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10.99
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of February 14, 2002
among
QUAKER FABRIC CORPORATION OF FALL RIVER
QUAKER TEXTILE CORPORATION,
QUAKER FABRIC MEXICO, S.A. de C.V., and
QUAKER FABRIC CORPORATION
and
FLEET NATIONAL BANK
(formerly known as The First National Bank of Boston)
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...........................................................1
SECTION 1.01. Certain Defined Terms........................................................1
SECTION 1.02. Computation of Time Period...................................................13
SECTION 1.03. Accounting Terms.............................................................13
SECTION 1.04. Time Zones...................................................................13
SECTION 1.05. Amendments to Documents......................................................13
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES.........................................................13
SECTION 2.01. The Advances.................................................................13
SECTION 2.02. Making the Advances..........................................................14
SECTION 2.03. Letters of Credit............................................................14
SECTION 2.04. Fees.........................................................................16
SECTION 2.05. Voluntary Reduction of the Commitment........................................16
SECTION 2.06. Repayment; Prepayment........................................................17
SECTION 2.07. Interest.....................................................................17
SECTION 2.08. Additional Interest on Eurodollar Advances...................................18
SECTION 2.09. Voluntary Conversion or Continuation of Advances.............................18
SECTION 2.10. Interest Rate Determination and Protection...................................19
SECTION 2.11. Increased Costs..............................................................19
SECTION 2.12. Illegality...................................................................20
SECTION 2.13. Payments and Computations....................................................20
SECTION 2.14. Exchange Rate................................................................21
SECTION 2.15. Usury........................................................................21
SECTION 2.16. Taxes........................................................................22
SECTION 2.17. [Intentionally Omitted]......................................................23
SECTION 2.18. Evidence of Debt.............................................................23
SECTION 2.19. Funding Losses...............................................................23
SECTION 2.20 Determination of Applicable Margins and Applicable Fees......................24
SECTION 2.21. Capital Adequacy.............................................................25
SECTION 2.22. [Intentionally Omitted]......................................................26
SECTION 2.23. [Intentionally Omitted]......................................................26
ARTICLE IIA GUARANTY OF the Parent...................................................................26
SECTION 2A.01. Guaranty.............................................................................26
SECTION 2A.02. Guaranty Absolute...........................................................26
SECTION 2A.03. Effectiveness; Enforcement..................................................27
SECTION 2A.04. Waivers.....................................................................27
SECTION 2A.05. Subrogation; Subordination..................................................27
ARTICLE IIB GUARANTY OF the COMPANY..................................................................28
SECTION 2B.01. Guaranty....................................................................28
SECTION 2B.02. Guaranty Absolute...........................................................29
SECTION 2B.03. Effectiveness; Enforcement..................................................29
SECTION 2B.04. Waivers.....................................................................30
SECTION 2B.05. Subrogation; Subordination..................................................30
ARTICLE III CONDITIONS OF LENDING....................................................................32
SECTION 3.01. Conditions Precedent to Initial Borrowing....................................32
SECTION 3.02. Conditions Precedent to Each Borrowing.......................................33
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................33
2
SECTION 4.01. Corporate Existence and Standing.............................................33
SECTION 4.02. Authorization and Validity...................................................34
SECTION 4.03. No Conflict; Government Consent..............................................34
SECTION 4.04. Title to Properties..........................................................34
SECTION 4.05 Financial Statements.........................................................34
SECTION 4.06. Material Adverse Effect; Dividends or Distributions..........................34
SECTION 4.07. Taxes........................................................................35
SECTION 4.08. Litigation and Contingent Obligations........................................35
SECTION 4.09. Subsidiaries.................................................................35
SECTION 4.10. ERISA........................................................................35
SECTION 4.11. Accuracy of Information......................................................36
SECTION 4.12. Material Agreements..........................................................36
SECTION 4.13. Compliance with Laws.........................................................36
SECTION 4.14. Investment Company Act.......................................................37
SECTION 4.15. Public Utility Holding Company Act...........................................37
SECTION 4.16. Regulations U and X..........................................................37
SECTION 4.17. No Event of Default..........................................................37
ARTICLE V COVENANTS OF THE BORROWERS AND the Parent..................................................37
SECTION 5.01 Reporting and Notice Requirements............................................37
SECTION 5.02. Conduct of Business..........................................................39
SECTION 5.03. Taxes........................................................................39
SECTION 5.04. Compliance with Laws, Charter Documents and Agreements.......................39
SECTION 5.05. Maintenance of Properties....................................................39
SECTION 5.06. Inspection...................................................................40
SECTION 5.07. Dividends....................................................................40
SECTION 5.08. Debt.........................................................................40
SECTION 5.09. Mergers and Acquisitions.....................................................41
SECTION 5.10. Sale of Assets...............................................................42
SECTION 5.11. Investments: Quaker Fabric Foreign Sales Corporation.........................42
SECTION 5.12. Liens........................................................................44
SECTION 5.13. Punctual Payment.............................................................45
SECTION 5.14. Letters of Credit............................................................45
SECTION 5.15. Affiliates...................................................................45
SECTION 5.16. Existence; Maintenance of Office.............................................45
SECTION 5.17. ERISA........................................................................46
SECTION 5.18. Environmental Matters........................................................46
SECTION 5.19. Insurance....................................................................47
SECTION 5.20. Sale and Leaseback...........................................................47
SECTION 5.21. Negative Pledges.............................................................47
SECTION 5.22. [Intentionally Omitted]......................................................47
SECTION 5.23. Financial Covenants..........................................................47
SECTION 5.24. Use of Proceeds..............................................................48
SECTION 5.25. [Intentionally Omitted]......................................................48
SECTION 5.26. Modification of Debt.........................................................48
SECTION 5.27. Records and Accounts.........................................................48
SECTION 5.28. Quaker Mexico................................................................49
SECTION 5.28. Further Assurances...........................................................49
3
ARTICLE VI EVENTS OF DEFAULT.........................................................................49
SECTION 6.01. Events of Default............................................................49
SECTION 6.02. Termination of Commitment....................................................51
SECTION 6.03. Remedies.....................................................................51
ARTICLE VII [Intentionally Omitted]..................................................................52
ARTICLE VIII MISCELLANEOUS...........................................................................52
SECTION 8.01. Amendments. Etc..............................................................52
SECTION 8.02. Notices, Etc.................................................................52
SECTION 8.03. No Waiver; Remedies..........................................................52
SECTION 8.04. Costs, Expenses and Taxes....................................................52
SECTION 8.05. Right of Set-off.............................................................53
SECTION 8.06. Binding Effect...............................................................54
SECTION 8.07. Participations...............................................................54
SECTION 8.08. Governing Law; Jury Trial Waiver.............................................54
SECTION 8.09. Consent to Jurisdiction......................................................55
SECTION 8.10. Indemnity....................................................................55
SECTION 8.11. Severability of Provisions...................................................56
SECTION 8.12. Headings.....................................................................56
SECTION 8.13. Entire Agreement.............................................................56
SECTION 8.14. Execution in Counterparts....................................................56
SECTION 8.15. Survival of Covenants........................................................56
SECTION 8.16. Payments Set Aside...........................................................56
SECTION 8.17. Transitional Arrangements....................................................57
4
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Opinion
Exhibit C Form of Compliance Certificate
Exhibit D Form of Collateral Agency and Pledge Agreement
SCHEDULES
Schedule 4.04 Title to Properties
Schedule 4.08 Litigation
Schedule 4.09 Subsidiaries
Schedule 4.10 ERISA Matters
Schedule 5.08 Existing Debt
Schedule 5.11 Existing Investments
Schedule 5.12 Existing Liens
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND Amended and Restated Credit Agreement, dated as of February
14, 2002 is by and among (a) QUAKER FABRIC CORPORATION OF FALL RIVER, a
Massachusetts corporation (the "Company"), QUAKER TEXTILE CORPORATION, a
Massachusetts corporation ("Quaker Textile") and QUAKER FABRIC MEXICO, S.A. de
C.V., a Mexican corporation ("Quaker Mexico", and along with the Company and
Quaker Textile, the "Borrowers"), (b) QUAKER FABRIC CORPORATION, a Delaware
corporation (the "Parent"), and (c) FLEET NATIONAL BANK (formerly known as The
First National Bank of Boston) ("Fleet").
WHEREAS, pursuant to that certain Amended and Restated Credit Agreement,
dated as of December 18, 1995, as amended (as so amended, the "Original Credit
Agreement") by and among the Borrowers, Fleet National Bank (formerly known as
The First National Bank of Boston as agent for the banks party thereto and Fleet
as such a bank, Fleet has made advances to, and participated in letters of
credit issued for the account of, the Borrowers; and
WHEREAS, the Borrowers wish to amend and restate the Original Credit
Agreement; and
WHEREAS, subject to the satisfaction of the terms and provisions set forth
below, Fleet is willing to amend and restate the Original Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree that as of the Closing
Date (as defined below), the Original Credit Agreement shall be amended and
restated in its entirety as set forth herein and shall be in full force and
effect as provided herein.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"7.09% Senior Notes" shall have the meaning specified therefor in the
definition of Senior Notes.
"7.18% Senior Notes" shall have the meaning specified therefor in the
definition of Senior Notes.
"7.56% Senior Notes" shall have the meaning specified therefor in the
definition of Senior Notes.
"Acquisition" has the meaning set forth in Section 5.09 hereof.
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"Acquisition Intangibles" means, at any date of determination, the
aggregate amount of intangible assets of the Parent and its Subsidiaries
constituting intangible assets relating to Acquisitions.
Additional Note Agreement" shall have the meaning specified therefor in
the definition of Senior Notes.
"Additional Senior Notes" shall have the meaning specified therefor in the
definition of Senior Notes.
"Advance" means an advance by Fleet to the Borrowers pursuant to Article
II, and refers to a Reference Rate Advance or a Eurodollar Advance (each of
which shall be a "Type" of Advance).
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns ten
percent (10%) or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
"Agreement" means this Second Amended and Restated Credit Agreement, as it
may be amended, restated, modified or supplemented and in effect from time to
time.
"Applicable Lending Office" means Fleet's Domestic Lending Office in the
case of a Reference Rate Advance and Fleet's Eurodollar Lending Office in the
case of a Eurodollar Advance.
"Applicable Commitment Fee" shall have the meaning set forth in Section
2.20.
"Applicable Fees" and "Applicable Margins" shall have the meanings set
forth in Section 2.20.
"Applicable L/C Fee" shall have the meaning set forth in Section 2.20.
"Applicable Eurodollar Rate Margin" shall have the meaning set forth in
Section 2.20.
"Applicable Reference Rate Margin" shall have the meaning set forth in
Section 2.20.
"Application" means an application by the Company, in a form and
containing terms and provisions acceptable to Fleet, for the issuance by Fleet
of a Letter of Credit.
"Attorneys' Fees" means the reasonable value of the services of in-house
attorneys and paralegals and the reasonable fees of outside attorneys and
paralegals (and costs, charges and expenses related thereto) employed or
retained by Fleet from time to time (i) in connection with the negotiation,
preparation, execution, delivery, administration and enforcement of this
Agreement and all other documents or instruments provided for herein or in any
thereof or
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delivered or to be delivered hereunder or in connection herewith or therewith,
(ii) to prepare documentation related to the Advances made or Letters of Credit
issued hereunder, (iii) to prepare any amendment, consent or supplement to, any
modification or restatement of, or waiver under this Agreement or instruments or
documents related hereto or thereto and (iv) to represent Fleet in any
litigation, contest, dispute, suit or proceeding or to commence, defend or
intervene in any litigation, contest, dispute, suit or proceeding or to file a
petition, complaint, answer, motion or other pleading, or to take any other
action in or with respect to, any litigation, contest, dispute, suit or
proceeding (whether instituted by Fleet, the Borrowers, the Parent or any other
Person and whether in bankruptcy or otherwise) in any way or respect relating to
this Agreement or the Borrowers' or the Parent's affairs.
"Banking Day" means a day of the year on which banking institutions in
Boston, Massachusetts are open for the transaction of banking business and, if
the applicable Banking Day relates to any Eurodollar Advances, on which dealings
are carried on in the interbank eurocurrency market.
"Base Eurodollar Rate" means, for any Interest Period for each Eurodollar
Advance comprising part of the same Borrowing, an interest rate per annum equal
to the average (rounded upward to the nearest whole multiple of 1/16 of 1% per
annum, if such average is not such a multiple) of the rate per annum at which
deposits in U.S. dollars are offered to Fleet in the interbank eurocurrency
market where the eurocurrency and foreign currency and exchange operations of
Fleet are customarily conducted at or about 11:00 a.m. (Boston time) two Banking
Days before the first day of such Interest Period in an amount substantially
equal to the Eurodollar Advances comprising such Borrowing and for a period
equal to such Interest Period.
"Base Reference Rate" means, at any time, the higher of (i) the rate of
interest then most recently announced by Fleet at its head office in Boston,
Massachusetts as its "prime rate" and (ii) the Federal Funds Rate plus one-half
of one percent (0.5%). Each change in the interest rate on any Advance shall
take effect on the effective date of the change in the Base Reference Rate.
"Benefit Plan" means a defined benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) in respect of which the Borrowers, the
Parent or any ERISA Affiliate is, or at any time during the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
"Borrowers" shall have the meaning set forth in the preamble hereto.
"Borrowing" means a borrowing requested by the Borrowers pursuant to a
Notice of Borrowing consisting of Advances of the same Type made on the same day
by Fleet.
"Capitalized Lease" means any lease the discounted future rental payments
under which are or should be capitalized on the balance sheet of the lessee in
accordance with GAAP.
"Change of Control" means that any Person, other than Nortex Holdings,
Inc. or an Affiliate thereof, or any past or current officer or employee of the
Parent or the Company,
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acquires or owns more than thirty-five percent (35%) of the issued and
outstanding stock of the Parent.
"Closing Date" means the first date on which each of the conditions
precedent set forth in Article III have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed to also refer to any successor sections.
"Collateral Agency and Pledge Agreement" means the Amended and Restated
Collateral Agency and Pledge Agreement dated as of February 14, 2002 by and
among the Company, Fleet, in its individual capacity and as Collateral Agent,
and the Prudential Insurance Company of America, as Trustee, in the form
attached hereto as Exhibit D.
"Commitment" shall be an amount equal to $60,000,000, as such amount may
be reduced pursuant to the provisions hereof.
"Company Guaranteed Obligations" has the meaning specified in Section
2B.01.
"Compliance Certificate" shall have the meaning set forth in Section 5.01
hereof.
"Consolidated" or "consolidated" shall mean, with reference to any term
defined herein, that term as applied to the accounts of the Parent and its
Subsidiaries, consolidated in accordance with GAAP.
"Convert," "Conversion" and "Converted" each refers to a conversion of
Advances of one Type into Advances of another Type pursuant to Sections 2.09 or
2.10.
"Debt" means (i) indebtedness for borrowed money, including without
limitation obligations evidenced by bonds, debentures, notes or other similar
instruments, (ii) obligations to pay the deferred purchase price of property or
services other than credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and services, (iii)
Recourse Obligations, (iv) obligations as lessee under Capitalized Leases, (v)
letters of credit, and (vi) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (v) above.
"Debt Service" means, with respect to any period, the sum of (i) the
aggregate amount of any scheduled maturities of Debt for borrowed money of the
Parent and its Subsidiaries for such period, (ii) Interest Expense for such
period, (iii) the aggregate amount of the principal portion of all payments made
or scheduled to be made by the Parent and its Subsidiaries under Capital Leases
during such period, (iv) the aggregate amount paid with respect to any dividends
or distributions on, or redemptions of, any preferred stock of the Parent or its
Subsidiaries and (v) the aggregate amount of all commitment fees, agency fees,
facility fees and
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all other fees and expenses incurred in connection with the borrowing of money
during such period.
"Debt Service Coverage Ratio" means, for any period, the ratio of (i)
Operating Cash Flow for such period to (ii) Debt Service for such period.
"Default Rate" shall have the meaning set forth in Section 2.07(c).
"Distributions" shall have the meaning set forth in Section 5.07.
"DOL" means the United States Department of Labor and any successor
department or agency.
"Domestic Lending Office" means the office of Fleet specified as its
"Domestic Lending Office" opposite its name on the signature pages hereof, or
such other office of Fleet in the United States of America as Fleet may from
time to time specify in writing to the Company.
"EBIT" means, with respect to any period, (i) the Net Income for such
period plus (ii) Interest Expense for such period plus (iii) provisions for
income taxes of the Parent and its Subsidiaries determined on a consolidated
basis in accordance with GAAP for such period and minus (to the extent such
charge represents a gain) or plus (to the extent such charge represents a loss)
(iv) any extraordinary charges to net income determined on a consolidated basis
in accordance with GAAP for such period; provided that the amount of any such
charges representing a loss added pursuant to clause (iv) hereof for any such
period shall not exceed $1,000,000.
"EBITDA" means, with respect to any period, the sum of (i) EBIT for such
period plus (ii) the consolidated depreciation and amortization expense of the
Parent and its Subsidiaries for such period (including without limitation
amortization with respect to goodwill, deferred financing charges, the Parent's
stock option plan and fabric designs) determined on a consolidated basis in
accordance with GAAP. EBITDA shall exclude the EBITDA of any Non-Contributing
Subsidiary.
"Environmental Laws" means the Federal Clean Air Act (42 U.S.C. 7501 et
seq.), the Clean Water Act (33 U.S.C. 1251 et seq.), the Resource Conservation
and Recovery Act of 1976 (42 U.S.C. 6901 et seq.), the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. 969), any
so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act (15
U.S.C. 2601), any Occupational Safety and Health Law (29 U.S.C. 655), and any
other federal, state or local statute, law, ordinance, code, rule, regulation,
permit, license, order or decree regulating, relating to, or imposing liability
or standards of conduct concerning any Hazardous Materials, or any other
hazardous, toxic, special or dangerous waste, substance or constituent, whether
solid, liquid or gas, or employee health and/or safety, as from time to time
hereafter in effect.
"Environmental Lien" shall mean a Lien in favor of any governmental entity
for (i) any liability under Environmental Laws or (ii) damages arising from, or
costs incurred by such
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governmental entity in response to, a Release or threatened Release of a
Hazardous Material into the environment.
"Equipment Sales Proceeds" shall have the meaning set forth in Section
5.10(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" means any (i) corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Code) as the Borrowers or the Parent, (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with the Borrowers or the Parent, and (iii)
member of the same affiliated service group (within the meaning of Section
414(m) of the Code) as the Borrowers or the Parent, any corporation described in
clause (i) above or any partnership or trade or business described in clause
(ii) above; and (iv) entity treated as a single employer with the Borrowers or
the Parent pursuant to Section 414(o) of the Code.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" means a per annum interest rate equal to the sum of (i)
the Base Eurodollar Rate and (ii) the Applicable Eurodollar Rate Margin, as
determined pursuant to Section 2.20.
"Eurodollar Advance" means an Advance which bears interest at the
Eurodollar Rate.
"Eurodollar Lending Office" means the office of Fleet specified as its
"Eurodollar Lending Office" opposite its name on the signature pages hereof (or,
if no such office is specified, its Domestic Lending Office), or such other
office of Fleet as Fleet may from time to time specify in writing to the
Company.
"Eurodollar Rate Reserve Percentage" of Fleet for any Interest Period for
any Eurodollar Advance means the reserve percentage applicable during such
Interest Period (or if more than one such percentage shall be so applicable, the
daily average of such percentages for those days in such Interest Period during
which any such percentage shall be so applicable) under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for Fleet with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
"Event of Default" shall have the meaning specified in Section 6.01
hereof.
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"Export-Import Recourse Obligations" means Recourse Obligations guaranteed
by the Export-Import Bank of the United States or other qualified insurance
providers on terms acceptable to Fleet.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Banking Day, for the next preceding Banking Day) by the
Federal Reserve Bank of Boston, or, if such rate is not so published for any day
which is a Banking Day, the average of the quotations for such day on such
transactions received by Fleet from three Federal funds brokers of recognized
standing selected by it.
"Fee Letter" means that certain Fee Letter, dated as of February 14, 2002,
among the Borrowers, the Parent and Fleet.
"Fleet" means Fleet National Bank (f/k/a The First National Bank of
Boston).
"GAAP" means (i) when used in Sections 5.22 or 5.23, whether directly or
indirectly through reference to a capitalized term used therein, means (A)
principles that are consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors, in effect for the
fiscal year ended on December 30, 2000, and (B) to the extent consistent with
such principles, the accounting practices of the Parent reflected in its
financial statements for the year ended on December 30, 2000, and (ii) when used
in general, other than as provided above, means principles that are (A)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time,
and (B) consistently applied with past financial statements of the Parent
adopting the same principles, provided that in each case referred to in this
definition of "GAAP" a certified public accountant would, insofar as the use of
such accounting principles is pertinent, be in a position to deliver an
unqualified opinion (other than a qualification regarding changes in generally
accepted accounting principles) as to financial statements in which such
principles have been properly applied.
"Hazardous Materials" means any waste, pollutant, contaminant, toxic
substance, special waste or hazardous substance regulated by any Environmental
Law, including, without limitation, petroleum, including crude oil or any
fraction thereof which is liquid at standard conditions of temperature or
pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute), any
radioactive material, including, but not limited to, any source, special nuclear
or by-product material as defined at 42 U.S.C. section 2011 et. seq., as amended
or hereafter amended, and asbestos in any form or condition.
"Indemnified Liabilities" shall have the meaning specified in Section
8.10.
"Indemnitees" shall have the meaning specified in Section 8.10.
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"Interest Expense" means, with respect to any period, the total interest
expense of the Parent and its Subsidiaries determined on a consolidated basis
for such period (whether paid or accrued and including the interest component of
payments under Capitalized Leases).
"Interest Period" means, with respect to each Eurodollar Advance
comprising part of the same Borrowing, a period of one (1), two (2), three (3),
six (6), or, with the prior consent of Fleet, nine (9) or twelve (12) months
commencing on a Banking Day selected by the Borrowers pursuant to the provisions
below upon notice received by Fleet not later than 11:00 A.M. (Boston time) on
the third Banking Day prior to the first day of such Interest Period. Such
Interest Period shall end on (but exclude) the day which corresponds numerically
to such date one, two, three, six, nine or twelve months thereafter; provided,
however, that if there is no such numerically corresponding day in such next,
second, third, sixth, ninth or twelfth succeeding month, such Interest Period
shall end on the last Banking Day of such next, second, third, sixth, ninth or
twelfth succeeding month. If an Interest Period would otherwise end on a day
which is not a Banking Day, such Interest Period shall end on the next
succeeding Banking Day, provided, however, that if said next succeeding Banking
Day falls in a new calendar month, such Interest Period shall end on the
immediately preceding Banking Day; and provided further that:
(i) Interest Periods commencing on the same date for Advances
comprising part of the same Borrowing shall be of the same duration;
(ii) no more than six (6) Borrowings having different Interest
Periods shall be in effect at any time;
(iii) the Borrowers may not select an Interest Period which would
end after the Maturity Date; and
(iv) the Borrowers shall select Interest Periods so that it is not
necessary to repay or prepay all or any portion of any Borrowing bearing
interest at the Eurodollar Rate prior to the last day of the applicable
Interest Period in order to make mandatory repayments or prepayments as
required pursuant to the terms of this Agreement.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers, directors and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business), deposit account or
contribution of capital by such Person to any other Person or any investment in,
or purchase or other acquisition of, the stock, partnership interests, notes,
debentures or other securities of, or in respect of any guaranty of the
obligations of, any other Person made by such Person. In determining the
aggregate amount of Investments outstanding at any particular time: (i) the
amount of any Investment represented by a guaranty shall be taken at not less
than the principal amount of the obligations guaranteed and still outstanding;
(ii) there shall be included as an Investment all interest accrued with respect
to Indebtedness constituting an Investment unless and until such interest is
paid; (iii) there shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (iv)
there shall not be deducted in respect of any
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Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (ii) may be deducted when paid; and (v) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
"IRS" shall mean the Internal Revenue Service or any successor agency
thereto.
"L/C Draft" means a draft drawn on Fleet pursuant to a Letter of Credit.
"Letter of Credit" means a standby or documentary letter of credit issued
by Fleet pursuant to this Agreement on the Application of the Company.
"Letter of Credit Obligations" means at any time an amount equal to the
sum of (i) the aggregate outstanding face amount of all Letters of Credit (as
reduced by the aggregate outstanding face amount of all accepted but unpaid L/C
Drafts relating to such Letters of Credit) plus (ii) the aggregate amount of all
Unpaid Reimbursement Obligations.
"Leverage Ratio" means, as of any date of determination, the ratio of (i)
Total Funded Debt as of such date to (ii) EBITDA for the four (4) fiscal
quarters of the Parent and its Subsidiaries then ended.
"Lien" means any security interest, mortgage, pledge, hypothecation,
judgment lien or similar legal process, Environmental Lien, title retention
lien, or other lien or encumbrance, including, without limitation, the interest
of a vendor under any conditional sale or other title retention agreement and
the interest of a lessor under any Capitalized Lease.
"Material Adverse Effect" means a material adverse effect upon (i) the
business, properties, prospects, condition (financial or otherwise) or
operations of the Parent and its Subsidiaries taken as a whole or (ii) the
ability of the Parent and its Subsidiaries taken as a whole to pay or perform
any obligation or agreement hereunder.
"Maturity Date" means January 31, 2007.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001 (a) (3) of ERISA which is subject to Title IV of ERISA which is, or within
the immediately preceding six (6) years was, contributed to by the Borrowers,
the Parent or any ERISA Affiliate.
"Net Income" means, with respect to any period, the net earnings after
interest and taxes of the Parent and its Subsidiaries for such period determined
on a consolidated basis in conformity with GAAP.
"New Parent Subsidiary" has the meaning specified in Section 5.09.
"Non-Contributing Subsidiary" means any Subsidiary which for any reason is
prohibited from making dividend payments to the Company, the Parent or another
Subsidiary.
"Notice of Borrowing" has the meaning specified in Section 2.02.
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"Note Agreement" shall have the meaning specified therefor in the
definition of Senior Notes.
"Occupational Safety and Health Law" means the Occupational Safety and
Health Act of 1970, as amended, and any other federal, state or local statute,
law, ordinance, code, rule, regulation, order or decree regulating, relating to
or imposing liability or standards of conduct concerning employee health and/or
safety.
"OECD" means the Organization for Economic Cooperation and Development.
"Operating Cash Flow" means, with respect to any period (a) EBIT for such
period plus (b) the amortization expense of the Parent and its Subsidiaries for
such period (including without limitation amortization with respect to goodwill,
deferred financing charges, the Parent's stock option plan and fabric designs),
calculated on a consolidated basis in accordance with GAAP, minus (c) the sum of
(i) actual cash payments with respect to income taxes for such period of the
Parent and its Subsidiaries, net of any cash refunds with respect to income
taxes received during such period and (ii) any dividends or other distributions
paid on or in respect of any shares of any class of capital stock of the Parent
for such period. Operating Cash Flow shall exclude the Operating Cash Flow of
any Non-Contributing Subsidiary.
"Original Credit Agreement" has the meaning specified in the preamble
hereto.
"Parent" shall have the meaning specified in the preamble hereto.
"Parent Guaranteed Obligations" shall have the meaning specified in
Section ▇▇.▇▇.
"▇▇▇▇" means the Pension Benefit Guaranty Corporation and any Person
succeeding to any or all of the functions thereof.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA in
respect of which the Borrowers, the Parent or any ERISA Affiliate is, or within
the immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Purchase Money Debt" means Debt incurred solely for the purpose of
financing the acquisition of new or used property in a principal amount not to
exceed the installed cost of any such property.
"Quaker LLC" means Quaker Fabric Corporation of Fall River Holdings LLC, a
Delaware limited liability company.
"Quaker Mexico" shall have the meaning specified in the preamble hereto.
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"Quaker Textile" shall have the meaning specified in the preamble hereto.
"Recourse Obligations" means, at any time, the aggregate amount that the
Borrowers, the Parent or any of their Subsidiaries may be required to pay to the
purchaser of any accounts receivable or other payment obligations of any Person
to the Borrowers, the Parent or any of their Subsidiaries pursuant to any sale
of accounts receivable or any factoring arrangement, whether or not such amounts
are contingent.
"Reference Rate" means a per annum interest rate equal to the sum of (i)
the Base Reference Rate and (ii) the Applicable Reference Rate Margin, as
determined pursuant to Section 2.20.
"Reference Rate Advance" means an Advance bearing interest at the
Reference Rate.
"Register" has the meaning specified in Section 2.18(a).
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any property, including the movement of
Hazardous Materials through or in the air, soil, surface water, groundwater or
property.
"Remedial Action" means actions required to (i) clean up, remove, treat or
in any other way address Hazardous Materials in the indoor or outdoor
environment; (ii) prevent the Release or threatened Release or minimize the
further Release of Hazardous Materials so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; or (iii) perform remedial investigations and feasibility studies as
well as operations and maintenance activities that may be required after the
completion of any cleanup.
"Reportable Event" means any of the events described in Section 4043 of
ERISA.
"Seller Debt" shall have the meaning specified therefor in the definition
of Senior Acquisition Debt.
"Senior Acquisition Debt" means (a) Advances hereunder borrowed in
connection with an Acquisition permitted by Section 5.09 hereof, and (b)
unsecured Debt other than Subordinated Debt issued by the Company to the seller
of an entity acquired after the Closing Date in an Acquisition permitted by
Section 5.09 hereof (the "Seller Debt").
"Senior Debt Ratio" means, as of any date of determination, the ratio of
(i) the result of (a) Total Funded Debt as of such date minus (b) the
outstanding amount of the Subordinated Debt as of such date to (ii) EBITDA for
the four fiscal quarters of the Parent and its Subsidiaries then ended.
"Senior Notes" means (a) the 7.09% senior promissory notes due October 10,
2005 issued by the Company to The Prudential Insurance Company of America and
Pruco Life
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Insurance Company pursuant to the Note Purchase Agreement (the "Note Agreement")
dated as of October 10, 1997 in an original aggregate amount of $15,000,000 (the
"7.09% Notes"), (b) the 7.18% senior promissory notes due October 10, 2007
issued by the Company to The Prudential Insurance Company of America and Pruco
Life Insurance Company pursuant to the Note Agreement, in an original aggregate
amount of $30,000,000 (the "7.18% Notes"), (c) the 7.56% senior promissory notes
due February 14, 2009 issued by the Company to The Prudential Insurance Company
of America pursuant to the Note Purchase Agreement and Private Shelf Facility
(the "Additional Note Agreement") dated as of February 14, 2002 in an aggregate
amount not to exceed $5,000,000 (the "7.56% Senior Notes"), (d) the Shelf Notes
(as defined in the Additional Note Agreement) issued under the terms of the
Additional Note Agreement on terms and conditions substantially similar to the
7.56% Senior Notes so long as such Shelf Notes have a maturity of no more than
ten (10) years and an average weighted life of no more than ten (10) years, in
an aggregate amount not to exceed $45,000,000 (the "Additional Senior Notes")
and (e) any replacements of the foregoing issued on terms and conditions
satisfactory to Fleet in its sole discretion.
"Subordinated Debt" has the meaning specified in Section 5.08(v).
"Subsidiary" means any Person of which or in which the Parent, the Company
and their Subsidiaries own directly or indirectly fifty (50%) or more of (i) 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, if it is a corporation, (ii) the capital interest or profits interest of
such Person, if it is a partnership, joint venture or similar entity, or (iii)
the beneficial interest of such Person, if it is a trust, association or other
unincorporated organization.
"Tangible Net Worth" means, as of any date of determination, (i) the total
shareholders' equity of the Parent and its Subsidiaries determined on a
consolidated basis in conformity with GAAP as of such date minus (ii) the book
value of the intangible assets of the Parent and its Subsidiaries determined on
a consolidated basis in conformity with GAAP as of such date.
"Taxes" with respect to any Person means taxes, assessments or other
governmental charges or levies imposed upon such Person, its income or any of
its properties, franchises or assets.
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Borrowers, the Parent or any ERISA
Affiliate from a Benefit Plan during a plan year in which the Borrowers, the
Parent or such ERISA Affiliate was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the institution by the Borrowers, the Parent
or any ERISA Affiliate under Section 4041 of ERISA with respect to any Benefit
Plan of a distress termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Benefit Plan or to appoint
a trustee to administer any Benefit Plan; or (v) the partial or complete
withdrawal of the Borrowers, the Parent or any ERISA Affiliate from a
Multiemployer Plan.
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"Total Funded Debt" means, as of any date of determination, the sum of (a)
the outstanding amount of all Debt (other than Export-Import Recourse
Obligations or those Recourse Obligations referred to in Section 5.10(b)(ii)
which are backed by other credit support acceptable to Fleet) of the Parent and
its Subsidiaries on a consolidated basis for borrowed money including without
limitation obligations under Capitalized Leases allocable to principal and (b)
the aggregate liquidation value of all shares of preferred stock having
mandatory redemption features issued by the Parent or any of the Borrowers
(other than such shares issued to the Parent or the Company) together with any
accrued but unpaid dividends thereon.
"Type" shall have the meaning set forth in the definition of Advance.
"Unpaid Reimbursement Obligation" means any obligation of the Company to
reimburse Fleet on account of any drawings under any Letter of Credit or L/C
Draft as provided in Section 2.03(c) for which the Company has not reimbursed
Fleet on the date specified in Section 2.03(c).
SECTION 1.02. Computation of Time Period. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistently applied.
SECTION 1.04. Time Zones. All references to time zones set forth in this
Agreement shall be deemed to be references to the appropriate time zone of
Fleet's principal place of business located in the United States of America.
SECTION 1.05. Amendments to Documents. A reference to any document or
agreement shall include such document or agreement as amended, modified or
supplemented from time to time in accordance with its terms and the terms of
this Agreement. A reference to any law or statute shall include such law or
statute and any successor law or statute of similar import in each case as
amended and in effect from time to time.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances. Fleet agrees, on the terms and conditions
hereinafter set forth, to make Advances to the Borrowers from time to time on
any Banking Day during the period from the Closing Date until the Maturity Date
in an aggregate amount not to exceed at any time outstanding, when added to the
sum of the aggregate amount of the Letter of Credit Obligations, the Commitment.
Prior to the Maturity Date, the Borrowers may borrow up to an aggregate
principal amount outstanding at any time of the difference between (i) the
Commitment and (ii) the Letter of Credit Obligations
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provided that (a) the aggregate outstanding principal balance of all of the
Advances and the Letter of Credit Obligations shall not exceed the Commitment at
any time, (b) the aggregate outstanding principal balance of all Advances to
Quaker Textile and Quaker Mexico shall not exceed $5,000,000, and (c) the
aggregate outstanding principal balance of all Advances by Fleet to Quaker
Textile and Quaker Mexico shall not exceed $5,000,000. Each Borrowing shall be
in an aggregate amount not less than $1,000,000 in the case of Borrowings
consisting of Eurodollar Advances and $100,000 in the case of Borrowings
consisting of Reference Rate Advances or an integral multiple of $100,000 in
excess thereof, in either case, and shall consist of Advances of the same Type
made on the same day by Fleet. Within the limits of the Commitment and subject
to the provisions of this Section 2.01, each Borrower may borrow, prepay
pursuant to Section 2.06 and reborrow under this Section 2.01.
SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made on
notice, given not later than (i) 11:00 A.M. (Boston time) on the third Banking
Day prior to the date of the proposed Borrowing in the case of Borrowings
consisting of Eurodollar Advances and (ii) 10:00 A.M. (Boston time) on the date
of the proposed Borrowing in the case of Borrowings consisting of Reference Rate
Advances, by the Company to Fleet. Each such notice of a Borrowing (a "Notice of
Borrowing") shall be by telecopier, in substantially the form of Exhibit A
hereto, specifying therein (A) the relevant Borrower, (B) the date of such
Borrowing, (C) the Type of Advances comprising such Borrowing, (D) the aggregate
amount of such Borrowing, and (E) if such Advance is a Eurodollar Advance, the
Interest Period for each such Advance. Upon fulfillment of the applicable
conditions set forth in Article III, Fleet shall, on the date of such Borrowing,
make the amount of such Borrowing available to the applicable Borrower at the
Applicable Lending Office.
(b) Each of Quaker Textile and Quaker Mexico hereby authorizes the Company
to give Notices of Borrowing on such Borrower's behalf, to give any other notice
or make any election contemplated by this Agreement and to have Advances made to
such Borrower deposited in the Company's account with Fleet.
(c) [Intentionally Omitted]
(d) Anything in subsection (a) above to the contrary notwithstanding, the
Borrowers may not select Eurodollar Advances for any Borrowing if the aggregate
amount of such Borrowing is less than $1,000,000 and the Borrowers may not
collectively request more than three (3) Borrowings bearing interest at the
Eurodollar Rate on any single Banking Day.
(e) Each Notice of Borrowing shall be irrevocable and binding on the
Borrowers. In the case of any Borrowing which the related Notice of Borrowing
specifies is to be comprised of Eurodollar Advances, the Borrowers shall
indemnify Fleet against any loss, cost or expense incurred by Fleet as a result
of any failure to fulfill on or before the date specified in such Notice of
Borrowing for such Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by Fleet to
fund the Advance as part of such Borrowing when such Advance, as a result of
such failure, is not made on such date.
SECTION 2.03. Letters of Credit.
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(a) In addition to Advances made pursuant to Sections 2.01 and 2.02,
subject to the terms and conditions set forth herein, Fleet will, upon receipt
of duly executed Applications and such other documents, instruments and/or
agreements as Fleet may reasonably require, issue, extend or renew Letters of
Credit for the account of the Company on such terms as are satisfactory to Fleet
and to such beneficiaries as are permitted by law and Fleet's internal policies,
provided, however that no Letter of Credit will be issued if, before or after
taking such Letter of Credit into account, (i) the sum of (A) the Letter of
Credit Obligations and (B) the outstanding principal balance of the Advances
exceeds the Commitment in effect as of such date or (ii) the Letter of Credit
Obligations exceed $10,000,000. No Letter of Credit shall have an initial
expiration date which is later than the one (1) year anniversary of the date of
issuance of such Letter of Credit, or if earlier thirty (30) days prior to the
Maturity Date. Notwithstanding the foregoing, the Company shall be permitted to
request Letters of Credit having initial expiration dates which extend beyond
the Maturity Date so long as, at least one hundred eighty (180) days prior to
the Maturity Date, the Company provides to Fleet, cash collateral in an amount
equal to one hundred five percent (105%) of the face amount of such Letters of
Credit. Each Letter of Credit issued, extended or renewed hereunder shall be
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 or any
successor version thereof adopted by Fleet in the ordinary course of its
business as a letter of credit issuer and in effect at the time of issuance of
such Letter of Credit.
(b) The Company agrees to pay Fleet the Applicable L/C Fee (calculated on
the basis of a year consisting of 360 days and paid for actual days elapsed) of
the undrawn amount of each Letter of Credit (which undrawn amount shall include
the amount of any L/C Draft accepted by Fleet but not yet paid, to the extent
the amount of the Letter of Credit to which such L/C Draft relates shall have
been reduced thereby). The Applicable L/C Fee and such other fees for the
account of Fleet shall be payable with respect to each such Letter of Credit, in
arrears, for each calendar quarter on the last day of each March, June,
September and December. The Company further agrees to pay Fleet, on demand,
Fleet's standard administrative operating fees and charges in effect from time
to time for issuing and administering any Letters of Credit.
(c) In order to induce Fleet to issue, extend or renew each Letter of
Credit, the Company agrees to reimburse Fleet on demand for each payment made by
Fleet under or pursuant to any Letter of Credit or L/C Draft, together with the
amount of any taxes, fees, charges or other costs and expenses whatsoever
incurred by Fleet in connection with any payment made under such Letter of
Credit. In the event that Fleet makes a payment under or pursuant to a Letter of
Credit or L/C Draft at a time when all conditions precedent to the making of
Advances by Fleet in an aggregate principal amount equal to the amount of such
payment are satisfied, then such payment by Fleet pursuant to such Letter of
Credit or L/C Draft shall constitute a Reference Rate Advance hereunder in such
amount without the necessity of the Company's further request or authorization
therefor. In the event that any such payment is made under or pursuant to a
Letter of Credit or L/C Draft at any time when all conditions precedent to the
making of Advances are not satisfied and have not been waived, the Company
further agrees to pay to Fleet, on demand, interest at the Default Rate with
respect to Reference Rate Advances on any amount paid by Fleet under or pursuant
to any Letter of Credit or L/C Draft from the date of payment until the date of
reimbursement to
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Fleet. Upon the reduction of the Commitment to an amount less than the Letter of
Credit Obligations, the Company further agrees to pay to Fleet an amount equal
to such difference, which amount shall be held by Fleet as cash collateral for
the Letter of Credit Obligations.
(d) The Company's obligation to reimburse Fleet for payments and
disbursements made by Fleet under any Letter of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Company may have or have had
against Fleet, including, without limitation, any defense based on the failure
of the demand for payment under such Letter of Credit to conform to the terms of
such Letter of Credit, the legality, validity, genuineness, regularity or
enforceability of such Letter of Credit or any L/C Draft or the validity or
genuineness of any endorsements thereon, even if such Letter of Credit should in
fact prove to be in any or all respects invalid, fraudulent or forged, or the
identity of the transferee of such Letter of Credit or the sufficiency of any
transfer if such Letter of Credit is transferable; provided, however, that the
Company shall not be obligated to reimburse Fleet for any wrongful payment or
disbursement made under any Letter of Credit as a result of acts or omissions
constituting gross negligence or willful misconduct on the part of Fleet or any
of its officers, employees or agents.
(e) In determining whether to make any payment under or pursuant to any
Letter of Credit or any related L/C Draft, Fleet shall have no obligation to the
Company or any other person other than to confirm that any documents required to
be delivered have been delivered and that such documents comply on their face
with the requirements of such Letter of Credit. To the extent not inconsistent
with the foregoing sentence, Fleet shall be entitled to rely, and shall be fully
protected in relying upon, any Letter of Credit, L/C Draft, writing, resolution,
notice, consent, certificate, affidavit, telegram, telecopy or telex statement,
order or other documents believed by it to be genuine or correct and to have
been signed, sent or made by the proper Person or Persons and upon the advice
and statements of legal counsel, independent accountants and other experts
selected by Fleet. No action taken or omitted by Fleet under or in connection
with any Letter of Credit or L/C Draft, if taken or omitted in the absence of
gross negligence or willful misconduct, shall put Fleet under any resulting
liability to the Company or any other person.
SECTION 2.04. Fees.
(a) Commitment Fee. The Borrowers hereby agree to pay to Fleet a
commitment fee calculated at a percentage rate equal to the Applicable
Commitment Fee then in effect on the average daily amount during each calendar
quarter by which the Commitment minus the Letter of Credit Obligations exceeds
the aggregate outstanding amount of Advances during such calendar quarter
payable in arrears, on the last calendar day of each March, June, September and
December and on the Maturity Date.
(b) Structuring Fee. The Company also agrees to pay to Fleet, for its own
account, the structuring fee as set forth in the Fee Letter, which fees shall be
fully earned in advance and shall not be refundable.
SECTION 2.05. Voluntary Reduction of the Commitment. The Company shall
have the right, upon at least five (5) Banking Days' prior written notice to
Fleet, to terminate in whole or
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reduce ratably in part the unused portions of the Commitment; provided that (i)
each partial reduction shall be in the aggregate amount of $1,000,000 or an
integral multiple of $100,000 in excess thereof and (ii) the Commitment shall
not be reduced below the sum of the outstanding principal balance of the
Advances and the Letter of Credit Obligations owing to Fleet. No reduction or
termination of the Commitment may be reinstated.
SECTION 2.06. Repayment; Prepayment. (a) The Borrowers shall repay the
principal amount of each Eurodollar Advance owing to Fleet on the last day of
the Interest Period with respect thereto, unless such Advance is Converted or
continued in accordance with the terms hereof.
(b) The outstanding principal balance of all of the Advances shall be
payable in full upon the earlier of (i) the Maturity Date and (ii) the
acceleration thereof in accordance with the terms of Section 6.01 hereof.
(c) The Borrowers may repay the outstanding amount of the Advances, in
whole or in part, at any time without premium or penalty; provided that any full
or partial repayment of any Eurodollar Advance on any day other than the last
day of the Interest Period with respect thereto shall be subject to the
provisions of Sections 2.19 and 2.02(e) hereof. The Borrowers, shall give Fleet,
no later than 10:00 A.M., Boston time, prior written notice on the date of any
proposed repayment of any Reference Rate Advance and four (4) Banking Days prior
written notice of any proposed repayment of any Eurodollar Advances, in each
case specifying the proposed date of repayment and the principal amount to be
repaid. Each such partial repayment of the Advances shall be in a minimum amount
of $100,000 or larger integral multiple thereof. Notwithstanding the notice and
minimum amount requirements set forth in this Section 2.06(c), Fleet may, in its
sole discretion, allow the Borrowers to repay Reference Rate Advances in amounts
as requested by the Borrowers.
(d) If at any time the sum of the outstanding amount of the Advances and
the Letter of Credit Obligations exceeds the Commitment, including without
limitation following any acceleration pursuant to Section 6.01 hereof, then the
Borrowers shall immediately pay the amount of such excess to Fleet for
application: first, to any Unpaid Reimbursement Obligations; second, to the
Advances; and third, to provide to Fleet cash collateral for Letter of Credit
Obligations as contemplated by Section 2.03(c).
SECTION 2.07. Interest. The Borrowers shall pay interest on the unpaid
principal amount of each Advance owing to Fleet from the date of such Advance
until such principal, interest, fees and other amounts payable hereunder shall
be paid in full, at the following rates per annum:
(a) Reference Rate Advances. Except as set forth in (c) below, if
such Advance is a Reference Rate Advance, a rate per annum equal at all
times to the Reference Rate in effect from time to time, payable quarterly
on the last calendar day of each March, June, September and December.
(b) Eurodollar Advances. Except as set forth in (c) below if such
Advance is a Eurodollar Advance, a rate per annum equal at all times
during the Interest Period for
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such Advance to the Eurodollar Rate for such Interest Period, payable on
the last day of such Interest Period and, if such Interest Period has a
duration of more than three months, on each day which occurs during such
Interest Period every three months from the first day of such Interest
Period.
(c) Interest After Default. Any amount of principal, interest, fees
and other amounts payable hereunder which is not paid when due (whether at
stated maturity, by acceleration or otherwise) shall bear interest, from
the date on which such amount is due until such amount is paid in full
(after as well as before judgment), payable on demand, at a rate per annum
equal at all times to two percent (2%) per annum above the rate of
interest otherwise applicable to such Advances, and, in the case of such
fees and other amounts payable hereunder, above the Reference Rate in
effect from time to time (in each case, the "Default Rate"). During the
continuance of an Event of Default the principal of each Advance not
overdue shall bear interest, until such Event of Default has been cured or
remedied or such Event of Default has been waived by Fleet pursuant to
Section 8.01 hereof, payable on demand, at the Default Rate applicable
thereto.
SECTION 2.08. Additional Interest on Eurodollar Advances. The Borrowers
shall pay to Fleet, to the extent that Fleet shall be required under regulations
of the Board of Governors of the Federal Reserve System to maintain reserves
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, additional interest on the unpaid principal amount of each
Eurodollar Advance of Fleet, from the date of such Advance until such principal
amount is paid in full, at an interest rate per annum equal at all times to the
remainder obtained by subtracting (i) Base Eurodollar Rate for the Interest
Period for such Advance from (ii) the rate obtained by dividing such Base
Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of Fleet for such Interest Period, payable on each date on which
interest is payable on such Advance. Such additional interest shall be
determined by Fleet and notified to the Company. To the extent that Fleet is
required to maintain reserves as described in this Section 2.08 in any calendar
year and desires to receive additional interest with respect to such calendar
year, Fleet shall make demand hereunder within one hundred (100) days of the
last day of such calendar year. A certificate as to the basis of such increased
cost and the amount of such increased cost, submitted to the Company by Fleet,
shall be conclusive and binding for all purposes, absent demonstrable error. At
the request of the Company, Fleet will promptly provide the Company with a
certificate demonstrating the calculations on which such increased costs are
based.
SECTION 2.09. Voluntary Conversion or Continuation of Advances. The
Borrowers may on any Banking Day, upon notice given to Fleet not later than
11:00 A.M. (Boston time) on the third Banking Day prior to the date of the
proposed Conversion or continuation and subject to the provisions of Sections
2.10 and 2.12, Convert all Advances of one Type comprising the same Borrowing
into Advances of another Type or continue as of the last day of the Interest
Period with respect thereto, all Eurodollar Advances comprising the same
Borrowing; provided, however, that (a) any Conversion of any Eurodollar Advances
into Reference Rate Advances and the continuation as such of any Eurodollar
Advance shall be made on, and only on, the last day of an Interest Period for
such Eurodollar Advances and (b) no Advance may be Converted to a Eurodollar
Advance and no Eurodollar Advance may be continued as such
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when any Event of Default has occurred and is continuing. Each such notice of a
Conversion or continuation shall, within the restrictions specified above,
specify (i) the date of such Conversion or continuation, (ii) the Advances to be
Converted, and (iii) if such Conversion is into Eurodollar Advances or is a
continuation, the duration of the Interest period for each such Advance. Any
conversion to or from Eurodollar Advances, or continuation of Eurodollar
Advances as such, shall be in such amounts so that, after giving effect thereto,
the aggregate principal amount of all Eurodollar Advances having the same
Interest Period shall not be less than $1,000,00 or an integral multiple of
$100,000 in excess thereof.
SECTION 2.10. Interest Rate Determination and Protection. (a) Fleet shall
give prompt notice to the Company of the applicable Eurodollar Rate with respect
to each Eurodollar Advance. If Fleet is unable to determine the Eurodollar Rate
with respect to any Advance, Fleet shall forthwith notify the Company, and each
such Advance shall, in the case of new Advance, be advanced as a Reference Rate
Advance or, in the case of an outstanding Advance, be automatically, on the last
day of the then existing Interest Period therefor, Converted into a Reference
Rate Advance (or if such Advance is then a Reference Rate Advance be continued
as a Reference Rate Advance). In any such event, the obligation of Fleet to
make, to continue, or to Convert Advances into, Eurodollar Advances, as the case
may be, shall be suspended until the circumstances causing such suspension no
longer exist. If Fleet obtains knowledge that the circumstances causing such
suspension no longer exist, Fleet shall promptly so notify the Company.
(b) If, with respect to any Borrowing, Fleet determines, in its sole
discretion, that the Eurodollar Rate for any Interest Period for such Advances
will not adequately reflect the cost to Fleet of making, funding or maintaining
its respective Eurodollar Advances for such Interest Period, Fleet shall
forthwith so notify the Company, whereupon
(i) each Eurodollar Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Reference Rate
Advance, and
(ii) the obligation of Fleet to make, to continue, or to Convert
Advances into, Eurodollar Advances shall be suspended until the
circumstances causing such suspension no longer exist.
(iii) If Fleet obtains knowledge that the circumstances causing such
suspension no longer exist, Fleet shall promptly so notify the Company.
(c) If the Borrowers shall fail to select the duration of any Interest
Period for any Eurodollar Advances in accordance with the provisions contained
in the definition of "Interest Period" in Section 1.1 of this Agreement, Fleet
will forthwith so notify the Company and such Advances will automatically, on
the last day of the then existing Interest Period therefor, Convert into
Reference Rate Advances.
(d) After the occurrence and during the continuation of an Event of
Default, no Eurodollar Advances may be made or continued as such and no
Reference Rate Advances may be Converted to Eurodollar Advances.
-20-
SECTION 2.11. Increased Costs. If, due to either (i) the introduction of
or any change (other than any change by way of imposition or increase of reserve
requirements, in the case of Eurodollar Advances, included in Eurodollar Rate
Reserve Percentage) in or in the interpretation of any law or regulation or (ii)
the compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to Fleet of agreeing to make or making, issuing,
funding, renewing, extending or maintaining Advances or Letters of Credit, then
the Borrowers shall from time to time, upon demand by Fleet, pay to Fleet for
its own account, additional amounts sufficient to compensate Fleet for such
increased cost; provided that, before making any such demand, Fleet agrees to
use its best efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending Office or
take such additional action, if the making of such a designation or the taking
of such action, as the case may be, would avoid the need for, or reduce the
amount of, such increased cost and would not, in the reasonable judgment of
Fleet, be otherwise disadvantageous to Fleet. To the extent that Fleet incurs
additional costs as described in this Section 2.11 in any calendar year and
desires to receive additional compensation with respect to such calendar year,
Fleet shall make demand hereunder within one hundred (100) days of the last day
of such calendar year. A certificate as to the basis of such increased cost and
the amount of such increased cost, submitted to the Company by Fleet, shall be
conclusive and binding for all purposes, absent demonstrable error. At the
request of the Company, Fleet will promptly provide the Borrowers with a
certificate demonstrating the calculations on which such increased costs are
based.
SECTION 2.12. Illegality. Notwithstanding any other provision of this
Agreement, if Fleet shall notify the Company that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for Fleet or its Eurodollar Lending Office to perform its obligations hereunder
to make Eurodollar Advances or to fund or maintain Eurodollar Advances
hereunder, (i) the obligation of Fleet to make, to continue, or to Convert
Advances into, Eurodollar Advances shall be suspended until the circumstances
causing such suspension no longer exist and (ii) the Borrowers shall forthwith
prepay in full all Eurodollar Advances then outstanding, together with interest
accrued thereon, unless the Borrowers, within five Banking Days of notice from
Fleet, Converts all Eurodollar Advances then outstanding into Advances of
another Type in accordance with Section 2.09, in either case subject to the
provisions of Section 2.02(e) and 2.19.
SECTION 2.13. Payments and Computations. (a) The Borrowers shall make each
payment hereunder not later than 11:00 A.M. (Boston time) on the day when due in
U.S. dollars to Fleet at its address referred to in Section 8.02 in immediately
available funds, without counterclaim or setoff and free and clear of, and
without any deduction or withholding for, any taxes or other payments.
(b) The Borrowers hereby authorize Fleet, if and to the extent payment
owed to Fleet is not made when due hereunder, to charge from time to time
against any or all of the Borrowers' accounts with Fleet any amount so due;
provided that Fleet shall not charge any such account for any payment to the
extent that such payment was timely remitted to Fleet by the Borrowers.
-21-
(c) All computations of interest based on the Reference Rate shall be made
by Fleet, on the basis of a year of 365 days, and all computations of interest
based on the Eurodollar Rate and of commitment fees and letter of credit fees
shall be made by Fleet, on the basis of a year of 360 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or commitment fees are payable.
Each determination by Fleet of an interest rate hereunder shall be conclusive
and binding for all purposes, absent demonstrable error.
(d) Whenever any payment hereunder or under the Notes shall be stated to
be due on a day other than a Banking Day, except as otherwise provided in the
definition of Interest Period, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall in such case be included in the
computation of payment of interest or commitment fee, as the case may be;
provided, however, if such extension would cause payment of interest on or
principal of Eurodollar Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Banking Day.
SECTION 2.14. Exchange Rate. If, for the purpose of obtaining judgment in
any court or obtaining an order enforcing a judgment, it becomes necessary to
convert any amount due under this Agreement in any currency (hereinafter in this
Section 2.14 called the "first currency") into any other currency (hereinafter
in this Section 2.14 called the "second currency"), then the conversion shall be
made at Fleet's spot rate of exchange for buying the first currency with the
second currency prevailing at Fleet's close of business on the Banking Day next
preceding the day on which the judgment is given or (as the case may be) the
order is made. In the event that there is a difference between the rate of
exchange on the basis of which the amount of such judgment or order is
determined and the rate of exchange prevailing on the date of payment, then the
rate of exchange prevailing on the date of payment shall govern the amount owing
hereunder, and the Borrowers hereby jointly and severally agree to pay such
additional amount as may be necessary to ensure that the amount paid on such
date in the second currency is the amount in such second currency which, when
converted at Fleet's spot rate of exchange for buying the first currency with
the second currency prevailing at Fleet's opening of business on the date of
payment, is the amount which was due under this Agreement in the first currency
before such judgment was obtained or made. Any amount due from the Borrowers to
Fleet under the second sentence of this Section 2.14 will be due as a separate
debt of the Borrowers to Fleet and shall not be affected by any judgment or
order being obtained for any other sum due under or in respect of this
Agreement. The covenant contained in this Section 2.14 shall survive the payment
in full of all of the other obligations of the Borrowers under this Agreement.
SECTION 2.15. Usury. It is not the intention of any parties to this
Agreement to make an agreement in violation of the laws of any applicable
jurisdiction relating to usury. Regardless of any provision of this Agreement,
Fleet shall never be entitled to receive, collect or apply, as interest on the
Advances, any amount in excess of the maximum amount permitted by applicable
law. If Fleet ever receives, collects or applies, as interest, any such excess,
such amount which would be excessive interest shall be deemed a partial
prepayment of principal and treated hereunder as such; and if principal is paid
in full, any remaining excess shall be paid to the Borrowers. In determining
whether or not the
-22-
interest paid or payable under any specific contingency exceeds the maximum
amount permitted by applicable law, Fleet shall, to the extent permitted under
applicable laws, and solely for purposes of making such determination,
characterize any nonprincipal payment as an expense, fee or premium rather than
as interest throughout the entire contemplated term of this Agreement so that
the interest rate is uniform throughout the entire term of this Agreement;
provided, however, that if the Advances are paid and performed in full prior to
the end of the full contemplated term thereof, and if the interest received for
the actual period of existence thereof exceeds the maximum amount permitted by
applicable law, Fleet shall refund to the Borrowers the amount of such excess or
credit the amount of such excess against the total principal amount of the
Advances owing, and, in such event, Fleet shall not be subject to any penalties
provided by any laws for contracting for, charging or receiving interest in
excess of the maximum amount permitted by applicable law. This Section 2.15
shall control every other provision of all agreements pertaining to the
transactions contemplated by or contained in this Agreement.
SECTION 2.16. Taxes. (a) Any and all payments by the Borrowers hereunder
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on Fleet's income, and
franchise taxes imposed on Fleet by the jurisdiction under the laws of which
Fleet is organized or any political subdivision thereof, or the United States of
America (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Special Taxes").
If the Borrowers shall be required by law to deduct any Special Taxes from or in
respect of any sum payable hereunder to Fleet which is in compliance with
subsection (e) of this Section 2.16, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.16), Fleet
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrowers shall make such deductions and (iii)
the Borrowers shall pay the full amount deducted to the relevant authority in
accordance with applicable law provided that Fleet agrees to use its best
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office or take such
additional action, if the making of such a designation or the taking of such
action, as the case may be, would avoid the need for, or reduce the amount of,
such Special Taxes and would not, in the reasonable judgment of Fleet, be
otherwise disadvantageous to Fleet.
(b) In addition, the Borrowers agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").
(c) The Borrowers will jointly and severally indemnify Fleet for the full
amount of Special Taxes or Other Taxes (including, without limitation, any
Special Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Section 2.16) paid by Fleet and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Special Taxes or Other Taxes were correctly or legally asserted; provided
that to the extent that Fleet receives a refund for such Special Taxes or Other
Taxes which amount was originally paid by a Borrower, Fleet shall promptly remit
such refund to such
-23-
Borrower. This indemnification shall be made within thirty (30) days from the
date Fleet makes written demand therefor.
(d) Within thirty (30) days after the date of any payment of Special Taxes
or Other Taxes, the Borrowers will furnish to Fleet, at its address referred to
in Section 8.02, proof of the payment thereof.
(e) Fleet, if requested in writing by the Company (but only so long as
Fleet remains lawfully able to do so), shall provide the Company with Internal
Revenue Service form W-8BEN or W-8ECI, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that Fleet is completely
exempt from Special Taxes as of the date of this Agreement or the date of such
request, as the case may be. To the extent that Fleet has previously delivered
such a form W-8BEN or W-8ECI to the Company and a change in circumstances causes
Fleet to no longer be completely exempt from withholding and deduction of
Special Taxes, Fleet shall promptly so notify the Company.
(f) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Section 2.16 shall survive the payment in full of principal and interest
hereunder.
SECTION 2.17. [Intentionally Omitted]
SECTION 2.18. Evidence of Debt.
(a) Fleet shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrowers to Fleet resulting from
each Advance owing to Fleet from time to time, including the amounts of
principal and interest payable and paid to Fleet from time to time hereunder
(the "Register"). The Borrowers hereby absolutely and unconditionally promise to
pay to the order of Fleet the principal amount of Advances owed to Fleet, plus
interest thereon and all other amounts owing in respect thereof, in the amounts
and at the times set forth in this Agreement.
(b) [Intentionally Omitted]
(c) The entries made in the Register shall be conclusive and binding for
all purposes, absent demonstrable error.
SECTION 2.19. Funding Losses. In the event Fleet shall incur any loss or
expense (including any loss or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by Fleet to make, continue or
maintain any portion of the principal amount of any Eurodollar Advance) by
reason of the prepayment or repayment of the principal amount of any Eurodollar
Advance on a date other than the scheduled last day of the Interest Period
applicable thereto, then, upon the request of Fleet to the Borrowers, the
Borrowers shall pay directly to Fleet such amount as will (in the reasonable
determination of Fleet) reimburse Fleet for such cost or expense. A statement as
to any such loss or expense (including calculations thereof in reasonable
detail) shall be submitted by Fleet to the Company and shall, in the absence of
demonstrable error, be conclusive and binding on the Borrowers.
-24-
SECTION 2.20 Determination of Applicable Margins and Applicable Fees.
(a) Definitions. As used in this Section 2.20 and in this Agreement, the
following terms shall have the following meanings:
"Applicable Fees" and "Applicable Margins" shall mean the Applicable
Commitment Fee and/or the Applicable L/C Fee, with respect to "Applicable Fees",
and the Applicable Reference Rate Margin and/or the Applicable Eurodollar Rate
Margin, with respect to "Applicable Margins", as the case may be. Applicable
Fees and Applicable Margins shall be determined by reference to the following:
----------------------------------------------------------------------------------------------------------------
Applicable Applicable
Eurodollar Reference Applicable
Leverage Rate Rate Applicable Commitment
Ratio Margin Margin L/C Fee Fee
----------------------------------------------------------------------------------------------------------------
Greater than or equal to
3.00:1.00 1.875% 0.25% 1.875% 0.375%
----------------------------------------------------------------------------------------------------------------
Less than 3.00:1.00 but
greater than or equal to
2.50:1.00 1.625% 0.25% 1.625% 0.375%
----------------------------------------------------------------------------------------------------------------
Less than 2.50:1.00 but
greater than or equal to
2.00:1.00 1.50% 0.25% 1.50% 0.375%
----------------------------------------------------------------------------------------------------------------
Less than 2.00:1.00 but
greater than or equal to
1.50:1.00 1.375% 0.25% 1.375% 0.30%
----------------------------------------------------------------------------------------------------------------
Less than 1.50:1.00 but
greater than or equal to
1.00:1.00 1.125% 0.25% 1.125% 0.25%
----------------------------------------------------------------------------------------------------------------
Less than 1.00:1.00 1.00% 0.25% 1.00% 0.25%
----------------------------------------------------------------------------------------------------------------
(b) Determination of Applicable Margins and Applicable Fees.
(i) The Applicable Margin in respect of any Advance and the
Applicable Fees payable under Sections 2.03 and 2.04 shall be determined
by reference to the tables
-25-
set forth in clause (a) above, as applicable, on the basis of the Leverage
Ratio as of the last day of the most recent fiscal quarter of the Parent
and determined by reference to the most recent financial statements
delivered pursuant to Section 5.01.
(ii) Upon receipt of the financial statements delivered pursuant to
Section 5.01 and the satisfactory review thereof by Fleet, the Applicable
Margins for all outstanding Advances and the Applicable Fees shall be
adjusted, such adjustment being effective on the fifth Banking Day after
such financial statements and the Compliance Certificate are (a) delivered
to Fleet to the extent such financial statements and the Compliance
Certificate are delivered prior to the due date or (b) required to be
delivered, in accordance with Section 5.01 of this Agreement.
(iii) Notwithstanding anything herein to the contrary, from the
Closing Date through the date of receipt of the financial statements and
Compliance Certificate for the Parent's fiscal quarter ending on December
29, 2001 pursuant to Section 5.01, the Applicable Eurodollar Rate Margin
shall be 1.375%, the Applicable Reference Rate Margin shall be 0.25%, the
Applicable L/C Fee shall be 1.375%, and the Applicable Commitment Fee
shall be 0.30%.
SECTION 2.21. Capital Adequacy. If Fleet shall reasonably determine that
the application, adoption or phase-in of any law, rule, regulation, directive,
interpretation, treaty or guideline regarding capital adequacy, or any change
therein or in the interpretation or administration thereof, whether or not
having the force of law (including, without limitation, application of changes
to Regulation H and Regulation Y of the Federal Reserve Board issued by the
Federal Reserve Board on January 19, 1989 and regulations of the Comptroller of
the Currency, Department of the Treasury, 12 CFR Part 3, Appendix A, issued by
the Comptroller of the Currency on January 27, 1989) increases the amount of
capital required or expected to be maintained by or any Person controlling Fleet
and such increase is based upon the existence of Fleet's obligations hereunder
and other commitments of this type, then from time to time, within ten (10) days
after demand from Fleet, the Borrowers shall pay to Fleet the Borrowers'
allocable share of such amount or amounts as will compensate Fleet or such
controlling Person, as the case may be, for such increased capital requirement.
The determination of any amount to be paid by the Borrowers under this Section
2.21 shall take into consideration the policies of Fleet or any Person
controlling Fleet with respect to capital adequacy and shall be based upon any
reasonable averaging, attribution and allocation methods. A certificate of Fleet
setting forth the amount or amounts as shall be necessary to compensate Fleet as
specified in this Section 2.21 shall be delivered to the Company and shall be
conclusive in the absence of demonstrable error. To the extent that Fleet is
subjected to increased capital requirements as described in this Section 2.21 in
any calendar year and desires to receive additional compensation with respect to
such calendar year, Fleet shall make demand hereunder within one hundred (100)
days of the last day of such calendar year. A certificate as to basis of such
increased capital requirements and the amount of such increased capital
requirements, submitted to the Company by Fleet, shall be conclusive and binding
for all purposes, absent demonstrable error. At the request of the Company, will
promptly provide the Company with a certificate demonstrating the calculations
on which such request for additional compensation is based.
-26-
SECTION 2.22. [Intentionally Omitted]
SECTION 2.23. [Intentionally Omitted]
ARTICLE IIA
GUARANTY OF the Parent
SECTION 2A.01. Guaranty. For value received and hereby acknowledged and as
an inducement to Fleet to make Advances available to the Borrowers and to Fleet
to issue Letters of Credit for the account of the Company, the Parent hereby
unconditionally and irrevocably guarantees (i) the full punctual payment when
due, whether at stated maturity, by acceleration or otherwise, of all
obligations of the Borrowers now or hereafter existing hereunder and the other
documents executed and/or delivered in connection with this Agreement, whether
for principal, interest, fees, expenses, or otherwise, (ii) the strict
performance and observance by the Borrowers of their obligations under this
Agreement and the other documents executed and/or delivered in connection with
this Agreement and of all agreements, warranties and covenants applicable to the
Borrowers in this Agreement; and (iii) the strict performance of all such
obligations under this Agreement and the other documents executed and/or
delivered in connection with this Agreement which would become due but for the
operation of the automatic stay pursuant to Section 362(a) of the United States
Bankruptcy Code and the operation of Sections 502(b) and 506(c) of the United
States Bankruptcy Code (such obligations collectively being the "Parent
Guaranteed Obligations").
SECTION 2A.02. Guaranty Absolute. The Parent guarantees that the Parent
Guaranteed Obligations will be paid strictly in accordance with the terms hereof
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of Fleet with respect
thereto. The liability of the Parent under this Article IIA with regard to the
Parent Guaranteed Obligations of the Borrowers shall be absolute and
unconditional irrespective of:
(i) any lack of validity or enforceability of this Agreement with
respect to the Borrowers (with regard to such Parent Guaranteed
Obligations), the other documents executed and/or delivered in connection
with this Agreement, or any other agreement or instrument relating
thereto;
(ii) any change in the time of, manner or place of payment of, or in
any other term of, all or any of the Parent Guaranteed Obligations of the
Borrowers or any other amendment or waiver of or any consent to departure
from this Agreement (with regard to such Parent Guaranteed Obligations) of
the Borrowers;
(iii) any exchange, release or nonperfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Parent Guaranteed Obligations of the
Borrowers;
(iv) any change in ownership of the Borrowers;
-27-
(v) any acceptance of any partial payment(s) from the Borrowers; or
(vi) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrowers in respect of the
Parent Guaranteed Obligations.
The obligations of the Parent contained in this Article IIA shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Parent Guaranteed Obligations is rescinded or must otherwise be
returned by Fleet upon the insolvency, bankruptcy or reorganization of the
Borrowers or otherwise, all as though such payment had not been made.
SECTION 2A.03. Effectiveness; Enforcement. The guaranty obligations of the
Parent under this Article IIA shall be effective and shall be deemed to be made
with respect to each Advance made to the Borrowers, or each Letter of Credit
issued, extended or renewed as of the time it is made or issued, extended or
renewed. No invalidity, irregularity or unenforceability by reason of any
bankruptcy or similar law, or any law or order of any government or agency
thereof purporting to reduce, amend or otherwise affect any liability of the
Borrowers, and no defect in or insufficiency or want of powers of the Borrowers
or irregular or improperly recorded exercise thereof, shall impair, affect, be a
defense to or claim against such guaranty. The agreements of the Parent
contained in this Article IIA constitute a continuing guaranty and shall (i)
survive any termination of this Agreement and (ii) remain in full force and
effect until payment in full of, and performance of all Parent Guaranteed
Obligations and all other amounts payable under this Article IIA. The agreements
of the Parent contained in this Article IIA are made for the benefit of Fleet
and its successors and assigns, and may be enforced from time to time as often
as occasion therefor may arise and without requirement on the part of Fleet
first to exercise any rights against the Borrowers or to exhaust any remedies
available to them against the Borrowers or to resort to any other source or
means of obtaining payment of any of the said obligations or to elect any other
remedy.
SECTION 2A.04. Waivers. To the fullest extent permitted by law, the Parent
hereby irrevocably waives promptness, diligence, presentment, demand, protest,
notice of acceptance and any other notice with respect to any of the Parent
Guaranteed Obligations and this Article IIA and any requirement that Fleet
protect, secure, perfect or otherwise take action to ensure any security
interest or lien on any property subject thereto or exhaust any right or take
any action against the Borrowers or any other Person or any collateral. The
Parent also irrevocably waives, to the fullest extent permitted by law, all
defenses which at any time may be available to it in respect of the Parent
Guaranteed Obligations by virtue of any valuation, stay, moratorium law or other
similar law now or hereafter in effect.
SECTION 2A.05. Subrogation; Subordination. (a) Until the final payment and
performance in full of all of the obligations of the Borrowers hereunder, the
Parent shall not exercise and hereby waives any rights against the Borrowers
arising as a result of payment by the Parent hereunder, by way of subrogation,
reimbursement, restitution,
-28-
contribution or otherwise, and will not prove any claim in competition with
Fleet in respect of any payment hereunder in any bankruptcy, insolvency or
reorganization case or proceedings of any nature; the Parent will not claim any
setoff, recoupment or counterclaim against the Borrowers in respect of any
liability of the Parent to the Borrowers; and Parent waives any benefit of and
any right to participate in any collateral security which may be held by Fleet.
(b) The payment of any amounts due with respect to any indebtedness of the
Borrowers for money borrowed or credit received now or hereafter owed to the
Parent is hereby subordinated to the prior payment in full of all of the
obligations of the Borrowers hereunder. The Parent agrees that, after the
occurrence of any default in the payment or performance of any of such
obligations, the Parent will not demand, ▇▇▇ for or otherwise attempt to collect
any such indebtedness of the Borrowers to such Parent until all of the
obligations of the Borrower hereunder shall have been paid in full. If,
notwithstanding the foregoing sentence, the Parent shall collect, enforce or
receive any amounts in respect of such indebtedness while any obligations of the
Borrowers hereunder are still outstanding, such amounts shall be collected,
enforced and received by the Parent as trustee for Fleet and be paid over to
Fleet, for its own benefit, on account of the obligations of the Borrowers
hereunder without affecting in any manner the liability of the Parent under the
other provisions of this Article IIA.
(c) The provisions of this Section 2A.05 shall be supplemental to and not
in derogation of any rights and remedies of Fleet under any separate
subordination agreement which Fleet may at any time and from time to time enter
into with the Parent for its own benefit.
ARTICLE IIB
GUARANTY OF the COMPANY
SECTION 2B.01. Guaranty. For value received and hereby acknowledged and as
an inducement to Fleet to make Advances available to Quaker Textile and Quaker
Mexico, the Company hereby unconditionally and irrevocably guarantees (i) the
full punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of Quaker Textile and Quaker Mexico now or
hereafter existing hereunder and under the other documents executed and/or
delivered in connection with this Agreement, whether for principal, interest,
fees, expenses, or otherwise, (ii) the strict performance and observance by
Quaker Textile and Quaker Mexico of their obligations under this Agreement and
the other documents executed and/or delivered in connection with this Agreement
and of all agreements, warranties and covenants applicable to Quaker Textile and
Quaker Mexico in this Agreement; and (iii) the strict performance of all such
obligations under this Agreement and the other documents executed and/or
delivered in connection with this Agreement which would become due but for the
operation of the automatic stay pursuant to Section 362(a) of the United States
Bankruptcy Code and the operation of Sections 502(b) and 506(c) of the United
States Bankruptcy Code (such obligations collectively being the "Company
Guaranteed Obligations").
-29-
SECTION 2B.02. Guaranty Absolute. The Company guarantees that the Company
Guaranteed Obligations will be paid strictly in accordance with the terms hereof
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of Fleet with respect
thereto. The liability of the Company under this Article IIB with regard to the
Company Guaranteed Obligations shall be absolute and unconditional irrespective
of:
(i) any lack of validity or enforceability of this Agreement with
respect to Quaker Textile and Quaker Mexico (with regard to the Company
Guaranteed Obligations), the other documents executed and/or delivered in
connection with this Agreement, or any other agreement or instrument
relating thereto;
(ii) any change in the time of, manner or place of payment of, or in
any other term of, all or any of the Company Guaranteed Obligations or any
other amendment or waiver of or any consent to departure from this
Agreement (with regard to the Company Guaranteed Obligations) by Quaker
Textile and Quaker Mexico;
(iii) any exchange, release or nonperfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Company Guaranteed Obligations;
(iv) any change in ownership of Quaker Textile or Quaker Mexico;
(v) any acceptance of any partial payment(s) from Quaker Textile or
Quaker Mexico; or
(vi) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Quaker Textile or Quaker Mexico
in respect of the Company Guaranteed Obligations.
The obligations of the Company contained in this Article IIB shall continue to
be effective or be reinstated, as the case may be, if at any time any payment of
any of the Company Guaranteed Obligations is rescinded or must otherwise be
returned by Fleet upon the insolvency, bankruptcy or reorganization of Quaker
Textile or Quaker Mexico or otherwise, all as though such payment had not been
made.
SECTION 2B.03. Effectiveness; Enforcement. The guaranty obligations of the
Company under this Article IIB shall be effective and shall be deemed to be made
with respect to each Advance made to Quaker Textile or Quaker Mexico. No
invalidity, irregularity or unenforceability by reason of any bankruptcy or
similar law, or any law or order of any government or agency thereof purporting
to reduce, amend or otherwise affect any liability of Quaker Textile or Quaker
Mexico, and no defect in or insufficiency or want of powers of Quaker Textile or
Quaker Mexico or irregular or improperly recorded exercise thereof, shall
impair, affect, be a defense to or claim against such guaranty. The agreements
of the Company contained in this Article IIB constitute a continuing guaranty
and shall (i) survive any termination of this Agreement and (ii) remain in full
force and
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effect until payment in full of, and performance of all Company Guaranteed
Obligations and all other amounts payable under this Article IIB. The agreements
of the Company contained in this Article IIB are made for the benefit of Fleet
and its successors and assigns, and may be enforced from time to time as often
as occasion therefor may arise and without requirement on the part of Fleet
first to exercise any rights against Quaker Textile or Quaker Mexico or to
exhaust any remedies available to them against Quaker Textile or Quaker Mexico
or to resort to any other source or means of obtaining payment of any of the
said obligations or to elect any other remedy.
SECTION 2B.04. Waivers. To the fullest extent permitted by law, the
Company hereby irrevocably waives promptness, diligence, presentment, demand,
protest, notice of acceptance and any other notice with respect to any of the
Company Guaranteed Obligations and this Article IIB and any requirement that
Fleet protect, secure, perfect or otherwise take action to ensure any security
interest or lien on any property subject thereto or exhaust any right or take
any action against Quaker Textile or Quaker Mexico or any other Person or any
collateral. The Company also irrevocably waives, to the fullest extent permitted
by law, all defenses which at any time may be available to it in respect of the
Company Guaranteed Obligations by virtue of any valuation, stay, moratorium law
or other similar law now or hereafter in effect.
SECTION 2B.05. Subrogation; Subordination. (a) Until the final payment and
performance in full of all of the obligations of Quaker Textile and Quaker
Mexico hereunder, the Company shall not exercise and hereby waives any rights
against Quaker Textile or Quaker Mexico arising as a result of payment by the
Company hereunder, by way of subrogation, reimbursement, restitution,
contribution or otherwise, and will not prove any claim in competition with
Fleet in respect of any payment hereunder in any bankruptcy, insolvency or
reorganization case or proceedings of any nature; the Company will not claim any
setoff, recoupment or counterclaim against Quaker Textile or Quaker Mexico in
respect of any liability of the Company to Quaker Textile or Quaker Mexico; and
the Company waives any benefit of and any right to participate in any collateral
security which may be held by Fleet.
(b) The payment of any amounts due with respect to any indebtedness of
Quaker Textile or Quaker Mexico for money borrowed or credit received now or
hereafter owed to the Company is hereby subordinated to the prior payment in
full of all of the obligations of Quaker Textile or Quaker Mexico hereunder. The
Company agrees that, after the occurrence of any default in the payment or
performance of any of such obligations, the Company will not demand, ▇▇▇ for or
otherwise attempt to collect any such indebtedness of Quaker Textile or Quaker
Mexico to the Company until all of the obligations of Quaker Textile and Quaker
Mexico hereunder shall have been paid in full. If, notwithstanding the foregoing
sentence, the Company shall collect, enforce or receive any amounts in respect
of such indebtedness while any obligations of Quaker Textile or Quaker Mexico
hereunder are still outstanding, such amounts shall be collected, enforced and
received by the Company as trustee for Fleet and be paid over to Fleet on
account of the obligations of Quaker Textile or Quaker Mexico hereunder, without
affecting in any manner the liability of the Company under the other provisions
of this Article IIB.
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(c) The provisions of this Section 2B.05 shall be supplemental to and not
in derogation of any rights and remedies of Fleet under any separate
subordination agreement which Fleet may at any time and from time to time enter
into with the Company.
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ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Borrowing. The obligation of
Fleet to make an Advance on the occasion of the initial Borrowing and the
obligation of Fleet to issue the initial Letters of Credit is subject to the
condition precedent that Fleet shall have received on or before the day of the
initial Borrowing, and in any event no later than February 14, 2002, the
following, in form and substance satisfactory to Fleet:
(a) This Agreement executed by the Borrowers, the Parent and Fleet.
(b) Certified copies of the resolutions of the Board of Directors of each
of the Borrowers and the Parent approving this Agreement, and of all documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to this Agreement.
(c) A certificate of the Secretary or Clerk, as the case may be, of each
of the Borrowers and the Parent certifying the names and true signatures of the
officers of the Borrowers and the Parent authorized to sign this Agreement and
the other documents to be delivered hereunder to which they are a party and in
the case of each Borrower (other than Quaker Mexico) and the Parent, certifying
as to the accuracy and currency of the respective Articles of Organization or
other charter documents and By-laws.
(d) A favorable opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel to the
Borrowers and the Parent, substantially in the form of Exhibit B hereto.
(e) A certificate of good standing of each of the Borrowers (other than
Quaker Mexico) and the Parent certified by the secretary of state of the
jurisdiction in which it is incorporated.
(f) [Intentionally Omitted]
(g) The Borrowers and the Parent shall have paid to Fleet all fees to be
paid on the Closing Date in accordance with the provisions of the Fee Letter.
(h) [Intentionally Omitted]
(i) The Company shall have received the principal amount of the 7.56%
Senior Notes issued pursuant to the Additional Note Agreement, which 7.56%
Senior Notes and Additional Note Agreement shall be on terms and conditions
satisfactory to Fleet.
(j) The Collateral Agency and Pledge Agreement executed by the Company,
Fleet in its individual capacity and as Collateral Agent, and The Prudential
Insurance Company of America in its capacity as Trustee.
(k) All proceedings in connection with the transactions contemplated by
this Agreement, the other documents delivered in connection herewith and all
other documents incident thereto shall be satisfactory in substance and in form
to Fleet, and
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Fleet shall have received all information and such counterpart originals or
certified or other copies of such documents as Fleet may reasonably request.
SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation of
Fleet to make an Advance on the occasion of each Borrowing (including the
initial Borrowing) and the obligation of Fleet to issue, extend or renew any
Letter of Credit shall be subject to the further conditions precedent that on
the date of such Borrowing or issuance, extension or renewal of such Letter of
Credit, as the case may be:
(i) The representations and warranties contained in Article IV are correct
on and as of the date of such Borrowing, before and after giving effect to such
Borrowing and to the application of the proceeds therefrom, as though made on
and as of such date.
(ii) No event has occurred and is continuing, or would result from such
Borrowing or from the application of the proceeds therefrom, which constitutes
an Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
(iii) No change shall have occurred in any law or regulations thereunder
or interpretations thereof that in the reasonable opinion of Fleet would make it
illegal for Fleet to make such Advance or in the reasonable opinion of Fleet
would make it illegal for Fleet to issue, extend or renew such Letter of Credit.
(iv) Fleet shall have received from the Borrowers such statements in
substance and form reasonably satisfactory to Fleet as Fleet shall require for
the purpose of compliance with any applicable regulations of the Comptroller of
the Currency or the Board of Governors of the Federal Reserve System.
(v) Prior to the making of any Advance to Quaker Mexico, Fleet shall have
received evidence satisfactory to Fleet (a) of the due organization and valid
existence of Quaker Mexico and (b) that Quaker Mexico has the requisite
corporate power and authority to execute and deliver this Agreement and perform
its obligations under this Agreement and the other documents delivered in
connection with this Agreement to which it is a party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of the Borrowers and the Parent represents and warrants to Fleet
that:
SECTION 4.01. Corporate Existence and Standing. Each of the Borrowers and
the Parent is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted where the failure to possess such authority is likely to
result in a Material Adverse Effect.
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SECTION 4.02. Authorization and Validity. Each of the Borrowers and the
Parent has the corporate power and authority and legal right to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery by each of the Borrowers and the Parent of this Agreement and the
performance of its obligations hereunder have been duly authorized by proper
corporate proceedings, and this Agreement constitutes the legal, valid and
binding obligations of the Borrowers and the Parent enforceable against the
Borrowers and the Parent in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency or other similar laws of general
application or applicable decisional law affecting the enforcement of creditors'
rights generally or by general principles of equity limiting the availability of
equitable remedies.
SECTION 4.03. No Conflict; Government Consent. Neither the execution and
delivery by each of the Borrowers and the Parent of this Agreement, nor the
consummation of the transactions herein or therein contemplated, nor compliance
with the provisions thereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Parent, any of its
Subsidiaries or their respective articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Parent or any
of its Subsidiaries is a party or is subject, or by which it, or its property,
is bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien in, of or on the property of the Parent or
any of its Subsidiaries pursuant to the terms of any such indenture, instrument
or agreement. No order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
this Agreement.
SECTION 4.04. Title to Properties. Except as indicated on Schedule 4.04
hereto, the Parent and its Subsidiaries own all of the assets reflected on the
consolidated balance sheet of the Parent and its Subsidiaries as at [December
30, 2000] or acquired since that date (except property or assets sold or
otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any Liens other than Liens permitted
under Section 5.12 hereof.
SECTION 4.05 Financial Statements. The 2000 annual audited financial
statements, the unaudited quarterly financial statements for the first three
fiscal quarters of 2001 of the Parent and its Subsidiaries heretofore delivered
to Fleet were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the financial condition and operations of the Parent and its
Subsidiaries at such date and the results of its operations for the periods then
ended (except that any such unaudited financial statements do not contain any
footnotes and are subject to year-end adjustments).
SECTION 4.06. Material Adverse Effect; Dividends or Distributions. During
the period beginning on [December 31, 2000] through and including the Closing
Date, there has been no change in the business, properties, prospects, condition
(financial or otherwise) or results of operations of the Parent and its
Subsidiaries which is likely to have a Material Adverse Effect. Since [December
31, 2000] the Parent and the Borrowers have not made any
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dividends or distributions with respect to their capital stock except as
otherwise permitted by this Agreement.
SECTION 4.07. Taxes. The Parent and its Subsidiaries have filed all United
States federal tax returns and all other tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Parent or any of its Subsidiaries, except such taxes,
if any, as are being contested in good faith and as to which adequate reserves
have been provided or with respect to such taxes (exclusive of state and federal
income taxes) where the failure to so file and pay is not likely to have a
Material Adverse Effect. No tax liens have been filed and no claims are being
asserted with respect to any such taxes. The charges, accruals and reserves on
the books of the Parent and its Subsidiaries in respect of any taxes or other
governmental charges are adequate.
SECTION 4.08. Litigation and Contingent Obligations. Except as set forth
on Schedule 4.08 hereto, there is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the knowledge of any of
their officers, threatened against or affecting the Parent or any of its
Subsidiaries which would be likely to have a Material Adverse Effect, or which
question the validity of this Agreement. Except as otherwise set forth on
Schedule 4.08 hereto, other than any liability incident to such litigation,
arbitration or proceedings, the Parent and its Subsidiaries have no material
contingent obligations not provided for or disclosed in the financial statements
referred to in Section 4.05.
SECTION 4.09. Subsidiaries. Schedule 4.09 hereto contains an accurate list
of all of the Subsidiaries of the Company and the Parent, setting forth their
respective jurisdictions of incorporation and the percentage of their respective
capital stock owned by the Company or other Subsidiaries or the Parent. All of
the issued and outstanding shares of capital stock of such Subsidiaries have
been duly authorized and issued and are fully paid and non-assessable. Schedule
4.09 shall be deemed to be amended in connection with the acquisition or
formation of any Subsidiary permitted by Sections 5.09 or 5.11 hereof upon
delivery to Fleet of a certificate of the Company and the Parent as to such
Subsidiary setting forth its jurisdiction of incorporation and the percentage of
its capital stock owned by the Company or the Parent.
SECTION 4.10. ERISA. Neither the Borrowers nor the Parent nor any ERISA
Affiliate maintains or contributes to any Plan other than those listed on
Schedule 4.10 hereto. Each Plan which is intended to be qualified under Section
401 (a) of the Code as currently in effect has been determined by the IRS to be
so qualified, and each trust related to any such Plan has been determined to be
exempt from federal income tax under Section 501 (a) of the Code as currently in
effect. Neither the Borrowers nor the Parent nor any ERISA Affiliate maintains
or contributes to any employee welfare benefit plan within the meaning of
Section 3(1) of ERISA which provides benefits to employees after termination of
employment other than as required by Section 601 of ERISA or applicable state
law. Neither the Borrowers nor the Parent nor any ERISA Affiliate has breached
any of the responsibilities obligations or duties imposed on it by ERISA or
regulations promulgated thereunder with respect to any Plan which is likely to
have a Material Adverse Effect. No Benefit Plan has incurred any accumulated
funding deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the
Code) whether or not waived. Neither the Borrowers nor the Parent nor any ERISA
Affiliate nor any fiduciary of any Plan which is not a Multiemployer Plan (i)
has engaged in a nonexempt prohibited transaction
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described in Sections 406 of ERISA or 4975 of the Code or (ii) has taken or
failed to take any action which would constitute or result in a Termination
Event. Neither the Borrowers nor the Parent nor any ERISA Affiliate has incurred
any liability to the PBGC which remains outstanding other than the payment of
premiums, and there are no premium payments which have become due which are
unpaid. Schedule B to the most recent annual report filed with the IRS with
respect to each Benefit Plan and furnished to Fleet is complete and accurate.
Since the date of each such Schedule B, there has been no adverse change in the
funding status or financial condition of the Benefit Plan relating to such
Schedule B. Neither the Borrowers nor the Parent nor any ERISA Affiliate has (i)
failed to make a required contribution or payment to a Multiemployer Plan or
(ii) made a complete or partial withdrawal under Sections 4203 or 4205 of ERISA
from a Multiemployer Plan. Neither the Borrowers nor the Parent nor any ERISA
Affiliate has failed to make a required installment or any other required
payment under Section 412 of the Code on or before the due date for such
installment or other payment which is likely to have a Material Adverse Effect.
Neither the Borrowers nor the Parent nor any ERISA Affiliate is required to
provide security to a Benefit Plan under Section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the plan
year. Each of the Borrowers and the Parent has given to Fleet copies of all of
the following: the most recent actuarial report and Form 5500 filed in respect
of each Benefit Plan in existence, a listing of all Multiemployer Plans with the
aggregate amount of the most recent annual contributions required to be made by
the Borrowers, the Parent and all ERISA Affiliates to each such Multiemployer
Plan and all information which has been provided to the Borrowers or the Parent
or an ERISA Affiliate regarding withdrawal liability under any Multiemployer
Plan.
SECTION 4.11. Accuracy of Information. No information, exhibit or report
heretofore or hereafter furnished by the Parent or any of its Subsidiaries to
Fleet in connection with the negotiation of, or compliance with, this Agreement
contains any material misstatement of fact or omits to state a material fact or
any fact necessary to make the statements contained therein not misleading as of
the date such information, exhibit or report was or shall be furnished.
SECTION 4.12. Material Agreements. Neither the Parent nor any Subsidiary
is a party to any agreement or instrument or subject to any charter or other
corporate restriction which is likely to have a Material Adverse Effect. Neither
the Parent nor any Subsidiary is in default under (i) any agreement to which it
is a party or (ii) any agreement or instrument evidencing or governing Debt,
which default is likely, in either case, to have a Material Adverse Effect.
SECTION 4.13. Compliance with Laws. The Parent and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties, the failure to
comply with which is likely to result in a Material Adverse Effect. Neither the
Parent nor any Subsidiary has received any notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable federal, state and local environmental, health and safety statutes
and regulations or the subject of any federal or state investigation evaluation
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action is likely to have a Material Adverse Effect.
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SECTION 4.14. Investment Company Act. Neither the Parent nor any
Subsidiary thereof is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.15. Public Utility Holding Company Act. Neither the Parent nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION 4.16. Regulations U and X. The proceeds of the Advances shall be
used for working capital and general corporate purposes. The Company will obtain
Letters of Credit solely for general corporate purposes. No portion of any
Advance is to be used, and no portion of any Letter of Credit is to be obtained,
for the purpose of purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
SECTION 4.17. No Event of Default. No Event of Default has occurred and is
continuing.
ARTICLE V
COVENANTS OF THE BORROWERS AND the Parent
So long as any Advance shall remain unpaid, any Letter of Credit shall
remain outstanding or Fleet shall have any Commitment hereunder, unless Fleet
shall otherwise consent in writing:
SECTION 5.01 Reporting and Notice Requirements. The Borrowers and the
Parent will furnish to Fleet:
(i) within fifty (50) days after the end of each of the first three
quarters of each fiscal year of the Parent, consolidated and consolidating
balance sheets, statements of income and retained earnings and cash flow
statements of the Parent and its Subsidiaries as of the end of such
quarter, consolidated and consolidating balance sheets, statements of
income and retained earnings and cash flow statements of the Parent and
its Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter and consolidated
balance sheets of the Parent and its Subsidiaries as of the end of the
immediately preceding fiscal year, all certified by the chief financial
officer of the Parent, along with a certificate (a "Compliance
Certificate"), signed by the Parent's chief financial officer, in the form
attached as Exhibit C hereto or such other form as may be mutually
acceptable to the Parent and Fleet, setting forth the calculations
necessary to establish the compliance or non-compliance with the financial
covenants set forth in Sections 5.22 and 5.23 and setting forth the
aggregate outstanding balance of obligations under Capitalized Leases and
Purchase Money Debt of the Parent and its Subsidiaries;
(ii) within ninety-five (95) days after the end of each fiscal year
of the Parent, a copy of the annual report for such year for the Parent
and its Subsidiaries, containing financial statements for such year
certified by the chief financial officer of the Parent and
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accompanied by an unqualified opinion of [▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP] or other
independent public accountants acceptable to Fleet, with a written
statement from such accountants to the effect that they have read a copy
of this Agreement and that in making the examination necessary to such
opinion, they have obtained no knowledge of any Event of Default, along
with a Compliance Certificate of the Parent's chief financial officer
setting forth the calculations necessary to establish the compliance or
noncompliance with the financial covenants set forth in Sections 5.22 and
5.23 and setting forth the aggregate outstanding balance of obligations
under Capitalized Leases and Purchase Money Debt of the Parent and its
Subsidiaries;
(iii) as soon as possible and in any event within five (5) days
after the occurrence of each Event of Default and each event which, with
the giving of notice or lapse of time or both, would constitute an Event
of Default continuing on the date of such statement, a statement of the
chief financial officer of the Parent setting forth details of such Event
of Default or event and the action which the Parent and the Borrowers have
taken and propose to take with respect thereto;
(iv) within ninety (90) days after the end of each fiscal year of
the Parent and its Subsidiaries, the annual business plan of the Parent
and its Subsidiaries for the succeeding fiscal year on a quarterly basis
in reasonable detail, including projected consolidated and consolidating
balance sheets, statements of income and retained earnings and cash flow
statements of the Parent and its Subsidiaries for the succeeding fiscal
year on a quarterly basis, in each case in the same format as the audited
balance sheet, statement of income and retained earnings and cash flow
statement respectively;
(v) promptly after the sending or filing thereof, copies of all
reports which the Parent or any Subsidiary sends to any of its
securityholders, and copies of all reports and registration statements
which the Parent, the Borrowers or any Subsidiary files with the
Securities and Exchange Commission or any national securities exchange,
which reports are required to be sent to securityholders or so filed by
law or by regulation or under the terms of the Parent's listing agreement
with NASDAQ or any other stock exchange;
(vi) as soon as possible and in any event within ten (10) days after
the Borrowers or the Parent knows that any Reportable Event has occurred
with respect to any Plan, a statement, signed by the chief financial
officer of the Borrowers or the Parent, describing said Reportable Event
and the action which the Borrowers or the Parent proposes to take with
respect thereto;
(vii) as soon as possible and in any event within ten (10) days
after receipt by the Parent or any of its Subsidiaries, a copy of (a) any
notice or claim to the effect that the Parent or any of its Subsidiaries
is or may be liable to any Person as a result of a Release by the Parent,
any of its Subsidiaries, or any other Person which is likely to have a
Material Adverse Effect and (b) any notice alleging any violation of any
federal, state or local environmental, health or safety law or regulation
by the Parent or any of its Subsidiaries which is likely to have a
Material Adverse Effect;
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(viii) as soon as possible and in any event within ten (10) days of
becoming aware of any litigation or proceedings threatened in writing
effecting the Parent or any Subsidiary or to which the Parent or any
Subsidiary is or is to become a party involving an uninsured claim against
the Parent or any Subsidiary which is likely to have a Material Adverse
Effect, notice in writing stating the nature and status of such litigation
or proceedings;
(ix) as soon as possible and in any event within ten (10) days of
any judgment not covered by insurance, final or otherwise, against the
Parent or any of its Subsidiaries in an amount in excess of $1,000,000,
notice in writing of such judgment; and
(x) such other information respecting the condition or operations,
financial or otherwise, of the Parent or any of its Subsidiaries
(including without limitation any accountants' management letters) as
Fleet may from time to time reasonably request.
SECTION 5.02. Conduct of Business. Each of the Borrowers and the Parent
will, and will cause each of its Subsidiaries to, carry on and conduct its
business in the textile industry and in the home furnishings industry and to do
all things necessary to remain duly incorporated, validly existing and in good
standing as a domestic corporation in its jurisdiction of incorporation and
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted except to the extent that the failure to
maintain such authority is not likely to have a Material Adverse Effect. Quaker
LLC shall not engage in any business of any kind or nature and shall not have a
net worth or assets of more than de minimis value unless the Company pledges one
hundred percent (100%) of its ownership interests to Fleet pursuant to a pledge
agreement in form and substance satisfactory to Fleet together with appropriate
undated instruments of transfer duly executed in blank.
SECTION 5.03. Taxes. Each of the Borrowers and the Parent will, and will
cause each of its Subsidiaries to, pay when due all taxes, assessments and
governmental charges and levies upon it or its income, profits or property,
except (i) taxes which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside and
(ii) taxes (exclusive of state and federal income taxes) where the failure to so
pay is not likely to have a Material Adverse Effect.
SECTION 5.04. Compliance with Laws, Charter Documents and Agreements. Each
of the Borrowers and the Parent will, and will cause each of its Subsidiaries
to, comply with (a) all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, (b) the provisions of
its charter documents and by-laws, and (c) all agreements and instruments by
which it or any of its properties may be bound; provided in each case that the
failure of the Borrowers, the Parent or any Subsidiary so to comply shall not
constitute a breach of this Section 5.04 unless such failure to comply is likely
to have a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties. Each of the Borrowers and the
Parent will, and will cause each of its Subsidiaries to, do all things necessary
to maintain, preserve, protect and keep its properties in good repair, working
order and condition in the Borrowers'
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or the Parent's reasonable judgment, and make all necessary and proper repairs,
renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times.
SECTION 5.06. Inspection. Each of the Borrowers and the Parent will, and
will cause each Subsidiary to, permit Fleet, by its representatives and agents
upon reasonable notice to the Borrowers or the Parent, as the case may be, and
during normal business hours, to inspect any of the properties, corporate books
and financial records of the Borrowers, the Parent and each Subsidiary, to
examine and make copies of the books of accounts and other financial records of
the Borrowers, the Parent and each Subsidiary, and to discuss the affairs,
finances and accounts of the Borrowers, the Parent and each Subsidiary with, and
to be advised as to the same by, their respective officers at such reasonable
times and intervals as Fleet may designate.
SECTION 5.07. Dividends. Each of the Borrowers and the Parent will not,
and will not permit any of its Subsidiaries to, declare or pay any dividends on
its capital stock (other than dividends payable in its own capital stock), make
any other cash distributions to any shareholders of the Borrowers or the Parent,
or redeem, repurchase or otherwise acquire or retire any of its capital stock at
any time outstanding ("Distributions"), except that (a) the Parent may make
Distributions to the holders of its capital stock so long (i) no Event of
Default has occurred and is continuing and (ii) no Event of Default would have
resulted therefrom, assuming for the purpose of this clause (ii) that such
Distribution had been made during the immediately prior fiscal quarter of the
Parent and its Subsidiaries and (b) Subsidiaries of the Parent may make
Distributions to the Parent or the Borrowers, as the case may be.
SECTION 5.08. Debt. The Borrowers and the Parent will not, nor will they
permit any of their Subsidiaries to, create, incur or suffer to exist any Debt,
except:
(i) The Advances and the Letters of Credit.
(ii) Debt existing on the date hereof and described in Schedule 5.08
hereto and as permitted under Section 5.14 hereof.
(iii) Recourse Obligations permitted under Section 5.10 hereof.
(iv) Capitalized Leases and Purchase Money Debt in an aggregate
principal amount outstanding at any time not to exceed the result of (x)
$25,000,000 minus (y) all amounts outstanding under subsection (ix) below.
(v) Subordinated indebtedness of the Company, any New Parent Subsidiary or
the Parent ("Subordinated Debt"), so long as (A) the Company and the
Parent have demonstrated compliance with the covenants set forth in
Section 5.23 both immediately before and immediately after the incurrence
of such indebtedness and (B) with respect to such indebtedness, the
subordination provisions, maturity, amortization, covenants, events of
default and payment provisions are acceptable to Fleet.
(vi) the Seller Debt.
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(vii) the Senior Notes.
(viii) Debt (A) of the Parent to the Company or a New Parent
Subsidiary or (B) of the Company or a New Parent Subsidiary to the Parent
or (C) of a Subsidiary of the Company to the Company or (D) of a
Subsidiary to another Subsidiary, in each case to the extent the
Investment corresponding to such Debt is permitted by Section 5.11 hereof.
(ix) Debt in an aggregate amount not to exceed $10,000,000 secured
by any Lien existing on the property of a Person to be acquired in an
Acquisition permitted by Section 5.09 hereof, provided that such Debt and
such Lien shall not have been incurred in contemplation of such
Acquisition.
SECTION 5.09. Mergers and Acquisitions. The Borrowers and the Parent will
not, nor will they permit any of their Subsidiaries to, merge or consolidate
with or into any other Person, except (a) that any of the Company's Subsidiaries
may merge with and into the Company, (b) that a Subsidiary of the Company may
merge with another Subsidiary of the Company and (c) that any New Parent
Subsidiary may merge with and into the Parent or the Company. In addition to the
mergers permitted under the immediately preceding sentence, the Company and the
Parent may from time to time (x) acquire one hundred percent of the issued and
outstanding stock of any corporation or (y) purchase all or substantially all of
the assets of any Person or a business unit of any Person (any transaction
described in clauses (x) and (y) being hereinafter referred to as an
"Acquisition"); provided that (i) prior to each Acquisition the Company and the
Parent shall deliver to Fleet (A) a Compliance Certificate based on the actual
historical performance of the Parent, the Company, their Subsidiaries and the
Person to be acquired, on a consolidated basis, demonstrating compliance with
the covenants set forth in Section 5.23 as of the last day of the fiscal quarter
of the Parent immediately preceding the Acquisition assuming for purposes of
this calculation that such Acquisition had been consummated at the beginning of
such period and would be accounted for as a pooling of interests; provided,
however, that Total Funded Debt shall be determined after giving effect to such
Acquisition, and (B) projections demonstrating compliance with the covenants set
forth in Section 5.23 for each of the four fiscal quarters of the Parent
immediately following such Acquisition, in each case described in clauses (A)
and (B) hereof on a pro forma basis as if such Acquisition had been completed at
the beginning of such period, (ii) immediately following such Acquisition (x)
the Commitment minus (y) the sum of the outstanding aggregate principal balance
of the Advances and the Letter of Credit Obligations shall not be less than
$5,000,000, (iii) in connection with such Acquisitions the Parent, the Company
and their Subsidiaries shall not incur, in the aggregate from and after the
Closing Date, Senior Acquisition Debt in excess of $45,000,000, (iv) any Debt
incurred in connection therewith which is not Senior Acquisition Debt must be
Subordinated Debt, and (v) the aggregate purchase price paid in connection with
such Acquisitions shall not exceed $50,000,000. To the extent that any Person
becomes a Subsidiary of the Company after the date of the Agreement and such
Person is not merged with and into the Company (1) if such Person is a stock
corporation organized under the laws of any political subdivision of the United
States of America the Company
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shall promptly deliver to Fleet all of the capital stock of such Person,
together with undated stock powers thereto duly executed in blank in accordance
with the terms of the Collateral Agency and Pledge Agreement, and (2) in all
other cases the Company shall pledge its interest in each such Subsidiary to
Fleet pursuant to a pledge agreement in form and substance satisfactory to Fleet
together with appropriate undated instruments of transfer duly executed in
blank. To the extent that any Person becomes a Subsidiary of the Parent after
the date of this Agreement and such Person is not also a Subsidiary of the
Company (any such Person a "New Parent Subsidiary"), such Person shall
immediately execute an instrument of adherence (in form acceptable to Fleet)
whereby it will become a party to Article IIA of this Agreement as an additional
guarantor of the Parent Guaranteed Obligations, provided, however, such guaranty
shall only extend to Section 2A.01(i) and not parts (ii) and (iii) of Section
2A.01.
SECTION 5.10. Sale of Assets.
(a) Sale of Property. The Borrowers and the Parent will not, nor will they
permit any of their Subsidiaries to, lease, sell or otherwise dispose of its
property, assets or business to any other Person except for (i) sales of
inventory in the ordinary course of business, (ii) sales permitted under
subsection (b) below and Section 5.20 below, (iii) assets consisting of
production equipment to the extent that the proceeds of such sale are used to
purchase additional production equipment within ninety (90) days of the date of
such sale (such proceeds being hereinafter referred to as "Equipment Sales
Proceeds"), (iv) Investments in the form of assets permitted under Section 5.11
hereof and (v) other assets of the Borrowers with a book value not to exceed
$5,000,000 in the aggregate during the term of this Agreement.
(b) Sale of Accounts. The Company and the Parent will not, nor will they
permit any of their Subsidiaries to, sell or otherwise dispose of any notes
receivable or accounts receivable, with or without recourse (exclusive of any
notes receivable or securities received in connection with the insolvency or
inability to pay of any of the Borrowers' or the Parent's account debtors);
provided that the Company (i) may sell, on a nonrecourse basis, accounts
receivable owing by account debtors located outside of the United States of
America, so long as such sales are made for cash, the proceeds of such sales are
used to prepay the Advances and the aggregate amount of such accounts receivable
sold in any fiscal year does not exceed fifty percent (50%) of the aggregate
amount of the Company's, the Parent's or such Subsidiaries' sales to customers
located outside of the United States of America for the immediately preceding
fiscal year and (ii) may sell, on a recourse basis, accounts receivable owing by
account debtors located outside of the United States, so long as such sales are
made for cash, the proceeds of such sales are used to prepay the Advances and
the aggregate amount of Recourse Obligations with respect thereto does not
exceed $10,000,000 at any time; provided, however, in no event shall the
aggregate amount of Recourse Obligations referred to in the preceding clause
which are neither Export-Import Recourse Obligations or backed by other credit
support acceptable to Fleet exceed $5,000,000 at any time.
SECTION 5.11. Investments: Quaker Fabric Foreign Sales Corporation. (a)
The Borrowers and the Parent will not make or suffer to exist, and shall not
permit any Subsidiary to make or suffer to exist, any Investments (including,
without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to create any
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Subsidiary or to become or remain a partner in any partnership or joint venture,
or to make any acquisition of any Person, except as otherwise permitted under
Sections 5.09 and:
(i) Short-term obligations of, or fully guaranteed by, the United
States of America.
(ii) Commercial paper rated A-1 or better by Standard and Poor's
Ratings Group or P-1 or better by ▇▇▇▇▇'▇ Investors Service.
(iii) Demand deposit accounts maintained in the ordinary course of
business.
(iv) Certificates of deposit issued by and time deposits with
commercial banks (whether domestic or foreign) having capital and surplus
in excess of $100,000,000.
(v) Overnight investments in money market funds with portfolios
comprised primarily of the items described in clauses (i) through (iv)
above.
(vi) Existing investments in Subsidiaries and other Investments in
existence on the date hereof and described in Schedule 5.11 hereto.
(vii) Notes receivable and securities received in connection with
the insolvency or inability to pay of any of the Borrowers' or the
Parent's account debtors in an aggregate amount not to exceed at any time
the greater of (i) $3,000,000 and (ii) ten percent (10%) of the
outstanding face amount of the Company's accounts receivable at such time.
(viii) Loans to employees of the Company or any of its Subsidiaries
not to exceed $750,000 in the aggregate outstanding for all such employees
at any time.
(ix) Prior to the occurrence of a Change in Control, Investments
(other than the Investments referred to in subsection (vi) above) not to
exceed $10,000,000 in the aggregate from and after the Closing Date,
provided that (A) Investments in Persons other than Subsidiaries shall not
exceed $5,000,000 in the aggregate from and after the Closing Date and (B)
after the occurrence of a Change in Control no further Investments under
this Section 5.11(a)(ix) shall be made.
(x) Investments in amounts and in connection with the acquisition or
formation of new Subsidiaries of the Company or the Parent pursuant to
Acquisitions permitted by Section 5.09 hereof.
(xi) Investments by the Parent and any New Parent Subsidiary
consisting of the guaranty of the Parent Guaranteed Obligations and
Investments by the Company consisting of its guaranty of the Company
Guaranteed Obligations.
(b) The Company will not permit cash and cash equivalents in Quaker Fabric
Foreign Sales Corporation to exceed $500,000 in the aggregate at any time;
provided that no
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cash or cash equivalents in an amount in excess of $100,000 shall remain in
Quaker Fabric Foreign Sales Corporation for a period in excess of ten (10)
Banking Days.
SECTION 5.12. Liens. The Borrowers and the Parent will not, nor will they
permit any of their Subsidiaries to, create, incur, or suffer to exist any Lien
in, of or on the property of the Borrowers, the Parent or any of their
Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies
on its property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good
faith and by appropriate proceedings and for which adequate reserves in
accordance with generally accepted principles of accounting shall have
been set aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than sixty (60) days
past due or which are being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on
its books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do
not in any material way affect the marketability of the same or interfere
with the use thereof in the business of the Company or the Subsidiaries.
(v) Liens existing on the date hereof and described in Schedule 5.12
hereto.
(vi) Liens securing Purchase Money Debt and Capitalized Leases
permitted under Section 5.08 hereof.
(vii) Environmental Liens in an aggregate outstanding amount not to
exceed $2,000,000; provided that to the extent that all such Environmental
Liens aggregate in excess of $200,000, each such Environmental Lien must
be abated, reduced, released, terminated or fully paid and discharged
within thirty (30) days of the creation thereof.
(viii) Other nonconsensual liens in an aggregate outstanding amount
not to exceed $100,000 at any time.
(ix) Liens with respect to accounts receivable securing Recourse
Obligations permitted under Sections 5.08 and 5.10 hereof.
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(x) Liens on the stock of Subsidiaries of the Company arising under
the Collateral Agency and Pledge Agreement or any similar pledge agreement
to which Fleet is a party executed pursuant to the last sentence of
Section 5.09 hereof.
(xi) Liens securing Debt permitted by Section 5.08(ix) hereof,
provided that each such Lien shall at all times be confined solely to the
item or items so encumbered and, if required by the terms of the
instrument originally creating such Lien, other property which is an
improvement to or is acquired for specific use in connection with such
property so encumbered.
SECTION 5.13. Punctual Payment. The Borrowers will duly and punctually pay
or cause to be paid the principal on the Advances and all reimbursement
obligations with respect to Letters of Credit, and within three (3) days
following the date the same becomes due and payable, interest on the Advances,
all commitment fees, all letter of credit fees, Fleet's fees and all other
amounts provided for in this Agreement and the other documents delivered in
connection herewith, all in accordance with the terms of this Agreement or such
other documents.
SECTION 5.14. Letters of Credit. The Borrowers and the Parent will not,
nor will they permit any of their Subsidiaries to, apply for or become liable
upon any letters of credit other than the Letters of Credit; provided that to
the extent Fleet refuses to issue any requested Letter of Credit notwithstanding
that the conditions set forth in Article III hereof have been satisfied, the
Company may apply for and become liable on letters of credit in an aggregate
outstanding face amount not to exceed $1,000,000 in the aggregate at any time.
SECTION 5.15. Affiliates. Each of the Borrowers and the Parent will not,
and will not permit any Subsidiary to, enter into any transaction (including
without limitation, the purchase or sale of any property or service) with, or
make any payment or transfer to, any Affiliate except in the ordinary course of
business and pursuant to the reasonable requirements of the Borrowers', the
Parent's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrowers, the Parent or such Subsidiary than the
Borrowers, the Parent or such Subsidiary would obtain in a comparable
arm's-length transaction; provided that in no event shall this Section 5.15 be
construed to place any limitations with respect to the compensation packages
including, without limitation, base compensation, bonuses, fringe benefits,
incentive compensation, option or other forms of compensation, paid by the
Company or any Subsidiary to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
SECTION 5.16. Existence; Maintenance of Office. Each of the Borrowers and
the Parent will maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve its existence as a corporation. Each of the Borrowers and
the Parent will maintain and preserve, and cause each of its Subsidiaries to
maintain and preserve, all rights, privileges, licenses, patents, patent
applications, copyrights, trademarks, trademark applications, service marks,
service ▇▇▇▇ applications, brand names, trade names, trade styles, franchises
and other authority to the extent material and necessary for the conduct of its
respective business in the ordinary course as conducted from time to time except
to the extent the failure to so maintain and preserve would not have a Material
Adverse Effect. Each of the Parent and the Company will maintain its chief
executive office in Fall River, Massachusetts, or at such other place in the
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ as the Parent and the Borrowers shall designate upon
written notice to Fleet, where notices, presentation or demands to or upon the
Parent or the Company may be given or made.
SECTION 5.17. ERISA. The Borrowers and the Parent will not:
(a) (i) Engage, or permit any ERISA Affiliate to engage, in any
prohibited transaction described in Sections 406 of ERISA or 4975 of the
Code for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the Department of
Labor;
(ii) permit to exist any accumulated funding deficiency (as defined
in Sections 302 of ERISA and 412 of the Code), whether or not waived;
(iii) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan which would result in any liability of any Borrowers or any
ERISA Affiliate under Title IV of ERISA;
(iv) fail to make any contribution or payment to any Multiemployer
Plan which the Borrowers or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto;
(v) fail, or permit any ERISA Affiliate to fail, to pay any required
installment or any other payment required under Section 412 of the Code on
or before the due date for such installment or other payment;
(vi) amend, or permit any ERISA Affiliate to amend, a Benefit Plan
resulting in an increase in current liability for the plan year such that
the Borrowers, the Parent or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the Code; or
(vii) permit or take any action which would result in the aggregate
benefit liabilities (within the meaning of ss.4001 of ERISA) of all
Benefit Plans exceeding the value of the aggregate assets of such Plans,
disregarding for this purpose the benefit liabilities and assets of any
such Plan with assets in excess of benefit liabilities.
SECTION 5.18. Environmental Matters. (a) Each of the Borrowers and the
Parent will, pertaining to the areas of environmental compliance, hazard or
liability, permit Fleet, or its agent or representative, during normal business
hours and with reasonable prior notice, to inspect any of the Borrowers' or the
Parent's or any of their Subsidiaries' documents, property or operations, and
interview any of the Borrowers' or the Parent's or any of their Subsidiaries'
employees, representatives or agents.
(b) The Borrowers and the Parent will not become subject to any
liabilities, or permit any of their Subsidiaries to become subject to any
liabilities, that would have a Material Adverse Effect arising out of or related
to (a) the Release or threatened Release at any location
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of any Hazardous Material into the environment, or any Remedial Action in
response thereto, or (b) any violation of any Environmental Law.
(c) The Borrowers and the Parent will not, or permit any of their
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Environmental Lien on or with respect to any of its assets or
property, real or personal except as otherwise permitted under Section 5.12
hereof.
SECTION 5.19. Insurance. Each of the Borrowers and the Parent will, and
will cause each of its Subsidiaries to, maintain, with insurance companies
recommended to the Borrowers or the Parent by a qualified and knowledgeable
insurance brokerage firm of recognized standing, insurance on all their property
in such amounts and covering such risks as is consistent with current sound
business practice, and the Borrowers and the Parent will furnish to Fleet upon
request full information as to the insurance carried.
SECTION 5.20. Sale and Leaseback. The Borrowers and the Parent will not,
nor will they permit any of their Subsidiaries to, sell or transfer any property
in order to concurrently or subsequently lease as lessee such or similar
property except in connection with Capitalized Leases or Purchase Money Debt
permitted under Section 5.08 hereof.
SECTION 5.21. Negative Pledges. The Borrowers and the Parent will not, nor
will they permit any of their Subsidiaries to, covenant or agree with any
Person, or in favor of any other Person, that the Borrowers, the Parent or any
of their Subsidiaries will not create any Lien with respect to its assets, other
than pursuant to (i) this Agreement, (ii) any agreement relating to the
Company's Capitalized Leases and Purchase Money Debt but only with respect to
the machinery and equipment leased or financed pursuant to such agreement and
(iii) the Senior Notes.
SECTION 5.22. [Intentionally Omitted].
SECTION 5.23. Financial Covenants.
(a) Minimum Tangible Net Worth. The Parent and the Company shall not
permit Tangible Net Worth, at any time, to be less than the sum of (i)
$120,000,000, minus (ii) to the extent that the aggregate amount of Acquisition
Intangibles is greater than $20,000,000 and less than $35,000,000, the aggregate
amount of such Acquisition Intangibles in excess of $20,000,000 (provided,
however, that no more than $15,000,000 shall be deducted pursuant to this clause
(ii)), plus (iii) on a cumulative basis, fifty percent (50%) of the Net Income
(exclusive of any losses) of the Parent and its Subsidiaries for each fiscal
quarter beginning with the Parent's fiscal quarter starting on December 30,
2001, plus (iv) the aggregate amount of any net proceeds of private or public
placement(s) of equity securities by the Parent during the term of this
Agreement.
(b) Debt Service Coverage Ratio. The Parent and the Company shall not
permit the Debt Service Coverage Ratio, calculated as of the last day of each
fiscal quarter of the Parent and its Subsidiaries, to be less than 1.50 to 1.00
for any period of four (4) consecutive fiscal quarters ending after the Closing
Date.
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(c) Leverage Ratio. The Parent and the Company shall not permit the
Leverage Ratio, calculated as of the last day of each fiscal quarter of the
Parent and its Subsidiaries to exceed 3.0 to 1.0.
(d) Senior Debt Ratio. The Parent and the Company shall not permit the
Senior Debt Ratio, calculated as of the last day of each fiscal quarter of the
Parent and its Subsidiaries to exceed 2.75 to 1.0.
(e) Profitable Operations. The Parent and the Company shall not permit
EBIT of the Parent and its Subsidiaries for each of any two consecutive fiscal
quarters of the Parent and its Subsidiaries to be less than $1.00.
(f) Compliance with Balance Sheet Covenants. For purposes of assessing the
Company's and the Parent's compliance with the financial covenants set forth in
clauses (a), (c) and (d) above, the Company and the Parent shall be deemed to be
in compliance at all times unless (i) any officer of the Company or the Parent
has actual knowledge that the Company or the Parent, as the case may be is not
in compliance with any such financial covenant or (ii) the Company or the
Parent, as the case may be is out of compliance with any such financial covenant
as of the last day of any fiscal month of the Parent and its Subsidiaries.
(g) Breach of Financial Covenants. The Company and the Parent shall notify
Fleet as soon as the Company becomes aware that it has failed to comply with any
of the financial covenants set forth above in this Section 5.23. Notwithstanding
the terms and conditions of Section 6.01 hereof, such noncompliance shall not
constitute an Event of Default until the earlier of (i) five (5) Banking Days
after the date the Company or the Parent, as the case may be, first became aware
of such noncompliance or (ii) the date on which Fleet first became aware of such
noncompliance; provided that Fleet shall have no obligation to fund new
Advances, Convert existing Advances to Eurodollar Advances or Continue existing
Advances as Eurodollar Advances on or after the date upon which the Company or
the Parent first became aware of such noncompliance.
SECTION 5.24. Use of Proceeds. The Borrowers will use the proceeds of the
Advances solely for working capital and general corporate purposes and, subject
to the limitations set forth in this Agreement, to fund capital expenditures and
Acquisitions permitted hereunder. The Company will obtain Letters of Credit
solely for general corporate purposes.
SECTION 5.25. [Intentionally Omitted]
SECTION 5.26. Modification of Debt. The Borrowers and the Parent will not,
nor will they permit their Subsidiaries to, (a) amend or otherwise modify the
terms of any of the documents pertaining to the Subordinated Debt or (b) prepay,
redeem or repurchase (i) the Senior Notes or (ii) the Subordinated Debt, other
than prepayments of the Senior Notes so long as no Event of Default has occurred
and is continuing or would result from such prepayment.
SECTION 5.27. Records and Accounts. The Parent and the Borrowers will
keep, and cause each of their Subsidiaries to keep, true and accurate records
and books of account in which full, true and correct entries will be made in
accordance with GAAP.
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SECTION 5.28. Quaker Mexico. Within sixty (60) days after the Closing
Date, Quaker Mexico will deliver to Fleet, (i) a good standing certificate
certified on behalf of the jurisdiction in which it is incorporated, and (ii) a
certificate of the Secretary of Quaker Mexico certifying as to the accuracy and
currency of the Articles of Organization or other charter documents and By-laws
of Quaker Mexico attached thereto.
SECTION 5.28. Further Assurances. The Parent and the Borrowers will, and
will cause each of their Subsidiaries to, cooperate with Fleet and execute such
further instruments and documents as Fleet shall reasonably request to carry out
to its satisfaction the transactions contemplated by this Agreement.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events ("Events
of Default") shall occur and be continuing:
(a) The Borrowers shall fail to (i) pay (a) any principal of any
Advance made to it or (b) any reimbursement obligation under any Letter of
Credit (to the extent not repaid out of the proceeds of a deemed Advance
hereunder), when the same becomes due and payable hereunder or (ii) pay
any interest or fees due hereunder, within three (3) days following the
date the same becomes due and payable; or
(b) Any representation or warranty made by the Borrowers or the
Parent herein or in any other document or instrument delivered in
connection herewith shall prove to have been incorrect in any material
respect when made or deemed made; or
(c) The Borrowers or the Parent shall fail to perform or observe (i)
any term, covenant or agreement contained in Sections 5.01, 5.06, 5.07,
5.08, 5.09, 5.10, 5.11, 5.12, 5.13, 5.16, 5.20, 5.21, 5.23 (subject to
clauses (f) and (g) thereof), 5.24 or 5.26 or (ii) any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed for a period of in excess of thirty (30) days; or
(d) (i) The Borrowers, the Parent or any of their Subsidiaries shall
fail to pay any principal of or premium or interest on any Debt which is
outstanding in a principal amount of at least $5,000,000 in the aggregate
(but excluding Debt outstanding hereunder) of the Parent, the Borrowers or
such Subsidiary (as the case may be), when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to
such Debt; or (ii) any other event shall occur or condition shall exist
under any agreement or instrument relating to any Debt which is
outstanding in a principal amount of at least $5,000,000 in the aggregate
(but excluding Debt outstanding hereunder) of the Parent, the Borrowers or
such Subsidiary (as the case may be) and shall continue after the
applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or
to permit the acceleration of, the maturity of such Debt (provided that if
any such default (other than
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a payment default) shall have occurred with respect to the Senior Notes,
it shall not be an Event of Default under this clause (ii) until the
earliest to occur of (x) acceleration of the Senior Notes, (y) thirty (30)
days after the occurrence of such default with respect to the Senior Notes
or (z) any default under clause (i) hereof); or any such Debt which is
outstanding in a principal amount of at least $5,000,000 in the aggregate
(but excluding Debt outstanding hereunder) of the Parent, the Borrowers or
such Subsidiary (as the case may be) shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), redeemed, purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof; or
(e) Any of the Borrowers, the Parent or any of their Subsidiaries
shall make an assignment for the benefit of creditors, or admit in writing
its inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee or
other custodian, liquidator or receiver of any of the Borrowers, the
Parent or any of their Subsidiaries or of any substantial part of the
assets of the Borrowers, the Parent or any of their Subsidiaries or shall
commence any case or other proceeding relating to any of the Borrowers,
the Parent or any of their Subsidiaries under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution
or liquidation or similar law of any jurisdiction, now or hereafter in
effect, or shall take any action to authorize or in furtherance of any of
the foregoing, or if any such petition or application shall be filed or
any such case or other proceeding shall be commenced against any of the
Borrowers, the Parent or any of their Subsidiaries and any of the
Borrowers, the Parent or any of their Subsidiaries shall indicate its
approval thereof, consent thereto or acquiescence therein or such petition
or application shall not have been dismissed within sixty (60) days
following the filing thereof; or
(f) A decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any of the Borrowers,
the Parent or any of their Subsidiaries bankrupt or insolvent, or
approving a petition in any such case or other proceeding, or a decree or
order for relief is entered in respect of any of the Borrowers, the Parent
or any of their Subsidiaries in an involuntary case under federal
bankruptcy laws as now or hereafter constituted; or
(g) If this Agreement, the Collateral Agency and Pledge Agreement or
any of the other documents executed in connection herewith shall be
cancelled, terminated, revoked or rescinded other than in accordance with
the terms thereof or with the express prior written agreement, consent or
approval of Fleet, or any action at law, suit or in equity or other legal
proceeding to cancel, revoke or rescind this Agreement or any of the other
documents executed in connection herewith shall be commenced by or on
behalf of the Borrowers, the Parent or any of their Subsidiaries party
thereto or any of their respective stockholders, or any court or any other
governmental or regulatory authority or agency of competent jurisdiction
shall make a determination that, or issue a judgment, order, decree or
ruling to the effect that this Agreement or any of the other documents
executed in connection herewith is illegal, invalid or unenforceable in
accordance with the terms thereof; or
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(h) Any judgment or order for the payment of money in excess of
$3,000,000 shall be rendered against the Borrowers, the Parent or any of
their Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall
be any period of 10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(i) the Parent shall fail to own, directly or indirectly, one
hundred percent of the issued and outstanding stock of the Company or any
New Parent Subsidiary; or
(j) The Company shall fail to own, directly or indirectly, one
hundred percent (100%) of the issued and outstanding stock of Quaker
Textile and Quaker Mexico (other than directors' qualifying shares); or
(k) a Change of Control occurs; or
(l) Any Termination Event shall occur which is reasonably likely to
have a Material Adverse Effect, or the plan administrator of any Plan
applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412 (a) of the Code and the approval of such
waiver is reasonably likely to have a Material Adverse Effect;
then, and in any such event, so long as the same may be continuing, Fleet may,
by notice in writing to the Borrowers, declare all amounts owing with respect to
this Agreement and all Letters of Credit to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Borrowers; provided that in the event of any Event of Default specified in
Sections 6.01(e) or (f), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from Fleet.
SECTION 6.02. Termination of Commitment. If any one or more of the Events
of Default specified in Sections 6.01(e) or (f) shall occur, any unused portion
of the credit hereunder shall forthwith terminate and Fleet shall be relieved of
all further obligations to make Advances to the Borrowers and Fleet shall be
relieved of all further obligations to issue, extend or renew Letters of Credit.
If any other Event of Default shall have occurred and be continuing Fleet may,
by notice to the Borrowers, terminate the unused portion of the credit
hereunder, and upon such notice being given such unused portion of the credit
hereunder shall terminate immediately and Fleet shall be relieved of all further
obligations to make Advances and Fleet shall be relieved of all further
obligations to issue, extend or renew Letters of Credit. No termination of the
credit hereunder shall relieve the Borrowers or any of their Subsidiaries of any
of their obligations hereunder.
SECTION 6.03. Remedies. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not Fleet shall have
accelerated the maturity of the Advances pursuant to Section 6.01, Fleet, if
owed any amount with respect
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to the Advances or the Letter of Credit Obligations, may proceed to protect and
enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Agreement or any instrument pursuant to which the obligations
of the Borrowers to Fleet are evidenced, including as permitted by applicable
law the obtaining of the ex parte appointment of a receiver, and, if such amount
shall have become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right of Fleet. No remedy herein
conferred upon Fleet or any purchaser of any Letter of Credit participation is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or any other provision
of law.
ARTICLE VII
[Intentionally Omitted]
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments. Etc. No amendment, consent or waiver of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed by Fleet and the Borrowers and the Parent, and
then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 8.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telecopier, telegraphic, telex or
cable communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to Fleet, at Fleet National Bank, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇; if to the
Borrowers or the Parent, at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: President; and, as to each
party, at such other address as shall be designated by such party in a written
notice to the other parties. All such notices and communications shall, when
mailed, telecopied, telegraphed, telexed or cabled, be effective when deposited
in the mails, telecopied, delivered to the telegraph company, confirmed by telex
answerback or delivered to the cable company, respectively, except that notices
and communications to Fleet pursuant to Article II shall not be effective until
received by Fleet.
SECTION 8.03. No Waiver; Remedies. No course of dealing or failure on the
part of Fleet to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. No waiver shall extend to or affect any obligations not expressly
waived or impair any right consequent thereto. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses and Taxes.
(a) Each of the Borrowers jointly and severally agrees to pay (i) the
reasonable costs of producing and reproducing this Agreement and the other
agreements and
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instruments mentioned herein, (ii) any taxes (including any interest and
penalties in respect thereto) payable by (other than taxes based upon Fleet's
net income) on or with respect to the transactions contemplated by this Credit
Agreement (the Borrowers hereby jointly and severally agreeing to indemnify
Fleet with respect thereto), (iii) all Attorneys' Fees incurred in connection
with the preparation, syndication, administration or interpretation of this
Agreement and the other agreements and instruments mentioned herein, each
closing hereunder, any amendments, modifications, approvals, consents or waivers
hereto or hereunder, or the cancellation of this Agreement or any of the other
agreements and instruments mentioned herein upon payment in full in cash of all
of the Obligations or pursuant to any terms of this Agreement or any of the
other agreements and instruments mentioned herein for providing for such
cancellation, (iv) the fees, expenses and disbursements of Fleet or any of its
affiliates incurred by Fleet or such affiliate in connection with the
preparation, syndication, administration or interpretation of the Credit
Agreement and any other agreements and instruments mentioned herein, including
all engineering, appraisal and examination charges, and (v) all reasonable
out-of-pocket expenses (including without limitation reasonable attorneys' fees
and costs, which attorneys may be employees of Fleet, and reasonable consulting,
accounting, appraisal, investment banking and similar professional fees and
charges) incurred by Fleet in connection with (A) the enforcement of or
preservation of rights under any of this Agreement or any of the other
agreements and instruments mentioned herein against the Borrowers or the Parent
or the administration thereof after the occurrence of a Default or Event of
Default, including, without limitation, reasonable counsel fees and expenses in
connection with the enforcement of rights under this Section 8.04(a), and (B)
any litigation, proceeding or dispute whether arising hereunder or otherwise, in
any way related to Fleet's relationship with the Borrowers or the Parent. Prior
to the occurrence of an Event of Default, Fleet may from time to time conduct
audits of the Borrowers and the Parent at their own expense in accordance with
Section 5.06. The covenants of this Section 8.04(a) shall survive satisfaction
and payment of the Advances and termination of this Agreement.
(b) If any payment of principal of, or Conversion of, any Eurodollar
Advance is made by any Borrower to Fleet other than on the last day of the
Interest Period for such Advance, as a result of a payment or Conversion
pursuant to Section 2.06 or Section 2.09, the Borrowers shall, upon demand by
Fleet, pay to Fleet for Fleet's account any amounts required to compensate Fleet
for any additional losses, costs or expenses which it may reasonably incur as a
result of such payment or Conversion, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by Fleet to fund or maintain such Advance.
SECTION 8.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, Fleet is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by Fleet to or for the
credit or the account of the Borrowers or the Parent against any and all of the
obligations of the Borrowers or the Parent now or hereafter existing under this
Agreement owed to Fleet, irrespective of whether or not Fleet shall have made
any demand under this Agreement and although such obligations may be unmatured.
Fleet agrees promptly to notify the Borrowers or the Parent, as the case may be
after any such set-off and
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application made by Fleet, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of Fleet
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which Fleet may have.
SECTION 8.06. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Borrowers, the Parent, and Fleet and their
respective successors and assigns, except that the Borrowers and the Parent
shall not have the right to assign their rights or obligations hereunder or any
interest herein without the prior written consent of Fleet.
SECTION 8.07. Participations.
(a) [Intentionally Omitted]
(b) [Intentionally Omitted]
(c) [Intentionally Omitted]
(d) Fleet may sell participations to one or more banks or other entities
in or to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment and the
Advances owing to it); provided, however, that (i) Fleet's obligations under
this Agreement (including, without limitation, its Commitment to the Borrowers
hereunder) shall remain unchanged, (ii) Fleet shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii) Fleet
shall remain the holder of any such Advance for all purposes of this Agreement,
(iv) the documentation evidencing such participation shall not grant the
participant the right to withhold its consent to any amendment or waiver under
this Agreement other than amendments and waivers described in clause (i) of
Section 8.01 hereof, and (v) the Borrowers and the Parent shall continue to deal
solely and directly with Fleet in connection with Fleet's rights and obligations
under this Agreement.
(e) Fleet may, in connection with any participation or proposed
participation pursuant to this Section 8.07, disclose to the participant or
proposed participant, any information relating to the Borrowers or the Parent
furnished to Fleet by or on behalf of the Borrowers or the Parent; provided
that, prior to any such disclosure, the participant or proposed participant
shall agree to preserve the confidentiality of any confidential information
relating to the Borrowers and the Parent received by it from Fleet.
(f) [Intentionally Omitted]
(g) [Intentionally Omitted]
(h) Anything contained in this Section 8.07 to the contrary
notwithstanding, Fleet may at any time pledge or assign a security interest in
all or any portion of its interest and rights under this Agreement to secure its
obligations, including any pledge or assignment to secure obligations to any of
the twelve Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof
shall release Fleet from its obligations hereunder.
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SECTION 8.08. Governing Law; Jury Trial Waiver. Each of the Borrowers and
the Parent agrees that this Agreement shall be governed by the internal laws (as
opposed to conflicts of laws provisions) of the Commonwealth of Massachusetts.
Because disputes arising in connection with complex financial transactions are
most quickly and economically resolved by an experienced and expert person and
the parties wish applicable state and federal rules to apply (rather than
arbitration rules), the parties desire that their disputes be resolved by a
judge applying such applicable laws. Therefore, to achieve the best combination
of the benefits of the judicial system and of arbitration (without submitting to
arbitration), the parties hereto waive all right to trial by jury in any action,
suit or proceeding brought to enforce or defend any rights or remedies under
this Agreement or the Notes. Except as prohibited by law, each of the Borrowers
and the Parent hereby waives any right it may have to claim or recover in any
such litigation any special, exemplary, punitive or consequential damages other
than, or in addition to, actual damages.
SECTION 8.09. Consent to Jurisdiction. To induce Fleet to accept this
Agreement, each of the Borrowers and the Parent irrevocably agrees that, subject
to Fleet's sole and absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY,
MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR THE
NOTES SHALL BE LITIGATED IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR
ANY FEDERAL COURT SITTING THEREIN. EACH OF THE BORROWERS AND the Parent HEREBY
CONSENTS AND SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN SAID COMMONWEALTH AND WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON THE BORROWERS AND the Parent, AND AGREES THAT ALL SUCH SERVICE
OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO THE BORROWERS AND the
Parent AT THE ADDRESS SET FORTH IN SECTION 8.02 HEREOF AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.
SECTION 8.10. Indemnity. Each of the Borrowers jointly and severally
agrees to indemnify, pay and hold Fleet, and its officers, directors, employees,
agents, and affiliates (collectively the "Indemnitees"), harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for any of such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not any of such Indemnitees shall be designated a party thereto) that
may be imposed on, incurred by, or asserted against any indemnitee in any manner
relating to or arising out of this Agreement or any other agreements executed
and delivered by the Borrowers or the Parent in connection herewith, the
statements contained in any commitment letter delivered by Fleet, Fleet's
agreement to make the Advances or to issue Letters of Credit hereunder, the use
or intended use of any Letters of Credit, or the use or intended use of the
proceeds of any of the Advances hereunder (the "Indemnified Liabilities");
provided, that the Borrowers shall have no obligation to an Indemnitee hereunder
with respect to Indemnified Liabilities arising from the gross negligence or
willful misconduct of such Indemnitee. In litigation, or the preparation
therefor, Fleet shall be entitled to select its own counsel and, in addition to
the foregoing indemnity, the Borrowers jointly and severally agree to pay
promptly the reasonable fees and
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expenses of such counsel. To the extent that the undertaking to indemnify, pay
and hold harmless set forth in the two immediately preceding sentences may be
unenforceable because it is violative of any law or public policy, each of the
Borrowers shall contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them. The provisions of the
undertakings and indemnification set out in this Section 8.10 shall survive
satisfaction and payment of the Advances and termination of this Agreement.
SECTION 8.11. Severability of Provisions. Any provision in this Agreement
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Agreement are declared to
be severable.
SECTION 8.12. Headings. Section headings in this Agreement are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of this Agreement.
SECTION 8.13. Entire Agreement. This Agreement embodies the entire
agreement and understanding among the Borrowers, the Parent and Fleet and
supersedes all prior agreements and understandings among the Borrowers, the
Parent and Fleet relating to the subject matter thereof.
SECTION 8.14. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 8.15. Survival of Covenants. All covenants, agreements,
representations and warranties made herein or in any documents or other papers
delivered by or on behalf of the Borrowers, the Parent or any of their
Subsidiaries pursuant hereto shall be deemed to have been relied upon by Fleet,
notwithstanding any investigation heretofore or hereafter made by any of them,
and shall survive the making by Fleet of any of the Advances and the issuance,
extension or renewal of any Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any Letter of Credit or any amount
due under this Agreement remains outstanding or Fleet has any obligation to make
any Advances or to issue, extend or renew any Letter of Credit, and for such
further time as may be otherwise expressly specified in this Agreement. All
statements contained in any certificate or other paper delivered to Fleet at any
time by or on behalf of the Borrowers, the Parent or any of their Subsidiaries
pursuant hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrowers, the Parent or such
Subsidiary hereunder.
SECTION 8.16. Payments Set Aside. To the extent that the Borrowers or the
Parent makes a payment or payments to Fleet, or Fleet exercises its rights of
setoff, and such payment or payments or the proceeds of such setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or
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equitable cause, then to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred; and the agreement or agreements evidencing or securing such
obligation shall continue in full force notwithstanding any contrary action
which may have been taken by Fleet in reliance upon such payment or payments and
any such contrary action shall be without prejudice to Fleet's rights thereunder
and shall be deemed to have been conditioned upon such payment or payments
having become final and irrevocable.
SECTION 8.17. Transitional Arrangements. Upon satisfaction of the
conditions set forth in Article III hereof on the Closing Date (a) all of the
obligations and rights of the Borrowers under or in respect of the Original
Credit Agreement shall be evidenced solely by the terms of this Agreement, (b)
the principal amount of all Advances outstanding under the Original Credit
Agreement shall be deemed to be Advances hereunder owed by the respective
Borrowers thereof and (c) all Letters of Credit issued by Fleet for the account
of the Borrowers under the Original Credit Agreement shall be deemed Letters of
Credit hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as an instrument under seal by their respective officers thereunto duly
authorized, as of the date first above written.
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:
FLEET NATIONAL BANK
By:____________________________________
Name:
Title:
Domestic Lending Office/Eurodollar Lending Office:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇