NationsBank of Texas, N.A.
FIFTH AMENDED AND RESTATED LOAN AGREEMENT
This Loan Agreement ("Agreement") dated as of February 3, 1997,
by and between NationsBank of Texas, N.A., a national banking
association ("Bank") and the Borrower described below.
In consideration of the Loan or Loans and Letters of Credit
described below and the mutual covenants and agreements
contained herein, and intending to be legally bound hereby,
Bank and Borrower agree as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other
terms defined herein, the following terms shall have the meaning
set forth with respect thereto:
A. Borrower: Peerless Mfg. Co., a Texas corporation
B. Borrower's Address: 2819 Walnut Hill Lane Dallas, Texas
75229
C. Collateral Account. Collateral Account means each deposit
account in which Bank has a perfected, first priority Lien, not
subject to any claim of any other Person.
D. Collateral Policy. Collateral Policy means each
effective insurance policy insuring the life of Don Sillars in
which Bank has a perfected, first priority Lien in the cash
value and all death benefits, together with such other
assurances as Bank may require to evidence its interest in such
policy.
E. Compliance Certificate. Compliance Certificate mean a
certificate in the form of Exhibit B.
F. Current Assets. Current Assets means the aggregate amount
of all the assets of the Borrower and its Subsidiaries, on a
consolidated basis, assets which would, in accordance with
GAAP, properly be defined as current assets.
G. Current Liabilities. Current Liabilities means the
aggregate amount of all current liabilities of the
Borrower and its Subsidiaries, on a consolidated basis, as
determined in accordance with GAAP, but in any event shall
include all liabilities except those having a maturity date which
is more than one year from the date as of which such
computation is being made, plus the amount equal to the
difference (but not less than zero) of (i) the aggregate
undrawn amount of all Letters of Credit, minus (ii) the sum
of (a) the aggregate amount in each Collateral Account, plus
(b) the aggregate cash value of each Collateral Policy.
H. Hazardous Materials. Hazardous Materials include all
materials defined as hazardous materials or substances under any
local, state or federal environmental laws, rules or
regulations, and petroleum, petroleum products, oil and
asbestos.
I. Investment. Investment means any acquisition of all
or substantially all assets of any Person, or any direct or
indirect purchase or other acquisition of, or a beneficial
interest in, capital stock or other securities of any other
Person, or any direct or indirect loan, advance (other than
advances to employees for moving and travel expenses, drawing
accounts, and similar expenditures in the ordinary course of
business), or capital contribution to or investment in any
other Person, including without limitation the incurrence or
sufferance of Debt or accounts receivable of any other Person
that are not current assets or do not arise from sales to that
other Person in the ordinary course of business.
J. Lien. Lien means any mortgage, pledge, security
interest, encumbrance, lien, or charge of any kind, including
without limitation any agreement to give or not to give any
of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement or other
similar form of public notice under the laws of any jurisdiction.
K. Loan. Any loan described in Section 2 hereof and any
subsequent loan which states that it is subject to this
Agreement.
L. Loan Documents. Loan Documents means this Agreement and any
and all promissory notes executed by Borrower in favor of
Bank, each application for issuance of a Letter of Credit
and all other documents, instruments, guarantees,
certificates and agreements executed and/or delivered by
Borrower, any guarantor or third party in connection with any
Loan or Letter of Credit.
M. Net Income. Net Income means net profit after taxes of
the Borrower and its Subsidiaries, on a consolidated basis,
determined in accordance with GAAP.
N. Net Loss. Net Loss means net loss after taxes of the
Borrower and its Subsidiaries, on a consolidated basis,
determined in accordance with GAAP.
O. Person. Person means an individual, partnership, joint
venture, corporation, trust, tribunal, unincorporated
organization, and government, or any department, agency,
or political subdivision thereof.
P. Subsidiary. Subsidiary means as to any Person, a
corporation, partnership or other entity of which shares of
stock or other ownership interests having ordinary voting
power (other than such stock or such other ownership
interests having such power only by reason of the happening of
a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership, or other entity
are at the time owned, or the management of which is otherwise
controlled, directly or indirectly, through one or more
intermediaries, or both by such Person.
Q. TCB Agreement. TCB Agreement means the Loan Agreement dated
as of March 7, 1997, between Borrower and Texas Commerce
Bank National Association.
R. Accounting Terms. All accounting terms not specifically
defined or specified herein shall have the meanings generally
attributed to such terms under generally accepted accounting
principles ("GAAP"), as in effect from time to time, consistently
applied, with respect to the financial statements referenced in
Section 3.H. hereof.
2. LOANS.
A. Loan. Bank hereby agrees to make (or has made) one or more
loans to Borrower in the aggregate principal face amount of
$5,000,000 (as such amount may be reduced, the "Line"),
provided, the aggregate unpaid principal of all loans shall
not at any time exceed the difference between (i) the Line,
minus (ii) the undrawn amount of all outstanding Letters of
Credit. The obligation to repay the loans is evidenced by the
promissory note dated February 3, 1997 (the promissory
note or notes together with any and all renewals,
extensions or rearrangements thereof being hereafter
collectively referred to as the "Note") having a maturity date,
repayment terms and interest rate as set forth in the Note (a
copy of which is attached as Exhibit A).
i. Revolving Credit Feature. The Note provides for a revolving
line of credit under which Borrower may from time to time,
borrow, repay and re-borrow funds.
ii. Usage Fee. Borrower will pay hereafter on February 3, 1997
and on the last day of each quarter for the period from and
including the date the Line was established to and including
the maturity date of the Line, a usage fee at a rate per annum
of .25% of the average daily unused portion of the Line during
such period. The Borrower may at any time upon written notice
to the Bank permanently reduce the amount of the Line at which
time the obligation of the Borrower to pay a usage fee shall
thereupon correspondingly be reduced.
iii. Letter of Credit Subfeature. As a subfeature under the
Line, Bank may from time to time up to and including December
11, 1998, issue letters of credit for the account of Borrower
(each, a "Letter of Credit" and collectively, "Letters of
Credit"); provided, however, that the form and substance of
each Letter of Credit shall be subject to approval by Bank in its
sole discretion; and provided further that the aggregate
undrawn amount of all outstanding Letters of Credit shall not
at any time exceed the difference between (a) the Line, minus
(b) the aggregate unpaid principal amount of all Loans. No
Letter of Credit shall have an expiry subsequent to December 11,
1998 or 366 or more days after the issuance date; provided
Borrower may request that Bank issue Letters of Credit having
an expiry after December 11, 1998 or an expiry 366 or more
days after the issuance date ("Extended Expiry LC"), if the
undrawn amount of such Extended Expiry LC plus the aggregate
undrawn amount of all other Extended Expiry LCs does not
exceed an amount equal to the sum of (a) the amount of each
Collateral Account plus (b) 95% of the cash value of each
Collateral Policy. The undrawn amount of all Letters of Credit
plus any and all amounts paid by Bank in connection with
drawings under any Letter of Credit for which the Bank has not
been reimbursed shall be reserved under the Line and shall
not be available for advances thereunder. Each draft paid by
Bank under a Letter of Credit shall be deemed an advance under
the Line and shall be repaid in accordance with the terms of
the Line; provided however, that if the Line is not available
for any reason whatsoever, at the time any draft is paid by
Bank, or if advances are not available under the Line in such
amount due to any limitation of borrowing set forth herein, then
the full amount of such drafts shall be immediately due and
payable, together with interest thereon, from the date such
amount is paid by Bank to the date such amount is fully repaid
by Borrower, at that rate of interest applicable to advances
under the Line. In such event, Borrower agrees that Bank, at
Bank's sole discretion may debit any Collateral Account or
Borrower's deposit accounts with Bank or obtain all or any of
the cash value of any Collateral Policy for the amount of such
draft. If at any time prior to December 12, 1997 the sum of (a)
the aggregate unpaid principal of the Loans, plus (b) the
aggregate undrawn amount of all outstanding Letters of Credit
exceeds the Line, Borrower shall immediately pay to Bank the
amount of such excess, together with accrued, unpaid interest
on the amount of such excess. If at any time after December
12, 1997 the aggregate undrawn amount of all Extended Expiry LCs
exceeds the sum of (a) the amount of each Collateral Account,
plus (b) 95% of the cash value of each Collateral Policy,
Borrower shall immediately deliver to Bank, for deposit into
a Collateral Account, an amount in cash equal to such excess.
Letters of Credit shall be priced at a rate of 1.5% per annum of
the face amount of the Letter of Credit, which fee is due
and payable on issuance of the Letters of Credit. Bank shall
send to Borrower notice of Bank's election to pursue any remedy
with respect to the Collateral Policy three days prior to
enforcing such remedy.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents
and warrants to Bank as follows:
A. Good Standing. Borrower is a corporation, duly organized,
validly existing and in good standing under the laws of Texas
and has the power and authority to own its property and to
carry on its business in each jurisdiction in which Borrower
does business. Each Subsidiary of Borrower is a corporation,
duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized (as
indicated on Schedule 1) and has the power and authority to own
its property and to carry on its business in each jurisdiction
in which it does business.
B. Authority and Compliance. Borrower has full power and
authority to execute and deliver the Loan Documents and to incur
and perform the obligations provided for therein, all of
which have been duly authorized by all proper and
necessary action of the Board of Directors of Borrower. No
consent or approval of any public authority or other third party
is required as a condition to the validity of any Loan Document,
and Borrower and each Subsidiary of Borrower is in compliance
with all laws and regulatory requirements to which it is
subject.
C. Binding Agreement. This Agreement and the other Loan
Documents executed by Borrower constitute valid and legally
binding obligations of Borrower, enforceable in accordance with
their terms.
D. Litigation. There is no proceeding involving Borrower or
any Subsidiary of Borrower pending or, to the knowledge of
Borrower, threatened before any court or governmental
authority, agency or arbitration authority, except as
disclosed to Bank in writing and acknowledged by Bank prior to
the date of this Agreement.
E. No Conflicting Agreements. There is no charter, bylaw,
stock provision, partnership agreement or other document
pertaining to the organization, power or authority of
Borrower or any Subsidiary of Borrower and no provision of
any existing agreement, mortgage, indenture or contract
binding on Borrower or any Subsidiary of Borrower or
affecting its respective property, which would conflict with or
in any way prevent the execution, delivery or carrying out of the
terms of this Agreement and the other Loan Documents.
F. Ownership of Assets. Borrower and each Subsidiary of
Borrower has good title to its respective assets, and its
respective assets are free and clear of Liens, except those
granted to Bank and as disclosed to Bank in writing prior to the
date of this Agreement.
G. Investments. Neither Borrower nor any Subsidiary of
Borrower has any Investments except as described on Schedule 1.
Schedule 1 is a complete and correct description of the name
and jurisdiction of organization of each Subsidiary of
Borrower.
H. Taxes. All taxes and assessments due and payable by
Borrower and each Subsidiary of Borrower have been paid or are
being contested in good faith by appropriate proceedings and
Borrower and each Subsidiary of Borrower have filed all tax
returns which it is required to file.
I. Financial Statements. The financial statements of
Borrower heretofore delivered to Bank have been prepared in
accordance with GAAP applied on a consistent basis throughout
the period involved and fairly present Borrower's financial
condition as of the date or dates thereof, and there has been no
material adverse change in Borrower's financial condition or
operations since June 30, 1996. All factual information
furnished by Borrower to Bank in connection with this
Agreement and the other Loan Documents is and will be accurate
and complete on the date as of which such information is
delivered to Bank and is not and will not be incomplete by the
omission of any material fact necessary to make such information
not misleading.
J. Place of Business. Borrower's chief executive office is
located at:
2819 Walnut Hill Lane Dallas, Texas 75229
K. Environmental. The conduct of Borrower's and each of
Borrower's Subsidiary's business operations and the condition of
Borrower's and each of Borrower's Subsidiary's property does not
and will not violate any federal laws, rules or ordinances for
environmental protection, regulations of the Environmental
Protection Agency, any applicable local or state law, rule,
regulation or rule of common law or any judicial
interpretation thereof relating primarily to the environment or
Hazardous Materials.
L. Continuation of Representations and Warranties.
All representations and warranties made under this Agreement
shall be deemed to be made at and as of the date hereof and at
and as of the date of any advance under any Loan and the
issuance of any Letter of Credit.
4. AFFIRMATIVE COVENANTS. Until full and final payment
and performance of all obligations of Borrower under the Loan
Documents, Borrower will, unless Bank consents otherwise in
writing (and without limiting any requirement of any other Loan
Document):
A. Financial Statements and Other Information. Maintain a
system of accounting satisfactory to Bank and in accordance with
GAAP applied on a consistent basis throughout the period
involved, permit Bank's officers or authorized representatives
to visit and inspect Borrower's books of account and other
records at such reasonable times and as often as Bank may
desire, and pay the reasonable fees and disbursements of
any accountants or other agents of Bank selected by Bank for
the foregoing purposes. Unless written notice of another
location is given to Bank, Borrower's books and records
will be located at Borrower's chief executive office set forth
above. All financial statements called for below shall be
prepared in form and content acceptable to Bank and by
independent certified public accountants acceptable to Bank.
In addition, Borrower will:
i. Furnish to Bank consolidated and consolidating
financial statements of Borrower for each fiscal year of
Borrower, within 90 days after the close of each such fiscal
year.
ii. Furnish to Bank consolidated and consolidating
financial statements (including a balance sheet and profit and
loss statement) of Borrower for each quarter of each fiscal
year of Borrower, within 45 days after the close of each such
period.
iii. Furnish to Bank a Compliance Certificate for (and executed
by an authorized representative of) Borrower concurrently with
and dated as of the date of delivery of each of the
financial statements as required in paragraphs i and ii above,
containing (a) a certification that the financial statements of
even date are true and correct and that the Borrower is not in
default under the terms of this Agreement, and (b) computations
and conclusions, in such detail as Bank may request, with
respect to compliance with this Agreement, and the other Loan
Documents, including computations of all quantitative covenants.
iv. Furnish to Bank promptly such additional information,
reports and statements respecting the business operations and
financial condition of Borrower and its Subsidiaries, from
time to time, as Bank may reasonably request.
B. Insurance. Maintain, and cause each Subsidiary of
Borrower to maintain, insurance with responsible insurance
companies on such of its properties, in such amounts and
against such risks as is customarily maintained by similar
businesses operating in the same vicinity, specifically to
include fire and extended coverage insurance covering all
assets, and liability insurance, all to be with such companies
and in such amounts as are satisfactory to Bank and
providing for at least 30 days prior notice to Bank of
any cancellation thereof. Satisfactory evidence of such
insurance will be supplied to Bank prior to funding under the
Loan(s) or issuance of the first Letter of Credit and 30 days
prior to each policy renewal.
C. Existence and Compliance. Maintain, and cause each
Subsidiary of Borrower to maintain, its existence, good standing
and qualification to do business, where required and comply
with all laws, regulations and governmental requirements
including, without limitation, environmental laws
applicable to it or to any of its property, business
operations and transactions.
D. Adverse Conditions or Events. Promptly advise Bank in
writing of (i) any condition, event or act which comes to its
attention that would or might materially adversely affect
Borrower's or any of Borrower's Subsidiary's financial
condition or operations or Bank's rights under the Loan
Documents, (ii) any litigation filed by or against Borrower
or any Subsidiary of Borrower, (iii) any event that has
occurred that would constitute an event of default under any Loan
Documents and (iv) any uninsured or partially uninsured loss
through fire, theft, liability or property damage.
E. Taxes and Other Obligations. Pay, and cause each
Subsidiary of Borrower to pay, all of its taxes, assessments
and other obligations, including, but not limited to taxes,
costs or other expenses arising out of this transaction, as the
same become due and payable, except to the extent the same are
being contested in good faith by appropriate proceedings in a
diligent manner.
F. Maintenance. Maintain, and cause each Subsidiary of
Borrower to maintain, all of its tangible property in good
condition and repair and make all necessary replacements
thereof, and preserve and maintain all licenses, trademarks,
privileges, permits, franchises, certificates and the like
necessary for the operation of its business.
G. Environmental. Immediately advise Bank in writing of (i)
any and all enforcement, cleanup, remedial, removal, or other
governmental or regulatory actions instituted, completed or
threatened pursuant to any applicable federal, state, or local
laws, ordinances or regulations relating to any Hazardous
Materials affecting Borrower's or any of Borrower's
Subsidiary's business operations; and (ii) all claims made or
threatened by any third party against Borrower or any Subsidiary
of Borrower relating to damages, contribution, cost
recovery, compensation, loss or injury resulting from any
Hazardous Materials. Borrower shall immediately notify Bank of
any remedial action taken by Borrower or any Subsidiary of
Borrower with respect to Borrower's or any of Borrower's
Subsidiary's business operations. Borrower will not use or
permit, and will cause each Subsidiary of Borrower to not use or
permit, any other party to use any Hazardous Materials at any
of Borrower's or any of Borrower's Subsidiary's places of
business or at any other property owned by Borrower or any
Subsidiary of Borrower except such materials as are
incidental to Borrower's or any of Borrower's Subsidiary's
normal course of business, maintenance and repairs and which
are handled in compliance with all applicable environmental
laws. Borrower agrees to permit Bank, its agents,
contractors and employees to enter and inspect any of
Borrower's or any of Borrower's Subsidiary's places of
business or any other property of Borrower and each Subsidiary
of Borrower at any reasonable times upon three (3) days prior
notice for the purposes of conducting an environmental
investigation and audit (including taking physical samples) to
insure that Borrower and each Subsidiary of Borrower are
complying with this covenant and Borrower shall reimburse
Bank on demand for the costs of any such environmental
investigation and audit. Borrower shall provide, and shall
cause each Subsidiary of Borrower to provide, Bank, its
agents, contractors, employees and representatives with
access to and copies of any and all data and documents
relating to or dealing with any Hazardous Materials used,
generated, manufactured, stored or disposed of by Borrower's and
each Subsidiary's of Borrower business operations within five
(5) days of the request therefore.
5. NEGATIVE COVENANTS. Until full and final payment and
performance of all obligations of Borrower under the Loan
Documents, Borrower will not, and will not permit any
Subsidiary of Borrower to, without the prior written consent of
Bank (and without limiting any requirement of any other Loan
Documents):
A. Financial Condition.
i. Borrower shall not permit the ratio of (a) Current Assets
divided by (b) Current Liabilities to be less than 1.0 to 1.0 as
at the last day of each calendar quarter.
ii. Borrower shall not permit
a) Net Income to be less than or equal to $0 for the nine
months ending on March 31, 1997. b) Net Income to be less than
or equal to $500,000 for the twelve months ending on June 30,
1997. c) Net Loss to be less than $0 by more than $300,000 for
the three months ending September 30, 1997.
B. Investments. Make an Investment in or to any Person;
provided, Borrower may make Investments in the existing
Subsidiaries of Borrower identified on Schedule 1 if the
aggregate of all existing Investments in such Subsidiaries (as
disclosed on Schedule 1), plus all future Investments in such
Subsidiaries, does not exceed at any time $2,000,000.
C. Extensions of Credit. Make any loan or advance to any
Person; provided Borrower may make loans and/or advances to
Subsidiaries under the terms specified in Section "B.
Investments" above.
D. Transfer of Assets or Control. Sell, lease, assign or
otherwise dispose of or transfer any assets, except in the
normal course of its business, or enter into any merger or
consolidation.
E. Liens. Grant, suffer or permit any contractual or
noncontractual Lien on any of its assets, or fail to promptly pay
when due all lawful claims, whether for labor, materials or
otherwise; or agree with any Person to not grant any Lien on any
of its assets.
F. Borrowings. Create, incur, assume or become liable in any
manner for any indebtedness (for borrowed money, deferred
payment for the purchase of assets, lease payments, as surety
or guarantor for the debt for another, or otherwise) other
than to Bank, except for normal trade debts incurred in the
ordinary course of Borrower's and each of Borrower's
Subsidiary's business, and except for (i) existing
indebtedness disclosed to Bank in writing and acknowledged by
Bank prior to the date of this Agreement and (ii) indebtedness
under the TCB Agreement.
G. TCB Agreement. Amend, modify or restate the TCB Agreement,
or any related agreement, as they exist on March 7, 1997.
H. Character of Business. Change the general character of
business as conducted at the date hereof, or engage in any type
of business not reasonably related to its business as presently
conducted.
6. DEFAULT. Borrower shall be in default under this Agreement
and under each of the other Loan Documents if any one or more
of the following shall occur for any reason whatsoever, whether
voluntary or involuntary, by operation of law, or otherwise:
A. Borrower shall fail to pay any principal, interest, fees or
other amounts payable under any Loan Document on the date due;
B. Any representation or warranty made or deemed made by
Borrower (or any of its officers or representatives) under or
in connection with any Loan Document shall prove to have been
incorrect or misleading in any material respect when made or
deemed made;
C. Borrower or any Subsidiary of Borrower shall fail to
perform or observe any term or covenant contained in any Loan
Document;
D. Any Loan Document or provision thereof shall, for any
reason, not be valid and binding on Borrower or not be in full
force and effect, or shall be declared to be null and
void; the validity or enforceability of any Loan Document
shall be contested by Borrower; or Borrower shall deny that
it has any or further liability or obligation under any Loan
Document;
E. The occurrence of any event described in Section 9(e) or
(f) of the Note with respect to Borrower or any Subsidiary of
Borrower;
F. Borrower or any Subsidiary of Borrower shall fail to pay any
debt (other than debt under the Loan Documents) or obligations
in respect of capital leases in an aggregate amount of $50,000
or more when due; or Borrower or any Subsidiary of Borrower
shall fail to perform or observe any term or covenant
contained in any agreement or instrument relating to any such
debt, when required to be performed or observed, and such
failure can result in acceleration of the maturity of such debt;
G. Borrower or any Subsidiary of Borrower shall have any
final judgment(s) outstanding against it for the payment of
$50,000 or more, and such judgment(s) shall remain unstayed, in
effect, and unpaid for the period of time after which the
judgment holder may and may cause the creation of Liens against
or seizure of any of its property;
H. Borrower or any Subsidiary of Borrower shall be required
under any environmental law (i) to implement any remedial,
neutralization, or stabilization process or program, the cost
of which exceeds $50,000, or (ii) to pay any penalty, fine, or
damages in an aggregate amount of $50,000 or more;
I. Other than with respect to any Loan Document, Borrower or
any Subsidiary of Borrower shall fail to timely and properly
observe, keep or perform any term, covenant, agreement or
condition in any other loan agreement, promissory note,
security agreement, deed of trust, deed to secure debt,
mortgage, assignment or other contract securing or evidencing
payment of any indebtedness of Borrower or any Subsidiary
of Borrower to Bank or any affiliate or subsidiary of
NationsBank Corporation.
7. REMEDIES UPON DEFAULT. If an event of default shall occur,
Bank shall have all rights, powers and remedies available under
each of the Loan Documents (including Section 11) as well as
all rights and remedies available at law or in equity.
8. NOTICES. All notices, requests or demands which any
party is required or may desire to give to any other party
under any provision of this Agreement must be in writing
delivered to the other party at the following address:
Borrower:
Peerless Mfg. Co. 2819 Walnut Hill Lane Dallas, Texas 75229
Attn: Kent Van Houten
Bank:
NationsBank of Texas, N.A. 901 Main Street, 7th Floor P.O.
Box 831000 Dallas, Texas 75283-1000 Attn: Brian Gordon, Vice
President
or to such other address as any party may designate by written
notice to the other party. Each such notice, request and
demand shall be deemed given or made as follows:
A. If sent by mail, upon the earlier of the date of receipt or
five (5) days after deposit in the U.S. Mail, first class
postage prepaid;
B. If sent by any other means , upon delivery.
9. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all costs and
expenses, including reasonable attorneys' fees (to include
outside counsel fees and all allocated costs of Bank's in-house
counsel if permitted by applicable law), incurred by Bank in
connection with (a) negotiation and preparation of this
Agreement and each of the Loan Documents, and (b) all other
costs and attorneys' fees incurred by Bank for which Borrower
is obligated to reimburse Bank in accordance with the terms of
the Loan Documents.
10. MISCELLANEOUS. Borrower and Bank further covenant and
agree as follows, without limiting any requirement of any other
Loan Document:
A. Cumulative Rights and No Waiver. Each and every right
granted to Bank under any Loan Document, or allowed it by law or
equity shall be cumulative of each other and may be exercised in
addition to any and all other rights of Bank, and no delay in
exercising any right shall operate as a waiver thereof, nor
shall any single or partial exercise by Bank of any right
preclude any other or future exercise thereof or the exercise
of any other right. Borrower expressly waives any
presentment, demand, protest or other notice of any kind,
including but not limited to notice of intent to accelerate
and notice of acceleration. No notice to or demand on
Borrower in any case shall, of itself, entitle Borrower to any
other or future notice or demand in similar or other
circumstances.
B. Applicable Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by
and interpreted in accordance with the laws of Texas and
applicable United States federal law.
C. Amendment. No modification, consent, amendment or waiver of
any provision of this Agreement, nor consent to any departure by
Borrower therefrom, shall be effective unless the same shall be
in writing and signed by an officer of Bank, and then shall be
effective only in the specified instance and for the purpose
for which given. This Agreement is binding upon Borrower,
its successors and assigns, and inures to the benefit of Bank,
its successors and assigns; however, no assignment or other
transfer of Borrower's rights or obligations hereunder shall be
made or be effective without Bank's prior written consent, nor
shall it relieve Borrower of any obligations hereunder. There is
no third party beneficiary of this Agreement.
D. Documents. All documents, certificates and other items
required under this Agreement to be executed and/or delivered to
Bank shall be in form and content satisfactory to Bank and its
counsel.
E. Partial Invalidity. The unenforceability or invalidity of
any provision of this Agreement shall not affect the
enforceability or validity of any other provision herein
and the invalidity or unenforceability of any provision of
any Loan Document to any person or circumstance shall not
affect the enforceability or validity of such provision as it
may apply to other persons or circumstances.
F. Indemnification. Notwithstanding anything to the
contrary contained in Section 10(G), Borrower shall indemnify,
defend and hold Bank and its successors and assigns harmless
from and against any and all claims, demands, suits, losses,
damages, assessments, fines, penalties, costs or other
expenses (including reasonable attorneys' fees and court costs)
arising from or in any way related to any of the transactions
contemplated hereby, including but not limited to actual or
threatened damage to the environment, agency costs of
investigation, personal injury or death, or property damage, due
to a release or alleged release of Hazardous Materials,
arising from Borrower's or any of Borrower's Subsidiary's
business operations, any other property owned by Borrower or any
Subsidiary of Borrower or in the surface or ground water
arising from Borrower's or any of Borrower's Subsidiary's
business operations, or gaseous emissions arising from
Borrower's or any of Borrower's Subsidiary's business
operations or any other condition existing or arising from
Borrower's or any of Borrower's Subsidiary's business operations
resulting from the use or existence of Hazardous Materials,
whether such claim proves to be true or false. Borrower
further agrees that its indemnity obligations shall include,
but are not limited to, liability for damages resulting from
the personal injury or death of an employee of Borrower or any
Subsidiary of Borrower, regardless of whether Borrower of such
Subsidiary of Borrower has paid the employee under the
workmen' s compensation laws of any state or other similar
federal or state legislation for the protection of employees.
The term "property damage" as used in this paragraph includes,
but is not limited to, damage to any real or personal property
of Borrower or any Subsidiary of Borrower, Bank, and of any
third parties. Borrower's obligations under this paragraph
shall survive the repayment of the obligations of Borrower under
the Loan Documents and any deed in lieu of foreclosure or
foreclosure of any Deed to Secure Debt, Deed of Trust,
Security Agreement or Mortgage securing the obligations of
Borrower under the Loan Documents.
G. Survivability. All covenants, agreements, representations
and warranties made herein or in the other Loan Documents shall
survive the making of the Loan and the issuance of each Letter
of Credit and shall continue in full force and effect so long
as the Loan or any Letter of Credit is outstanding or the
obligation of Bank to make any advances under the Line or issue
any Letter of Credit or honor any draft under any Letter of
Credit shall not have expired.
11. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG
THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING
OUT OF OR RELATING TO THIS, INSTRUMENT, AGREEMENT OR DOCUMENT
OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING
ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE
FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE
STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE
ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE
OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE
SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD
MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO
THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR
EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE
CITY OF THE BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS
INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S.
WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR
LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN
THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE
DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY,
UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION
PROVISION SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF
ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND
ANY WAIVERS CONTAINED IN THIS ARBITRATION PROVISION; OR (II) BE
A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR
(III) LIMIT THE RIGHT OF THE BANK HERETO (A) TO EXERCISE SELF
HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO
FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR
(C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES
SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES
BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR
DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR
THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF
THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH
ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR
CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
12. NO ORAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed under seal by their duly
authorized representatives as of the date first above written.
BORROWER: BANK:
PEERLESS MFG. CO. NATIONSBANK OF TEXAS, N.A.
By: /s/ Kent J. Van Houten By: /s/ Brian Gordon
Name: Kent J. Van Houten Name: Brian Gordon
Title: Chief Financial Officer Title: Vice President
Secretary/Treasurer