U.S. Bank National Association EXHIBIT 10.8 December 3, 1997
Mail Stop: SPFN0205
000 Xxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
ATTENTION: Xx. Xxxxx X. Xxxxxxxx
Re: $8,670,000 Loan (the "Loan") from U.S. Bank National Association
(US Bank) to Xxxxxx Manufacturing, Inc. (Xxxxxx) secured, in part, by
Mortgage on Property located at 000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxxx
Dear Xx. Xxxxxxxx:
Xxxxxx acknowledges that environmental due diligence in connection with the
Loan has revealed the following:
- Historical or current conditions or activities on or near the Property
which have been interpreted by an environmental consultant as "recognized
environmental conditions" (as said term is defined in ASTM Practice
E 1527-97 "Standard Practice for Environmental Site Assessments: Phase I
Environmental Site Assessment Process) as more particularly described in
that certain report (the "Phase I Report") entitled "Phase I Environmental
Site Assessment, Xxxxxx Manufacturing, Inc, 000 Xxxxxxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxxx 00000" and dated November 18, 1997, prepared by Peer
Environmental & Engineering Resources, Inc. (PEER); and
- Certain suspect asbestos containing materials ("ACM") observed by PEER
including drop-in ceiling panels, wallboard and floor tile, as more
particularly described in Section 6.2 of the Phase I Report.
US Bank requires that Xxxxxx take certain steps with respect to the ACM and
the "recognized environmental conditions" but nevertheless has agreed to proceed
with the closing of the Loan as long as Xxxxxx gives US Bank the assurances set
forth in this letter.
In consideration of US Bank's proceeding to close the Loan, Xxxxxx hereby
assures US Bank that it will undertake to do the following:
1. ASBESTOS. Xxxxxx shall engage PEER or another consultant properly
certified and experienced in the nature of the required work and reasonably
acceptable to US Bank to conduct a survey of the suspect ACM observed in the
U.S. Bank National Association December 3, 1997
Page 2
Property. Xxxxxx shall forward to US Bank a true, correct and complete copy of
the survey. In the event that the survey reveals actual ACM, Xxxxxx shall do
the following:
A. In the event of actual ACM which, due to its condition or
location, is recommended to be abated by repair, encapsulation, removal or
other action, Xxxxxx shall carry out the recommended abatement action. In
the event the recommended abatement includes removal of ACM, Xxxxxx shall
cause the same to be removed and disposed of offsite by a licensed and
experienced asbestos removal contractor, all in accordance with applicable
state, federal and local laws and regulations. Upon completion of any such
recommended abatement action, Xxxxxx shall deliver to US Bank a
certificate, signed by an officer of Xxxxxx and the consultant overseeing
the abatement action, certifying to US Bank that the work has been
completed in compliance with all applicable laws, ordinances, codes and
regulations (including without limitation those regarding notification,
removal and disposal) and that no airborne fibers beyond permissible
exposure limits remain on site.
X. Xxxxxx shall develop and implement an Operations and Maintenance
Program (as contemplated by Environmental Protection Agency guidance
document entitled "Managing Asbestos In Place; A Building Owner's Guide to
Operations and Maintenance Programs for Asbestos-Containing Materials" and
addressing any obligations of Xxxxxx under the Federal Occupational Safety
and Health Act) for managing in place any and all ACM recommended by the
report to remain in place in the Property. Xxxxxx shall deliver a true,
correct and complete copy of such Operations and Maintenance Program to
US Bank and a certificate signed by an officer of Xxxxxx certifying to
US Bank that such Program has been implemented.
The foregoing work with respect to ACM shall begin as soon as reasonably
possible and be diligently pursued to completion and copies of all required
reports, certificates and plans shall be furnished to US Bank no later than
sixty (60) days after the date of this letter.
2. FURTHER INQUIRY AS TO "RECOGNIZED ENVIRONMENTAL CONDITIONS". Xxxxxx
shall engage PEER or another consultant properly certified and experienced in
the nature of the required work and reasonably acceptable to US Bank to assist
Xxxxxx in the following tasks:
X. Xxxxxx shall review files at the Minnesota Pollution Control
Agency (MPCA) in an attempt to gain sufficient information about the
U.S. Bank National Association December 3, 1997
Page 3
off-site recognized environmental conditions to enable the consultant to judge
them as NOT falling within the definition of "recognized environmental
condition."
X. Xxxxxx shall perform the Phase II activities recommended by PEER
in the workplan attached hereto as Exhibit A.
The work described in A and B above shall begin as soon as reasonably possible
and be pursued diligently to completion and a true, correct and complete copy of
the consultant's report (the "Phase II Report") with respect thereto shall be
furnished to US Bank no later than sixty (60) days after the date of this
letter. Xxxxxx shall cause the environmental consultant to authorize US Bank to
rely on the report.
3. POST PHASE II WORK. In the event that the Phase II Report contains
recommendations with respect to compliance with applicable laws and regulations,
Xxxxxx shall comply with such recommendations within a time period reasonably
satisfactory to US Bank. Without regard to the consultant's recommendations, in
the event the Phase II Report reveals the presence of contamination, Xxxxxx
agrees to enter the Property into the appropriate voluntary program(s) at MPCA
and perform the work necessary to obtain from such program(s), within a time
period reasonably satisfactory to US Bank, such liability assurances for
Xxxxxx'x and/or US Bank's benefit as may be requested by US Bank in its
reasonable discretion. Prior to entering the Property into such program(s),
Xxxxxx shall discuss with US Bank the type of assurances that will be sought and
US Bank shall approve Xxxxxx'x application(s) to such program(s) before
submittal. Xxxxxx shall keep US Bank apprised of the progress of the
application(s) and promptly provide to US Bank full and complete copies of all
reports and other documents related thereto and of all responses or other
communications from such program(s).
4. FOLLOW-UP AS TO PHASE I REPORT. Xxxxxx shall cause PEER to issue a
letter addressed to US Bank confirming the following with respect to the Phase I
Report:
A. During the site visit, XXXX observed the Property for obvious
instances of noncompliance and mentioned any observations in the
Phase I Report.
B. In PEER's opinion, based on the investigation summarized in the
Phase I Report, the Property involves no "significant environmental risk"
with the possible exception of issues mentioned in Section 6 (Findings and
Conclusions) of the Phase I Report.
U.S. Bank National Association December 3, 1997
Page 4
5. DEFAULT. Xxxxxx agrees that failure to carry out its obligations set
forth in this letter, within ten (10) days after written notice of such failure
from US Bank to Xxxxxx, shall constitute a default by Xxxxxx under the documents
and agreements evidencing and/or securing the Loan, including, without
limitation the Financing Agreement and the Security Agreement, each dated as of
December 3, 1997, and made between US Bank and Xxxxxx, and the three Promissory
Notes made by Xxxxxx payable to the order of US Bank in the amounts of
$2,400,000, $1,000,000 and $270,000, respectively.
Very truly yours,
XXXXXX MANUFACTURING, INC.
By /s/ Xxxxxxx X. Xxxxxxx
-----------------------
Its Vice President-Controller
