1
EXHIBIT 10(m)
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of November 30, 2000, among BANK OF
AMERICA, N.A., a national banking association as a lender (referred to herein in
its capacity as a lender as "Bank of America"), and as collateral agent, THE
CHASE MANHATTAN BANK, a New York bank which is the successor by merger to Chase
Bank of Texas, National Association (referred to herein as "Chase"), and
PEERLESS MFG. CO. (the "Borrower").
R E C I T A L S
A. Bank of America and Chase have each extended separate credit
facilities to Peerless Mfg. Co. These facilities and other credit extended to or
for the benefit of the Borrower are secured by the Security Agreement and the
Deed of Trust defined in Section 1 below.
B. Bank of America and Chase have reached certain agreements with
respect to their rights, duties and obligations under the Security Agreement and
the Deed of Trust, all as hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt, sufficiency and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. In addition to any other terms defined herein, the
following terms shall have the meanings set forth below:
"ACCELERATION NOTICE" has the meaning set forth in Section 5.A.(v).
"AGENT-RELATED PERSONS" means the Collateral Agent (including any
successor collateral agent), and its affiliates, and the officers, directors,
employees, agents and attorneys in fact of the Collateral Agent and its
affiliates.
"AGREEMENT" means this Intercreditor Agreement, and all subsequent
modifications and amendments hereto.
"BANK OF AMERICA DEBT" has the meaning set forth in the Security
Agreement.
"BANK OF AMERICA LOAN DOCUMENTS" has the meaning set forth in the
Security Agreement.
"BANKS" means Bank of America and Chase and their respective
successors and assigns.
"CHASE DEBT" has the meaning set forth in the Security Agreement.
"CHASE LOAN DOCUMENTS" has the meaning set forth in the Security
Agreement.
"COLLATERAL" has the same meaning as provided therefor in the
Security Agreement.
1
2
"COLLATERAL ACCOUNT" means a special non-interest bearing account at
a financial institution selected by the Collateral Agent (which may be at Bank
of America) styled "Peerless Collateral Account."
"COLLATERAL AGENT" means Bank of America in its capacity as the
collateral agent under the Security Agreement and under the Deed of Trust, or
any successor collateral agent.
"DEED OF TRUST" means collectively any deed of trust executed by the
Borrower in favor of the Collateral Agent for the RATABLE benefit of the Banks,
and all subsequent modifications and amendments thereto.
"EVENT OF DEFAULT" has the same meaning set forth in the Security
Agreement.
"HEDGING ARRANGEMENTS" means any interest rate swap, interest rate
caps, interest rate collars or other similar agreements entered into by the
Borrower to fix or limit its actual interest expense or any foreign exchange,
currency hedging or other agreements entered into by Debtor to enable it to
limit the market risk of the Debtor actually holding currency in either the cash
or futures markets.
"INDEMNIFIED LIABILITIES" means any and all claims, demands, actions
or causes of action that may at anytime (including at anytime following
repayment of the Obligations) be asserted or imposed against any Agent-Related
Person arising out of or relating to this Agreement or the Security Agreement or
the Deed of Trust and any and all liabilities, losses, costs or expenses
(including attorneys' fees) that any Agent-Related Person suffers or incurs as
the result of the assertion of any foregoing claim, demand, action, cause of
action or proceeding.
"LOAN DOCUMENTS" has the meaning set forth in the Security
Agreement.
"NON-TRADING ASSET PROCEEDS" means (i) the Proceeds resulting from
the disposition of any Collateral other than a disposition of accounts and
inventory in the ordinary course of business to the extent permitted by the
Security Agreement; (ii) Proceeds received from or as a result of a casualty
loss to, or condemnation of, any of the Collateral; and (iii) Proceeds received
pursuant to the right of setoff pursuant to the Loan Documents.
"NOTICE OF DEFAULT" has the meaning set forth in Section 5.A.(u).
"OBLIGATIONS" has the meaning provided therefor in the Security
Agreement.
"PROCEEDS" means all funds, monies, assets or other proceeds
received by the Collateral Agent or either Bank in connection with the
Collateral and arising as a result of (a) actions taken by the Collateral Agent
or either Bank resulting from the realization upon the Collateral, or (b) any
dissolution, winding up, liquidation, arrangement or reorganization of the
Borrower, whether in any bankruptcy, insolvency, rearrangement, reorganization,
receivership or other proceeding or upon an assignment for the benefit of
creditors, or any other marshaling of the assets or liabilities of the Borrower.
"PRO RATA SHARE" (a) for Bank of America means the quotient,
expressed in terms of a percentage, obtained by dividing the Bank of America
Debt outstanding on the date of calculation by the Obligations outstanding on
the date of calculation, and (b) for Chase means the quotient, expressed in
terms of a percentage, obtained by dividing the Chase Debt outstanding on the
date of calculation by the Obligations outstanding on the date of calculation
(in all instances, the date of calculation of the Bank of
2
3
America Debt and/or the Chase Debt, as the case may be, and the Obligations
shall be the same date); provided however, if:
(a) with respect to Bank of America, if at any time of
determination, the sum of (i) the outstanding principal amount of the
loans owed to Bank of America by Borrower plus (ii) the aggregate
amount of all unreimbursed drawings under letters of credit issued by
Bank of America for the account of Borrower plus (iii) the aggregate
notional amount of all Hedging Arrangements plus (iv) the aggregate
face amount of all outstanding letters of credit issued by Bank of
America for the account of Borrower (the sum of the foregoing the "BofA
Principal and Letters of Credit") is in excess of $6,700,000 at the
time of determination of Pro Rata Share then the BofA Principal and
Letters of Credit in excess of $6,700,000 and any interest or fees
accrued thereon or in respect thereof (the "BofA Excess") shall not be
included in the Bank of America Debt or the Obligations for purposes of
determining Pro Rata Share until all Obligations owed to Chase have
been paid in full; and
(b) with respect to Chase, if at any time of determination,
the sum of (i) the outstanding principal amount of the loans owed to
Chase by Borrower plus (ii) the aggregate amount of all unreimbursed
drawings under letters of credit issued by Chase for the account of
Borrower plus (iii) the aggregate notional amount of all Hedging
Arrangements plus (iv) the aggregate face amount of all outstanding
letters of credit issued by Chase for the account of Borrower (the sum
of the foregoing the "Chase Principal and Letters of Credit") is in
excess of $5,500,000 at the time of determination of Pro Rata Share
then the Chase Principal and Letters of Credit in excess of $5,500,000
and any interest or fees accrued thereon or in respect thereof (the
"Chase Excess") shall not be included in the Chase Debt or the
Obligations for purposes of determining Pro Rata Share until all
Obligations owed to Bank of America have been paid in full.
Each Bank represents and warrants to the other that as of the date of this
Agreement: (i) the outstanding principal amount of the loans owed to it by
Borrower, (ii) the aggregate amount of all unreimbursed drawings under letters
of credit issued by it for the account of the Borrower, (iii) the aggregate
notional amount of all Hedging Arrangements entered into with the Borrower, and
(iv) the aggregate face amount of all outstanding letters of credit issued by it
for the account of the Borrower are all set forth on Schedule 1 attached hereto.
"REALIZATION DATE" means the first date when the following
shall have occurred:
(a) a Notice of Default shall have been sent; and
(b) either (i) the Banks shall have agreed that the
Realization Date shall ave occurred; (ii) the Banks shall have directed that the
Collateral Agent commence action to realize on the Collateral; or (iii) the
Collateral Agent shall have taken emergency action under Section 5.C. to realize
on the Collateral
"SECURITY AGREEMENT" means that certain Security Agreement
between the Borrower and the Collateral Agent dated as of November 30, 2000, and
all subsequent modifications and amendments thereto.
2. APPOINTMENT AND COLLATERAL SHARING. The Banks appoint Bank of
America, N.A. as collateral agent hereunder, and Bank of America, N.A. accepts
such appointment. The Collateral Agent, as the agent for the Banks, has a
security interest in the Collateral pursuant to the Security Agreement for the
benefit of the Banks and is the beneficiary under the Deed of Trust for the
ratable benefit of the Banks. The parties agree that all Proceeds shall be
shared between the
3
4
Banks in accordance with their respective Pro Rata Shares and each Lender shall
have an undivided interest in the Collateral.
3. PAYMENTS PRIOR TO A NOTICE OF DEFAULT AND COLLATERAL ACCOUNT. Prior
to the Realization Date, the Collateral Agent and the Banks agree that the
Collateral Agent or any Bank may accept and apply payments made from any source
(other than Non-Trading Asset Proceeds) on or in respect to the Obligations owed
under the Loan Documents to which they are a party without any responsibility to
turn over or share such payments with any other Bank. After the Realization
Date, the Collateral Agent and the Banks shall deposit all Proceeds received by
any of them into the Collateral Account after deducting from the Proceeds
received any costs or expenses (including attorney's fees and expenses) incurred
in connection with the acquisition of such Proceeds. Non-Trading Asset Proceeds
received by the Collateral Agent or either Bank at any time, whether before or
after the Realization Date, less any costs or expenses (including attorney's
fees) incurred in connection with the Acquisition of such Proceeds, shall be
delivered to the Collateral Agent for Deposit in the Collateral Account.
Disbursements from the Collateral Account shall be made in the manner specified
in Section 4 below. No Bank shall be required to deposit any Proceeds received
directly from the Collateral Agent in the Collateral Account.
4. SHARING OF PROCEEDS IN COLLATERAL ACCOUNT. Except as set forth in
Section 3 above, Proceeds in the Collateral Account shall be applied as follows:
A. IF BOTH BANK OF AMERICA DEBT AND CHASE DEBT ARE UNPAID. If
both the Bank of America Debt and the Chase Debt are unpaid, then
Proceeds in the Collateral Account or otherwise received by the
Collateral Agent shall be shared between the Banks in the manner set
forth below, such Proceeds to be disbursed by the Collateral Agent
within three business days of its receipt of the same:
First: To the extent necessary, to the payment of
insurance and taxes for any of the Collateral, and other
claims which might or could, if unpaid, result in a lien or
charge against any of the Collateral.
Second: To the extent not reimbursed by the Borrower,
to the payment of all out-of-pocket costs and expenses of the
Collateral Agent of every kind and character (including,
without limitation, expenses and reasonable attorneys' fees)
arising out of the Collateral Agent's exercise of its rights,
powers and remedies under the Security Agreement and under the
Deed of Trust and its duties under this Agreement.
Third: To the payment of the Bank of America Debt and
the Chase Debt in accordance with their respective Pro Rata
Shares.
B. IF EITHER BANK OF AMERICA DEBT OR THE CHASE DEBT IS PAID IN
FULL. If either the Bank of America Debt or the Chase Debt is fully and
finally paid, then Proceeds in the Collateral Account or otherwise
received by the Collateral Agent shall be applied in the manner set
forth below at such times as the remaining unpaid creditor, either Bank
of America or Chase, as the case may be (for purposes hereof, the
"Remaining Creditor") may direct:
First: To the extent necessary, to the payment of
insurance and taxes for the ----- Collateral, and other claims
which might or could, if unpaid, result in a lien or charge
against any of the Collateral.
4
5
Second: To the extent not reimbursed by the Borrower,
to the payment of all out-of-pocket costs and expenses of the
Collateral Agent of every kind and character (including,
without limitation, expenses and reasonable attorneys' fees)
arising out of the Collateral Agent's exercise of its rights,
powers and remedies under the Security Agreement and under the
Deed of Trust and its duties pursuant to this Agreement.
Third: To the extent not reimbursed by the Borrower,
to the payment of all out-of-pocket costs and expenses of the
Remaining Creditor of every kind and character (including,
without limitation, expenses and reasonable attorneys' fees)
arising out of the collection of the obligations owed to the
Remaining Creditor (either the Bank of America Debt or the
Chase Debt, as the case may be).
Fourth: To the payment of the Obligations owed to the
Remaining Creditor (either the Bank of America Debt or the
Chase Debt, as the case may be).
C. WHEN BANK DEBT IS FULLY PAID. Upon full and final payment
of both the Bank of America Debt and the Chase Debt, the balance, if
any, of the Proceeds remaining in the Collateral Account, plus all
interest earned thereon, shall be paid to the Borrower as a court of
competent jurisdiction shall direct or as otherwise required by law.
D. INCORRECT DISTRIBUTION. If Collateral Agent or any Bank
receives any Proceeds in an amount in excess of the amount such party
is entitled to receive under the terms hereof, such party shall (a)
hold such excess Proceeds in trust for the benefit of the Collateral
Agent until paid over to the Collateral Account and (b) shall promptly
pay the excess amount of such Proceeds to the Collateral Agent. The
Collateral Agent shall promptly distribute the amount so received to
the parties entitled thereto.
E. RETURN OF PROCEEDS. If at any time payment, in whole or in
part, of any Proceeds distributed hereunder is rescinded or must
otherwise be restored or returned by Collateral Agent or any Bank as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, then each party receiving any portion of
such Proceeds agrees, upon demand, to return the portion of such
Proceeds it has received to the party responsible for restoring or
returning such Proceeds.
F. NONCASH PROCEEDS. Notwithstanding anything contained herein
to the contrary, if Collateral Agent shall ever acquire any Collateral
through foreclosure or by a conveyance in lieu of foreclosure or by
retaining any of the Collateral in satisfaction of all or part of the
Obligations or if any Proceeds received by Collateral Agent (or
received directly by any Bank) to be distributed and shared pursuant to
this Agreement are in a form other than immediately available funds,
the party receiving such Collateral or Proceeds shall not be required
to remit any share thereof under the terms hereof and the Banks shall
only be entitled to their undivided interests in the Collateral or
noncash Proceeds as determined hereby. The Banks shall receive the
applicable Pro Rata Shares of any immediately available funds
consisting of Proceeds from such noncash Collateral or proceeds of such
noncash Proceeds so acquired only if and when paid in connection with
the subsequent disposition thereof. While any Collateral or other
property to be shared pursuant to this Agreement is held by Collateral
Agent pursuant to this Section 4.F., Collateral Agent shall hold such
Collateral or other property for the benefit of the Banks in accordance
with their respective undivided interest therein and all matters
relating to the management, operation, further disposition or any other
aspect of such Collateral or other property shall be resolved by the
agreement of the Banks.
5
6
G. NOTICE TO PERSONS MAKING DISTRIBUTIONS. The Collateral
Agent and each Bank shall promptly and appropriately instruct any party
(other than Collateral Agent) making any distribution of Proceeds, to
make such distribution so as to give effect to this Agreement.
H. PERFECTION BY POSSESSION. Collateral Agent hereby appoints
Chase serve as its bailee to perfect the Collateral Agent's liens and
security interest in any Collateral, including any Proceeds, in the
possession of Chase. Chase agrees to so act as bailee for the
Collateral Agent in accordance with the terms and provisions hereof.
Each Bank acknowledges that Borrower maintains deposit accounts at each
Bank as disclosed pursuant to the Security Agreement (the "Deposit
Accounts"). Each Bank agrees to hold its Deposit Accounts as bailee for
the Collateral Agent to perfect the security interest held for the
benefit of the Banks therein. Prior to the occurrence of an Event of
Default, Borrower is entitled to make withdrawals from and deposits
into the Deposit Accounts. After the occurrence of an Event of Default,
a Bank (and the Collateral Agent acting in accordance with this
Agreement) shall be the only parties entitled to make or authorize
withdrawals from the Deposit Accounts held at such Bank (until the
Realization Date, a Bank may authorize Borrower to continue deposits
and withdrawals from the Deposit Accounts held at such Bank). If
requested by the Collateral Agent in writing after the Realization
Date, each Bank shall transfer from time to time, in immediately
available funds by wire transfer to the Collateral Agent, the amount of
the collected funds credited to the Deposit Accounts held by it and
deliver to the Collateral Agent all monies or instruments relating
thereto or held by it; provided that notwithstanding Section 4.A.
hereof, if after a Bank shall have transferred such funds to the
Collateral Agent any item that was credited to any such Deposit Account
is subsequently returned for any reason, such Bank shall be entitled to
a priority distribution from the Collateral Account in an amount equal
to the item so returned.
5. RIGHTS AND REMEDIES.
A. BANKS' SEPARATE RIGHTS. The Banks shall have all the rights
and remedies available to them under the Loan Documents to which they
are a party upon the occurrence of a potential Event of Default or an
Event of Default or at any other time, and without limiting the
generality of the foregoing, each Bank shall have the independent
right, exercised in accordance with the applicable Loan Documents, to
any of the following:
(1) accelerate the Obligations owing to such Bank
pursuant to the Loan Documents (other than the Security
Agreement and the Deed of Trust) to which such Bank is a
party;
(2) institute suit against Borrower (i) under the
terms of the applicable notes or other Loan Documents (other
than the Security Agreement and the Deed of Trust) for
collection of the amounts owing thereunder or (ii) seeking an
injunction, restraining order or any other similar remedy;
(3) seek the appointment of a receiver for Borrower
(but not any of the Collateral);
(4) file an involuntary petition under any bankruptcy
or insolvency laws against Borrower or file a proof of claim
in any bankruptcy or insolvency proceeding;
(5) exercise the right of setoff provided for in the
Loan Documents; or
6
7
(6) take any other enforcement action with respect to
any Event of Default pursuant to and in accordance with the
Loan Documents (other than the Security Agreement and the Deed
of Trust) to which it is a party;
provided however, the exercise of any rights and remedies (including
any of the foregoing) shall be subject to the following:
(7) Any Bank which has actual knowledge of an Event
of Default or potential Event of Default which has not been
cured or waived or facts which indicate that a potential Event
of Default or an Event of Default which has not been cured or
waived has occurred, shall deliver to the Collateral Agent and
the other Bank a written notice (the "Notice of Default")
setting forth in reasonable detail the facts and circumstances
thereof. The applicable Bank shall not exercise any rights and
remedies arising as a result of the applicable Event of
Default until the fifteen (15) day period specified in Section
5. D below shall have expired except for the exercise of the
right of setoff and except for the rights of the Collateral
Agent under Section 5.C below.
(8) If a Bank desires to accelerate the maturity of
the Obligations owing to it, then the Bank desiring to
accelerate such Obligations shall first give the other Bank
revocable written notice of its intent to take such action at
least fifteen (15) days prior to the date such party desires
to take such action (the "Acceleration Notice").
Simultaneously with any notice of acceleration given to the
Borrower, the applicable Bank or shall furnish copies thereof
to the other Bank.
(9) After the occurrence of any Event of Default,
each Bank shall refrain from extending any further credit to
the Borrower under the Loan Documents; except advances
required to fund letters of credit issued prior to the
occurrence of such Event of Default, or advances or other
credit extended to protect the Collateral or with the
agreement of the Banks, and
(10) No Bank may bring any action or other proceeding
in respect of the Collateral or the Security Agreement or the
Deed of Trust or enforce, or demand enforcement of any rights
with respect to the Collateral except upon the terms and
conditions set forth in this Agreement.
If any Bank obtains any payment of any Obligations owed as a
result of the exercise of any right or remedy permitted by this Section
5, other than from a distribution of Proceeds, the Bank shall be
entitled to retain the full amount thereof and shall promptly apply the
amount received to the Obligations owed to it in accordance with the
Loan Documents to which it is a party.
B. COLLATERAL AGENT'S RIGHTS AND REMEDIES UPON DEFAULT. Upon
the receipt of a Notice of Default, the Collateral Agent shall, subject
to the other terms and provisions hereof, take such steps as the Banks
may direct, including without limitation, steps (a) after all the
Obligations have been accelerated pursuant to the applicable Loan
Documents, to foreclose or otherwise enforce any lien or security
interest granted to the Collateral Agent under the Security Agreement
and the Deed of Trust in accordance with the terms thereof and (b) to
exercise any and all other rights and remedies afforded to the
Collateral Agent by the terms of this Agreement,
7
8
by the terms of the Security Agreement, by the terms of the Deed of
Trust, by the laws of the State of Texas or any other jurisdiction, by
equity or otherwise.
C. EMERGENCY ACTIONS. The Collateral Agent, is authorized, but
not obligated, (a) to take any action reasonably required to perfect or
continue the perfection of the security interests and liens on the
Collateral for the benefit of the Banks and (b) following the
occurrence of an Event of Default and before the Banks have given the
Collateral Agent directions as contemplated in Section 5.B, to take any
action which the Collateral Agent, in its sole reasonable discretion
and good faith, believes to be reasonably required to promote and
protect the interests of the Banks and to maximize both the value of
the Collateral and the present value of the recovery by the Banks on
the Obligations; provided, however, that once such directions have been
received, the actions of the Collateral Agent shall be governed thereby
and the Collateral Agent shall not take any further action which would
be contrary thereto. The Collateral Agent shall give written notice of
any such action to Chase within one business day and shall cease any
such action upon its receipt of written instructions from Chase.
D. RIGHT TO CURE DEFAULTS. Upon receipt of any Notice of
Default either Bank shall be entitled to cure or cause the Borrower to
cure the applicable Event of Default within fifteen (15) days following
the date the applicable Notice of Default has been deemed given to the
Collateral Agent. During such fifteen (15) day period the applicable
Bank shall not take any steps to exercise its rights and remedies
arising as a result of such Event of Default (except the right of
setoff) but after the expiration of such fifteen (15) day period the
applicable Bank shall be free to exercise all rights and remedies
available to it arising as a result of such Event of Default which are
permitted by and in accordance with this Section 5.
6. LIQUIDATION DISTRIBUTIONS. Upon the distribution of the assets of
the Borrower to its creditors upon dissolution, winding up, liquidation,
arrangement or reorganization of such entity, whether in any bankruptcy,
insolvency, rearrangement, reorganization, receivership, or other proceeding or
upon an assignment for the benefit of creditors, or any other marshaling of the
assets and liabilities of the Borrower, any such payment or distribution of any
kind which constitutes Proceeds of Collateral which otherwise would be payable
or deliverable upon or with respect to the Security Agreement or the Deed of
Trust shall be paid or delivered directly to the Collateral Agent for
application pursuant to the provisions of Section 4 hereof.
7. SHARING SETOFFS. If Bank of America exercises any right of setoff
under the Bank of America Loan Documents or the Security Agreement or Chase
exercises any right of setoff under the Chase Loan Documents or the Security
Agreement, such Bank shall deliver the proceeds thereof to the Collateral Agent
for sharing between the Banks as provided in Section 4 hereof.
8. CONCERNING THE AGENT. Each Bank hereby irrevocably (subject to
Section 10 hereof) appoints, designates and authorizes the Collateral Agent to
take such action on its behalf as is provided and permitted by the provisions of
this Agreement, the Security Agreement and the Deed of Trust. The Collateral
Agent may exercise all powers specifically granted to it under the Security
Agreement, under the Deed of Trust and under this Agreement and all such other
powers which are reasonably incidental thereto. Notwithstanding any provision
hereof or of the Security Agreement or of the Deed of Trust, the Collateral
Agent may not without the prior written consent of each Bank, accept or propose
to accept all or any portion of the Collateral in full or partial satisfaction
of the Obligations. The Collateral Agent may perform any of its duties under the
Security Agreement, the Deed of Trust and this Agreement through its agents,
representatives or employees. The Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Security Agreement, the Deed of Trust. The
8
9
Collateral Agent shall not by reason of this Agreement or the Security Agreement
or the Deed of Trust have a fiduciary relationship with respect to any of the
parties hereto. Nothing herein express or implied is intended to or shall be so
construed as to impose upon the Collateral Agent any obligations except those
expressly set forth herein. Neither the Collateral Agent nor any of its
officers, directors, employees or agents shall be liable to any party for any
action taken or omitted by any of them hereunder, under the Security Agreement
or the Deed of Trust unless caused by its or their gross negligence or willful
misconduct. The Banks shall indemnify each Agent-Related Person (to the extent
not reimbursed by the Borrower), in accordance with their respective Pro Rata
Shares, and hold each Agent-Related Person harmless from and against any and all
Indemnified Liabilities incurred by it, provided however that no Bank shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities resulting from such Agent-Related Person's gross
negligence or willful misconduct (no action taken in accordance with the
directions of both Banks shall be deemed to constitute gross negligence or
willful misconduct for purposes of this indemnity if taken in accordance with
such instructions).
9. RELIANCE BY COLLATERAL AGENT. The Collateral Agent shall be entitled
to rely, and shall be fully protected in relying, upon any writing,
communication, signature, resolution, representation, notice, consent,
certificate, affidavit, letter or telephone message or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper person or entity, and upon advice and statements of
legal counsel (including counsel to either Bank), independent accountants and
other experts selected by the Collateral Agent. The Collateral Agent shall be
fully justified in failing or refusing to take any action under the Security
Agreement, Deed of Trust and this Agreement unless, if it so requests, it has
been indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Collateral Agent shall in all cases be fully protected
in acting or refraining from acting in accordance with the request or consent of
both Banks.
10. SUCCESSOR COLLATERAL AGENT. The Collateral Agent may, and at the
request of both Banks shall, resign as Collateral Agent upon thirty (30) days
notice to the Banks. If the Collateral Agent resigns, the Banks shall appoint
from among them a successor collateral agent. If no successor collateral agent
is appointed prior to the effective date of the resignation of the Collateral
Agent, the Collateral Agent may appoint a successor collateral agent from among
the Banks.
11. OBLIGATIONS UNIMPAIRED. Except as expressly provided herein,
nothing contained in this Agreement shall impair, as between Borrower and either
Bank the obligation of Borrower to pay or perform any obligation or liability of
Borrower to such Bank when the same shall become due and payable in accordance
with the terms of the applicable agreement.
12. NO ADDITIONAL RIGHTS FOR THE BORROWER. If any Bank shall enforce
its rights and remedies in violation of the terms of this Agreement, the
Borrower agrees that it shall not use such violation as a defense to the
enforcement by such Bank of any of its rights under the Loan Documents to which
it is a party nor assert such violation as a counterclaim or basis for setoff or
recoupment against such Bank. In furtherance of the foregoing, the Borrower
agrees that this Agreement shall not give the Borrower any substantive or
affirmative rights against any Bank.
13. ACCOUNTING AND OTHER INFORMATION. Each Bank will promptly furnish
to the Collateral Agent and all other Banks such other information concerning
the Obligations owed to it or its Loan Documents as the Collateral Agent or any
Bank may reasonably request.
14. KEEPING BOOKS AND RECORDS. The Collateral Agent will maintain
proper books of record and account in which full, true, and correct entries
shall be made of all dealings and transactions in
9
10
relation to this Agreement, the Security Agreement and the Deed of Trust
including without limitation, records of the calculation of the Pro Rata Shares
and the distributions made hereunder. Such records will be kept in accordance
with the usual practices which the Collateral Agent utilizes in connection with
similar loans for its own account. At any reasonable time and from time to time,
the Collateral Agent will permit representatives of either Bank to examine and
make copies of such books and records of the Collateral Agent
15. MODIFICATIONS TO LOAN DOCUMENTS. Unless otherwise agreed in writing
by the Banks and except as otherwise provided with respect to this Agreement,
the Security Agreement and the Deed of Trust, Collateral Agent and the Banks
will not agree or consent to any amendment, waiver, departure from or other
modification of any of the terms or provisions of the Loan Documents to which
such Bank is a party if the effect of such amendment, waiver, departure or
modification would be to permit any of the following: (a) an increase in the
principal amount of the Obligations; (b) an increase in the amount of any
commitment to extend credit under the Loan Documents; (c) an increase in the
rate of interest or any fees charged thereunder; (d) a change in the dates of
payment of principal or interest thereunder; (e) an increase in or addition to
the fees payable thereunder; or (f) a release of the Borrower or any Collateral.
16. PARTIES HAVING OTHER RELATIONSHIPS. Each Bank acknowledges and
accepts that now and in the future the other Bank or its affiliates may lend to
the Borrower on a basis other than as covered by this Agreement and on a basis
which is not secured by the Collateral or may accept deposits from, act as
trustee under indentures of, act as servicing bank or any similar function under
any credit relationship with, and generally engaged in any kind of business with
Borrower, all as if such Bank were not a party to this Agreement or the other
Loan Documents. Except with respect to the Collateral and Proceeds and as
otherwise set forth herein, each Bank acknowledges that the other Banks and
their respective affiliates may exercise all contractual and legal rights and
remedies which may exist from time to time with respect to such other existing
and future relationships without any duty to account therefore to the other
Banks; provided however, if any Bank exercises any right of setoff, banker's
lien or similar right against Borrower or its assets, any amounts received
pursuant thereto shall be deemed Proceeds and shall be distributed in accordance
with this Agreement before such amounts are utilized to reduce any other
obligations owed to such Bank.
17. BENEFIT. This Agreement shall inure to the benefit of the Banks and
their successors and assigns.
18. NOTICES. All notices and other communications provided for
hereunder shall be in writing and mailed, faxed or delivered to the address or
facsimile number specified on the signature pages of this Agreement. All notices
shall be deemed to be given or made upon the earlier to occur of (a) actual
receipt by the intended recipient, or (b) if delivered by hand or courier, when
signed for by the intended recipient, or (c) if delivered by mail, four business
days after deposit in the mail, postage prepaid, and (d) if delivered by
facsimile, when sent and receipt has been confirmed by telephone; provided
however, that notices and other communications to the Collateral Agent shall not
be effective until actually received by the Collateral Agent.
19. CHOICE OF LAW AND VENUE. (a) THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS
OF LAWS) OF THE STATE OF TEXAS AND SHALL BE PERFORMABLE IN DALLAS COUNTY, TEXAS.
The parties hereto irrevocably submit themselves to the jurisdiction of any
Texas state court or any United States court located in the state of Texas (or
any court having jurisdiction over appeals from any such court) in any
proceeding between or among them arising out of or in any way relating to this
Agreement whether arising in contract, tort or otherwise. Any suit, action or
10
11
proceeding may be brought in the courts of the state of Texas, county of Dallas,
or in the United States for the Northern District of Texas. All parties hereto
irrevocably consent to the service of process in any suit, action or proceeding
in said court by the mailing thereof, by registered or certified mail, postage
prepaid, to his address for notices set forth in this Agreement. Service shall
be deemed effective five (5) days after such mailing. If requested to do so by
any party, each party hereto agrees to waive service of process and to execute
any and all documents necessary to implement such waiver in accordance with the
Texas Rules of Civil Procedure. All parties hereto irrevocably waive any
objections which any may now or hereafter have (including any based on the
grounds of forum non conveniens) to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in the courts
located in the state of Texas, county of Dallas. Nothing herein impairs the
right to bring proceedings in the courts of any other jurisdiction or to effect
service of process in any other manner permitted.
(b) The parties recognize that courts outside Dallas County, Texas,
may also have jurisdiction over suits, actions or proceedings arising out of
this Agreement. In the event any party shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such litigation shall indemnify the other parties for any losses and
expenses that may result from the breach of the foregoing covenant to institute
such proceeding only in a state or federal court in Dallas County, Texas,
including without limitation any additional expenses incurred as the result of
litigating in another jurisdiction, such as the expenses and reasonable fees of
local counsel and travel and lodging expenses of the indemnified parties, its
witnesses, experts and support personnel.
20. COUNTERPART EXECUTION. To facilitate execution, this Agreement may
be executed in as many counterparts as may be required. It shall not be
necessary that the signature of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on each
counterpart. Instead, it shall be sufficient that the signature of, or on behalf
of, each party, or the signatures of persons required to bind any party, appear
on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in making proof of this
Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto. Any signature page to any counterpart may be detached from such
counterpart without impairing the legal effect of the signatures thereon and
thereafter attached to another counterpart identical thereto except having
attached to it additional signature pages.
21. NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE
FINAL AGREEMENT AMONG 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 AMONG THE PARTIES. NO AMENDMENT OR WAIVER OF ANY
PROVISION OF THIS AGREEMENT, THE SECURITY AGREEMENT OR THE DEED OF TRUST NOR ANY
CONSENT TO ANY DEPARTURE BY BORROWER THEREFROM, SHALL IN ANY EVENT BE EFFECTIVE
UNLESS THE SAME SHALL BE AGREED TO CONSENTED TO BY BANKS AND BORROWER, AND EACH
SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR
THE SPECIFIC PURPOSE FOR WHICH GIVEN.
11
12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Address: BANK OF AMERICA, N.A., as Lender and as
Collateral Agent
901 Main Street, 7th Floor
Dallas, Texas 75202
(214) 209-3140 (fax) By: /s/ J. Shelby Farris
----------------------------------------
J. Shelby Farris, Vice President
Address: THE CHASE MANHATTAN BANK
(Mail)
P.O. Box 660197
Dallas, Texas, 75266-0197
(Hand Delivery) By: /s/ Michael B. Phillips
----------------------------------------
700 North Pearl, Suite 801 Michael B. Phillips
Dallas, Texas 75201 Vice President
(214) 965-2649 (fax)
Address: PEERLESS MFG. CO.
2819 Walnut Hill Lane
Dallas, Texas 75229
(214) 351-0149 (fax) By: /s/ Sherrill Stone
----------------------------------------
Sherrill Stone
Chairman and Chief Executive Officer
12