SECOND AMENDED AND RESTATED
PLEDGE AGREEMENT
This SECOND AMENDED AND RESTATED PLEDGE AGREEMENT (this "Agreement") is
made as of March 31, 2005, among (i) QUAKER FABRIC CORPORATION OF FALL RIVER,
QUAKER TEXTILE CORPORATION, QUAKER FABRIC MEXICO, S.A. de C.V. and QUAKER FABRIC
CORPORATION (each a "Company" and collectively, the "Companies"), (ii) THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"), and the other Holders of
Debentures (as defined below) which have executed the signature pages hereof or
which have otherwise become parties hereto in the manner provided in 'SS'19.10
hereof, and (iii) FLEET NATIONAL BANK (f/k/a BankBoston, N.A.) ("Fleet") as the
Lender (as hereinafter defined) and as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as hereinafter defined) under the
Intercreditor and Collateral Agency Agreement of even date herewith (the
"Intercreditor Agreement"), among the Companies, the Secured Parties and the
Collateral Agent for the benefit of the Secured Parties.
WHEREAS, pursuant to a Second Amended and Restated Credit Agreement
dated as of February 14, 2002 (as amended, supplemented and in effect from time
to time, the "Credit Agreement"), among Quaker Fabric Corporation of Fall River
("Quaker"), Quaker Textile Corporation ("Quaker Textile"), Quaker Fabric Mexico,
S.A. de C.V. ("Quaker Mexico"), Quaker Fabric Corporation, and Fleet as Lender
(in such capacity, the "Lender"), the Lender agreed, upon the terms and subject
to the conditions contained therein, to make loans and otherwise extend credit
to the Company, Quaker Textile and Quaker Mexico;
WHEREAS, pursuant to a Note Purchase Agreement dated as of October 10,
1997 (as amended and in effect from time to time, the "1997 Indenture"), among
the Company, The Prudential Insurance Company of America and the other financial
institutions party (from time to time) thereto, the Company agreed to issue
those certain 7.09% Senior Notes due October 10, 2005, in an aggregate original
principal amount equal to $15,000,000, and those certain 7.18% Senior Notes due
October 10, 2007, in an aggregate original principal amount equal to $30,000,000
(collectively, the "1997 Notes");
WHEREAS, pursuant to a Note Agreement and Private Shelf Facility dated
as of February 14, 2002 (as amended and in effect from time to time, the "2002
Indenture"; and collectively with the 1997 Indenture, the "Indentures"), among
the Company, The Prudential Insurance Company of America and the other
Prudential Affiliates party (from time to time) thereto, the Company agreed to
issue those certain 7.56% Senior Notes due on or about February 14, 2009, in an
aggregate original principal amount equal to $5,000,000 (collectively, the
"Initial 2002 Notes") and also agreed to issue from time to time thereunder the
Shelf Notes (as defined in the 2002 Indenture) described therein (together with
the Initial 2002 Notes, the "2002 Notes"; such 2002 Notes, collectively with the
1997 Notes, the "Debentures");
WHEREAS, in connection with the Credit Agreement and the Debentures,
Quaker executed and delivered to the Collateral Agent, for the benefit of the
Secured Parties, a certain Amended and Restated Collateral Agency and Pledge
Agreement dated as of February 14, 2002 (as amended, supplemented and in effect
on the date hereof, the "Original Pledge Agreement");
WHEREAS, it is a condition precedent to (i) the Lender's obligations to
make further loans and otherwise further extend credit to Quaker, Quaker Textile
and Quaker Mexico and (ii) the Holders of Debentures agreeing to certain
forbearance arrangements in respect of the Indentures that the Companies execute
and deliver to the Collateral Agent, for the benefit of the Secured Parties, an
amended and restated pledge agreement in substantially the form hereof;
WHEREAS, the parties hereto wish to set forth their relative rights and
priorities with respect to the Stock Collateral (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
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1.1. Definitions. The following terms shall have the meanings set forth
in this 'SS'1 or elsewhere in the provisions of this Agreement referred to
below:
Act. See 'SS'5.2.
Actionable Default. Any Event of Default under and as defined in the
Credit Agreement or Event of Default under and as defined in either of the
Indentures.
Agreement. This Second Amended and Restated Pledge Agreement.
Bank Debt. The advances, letter of credit reimbursement obligations and
all other obligations of the Companies now existing or hereafter arising to the
Lender under the Credit Agreement. Bank Debt shall include without limitation,
any interest and collection costs.
Bank Loan Documents. The Credit Agreement and all other documents and
instruments executed or delivered in connection therewith, or any terms having
the same meaning contained in any other Credit Agreement.
Cash Collateral. See 'SS'4.2.
Cash Collateral Account. See 'SS'4.2.
Company. As defined in the preamble hereto.
Collateral. The Stock Collateral and the Cash Collateral.
Collateral Agent. As defined in the preamble hereto unless and until a
successor Collateral Agent shall have been appointed pursuant to 'SS'14.4
hereof, and thereafter "Collateral Agent" shall mean such successor Collateral
Agent.
Credit Agreement. The Credit Agreement and the other Bank Loan
Documents, and any agreement or agreements designated as a "Credit Agreement" to
other "Bank Loan Documents" hereunder by written notice by the Companies to the
Collateral Agent with the written consent of the Lender and governing Bank Debt
all or part of which was incurred to refund, refinance or replace all or any
portion of the Bank Debt under the Credit Agreement, as the same may hereafter
be amended, renewed, extended, restated, supplemented or otherwise modified
(including by increasing the amount of Bank Debt thereunder or by otherwise
providing additional financing to the Companies) from time to time.
Credit Documents. Collectively, the Credit Agreement and the
Indentures.
Debenture Debt. The obligations of the Company to the Holders of
Debentures under the Indentures and the Debentures. Debenture Debt shall include
without limitation, any interest and collection costs.
Debentures. As defined in the preamble hereto.
Fleet. As defined in the preamble hereto, together with its successors
and assigns.
Foreign Subsidiary. Any Subsidiary that is organized under the laws of
a jurisdiction other than the United States of America and the States (or the
District of Columbia) thereof.
Holders of Debentures. Any holder of the Debentures, together with
their respective successors, assigns and transferees.
Indentures. As defined in the preamble hereto and shall include any
respective amendment or supplement thereof.
Intercreditor Agreement. As defined in the preamble hereto.
Lender. As defined in the preamble hereto, together with its successors
and assignees, and shall include any replacement or successive lenders under the
Credit Agreement.
Majority Debenture Holder(s). The Holder(s) of (a) Debentures
representing a majority of the outstanding Debenture Debt in respect of the 1997
Indenture and 1997 Notes, and (b) Debentures representing a majority of the
outstanding Debenture Debt in respect of the 2002 Indenture and 2002 Notes,
which (in each case), for so long as it shall hold a majority of such Debenture
Debt, shall be Prudential.
Notice of Actionable Default. A notice by any Requisite Party delivered
to the Collateral Agent, stating that an Actionable Default has occurred. A
Notice of Actionable Default 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 has actually received from the notifying party a notice withdrawing such
notice. A Notice of Actionable Default 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.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Requisite Party. Fleet, so long as there shall be Bank Debt and the
Majority Debenture Holder(s), so long as there shall be Debenture Debt.
Secured Obligations. Collectively, the Bank Debt and the Debenture
Debt.
Secured Parties. The Lender and the Holders of Debentures.
Stock. Includes the shares of stock described in Annex A attached
hereto and any additional shares of stock at the time pledged with the
Collateral Agent hereunder.
Stock Collateral. The property at any time pledged to the Collateral
Agent hereunder (whether described herein or not) and all income therefrom,
increases therein and proceeds thereof, including without limitation that
included in Cash Collateral, but excluding from the definition of "Stock
Collateral" any income, increases or proceeds received by the Companies to the
extent expressly permitted by 'SS'8.
Subsidiary. Any corporation (other than Quaker Mexico or Quaker Fabric
Foreign Sales Corporation) of which or in which any Company owns directly or
indirectly 50% or more of the combined voting power of all classes of stock
having general voting power under ordinary circumstances to elect a majority of
the board of directors of such Person.
Time Deposits. See 'SS'4.2.
1.2. Terms Generally. The definitions in 'SS'1.2 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall 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." All references herein to
Sections shall be deemed references to Sections of this Agreement unless the
context shall otherwise require.
2. PLEDGE OF STOCK, ETC.
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2.1. Pledge of Stock. Each Company hereby pledges, assigns, grants a
security interest in, and delivers to the Collateral Agent, for the benefit of
the Secured Parties, all of the shares of capital stock of the Subsidiaries of
every class, as more fully described on Annex A hereto, to be held by the
Collateral Agent, for the benefit of the Secured Parties, subject to the terms
and conditions hereinafter set forth. The certificates for such shares,
accompanied by stock powers or other appropriate instruments of assignment
thereof duly executed in blank by the applicable Companies, have been delivered
to the Collateral Agent. In case any Company shall acquire any shares or
additional shares of the capital stock of any Subsidiary or corporation which is
the successor of any Subsidiary, or any securities exchangeable for or
convertible into shares of such capital stock of any class of any Subsidiary, by
purchase, stock dividend, stock split or otherwise, then such Company shall
forthwith deliver to, and upon such delivery shall be deemed to have pledged,
such shares or other securities to the Collateral Agent, for the benefit of the
Secured Parties, under this Agreement and shall deliver to the Collateral Agent
forthwith any certificates therefor, accompanied by stock powers or other
appropriate instruments of assignment duly executed by such Company in blank;
provided, however, that notwithstanding anything to the contrary contained in
this 'SS'2.1, each Company shall only be required to pledge sixty-five percent
(65%) of the shares of the capital stock of any Foreign Subsidiary. Each Company
agrees that the Collateral Agent may from time to time attach as Annex A hereto
an updated list of the shares of capital stock or securities at the time pledged
with the Collateral Agent hereunder.
2.2. Pledge of Cash Collateral Account. Each Company also hereby
pledges, assigns, grants a security interest in, and delivers to the Collateral
Agent, for the benefit of the Secured Parties, the Cash Collateral Account and
all of the Cash Collateral as such terms are hereinafter defined.
3. SECURITY FOR OBLIGATIONS.
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This Agreement and the security interest in and pledge of the Stock
Collateral hereunder are made with and granted to the Collateral Agent, for the
benefit of the Secured Parties and the Collateral Agent, as security for the
payment and performance in full of all the Secured Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC.
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4.1. Distributions Paid to Collateral Agent. Any sums or other property
paid or distributed upon or with respect to any of the Stock, whether by
dividend or redemption or upon the liquidation or dissolution of the issuer
thereof or otherwise, shall, except to the limited extent provided in 'SS'8, be
paid over and delivered to the Collateral Agent to be held by the Collateral
Agent, for the benefit of the Secured Parties, as security for the payment and
performance in full of all of the Secured Obligations. In case, pursuant to the
recapitalization or reclassification of the capital of the issuer thereof or
pursuant to the reorganization thereof, any distribution of capital shall be
made on or in respect of any of the Stock or any property shall be distributed
upon or with respect to any of the Stock, the property so distributed shall be
delivered to the Collateral Agent, for the benefit of the Secured Parties, to be
held by it as security for the Secured Obligations. Except to the limited extent
provided in 'SS'8, all sums of money and
property paid or distributed in respect of the Stock, whether as a dividend or
upon such a liquidation, dissolution, recapitalization or reclassification or
otherwise, that are received by any Company shall, until paid or delivered to
the Collateral Agent, be held in trust for the Collateral Agent, for the benefit
of the Secured Parties, as security for the payment and performance in full of
all of the Secured Obligations.
4.2. Cash Collateral Account. All sums of money that are delivered to
the Collateral Agent pursuant to this 'SS'4 shall be deposited to an interest
bearing account with the Collateral Agent (the "Cash Collateral Account"). Some
or all of the funds from time to time in the Cash Collateral Account may be
invested in time deposits, including, without limitation, certificates of
deposit being hereinafter referred to, collectively, as "Time Deposits"), that
are satisfactory to the Collateral Agent after consultation with the Companies,
provided, that, in each such case, arrangements satisfactory to the Collateral
Agent are made and are in place to perfect and to insure the first priority of
the Collateral Agent's security interest therein. Interest earned on the Cash
Collateral Account and on the Time Deposits, and the principal of the Time
Deposits at maturity that is not invested in the new Time Deposits, shall be
deposited in the Cash Collateral Account. The Cash Collateral Account, all sums
from time to time standing to the credit of the Cash Collateral Account, any and
all Time Deposits, any and all instruments or other writings evidencing Time
Deposits and any and all proceeds or any thereof are hereinafter referred to as
the "Cash Collateral."
4.3. Companies' Rights to Cash Collateral, etc. Except as otherwise
expressly provided in 'SS'8, no Company shall have any right to withdraw sums
from the Cash Collateral Account, to receive any of the Cash Collateral to
require the Collateral Agent to part with the Collateral Agent's possession of
any instruments or other writings evidencing any Time Deposits.
5. RECOURSE OF SECURED PARTIES;
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OTHER COLLATERAL; ACTS OF SECURED PARTIES.
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5.1. Recourse of Secured Parties; Other Collateral. Each of the Secured
Parties acknowledges and agrees that (i) it shall only have recourse to the
Collateral through the Collateral Agent and that it shall have no independent
recourse to the Collateral and (ii) the Collateral Agent shall have no
obligation to take any action, or refrain from taking any action, except upon
instructions from a Requisite Party in accordance with 'SS'5.2 hereof. Nothing
contained herein shall restrict the Majority Debenture Holder's or Fleet's
rights to pursue remedies, by proceedings in law and equity, to collect any
amounts due under the Debenture Debt or the Bank Debt, including without
limitation principal or interest thereon, or to enforce the performance of any
provisions of the Credit Documents, to the extent that such remedies do not
relate to the Collateral or interfere with the Collateral Agent's rights to take
action hereunder.
5.2. Acts of Secured Parties. Any request, demand, authorization,
direction, notice, consent, waiver or other action permitted or required by this
Agreement to be given or taken by any Requisite Party, may be and, at the
request of the Collateral Agent, shall be embodied in and evidenced by one or
more instruments satisfactory in form to the Collateral Agent and signed by
or on behalf of a Requisite Party and, except as otherwise expressly provided in
any such instrument, any such action shall become effective when such instrument
or instruments shall have been delivered to the Collateral Agent. The instrument
or instruments evidencing any action (and the action embodied therein and
evidenced thereby) are sometimes referred to herein as in "Act" of the persons
signing such instrument or instruments. The Collateral Agent shall be entitled
to rely absolutely upon an Act of any Requisite Party, and nothing in this
'SS'5.2 or elsewhere in this Agreement shall be construed to require Fleet or
the Majority Debenture Holder to demonstrate that it has been authorized by the
Lender or, as the case may be, holders of the Debentures to take any action
which it purports to be taking, the Collateral Agent being entitled to rely
conclusively, and being fully protected in so relying, on any Act of Fleet or
the Majority Debenture Holder, as the case may be.
6. PRIORITY OF RIGHTS AGAINST COLLATERAL AND PROCEEDS
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THEREOF.
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It is the intent of the parties hereto that any amounts received on
account of the Collateral are to be applied by the Collateral Agent to the
Secured Obligations in accordance with the provisions of the Intercreditor
Agreement.
7. WARRANTY OF TITLE; AUTHORITY.
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Each Company hereby represents and warrants that: (i) at the time of
the acquisition thereof such Company will have good and marketable title to, and
will be the sole record and beneficial owner of, the Stock described in 'SS'2
and any Stock Collateral hereafter pledged, subject to no pledges, liens,
security interests, charges, options, restrictions or other encumbrances except
the pledge and security interest created by the Agreement, (ii) all of the Stock
described in 'SS'2 and any Stock Collateral hereafter pledged will be validly
issued, fully paid and non-assessable, (iii) such Company has full power,
authority and legal right to execute, deliver and perform its obligations under
this Agreement and to pledge and grant a security interest in all of the Stock
Collateral pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security interest in the
Stock Collateral hereunder have been duly authorized by all necessary corporate
or other action and do not contravene any law, rule or regulation or any
provision of such Company's charter documents or by-laws or of any judgment,
decree or order of any tribunal or of any agreement or instrument to which such
Company is a party or by which it or any of its property is bound or affected or
constitute a default thereunder, and (iv) the information set forth in Annex A
hereto relating to the Stock is true, correct and complete in all respects.
8. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY.
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So long as no Actionable Default shall have occurred, the Companies
shall be entitled to receive all cash dividends paid in respect of the Stock, to
vote the Stock and to give consents, waivers and ratifications in respect of the
Stock; provided, however, that no vote shall be cast or consent, waiver or
ratification given by any Company if the effect thereof would impair any of the
Stock Collateral or be inconsistent with or result in any violation of any of
the provisions of
the Credit Documents. All such rights of the Companies to receive cash dividends
shall cease in case an Actionable Default shall have occurred and be continuing.
All such rights of the Companies to vote and give consents, waivers and
ratifications with respect to the Stock shall, at the Collateral Agent's option,
as evidenced by the Collateral Agent's notifying the Companies of such election,
cease in case an Actionable Default shall have occurred and be continuing.
9. REMEDIES.
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9.1. In General. If the Collateral Agent shall have received a Notice
of Actionable Default, the Collateral Agent shall thereafter have the following
rights and remedies (to the extent not inconsistent with any provisions of the
Intercreditor Agreement and as permitted by applicable law) in addition to the
rights and remedies of a secured party under the Uniform Commercial Code of the
State of New York, all such rights and remedies being cumulative, not exclusive,
and enforceable alternatively, successively or concurrently, at such time or
times as the Collateral Agent deems expedient:
(a) if the Collateral Agent so elects and gives notice of such
election to the Companies, the Collateral Agent may vote any or all
shares of the Stock (whether or not the same shall have been
transferred into its name or the name of its nominee or nominees) for
any lawful purpose, including, without limitation, if the Collateral
Agent so elects, for the liquidation of the assets of the issuer
thereof, and give all consents, waivers and ratifications in respect of
the Stock and otherwise act with respect thereto as though it were the
outright owner thereof (each Company hereby irrevocably constituting
and appointing the Collateral Agent proxy and attorney-in-fact of such
Company, with full power of substitution, to do so);
(b) the Collateral Agent may demand, xxx for, collect or make
any compromise or settlement the Collateral Agent deems suitable in
respect of any Stock Collateral;
(c) the Collateral Agent may sell, resell, assign and deliver,
or otherwise dispose of any or all of the Stock Collateral, for cash or
credit or both and upon such terms at such place or places, at such
time or times and to such entities or other persons as the Collateral
Agent thinks expedient, all without demand for performance by any
Company or any notice or advertisement whatsoever except as expressly
provided herein or as may otherwise be required by law;
(d) the Collateral Agent may cause all or any part of the
Stock held by it to be transferred into its name or the name of its
nominee or nominees; and
(e) the Collateral Agent may set off against the Secured
Obligations any and all sums deposited with it or held by it, including
without limitation, any sums standing to the credit of the Cash
Collateral Account and any Time Deposits issued by the Collateral
Agent.
Notwithstanding any provision of this Agreement to the contrary, the
Collateral Agent shall not take any action with respect to the Collateral set
forth in this 'SS'9.1 until five (5) business days have elapsed following the
delivery to the Majority Debenture Holder and Fleet of each Notice of Actionable
Default received by the Collateral Agent unless such lapse of time has been
waived by the Majority Debenture Holder and Fleet.
9.2. Sale of Stock Collateral. In the event of any disposition of the
Stock Collateral as provided in clause (c) of 'SS'9.1, the Collateral Agent
shall give to the Companies at least five Business Days prior written notice of
the time and place of any public sale of the Stock Collateral or of the time
after which any private sale or any other intended disposition is to be made.
Each Company hereby acknowledges that twenty days prior written notice of such
sale or sales shall be reasonable notice. The Collateral Agent may enforce its
rights hereunder without any other notice and without compliance with any other
condition precedent now or hereunder imposed by statute, rule of law or
otherwise (all of which are hereby expressly waived by each Company, to the
fullest extent permitted by law). The Collateral Agent may buy any part or all
of the Stock Collateral at any public sale and if any part or all of the Stock
Collateral is of a type customarily sold in a recognized market or is of the
type which is the subject of widely-distributed standard price quotations, the
Collateral Agent may buy at private sale and may make payments thereof by any
means. The Collateral Agent shall apply the cash proceeds actually received from
any sale or other disposition in the manner specified in the Intercreditor
Agreement.
9.3. Private Sales. Each Company recognizes that the Collateral Agent
may be unable to effect a public sale of the Stock by reason of certain
prohibitions contained in the Securities Act, federal banking laws, and other
applicable laws, but may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers. Each Company agrees that any such
private sales may be at prices and other terms less favorable to the seller than
if sold at public sales and that such private sales shall not by reason thereof
be deemed not to have been made in a commercially reasonable manner. The
Collateral Agent shall be under no obligation to delay a sale of any of the
Stock for the period of time necessary to permit the issuer of such securities
to register such securities for public sale under the Securities Act, or such
other federal banking or other applicable laws, even if the issuer would agree
to do so. Subject to the foregoing, the Collateral Agent agrees that any sale of
the Stock shall be made in a commercially reasonable manner, and each Company
agrees to use its best efforts to cause the issuer or issuers of the Stock
contemplated to be sold, to execute and deliver, and cause the directors and
officers of such issuer to execute and deliver, all at such Company's expense,
all such instruments and documents, and to do or cause to be done all such other
acts and things as may be necessary or, in the reasonable opinion of the
Collateral Agent, advisable to exempt such Stock from registration under the
provisions of the Securities Act, and to make all amendments to such instruments
and documents which, in the opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto. Each Company further agrees to use its best efforts to cause such
issuer or issuers to comply with the provisions of the securities or "Blue Sky"
laws of any jurisdiction which the Collateral Agent shall designate and, if
required, to cause such issuer or issuers to make available to its security
holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the provisions
of Section 11(a) of the Securities Act.
9.4. Companies' Agreements, etc. Each Company further agrees to do or
cause to be done all such other acts and things as may be reasonably necessary
to make any sales of any portion or all of the Stock pursuant to this 'SS'9
valid and binding and in compliance with any and all applicable laws (including,
without limitation, the Securities Act, the Securities Exchange Act of 1934, as
amended, the rules and regulation of the Securities and Exchange Commission
applicable thereto and all applicable state securities or "Blue Sky" laws),
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at such Company's expense.
Each Company further agrees that a breach of any of the covenants contained in
this 'SS'9 will cause irreparable injury to the Collateral Agent and the Secured
Parties, that the Collateral Agent and the Secured Parties have no adequate
remedy at law in respect of such breach and, as a consequence, agrees that each
and every covenant contained in this 'SS'9 shall be specifically enforceable
against such Company by Collateral Agent and each Company hereby waives and
agrees not to assert any defenses against an action for specific performance of
such covenants.
10. MARSHALLING.
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Neither the Collateral Agent nor any Secured Party shall be required to
marshal any present or future collateral security for (including but not limited
to this Agreement and the Stock Collateral), or other assurances of payment of,
the Secured Obligations or any of them, or to resort to such collateral security
or other assurances of payment in any particular order. All of the Collateral
Agent's rights hereunder and of the Secured Parties and the Collateral Agent in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising. To
the extent that it lawfully may, each Company hereby agrees that it will not
invoke any law relating to the marshalling of collateral that might cause delay
in or impede the enforcement of the Collateral Agent's rights under this
Agreement or under any other instrument evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by
which any of the Secured Obligations is secured or payment thereof is otherwise
assured, and to the extent that it lawfully may such Company hereby irrevocably
waives the benefits of all such laws.
11. COMPANIES' OBLIGATIONS NOT AFFECTED.
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The obligations of the Companies hereunder shall remain in full force
and effect without regard to, and shall not be impaired by (i) any exercise or
nonexercise, or any waiver, by the Collateral Agent or any Lender of any right,
remedy, power or privilege under or in respect of any of the Secured Obligations
or any security thereof (including this Agreement); (ii) any amendment to or
modification of the Credit Documents or (iii) the taking of additional security
for, or any other assurances of payment of any of the Secured Obligations or the
release or discharge or termination of any security or other assurances of
payment or performance for any
of the Secured Obligations; whether or not any Company shall have notice or
knowledge of any of the foregoing.
12. TRANSFER, ETC., BY COMPANIES.
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Without the prior written consent of the Collateral Agent, no Company
will sell, assign, transfer or otherwise dispose of, grant any option with
respect to, or pledge or grant any security interest in any of the Collateral,
except for the pledge thereof and security interest therein provided for in this
Agreement.
13. FURTHER ASSURANCES.
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Each Company will do all such acts, and will furnish to the Collateral
Agent all such financing statements, certificates, legal opinions and other
documents and will obtain all such governmental consents and corporate approvals
and will do or cause to be done all such other things as the Collateral Agent
may reasonably request from time to time in order to give full effect to this
Agreement and to secure the rights of the Secured Parties and the Collateral
Agent hereunder, all without any cost or expense to the Collateral Agent or any
Secured Party. If the Collateral Agent so elects, a photocopy of this Agreement
may at any time and from time to time be filed by the Collateral Agent as a
financing statement in any recording office in any jurisdiction.
14. CONCERNING THE COLLATERAL AGENT.
--------------------------------
14.1. General Provisions. All duties, responsibilities and rights of
the Collateral Agent (including, without limitation, its expense reimbursement
and indemnification rights in respect of this Agreement) shall be governed by
the terms of the Intercreditor Agreement.
15. REPRESENTATIONS AND WARRANTIES.
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Each of the Collateral Agent, the Majority Debenture Holder, and each
Company represents and warrants to the other parties hereto that (i) the
execution, delivery and performance of this Agreement (A) have been duly
authorized by all requisite corporate action on its part and, in the case of the
Majority Debenture Holder, by the Indenture, and (B) do not conflict with or
result in any breach or contravention of any provision of law, statute, rule or
regulation to which it is subject or any judgment, order, writ, injunction,
license or permit applicable to it and will not conflict with any provision of
its corporate charter or bylaws or any agreement or other instrument binding
upon it; and (ii) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms.
16. STOCK COLLATERAL; FREEDOM TO DEAL.
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16.1. Release of Stock Collateral. Subject to the provisions of the
Intercreditor Agreement, the Collateral Agent is hereby authorized, upon receipt
of instructions from each
Requisite Party, to release any Stock Collateral and to provide such releases
and termination statements with respect to any Stock Collateral in connection
with any sale, exchange or other disposition thereof.
16.2. Legally Required Releases. Whether or not so instructed by the
Requisite Parties, the Collateral Agent may release any Stock Collateral and may
provide any release, termination statement or instrument of subordination
required by order of a court of competent jurisdiction or otherwise required by
applicable law.
17. AMENDMENT OF THIS AGREEMENT.
----------------------------
17.1. General. No modification or amendment of this Agreement shall be
effective unless the same shall be in writing and signed by the Secured Parties,
the Collateral Agent and each Company and no modification or amendment of this
Agreement shall be effective without the written consent of the Lender and the
Majority Debenture Holder; provided, however, (i) no amendment or waiver shall
adversely affect any of the collateral Agent's rights, immunities or rights to
indemnification hereunder or expand its duties or reduce any amount payable to
the Collateral Agent hereunder without the written consent of the Collateral
Agent; and (ii) 'SS''SS'14 and 16 of this Agreement and any other provision of
this Agreement affecting the rights and obligations of the Collateral Agent
hereunder may not be amended without the written consent of the Collateral
Agent.
17.2. Waiver. No waiver of any provision of this Agreement and no
consent to any departure by any party hereto from the provisions hereof shall be
effective unless such waiver or consent shall be set forth in a written
instrument executed by the party against which it is sought to be enforced, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice to or demand on any party hereto in
any case shall entitle such party to any other or further notice or demand in
the same, similar or other circumstances.
18. COLLATERAL AGENT AS AGENT AND LENDER.
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In its individual capacity and in its capacity as Lender, Fleet
National Bank shall have the same obligations and the same rights, powers and
privileges as it would have had were it not also the Collateral Agent.
19. MISCELLANEOUS.
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19.1. Further Assurances, etc. The Lender, the Majority Debenture
Holder and each of the Companies agree to execute and deliver such other
documents and instruments, in form and substance reasonably satisfactory to the
Collateral Agent, and shall take such other action, in each case as the
Collateral Agent or any Secured Party may reasonably request (at the sole cost
and expense of the Companies which agree to pay such costs and expenses), to
effectuate and carry out the provisions of this Agreement including, without
limitation, by recording or filing in
such places as the requesting party may deem desirable, this Agreement or such
other documents or instruments.
19.2. Notices. All notices and other communications made or required to
be given pursuant to this Agreement shall be in writing and shall be delivered
in hand, mailed by United States registered or certified first class mail,
postage prepaid, sent by overnight courier or sent by telegraph, telecopy,
facsimile or telex, confirmed by delivery via courier or postal service
addressed as follows:
(a) if to Fleet, at
Fleet National Bank
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxx, Senior Vice President
(b) if to the Majority Debenture Holder(s), at
The Prudential Insurance Company of America
c/o Prudential Capital Group
1114 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Managing Director
(c) if to the Collateral Agent, at
Fleet National Bank
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxx, Senior Vice President; and
(d) if to the Company, at
Quaker Fabric Corporation of Fall River
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Any such notice and other communications shall be deemed to have been duly given
or made and to have become effective (i) if delivered by hand, overnight courier
or facsimile to a responsible officer of the party to which it is directed, at
the time of the receipt thereof by such officer or the sending of such facsimile
and (ii) if mailed, sent by registered or certified first class mail postage
prepaid, on the third Business Day following the mailing thereof; provided,
however, that a Notice of Actionable Default or any other notice to be delivered
to the Collateral Agent pursuant
to the terms of this Agreement shall not be deemed to have been received by the
Collateral Agent until the Collateral Agent actually receives such notice.
19.3. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO
CONFLICT OF LAWS). THE PARTIES AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL
COURT SITTING THEREIN AND CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT
AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE PARTIES BY MAIL AT
THE ADDRESSES SPECIFIED IN 'SS'19.2. THE PARTIES HEREBY WAIVE ANY OBJECTION THAT
THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT
OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
19.4. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES
ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER,
OR THE PERFORMANCE OF ANY SUCH RIGHTS AND OBLIGATIONS. Except as prohibited by
law, each of the parties hereto hereby waive any right which it may have to
claim or recover in any litigation referred to in the preceding sentence any
special, exemplary, punitive or consequential damages or any damages other than,
or in addition to, actual damages. Each of the parties hereto (i) certifies that
neither the Collateral Agent, the Lender or the Majority Debenture Holder nor
any representative, agent or attorney of the Collateral Agent, the Lender or the
Majority Debenture Holder has represented, expressly or otherwise, that the
Collateral Agent would not, in the event of litigation, seek to enforce the
foregoing waivers, and (ii) acknowledges that, in entering into this Agreement,
the Collateral Agent, the Lender and the Majority Debenture Holder are relying
upon, among other things, the waivers and certifications contained in this
'SS'19.4.
19.5. Waiver of Rights. Neither any failure nor any delay on the part
of any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, and a single or partial exercise thereof shall not
preclude any other or further exercise or the exercise of any other right, power
or privilege.
19.6. Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
19.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.
19.8. Section Headings. The section headings used herein are for
convenience of reference only and are not to affect the construction of or be
taken into consideration in interpreting this Agreement.
19.9. Complete Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all prior representations, negotiations, writings, memoranda and
agreements. To the extent any provision of this Agreement conflicts with the
Credit Agreement, the Indentures or any other Credit Document, as among the
Secured Parties the provisions of this Agreement shall be controlling. To the
extent any provision of this Agreement conflicts with the Intercreditor
Agreement, as among the Secured Parties the provisions of the Intercreditor
Agreement shall be controlling. Nothing in this Agreement, expressed or implied,
is intended to confer upon any person other than the parties hereto and the
Secured Parties any rights or remedies under or by reason of this Agreement.
19.10. Subsequent Holders of Debentures as Parties. Any Holder of
Debentures which is not one of the original parties hereto by accepting any
Debenture shall be subject to all the provisions hereof and entitled to the
benefits hereof. Any such holder shall execute and deliver an Instrument of
Accession substantially in the form of Annex B hereto and shall deliver a copy
thereof to the Lender and the Collateral Agent, but no such execution and
delivery shall be required as a pre-condition to becoming a holder hereunder and
being subject to the provisions hereof and receiving the benefits hereof.
IN WITNESS WHEREOF, the Collateral Agent, the Lender, the Holders of
Debentures and each of the Companies have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year first
above written.
FLEET NATIONAL BANK,
in its capacity as Collateral Agent
By: ________________________________
Name:
Title:
FLEET NATIONAL BANK,
as a Lender
By: ________________________________
Name:
Title:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: ________________________________
Name:
Title:
PRUCO LIFE INSURANCE COMPANY
By: ________________________________
Name:
Title:
QUAKER FABRIC CORPORATION OF
FALL RIVER
By: ________________________________
Name:
Title:
QUAKER TEXTILE CORPORATION
By: ________________________________
Name:
Title:
QUAKER FABRIC MEXICO, S.A. de C.V.
By: ________________________________
Name:
Title:
QUAKER FABRIC CORPORATION
By: ________________________________
Name:
Title:
ANNEX A
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[To be Provided]
ANNEX B
-------
INSTRUMENT OF ACCESSION
-----------------------
With the intention of becoming a "Secured Party" for the purposes and within the
meaning of the SECOND AMENDED AND RESTATED PLEDGE AGREEMENT dated as of March
__, 2005, a copy of which being annexed hereto (the "Agreement"), the
undersigned hereby consents and agrees to be bound by the terms and provisions
of the Agreement to the same extent and with the same effect as if the
undersigned had executed and delivered the same as one of the original parties
thereto as a Secured Party and Holder of Debentures. The address of the
undersigned for purposes of notices given under the Agreement is set forth
below.
Dated: ____________, __, 20__
[NAME OF HOLDER OF DEBENTURES]
By: ________________________________
Name:
Title:
Address for Notices:
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Telecopy:
