EXHIBIT 10.F
NationsBank, N.A.
SEVENTH AMENDED AND RESTATED LOAN AGREEMENT
This Loan Agreement ("Agreement") dated as of December 12, 1998, by
and between NationsBank, N.A. (successor by merger of NationsBank of
Texas, N.A. into NationsBank, N.A.), a national banking association
("Bank") and the Borrower described below. This Agreement amends and
restates in its entirety the Sixth Amended and Restated Loan Agreement
dated as of January 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 31,
1998 (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,
1999, 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 11, 2000 or 364 or more
days after the issuance date; provided Borrower may request that
Bank issue Letters of Credit having an expiry after December 11,
2000 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, 1998. 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.
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
NationsBank 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:
NationsBank of Texas, 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
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 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. NATIONSBANK, N.A. (successor by
merger of NationsBank of Texas,
N.A. into NationsBank, N.A.)
By: By:
Name: Paul Willey Name: Barry Bruce Conrad, II
Title: Chief Financial Officer Title: Vice President