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EXHIBIT 10(j)
As of December 1, 2000
Peerless Mfg. Co.
2819 Walnut Hill Lane
Dallas, Texas 75229
Attn: Sherrill Stone, Chairman and Chief Executive Officer
Re: Second Amended and Restated Credit Agreement dated as of
December 12, 1998 between PEERLESS MFG. CO. (the "Borrower")
and Chase Bank of Texas, National Association (who is now know
as The Chase Manhattan Bank as a result of the merger of Chase
Bank of Texas, National Association with and into The Chase
Manhattan Bank and is herein the "Bank" and such Credit
Agreement, as the same has been amended, the "Credit
Agreement"). All capitalized terms used herein, unless
otherwise defined herein, shall have the same meaning as in
the Credit Agreement.
Ladies and Gentlemen:
Borrower has advised the Bank that Events of Default have occurred
under Section 6.C. of the Credit Agreement as a result of the Borrower's failure
to comply with the covenants set forth in Section 5.A.ii. of the Credit
Agreement as of June 30, 2000 and September 30, 2000 and for each of the four
quarter periods then ended (the "Existing Defaults" and the covenants in Section
5.A.ii., herein the "Violated Covenants"). In accordance with the Credit
Agreement, the Borrower has requested that the Bank waive the Existing Defaults
and amend the Credit Agreement to change the definition of the term "Termination
Date" as defined in the Credit Agreement to mean January 31, 2001.
Borrower has granted (or has agreed to grant) to Bank of America, N.A.
as agent for itself and the Bank a first priority perfected security interests
(subject to certain permitted encumbrances and exceptions) in and to all of its
property to secure the obligations of the Borrower to Bank of America, N.A. and
to the Bank. In consideration for such grant and the other agreements of the
Borrower herein, the Bank (i) agrees to waive the Existing Defaults; (ii) agrees
not to exercise any rights or remedies available as a result of the occurrence
thereof and (iii) agrees that the term "Termination Date" as defined in the
Credit Agreement and used in the Note and the other Loan Documents is amended to
mean January 31, 2001 (the "Amendment").
To induce the Bank to agree to the terms of this letter (the "Waiver
Letter"), Borrower and the Bank also agree that:
1. The waiver specifically described herein shall not constitute and
shall not be deemed a waiver of any other Event of Default or event
or condition that with the giving of notice or passage of time or
both would be an Event of Default (a "Potential Default"), whether
arising as a result of the further violation of the Violated
Covenants or otherwise, or a waiver of any rights or remedies
arising as a result of such other Potential Defaults or Events of
Default. The failure to comply with the Violated Covenants for any
date, or any period ending on any date, other than as described
above in the definition of Existing Defaults shall constitute an
Event of Default.
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2. The term "Adjusted LIBOR Rate" set forth in Section 1 of the Credit
Agreement is amended in its entirety to read as follows, effective
as of the date hereof for all Interest Periods in effect as of the
date hereof and all Interest Periods hereafter established:
Adjusted LIBOR Rate means, for any Interest Period, LIBOR plus 3%.
3. Effective as of the date hereof, Section 5 of the Credit Agreement
is amended to add a new clause I to the end thereto, to read in its
entirety as follows:
I. DIVIDENDS AND OTHER DISTRIBUTIONS. Declare or 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 of its capital
stock, or permit any of the Subsidiaries to purchase or otherwise
acquire any capital stock of the 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 the Borrower and (ii) Borrower may declare and pay
dividends if no Event of Default exists or would result therefrom .
4. Borrower agrees to pay to the Bank on the date hereof a waiver fee
in the amount of $10,000 as additional consideration for the Bank's
agreement to waive the Existing Defaults as herein set forth and
agrees to the Amendment.
5. Except as specifically set forth herein, all terms and provisions of
the Loan Documents, all rights of the Bank thereunder and all
obligations of Borrower thereunder shall remain in full force and
effect and are ratified and confirmed in all respects. Borrower
agrees to strictly comply with the Loan Documents.
6. The Credit Agreement and the other Loan Documents shall continue to
be legal, valid, binding and enforceable in accordance with their
respective terms.
7. IN ADDITION, TO INDUCE THE BANK TO AGREE TO THE TERMS OF THIS WAIVER
LETTER, BORROWER REPRESENTS AND WARRANTS THAT AS OF THE DATE OF ITS
EXECUTION OF THIS WAIVER LETTER THERE ARE NO CLAIMS OR OFFSETS
AGAINST OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE
LOAN DOCUMENTS AND IN ACCORDANCE THEREWITH IT:
(a) WAIVER. WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS,
DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR
TO THE DATE OF ITS EXECUTION OF THIS WAIVER LETTER AND
(b) RELEASE. RELEASES AND DISCHARGES BANK, AND ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, SHAREHOLDERS, AFFILIATES AND
ATTORNEYS (COLLECTIVELY THE "RELEASED PARTIES") FROM ANY
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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, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY RELEASED PARTY
ARISING PRIOR TO THE DATE HEREOF AND FROM OR IN CONNECTION WITH THE
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
Borrower also represents and warrants to the Bank that the following
statements are true, correct and complete: (a) after giving effect to this
Waiver Letter, no Potential Default or Event of Default has occurred and is
continuing; (b) after giving effect to this Waiver Letter, the representations
and warranties set forth in the Loan Documents are true and correct in all
material respects on and as of the date hereof with the same effect as though
made on and as of such date except with respect to any representations and
warranties limited by their terms to a specific date; and (c) the execution,
delivery and performance of this Waiver Letter has been duly authorized by all
necessary action on the part of Borrower and does not and will not: (1) violate
any provision of law applicable to Borrower, the certificate of incorporation or
bylaws of Borrower or any order, judgment, or decree of any court or agency of
government binding upon Borrower; (2) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of Borrower; (3) result in or require the
creation or imposition of any material lien upon any of the assets of Borrower;
or (4) require any approval or consent of any party under any material
contractual obligation of Borrower.
THIS WAIVER LETTER EMBODIES THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS WHETHER WRITTEN OR ORAL RELATING TO THE
SUBJECT MATTER HEREOF, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. This Waiver Letter shall be governed by and construed in
accordance with the internal laws of the State of Texas without regard to
conflicts of law principles. This Waiver Letter may be executed in one or more
counterparts and on telecopies counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Very truly yours,
The Chase Manhattan Bank
(successor in interest by merger to Chase Bank
of Texas, National Association)
By: /s/ Michael B. Phillips
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Michael B. Phillips, Vice President
Accepted and agreed to
as of December 1, 2000
BORROWER:
PEERLESS MFG. CO.
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By: /s/ Sherrill Stone
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Sherrill Stone, Chairman and Chief Executive Officer