EXHIBIT 10 (f)
Bank of America, N.A.
EIGHTH AMENDED AND RESTATED LOAN AGREEMENT
This Loan Agreement ("Agreement") dated as of December 12, 1999,
by and between Bank of America, N.A. (formerly known as NationsBank,
N.A. and successor by merger of NationsBank of Texas, N.A.), a national
banking association ("Bank") and the Borrower described below. This
Agreement amends and restates in its entirety the Seventh Amended and
Restated Loan Agreement dated as of December 12, 1998, between Bank and
Borrower.
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. Chase Agreement. Chase Agreement means the Loan Agreement
dated as of December 12, 1998, between Borrower and Chase Bank of
Texas, N.A.
D. 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.
E. 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.
F. Compliance Certificate. Compliance Certificate mean a
certificate substantially in the form of Exhibit B.
G. 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.
H. 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.
I. 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.
J. 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.
K. 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.
L. Loan. Any loan described in Section 2 hereof and any
subsequent loan which states that it is subject to this Agreement.
M. 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.
N. Material Adverse Effect. Material Adverse Effect means any
circumstance or event that is or would reasonably be expected to be
material and adverse to the financial condition, business operations,
prospects or properties of Borrower and its Subsidiaries, taken as a
whole.
O. Net Income. Net Income means net profit after taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP.
P. Net Loss. Net Loss means net loss after taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP.
Q. 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.
R. Person. Person means an individual, partnership, joint
venture, corporation, trust, tribunal, unincorporated organization, and
government, or any department, agency, or political subdivision
thereof.
S. 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.
T. 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. Bank hereby agrees to make (or has made) one or more
loans to Borrower in the aggregate principal face amount of $3,500,000
(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, minus (iii) the amount of all drawings
under any Letter of Credit for which Bank has not been reimbursed. The
obligation to repay the loans is evidenced by the promissory note dated
December 12, 1999 (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 the last day
of each calendar 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 12,
2000, 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, 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 10, 2001 or 364 or more days after the issuance date;
provided Borrower may request that Bank issue Letters of Credit
having an expiry after December 10, 2001 or an expiry 364 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.
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, 1999 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, 1999 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 is qualified to conduct
its business in each jurisdiction in which Borrower does business,
except to the extent the failure to obtain such qualifications or to
remain in good standing 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 or to remain in good
standing 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
with all laws and regulatory requirements to which it is subject,
except to the extent the failure to comply with such laws or regulatory
requirements would not result in a Material Adverse Effect.
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, 1999. 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. Chase Agreement. Borrower has delivered to Bank a complete
and correct copy of the Chase 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.
N. Year 2000.
i. Borrower has (a) begun analyzing the operations of
Borrower and its subsidiaries and affiliates that could be
adversely affected by failure to become Year 2000 compliant (that
is, that computer applications, imbedded microchips and other
systems will be able to perform date-sensitive functions prior to
and after December 31, 1999) and (b) developed a plan for becoming
Year 2000 compliant in a timely manner, the implementation of
which is on schedule in all material respects. Borrower
reasonably believes that it will become Year 2000 compliant for
its operations and those of its subsidiaries and affiliates on a
timely basis except to the extent that a failure to do so could
not reasonably be expected to have a material adverse effect upon
the financial condition of Borrower.
ii. Borrower reasonably believes any suppliers and vendors
that are material to the operations of Borrower or its
subsidiaries and affiliates will be Year 2000 compliant for their
own computer applications except to the extent that such failure
could not reasonably be expected to have a material adverse effect
on the financial condition of Borrower.
iii. Borrower will promptly notify Bank in the event Borrower
determines that any computer application which is material to the
operations of Borrower, its subsidiaries or any of its material
vendors or suppliers will not be fully Year 2000 compliant on a
timely basis, except to the extent that such failure could not
reasonably be expected to have a material adverse effect upon the
financial condition of the Borrower.
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. Bank acknowledges
that Grant Thornton, L.P., independent certified accountants of
Borrower on the date hereof, is acceptable to Bank as of the date
hereof.
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 60
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 detail as Bank
may reasonably 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 15 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 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 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, except in each case,
where the failure of such Subsidiary to comply with the requirements of
this section would not result in a Material Adverse Effect.
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, (iv) any uninsured or partially uninsured loss through fire,
theft, liability or property damage, and (v) 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. 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) all 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 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 material 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
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 request written 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 Net Income to be less than
$750,000 for the twelve months ending on the last day of any
fiscal quarter of Borrower.
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 does not exceed at any time $2,500,000.
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 Borrower or any other Subsidiary of Borrower.
E. Liens. Grant, suffer or permit any contractual or
noncontractual Lien on any of its assets (other than liens granted
under the Chase 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), 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, except (i)
with respect to any failure to pay a claim, to the extent the failure
to pay such claims would not result in a Material Adverse Effect, and
(ii) as provided in the Chase 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, 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 or
evidenced by the Chase Agreement and any related promissory notes.
G. Chase Agreement. Amend, modify or restate the Chase
Agreement, or any related agreement, as they exist on December 12,
1998.
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 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. 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;
F. 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;
G. 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;
H. 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 Bank of America Corporation.
I. The withdrawal of any material owner of Borrower, as
determined by Bank in its sole discretion;
J. 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.);
K. 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;
L. 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;
M. The entry of a judgment against any Obligor which Bank deems
to be of a material nature, in Bank's sole discretion;
N. 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
O. 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: Paul Willey
Bank:
Bank of America, N.A.
901 Main Street, 7th Floor
P.O. Box 831000
Dallas, Texas 75283-1000
Attn: Barry Bruce Conrad, II, 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 not later than 5 days after 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
A R ISING 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 UNWRITTEN ORAL
AGREEMENTS BETWEEN 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. BANK OF AMERICA, N.A.
(formerly known as
NationsBank, N.A. and
successor by merger to
NationsBank of Texas,
N.A.)
By: By:
Name: Paul Willey Name:
Title: Chief Financial Officer Title: