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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
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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
