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
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
the covenants or agreements contained herein or any of the Credit Documents.
Neither the Collateral Agent nor any officer, agent or representative thereof
shall be personally liable for any action taken or omitted to be taken by any
such person in connection with this Agreement except for such person's own gross
negligence or willful misconduct. Neither the Collateral Agent nor any officer,
agent or representative thereof shall be personally liable for any action taken
by any such person in accordance with any notice given by the Required Senior
Lenders pursuant to the terms of this Agreement even if, at the time such action
is taken by any such person, the Required Senior Lenders or Persons purporting
to be the Required Senior Lenders are not entitled to give such notice, except
where the account officer of the Collateral Agent active upon the Company's
account has actual knowledge that the Required Senior Lenders or Persons
purporting to be the Required Senior Lenders are not entitled to give such
notice. The Collateral Agent may execute any of the powers granted under this
Agreement and perform any duty hereunder or thereunder either directly or by or
through employees or agents, and shall not be responsible for the negligence or
misconduct of any employees or agents selected by it without gross negligence or
willful misconduct. The Collateral Agent may utilize the services of such
employees or agents as the Collateral Agent in its sole discretion may
reasonably determine, and all reasonable fees and expenses of any such employees
or agents shall be paid by the Obligors.
Section 2.06. Reliance by Collateral Agent; etc. Whenever in the
performance of its duties under this Agreement the Collateral Agent shall deem
it necessary or desirable that a matter be proved or established with respect to
any Person in connection with the taking, suffering or omitting of any action
hereunder by the Collateral Agent such matter may be conclusively deemed to be
proved or established by a certificate executed by an officer of such Person and
the Collateral Agent shall have no liability with respect to any action taken,
suffered or omitted in reliance thereon. The Collateral Agent may consult with
counsel and shall be fully protected in taking any action hereunder in
accordance with any advice of such counsel. The Collateral Agent shall have the
right but not the obligation at any time to seek instructions from any court of
competent jurisdiction concerning the administration of this Agreement, the
duties created hereunder, or any of the Collateral.
11
(a) Resolutions, etc. The Collateral Agent shall be fully
protected in relying upon any resolution, statement, certificate,
instrument, opinion, report, notice, request, consent, order or other
paper or document which it believes to be genuine and to have been
signed or presented by the proper party or parties. In the absence of
its gross negligence or willful misconduct, the Collateral Agent may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificate or
opinions furnished to the Collateral Agent in connection with this
Agreement.
(b) Events of Defaults. The Collateral Agent shall not be
deemed to have actual, constructive, direct or indirect notice of
knowledge of the occurrence of any Event of Default unless and until
the Collateral Agent shall have received a Notice to Enforce. The
Collateral Agent shall have no obligations whatsoever either prior to
or after receiving such a Notice to Enforce to inquire whether an Event
of Default has, in fact, occurred and shall be entitled to rely
conclusively, and shall be fully protected in so relying, on any
certificate so furnished to it and shall have no obligation, absent
written instructions from the Required Senior Lenders, to take or omit
to take any action with respect to such Notice to Enforce.
(c) No Obligation to Act. If the Collateral Agent has been
requested by the Required Senior Lenders to take any specific action
pursuant to any provision of this Agreement, the Collateral Agent shall
not be under any obligation to exercise any of the rights or powers
vested in it by this Agreement in the manner so requested unless, if so
requested by the Collateral Agent, it shall have been provided with an
indemnity satisfactory to it against the costs, expenses and
liabilities which may be incurred by it in compliance with such request
or direction.
(d) Disputes. If any dispute or disagreement shall arise as to
the allocation of any sum of money received by the Collateral Agent
hereunder, the Collateral Agent shall have the right to deliver such
sum to a court of competent jurisdiction and therein commence an action
for interpleader.
Section 2.07. Document Amendments. An amendment, supplement,
modification, restatement or waiver of any provision of any Collateral Document,
any consent to any departure by any Obligor therefrom, or the execution or
acceptance by the Collateral Agent of any Collateral Document not in effect on
the date hereof shall be effective if and only if, consented to in writing by
the Required Senior Lenders; provided, however, that, (i) no such amendment,
supplement, modification, restatement, waiver, consent or such Collateral
Document not in effect on the date hereof which imposes any additional
responsibilities upon the Collateral Agent shall be effective without the
written consent of the Collateral Agent and (ii) no such amendment, supplement,
modification, waiver or consent shall release, reconvey or terminate the
security interest in or lien on any Collateral from the lien or security
interest created by any Collateral Document not subject to the exception in
Section 2.03(ii) hereof or narrow the scope of the property or assets in which a
lien or security interest is granted pursuant to any Collateral Document without
the written consent of all Lenders.
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Section 2.08. Administrative Actions. The Collateral Agent shall have
the right, but not the obligation, to take such actions hereunder and under the
Collateral Documents, not inconsistent with the instructions of the Required
Senior Lenders or the terms of the Collateral Documents and this Agreement, as
the Collateral Agent in good xxxxx xxxxx necessary or appropriate to perfect or
continue the perfection of the liens on the Collateral for the benefit of the
Lenders.
Section 2.09. Resignation and Removal of Collateral Agent.
(a) The Collateral Agent (i) may resign at any time upon 60 days prior
written notice to the Lenders and the Company and (ii) may be removed at any
time upon the written request of the Required Senior Lenders sent to the
Collateral Agent and the other Lenders.
(b) If the Collateral Agent shall resign or be removed, the Required
Senior Lenders shall have the right to appoint a replacement Collateral Agent by
notice to the Collateral Agent and the other Lenders.
(c) No resignation or removal of the Collateral Agent shall become
effective until a replacement Collateral Agent shall have been selected as
provided herein and shall have executed and delivered to each Lender a joinder
agreement in the form attached hereto as Exhibit A. In the event that a
replacement Collateral Agent shall not have been selected as provided herein or
shall not have assumed such obligations within 60 days after the resignation or
removal of the Collateral Agent, then the Lender holding the largest outstanding
amount of Senior Indebtedness may appoint the replacement Collateral Agent.
(d) Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent and the retiring Collateral Agent
shall be discharged from its duties and obligations hereunder. The retiring or
removed Collateral Agent shall execute such assignments and amendments of UCC
financing statements and perform such other acts as are necessary or appropriate
to maintain the due perfection of the security interests in and liens on the
Collateral.
(e) Any replacement Collateral Agent shall be a Lender or a bank, trust
company, or insurance company having capital, surplus and undivided profits of
at least $500 million and a long-term bank deposit rating of not less than "A"
if rated by Standard & Poor's Ratings Group or Xxxxx'x Investors Service.
Section 2.10. Expenses and Indemnification by the Company. The Company
agrees (i) to reimburse the Collateral Agent, on demand, for any expenses
incurred by the Collateral Agent, including reasonable counsel fees and
disbursements and compensation of agents, arising out of, in any way connected
with, or as a result of, the execution or delivery of this Agreement or any
agreement or instrument contemplated hereby or thereby or the performance by the
parties hereto or thereto of their respective obligations hereunder or
thereunder or in connection with the enforcement or protection of the rights of
the Collateral Agent and the Lenders hereunder, (ii) to indemnify and hold
harmless the Collateral Agent and its directors, officers, employees and agents,
on demand, from and against any and all liabilities, obligations, losses,
damages,
13
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind of nature whatsoever which may be imposed on, incurred by or asserted
against the Collateral Agent in its capacity as the Collateral Agent or any of
them in any way relating to or arising out of this Agreement or any action taken
or omitted by them under this Agreement; provided that the Company shall not be
liable to the Collateral Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of the
Collateral Agent or any of its directors, officers, employees or agents, (iii)
to indemnify and hold harmless the Collateral Agent, on demand, from and against
any and all liabilities which may be imposed on or incurred by the Collateral
Agent (in its capacity as Collateral Agent) for the net amount of taxes (after
taking into account any deduction, credit or other tax reduction or benefit
available by reason of the imposition of any such tax) in any jurisdiction in
which the Collateral Agent would not otherwise be subject to tax except by
reason of its acting under this Agreement (directly or through agents); provided
that such indemnification for taxes (A) shall apply only in respect of taxes
attributable to the performance of the Collateral Agent's obligations hereunder
and (B) shall in no event cover any federal, state, local or other taxes imposed
upon the Collateral Agent with respect to or measured by its gross or net income
or profits. A detailed statement by the Collateral Agent that is submitted to
the Company with respect to the amount of such expenses and containing a basic
description thereof and the amount of its indemnification obligation shall be
prima facie evidence of the amount thereof owing to the Collateral Agent.
Section 2.11. Expenses and Indemnification by Lenders. Each of the
Lenders severally agrees (i) to reimburse the Collateral Agent, on demand, in
the amount of its pro rata share, for any expenses referred to in Section 2.10
which shall not have been reimbursed or paid by the Company or paid from the
proceeds of Collateral as provided herein and (ii) to indemnify and hold
harmless the Collateral Agent and its directors, officers, employees and agents,
on demand, in the amount of such pro rata share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements referred to in Section 2.10, to the extent the
same shall not have been reimbursed by the Company or paid from the proceeds of
Collateral as provided herein; provided that no Lender shall be liable to the
Collateral Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Collateral
Agent or any of its directors, officers, employees or agents as determined by a
final non-appealable order of a court of competent jurisdiction. For the
purposes of this Section 2.11, pro rata shares at any time shall be determined
based upon the principal amount of loans, letters of credit or other credits
outstanding at the time such expenses were incurred.
Section 2.12. Limited Agency. The Collateral Agent and the Lenders
agree that it is the intent of the Lenders to limit the scope of the powers of
the Collateral Agent to the specific powers delegated hereunder, together with
such powers as are reasonably incidental thereto, and the Collateral Agent does
not and shall not have any right or authority to bind any Lender in any other
manner or thing whatsoever.
Section 2.13. Collateral Agent's Fees. The Company agrees to pay to the
Collateral Agent the collateral agency fees separately agreed upon between the
Company and the Collateral
14
Agent (the "Collateral Agent's Fee") with respect to this Agreement and the
other Collateral Documents. In the event that the Collateral Agent shall resign
or be removed as Collateral Agent hereunder, the Obligors agree to pay the
successor Collateral Agent such collateral agency fees as such successor
Collateral Agent shall from time to time charge (in accordance with its normal
practice) for performance of services of the type required of it hereunder and
under the Collateral Documents. Any such fees shall be fully earned when due and
payable and shall not be subject to rebate, reduction, or refund for any reason,
nor shall the Collateral Agent be obligated to apply any amount of such fee to
expenses incurred by it that are otherwise reimbursable by any Obligor pursuant
to any other provision of this Agreement or any Collateral Document.
Section 2.14. Non-Reliance on Collateral Agent or any Other Lenders.
Each Lender agrees that it has, independently and without reliance upon the
Collateral Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition, and creditworthiness of each Obligor and as to the adequacy of the
Collateral, and has made its own decision to extend credit to the Obligors under
the Secured Debt Agreements and to enter into this Agreement and the Collateral
Documents to which it is a party, and that each Lender has been represented by
its own counsel in connection with the negotiation of the Secured Debt
Agreements, the initial perfection of the liens created by the Collateral
Documents, and the consummation of the closing of the transactions contemplated
by the Secured Debt Agreements. Each Lender also agrees that it will,
independently and without reliance upon the Collateral Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals, and decisions
in taking or not taking action under this Agreement and the Secured Debt
Agreements, and to make such investigation, as it deems necessary to inform
itself as to the business, operations, property, financial and other condition,
and creditworthiness of each Obligor. Except for notices, reports, and other
documents expressly required to be furnished to the Lenders by the Collateral
Agent hereunder or by the other Secured Debt Agreement, the Collateral Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, financial
and other condition, or creditworthiness of each Obligor which may come into the
possession of the Collateral Agent or any of its officers, directors, employees,
agents, attorneys-in-fact, or affiliates.
ARTICLE III
SHARING PROVISIONS
Section 3.01. Sharing of Payments and Proceeds After Sharing Event.
(a) On and after the occurrence of any Sharing Event, all proceeds of
Collateral held or received by the Collateral Agent or any Lender (including,
without limitation, any amount of any balances held by the Collateral Agent or
any Lender for the account of any Obligor or any other property held or owing by
it to or for the credit or for the account of any Obligor to the extent set off
or appropriated by it, but excluding, except as otherwise provided in paragraph
(c) of this Section 3.01, amounts on deposits in the Special Cash Collateral
Account provided for in such paragraph (c)) and any other payments received,
directly or indirectly, by the Collateral
15
Agent or any Lender on or with respect to any Senior Indebtedness (including,
without limitation, any payment made with respect to any Guaranteed Obligations,
any payment in any insolvency or reorganization proceeding and the proceeds from
any sale of any Senior Indebtedness or any interest therein to any Obligor or
any affiliate of any Obligor) shall be delivered to the Collateral Agent and
distributed as follows:
(i) First, to the Collateral Agent in the amount of any unpaid
Collateral Agent Expenses;
(ii) Next, to the Lenders in the amount of any unreimbursed
amounts paid by the Lenders to any Indemnitee pursuant to Section 2.11
hereof, pro rata in proportion to the respective unreimbursed amounts
thereof paid by each Lender;
(iii) Next, to the Banks in the amount of any outstanding New
Senior Indebtedness, pro rata in proportion to the respective amounts
thereof owed to each Bank as of the applicable Sharing Date (and, for
this purpose, New Letter of Credit Exposure shall be considered to have
been paid to the extent of any amount then on deposit in the New L/C
Cash Collateral Account provided for in paragraph (b) of this Section
3.01);
(iv) Next, to the Lenders in the amount of any outstanding
Existing Senior Indebtedness and any Yield Maintenance Amount that
would be due upon any prepayment thereof, pro rata in proportion to the
respective amounts thereof owed to each Lender as of the applicable
Sharing Date (and, for this purpose, Existing Letter of Credit Exposure
shall be considered to have been paid to the extent of any amount then
on deposit in the Existing L/C Cash Collateral Account provided for in
paragraph (c) of this Section 3.01);
(v) Next, to the Lenders in the amount of any other
obligations or indebtedness owed to such Lenders by any Obligor, pro
rata in proportion to the respective amounts thereof owed to each
Lender as of the Sharing Date.
After all Senior Indebtedness has been indefeasibly paid in full in
cash, the balance of the proceeds of the Collateral, if any, shall be paid to
the Obligors, as applicable, or as otherwise required by law.
(b) Any payment pursuant to clause (a)(iii) above with respect to New
L/C Reimbursement Obligations shall be paid to the Collateral Agent for deposit
in an account (the "New L/C Cash Collateral Account") to be held as collateral
for the Senior Indebtedness. On each date after the Sharing Date on which a
payment is made to a beneficiary pursuant to a draw on a New Letter of Credit,
the Collateral Agent shall distribute to the Banks from the New L/C Cash
Collateral Account for application to the payment of the reimbursement
obligation due to the Banks with respect to such draw an amount equal to such
draw. On the last day of each calendar quarter after the Sharing Date, the
Collateral Agent shall distribute from the New L/C Cash Collateral Account the
amount, if any, by which the cash collateral in the New L/C Cash Collateral
Account exceeds the New Letter of Credit Exposure on the last day of such
calendar quarter and shall apply such amount as provided in clauses (a)(i)
through (v) above. At such time as the amount of the New Letter of Credit
Exposure is reduced to zero, any amount
16
remaining in the New L/C Cash Collateral Account, after the distribution
therefrom as provided above, shall be distributed as provided in clauses (a)(i)
through (v), above.
(c) Any payment pursuant to clause (a)(iv) above with respect to
Existing L/C Reimbursement Obligations shall be paid to the Collateral Agent for
deposit in an account (the "Existing L/C Cash Collateral Account") to be held as
collateral for the Existing Senior Indebtedness and any Yield Maintenance Amount
that would be due upon any prepayment thereof and disposed of as provided
herein. On each date after the Sharing Date on which a payment is made to a
beneficiary pursuant to a draw on an Existing Letter of Credit, the Collateral
Agent shall distribute to the Banks from the Existing L/C Cash Collateral
Account for application to the payment of the reimbursement obligation due to
the Banks with respect to such draw an amount equal to the product of (1) (A)
the amount then on deposit in the Existing L/C Cash Collateral Account less (B)
the outstanding Existing L/C True-Up Amount and (2) a fraction, the numerator of
which is the amount of such draw and the denominator of which is the amount of
the Existing Letter of Credit Exposure immediately prior to such draw. On the
last day of each calendar quarter after the Sharing Date, the Collateral Agent
shall distribute from the Existing L/C Cash Collateral Account an amount equal
to the Existing L/C True-Up Amount on the last day of such calendar quarter and
shall apply such Existing L/C True-Up Amount as provided in clauses (a)(i)
through (v) above. At such time as the amount of the Existing Letter of Credit
Exposure is reduced to zero, any amount remaining in the Existing L/C Cash
Collateral Account, after the distribution therefrom as provided above, shall be
distributed as provided in clauses (a)(i) through (v), above.
(d) Except as otherwise provided in this subsection (d), the
distribution provisions of this Section 3.01 are for the purpose of determining
the relative amounts of payments to be distributed to the Lenders and not for
the purpose of creating an agreement among the parties as to the manner in which
any proceeds or other payments distributed to them are actually to be applied to
pay the Senior Indebtedness. Each Lender shall be free, in its own discretion,
to apply any proceeds or other payments distributed to it hereunder to the
Senior Indebtedness held by such Lender in such order as it may determine. Each
Obligor, by its consent hereto, agrees that in the event any payment is made
pursuant to the distribution provisions of this Section 3.01, the amount
distributed to each Lender shall be applied to the Senior Indebtedness owing to
such Lender in the manner in which such Lender elects as provided in the
preceding sentence. Notwithstanding the foregoing, for all purposes of this
Agreement the Senior Indebtedness shall be deemed paid to the same extent that
proceeds and other payments are distributed with respect to it pursuant to
Section 3.01(a) notwithstanding the actual application thereof by any individual
Lender to the Senior Indebtedness owing to it. Each Obligor, by its consent
hereto, agrees that, notwithstanding anything to the contrary in this Agreement,
the Credit Agreement or the Note Agreements, the amount of the obligations in
respect of Senior Indebtedness owed by any Obligor to a Lender (1) shall be
reduced by the amount of the proceeds or other payments received by such Lender
pursuant to the distribution provisions of this Section 3.01 and (2) shall not
be reduced by the amount of the proceeds or other payments paid over to the
Collateral Agent by such Lender pursuant to the terms of this Agreement.
Section 3.02. Invalidated Payments. If any amount paid by any Lender to
the Collateral Agent for distribution in accordance with the provisions of this
Agreement is subsequently
17
required to be returned or repaid, whether by court order, settlement or
otherwise, such Lender shall promptly notify the Collateral Agent of such
requirement, the Collateral Agent shall notify each of the Lenders thereof, and
each Lender shall, promptly upon its receipt of such notice from the Collateral
Agent, pay to the Collateral Agent the pro rata portion received by it of such
amount, without any interest thereon, for payment to the appropriate party in
interest. If any such amounts are subsequently recovered by any Lender, such
Lender shall remit such amounts to the Collateral Agent and the Collateral Agent
shall redistribute such amounts to the Lenders, without any interest thereon, on
the same basis as such amounts were originally distributed. The obligations of
the Lenders and the Collateral Agent under this Section 3.02 shall survive the
repayment of the Senior Indebtedness and termination of the Credit Agreement and
the Note Agreements.
Section 3.03. Additional Collateral. Each of the Lenders hereby
covenants and agrees that (i) such Lender will not accept from any Person on
behalf of the Company or any Subsidiary any guarantee (a "Third-Party
Guarantee") of any of the Senior Indebtedness or any other Senior Indebtedness
owing to such Lender unless such Person also guarantees substantially
contemporaneously, by the same or separate instrument, the payment of all of the
Senior Indebtedness owing to all Lenders (or, if such Third-Party Guarantee
guarantees only a portion thereof owing to such Lender, such Lender will not
accept such Third-Party Guarantee unless such Guarantor simultaneously
guarantees the same proportion of Senior Indebtedness owing to the other
Lenders) and (ii) such Lender will not take, accept or obtain any security
interest in, or lien or encumbrance upon, any assets of any of Obligor, any
Subsidiary thereof or any other Person (other than assets which, if obtained by
the Lenders, would be shared pro rata as provided herein) to secure the payment
and performance of the Senior Indebtedness or any other Senior Indebtedness owed
to such Lender except by virtue of all of the Lenders being granted a security
interest in, or lien upon, such assets, in either case, pursuant to documents in
form and substance satisfactory to all of the Lenders, to secure the Senior
Indebtedness pro rata as provided herein.
Section 3.04. Turnover of Collateral. If any Lender acquires custody,
control or possession of any Collateral or any proceeds thereof or any payment
of any Guaranteed Obligation other than pursuant to the terms of this Agreement,
such Lender, as the case may be, shall promptly cause such Collateral or the
proceeds thereof or any such payment to be delivered to or put in the custody,
possession or control of the Collateral Agent for disposition and distribution
in accordance with the provisions of Section 3.01 of this Agreement. Until such
time as such Lender, as the case may be, shall have complied with the provisions
of the immediately preceding sentence, such Lender, as the case may be, shall be
deemed to hold such Collateral and the proceeds thereof or any such payment in
trust for the parties entitled thereto under this Agreement.
Section 3.05. Accounting; Adjustments.
(a) The Collateral Agent and each Lender agrees to render at any time
an accounting to any of the others of the amounts of the outstanding Senior
Indebtedness, any other payments from the Obligors or from the Collateral and of
other items relevant to the provisions of this Agreement upon the reasonable
request from one of the other Lenders as soon as reasonably
18
practicable after such request, giving effect to the application of payments and
the proceeds of Collateral as hereinbefore provided in this Agreement.
(b) Each party hereto agrees that to the extent any payment of any
Senior Indebtedness made to it hereunder is in excess of the amount due to be
paid to it hereunder, then it shall pay to the other parties hereto such amounts
so that, after giving effect to such payments, the amounts received by all
parties are equal to the amounts to be paid to them hereunder.
Section 3.06. Notice; Cooperation of Lender. Each Lender hereby agrees
and covenants with each other Lender that:
(a) it will from time to time provide such information that is
available to it to the Collateral Agent as may be necessary to enable the
Collateral Agent to make any calculation hereunder or otherwise required for any
other purpose hereof;
(b) it will from time to time consult with the Collateral Agent and the
other Lenders in good faith regarding the Enforcement of its rights with a view
to recovering amounts due under any of the Collateral Documents; and
(c) it will not amend, modify, supplement or waive any of the terms or
provisions of any Collateral Document in any manner detrimental to any other
Lender or in any manner impair the Collateral without the consent of the
Required Senior Lenders.
ARTICLE IV
NO CONTEST; BANKRUPTCY
Section 4.01. Contesting Liens or Security Interests; No Partitioning
or Marshalling of Collateral; Contesting Senior Indebtedness.
(a) Neither the Collateral Agent nor any Lender shall contest the
validity, perfection, priority or enforceability of or seek to avoid, have
declared fraudulent or have set aside any lien or security interest granted to
the Collateral Agent or any Noteholder Guaranteed Obligations or any Bank
Guaranteed Obligations and each party hereby agrees to cooperate in the defense
of any action contesting the validity, perfection, priority or enforceability of
such liens or security interests or Guaranteed Obligations.
(b) Notwithstanding anything to the contrary in this Agreement or in
any Collateral Document, no Lender shall have the right to have any of the
Collateral, or any security interest or other property being held as security
for all or any part of the Senior Indebtedness by the Collateral Agent,
partitioned, or to file a complaint or institute any proceeding at law or in
equity to have any of the Collateral or any such security interest or other
property partitioned, and the each Lender hereby waives any such right. Each
Lender hereby waives any and all rights to have the Collateral, or any part
thereof, marshaled upon any foreclosure of any of the liens or security
interests securing the Senior Indebtedness.
19
(c) Neither the Collateral Agent nor any Lender shall contest the
validity or enforceability of or seek to avoid, have declared fraudulent or have
set aside any Senior Indebtedness. In the event any Senior Indebtedness is
invalidated, avoided, declared fraudulent or set aside for the benefit of any
Obligor, the Collateral Agent and the Lenders agree that such Senior
Indebtedness shall nevertheless be considered to be outstanding for all purposes
of this Agreement.
(d) Each party hereto agrees to cooperate fully with the other parties
hereto, in the exercise of its reasonable judgment, to the end that the terms
and provisions of this Agreement may be promptly and fully carried out. Each
party hereto also agrees, from time to time, to execute and deliver any and all
other agreements, documents or instruments and to take such other actions, all
as may be reasonably necessary or desirable to effectuate the terms, provisions
and intent of this Agreement.
Section 4.02. Lien Priorities. The parties hereto expressly agree that
the security interests and liens granted to the Collateral Agent shall secure
the Senior Indebtedness on a pari passu basis for the benefit of the Collateral
Agent and the Lenders and that, notwithstanding the relative priority or the
time of grant, creation, attachment or perfection under applicable law of any
security interests and liens, if any, of any of the Collateral Agent or any
Lender upon or in any of the Collateral to secure any Senior Indebtedness,
whether such security interests and liens are now existing or hereafter acquired
or arising and whether such security interests and liens are in or upon now
existing or hereafter arising Collateral, such security interests and liens
shall be first and prior security interests and liens in favor of the Collateral
Agent to secure the Senior Indebtedness on a pari passu basis for the benefit of
the Collateral Agent and the Lenders.
Section 4.03. Bankruptcy Proceedings. Nothing contained herein shall
limit or restrict the independent right of any Lender to initiate an action or
actions in any bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar proceeding in its
individual capacity and to appear or be heard on any matter before the
bankruptcy or other applicable court in any such proceeding, including, without
limitation, with respect to any question concerning the post-petition usage of
Collateral and post-petition financing arrangements. The Collateral Agent is not
entitled to initiate such actions on behalf of any Lender or to appear and be
heard on any matter before the bankruptcy or other applicable court in any such
proceeding to enter into any agreement for, or give any authorization or consent
with respect to, the post-petition usage of Collateral, unless such agreement,
authorization or consent with respect to, the post-petition usage of Collateral,
unless such agreement, authorization or consent has been approved in writing by
the Required Banks and Required Holders. This Agreement shall survive the
commencement of any such bankruptcy, reorganization, compromised, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
proceeding.
Section 4.04. Other Rights. Nothing contained in this Agreement shall
(i) prevent any Lender from imposing a default rate of interest in accordance
with the Credit Agreement, the Note Agreements or the Senior Notes, as
applicable, or prevent a Lender from raising any defenses in any action in which
it has been made a party defendant or has been joined as a third party, except
that the Collateral Agent may direct and control any defense directly relating
to the
20
Collateral or any one or more of the Collateral Documents as directed by the
Required Senior Lenders, which shall be governed by the provisions of this
Agreement or (ii) affect or impair the right any Lender may have under the terms
and conditions governing the Senior Indebtedness to accelerate and demand
repayment of such Senior Indebtedness. Subject only to the express limitations
set forth in this Agreement, each Lender retains the right to freely exercise
its rights and remedies as a general creditor of the Obligors in accordance with
applicable law and agreements with the Obligors, including, without limitation,
the right to file a lawsuit and obtain a judgment therein against the Obligors
and to enforce such judgment.
ARTICLE V
MISCELLANEOUS
Section 5.01. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED,
INTERPRETED AND ENFORCED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS
OF THE STATE OF NEW YORK.
Section 5.02. Certain Notices. Each of the Collateral Agent and each
Lender agrees to use its reasonable efforts to give to the others (a) notice of
the refusal of any Bank to make any Revolving Loans or issue any Letter of
Credit, promptly after such refusal and (b) notice of an Enforcement by such
party, prior to commencing such Enforcement, but the failure to give any of the
foregoing notices shall not affect the validity of any notice given to an
Obligor or create a cause of action against or cause a forfeiture of any rights
of the party failing to give such notice or create any claim or right on behalf
of any third party.
Section 5.03. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one agreement, and shall constitute a binding agreement when executed
by each of the parties hereto.
Section 5.04. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successor and assigns of the
parties hereto including any assignees of the Senior Indebtedness and Persons
subsequently becoming parties to the Credit Agreement as a "Bank" thereunder.
Section 5.05. Amendments to Agreement and Documentation. This Agreement
and the provisions hereof may be amended, modified or waived only by a writing
signed by the Collateral Agent and all of the Lenders. Neither Section 2.05, nor
any other provision of this Agreement, shall in any way limit the ability of any
Lender to waive, amend or otherwise modify any document relating to the Senior
Indebtedness, except that, without the consent of all Lenders, no Lender shall
release any Guarantor from its liabilities in respect of such obligations unless
the portion of such Senior Indebtedness owing to such Lender shall have been
finally and indefeasibly paid in full except as permitted by each of the Credit
Agreement and the Note Agreements or any Collateral Document.
Section 5.06. Termination. This Agreement shall terminate upon the
payment in full of all Senior Indebtedness and the termination of the Credit
Agreement and the Note Agreements.
21
Section 5.07. Transfer. In connection with an assignment of all, or of
a proportionate part of all, of any Lender's right, title and interest under the
Credit Agreement or the Note Agreements, as the case may be, to any bank,
insurance company, other financial institution or other Person (the
"Transferee"), such Transferee shall become a Lender hereunder only upon, and
each of the Lenders party hereto hereby covenants and agrees that prior to the
effectiveness of any transfer it shall cause to occur, (i) the written agreement
of such transferor Lender and such Transferee and (ii) the receipt by the
Collateral Agent of a supplement to this Agreement in the form of Exhibit B
hereto executed by such Transferee.
Section 5.08. No Waiver. No failure or delay on the part of any Lender
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder.
Section 5.09. Notices. All written communications provided for
hereunder shall be sent (x) by telecopier if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service, with
charges prepaid, or (y) by first class mail or nationwide overnight delivery
service, with charges prepaid and
(i) if to a Bank, addressed to such Bank at the address
specified on the signature page hereof or any such other address as the
Bank shall have specified to the Noteholders and the Collateral Agent
in writing,
(ii) if to any Noteholder, addressed to such Noteholder at the
address specified on the signature page hereof, or at such other
address as such Noteholder shall have specified to the Collateral Agent
in writing, and
(iii) if to the Collateral Agent, addressed to the Collateral
Agent at such address specified on the signature page hereof, or at
such other address as the Collateral Agent shall have specified to each
Lender in writing.
Section 5.10. Third Party Beneficiary. No Person, including. without
limitation, the Obligors shall have any rights under this Agreement, other than
the Lenders, the Collateral Agent and their respective successors and assigns.
Section 5.11. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 5.12. Headings. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
Section 5.13. Submission to Jurisdiction; Waiver of Jury Trial. EACH OF
THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR NEW YORK STATE COURT
22
SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT. NONE OF THE PARTIES HERETO SHALL SEEK A JURY TRIAL
IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION PROCEDURE BASED
UPON OR ARISING OUT OF OR OTHERWISE RELATED TO THIS AGREEMENT AND EACH OF THE
PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND
ALL RIGHT TO ANY SUCH JURY TRIAL AND ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY SUCH
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 5.13.
Section 5.14. Entire Agreement. This Agreement embodies the entire
agreement and understanding among the parties hereto and supersedes all prior
agreements and understandings related to the subject matter hereof.
[Signatures On Next Page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date and year first written above.
Collateral Agent:
FLEET NATIONAL BANK, as Collateral Agent on behalf
of the Lenders
By:
----------------------------------------
Name:
Title:
Address:
Fleet National Bank
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxx, Senior Vice
President
Telecopy: 617) 4340-4929
Signature Page to Intercreditor Agreement
Bank:
FLEET NATIONAL BANK
By:
----------------------------------------
Name:
Title:
Address:
Fleet National Bank
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxx, Senior Vice
President
Telecopy: 617) 4340-4929
Noteholder:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:
----------------------------------------
Name:
Title:
Address:
The Prudential Insurance Company of
America
c/o Prudential Capital Group
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Managing Director
Telecopier: 000-000-0000
Signature Page to Intercreditor Agreement
ACKNOWLEDGMENT OF AND CONSENT AND AGREEMENT
TO INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
The undersigned, the Obligors described in the Intercreditor and
Collateral Agency Agreement set forth above, acknowledge and, to the extent
required, consent to the terms and conditions thereof. The undersigned Obligors
do hereby further acknowledge and agree to their joint and several agreements
under Sections 2.10 and 3.01(d) of the Intercreditor and Collateral Agency
Agreement and acknowledge and agree that no Obligor is a third-party beneficiary
of, or has any rights under, the Intercreditor and Collateral Agency Agreement.
Each Obligor, by its consent hereto, acknowledges that it shall have no
rights under the Intercreditor and Collateral Agency Agreement. If the
Collateral Agent or any Lender shall violate the terms of the Intercreditor and
Collateral Agency Agreement, each Obligor agrees, by its consent hereto, that it
shall not use such violation as a defense to any enforcement by any such party
nor assert such violation as a counterclaim or basis for setoff or recoupment
against any such party. Nothing contained in the foregoing sentence shall be
deemed to modify, amend or waive any rights that any Obligor may otherwise have
under the Collateral Documents.
This Acknowledgment of and Agreement to Intercreditor and Collateral
Agency Agreement and any amendment hereof may be executed in several
counterparts and by each parry on a separate counterpart, each of which, when so
executed and delivered, shall be an original, but all of which together shall
constitute but one of the same instrument.
IN WITNESS WHEREOF, the parties below have caused this Acknowledgment
of and Consent and Agreement to Intercreditor and Collateral Agency Agreement to
be executed by their respective duly authorized officer as of March 31, 2005.
QUAKER FABRIC CORPORATION OF FALL
RIVER, a Massachusetts corporation
By:
----------------------------------------
Name:
Title:
QUAKER FABRIC CORPORATION, a
Delaware corporation
By:
----------------------------------------
Name:
Title:
Signature Page to Intercreditor Agreement
QUAKER TEXTILE CORPORATION, a
Massachusetts corporation
By:
----------------------------------------
Name:
Title:
QUAKER FABRIC MEXICO, S.A. de C.V., a
Mexican corporation
By:
----------------------------------------
Name:
Title:
EXHIBIT A TO
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
FORM OF JOINDER
REPLACEMENT COLLATERAL AGENT
Upon execution of this signature page, the undersigned acknowledges
that it has been appointed as a replacement Collateral Agent pursuant to Section
2.09 of the Agreement (as defined below) and shall, from the date set forth
below, become the "Collateral Agent" under the Intercreditor and Collateral
Agency Agreement, dated as of March 31, 2005 (as amended, restated, supplemented
or otherwise modified, the "Agreement"), by and among The Prudential Insurance
Company of America and Fleet National Bank, individually and as the original
Collateral Agent. As a party to the Agreement, the undersigned agrees to be
bound by all of the terms and conditions of the Agreement in its capacity as the
"Collateral Agent". Capitalized terms used and not defined in this joinder
instrument shall have meanings given in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Joinder to
Intercreditor and Collateral Agency Agreement to be duly executed by its
authorized officer as of the date set forth opposite such officer's signature.
REPLACEMENT COLLATERAL AGENT: [NAME]
By:
-----------------------------------
Title:
--------------------------------
ADDRESS:
---------------------------------------
---------------------------------------
---------------------------------------
Telephone:
----------------------------
Telecopy:
-------------------------
Dated:
--------------------
A-1
EXHIBIT B
Form of INTERCREDITOR AND
COLLATERAL AGENCY AGREEMENT SUPPLEMENT
THIS INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT SUPPLEMENT (the
"Supplement") is made and entered into as of this __ day of ___________, 20__,
by and between ________________________ (the "Assignor") and
________________________ (the "Assignee"). Reference is hereby made to that
certain Intercreditor and Collateral Agency Agreement dated as of March 31, 2005
(as it may be modified, amended, supplemented or restated from time to time, the
"Intercreditor Agreement") by and among each of the banks listed on the
signature page thereof (together with its successors and assigns, other than the
Company and its subsidiaries and affiliates, collectively the "Banks"), Fleet
National Bank, as Collateral Agent for the Lenders, and the holders of the
Senior Notes listed on the signature pages thereof (together with their
respective successors and assigns, other than the Company and its subsidiaries
and affiliates, the "Noteholders" and together with the Bank, the "Lenders").
WITNESSETH
WHEREAS, pursuant to that certain ____________ dated as of __________,
20__ among the Assignor and the Assignee, the Assignor has assigned all, or a
proportionate part of all, of its right, title and interest under the [Credit
Agreement] [1997 Note Agreement] [2002 Note Agreement] (as defined in the
Intercreditor Agreement) to the Assignee and the Assignee has accepted such
assignment; and
WHEREAS, pursuant to the terms of the Intercreditor Agreement, such
assignment requires the delivery of this Supplement to the Collateral Agent (as
defined in the Intercreditor Agreement); and
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Assignee hereby acknowledges and agrees that it is a party to
and is bound by the terms and conditions of the Intercreditor Agreement to the
same degree and extent as if it were an original signatory thereto.
B-1
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Supplement as of the date first
above written.
ASSIGNEE:
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ASSIGNOR:
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Signature Page to Intercreditor Agreement
Signature Page to Intercreditor Agreement
Schedule I
Existing Letters of Credit
--------------------------
Instrument Letter of Credit Expiry
Number Amount Date
64144463 $400,000.00 04/15/05
64137478 $4,500,000.00 12/01/05
64034704 $5,832.75 03/04/05
64034705 $134,095.50 06/20/05
64034706 $41,233.50 06/04/05
64034707 $44,467.50 06/04/05
50065711 855,527.05 (MXN) 02/08/06
$77,112.72 (USD)
