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EXECUTION COPY
INTERCREDITOR AND COLLATERAL
AGENCY AGREEMENT
THIS INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT is dated as
of March
31, 2005, by and among Fleet National Bank (formerly known as
The First National
Bank of Boston, and together with its successors and assigns,
other than the
Company and its subsidiaries and affiliates, collectively the
"Banks"), the
holder of the Senior Notes listed on the signature pages hereof
(together with
their respective successors and assigns, other than the Company
and its
subsidiaries and affiliates, the "Noteholders" and, together
with the Banks, the
"Lenders") and Fleet National Bank, as Collateral Agent on
behalf of the Lenders
(together with its successors and permitted replacements, the
"Collateral
Agent"). Capitalized terms used herein have the respective
meanings ascribed
thereto in Section 1.1 of this Agreement.
PRELIMINARY STATEMENTS
1. Quaker Fabric Corporation of Fall River, a Massachusetts
corporation
(the "Company"), Quaker Textile Corporation, a Massachusetts
corporation
("Quaker Textile"), Quaker Fabric Mexico, S.A. de C.V., a
Mexican corporation
("Quaker Mexico"), and Quaker Fabric Corporation, a Delaware
corporation (the
"Parent"), are parties to that certain Second Amended and
Restated Credit
Agreement, dated as of February 14, 2002 (as amended, restated,
supplemented,
replaced, refinanced, refunded or otherwise modified from time
to time, the
"Credit Agreement"), with the Banks, pursuant to which the Banks
are providing a
revolving credit facility to the Obligors in an amount up to
$20,000,000;
2. Pursuant to the terms and conditions of that certain Note
Purchase
Agreement, dated as of October 10, 1997 (as amended, restated,
supplemented,
replaced, refinanced, refunded or otherwise modified from time
to time, the
"1997 Note Agreement"), the Noteholders purchased from the
Company those certain
7.09% Senior Notes due October 10, 2005 in an aggregate original
principal
amount equal to $15,000,000 and 7.18% Senior Notes due October
10, 2007 in an
aggregate original principal amount equal to $30,000,000 (as
amended, restated,
supplemented, replaced, refinanced, refunded or otherwise
modified from time to
time, the "1997 Notes");
3. Pursuant to the terms and conditions of that certain Note
Agreement
and Private Shelf Facility dated as of February 14, 2002 (as
amended, restated,
supplemented, replaced, refinanced, refunded or otherwise
modified from time to
time, the "2002 Note Agreement", and together with the 1997 Note
Agreement, the
"Note Agreements"), the Noteholders purchased from the Company
those certain
7.56% Senior Notes due February 14, 2009 in an aggregate
original principal
amount equal to $5,000,000 (as amended, restated, supplemented,
replaced,
refinanced, refunded or otherwise modified from time to time,
the "2002 Notes",
and together with the 1997 Notes, the "Senior Notes");
4. The Parent has guaranteed the Noteholder Guaranteed
Obligations to
the Noteholders pursuant to the Noteholder Parent Guaranty, and
Quaker Mexico
and Quaker
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Textile have guaranteed the Noteholder Guaranteed Obligations to
the Noteholders
pursuant to the terms of the Noteholder Subsidiary Guaranty.
5. Pursuant to the Collateral Documents (as defined below),
the
Obligors have pledged substantially all of their personal
property to the
Collateral Agent for the benefit of the Lenders.
6. The Banks and the Noteholders wish to define their rights
and
obligations with respect to each other such that any payments
received by the
Collateral Agent, any Bank or any Noteholder, as the case may
be, through any
Enforcement, and payments by the Obligors under the Credit
Documents or the
Noteholder Documents after any Sharing Event, as the case may
be, shall be
shared among the Lenders equally and ratably in accordance with
the respective
amounts of the Senior Indebtedness then held by each of them,
all as set forth
in this Agreement.
ARTICLE I
INTERPRETATION OF THIS AGREEMENT
Section 1.01. Defined Terms. As used in this Agreement,
capitalized
terms have the respective meanings specified below or set forth
in the Section
of this Agreement referred to immediately following such term
(such definitions,
unless otherwise expressly provided, to be equally applicable to
both the
singular and plural forms of the terms defined):
"Agreement" means this Intercreditor and Collateral Agency
Agreement,
as amended, restated, supplemented, replaced, or otherwise
modified from time to
time.
"Bank Guaranteed Obligations" means, collectively, all amounts
payable
by the Parent to the Banks pursuant to Article IIA of the Credit
Agreement and
all amounts payable by the Company to the Banks pursuant to
Article IIB of the
Credit Agreement.
"Bank Obligations" means all obligations of the Obligors to the
Banks
under the Credit Agreement, including without limitation, the
Existing L/C
Reimbursement Obligations, the New L/C Reimbursement
Obligations, and the
obligation to pay the principal of and interest on the Revolving
Loans.
"Bank Product Obligations" means all of the obligations of the
Obligors
to reimburse the Banks on account of any service or facility
extended by any
Bank including, without limitation, credit cards, credit card
processing
services, debit cards, purchase cards, automated clearing house
transactions,
cash management, including controlled disbursement, accounts or
services,
currency exchange contracts and interest rate protection
agreements.
"Banks" has the meaning set forth in the first paragraph of
this
Agreement.
"Collateral" means all property and assets, and interest in
property
and assets, upon or in which any Obligor has granted a lien or
security interest
to the Collateral Agent to secure any Senior Indebtedness and
all balances held
by the Collateral Agent or any Lender for the account of any
Obligor or any
other property held or owing by the Collateral Agent or any
Lender to or
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for the credit or for the account of any Obligor with respect to
which the
Collateral Agent or any Lender has rights to setoff or
appropriate or a common
law lien.
"Collateral Agent" has the meaning set forth in the first
paragraph of
this Agreement.
"Collateral Agent Expenses" means, without limitation, all costs
and
expenses incurred by the Collateral Agent, its employees or
agents in connection
with the performance of its duties under this Agreement,
including the
realization upon or protection of the Collateral or enforcing or
defending any
lien upon or security interest in the Collateral or any other
action taken in
accordance with the provisions of this Agreement, expenses
incurred for legal
counsel in connection with the foregoing, and any other costs,
expenses or
liabilities incurred by the Collateral Agent for which the
Collateral Agent is
entitled to be reimbursed or indemnified by a Obligor pursuant
to any Collateral
Document or any other Secured Debt Agreement or by the Lenders
pursuant to this
Agreement.
"Collateral Agent Obligations" means all obligations of any
Obligor or
any Lender to pay, reimburse or indemnify the Collateral Agent
for any
Collateral Agent Expenses.
"Collateral Documents" means (i) the Security Agreement, (ii)
the
Pledge Agreement, (iii) the Trademark Security Agreement, (iv)
the Patent
Security Agreement, (v) the Copyright Security Agreement, (vi)
any other
agreement, document or instrument executed and delivered by any
Obligor or a
direct or indirect subsidiary of any Obligor pursuant to this
Agreement, the
Note Agreements or the Credit Agreement after the date hereof,
(vii) any other
agreement, document or instrument executed and delivered by any
Obligor after
the date hereof under which such Obligor has granted a lien upon
or security
interest in any property or assets to the Collateral Agent to
secure all or any
part of the Senior Indebtedness and (viii) all financing
statements,
certificates, documents and instruments relating thereto or
executed or provided
in connection therewith, each as amended, restated, supplemented
or otherwise
modified from time to time.
"Company" has the meaning set forth in the Preliminary Statement
of
this Agreement.
"Copyright Security Agreement" means that certain Memorandum of
Grant
of Security Interest in Copyrights, dated as of the date hereof,
executed by the
Obligors in favor of the Collateral Agent, as amended, restated,
supplemented,
replaced, refinanced, refunded or otherwise modified from time
to time.
"Credit Agreement" has the meaning set forth in the
Preliminary
Statement of this Agreement.
"Enforcement" means (a) for one or more of any Lender to make
demand
for payment or accelerate the time for payment prior to the
scheduled payment
date of any Revolving Loan or any Senior Note, (b) for any Bank
to terminate its
commitment to make Revolving Loans or issue Letters of Credit
pursuant to the
Credit Agreement, (c) for one or more of any Lender to commence
the judicial
enforcement of any rights or remedies under or with respect to
any Secured Debt
Agreement or any Senior Indebtedness, or to set off, freeze or
appropriate any
balances held by it for the account of any Obligor or any other
property at any
time held or
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owing by it to or for the credit or for the account of any
Obligor, (d) for
any Bank to call for funding of a Letter of Credit prior to its
due date,
(e) for the Collateral Agent to commence the judicial
enforcement of any
rights or remedies under any Collateral Document (other than an
action solely
for the purpose of establishing or defending the lien or
security interest
intended to be created by any Collateral Document upon or in any
Collateral as
against or from claims of third parties on or in such
Collateral), to set off,
freeze or otherwise appropriate any balances held by it for the
account of any
Obligor or any other property at any time held or owing by it to
or for the
credit or for the account of any Obligor or to otherwise take
any action,
including the exercise of self-help, to realize upon the
Collateral, (f) the
commencement by, against or with respect to any Obligor of any
proceeding
under any bankruptcy, reorganization, compromise, arrangement,
insolvency,
readjustment of debt, dissolution or liquidation or similar law
or for the
appointment or a receiver for such Obligor or its assets, (g)
for any Bank
to make a demand for payment under the Article IIA or Article
IIB of the
Credit Agreement, (h) for any Noteholder to make a demand for
payment under the
Noteholder Parent Guaranty or the Noteholder Subsidiary
Guaranty, and (i) the
payment by the Parent of any Bank Guaranteed Obligations or the
payment by any
Obligor (other than the Company) of any Noteholder Guaranteed
Obligations, as
the case may be.
"Event of Default" means (i) an "Event of Default", as defined
in the
Credit Agreement, (ii) an "Event of Default", as defined in any
Note Agreement
or (iii) an "Event of Default", as defined in any Collateral
Document.
"Existing L/C Cash Collateral Account" has the meaning set forth
in
Section 3.01(c).
"Existing L/C Reimbursement Obligations" means, without
duplication,
all of the obligations of the Obligors under Section 2.03 of the
Credit
Agreement to reimburse the Banks for draws on any Existing
Letters of Credit.
"Existing L/C True-Up Amount" means, as of any date, an amount
equal to
the product of (1) the amount then on deposit in the Existing
L/C Cash
Collateral Account and (2) a fraction (A) the numerator of which
is the
aggregate reduction in the Existing Letter of Credit Exposure
(excluding any
reduction on account of drawings made under the Existing Letters
of Credit)
since the later of (x) the Sharing Date and (y) the last day of
the most
recently ended calendar quarter, and (B) the denominator of
which is the amount
of the Existing Letter of Credit Exposure on the later of (x)
the Sharing Date
and (y) the last day of the most recently ended calendar
quarter.
"Existing Letters of Credit" means all Letters of Credit
described on
Schedule I attached hereto, as such Letters of Credit Agreement
may be amended,
modified, extended or renewed from time to time.
"Existing Letter of Credit Exposure" at any time means the
undrawn face
amount of all Existing Letters of Credit outstanding at such
time.
"Existing Senior Indebtedness" means all Senior Indebtedness
other than
New Senior Indebtedness.
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"Guaranteed Obligations" means, collectively, the Bank
Guaranteed
Obligations and the Noteholder Guaranteed Obligations.
"Lenders" has the meaning set forth in the first paragraph of
this
Agreement.
"Letter of Credit" means any irrevocable commercial or standby
letter
of credit issued pursuant to the Credit Agreement.
"1997 Note Agreement" has the meaning set forth in the
Preliminary
Statement of this Agreement.
"1997 Notes" has the meaning set forth in the Preliminary
Statement of
this Agreement.
"New L/C Cash Collateral Account" has the meaning set forth in
Section
3.01(b).
"New L/C Reimbursement Obligations" means, without duplication,
all of
the obligations of the Obligors under Section 2.03 of the Credit
Agreement to
reimburse the Banks for draws on any New Letters of Credit.
"New Letters of Credit" means all Letters of Credit issued after
the
date of this Agreement.
"New Letter of Credit Exposure" at any time means 105% of the
sum of
(a) the undrawn face amount of all New Letters of Credit
outstanding at such
time and (b) the aggregate amount by which the face amount of
Existing Letters
of Credit are increased after the date of this Agreement.
"New Senior Indebtedness" means all Revolving Loans and New
Letter of
Credit Exposure incurred by the Banks after the date hereof in
an aggregate
amount at any time outstanding not to exceed $10,000,000,
together with accrued
interest and letter of credit fees with respect thereto.
"Note Agreements" has the meaning set forth in the
Preliminary
Statement of this Agreement.
"Noteholder Guaranteed Obligations" means, collectively, all
amounts
payable by the Obligors other than the Company to the
Noteholders pursuant to
the terms of the Noteholder Parent Guaranty and the Noteholder
Subsidiary
Guaranty.
"Noteholder Obligations" means all obligations of the Obligors
to the
Noteholders arising under the Note Agreements, the Senior Notes,
the Noteholder
Parent Guaranty and the Noteholder Subsidiary Guaranty,
including without
limitation the obligation to pay principal, interest, fees,
Yield-Maintenance
Amount and other amounts to the Noteholders.
"Noteholder Parent Guaranty" means (i) that certain Guaranty
Agreement,
dated as of October 10, 1997, executed by the Parent in favor of
the Noteholders
holding the 1997 Notes, and (ii) that certain Guaranty
Agreement, dated as of
February 14, 2002, executed by the Parent
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in favor of the Noteholders holding the 2002 Notes, in each case
as amended,
restated, reaffirmed, supplemented, replaced, refinanced,
refunded or otherwise
modified from time to time.
"Noteholders" has the meaning specified in the first paragraph
of this
Agreement.
"Noteholder Subsidiary Guaranty" means (i) that certain
Guaranty
Agreement, dated as of the date hereof, executed by Quaker
Textile and Quaker
Mexico in favor of the Noteholders holding the 1997 Notes and
(ii) that certain
Guaranty Agreement, dated as of the date hereof, executed by
Quaker Textile and
Quaker Mexico in favor of the Noteholders holding the 2002
Notes, in each case
as amended, restated, supplemented, replaced, refinanced,
refunded or otherwise
modified from time to time.
"Notice to Enforce" means a notice by the Required Senior
Lenders
delivered to the Collateral Agent, stating that an Event of
Default has occurred
and that the Collateral Agent should commence the exercise of
remedies outlined
in such Notice to Enforce. A Notice to Enforce shall be deemed
to have been
given when the notice referred to in the preceding sentence has
actually been
received by the Collateral Agent and shall be deemed to have
been rescinded when
the Collateral Agent have actually received from the notifying
party a notice
withdrawing such notice. A Notice to Enforce shall be deemed to
be outstanding
at all times after such notice has been given until such time,
if any, as such
notice has been rescinded.
"Obligor" means the Company, the Parent, Textile, Quaker Mexico,
and
each other Person that joins the Noteholder Subsidiary Guaranty
or that becomes
a co-borrower under the Credit Agreement.
"Patent Security Agreement" means that certain Patent
Collateral
Security and Pledged Agreement, dated as of the date hereof,
executed by the
Obligors in favor of the Collateral Agent, as amended, restated,
supplemented,
replaced, refinanced, refunded or otherwise modified from time
to time.
"Person" means an individual, partnership, corporation
(including a
business trust), limited liability company or partnership, joint
stock company,
trust unincorporated association, joint venture, governmental
agency or other
authority.
"Pledge Agreement" means that certain Second Amended and
Restated
Pledge Agreement, dated as of the date hereof, executed by
certain Obligors in
favor of the Collateral Agent, as amended, restated,
supplemented, replaced,
refinanced, refunded or otherwise modified from time to
time.
"Required Holders" shall mean the holder or holders of at least
51% of
the aggregate principal amount of the Senior Notes from time to
time
outstanding.
"Required Banks" shall mean Banks holding at least 51% of the
aggregate
principal amount of all outstanding Revolving Loans and all
unused commitments
to advance additional Revolving Loans.
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"Required Senior Lenders" means the Required Holders and the
Required
Banks.
"Revolving Loans" mean all Advances, as defined in the
Credit
Agreement.
"Secured Debt Agreements" shall mean, collectively, the
Credit
Agreement, the Note Agreements, the Senior Notes, the Noteholder
Parent
Guaranty, the Noteholder Subsidiary Guaranty, the Collateral
Documents, the
documents governing the Bank Product Obligations and each other
document
executed in connection with the foregoing.
"Security Agreement" means that certain Security Agreement,
dated as of
the date hereof, executed by the Obligors in favor of the
Collateral Agent, as
amended, restated, supplemented, replaced, refinanced, refunded
or otherwise
modified from time to time.
"Senior Indebtedness" means the Collateral Agent Obligations,
the Bank
Obligations, the Noteholder Obligations, the Bank Product
Obligations and all of
the other present or future indebtedness, liabilities and
obligations of all and
each of the Obligors now or hereafter owed to any or all of the
Collateral Agent
or the Lenders, evidenced by or arising under, by virtue of or
pursuant to any
Secured Debt Agreements, or any document executed in connection
with the
foregoing or any Bank Guaranteed Obligation or Noteholder
Guaranteed Obligation,
whether such indebtedness, liabilities and obligations are
direct or indirect,
joint, several or joint and several, or now exist or hereafter
arise, all
renewals and extensions thereof, and all interest on the
Revolving Loans and the
Senior Notes and all Yield-Maintenance Amounts. The term "Senior
Indebtedness"
shall include all of the foregoing indebtedness, liabilities and
obligations
whether or not allowed as a claim in any bankruptcy, insolvency,
receivership or
similar proceeding.
"Senior Notes" has the meaning set forth in the Preliminary
Statement
of this Agreement.
"Sharing Date" means the first date on which a Sharing Event
shall
occur.
"Sharing Event" means (a) an Enforcement, (b) the occurrence of
any
Event of Default under the Credit Agreement or the Note
Agreements and the
receipt by the Collateral Agent of a Notice to Enforce or (c)
any refusal by any
Bank to advance or continue any Revolving Loans or issue any
Letter of Credit
requested by any Obligor (other than the Parent) (irrespective
of whether the
conditions precedent thereto specified in the Credit Agreement
have been
satisfied) where such Revolving Loans or issuance would not
cause the
limitations set forth in Section 2.01 of the Credit Agreement to
be exceeded.
"Special Cash Collateral Account" has the meaning set forth in
Section
3.01(c).
"Subsidiary" means, as to any Person, any corporation,
association or
other business entity in which such Person or one or more of its
Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient
equity or voting
interests to enable it or them (as a group) ordinarily, in the
absence of
contingencies, to elect a majority of the directors (or Persons
performing
similar functions) of such entity, and any partnership or joint
venture if more
than a 50% interest in the profits or capital thereof is owned
by such Person or
one or more of its Subsidiaries or such Person and one or more
of its
Subsidiaries (unless such partnership can and does ordinarily
take major
business actions without the prior approval of such Person or
one or
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more of its Subsidiaries). Unless the context otherwise clearly
requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of
the Company.
"Third-Party Guarantee" has the meaning set forth in Section
3.03.
"Trademark Security Agreement" means that certain Trademark
Collateral
Security and Pledged Agreement, dated as of the date hereof,
executed by the
Obligors in favor of the Collateral Agent, as amended, restated,
supplemented,
replaced, refinanced, refunded or otherwise modified from time
to time.
"Transferee" has the meaning set forth in Section 5.07.
"2002 Note Agreement" has the meaning set forth in the
Preliminary
Statement of this Agreement.
"2002 Notes" has the meaning set forth in the Preliminary
Statement of
this Agreement.
"Yield-Maintenance Amount" shall mean the "Yield-Maintenance
Amount",
as defined in the Note Agreements.
Section 1.02. Certain Other Terms. The words "hereof," "herein"
and
"hereunder" and words of similar import when used in this
Agreement shall refer
to this Agreement as a whole and not in any particular provision
of this
Agreement. Section references are to this Agreement unless
otherwise specified.
All terms defined in this Agreement in the singular shall have
comparable
meanings when used in the plural and vice versa, unless
otherwise specified.
ARTICLE II
APPOINTMENT OF FLEET NATIONAL BANK AS COLLATERAL AGENT
FOR THE LENDERS
Section 2.01. Appointment of Collateral Agent. Subject in all
respects
to the terms and provisions of this Agreement, each of the
Lenders hereby
appoint Fleet National Bank to act as agent for the benefit of
each of the
Lenders with respect to the liens upon and the security
interests in the
Collateral and the rights and remedies granted under and
pursuant to the
Collateral Documents, and Fleet National Bank hereby accepts
such appointment
and agrees to act as such agent. The Collateral Agent is
authorized to take such
action on behalf of each of the Lenders and to exercise all such
powers as are
hereunder and under any of the other Collateral Documents and
any related
documents delegated to the Collateral Agent, together with such
powers as are
reasonably incident thereto, including the authority, without
the necessity of
any notice to or further consent of the Lenders, from time to
time to take any
action with respect to any Collateral or the Collateral
Documents which may be
necessary to perfect, maintain perfected or insure the priority
of the security
interest in and liens upon the Collateral granted pursuant to
the Collateral
Documents, provided that no duties or responsibilities not
expressly assumed
herein or therein shall be implied to have been assumed by the
Collateral Agent.
The relationship between the Collateral Agent and each of the
Lenders is that of
an independent contractor. The use of the term "Collateral
Agent" is for
convenience only and is used to
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describe, as a form of convention, the independent contractual
relationship
between the Collateral Agent and each of the Lenders. Nothing
contained in this
Agreement nor the other Secured Debt Agreements shall be
construed to create an
agency, trust or other fiduciary relationship between the
Collateral Agent and
any of the Lenders. As an independent contractor empowered by
the Lenders to
exercise certain rights and perform certain duties and
responsibilities
hereunder and under the other Secured Debt Agreements, the
Collateral Agent is
nevertheless a "representative" of the Lenders, as that term is
defined in
Article 1 of the Uniform Commercial Code, for purposes of
actions for the
benefit of the Lenders and the Collateral Agent with respect to
all collateral
security and guaranties contemplated by the Secured Debt
Agreements. Such
actions include the designation of the Collateral Agent as
"secured party",
"mortgagee" or the like on all financing statements and other
documents and
instruments, whether recorded or otherwise, relating to the
attachment,
perfection, priority or enforcement of any security interests,
mortgages or
deeds of trust in collateral security intended to secure the
payment or
performance of any of the Obligations, all for the benefit of
the Lenders and
the Collateral Agent. The appointment of the Collateral Agent
pursuant to this
Agreement shall be effective with respect to all financing
statements filed in
any filing office with respect to any Obligor, if any, prior to
the date of this
Agreement on and as of the date filed. The Collateral Agent in
its individual
capacity and its affiliates may accept deposits from, lend to,
and generally
engage in any kind of lending, banking, or trust business with,
the Obligors and
any of their affiliates as if it were not acting as the
Collateral Agent. With
respect to its commitment and in its capacity as a Bank, the
Collateral Agent
shall have and may exercise the same rights and powers under
this Agreement and
is subject to the same obligations and liabilities as applicable
to any other
Lender. To the extent legally necessary to enable the Collateral
Agent to
enforce or otherwise foreclose and realize upon any of the liens
or security
interests in the Collateral in any legal proceeding which the
Collateral Agent
either commences or joins as a party in accordance with the
terms hereof, each
of the Lenders agree to join as a party in such proceeding and
take such action
therein concurrently to enforce and obtain a judgment for the
payment of the
Senior Indebtedness held by it.
Section 2.02. Notices to the Lenders and the Company. The
Collateral
Agent shall promptly and in any event no later than five (5)
days following
receipt thereof furnish to each of the Banks and the
Noteholders:
(a) a copy of each Notice to Enforce received by the Collateral
Agent;
(b) a copy of each certificate received by the Collateral
Agent
rescinding a Notice to Enforce;
(c) a copy of any direction, notice, consent, waiver or any
other
document delivered to the Collateral Agent by any Lender;
and
(d) such other notices required by the terms of this Agreement
to be
furnished by the Collateral Agent.
The Collateral Agent shall promptly and in any event no later
than five (5) days
following receipt thereof furnish to the Company a copy of the
documents listed
in (a) and (b) above, and to the extent requested by a Lender,
the items in (c)
and (d) as well.
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Section 2.03. Duties of Collateral Agent. The Collateral Agent
shall
not be obligated to take any action under this Agreement except
for the
performance of such duties as are specifically set forth herein
or therein.
Subject to the provisions of Section 2.06, the Collateral Agent
shall take any
action under or with respect to this Agreement which is
requested by the
Required Senior Lenders and which is not inconsistent with or
contrary to the
provisions of this Agreement; provided that the Collateral Agent
shall not amend
or waive any provision of the Collateral Documents except with
the consent of
the Required Senior Lenders. At any time when a Notice to
Enforce shall have
been given and shall be outstanding, the Collateral Agent shall,
subject in all
cases to the provisions of Sections 2.04 and 2.06, exercise or
refrain from
exercising all such rights, powers and remedies as shall be
available to it
hereunder in accordance with any written instructions received
from the Required
Senior Lenders. The Collateral Agent shall have the right to
decline to follow
any such direction if the Collateral Agent, being advised by
counsel, determines
that the directed action is not permitted by the terms of this
Agreement, may
not lawfully be taken or would involve it in personal liability,
and the
Collateral Agent shall not be required to take any such action
unless any
indemnity which is required hereunder in respect of such action
has been
provided. Subject to Section 2.06 hereof, the Collateral Agent
may rely on any
such direction given to it by the Required Senior Lenders and
shall be fully
protected, and shall under no circumstances (absent the gross
negligence and
willful misconduct of the Collateral Agent) be liable to the
Company, any holder
of any Senior Indebtedness or any other Person for taking or
refraining from
taking action in accordance therewith. Absent written
instructions from the
Required Senior Lenders (i) at a time when a Notice to Enforce
shall be
outstanding or (ii) in the case of an emergency in order to
protect any of the
Collateral, the Collateral Agent may take, but shall have no
obligation to take,
any and all such actions hereunder or any of them or otherwise
as it shall deem
to be in the best interests of the Lenders. Except as provided
in the preceding
sentence, in the absence of written instruction (which may
relate to the
exercise of specific remedies or to the exercise of remedies in
general) from
the Required Senior Lenders, the Collateral Agent shall not
exercise remedies
available to it hereunder with respect to the Collateral or any
part thereof.
The Collateral Agent shall not, without the written consent of
all of the
Lenders, release, reconvey, subordinate or terminate by
affirmative action or
consent to any lien upon or security interest in any Collateral
granted under
any Collateral Documents (except upon disposition of such
Collateral after an
Event of Default pursuant to direction given by the Required
Senior Lenders),
and the Collateral Agent shall not accept any Senior
Indebtedness in whole or
partial consideration for the disposition of any Collateral
without the written
consent of all of the Lenders.
Section 2.04. Instructions to the Collateral Agent. To the
extent the
Collateral Agent receives conflicting instructions from the
Lenders, the
Collateral Agent shall be entitled to rely on the instructions
of the Required
Senior Lenders, and it shall take Required Senior Lenders to
rescind a Notice to
Enforce.
Section 2.05. Limitations on Responsibility of Collateral Agent.
The
Collateral Agent shall not be responsible in any manner
whatsoever for the
correctness of any recitals, statements, representations or
warranties contained
herein, except for those made by it herein. The Collateral Agent
makes no
representation as to the value or condition of the Collateral or
any part
thereof, as to the title of the Obligors to the Collateral, as
to the security
afforded by this
10
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Agreement or any Collateral Document or as to the validity,
execution,
enforceability, legality or sufficiency of this Agreement, and
the Collateral
Agent shall incur no liability or responsibility in respect of
any such matters.
The Collateral Agent shall not be responsible for insuring the
Collateral, for
the payment of taxes, charges, assessments or liens upon the
Collateral or
otherwise as to the maintenance of the Collateral, except as
provided in the
immediately following sentence when the Collateral Agent has
possession of the
Collateral. The Collateral Agent shall have no duty to the
Company or to the
holders of any of the Senior Indebtedness as to any Collateral
in its possession
or control or in the possession or control of any agent or
nominee of the
Collateral Agent or any income thereon or as to the preservation
of rights
against prior parties or any other rights pertaining thereto,
except the duty to
accord such of the Collateral as may be in its possession
substantially the same
care as it accords its own assets and the duty to account for
monies received by
it. The Collateral Agent shall not be responsible for any loss
suffered with
respect to any investment permitted to be made under this
Agreement and shall
not be responsible for the consequences of any oversight or
error of judgment
whatsoever, except that the Collateral Agent shall be liable for
losses due to
its willful misconduct or gross negligence. The Collateral Agent
shall not be
required to ascertain or inquire as to the performance by the
Company of any of
the coven
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