AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement ( Agreement ) dated as of
January 12, 1998, by and between Texas Commerce Bank National
Association, which will change its name after January 20, 1998 to
Chase Bank of Texas, N.A. ( Bank ) and the Borrower described below.
This Agreement amends and restates in its entirety the Loan Agreement
dated as of March 7, 1997, between Bank and Borrower (the Prior
Agreement ).
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. Compliance Certificate. Compliance Certificate means a
certificate substantially in the form of Exhibit B.
E. 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.
F. 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, without duplication, the
amount equal to the aggregate undrawn amount of all letters of credit
issued for the account of Borrower or any of its Subsidiaries.
G. 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.
H. 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.
I. 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, and the filing of
or agreement to give any financing statement or other similar form of
public notice under the laws of any jurisdiction.
J. Loan. Any loan described in Section 2 hereof (including any
unreimbursed draw under Letters of Credit) and any subsequent loan
which states that it is subject to this Agreement.
K. 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.
L. Material Adverse Effect. Any material adverse effect on (a) the
property, business operations or financial prospects of Borrower and
its Subsidiaries, taken as a whole, (b) the validity or enforceability
of any Loan Document or (c) the timely payment, after giving effect to
any applicable cure periods, of the principal of or interest on any
Loans hereunder or any other amounts payable in connection herewith.
M. NationsBank Agreement. NationsBank Agreement means the Loan
Agreement of even date herewith between Borrower and NationsBank of
Texas, N.A.
N. Net Income. Net Income means net profit after taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP.
O. Net Loss. Net Loss means net loss after taxes of the Borrower and
its Subsidiaries, on a consolidated basis, determined in accordance
with GAAP.
P. Obligor. Obligor means Borrower, any Subsidiary of Borrower, any
indorser or guarantor of any obligation under any Loan Document and
any other Person liable for or the property of which secures any
obligation under any Loan Document.
Q. Person. Person means an individual, partnership, joint venture,
corporation, trust, tribunal, unincorporated organization, and
government, or any department, agency, or political subdivision
thereof.
R. 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.
S. 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.I hereof.
2. LOANS.
A. Loan. Until December 12, 1998, Bank hereby agrees to make (or has
made) one or more loans to Borrower in the aggregate principal face
amount of $2,500,000 (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 of even date
herewith (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 until December 12, 1998.
ii. Usage Fee. Borrower will pay a usage fee for the period from and
including the date the Line was established to and including the
maturity date of the Line at a rate per annum of .25% of the average
daily unused portion of the Line (calculated on the basis of a year of
365 or 366 days as the case may be), with the accrued and unpaid usage
fee being payable on the last day of each calendar quarter (beginning
March 31, 1998) and on December 12, 1998. 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, 1999,
issue letters of credit for the account of Borrower (each such letter
of credit and each letter of credit issued by the Bank for the account
of Borrower or one of its Subsidiaries under the Prior Agreement which
is outstanding on the date hereof, 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, minus (c) the amount
of all drawings under any Letter of Credit for which Bank has not been
reimbursed. No Letter of Credit shall have an expiry subsequent to
December 11, 1999 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, 1999 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 aggregate
amount on deposit in the Collateral Accounts. 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 for the amount of such draft. If at any time prior
to December 12, 1998 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, 1998
the aggregate undrawn amount of all Extended Expiry LCs exceeds the
aggregate amount on deposit in the Collateral Accounts, 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 1.00% per annum of the face amount of the Letter
of Credit, which fee is due and payable on issuance of the Letters of
Credit.
B. Before making any Loan or issuing any Letter of Credit Bank may
require satisfaction of the following conditions precedent: (1) Bank
has received the following, each duly executed and in form acceptable
to Bank: (a) if requested by Bank, a Request for Loan, substantially
in the form of Exhibit C, not later than one (1) Business Day before
the date (which shall also be a Business Day) of the proposed Loan;
(b) such other documents as Bank reasonably requires; and (c) in the
case of Letters of Credit, Banks standard form Application for the
Issuance of an Irrevocable Standby Letter of Credit in form and
substance acceptable to Bank and its legal counsel, duly executed and
delivered by Borrower two (2) Business Days, prior to the date on
which the Letter of Credit is to be issued; and (2) no Event of
Default has occurred and is continuing; and (3) making the Loan or
the issuance of a Letter of Credit is not prohibited by, and will not
subject Bank to any penalty or onerous condition under any legal
requirement as determined by Bank.
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 is qualified to conduct
its business in each jurisdiction in which Borrower does business,
except to the extent the failure to obtain such qualifications would
not result in a Material Adverse Effect. 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 is qualified to conduct its business in each
jurisdiction in which it does business, except to the extent the
failure to obtain such qualifications would not result in a Material
Adverse Effect.
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 corporate action 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 in all
material respects 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 (i) disclosed to Bank in writing and
acknowledged by Bank prior to the date of this Agreement or (ii) would
not result in a Material Adverse Effect if adversely determined.
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, 1997. All factual
information furnished by Borrower to Bank in connection with this
Agreement and the other Loan Documents, when taken as a whole, 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, in
light of the circumstances under which they were made, 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. NationsBank Agreement. Borrower has delivered to Bank a complete
and correct copy of the NationsBank Agreement and all related
documents.
M. 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 reasonably 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 reasonably acceptable to Bank and by independent certified
public accountants acceptable to Bank; provided, however, Bank hereby
(i) acknowledges the adequacy of the form and content of Borrower s
financial statements delivered prior to the date hereof and (ii)
unless the Bank provides the Borrower written notice otherwise, the
Borrower s current independent certified public accountants are
acceptable to the Bank.
In addition, Borrower will:
i. Furnish to Bank consolidated and consolidating financial
statements of Borrower for each fiscal year of Borrower, within 120
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 therewith 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
reasonable 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. 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 15 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, except in the case of good standing
and qualification, where the failure of Borrower or such Subsidiary to
be so qualified or in good standing would not result in a Material
Adverse Effect, and comply in all material respects 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 reasonably be expected to result in a Material Adverse Effect,
(ii) any litigation filed by or against Borrower or any Subsidiary of
Borrower, which would reasonably be expected to result in a Material
Adverse Effect, if adversely determined, (iii) any event that has
occurred that would constitute an event of default under any Loan
Documents, and (iv) any actual or potential contingent liability which
singly or in the aggregate with all other actual or potential
contingent liabilities could equal or exceed $500,000.
E. Taxes and Other Obligations. Pay, and cause each Subsidiary of
Borrower to pay, all of its taxes, assessments and other material
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. Environmental. Immediately advise Bank in writing of (i) any
material 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 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
material 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 reasonable 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 written 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 $100,000 for the six months
ending on December 31, 1997.
(b) Net Income to be less than or equal to $500,000 for the nine
months ending on March 31, 1998.
(c) Net Income to be less than or equal to $750,000 for the twelve
months ending on June 30, 1998.
(d) Net Income to be less than or equal to $1 for the three months
ending September 30, 1998.
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 Investments in such
Subsidiaries (as disclosed on Schedule 1) does not exceed at any time
$2,000,000.
C. Extensions of Credit. Make any loan or advance to any Person;
provided Borrower may (i) make loans and/or advances to Subsidiaries
under the terms specified in Section "B. Investments" above and (ii)
advances (not to exceed $50,000 in the aggregate) to employees for
moving and travel expenses, drawing accounts, and similar expenditures
in the ordinary course of Borrower's or its Subsidiary's business.
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; provided,
however, any Subsidiary of Borrower may dissolve or merge or
consolidate with or into any other Subsidiary of Borrower.
E. Liens. Grant, suffer or permit any contractual Lien on any of its
assets (other than Liens granted under the NationsBank Agreement or
related agreements to assure performance of obligations related to
letters of credit issued for the account of Borrower or any of its
Subsidiaries) except Liens granted under the terms of this Agreement
and the NationsBank Agreement. Fail to promptly pay when due all
lawful claims, whether for labor, materials or otherwise, except to
the extent the failure to pay such claims would not result in a
Material Adverse Effect. Agree with any Person to not grant any Lien
on any of its assets, except as set forth in the NationsBank
Agreement.
F. Borrowings. Create, incur, assume or become liable in any manner
for any indebtedness (for borrowed money, deferred payment for the
purchase of assets, 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 or evidenced by the
NationsBank Agreement and any related promissory notes.
G. NationsBank Agreement. Amend, modify or restate the NationsBank
Agreement, or any related agreement and any related promissory notes
as they exist the date hereof.
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 interest, fees or other amounts
payable under any Loan Document within three days after date due or
Borrower shall fail to pay any principal under any Loan Document when
due;
B. Any representation or warranty made or deemed made by any Obligor
(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 other Obligor 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 any Obligor 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 any Obligor,
or any Obligor shall deny that it has any or further liability or
obligation under any Loan Document;
E. The occurrence of any event described in Section 8(b) or (c) of
the Note with respect to Borrower or any Subsidiary of Borrower;
F. Any Obligor 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 any Obligor 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, including, without limitation, any term or
covenant contained in the NationsBank Loan Agreement;
G. Any Obligor 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. Any Obligor 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, any Obligor 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 any Obligor to Bank or any affiliate or
subsidiary of the Bank;
J. The withdrawal of any material owner of Borrower, as determined by
Bank in its sole discretion;
K. The commencement of a proceeding against any Obligor for
dissolution or liquidation, the voluntary or involuntary termination
or dissolution of any Obligor or the merger or consolidation of any
Obligor with or into another entity (except as permitted by Section
5.D);
L. The insolvency of, the business failure of, the appointment of a
custodian, trustee, liquidator or receiver for or for any of the
property of, the assignment for the benefit of creditors by, or the
filing of a petition under bankruptcy, insolvency or debtor's relief
law or the filing of a petition for any adjustment of indebtedness,
composition or extension by or against any Obligor;
M. The failure of any Obligor to timely deliver such financial
statements, including tax returns, other statements of condition or
other information, as Bank shall request from time to time;
N. The entry of a judgment against any Obligor which Bank deems to be
of a material nature, in Bank's sole discretion;
O. The seizure or forfeiture of, or the issuance of any writ of
possession, garnishment or attachment, or any turnover order for any
material property of any Obligor; or
P. The determination by Bank that a material adverse change has
occurred in the financial condition of any Obligor.
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: Ken Van Houten
Bank:
Texas Commerce Bank National Association
12875 Josey Lane
Dallas, Texas 75234-6398
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
on 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
OR 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. THERE ARE NO ORAL
AGREEMENTS BETWEEN THE PARTIES.
13. TEXAS FINANCE CODE. Chapter 346 of the Texas Finance Code is
specifically declared by the parties hereto not to be applicable to
any Loan Documents or the transactions contemplated thereby.
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. TEXAS COMMERCE BANK NATIONAL
NATIONAL ASSOCIATION
By: /s/ Kent J. Van Houten By: /s/ David L. Howard
----------------------- ----------------------------
Name: Kent J. Van Houten Name: David L. Howard
Title: Chief Financial Officer Title: Vice President
Secretary/Treasurer