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EXHIBIT 10(r)
AMENDMENT D
TO
EIGHTH AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDMENT D TO EIGHTH AMENDED AND RESTATED LOAN AGREEMENT (this
"Amendment") is made as of January 31, 2001, between BANK OF AMERICA, N.A., a
national banking association (the "Bank"), and PEERLESS MFG. CO., a Texas
corporation (the "Borrower").
R E C I T A L S:
A. The Borrower and the Bank are parties to that certain Eighth
Amended and Restated Loan Agreement dated as of December 12, 1999 (the "Original
Loan Agreement"), as amended by that certain Amendment A to Eighth Amended and
Restated Loan Agreement dated as of February 25, 2000 ("Amendment A"), and as
amended by that certain Amendment B to Eighth Amended and Restated Loan
Agreement dated as of May 30, 2000 ("Amendment B"), and as amended by that
certain Amendment C to Eighth Amended and Restated Loan Agreement dated as of
November 30, 2000 ("Amendment C"). The Original Loan Agreement, Amendment A,
Amendment B and Amendment C are collectively referred to herein as the "Existing
Loan Agreement."
B. The Borrower and the Bank desire to amend the Existing Loan
Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Bank and the Borrower agree as follows:
1. SAME TERMS. All terms used herein which are defined in the
Existing Loan Agreement shall have the same meanings when used herein, unless
the context hereof otherwise requires or provides. In addition, all references
in the Loan Documents to the "Agreement" shall mean the Existing Loan Agreement,
as amended by this Amendment, and as the same shall hereafter be amended from
time to time. All references to the "Line" and the "Note" in the Existing Loan
Agreement and the other Loan Documents shall mean the "Line" and the "Line of
Credit Note" each as defined in this Amendment. In addition, the following terms
have the meanings set forth below:
"CHASE CONSENT": See Section 3.5.
"EFFECTIVE DATE" means January 31, 2001, or such later date as the
Borrower has satisfied the conditions precedent specified in Section 3.0 of this
Amendment.
"MODIFICATION PAPERS" means this Amendment, the Renewal Line of
Credit Note, the Notice of Final Agreement, the Officer's Certificate, the Chase
Consent, and all of the other documents and agreements executed in connection
with the transactions contemplated by this Amendment.
"NOTICE OF FINAL AGREEMENT": See Section 3.7.
"OFFICER'S CERTIFICATE": See Section 3.4
"RENEWAL LINE OF CREDIT NOTE": See Section 3.3.
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AMENDMENTS TO AGREEMENT. On the Effective Date, the Existing Loan
Agreement shall be amended as follows:
2. Amendment to Definitions. Section 1. shall be amended by deleting
the letters before each of the paragraphs thereof. In addition, Section 1. shall
be amended by deleting therefrom the definition of "Collateral Policy." In
addition, Section 1. shall be amended by adding the following definition in
appropriate alphabetical order:
"'COLLATERAL AGENT' means Bank of America, N.A., in its
capacity as the collateral agent pursuant to the Intercreditor Agreement."
3. Amendment of Section 2.A. Section 2.A. shall be amended to read in
its entirety as follows:
"A. LOAN. Bank hereby agrees to make (or has made) one or more
loans to Borrower in the aggregate principal face amount of
$5,500,000 (as such amount may be reduced, the `Line'), provided
that the aggregate unpaid principal amount 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 Renewal Line of Credit Note in the original principal sum of
$5,500,000 made by Borrower payable to the order of Bank dated as of
January 31, 2001 (as modified and amended from time to time, the
`Line of Credit Note' or `Note,' 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."
4. Amendment of Section 2.A.iii. Section 2.A.iii. shall be amended to
read in its entirety as follows:
"iii. LETTER OF CREDIT SUBFEATURE. As a subfeature under the
Line, Bank may from time to time, up to and including August 31,
2001, 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
issued or renewed after January 31, 2001, shall have an expiry 365
or more days after August 31, 2001 (any Letter of Credit with an
expiry beyond August 31, 2001, an `Extended Expiry LC'). 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
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Collateral Account or Borrower's deposit accounts with Bank for the
amount of such draft. If at any time prior to August 31, 2001, 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 August 31, 2001, the aggregate
undrawn amount of all Extended Expiry LCs exceeds the aggregate
amount on deposit in each Collateral Account, 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 1.50% per annum of the face amount of the Letter
of Credit, which fee is due and payable on issuance of the Letters
of Credit."
5. Amendment of Section 4.A.ii. Section 4.A.ii. shall be amended to
read in its entirety as follows:
"ii. Furnish to Bank within forty-five (45) days after the end
of each month (a) consolidated and consolidating financial
statements (including a balance sheet and a profit and loss
statement) of Borrower for each month of each fiscal year of
Borrower, (b) a listing of accounts receivable aged from date of
invoice, and (c) a list of inventory of Borrower."
6. Amendment to Section 5.A.ii. Section 5.A.ii. shall be amended to
read in its entirety as follows:
"ii. Borrower shall not permit (a) Net Income to be less than
or equal to $96,000 for the quarter ending December 31, 2000; (b)
Net Income to be less than or equal to $309,000 for the quarter
ending March 31, 2001; or Net Income to be less than or equal to
$540,000 for the quarter ending June 30, 2001."
7. Amendment to Section 5.I. Section 5.I. shall be amended to read in
its entirety as follows:
"I. DIVIDENDS AND OTHER DISTRIBUTIONS. Pay any dividends or
make any other payment or distribution (whether in cash, other
property, or obligations) on account of its capital stock, or
redeem, purchase, retire, or otherwise acquire any capital stock, or
permit any of the subsidiaries to purchase or otherwise acquire any
capital stock of Borrower or another subsidiary, or set apart any
money for a sinking or other analogous fund for any dividend or
other distribution on its capital stock or for any redemption,
purchase, retirement, or other acquisition of any of its capital
stock; except that (i) subsidiaries may declare and pay dividends to
Borrower, and (ii) Borrower may pay dividends if (a) no event of
default exists or would result therefrom and (b) Borrower's Net
Income calculated for the four quarter period then most recently
ended as of the date of payment equals or exceeds $1,100,000."
8. Amendment to Section 5.G. Section 5.G. shall be amended to read in
its entirety as follows:
"G. CHASE LOAN DOCUMENTS. Amend, modify or restate the Chase
Loan Documents."
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9. CONDITIONS PRECEDENT. The transactions contemplated by this
Amendment shall be deemed effective on the Effective Date when the following
conditions have been complied with to the satisfaction of the Bank, unless
waived by the Bank in writing:
a. Renewal Fee. The Borrower shall have paid the Bank a renewal
fee of $25,000.
b. Amendment. The Borrower shall have executed and delivered to
the Bank this Amendment.
c. Renewal Line of Credit Note. The Borrower shall have executed
a new promissory note (as modified and amended from time to time,
the "Renewal Line of Credit Note") which shall be given in renewal,
replacement, amendment and substitution of that certain Line of
Credit Note made by the Borrower payable to the order of the Bank
dated as of February 25, 2000, as modified by a Note Modification
Agreement between the parties dated as of May 30, 2000, and as
modified by a Second Note Modification Agreement between the parties
dated as of December 12, 2000. The Renewal Line of Credit Note
shall, among other things (a) be payable on or before August 31,
2001 for the amount of $5,500,000, or the principal indebtedness
then outstanding, whichever is less, (b) bear interest from the date
thereof until paid in the manner therein provided (the interest rate
prior to default being the Bank's prime rate plus 2.5% per annum),
and (c) be entitled to the benefits of the Loan Documents, including
without limitation the Security Agreement and all of the collateral
described or referred to in the Intercreditor Agreement.
d. Officer's Certificate. The Bank shall have received and
approved an officer's certificate (the "Officer's Certificate") of
the Borrower which shall, among other things, have attached thereto
a copy of resolutions of its directors approving the Modification
Papers and authorizing its officers to execute, deliver and perform
the Modification Papers.
e. Chase Consent. Chase shall have executed and delivered a
written agreement (the "Chase Consent") consenting to the terms and
provision of the transactions described in the Modification Papers.
f. Consent to Modification of Chase Loan Documents. The Bank shall
have reviewed, approved and consented to modifications to the Chase
Loan Documents which parallel those contained in the Modification
Papers.
g. Notice of Final Agreement. The Borrower and the Bank shall have
executed a notice in compliance with the provisions of Section 26.02
of the Texas Business and Commerce Code (the "Notice of Final
Agreement").
h. Representations and Warranties. All representations and
warranties contained in the Loan Documents and the Modification
Papers shall be true and correct in all material respects as
though the same have been made on and as of the Effective Date.
i. Expenses. The Borrower shall have paid all reasonable expenses
of the Bank in connection with the preparation of the Modification
Papers including, but not limited to, the expenses and reasonable
fees of counsel for the Bank.
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10. WAIVER OF CERTAIN EVENTS OF DEFAULT. The Borrower is in default
under certain terms and provisions of the Existing Loan Agreement and the Loan
Documents. The parties desire that the Bank waive these defaults as of the
Effective Date and subject to the terms and provisions of this Amendment.
a. Waiver of Event of Default Arising out of Failure to Comply
with Sections 4.12 and 4.17 of Security Agreement. The Bank hereby
waives the event of default resulting from the Borrower's failure to
furnish to the Bank (a) a security agreement describing the
Borrower's trademarks which are registered with the United States of
America Patent and Trademark Office (the "U.S. Trademarks") and (b)
a valid perfected first priority security interest in the Borrower's
trademarks which are registered with governmental authorities other
than the United States of America, which were to be furnished to the
Bank in connection with the execution of the Security Agreement. To
induce the Bank to agree to this waiver of the event of default, the
Borrower agrees that it will (a) execute and deliver a trademark
security agreement granting the Bank a perfected first priority
security interest in the Borrower's U.S. Trademarks required to be
delivered pursuant to Sections 4.12 and 4.17 of the Security
Agreement on or before February 28, 2001 and its failure to deliver
such trademark security agreement on or before February 28, 2001
shall constitute and event of default under the Agreement, and (b)
at any time in the future upon the Bank's request execute and
deliver a trademark security agreement granting the Bank a perfected
first priority security interest in the Borrower's trademarks which
are registered with governmental authorities other than the United
States of America.
b. Waiver of Event of Default Arising out of Failure to Comply
with Section 4.18 of Security Agreement. The Bank hereby waives the
event of default resulting from the Borrower's failure to have
taken, on or before January 15, 2001, all action required by the
Collateral Agent to give the Collateral Agent control over the
accounts described in Exhibit 3.7 to the Security Agreement,
including without limitation, the execution and delivery among the
Borrower, the Collateral Agent and the institutions identified on
such Exhibit 3.7 of control agreements in form and substance
satisfactory to the Collateral Agent.
c. Waiver of Event of Default Arising out of Failure to Comply
with Section 4.22 of Security Agreement. The Bank hereby waives the
event of default resulting from the Borrower's failure to have
delivered on or before January 15, 2001 (a) the share certificates
for each of the entities listed on Exhibit 1.2 of the Security
Agreement, (b) the certificates of existence and good standing for
Peerless (Barbados) Ltd., (c) resolutions from the board of
directors of Peerless (Barbados) Ltd. authorizing the transfer of
the Peerless (Barbados) Ltd. shares to the Collateral Agent, and (d)
the documentation necessary to perfect the Collateral Agent's
interest in the Peerless Europe Ltd. share certificates pursuant to
the laws of the United Kingdom. To induce the Bank to agree to the
waiver of the event of default, the Borrower agrees that it will
deliver, on or before February 28, 2001, (a) the certificates of
existence and good standing for Peerless (Barbados) Ltd. and (b)
resolutions from the board of directors of Peerless (Barbados) Ltd.
authorizing the transfer of the Peerless (Barbados) Ltd. shares to
the Collateral Agent, and its failure to deliver such certificates
and resolutions on or before February 28, 2001 shall constitute an
event of default under the Agreement. As a further inducement to the
Bank to agree to the waiver of the event of default, (a) the
Borrower represents and warrants to the Bank that the net income of
Peerless Europe Ltd. for the twelve (12) months most recently ended
is $____________, and the net worth of Peerless Europe Ltd. for the
most recent month ended is $____________, and (b) the Borrower
agrees it will at any time in the future upon the Bank's request
execute and deliver the documentation necessary to perfect the
Collateral Agent's interest in the Peerless Europe Ltd. share
certificates pursuant to the laws of the United Kingdom.
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d. Waiver of Event of Default Arising Out of Failure to Company
with Section 5.A.ii. The Bank hereby waives the event of default
which existed prior to the Effective Date with respect to the
Borrower's compliance with Section 5.A.ii. of the Existing Loan
Agreement. This default has ceased to exist as of the Effective Date
by virtue of the amendment set forth in Section 2.__ above.
e. Limitation of Waivers. The waivers contained in Section 4.1,
Section 4.2, Section 4.3, and Section 4.4 of this Amendment shall
not constitute a waiver of any future Event of default that may
occur under the Security Agreement, including, without limitation,
the Borrower's failure to keep, perform, or observe the covenants
set forth in Sections 4.12, 4.17, 4.18, and 4.22 of the Security
Agreement.
11. CERTAIN REPRESENTATIONS AND WARRANTIES. To induce the Bank to
enter into this Amendment, the Borrower represents and warrants as
follows (which representations and warranties shall survive the
execution and delivery hereof):
a. Authority and Compliance. The Borrower has full power and
authority to execute, deliver, and perform all of the Modification
Papers to which it is a party and to incur and perform the
obligations provided for therein. No consent or approval of any
public authority or third party is required as a condition to the
validity or performance of any of the Modification Papers.
b. Binding Agreements. The Modification Papers executed by the
Borrower constitute valid and legally binding obligations of the
Borrower, enforceable in accordance with their terms.
c. No Conflicting Agreements. There is no charter, bylaw, stock
provision, partnership agreement, or other document pertaining to
the power or authority of the Borrower and no provision of any
existing agreement, mortgage, indenture, or contract binding upon
the Borrower or affecting any of the property of the Borrower which
would conflict with or in any way prevent in any material respect
the execution, delivery, or carrying out of the terms of the
Modification Papers.
d. Previous Representations. All of the representations by the
Borrower in the Agreement are true and correct as of the date hereof
as if set forth herein.
e. No Claims. To induce the Bank to agree to the terms and
provisions of the Modification Papers, the Borrower represents and
warrants that as of the Effective Date of the Borrower's execution
of this Amendment there are no claims or offsets against or defenses
or counterclaims to the Borrower's obligations under the Loan
Documents.
12. LIMITATION ON AGREEMENTS. The modifications set forth herein are
limited precisely as written and shall not be deemed (a) to be a consent under
or a waiver of or an amendment to any other term or condition of the Agreement
or any of the Loan Documents, or (b) to prejudice any right or rights which the
Bank now has or may in the future have under or in connection with the Agreement
and the Loan Documents, each as amended hereby. The Modification Papers
constitute Loan Documents for all purposes.
13. WAIVER AND RELEASE. To induce the Bank to agree to the terms and
provisions of the Modification Papers, the Borrower:
a. Waives all claims, offsets, defenses or counterclaims to its
obligations under the Loan Documents, whether known or unknown,
arising prior to the Effective Date, and
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b. Releases and discharges the Bank and its officers, directors,
employees, agents, shareholders, affiliates and attorneys
(collectively, the "Released Parties") from any and all obligations,
indebtedness, liabilities, claims, rights, causes of action or
demands whatsoever, whether known or unknown, suspected or
unsuspected, in law or equity, which the Borrower ever had, now has,
claim to have or may have against any Released Party arising prior
to the Effective Date and from or in connection with the Loan
Documents or the transactions contemplated thereby.
14. INCORPORATION OF CERTAIN PROVISIONS BY REFERENCE. The provisions
of Section 10.B and Section 11 of the Agreement are incorporated herein by
reference for all purposes.
15. ENTIRETY, ETC. This instrument and all of the other Loan Documents
embody the entire agreement between the parties. THIS AGREEMENT AND ALL OF 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 have executed this Amendment D to
Eighth Amended and Restated Loan Agreement to be effective as of the Effective
Date.
BANK OF AMERICA, N.A.
By: /s/
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Mark L. Henze, Senior Vice President
PEERLESS MFG. CO.
By: /s/
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Sherrill Stone, Chairman and Chief
Executive Officer
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