
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Section 2.7 Amendment to Section 8.5 of the Loan Agreement. Effective as
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of the date hereof, Section 8.5 of the Loan Agreement is hereby amended and
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restated to read in its entirety as follows:
8.5 Current and Long Term Liabilities to Tangible Net Worth. To
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maintain on a consolidated basis a ratio of long term debt and Current
Liabilities to Tangible Net Worth not exceeding 4.50 to 1.00 for the period
from the date of the Sixth Amendment to this Agreement through February 28,
2000, 3.00 to 1.00 thereafter through February 28, 2001, or 2.00 to 1.00
thereafter.
Section 2.8 Amendment to Section 8.6 of the Loan Agreement. Effective as
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of the date hereof, Section 8.6 of the Loan Agreement is hereby amended and
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restated to read in its entirety as follows:
8.6 Cash Flow Ratio. To maintain on a consolidated basis a Cash
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Flow Ratio of at least 1.6:1.0. As used herein, the term "Cash Flow Ratio"
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means the ratio of Cash Flow to the current portion of long term debt plus
interest expense. "Cash Flow" is defined as net income from operations
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(before extraordinary or nonrecurring gains or losses), after taxes, plus
depreciation, amortization and other non-cash charges, plus interest
expense, minus dividends. This ratio will be calculated at the end of each
fiscal quarter, using the results of that quarter and each of the 3
immediately preceding quarters. The current portion of long term debt will
be measured as of the last day of the fiscal quarter preceding the date of
calculation.
Section 2.9 Amendment to Section 8.11 of the Loan Agreement. Effective
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as of the date hereof, Section 8.1l of the Loan Agreement is hereby amended and
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restated to read in its entirety as follows:
8.11 Treasury Stock. Not to purchase, redeem, or otherwise acquire
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for value any of its shares, or create any sinking fund in relation
thereto.
Section 2.10 Amendment to Section 8.22 of the Loan Agreement. Effective
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as of the date hereof, clause (c) of Section 8.22 of the Loan Agreement is
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hereby amended and restated to read in its entirety as follows:
(c) enter into any consolidation, merger, pool, joint
venture, syndicate, or other combination or purchase or
acquire all or substantially all the assets of another
business, except for such transaction if (i) the Borrower or
applicable Guarantor is the surviving entity; (ii) no
default exists hereunder or would result therefrom and
before, and after giving effect to, the proposed
acquisition, the representations and warranties set forth
herein shall be true and correct; and (iii) Borrower
delivers to the Bank an Environmental Questionnaire and
Disclosure Statement in form and disclosing such information
as is acceptable to the Bank relating to the assets or
entity to be acquired prior to the acquisition.
Section 2.11 Amendment to Article 8 of the Loan Agreement. Effective as
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of the date hereof, Article 8 of the Loan Agreement is hereby amended by adding
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thereto new Sections 8.24 to read in its entirety as follows:
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8.24 Funded Debt to EBITDA. To maintain on a consolidated basis
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at the end of each of the Borrower's fiscal quarters ending after the date
of the Sixth Amendment to this Agreement a ratio of Funded Debt to EBITDA
for the four consecutive fiscal quarters then ended not exceeding 3.00 to
1.00. As used herein, the term "Funded Debt" means all debt of the Borrower
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and its Subsidiaries for borrowed money (including capital lease
obligations) and the term "EBITDA" means: (i) net income from operations
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(before extraordinary or non-recurring gains or losses); plus (ii) any
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provision for income or franchise taxes deducted in determining net income;
plus (iii) interest expense deducted in determining net income; plus (iv)
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depreciation and amortization expense deducted in determining net income;
plus (v) other non cash charges deducted in determining net income.
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ARTICLE 3
Conditions Precedent
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Section 3.1 Items to be Delivered By Borrower. Prior to or
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simultaneously with execution and delivery of this Amendment, the Borrower shall
deliver, or cause to be delivered, to the Bank the following:
1 Officer's Certificates. Due certification by the corporate
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secretary (or other duly authorized officer acceptable to the Bank) of the
Borrower and each other Pledging Party (or the general partner of any
Pledging Party) (a) attaching a copy of resolutions duly adopted by its
board of directors approving the terms and conditions contained in this
Amendment, (b) certifying that the certificate of incorporation, bylaws,
certificate of limited partnership, and other constituent documents of the
Borrower, such other Pledging Party, or its general partner (as applicable)
as previously certified to the Bank remain in full force and effect without
amendment, and (c) including a certification of incumbency of all officers
who are authorized to act in respect of the corporate resolutions
referenced above, including the name, office, and signature of each such
officer.
2 Amendment Documents. Each agreement, certificate, document,
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or instrument required by the Bank to be executed or delivered by the
Borrower or any other Pledging Party in connection with this Amendment (the
"Amendment Documents"), duly executed or delivered by the parties thereto.
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Section 3.2 Other Conditions. The effectiveness of this Amendment is
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subject to the satisfaction of each of the additional following conditions
precedent:
1 Continued Effect of Representations and Warranties. All
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representations and warranties contained in any loan document (including,
without limitation, the Loan Agreement, as amended hereby; all of such loan
documents are referred to collectively herein as the "Loan Documents") shall be
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true, correct, and complete in all material respects (as determined by the Bank
in its sole discretion) except as disclosed otherwise to the Bank in writing and
as acceptable to the Bank or representations specifically relating to a prior
date
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or no longer relevant due to the occurrence of an event or circumstances
specifically permitted hereunder or by any other Loan Document;
2 Absence of Default. No default or event of default shall have
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occurred and be continuing (after giving effect to this Amendment);
3 Corporate Proceedings. All corporate proceedings taken in
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connection with the transactions contemplated by this Amendment and all
other agreements, documents, and instruments executed and/or delivered
pursuant hereto, and all legal matters incident thereto, shall be
satisfactory to the Bank and its legal counsel; and
4 Additional Information. The Bank shall have received such
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additional agreements, certificates, documents, instruments, and
information as the Bank or its legal counsel, Jenkens & Xxxxxxxxx, a
Professional Corporation, may reasonably request to effect the transactions
contemplated hereby.
ARTICLE 4
Representations and Warranties
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Section 4.1 Representations and Warranties. The Borrower hereby
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represents and warrants to the Bank that, as of the date of and after giving
effect to this Amendment: (a) the execution, delivery, and performance of this
Amendment and any and all other Amendment Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of the Borrower and will not violate the Borrower's certificate of
incorporation or bylaws; (b) all representations and warranties set forth in the
Loan Agreement and in the Loan Documents are true and correct in all material
respects as if made again on and as of such date (except as disclosed otherwise
to the Bank in writing and as acceptable to the Bank or representations
specifically relating to a prior date or no longer relevant due to the
occurrence of an event or circumstances specifically permitted hereunder or by
any other Loan Document); (c) no default or event of default has occurred and is
continuing; and (d) the Loan Agreement and the other Loan Documents (as amended
by this Amendment) are and remain legal, valid, binding, and enforceable
obligations of the Borrower.
ARTICLE 5
Miscellaneous
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Section 5.1 Governing Law. THIS AMENDMENT, AND ALL DOCUMENTS AND
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INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF TEXAS, PROVIDED THAT TO THE EXTENT FEDERAL
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LAW WOULD ALLOW A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY THE LAWS OF
THE STATE OF TEXAS, THEN WITH RESPECT TO THE PROVISIONS OF ANY LAW WHICH
PURPORTS TO LIMIT THE AMOUNT OF INTEREST THAT MAY BE CONTRACTED FOR, CHARGED OR
RECEIVED IN CONNECTION WITH ANY OF THE OBLIGATIONS, SUCH FEDERAL LAW SHALL
APPLY.
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Section 5.2 Agreement Remains in Effect; No Waiver. Except as expressly
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provided herein, all terms and provisions of the Loan Agreement and the other
Loan Documents shall remain unchanged and in full force and effect and are
hereby ratified and confirmed. No delay or omission by the Bank in exercising
any power, right, or remedy shall impair such power, right, or remedy or be
construed as a waiver thereof or an acquiescence therein, and no single or
partial exercise of any such power, right, or remedy shall preclude other or
further exercise thereof or the exercise of any other power, right, or remedy
under the Loan Agreement, the Loan Documents, or otherwise.
Section 5.3 Survival of Representations and Warranties. All
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representations and warranties made in this Amendment or any other Loan Document
shall survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by the Bank or any closing shall affect the
representations and warranties or the right of the Bank to rely upon them.
Section 5.4 Reference to Loan Agreement and Loan Documents. Each of the
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Loan Documents, including the Loan Agreement, the Amendment Documents, and any
and all other agreements, documents, or instruments now or hereafter executed
and/or delivered pursuant to the terms hereof or pursuant to the terms of the
Loan Agreement, as amended hereby, are hereby amended so that any reference in
the Loan Documents to the Loan Agreement shall mean a reference to the Loan
Agreement as amended hereby, and the term "loan documents" as used in the Loan
Agreement and as used in any of the other Loan Documents includes, without
limitation, the Amendment Documents.
Section 5.5 Severability. Any provision of this Amendment held by a
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court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 5.6 Successors and Assigns. This Amendment is binding upon and
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shall inure to the benefit of the Borrower, the Bank, and their respective
successors in interest and assigns. The Borrower may not assign any right,
power, duty, or obligation hereunder without the prior written consent of the
Bank.
Section 5.7 Headings. The headings, captions, and arrangements used in
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this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 5.8 Expenses of the Bank. As provided in the Loan Agreement, the
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Borrower agrees to pay on demand all reasonable, third party out-of-pocket costs
and expenses incurred by the Bank in connection with the preparation,
negotiation, and execution of this Amendment, the Amendment Documents, or the
other Loan Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including, without limitation, the
reasonable fees of the Bank's legal counsel, and all reasonable costs and
expenses incurred by the Bank in connection with the enforcement or preservation
of any rights under the Loan Agreement, as amended hereby, or any other Loan
Document, including, without limitation, the reasonable costs and fees of the
Bank's legal counsel.
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Section 5.9 Counterparts. This Amendment may be executed simultaneously
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in one or more multiple originals, each of which shall be deemed an original,
but all of which together shall constitute one and the same agreement.
THIS AMENDMENT, TOGETHER WITH THE LOAN AGREEMENT AND THE OTHER
LOAN DOCUMENTS AS WRITTEN, 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.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this Amendment to
be executed and delivered by their duly authorized officers effective as of the
date first written above.
BORROWER:
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AZTEC MANUFACTURING CO.
By: /s/ XXXX XXXXX
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Name: XXXX XXXXX
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Title: V.P. FINANCE
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BANK:
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BANK OF AMERICA, N.A. (successor by
merger to Bank of America, Texas, N.A.)
By: /s/ XXXXX XXXXXXX
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Name: XXXXX XXXXXXX
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Title: SENIOR V.P.
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