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INTERCREDITOR AGREEMENT

Intercreditor Agreement

INTERCREDITOR AGREEMENT | Document Parties: Bank of America, N.A | GB Merchant  Partners,  LLC | Quaker  Fabric  Corporation You are currently viewing:
This Intercreditor Agreement involves

Bank of America, N.A | GB Merchant Partners, LLC | Quaker Fabric Corporation

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Title: INTERCREDITOR AGREEMENT
Date: 11/15/2006
Industry: Apparel/Accessories    

INTERCREDITOR AGREEMENT, Parties: bank of america  n.a , gb merchant  partners   llc , quaker  fabric  corporation
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                                                                   EXHIBIT 10.44


                             INTERCREDITOR AGREEMENT


         INTERCREDITOR AGREEMENT (this "INTERCREDITOR   AGREEMENT"),   dated as of
November 9, 2006, among Bank of America, N.A., in its capacity as administrative
agent   (the   "REVOLVING   AGENT")   for   the   Revolving   Lenders   (as   hereinafter
defined),   GB Merchant   Partners,   LLC, in its capacity as agent (the "TERM LOAN
AGENT")   for the Term Loan   Lenders   (as   hereinafter   defined),   Quaker   Fabric
Corporation   of Fall River (the   "BORROWER"),   Quaker   Fabric   Corporation   (the
"PARENT")   and the other credit   parties   named on the   signature   pages of this
Intercreditor   Agreement (together with the Borrower and the Parent, the "CREDIT
PARTIES").

         WHEREAS, pursuant to an Amended and Restated Revolving Credit Agreement
dated as of the   date   hereof   (as   amended   and in   effect   from   time to time,
including any   replacement   agreement or   agreements   therefor,   the   "REVOLVING
CREDIT AGREEMENT"), among the lending institutions party thereto (the "REVOLVING
LENDERS"),   the   Revolving   Agent,   the Borrower and the Parent,   the   Revolving
Lenders   have   agreed,   upon the terms and subject to the   conditions   contained
therein, to make loans and otherwise to extend credit to the Borrower; and

         WHEREAS, pursuant to a Term Loan Agreement, dated as of the date hereof
(as amended and in effect from time to time, including any replacement agreement
or agreements   therefor,   the "TERM LOAN   AGREEMENT"),   among the Borrower,   the
Parent,   the Term Loan Agent and the lending   institutions   party   thereto   (the
"TERM LOAN   LENDERS"),   the Term Loan Lenders   have   agreed,   upon the terms and
subject to the conditions contained therein, to make term loans in the aggregate
amount of $24,600,000 to the Borrower; and

         WHEREAS,   it   is   a   condition   precedent   to   the   Revolving   Lenders'
willingness to make loans and otherwise   extend credit to the Borrower   pursuant
to the Revolving Credit Agreement and the Term Loan Lenders' willingness to make
term loans to the Borrower   pursuant to the Term Loan   Agreement that the Credit
Parties,    the   Revolving   Agent   and   the   Term   Loan   Agent   enter   into   this
Intercreditor Agreement; and

         WHEREAS,   in order to induce   the   Revolving   Lenders to make loans and
otherwise   extend   credit   to the   Borrower   pursuant   to the   Revolving   Credit
Agreement   and the Term   Loan   Lenders   to make the term   loans to the   Borrower
pursuant to the Term Loan Agreement, the Credit Parties, the Revolving Agent and
the Term Loan Agent have agreed to enter into this Intercreditor Agreement;

         NOW,   THEREFORE,    in   consideration   of   the   foregoing,    the   mutual
agreements   herein   contained   and other good and   valuable   consideration,   the
receipt and   adequacy   of which are hereby   acknowledged,   the   parties   hereto,
intending to be legally bound, hereby agree as follows:

1.   DEFINITIONS.   Terms not otherwise   defined   herein have the same   respective
meanings   given to them in the   Revolving   Credit   Agreement.   In addition,   the
following terms shall have the following meanings:

         AGREEMENTS.   Collectively,   the Revolving Credit Agreement and the Term
Loan Agreement.

         BANK DEBT. At any time, as reasonably calculated by the Revolving Agent
at such time,   all   "Obligations"   under and as defined in the Revolving   Credit
Agreement at such time. Bank Debt shall   expressly   include any and all interest
accruing   or out of   pocket   costs or   expenses   incurred   after the date of any
filing by or against any Credit Party of any petition under any Insolvency   Law,
regardless of whether the   Revolving   Agent's or any   Revolving   Lender's   claim
therefor is allowed or allowable in the Insolvency Proceeding.

<PAGE>

         BANK LOAN   TERMINATION   DATE. The first date on which (a) the Revolving
Lenders have received   payment in full in cash of all of the Priority Bank Debt,
(b) the   Revolving   Agent or the   Revolving   Lenders   shall have   received   cash
collateral (or, in connection with Letters of Credit,   "back-to-back" Letters of
Credit from a   financial   institution   acceptable   to   Revolving   Agent) in such
amounts as the Revolving Agent determines is reasonably   necessary to secure the
Revolving   Lenders (and their   affiliates) in connection with (i) any issued and
outstanding   Letters of Credit   constituting   Priority   Bank Debt but not in any
event in an amount   greater   than 103% of the   aggregate   undrawn face amount of
such Letters of Credit (or such   Letters of Credit   shall have been   returned to
the Issuing Bank for cancellation) and (ii) Derivative Agreements but not in any
event   in   an   amount   greater   than   100%   of   the   applicable   Credit   Party's
obligations   to the   Revolving   Agent   and   the   Revolving   Lenders   (and   their
affiliates)   under such   Derivative   Agreements,   and (c) the   commitment of the
Revolving Lenders to make any loans or provide other financial accommodations to
the Borrower shall have been terminated.

         COLLATERAL.   All assets and   properties   of any kind   whatsoever of any
Credit   Party that is at any time   subject   to a lien in favor of the   Revolving
Agent or the Term Loan Agent.

         EXCLUDED   BANK   DEBT.   At   any   time,   (i)   the   aggregate   outstanding
principal   amount of Revolving   Loans and the   aggregate   undrawn face amount of
Letters   of Credit   made,   issued or   incurred   pursuant   to the Loan   Documents
intentionally   and with actual   knowledge   of the account   officers of Revolving
Agent active on the account of the Credit Parties that such making,   issuance or
incurrence   would cause such amount of Revolving   Loans and Letters of Credit to
exceed the Maximum Bank Debt at the time of such making,   issuance or incurrence
at such time and (ii) any prepayment or early   termination   fee set forth in the
Revolving Credit Agreement;   PROVIDED THAT, Excluded Bank Debt shall not include
any interest,   costs, fees, expenses,   or indemnities incurred by or owed to the
Revolving   Agent or the Revolving   Lenders   pursuant to the Loan Documents which
are charged to a Credit Party's loan account   through the advance of a Revolving
Loan.

         EXCLUDED   TERM LOAN DEBT. At any time,   (i) the   aggregate   outstanding
principal amount of indebtedness   under the Term Loan Documents in excess of the
result of   $24,600,000   MINUS all   repayments   and   prepayments of the principal
thereof as of such date and (ii) any   prepayment   or early   termination   fee set
forth in the Term Loan Agreement;   PROVIDED THAT,   Excluded Term Loan Debt shall
not include (a) any interest,   costs, fees, expenses, or indemnities incurred by
or owed to the Term Loan   Agent or the Term Loan   Lenders   pursuant   to the Loan
Documents   and (b) any amounts not to exceed   $2,500,000 in the aggregate at any
time advanced by the Term Loan Agent, in its reasonable business judgment in the
performance   of its duties   under the Term Loan   Agreement,   which the Term Loan
Agent determines to be reasonably   necessary to (1) preserve or protect the Term
Loan Primary   Collateral,   or any portion thereof, or (2) enhance the likelihood
of, or to maximize the amount of, repayment of the Term Loan Debt.

         INSOLVENCY   LAWS. (i) The U.S.   Bankruptcy   Code, (ii) any successor to
such statute,   (iii) any statute dealing with the   reorganization or liquidation
of debtors, and (iv) any other applicable insolvency or other similar law of any
jurisdiction   including,    without   limitation,   any   law   of   any   jurisdiction
permitting   a debtor   to   obtain a stay or a   compromise   of the   claims   of its
creditors against it.

         INSOLVENCY   PROCEEDING.   (a) Any   case or   proceeding   commenced   by or
against   any Person   under any   provision   of any   Insolvency   Laws,   or (b) any
proceeding   seeking   the   appointment   of   any   trustee,   receiver,   liquidator,
custodian or other insolvency   official with similar powers with respect to such
Person or any of its assets, or (c) any proceeding for liquidation,   dissolution
or other winding up of the business of such Person,   or (d) any   assignment   for
the benefit of creditors or any marshalling of assets of such Person.

                                      -2-
<PAGE>

         LIEN   ENFORCEMENT   ACTION.   (a) Any   action by   Revolving   Agent or any
Revolving   Lender or the Term Loan Agent or any Term Loan Lender to foreclose on
the   lien of such   Person   in any   Collateral,   (b)   any   action,   as part of an
exercise   of rights or   remedies,   by either   Revolving   Agent or any   Revolving
Lender or the Term Loan   Agent or any Term Loan   Lender to take   possession   of,
exercise    exclusive   or   partial   control   over,   sell   or   otherwise    realize
(judicially   or   non-judicially)    upon   any   Collateral    (including,    without
limitation,   by setoff or   notification   of   account   debtors   or other   Persons
obligated on Collateral),   and/or (c) the commencement by Revolving Agent or any
Revolving   Lender   or the Term Loan   Agent or any Term Loan   Lender of any legal
proceedings   against   any   Credit   Party or with   respect to any   Collateral   to
facilitate   the actions   described in (a) and (b) above;   PROVIDED that, for the
avoidance   of   doubt   but   without   limitation,   none   of   the   following   shall
constitute   a Lien   Enforcement   Action:   (i)   declaring   a default   or event of
default   under the Revolving   Credit   Agreement or the Term Loan   Agreement,   or
making demand for payment or accelerating   the maturity of any Bank Debt or Term
Loan Debt,   (ii) the receipt of payments of principal of or interest on the Bank
Debt or the Term Loan Debt, or payments of other   obligations   arising under the
Loan   Documents or the Term Loan   Documents,   except as otherwise   expressly set
forth in this   Intercreditor   Agreement,   (iii) the   implementation   of reserves
under the Revolving Credit Agreement,   (iv) the reduction of advance rates under
the Revolving   Credit   Agreement,   (v) the termination of the Commitments or the
cessation (whether temporary or permanent) of lending under the Revolving Credit
Agreement due to the existence of a Default or Event of Default, (vi) sending by
the   Revolving   Agent,   any Revolving   Lender or any of their   Affiliates of any
"activation"   notice   under a deposit   control   agreement to block access to any
deposit account of a Credit Party, or (vii) the exercise by Revolving Agent, any
Revolving   Lender or any of their   respective   Affiliates of any right of offset
with respect to Bank Debt not arising under the Revolving Credit Agreement.

          MAXIMUM REVOLVING CREDIT AMOUNT. On any date of determination   thereof,
an amount equal to the sum of (a) the lesser of (i) the Revolving Borrowing Base
Amount at such time and (ii) $25,000,000 less permanent   reductions in the Total
Commitment under the Revolving Credit Agreement (other than in connection with a
refinancing   in total of the Bank Debt and other than a reduction or termination
occurring after an Event of Default), PLUS (b) $2,500,000.

         MAXIMUM   BANK DEBT.   On any date of   determination   thereof,   an amount
equal to the Maximum Revolving Credit Amount on such date, regardless of whether
allowed or allowable in any Insolvency Proceeding;   PROVIDED,   HOWEVER, that the
Maximum Bank Debt shall be calculated   without giving effect to any decreases in
the Maximum   Revolving   Credit Amount   occurring   after the making,   issuance or
incurrence   of any   Revolving   Loans or Letters   of   Credit,   as a result of (i)
Accounts   Receivable or inventory   that are deemed by the Revolving   Agent to be
eligible on any date   thereafter   becoming or being deemed,   with the passage of
time,   ineligible   (whether   as a result of aging,   obsolescence,   disputes,   or
non-payment by account debtors or otherwise),   the return of uncollected   checks
or other items of payment applied to the reduction of Revolving   Loans, or other
similar   involuntary   or   unintentional    actions;   (ii)   the   Revolving   Agents
exercising   discretion   under the   Revolving   Credit   Agreement   to (x)   declare
Accounts   Receivable   previously   deemed to be Eligible   Accounts   Receivable or
inventory   previously deemed to be Eligible Inventory as no longer   constituting
Eligible Accounts Receivable or Eligible Inventory,   (y) reduce advance rates or
(z) impose,   release,   increase or   decrease   the amount of reserves   (except as
otherwise   expressly   set   forth in this   Intercreditor   Agreement);   (iii)   any
failure   of the   Credit   Parties to report   accurately   the   amount of   Eligible
Accounts Receivable or Eligible Inventory on any Borrowing Base Certificate;   or
(iv) any revaluations or re-appraisals of Collateral.

                                      -3-
<PAGE>

         OCCUPANCY   COMMENCEMENT DATE. The earlier to occur of (a) the Term Loan
Agent's   commencement of any Lien Enforcement   Action or (b) the commencement of
an Insolvency Proceeding.

         PRIORITY BANK DEBT.   All Bank Debt other than Excluded Bank Debt.

         PRIORITY TERM LOAN DEBT.   All Term Loan Debt other than   Excluded Term
Loan Debt.

         REVOLVING   BORROWING   BASE AMOUNT.   At any time, an amount equal to the
Borrowing Base (as defined in the Revolving   Credit   Agreement and as determined
by the Revolving   Agent from time to time);   PROVIDED   that the   Borrowing   Base
shall be calculated without giving effect to (a) any amendments or modifications
to the   definition of   "Borrowing   Base",   or any of the   component   definitions
thereof after the Closing Date, (b) any increase in the percentage advance rates
under the Revolving   Credit   Agreement   above the rates in effect on the Closing
Date,   or (c)   any   release   in   whole   or in   part   of,   or   decrease   in,   the
Availability Reserve after the Closing Date, in the case of (a), (b) and (c), in
a manner which would result in a greater   amount of credit being provided to the
Borrower as an advance   against the   Borrowing   Base as in effect on the Closing
Date;   PROVIDED,   HOWEVER,   the Revolving   Credit   Agent's   discretion to reduce
advance   rates,   establish   and release   reserves   (other than the   Availability
Reserve) and to determine eligibility pursuant to the Revolving Credit Agreement
shall not be limited.

         REVOLVING PRIMARY COLLATERAL.   All the Collateral   other than the Term
Loan Primary Collateral.

         REVOLVING    RELEASE    EVENT.    After   the   occurrence   and   during   the
continuance   of an   Event   of   Default,   but   prior   to the   commencement   of an
Insolvency   Proceeding,   the written request of the Revolving Agent delivered to
the Term Loan Agent   requesting that the Term Loan Agent release its lien on any
Revolving Primary   Collateral to be sold or otherwise   disposed of, such written
request to be delivered to the Term Loan Agent not less than five (5) days prior
to the proposed sale or disposition of any Revolving Primary Collateral.

         TERM LOAN DEBT. At any time, as reasonably   calculated by the Term Loan
Agent at such   time,   all   "Obligations"   under and as   defined in the Term Loan
Agreement   at such time.   Term Loan Debt   shall   expressly   include   any and all
interest   accruing or out of pocket costs or expenses incurred after the date of
any filing by or against any Credit Party of any petition   under any   Insolvency
Law, regardless of whether the Term Loan Agent's or any Term Loan Lender's claim
therefor is allowed or allowable in the Insolvency Proceeding.

         TERM LOAN DOCUMENTS. Collectively, the "Loan Documents" as such term is
defined in the Term Loan Agreement.
 
         TERM LOAN EVENT OF   DEFAULT.   An   "Event   of Default" as   such   term is
defined in the Term Loan Agreement.

         TERM LOAN PRIMARY   COLLATERAL.   All of the Real Estate,   Equipment   (as
defined in the UCC) and Fixtures   (as defined in the UCC) of the Credit   Parties
which is subject to a mortgage,   lien or security   interest pursuant to the Term
Loan Documents, together with all identifiable proceeds of the foregoing.

         TERM   LOAN   RELEASE    EVENT.    After   the   occurrence   and   during   the
continuance of a Term Loan Event of Default, but prior to the commencement of an
Insolvency   Proceeding,   the written request of the Term Loan Agent delivered to
the Revolving Agent   requesting that the Revolving Agent release its lien on any
Term Loan Primary   Collateral to be sold or otherwise   disposed of, such written
request to be delivered to the Revolving Agent not less than five (5) days prior
to the proposed sale or disposition of any Term Loan Primary Collateral.

                                      -4-
<PAGE>

         TERM LOAN   TERMINATION   DATE.   The first date on   which   the   erm Loan
Lenders have   received   payment in full in cash of all of the Priority Term Loan
Debt.

         UCC. The Uniform   Commercial   Code, as the same may, from time to time,
be enacted and in effect in the Commonwealth of Massachusetts; PROVIDED, that to
the   extent   that the UCC is used to   define   any term   herein   and such term is
defined   differently   in   different   Articles   or   Divisions   of   the   UCC,   the
definition of such term contained in Article or Division 9 shall govern.

                            2. SECURITY INTERESTS; PRIORITIES.

         2.1.   ACKNOWLEDGEMENT   OF   LIENS.   Subject   to the   provisions   of this
Intercreditor   Agreement,   the Revolving Agent hereby acknowledges that the Term
Loan Agent has been   granted   Liens upon all of the   Collateral   pursuant to the
Term Loan   Documents to secure the Term Loan Debt and further   acknowledges   and
agrees   that the Term Loan Debt is   entitled   to be secured on a first   priority
basis by the Term Loan Primary   Collateral.   Subject to the   provisions   of this
Intercreditor   Agreement,   the Term   Loan   Agent   hereby   acknowledges   that the
Revolving   Agent has been granted Liens upon all of the   Collateral   pursuant to
the Loan Documents to secure the Bank Debt, and further   acknowledges and agrees
that the Bank Debt is   entitled to be secured on a first   priority   basis in all
the Revolving Primary Collateral.

         2.2. PRIORITIES.

         (a) The parties   agree that,   at all times,   whether   before   during or
after any   Insolvency   Proceeding,   liens on the   Revolving   Primary   Collateral
securing   the Priority   Bank Debt shall be senior to the liens on the   Revolving
Primary   Collateral   securing   the Term   Loan Debt   irrespective   of the time or
manner of perfection or the execution, delivery or issuance of any thereof.

         (b) The parties   agree that,   at all times,   whether   before   during or
after   any   Insolvency   Proceeding,   liens on the Term Loan   Primary   Collateral
securing   the   Priority   Term Loan Debt shall be senior to the liens on the Term
Loan   Primary   Collateral   securing   the Bank Debt   irrespective   of the time or
manner of perfection or the execution, delivery or issuance of any thereof.

         2.3. APPLICATION OF COLLATERAL PROCEEDS.

         (a) All   proceeds   of the   Revolving   Primary   Collateral   received   or
collected by any Credit Party,   the Revolving Agent or the Term Loan Agent shall
be applied:   FIRST,   to the payment of the   Priority   Bank Debt,   including   the
provision of cash collateral in an amount equal to 103% of the undrawn amount of
any Letters of Credit constituting   Priority Bank Debt and in an amount equal to
100% of the obligations in respect of Cash Management   Obligations   constituting
Priority Bank Debt, and to the payment of interest,   costs,   fees,   expenses and
indemnities   constituting   Priority Bank Debt; SECOND,   after a Lien Enforcement
Action, to the payment of the Priority Term Loan Debt,   including the payment of
interest,   costs, fees, expenses and indemnities constituting Priority Term Loan
Debt,   in each case,   to the extent due and   payable;   THIRD,   to the payment of
Excluded Bank Debt and, with respect to Excluded Bank Debt   consisting of issued
and outstanding   Letters of Credit,   the provision of cash collateral in respect
of such   Letters   of Credit (in an amount   not to exceed   103% of the   aggregate
undrawn   face   amount of such   Letters   of   Credit);   and   FOURTH,   after a Lien
Enforcement Action, to the payment of Excluded Term Loan Debt.

         (b) All   proceeds   of the Term   Loan   Primary   Collateral   received   or
collected by any Credit Party,   the Term Loan Agent or the Revolving Agent shall
be applied:   FIRST,   to the payment of the Priority   Term Loan Debt,   and to the
payment of interest, costs, fees, expenses and indemnities constituting Priority
Term Loan Debt, in each case, to the extent then due and payable;   SECOND, after
a Lien Enforcement   Action, to the payment of the Priority Bank Debt,   including
the payment of interest,   costs,   fees,   expenses and   indemnities   constituting
Priority Bank Debt, in each case, to the extent then due and payable;   THIRD, to
the payment of Excluded   Term Loan Debt;   and FOURTH,   after a Lien   Enforcement
Action, to the payment of Excluded Bank Debt.

                                       -5-
<PAGE>

         2.4. FURTHER ASSURANCES.

         (a) The Term Loan Agent hereby   agrees,   upon request of the   Revolving
Agent at any time and from time to time,   to   execute   such other   documents   or
instruments   as may be requested by the   Revolving   Agent further to evidence of
public   record or otherwise   the senior   priority of the liens on the   Revolving
Primary Collateral securing the Priority Bank Debt as contemplated hereby.

         (b) The Revolving   Agent hereby   agrees,   upon request of the Term Loan
Agent at any time and from time to time,   to   execute   such other   documents   or
instruments   as may be requested   by the Term Loan Agent   further to evidence of
public   record or   otherwise   the senior   priority of the liens on the Term Loan
Primary Collateral securing the Priority Term Loan Debt as contemplated hereby.

         2.5.   BOOKS AND RECORDS.   The Term Loan Agent and the   Revolving   Agent
further agree to maintain on their   respective   books and records such notations
as the Revolving Agent or the Term Loan Agent may reasonably   request to reflect
the lien subordination contemplated hereby and to perfect or preserve the rights
of the Revolving Agent and the Term Loan Agent hereunder.

         2.6. LIEN   VALIDITY.   The   subordination   provisions   contained   herein
relate solely to the priority of liens   granted to the   Revolving   Agent and the
Term   Loan   Agent   by   the   Credit    Parties.    It   is   the   Revolving    Agent's
responsibility   to ensure the validity,   perfection   and   enforceability   of the
liens granted by the Credit   Parties to the   Revolving   Agent for the benefit of
itself and the Revolving Lenders. It is the Term Loan Agent's   responsibility to
ensure the validity,   perfection and   enforceability of the liens granted by the
Credit   Parties   to the Term Loan   Agent for the   benefit of itself and the Term
Loan Lenders.   Except as expressly   set forth herein,   (a) neither the Revolving
Agent nor any   Revolving   Lender shall have any duties to the Term Loan Agent or
the Term Loan Lenders with   respect to the   Collateral   and (b) neither the Term
Loan Agent nor any Term Loan Lender shall have any duties to the Revolving Agent
or the Revolving Lenders with respect to the Collateral. The Term Loan Agent and
the Term Loan Lenders agree that they will not contest the validity, perfection,
priority   or   enforceability   of the   claims   of the   Revolving   Agent   and   the
Revolving   Lenders with respect to the Priority   Bank Debt or the liens upon the
Collateral   in   favor   of the   Revolving   Agent.   The   Revolving   Agent   and the
Revolving   Lenders   agree that they will not contest the   validity,   perfection,
priority   or   enforceability   of the   claims of the Term Loan Agent and the Term
Loan Lenders   with respect to the Priority   Term Loan Debt or the liens upon the
Collateral in favor of the Term Loan Agent.

         2.7. NOT DEBT SUBORDINATION.

         (a)   Nothing   in   this   Intercreditor   Agreement   shall   be   deemed   to
subordinate   the right of Term Loan   Lenders   to receive   payment   from a source
other   than the   Revolving   Primary   Collateral   (whether   before   or after   the
occurrence of any default, event of default or Insolvency Proceeding),   it being
the   intent   of   the   parties   hereto   that,   to the   extent   provided   in   this
Intercreditor   Agreement,   the lien of the Term Loan Agent   with   respect to the
Revolving Primary   Collateral shall be junior to the lien of the Revolving Agent
with respect to the Revolving Primary Collateral to the extent of the respective
lien priorities provided for in this Intercreditor Agreement.

                                      -6-
<PAGE>

         (b)   Nothing   in   this   Intercreditor   Agreement   shall   be   deemed   to
subordinate   the right of   Revolving   Lenders to receive   payment   from a source
other   than the Term   Loan   Primary   Collateral   (whether   before   or after   the
occurrence of any default, event of default or Insolvency Proceeding),   it being
the   intent   of   the   parties   hereto   that,   to the   extent   provided   in   this
Intercreditor   Agreement,   the lien of the   Revolving   Agent with respect to the
Term Loan Primary   Collateral shall be junior to the lien of the Term Loan Agent
with respect to the Term Loan Primary Collateral to the extent of the respective
lien priorities provided for in this Intercreditor Agreement.

         2.8. COLLATERAL RELEASE.

         (a) Following the   occurrence of a Revolving   Release   Event,   upon the
request of the Revolving Agent with respect to the Revolving Primary   Collateral
identified in such request   (which   request shall specify the proposed   terms of
the   proposed   transfer,   sale or other   disposition   and the type and amount of
consideration   to be received in connection   therewith),   the Term Loan Agent on
behalf of the Term Loan Lenders shall:

                  (i) release or otherwise terminate its liens on such Revolving
         Primary   Collateral (to the same extent that the Revolving   Agent shall
         release or terminate its liens on such Collateral),   to the extent such
         Revolving   Primary   Collateral   is to be sold or otherwise   disposed of
         either by (i) the   Revolving   Agent or its   agents,   or (ii) any Credit
         Party with the consent of the requisite Revolving Lenders;

                  (ii) deliver such release documents as the Revolving Agent may
         reasonably   require   in   connection   therewith;   PROVIDED   that   if the
         closing of the sale or disposition of such Revolving Primary Collateral
         is not consummated   within thirty (30) days of receipt by the Revolving
         Agent of such release documents from the Term Loan Agent, the Revolving
         Agent   shall   promptly   return all release   documents   to the Term Loan
          Agent; and

                  (iii)   be   deemed   to   have   consented   under   the   Term   Loan
         Agreement to such sale or other disposition;   PROVIDED that such deemed
         consent   shall lapse in the event such sale or other   disposition   does
         not occur within thirty (30) days of receipt by the Revolving   Agent of
         the relevant release documents from the Term Loan Agent.

         (b) The effectiveness of any such release,   termination   and/or consent
by the Term Loan Agent   under   clause (a) above shall be subject to (i) the sale
or other   disposition   of the   Revolving   Primary   Collateral   described in such
request on the terms described in such request or on substantially similar terms
and in a commercially   reasonable manner, (ii) the application of all of the net
proceeds of such sale or other   disposition   promptly by the Revolving   Agent or
the Term Loan Agent as   specified in SECTION   2.3(A)   hereof and Section 12.4 of
the Revolving   Credit   Agreement (as in effect on the date hereof) to reduce the
Priority   Bank Debt,   and (iii) the rights of the Term Loan Agent under   SECTION
2.9(A).

         (c) Following the   occurrence   of a Term Loan Release   Event,   upon the
request of the Term Loan Agent with respect to the Term Loan Primary   Collateral
identified in such request   (which   request shall specify the proposed   terms of
the   proposed   transfer,   sale or other   disposition   and the type and amount of
consideration   to be received in connection   therewith),   the Revolving Agent on
behalf of the Revolving Lenders shall:

                                      -7-
<PAGE>

                  (i) release or otherwise terminate its liens on such Term Loan
         Primary   Collateral   (to the same extent that the Term Loan Agent shall
         release or terminate its liens on such Collateral),   to the extent such
         Term Loan Primary   Collateral   is to be sold or   otherwise   disposed of
         either by (i) the Term Loan   Agent or its   agents,   or (ii) any   Credit
          Party with the consent of the requisite Term Loan Lenders;

                  (ii) deliver such release documents as the Term Loan Agent may
         reasonably   require   in   connection   therewith;   PROVIDED   that   if the
         closing of the sale or disposition of such Term Loan Primary Collateral
         is not consummated   within thirty (30) days of receipt by the Term Loan
         Agent of such release documents from the Revolving Agent, the Term Loan
         Agent shall   promptly   return all release   documents   to the   Revolving
         Agent; and

                  (iii) be deemed to have consented   under the Revolving   Credit
         Agreement to such sale or other disposition;   PROVIDED that such deemed
         consent   shall lapse in the event such sale or other   disposition   does
         not occur within   thirty (30) days of receipt by the Term Loan Agent of
         the relevant release documents from the Revolving Agent.

         (d) The effectiveness of any such release,   termination   and/or consent
by the   Revolving   Agent under clause (c) above shall be subject to (i) the sale
or other   disposition   of the Term Loan   Primary   Collateral   described   in such
request on the terms described in such request or on substantially similar terms
and in a commercially   reasonable manner, (ii) the application of all of the net
proceeds   of such sale or other   disposition   promptly by the Term Loan Agent or
the   Revolving   Agent as specified in SECTION   2.3(B) hereof and Section 12.4 of
the Term Loan Agreement (as in effect on the date hereof) to reduce the Priority
Term Loan Debt and (iii) the rights of the Revolv


 
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