EXHIBIT 10.4
[Execution]
INTERCREDITOR AND SUBORDINATION AGREEMENT
This Intercreditor and Subordination Agreement ("Intercreditor
Agreement") dated as of November 8, 2006 is by and between Fortress
Credit
Corp., a Delaware corporation, in its capacity as agent pursuant to
the Senior
Creditor Agreements (as hereinafter defined) acting for and on
behalf of the
parties thereto as lenders (in such capacity, the "Senior Creditor
Agent" as
hereinafter further defined), the parties to the Senior Creditor
Agreements as
lenders (collectively, together with Senior Creditor Agent, the
"Senior
Creditors" as hereinafter further defined), and The Law Debenture
Trust Company
of New York, a limited purpose trust company chartered by the New
York State
Banking Department, in its capacity as agent pursuant to the
Noteholder
Agreements (as hereinafter defined) acting for and on behalf of the
holders of
the Convertible Notes as defined below (in such capacity, the
"Noteholder Agent"
as hereinafter further defined), and the holders of the Convertible
Notes (the
"Noteholders" as hereinafter further defined). Senior Creditors,
Noteholder
Agent and the Noteholders are sometimes individually referred to
herein as
"Creditor" and collectively as "Creditors."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Aerobic Creations, Inc., to be known as Summit Global
Logistics, Inc., a Delaware corporation ("Summit") and certain of
its
subsidiaries as set forth on Exhibit A hereto (Summit, together
with such
subsidiaries being, collectively, "Borrowers" as hereinafter
further defined)
have entered or are about to enter into financing arrangements with
Senior
Creditors, pursuant to which Senior Creditors have made term loans
and may, upon
certain terms and conditions, make revolving loans and provide
other financial
accommodations to Borrowers secured by substantially all of the
assets and
properties of Borrowers, and the obligations of Borrowers to Senior
Creditors
are guaranteed by the subsidiaries of Summit set forth on Exhibit B
hereto
(collectively, "Guarantors" as hereinafter further defined, and
together with
Borrowers, collectively, "Debtors" as hereinafter further defined)
which
guarantees are secured by substantially all of the assets and
properties of
Guarantors;
WHEREAS, Summit has issued or is about to issue its Senior
Secured
Convertible Notes in the original aggregate principal amount of
$65,000,000
(collectively, the "Convertible Notes" as hereinafter further
defined) pursuant
to the Securities Purchase Agreement (Notes and Warrants), dated on
or about the
date hereof, by and among Summit, Maritime Logistics U.S. Holdings
Inc. and the
holders of the Convertible Notes (the "Securities Purchase
Agreement" as
hereinafter further defined);
WHEREAS, Creditors desire to enter into this Intercreditor
Agreement to
(i) confirm the relative priority of the security interests of each
Creditor in
the assets and properties of Debtors, (ii) provide for the orderly
sharing among
Creditors, in accordance with such priorities, of proceeds of such
assets and
properties upon any foreclosure thereon or other disposition
thereof, and (iii)
agree upon the terms of the subordination in right of payment of
the obligations
of Debtors to the Noteholder Agent and the Noteholders to the
obligations of
Debtors to Senior Creditors and related matters;
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NOW THEREFORE, in consideration of the mutual benefits accruing
to
Creditors hereunder and other good and valuable consideration, the
receipt and
sufficiency of which is hereby acknowledged, the parties hereto do
hereby agree
as follows:
1. DEFINITIONS
As used above and in this Intercreditor Agreement, the following
terms
shall have the meanings ascribed to them below:
1.1 "Agents" shall mean collectively Senior Creditor Agent and
Noteholder Agent, each sometimes being referred to herein
individually as an
"Agent".
1.2 "Agreements" shall mean, collectively, the Senior Creditor
Agreements and the Noteholder Creditor Agreements.
1.3 "Borrowers" shall mean, collectively, the companies listed
on
Exhibit A hereto, together with their respective successors and
assigns,
including, without limitation, a receiver, trustee or debtor in
possession on
behalf of any of such persons or on behalf of any such successor or
assign; each
sometimes being referred to herein individually as a
"Borrower".
1.4 "Collateral" shall mean all of the property and interests
in
property, real or personal, tangible or intangible, now owned or
hereafter
acquired by any Debtor in or upon which any of Creditors at any
time has a Lien,
and including, without limitation, all proceeds of such property
and interests
in property.
1.5 "Convertible Notes" shall mean, collectively, the Senior
Secured
Convertible Notes issued by MLI pursuant to the Securities Purchase
Agreement
payable to the Noteholders in the original aggregate principal
amount of
$65,000,000, as the same now exist or may hereafter be amended,
modified,
supplemented, renewed, restated or replaced.
1.6 "Creditors" shall mean, collectively, Senior Creditors and
Noteholder Creditors and their respective successors and
assigns.
1.7 "Debtors" shall mean, collectively, Borrowers and Guarantors;
each
sometimes being referred to herein individually as a "Debtor".
1.8 "Default Notice" shall mean any written notice from Senior
Creditor
Agent to Noteholder Agent of a Senior Creditor Default sent
pursuant to and in
accordance with Section 3.3 hereof.
1.9 "Enforcement Action" shall mean the exercise by any Senior
Creditor, or by any Debtor on behalf of and at the request of a
Senior Creditor,
of any of the enforcement rights and remedies with respect to the
Collateral
under the Senior Creditor Agreements of such Senior Creditor,
applicable law or
otherwise at any time on or after an event of default under the
Senior Creditor
Agreements, including, without limitation, any or all of the
following: any sale
or any appointment of a receiver in respect of any Collateral, the
making of any
petition or application to or vote in favor of any resolution for
the winding
up, dissolution, administration or implementation of a voluntary
arrangement in
relation to any Debtor, any motion to vacate any
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stay on enforcement of its Liens on the Collateral, solicitation of
bids from
third parties to conduct the liquidation of Collateral, the
engagement or
retention of third parties for the purposes of valuing, marketing,
promoting or
selling all or any material portion of the Collateral, the
commencement of any
action to foreclose on its Lien on all or any material portion of
the
Collateral, notification of account debtors to make payments to
such Senior
Creditor or its agents, any action to take possession of any
Collateral or
commencement of any legal proceedings or actions seeking payment of
any
indebtedness owing to such Senior Creditor or otherwise in
connection with the
preservation or protection of any of the Collateral, its value or
any rights or
remedies of such Senior Creditor therein.
1.10 "Guarantors" shall mean collectively, the companies listed
on
Exhibit B hereto and any other person that at any time after the
date hereof
becomes a party to a guarantee in favor of any Senior Creditor in
respect of any
of the Senior Debt or any Noteholder Creditor in respect of any of
the
Noteholder Debt, together with their respective successors and
assigns,
including, without limitation, a receiver, trustee or debtor in
possession on
behalf of any of such persons or on behalf of any such successor or
assign; each
sometimes being referred to herein individually as a
"Guarantor".
1.11 "Insolvency Proceeding" shall mean, as to any Person, any of
the
following: (a) any case or proceeding with respect to such Person
under the U.S.
Bankruptcy Code or any other Federal, State or foreign bankruptcy,
insolvency,
reorganization or other law affecting creditors' rights generally
or any other
or similar proceedings seeking any stay, reorganization,
arrangement,
composition or readjustment of the obligations and indebtedness of
such Person
or (b) any proceeding seeking the appointment of any trustee,
receiver,
administrator, manager, liquidator, custodian or other insolvency
official with
similar powers with respect to such Person or any or all of its
assets or
properties or (c) any proceedings for liquidation, dissolution or
other winding
up of the business of such Person or (d) any assignment for the
benefit of
creditors or any marshaling of assets of such Person.
1.12 "Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, security interest,
encumbrance
(including, but not limited to, easements, rights of way and the
like), lien
(statutory or other), security agreement or transfer intended as
security,
including without limitation, any conditional sale or other title
retention
agreement, the interest of a lessor under a capital lease or any
financing lease
having substantially the same economic effect as any of the
foregoing.
1.13 "Maximum Senior Debt" shall mean the amount equal to the sum
of:
(a) $65,000,000, plus (b) Senior Creditor Agent Advances of up to
the greater of
(i) $10,000,000 at any time outstanding or (ii) ten (10%) percent
of the Total
Commitments (as such term is defined in the Senior Creditor Loan
Agreement),
plus (c) such other indebtedness that may be permitted to be
incurred from time
to time on or after the date hereof under the terms of the
Convertible Notes as
Permitted Senior Indebtedness as such term is defined in the
Convertible Notes.
1.14 "Noteholder Agent" shall mean The Law Debenture Trust Company
of
New York, a limited purpose trust company chartered by the New York
State
Banking Department, in its capacity as collateral agent pursuant to
the
Securities Purchase Agreement and the other
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applicable Noteholder Agreements, and its successors and assigns,
including any
replacement or successor trustee or agent or any additional trustee
or agent.
1.15 "Noteholder Agreements" shall mean, collectively, the
following
(as the same now exist or may hereafter be amended, modified,
supplemented,
extended, renewed, restated or replaced): (a) the Convertible
Notes; (b) the
Securities Purchase Agreement; and (c) all agreements, documents
and instruments
at any time executed and/or delivered by any Debtor or any other
person to, with
or in favor of Noteholder Agent or any Noteholder in connection
therewith or
related thereto.
1.16 "Noteholder Creditors" shall mean, collectively, the
Noteholder
Agent and the Noteholders; sometimes being referred to herein
individually as a
"Noteholder Creditor".
1.17 "Noteholder Debt" shall mean all present and future
indebtedness,
obligations, and liabilities of each Debtor to any Noteholder
Creditor under any
of the Noteholder Agreements, whether or not the right of payment
in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed,
contingent,
matured, disputed, undisputed, legal, equitable, secured,
unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by
any Insolvency
Proceeding or other similar proceeding. Without limiting the
generality of the
foregoing, the Noteholder Debt includes (a) the obligation to pay
principal,
interest, charges, expenses, fees, attorneys' fees and
disbursements,
indemnities and other amounts payable by any such Person under any
of the
Noteholder Agreements, whether now existing or hereafter arising,
whether
arising before, during or after the initial or any renewal term of
the
Convertible Notes or after the commencement of any Insolvency
Proceeding with
respect to such Debtor (including the payment of interest and other
amounts
which would accrue and become due but for the commencement of such
case, whether
or not such amounts are allowed or allowable in whole or in part in
such case),
and (b) the obligation of such Person to reimburse any amount in
respect of any
of the foregoing that any Noteholder Creditor (in its discretion)
may elect to
pay or advance on behalf of such Person.
1.18 "Noteholders" shall mean, collectively, the persons listed
on
Exhibit C hereto and their respective successors and assigns, and
any other
person that at any time is the owner or holder, directly or
indirectly, of
record or beneficially, of any of the Convertible Notes; sometimes
being
referred to herein individually as a "Noteholder".
1.19 "Payment Default" shall have the meaning set forth in Section
3.3
hereof.
1.20 "Payment in full" or "payment in full" shall mean (a) as to
any
Senior Debt, (i) the final payment and satisfaction in full in
immediately
available funds of all of such Senior Debt (other than the Senior
Debt described
in clause (b) of this definition), (ii) payment in full in
immediately available
funds of cash collateral (or at the option of Senior Creditor
Agent, instead of
such cash collateral, the delivery to Senior Creditor Agent of a
letter of
credit issued for the account of Borrowers, in form and substance
reasonably
satisfactory to Senior Creditor Agent, by an issuer acceptable to
Senior
Creditor Agent and payable to Senior Creditor Agent as beneficiary)
for (A)
letters of credit issued under or pursuant to the Senior Creditor
Loan Agreement
in an amount equal to one hundred five (105%) percent of the amount
of such
letters of credit, (B) any payments that have been provisionally
credited to the
Senior Debt and for
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which Senior Creditor Agent or other Senior Creditors have not
received final
payment, (C) any continuing obligations (contingent or otherwise)
that Senior
Creditor Agent or any Senior Creditor has pursuant to any Control
Agreement (as
such term is defined in the Senior Creditor Loan Agreement), and
(D) liabilities
of Senior Creditors in respect of matters or circumstances known to
a Senior
Creditor at the time which are reasonably expected to result in any
loss, cost,
damage or expense (including attorneys' fees and legal expenses) to
any Senior
Creditor for which Senior Creditors are entitled to indemnification
by Debtors
and (iii) the termination of the commitments of the Senior
Creditors (but not
including for this purpose the refinancing or replacement of the
Senior
Creditors) and (b) as to the Noteholder Debt, the final payment and
satisfaction
in full in immediately available funds of all of such Noteholder
Debt. If after
receipt of any payment of, or proceeds of collateral applied to the
payment of,
either any Senior Debt or Noteholder Debt, as the case may be, any
Senior
Creditor or Noteholder Creditor is required to surrender or return
such payment
or proceeds to any person for any reason, then the Senior Debt or
Noteholder
Debt, as applicable, intended to be satisfied by such payment or
proceeds shall
be reinstated and continue as if such payment or proceeds had not
been received
by such Senior Creditor or Noteholder Creditor, as the case may be.
The term
"paid in full" as used herein shall have the same meaning as the
term "payment
in full". Notwithstanding anything to the contrary contained
herein, for
purposes of this definition, the Senior Debt shall not include the
principal
amount of the Senior Debt (but not interest, costs, expenses or
other charges at
any time payable by Debtor to Senior Creditor or charged by Senior
Creditor to
the loan account of Debtor maintained by Senior Creditor) in excess
of the
Maximum Senior Debt and the Noteholder Debt shall not include the
principal
amount of the Noteholder Debt in excess of $65,000,000 as reduced
by all
payments, whether mandatory or optional, in respect thereof.
1.21 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without
limitation, any
corporation which elects subchapter S status under the Internal
Revenue Code of
1986, as amended), limited liability company, limited liability
partnership,
business trust, unincorporated association, joint stock company,
trust, joint
venture, or other entity or any government or any agency or
instrumentality or
political subdivision thereof.
1.22 "Securities Purchase Agreement" shall mean the Securities
Purchase
Agreement (Notes and Warrants), dated on or about the date hereof,
by and among
Summit, Maritime Logistics U. S. Holdings, Inc. and the Noteholder
Creditors in
connection with the Convertible Notes and warrants, as the same now
exists or
may hereafter be amended, modified, supplemented, extended,
renewed, restated or
replaced.
1.23 "Senior Creditor Agent" shall mean Fortress Credit Corp.,
a
Delaware corporation, and its successors and assigns in its
capacity as agent
pursuant to the Senior Creditor Agreements acting for and on behalf
of the other
Senior Creditors and any successor or replacement agent.
1.24 "Senior Creditor Agent Advances" shall mean loans or advances
by
Senior Creditor Agent, which Senior Credit Agent, in its sole
discretion, deems
necessary or desirable either to preserve or protect the Collateral
or to
prepare for sale or lease or other disposition of the Collateral
(or any portion
thereof) or to enhance the likelihood or maximize the amount of
repayment by
Debtors of the Senior Debt.
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1.25 "Senior Creditor Agreements" shall mean, collectively, the
Senior
Creditor Loan Agreement and all agreements, documents and
instruments at any
time executed and/or delivered by any Debtor or any other person
to, with or in
favor of any Senior Creditor in connection therewith or related
thereto, as all
of the foregoing now exist or may hereafter be amended, modified,
supplemented,
extended, renewed, restated, refinanced, replaced or restructured
(in whole or
in part and including any agreements with, to or in favor of any
other lender or
group of lenders that at any time refinances, replaces or succeeds
to all or any
portion of the Senior Debt).
1.26 "Senior Creditor Loan Agreement" shall mean the Loan
Agreement,
dated on or about the date hereof, by and among Debtors and Senior
Creditors, as
the same now exists or may hereafter be amended, modified,
supplemented,
extended, renewed, restated or replaced.
1.27 "Senior Creditor Default" shall mean a Default or Event of
Default
as such terms are defined in the Senior Creditor Agreements and for
purposes of
Section 3.3(b) hereof shall include the failure of Summit or any
other Debtor to
cause a registration statement with respect to the Convertible
Notes to be
registered with, or declared effective by, the Securities Exchange
Commission in
accordance with the requirements of any of the Noteholder
Agreements.
1.28 "Senior Creditors" shall mean, collectively, Senior Creditor
Agent
and any other person party to the Senior Creditor Agreements as
lender (and
including any other lender or group of lenders that at any time
refinances,
replaces or succeeds to all or any portion of the Senior Debt or is
otherwise
party to the Senior Creditor Agreements as a lender).
1.29 "Senior Debt" shall mean all present and future
indebtedness,
obligations, and liabilities of each Debtor to any Senior Creditor
under any of
the Senior Creditor Agreements, whether or not the right of payment
in respect
of such claim is reduced to judgment, liquidated, unliquidated,
fixed,
contingent, matured, disputed, undisputed, legal, equitable,
secured, unsecured,
and whether or not such claim is discharged, stayed or otherwise
affected by any
Insolvency Proceeding or other similar proceeding. Without limiting
the
generality of the foregoing, the Senior Debt includes (a) the
obligation to pay
principal, interest, charges, expenses, fees, attorneys' fees and
disbursements,
indemnities and other amounts payable by any such Person under any
of the Senior
Creditor Agreements, whether now existing or hereafter arising,
whether arising
before, during or after the initial or any renewal term of the
Senior Creditor
Loan Agreement or after the commencement of any Insolvency
Proceeding with
respect to such Debtor (including the payment of interest and other
amounts
which would accrue and become due but for the commencement of such
case, whether
or not such amounts are allowed or allowable in whole or in part in
such case),
and (b) the obligation of such Person to reimburse any amount in
respect of any
of the foregoing that any Senior Creditor (in its discretion) may
elect to pay
or advance on behalf of such Person.
1.30 "Summit" shall mean Aerobic Creations, Inc., to be known as
Summit
Global Logistics, Inc., a Delaware corporation, together with its
successors and
assigns including, without limitation, a receiver, trustee or
debtor in
possession on behalf of such person or on behalf of any such
successor or
assigns.
1.31 Terms Generally. The definitions of terms herein shall
apply
equally to the singular and plural forms of the terms defined.
Whenever the
context may require, any pronoun shall
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include the corresponding masculine, feminine and neuter forms. The
words
"include", "includes" and "including" shall be deemed to be
followed by the
phrase "without limitation". The word "will" shall be construed to
have the same
meaning and effect as the word "shall". Unless the context requires
otherwise
(a) any definition of or reference to any agreement, instrument or
other
document herein shall be construed as referring to such agreement,
instrument or
other document as from time to time amended, supplemented or
otherwise modified,
(b) any reference herein to any Person shall be construed to
include such
Person's successors and assigns, and as to any Debtor shall be
deemed to include
a receiver, trustee or debtor-in-possession on behalf of any of
such person or
on behalf of any such successor or assign, (c) the words "herein",
"hereof" and
"hereunder", and words of similar import, shall be construed to
refer to this
Agreement in its entirety and not to any particular provision
hereof, (d) all
references herein to Sections shall be construed to refer to
Sections of this
Agreement and (e) the words "asset" and "property" shall be
construed to have
the same meaning and effect and to refer to any and all tangible
and intangible
assets and properties, including cash, securities, accounts and
contract rights.
2. SECURITY INTERESTS; PRIORITIES; REMEDIES
2.1 ACKNOWLEDGEMENT OF LIENS. Each Creditor hereby acknowledges
that
the Noteholder Agent, for the benefit of itself and the
Noteholders, has been
granted a Lien upon the Collateral to secure the Noteholder Debt
and Senior
Creditor Agent, for the benefit of itself and the other Senior
Creditors, has
been granted a Lien upon the Collateral to secure the Senior
Debt.
2.2 PRIORITY OF LIENS. Notwithstanding the order or time of
attachment,
or the order, time or manner of perfection, or the order or time of
filing or
recordation of any document or instrument, or other method of
perfecting a
security interest in favor of any Creditor in any Collateral,
and
notwithstanding any conflicting terms or conditions which may be
contained in
any of the Agreements, the Liens upon the Collateral of Senior
Creditor Agent
have and shall have priority over the Liens upon the Collateral of
the
Noteholder Agent and such Liens of Noteholder Agent are and shall
be, in all
respects, junior and subordinate to the Liens of Senior Creditor
Agent therein
to the full extent of the Senior Debt; PROVIDED, THAT, the
principal amount of
the Senior Debt (but not interest, costs, expenses or other charges
at any time
payable by any Debtor to any Senior Creditor or charged by Senior
Creditor Agent
to the loan account of any Debtor maintained by Senior Creditor
Agent except as
provided below) in excess of the Maximum Senior Debt at any time
outstanding
(together with the interest on such excess) shall not be entitled
to the benefit
of the priority of the security interest of Senior Creditor Agent
provided for
herein.
2.3 RIGHTS OF THIRD PARTIES; NO CONTEST OF LIEN. Except as
otherwise
expressly provided in Section 2.8, each Creditor shall be solely
responsible for
perfecting and maintaining the perfection of its Lien in and to
each item
constituting the Collateral in which such Creditor has been granted
a Lien. The
foregoing provisions of this Agreement are intended solely to
govern the
respective lien priorities as between the Creditors and shall not
impose on any
Senior Creditor any obligations in respect of the disposition of
proceeds of
foreclosure on any Collateral which would conflict with prior
perfected claims
therein in favor of any other person or any order or decree of any
court or
other governmental authority or any applicable law. Each Creditor
agrees that it
will not contest the validity, perfection, priority or
enforceability of the
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Liens upon the Collateral of the other Creditor and that as between
Senior
Creditors and Noteholder Creditors, the terms of this Intercreditor
Agreement
shall govern even if part or all of the Senior Debt or the Liens
securing
payment and performance thereof are not perfected or are avoided,
disallowed,
set aside or otherwise invalidated in any judicial proceeding or
otherwise.
2.4 RIGHT TO ENFORCE AGREEMENT. Until the payment in full of the
Senior
Debt, Senior Creditors shall have the exclusive right to manage,
perform and
enforce the terms of the Senior Creditor Agreements with respect to
the
Collateral, to exercise and enforce all privileges and rights
thereunder
according to their discretion and the exercise of their business
judgment,
including, without limitation, the exclusive right to take or
retake control or
possession of such Collateral and to hold, prepare for sale,
process, sell,
lease, dispose of, or liquidate such Collateral in accordance with
the rights of
Senior Creditors. Noteholder Creditors shall not have any right to
direct Senior
Creditor Agent to exercise any right, remedy or power with respect
to the
Collateral and each Noteholder Creditor consents to the exercise by
Senior
Creditor Agent of any such right, remedy or power. Noteholder
Creditors shall
not institute any suit or assert in any suit, bankruptcy,
insolvency or other
proceeding any claim against any Senior Creditor seeking damages
from or other
relief by way of specific performance, instructions or otherwise,
with respect
to, and Senior Creditors shall not be liable for, any action take
or omitted to
be taken by Senior Creditors with respect to the Collateral. On and
after the
payment in full of the Senior Debt and until the payment in full of
the
Noteholder Debt, the Noteholder Agent shall have the exclusive
right to manage,
perform and enforce the terms of the Noteholder Documents in
respect of the
Collateral, to exercise and enforce all privileges and rights
thereunder
according to its discretion and the exercise of its business
judgment,
including, without limitation, the exclusive right to take or
retake control or
possession of the Collateral and to hold, prepare for sale,
process, sell,
lease, dispose of, or liquidate the Collateral.
2.5
SALE AND RELEASE OF COLLATERAL.
(a) Notwithstanding anything to the contrary contained in any of
the
Agreements, until the payment in full of the Senior Debt, only
Senior Creditor
Agent shall have the right to restrict or permit, or approve or
disapprove, the
sale, transfer, lease, license or other disposition of Collateral,
provided that
(i) any sale, transfer, lease, license or other disposition of
Collateral shall
be conducted in a commercially reasonable manner and (ii) in no
event shall
Noteholder Agent or any Noteholder take any action to hinder, delay
or prevent
any sale, transfer, lease, license or other disposition of
Collateral, or the
terms hereof allowing such sale, transfer, lease, license or other
disposition
of Collateral, not be deemed fulfilled as a result of any claim by
Noteholder
Agent or any Noteholder that any such sale, transfer, lease,
license or other
disposition of Collateral has not been conducted in a commercially
reasonable
manner and (iii) the failure of Noteholder Agent or any Noteholder
to take such
action shall not be deemed to waive or release any claims of
Noteholder Agent or
such Noteholder as a result of any such sale, transfer, lease,
license or other
disposition of Collateral not being conducted in a commercially
reasonable
manner. After payment in full of the Senior Debt and until the
payment in full
of the Noteholder Debt, only Noteholder Agent shall have the right
to restrict
or permit, or approve or disapprove, the sale, transfer, lease,
license or other
disposition of Collateral. Any sale, transfer, lease, license or
other
disposition of Collateral by Noteholder Agent shall be conducted in
a
commercially reasonable manner.
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(b) As to any sale, transfer, lease, license or other disposition
of
any Collateral, Noteholder Agent shall (i) be deemed to have
automatically and
without further action released and terminated any Liens it may
have on the
Collateral to the extent such Collateral is sold, transferred,
leased, licensed
or otherwise disposed of either by Senior Creditor Agent, any agent
of Senior
Creditor Agent, or any Debtor with the consent of Senior Creditor
Agent, (ii) be
deemed to have authorized Senior Creditor Agent to file UCC
amendments and
terminations covering the Collateral so sold, transferred, leased,
licensed or
otherwise disposed of as to UCC financing statements between any
Debtor and
Noteholder Creditor to evidence such release and termination, (iii)
promptly
upon the request of Senior Creditor Agent execute and deliver such
other release
documents and confirmations of the authorization to file UCC
amendments and
terminations provided for herein, in each case as Senior Creditor
Agent may
require in connection with such sale, transfer, lease, license or
other
disposition by Senior Creditor Agent, Senior Creditor Agent's
agents or any
Debtor with the consent of Senior Creditor Agent to evidence and
effectuate such
termination and release, and (iv) be deemed to have consented under
the
Noteholder Agreements to such sale or other disposition; PROVIDED,
THAT, (A) any
such release or UCC amendment or termination by Noteholder Agent
shall not
extend to or otherwise affect any of the rights, if any, of
Noteholder Agent to
the proceeds from any such sale, transfer, lease, license or other
disposition
of Collateral and (B) the proceeds of such sale, transfer, lease,
license or
other disposition shall be applied to the Senior Debt to the extent
required
under the terms of the Senior Creditor Loan Agreement as in effect
on the date
hereof, except that, in addition to any other right of a Debtor to
reinvest such
proceeds provided for in the Senior Creditor Loan Agreement as in
effect on the
date hereof, Senior Creditor Agent may, at its option, agree to
allow up to
$1,000,000 of the proceeds from any such sale, transfer, lease,
license or other
disposition of Collateral (or related series of such transactions)
to be used
within one hundred eighty (180) days of the receipt of such
proceeds to reinvest
in the operations and business of a Debtor and (C) notwithstanding
anything to
the contrary in this Agreement, as to any sale, transfer, lease,
license or
other disposition of any Collateral in an Insolvency Proceeding, a
Noteholder
may exercise such rights and remedies as it may have as an
unsecured creditor in
such Insolvency Proceeding with respect to such sale, transfer,
lease, license
or other disposition of any Collateral.
(c) Noteholder Agent, for itself and on behalf of the
Noteholders,
hereby irrevocably constitutes and appoints the Senior Creditor
Agent and any
officer or agent of the Senior Creditor Agent, with full power of
substitution,
as its true and lawful attorney-in-fact with full irrevocable power
and
authority in the place and stead of the Noteholder Agent or such
holder or in
the Senior Creditor Agent's own name, from time to time in the
Senior Creditor
Agent's discretion, for the purpose of carrying out the terms of
this Section
2.5, to take any and all appropriate action and to execute any and
all documents
and instruments which may be necessary or desirable to accomplish
the purposes
of this Section 2.5, including any termination statements,
endorsements or other
instruments of transfer or release. Nothing contained in this
Agreement shall be
construed to modify the obligation of Senior Creditor Agent to act
in a
commercially reasonable manner in the exercise of its rights to
sell, lease,
license, exchange, transfer or otherwise dispose of any
Collateral.
2.6
LIMITATION ON REMEDIES.
9
<PAGE>
(a) Except as specifically provided in Section 2.6(b),
notwithstanding any rights or remedies available to the Noteholder
Agent or any
Noteholder under an
