EXHIBIT 10.37
AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT
DATED AS OF NOVEMBER 9, 2006
AMONG
QUAKER FABRIC CORPORATION OF FALL RIVER
AS BORROWER,
BANK OF AMERICA, N.A., AND THE OTHER LENDING
INSTITUTIONS LISTED ON SCHEDULE 1 HERETO,
AND
BANK OF AMERICA, N.A.
AS ADMINISTRATIVE AGENT, ISSUING BANK AND CASH MANAGEMENT BANK
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TABLE OF CONTENTS
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1.
DEFINITIONS AND RULES OF
INTERPRETATION.................................................................1
1.1.
Definitions....................................................................................1
1.2.
Rules of
Interpretation.......................................................................22
2.
REVOLVING
LOANS........................................................................................23
2.1.
Revolving
Loans...............................................................................23
2.2.
Commitment
Fee................................................................................23
2.3.
Reduction of
Commitments......................................................................23
2.4.
The Revolving
Notes...........................................................................24
2.5.
Interest on Revolving
Loans...................................................................24
2.6.
Requests for Revolving
Loans..................................................................25
2.6.1.
General..............................................................................25
2.6.2. Swing
Line...........................................................................25
2.7. Conversion
Options............................................................................25
2.7.1.
Conversion to Different Type of Revolving
Loan.......................................25
2.7.2.
Continuation of Type of Revolving
Loan...............................................26
2.7.3. LIBOR
Rate
Loans.....................................................................26
2.8.
Funds for Revolving
Loans.....................................................................26
2.8.1. Funding
Procedures for Revolving
Loans...............................................26
2.8.2. Advances
by Administrative Agent for Revolving
Loans.................................26
2.9.
Change in Borrowing
Base......................................................................27
2.10.
Settlements...................................................................................27
2.10.1.
General..............................................................................27
2.10.2. Failure to
Make Funds
Available......................................................27
2.10.3. No Effect on
Other
Lenders...........................................................28
2.11.
Repayments of Revolving Loans Prior to Event of
Default.......................................28
2.11.1. Credit for
Funds Received in Concentration
Account...................................28
2.11.2. Application of
Payments Prior to Event of
Default....................................29
2.12.
Repayments of Loans After Event of
Default....................................................29
2.13.
[Intentionally
Omitted].......................................................................30
2.14.
[Intentionally
Omitted].......................................................................30
2.15.
[Intentionally
Omitted].......................................................................30
2.16.
Administrative Agent
Advances.................................................................30
3.
REPAYMENT OF
LOANS.....................................................................................30
3.1.
Revolving
Loans...............................................................................30
3.1.1.
Maturity.............................................................................30
3.1.2. Mandatory
Repayments of Revolving
Loans..............................................30
3.1.3. Optional
Repayments of Revolving
Loans...............................................31
3.2.
Mandatory
Prepayments.........................................................................31
3.2.1.
Additional Mandatory Prepayments of Revolving
Loans..................................31
4.
LETTERS OF
CREDIT......................................................................................32
4.1.
Letter of Credit
Commitments..................................................................32
4.1.1.
Commitment to Issue Letters of
Credit................................................32
4.1.2. Letter of
Credit
Applications........................................................32
4.1.3. Terms of
Letters of
Credit...........................................................32
4.1.4.
Reimbursement Obligations of
Lenders.................................................33
4.1.5.
Participations of
Lenders............................................................33
4.2.
Reimbursement Obligation of the
Borrower......................................................33
4.3.
Letter of Credit
Payments.....................................................................34
4.4.
Obligations
Absolute..........................................................................35
4.5.
Reliance by
Issuer............................................................................35
4.6.
Letter of Credit
Fee..........................................................................35
4.7.
Existing Letters of
Credit....................................................................36
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5.
CERTAIN GENERAL
PROVISIONS.............................................................................36
5.1.
Fees..........................................................................................36
5.1.1.
Administrative Agent's
Fee...........................................................36
5.1.2. Closing
Fee..........................................................................36
5.1.3. Other
Fees...........................................................................36
5.2.
Funds for
Payments............................................................................36
5.2.1. Payments
to Administrative
Agent.....................................................36
5.2.2. No
Offset,
etc.......................................................................36
5.2.3. Non-U.S.
Lenders.....................................................................37
5.3.
Computations..................................................................................37
5.4.
Interest
Limitation...........................................................................38
5.5.
Inability to Determine LIBOR
Rate.............................................................38
5.6.
Illegality....................................................................................38
5.7.
Additional Costs,
etc.........................................................................38
5.8.
Capital
Adequacy..............................................................................40
5.9.
Certificate...................................................................................40
5.10.
Indemnity.....................................................................................40
5.11.
Interest After
Default........................................................................40
5.12.
Collateral Security and
Guaranties............................................................41
6.
REPRESENTATIONS AND
WARRANTIES.........................................................................41
6.1.
Corporate Authority,
Etc......................................................................41
6.1.1.
Existence, Good
Standing.............................................................41
6.1.2.
Authorization........................................................................41
6.1.3.
Delivery.............................................................................42
6.1.4.
Enforceability.......................................................................42
6.2.
Financial Statements;
Projections.............................................................42
6.3.
Solvency......................................................................................43
6.4.
No Material Adverse
Changes,
etc.............................................................43
6.5.
Absence of Mortgages and
Liens................................................................43
6.6.
Franchises, Patents, Copyrights,
etc..........................................................44
6.7.
Litigation....................................................................................44
6.8.
No Materially Adverse Contracts,
etc..........................................................44
6.9.
Compliance with Other Instruments, Laws,
etc..................................................44
6.10. Tax
Status....................................................................................44
6.11. No
Default or Event of
Default................................................................44
6.12.
Holding Company and Investment Company
Acts...................................................45
6.13.
Employee Benefit
Plans........................................................................45
6.13.1. In
General...........................................................................45
6.13.2. Terminability
of Welfare
Plans.......................................................45
6.13.3. Guaranteed
Pension
Plans.............................................................45
6.13.4. Multiemployer
Plans..................................................................45
6.14.
Regulations U and
X...........................................................................46
6.15. True
Copies of Governing
Documents............................................................46
6.16.
Fiscal
Year...................................................................................46
6.17.
Perfection of Security
Interest...............................................................46
6.18.
Subsidiaries,
etc.............................................................................46
6.19.
Environmental
Compliance......................................................................46
6.20. Bank
Accounts.................................................................................48
6.21.
Labor
Contracts...............................................................................48
6.22.
Disclosure....................................................................................48
6.23.
Title to Properties;
Leases...................................................................48
6.24.
Certain
Transactions..........................................................................49
6.25.
Foreign Assets Control Regulations,
Etc.......................................................49
6.26.
Compliance....................................................................................49
6.27.
Contracts.....................................................................................50
6.28.
Utilities and Public
Access...................................................................50
6.29.
Physical
Condition............................................................................50
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7.
AFFIRMATIVE COVENANTS OF THE PARENT AND THE
BORROWER...................................................50
7.1.
Punctual
Payment..............................................................................50
7.2.
Maintenance of
Office.........................................................................50
7.3.
Records and
Accounts..........................................................................51
7.4.
Financial Statements, Certificates and
Information............................................51
7.5.
Notices.......................................................................................53
7.5.1.
Defaults.............................................................................53
7.5.2. Notice of
Litigation and
Judgments...................................................53
7.5.3.
Notification of Claim Against
Collateral.............................................54
7.5.4. Notices
Concerning Inventory
Collateral..............................................54
7.5.5.
Notification of Additional Intellectual Property
Rights..............................54
7.5.6.
Environmental
Events.................................................................54
7.5.7.
Notification Regarding the Real
Property.............................................54
7.6.
Legal Existence; Maintenance of
Properties....................................................55
7.7.
Insurance.....................................................................................55
7.8.
Taxes.........................................................................................55
7.9.
Compliance with Laws, Contracts, Licenses, and
Permits........................................56
7.10.
Employee Benefit
Plans........................................................................56
7.11. Use
of
Proceeds...............................................................................56
7.12.
Certain
Changes...............................................................................56
7.13.
Conduct of
Business...........................................................................56
7.14.
Further
Assurances............................................................................56
7.15.
Inspection of Properties and Books,
etc.......................................................57
7.15.1.
General..............................................................................57
7.15.2.
Appraisals...........................................................................57
7.15.3. Communications
with
Accountants......................................................57
7.15.4. Environmental
Assessments............................................................57
7.16.
Additional Mortgaged
Property.................................................................58
7.17. Bank
Accounts.................................................................................58
7.17.1.
General..............................................................................58
7.18.
Domestic
Subsidiaries.........................................................................59
7.19.
[Intentionally
Omitted].......................................................................59
7.20.
Financial
Consultant..........................................................................59
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8.
NEGATIVE COVENANTS OF THE PARENT AND THE
BORROWER......................................................59
8.1.
Investments...................................................................................59
8.2.
Restrictions on
Indebtedness..................................................................60
8.3.
Restrictions on
Liens.........................................................................61
8.3.1.
Permitted
Liens......................................................................61
8.3.2.
Restrictions on Negative Pledges and Upstream
Limitations............................62
8.4.
Restricted
Payments...........................................................................62
8.5.
Merger, Consolidation and Disposition of
Assets...............................................62
8.5.1. Mergers
and
Acquisitions.............................................................62
8.5.2.
Disposition of
Assets................................................................62
8.6.
Sale and
Leaseback............................................................................63
8.7.
Change of Fiscal
Year.........................................................................63
8.8.
Employee Benefit
Plans........................................................................63
8.9.
Compliance with Environmental
Laws............................................................63
8.10.
Change in Terms of Governing
Documents........................................................63
8.11.
Creation of
Subsidiaries......................................................................63
8.12.
Transactions with
Affiliates..................................................................64
8.13.
Agency
Account................................................................................64
8.14.
Business
Activities...........................................................................65
8.15.
Changes Relating to Term Loan
Documents.......................................................65
9.
FINANCIAL COVENANTS OF THE PARENT AND THE
BORROWER.....................................................65
9.1.
Fixed Charge Coverage
Ratio...................................................................65
9.2.
[Intentionally
Omitted].......................................................................65
9.3.
Capital
Expenditures..........................................................................65
10. CLOSING
CONDITIONS.....................................................................................65
10.1. Loan
Documents................................................................................66
10.2.
Certified Copies of Governing
Documents.......................................................66
10.3.
Corporate or Other
Action.....................................................................66
10.4.
Incumbency
Certificate........................................................................66
10.5.
Validity of
Liens.............................................................................66
10.6.
Perfection Certificates and UCC Search
Results................................................66
10.7.
Certificates of
Insurance.....................................................................66
10.8.
Agency Account
Agreements.....................................................................66
10.9.
Borrowing Base and Collateral Update
Certificates.............................................67
10.10. Accounts
Receivable Aging
Report..............................................................67
10.11. Payment
of Closing
Fees.......................................................................67
10.12. Existing
Credit
Agreement.....................................................................67
10.13.
Intercreditor Agreement; Term Loan
Documents..................................................67
10.14. Opinions
of
Counsel...........................................................................67
10.15.
[Intentionally
Omitted].......................................................................67
10.16.
[Intentionally
Omitted].......................................................................67
10.17.
[Intentionally
Omitted].......................................................................67
10.18.
[Intentionally
Omitted].......................................................................67
10.19. No
Material Adverse
Change....................................................................68
10.20. Landlord
Waivers..............................................................................68
10.21. Landlord
Consents.............................................................................68
10.22.
Collateral
Examinations/Appraisals............................................................68
10.23. Financial
Statement and
Projections...........................................................68
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11. CONDITIONS
TO ALL
BORROWINGS...........................................................................68
11.1.
Representations True; No Default or Event of
Default..........................................68
11.2. No
Legal
Impediment...........................................................................68
11.3.
Governmental
Regulation.......................................................................68
11.4.
Proceedings and
Documents.....................................................................69
11.5.
Payment of
Fees...............................................................................69
11.6.
Exchange
Limitations..........................................................................69
11.7.
Validity of
Liens.............................................................................69
11.8.
Financial
Covenants...........................................................................69
12. EVENTS OF
DEFAULT; ACCELERATION;
ETC...................................................................69
12.1.
Events of Default and
Acceleration............................................................69
12.2.
Termination of
Commitments....................................................................72
12.3.
Remedies......................................................................................72
12.4.
Distribution of Collateral
Proceeds...........................................................73
13.
SETOFF.................................................................................................74
14. THE
ADMINISTRATIVE
AGENT...............................................................................74
14.1.
Authorization.................................................................................74
14.2.
Employees and Administrative
Agents...........................................................75
14.3. No
Liability..................................................................................75
14.4. No
Representations............................................................................75
14.4.1.
General..............................................................................75
14.4.2. Closing
Documentation,
etc...........................................................76
14.5.
Payments......................................................................................76
14.5.1. Payments to
Administrative
Agent.....................................................76
14.5.2. Distribution
by Administrative
Agent.................................................76
14.5.3. Delinquent
Lenders...................................................................76
14.6.
Holders of Letters of Credit
Participation....................................................77
14.7.
Indemnity.....................................................................................77
14.8.
Administrative Agent
as
Lender................................................................77
14.9.
Resignation...................................................................................77
14.10.
Notification of Defaults and Events of
Default................................................78
14.11. Duties in
the Case of
Enforcement.............................................................78
14.12.
Administrative Agent May File Proofs of
Claim.................................................78
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15.
EXPENSES...............................................................................................79
16.
INDEMNIFICATION........................................................................................80
17. SURVIVAL
OF COVENANTS,
ETC.............................................................................80
18. ASSIGNMENT
AND
PARTICIPATION...........................................................................81
18.1.
General
Conditions............................................................................81
18.2.
Assignments...................................................................................81
18.3.
Register......................................................................................82
18.4.
Participations................................................................................82
18.5.
Payments to
Participants......................................................................82
18.6.
Miscellaneous Assignment
Provisions...........................................................82
18.7.
Assignee or Participant Affiliated with the
Parent............................................83
18.8. New
Notes.....................................................................................83
18.9.
Special Purpose Funding
Vehicle...............................................................83
19. NOTICES,
ETC...........................................................................................84
20. GOVERNING
LAW..........................................................................................85
21.
HEADINGS...............................................................................................85
22.
COUNTERPARTS...........................................................................................85
23. ENTIRE
AGREEMENT,
ETC..................................................................................85
24. WAIVER OF
JURY
TRIAL...................................................................................85
25. CONSENTS,
AMENDMENTS, WAIVERS,
ETC.....................................................................86
26.
SEVERABILITY...........................................................................................87
27.
CONFIDENTIALITY........................................................................................87
28. USA
PATRIOT
ACT........................................................................................89
29.
DESIGNATION OF PERMITTED
LIENS.........................................................................89
30.
TRANSITIONAL
ARRANGEMENTS..............................................................................89
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SCHEDULES AND EXHIBITS
Schedule 1
Lenders, Commitment Percentages, Lending Offices
Schedule 1.1(a)
Mortgaged Properties
Schedule 1.2
Certain Account Debtors
Schedule 4.7
Existing Letters of Credit
Schedule 6.6
Intellectual Property
Schedule 6.7
Litigation
Schedule 6.8
Material Adverse Contracts
Schedule 6.10
Municipal Taxes
Schedule 6.13.1
Employment Matters
Schedule 6.18
Subsidiaries
Schedule 6.19(a)
Environmental Notices
Schedule 6.19(b) Material
Environmental Notices
Schedule 6.19(e) Material
Environmental Reports
Schedule 6.20
Bank Accounts
Schedule 6.21
Labor Contracts
Schedule 6.23
Title to Properties
Schedule 8.1
Existing Investments
Schedule 8.2
Existing Indebtedness
Schedule 8.3.1
Existing Liens
Schedule 10.20(a) Landlord
Waivers
Exhibit A
Form of Loan Request
Exhibit B
Form of Compliance Certificate
Exhibit C
Form of Assignment and Acceptance
Exhibit D-1
Form of Borrowing Base Certificate
Exhibit D-2
Form of Collateral Update Certificate
Exhibit D-3
Form of Accounts Receivable/Loan Reconciliation Report
Exhibit E
Form of Revolving Note
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AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
THIS AMENDED
AND RESTATED REVOLVING CREDIT AGREEMENT dated as of
November 9, 2006 is by and among Quaker Fabric Corporation of Fall River, a
Massachusetts
corporation (the
"Borrower"),
Quaker
Fabric Corporation, a
Delaware corporation (the "Parent"), Bank of America, N.A. and the
other Lenders
from time to time party hereto and Bank of America, N.A., as Administrative
Agent, Issuing Bank and Cash Management Bank.
WHEREAS, the Borrower,
the Parent,
the Lenders,
the Administrative
Agent, the
Issuing Bank and the Cash Management Bank are parties to that
Existing Credit
Agreement (as hereinafter defined), pursuant to which the
Lenders have made loans and other extensions of credit to the
Borrower.
WHEREAS, the Lenders
are willing to amend and restate the Existing
Credit Agreement, and the Lenders are willing to make loans and
other extensions
of credit to the Borrower, all on the terms and conditions set
forth herein.
NOW THEREFORE, in
consideration of the
foregoing, and for
other good
and valuable
consideration,
the receipt and sufficiency of which is hereby
acknowledged (these
recitals being an
integral part of this Credit Agreement)
the Borrower, the
Parent, the
Administrative Agent,
the Lenders, the
Issuing
Bank and the Cash
Management Bank hereby agree that, as of the Closing Date (as
defined below), the
Existing Credit
Agreement shall be amended and restated in
its entirety and shall
remain in full force and effect only as set forth herein
and the parties hereto hereby agree as follows:
The parties hereto agree as follows:
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set
forth
in this ss.1 or elsewhere in the provisions of this Credit
Agreement referred to
below:
ACCOUNTS RECEIVABLE.
All rights of a Person to payment for goods sold,
leased or otherwise
marketed in the ordinary course of business and all
rights
of a Person to payment for services rendered in the ordinary course of
business
and all sums of money or other proceeds due thereon pursuant to transactions
with account debtors recorded on books of account in accordance
with GAAP.
ACCOUNTS RECEIVABLE/LOAN RECONCILIATION REPORT. A certificate
signed by
the senior financial
officer (or
another officer designated by such senior
financial officer)
of the Borrower in substantially the form of EXHIBIT D-3
hereto.
ADMINISTRATIVE AGENT.
Bank of America,
acting as administrative agent
for the Lenders, and each other person appointed as the successor
Administrative
Agent in accordance with ss.14.9.
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ADMINISTRATIVE QUESTIONNAIRE. An Administrative Questionnaire in a
form
supplied by the Administrative Agent.
ADMINISTRATIVE AGENTS ADVANCES. See ss.2.16.
ADMINISTRATIVE AGENT'S FEE. See ss.5.1.1.
ADMINISTRATIVE
AGENT'S OFFICE.
The Administrative Agent's office
located at One Federal
Street, Boston,
Massachusetts
02110, or at such
other
location as the Administrative Agent may designate from time to
time.
ADMINISTRATIVE AGENT'S
SPECIAL COUNSEL. Bingham McCutchen LLP of
Boston, Massachusetts
or such other counsel as may be approved by the
Administrative Agent.
AFFILIATE. With
respect to any Person, any other Person which directly
or indirectly,
controls, is
controlled by or is under common control with such
Person. "Control"
means the power,
directly or indirectly, (a) to vote ten
percent (10%) or more
of the Capital
Stock (on a fully diluted basis) of a
Person having
ordinary voting power for the election of
directors,
managing
members or
general partners (as applicable); or (b) to direct or cause the
direction of the
management and
policies of a Person
(whether by contract
or
otherwise).
AGENCY ACCOUNT AGREEMENT. See ss.7.17.1.
AMENDMENT AND
REAFFIRMATION
OF LOAN DOCUMENTS. The Amendment and
Reaffirmation of Loan
Documents,
dated as of the Closing Date, among the
Borrower, the
Guarantors and the
Administrative Agent,
in form and
substance
satisfactory to the Administrative Agent.
APPLICABLE MARGIN. With respect to (a) Base Rate Loans, 1.25%, and
(b),
with respect to LIBOR Rate Loans, 2.75%.
APPLICABLE PENSION LEGISLATION. At any time, any pension or
retirement
benefits legislation
(be it national, federal, provincial, territorial or
otherwise) then applicable to the Parent or any of its
Subsidiaries.
APPROVED
FUND. Any Fund that is administered or managed by (a) a
Lender, (b) an
Affiliate of a Lender or (c) an entity or an
Affiliate of an
entity that administers or manages a Lender.
ARRANGER. Banc of America Securities LLC.
ASSET SALE.
Any one or series of
related transactions in which the
Parent or any of its Subsidiaries conveys, sells, leases, licenses or
otherwise
disposes of, directly or indirectly, any of its properties,
businesses or assets
(including the sale or issuance of Capital Stock of any Subsidiary
other than to
the Parent) whether owned on the Closing Date or thereafter
acquired.
ASSIGNMENT AND ACCEPTANCE. An assignment and acceptance entered
into by
a Lender and an Eligible Assignee (with the consent of any party
whose consent
is required
by ss.18.2), and accepted by the Administrative Agent, in
substantially the
form of EXHIBIT C or any other form approved by the
Administrative Agent.
AVAILABILITY RESERVE.
The sum of (a)
$4,250,000
PLUS (b) $0.75 for
every $1.00 released from the Environmental Escrow Funds (as
defined in the Term
Loan Agreement as in effect on the date hereof), other than amounts released to
fund Remediation
Costs (as defined in
the Term Loan
Agreement as in effect on
the date hereof).
BALANCE SHEET DATE.
September 30, 2006.
BANK OF AMERICA. Bank
of America, N.A and its successors and assigns.
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BASE RATE. The higher
of (i) the variable
annual rate of
interest so
designated from time
to time by Bank of America as its "prime rate", such rate
being a reference rate and not necessarily representing the lowest or best
rate
being charged to any customer, and (ii) one-half of one percent
(0.5%) above the
Federal Funds
Effective Rate.
For the purposes of
this definition,
"FEDERAL
FUNDS EFFECTIVE
RATE" shall mean for
any day, the rate per
annum equal 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 Business
Day, for the next
preceding Business
Day) by the Federal
Reserve Bank of New
York, or, if such
rate is not so published for any day that is a Business
Day, the average of the
quotations for such
day on such
transactions received
by the Administrative
Agent from
three funds brokers of recognized standing selected by the
Administrative Agent.
Changes in the Base
Rate resulting
from any changes
in
Bank of America's
"PRIME RATE" shall take place immediately without notice or
demand of any kind.
BASE RATE LOANS. All
or any portion of the
Revolving Loans bearing
interest calculated by reference to the Base Rate.
BORROWER. As defined in the preamble hereto.
BORROWING BASE. As of any date of determination, an amount equal to
the
result of the following:
(a) eighty-five
percent (85%) of the net amount of
Eligible
Accounts Receivable of the Borrower outstanding at such date;
PLUS
(b) the lesser of
(i) $12,500,000 and
(ii) the sum of
(A) the lesser
of (x) 65% of the Net
Book
Value of Eligible
Finished Goods
Inventory
of the Borrower,
determined
in accordance
with GAAP and (y) 85% of the Net Orderly
Liquidation Value of Eligible Finished Goods
Inventory of the Borrower; PLUS
(B) the lesser of (x) 35% of the Net Book
Value of Eligible Raw Materials Inventory of
the Borrower,
in each case,
determined in
accordance with GAAP
and (y) 85% of the Net
Orderly Liquidation
Value of Eligible
Raw
Materials Inventory of the Borrower; MINUS
(c) the Availability Reserve; MINUS
(d) Reserves.
The Administrative
Agent may, from time
to time in its sole discretion (not to
be exercised
unreasonably),
(x) reduce the lending
formula with respect to
Eligible
Accounts
Receivable of
the Borrower to the extent that the
Administrative Agent
determines
that: (i) the dilution with respect of the
Accounts Receivable of the Borrower for any period has increased in
any material
respect or may be
reasonably anticipated
to increase in any
material respect
above historical levels, or (ii) the general creditworthiness of
account debtors
or other obligors
of the Borrower has declined or (y) reduce the lending
formula(s) with respect to Eligible Inventory of the Borrower to
the extent that
the Administrative Agent determines that: (i) the number of days of
the turnover
of the inventory
of the Borrower for any period has changed in any
material
adverse respect,
(ii) the liquidation
value of the Eligible
Inventory of the
Borrower, or any
category thereof, has decreased, or (iii) the nature and
quality of the
inventory of the
Borrower has deteriorated in any material
respect or the mix of such inventory has changed materially. In determining
whether to reduce the lending formula(s), the Administrative Agent may
consider
events, conditions,
contingencies
or risks which are also considered in
determining Eligible Accounts Receivable of the Borrower,
Eligible Inventory
of
the Borrower or in establishing the Reserves.
<PAGE>
BORROWING BASE
CERTIFICATE.
A certificate signed by the senior
financial officer
(or another
officer designated by such senior financial
officer) of the Borrower demonstrating calculation of the Borrowing Base
in the
form of EXHIBIT D-1 hereto.
BUSINESS DAY.
Any day on which
commercial
banking institutions in
Boston, Massachusetts,
are open for the transaction of banking business and, in
the case of LIBOR Rate Loans, also a day which is a LIBOR Business
Day.
BUSINESS PLAN. The
"Quaker Fabric Bank
Presentation"
by Alvarez and
Marsal, dated May 19,
2006, as supplemented on September 29, 2006, October 30,
2006 and November 9, 2006, as the same may be updated from time to
time.
CAPITAL ASSETS. Fixed
assets, both tangible (such as land, buildings,
fixtures, machinery
and equipment) and intangible (such as patents, copyrights,
trademarks, franchises
and goodwill); PROVIDED that Capital Assets shall
not
include any item
customarily charged
directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with
GAAP.
CAPITAL EXPENDITURES.
Amounts paid or Indebtedness incurred by the
Parent or any
Subsidiary of the Parent in connection with (i) the purchase or
lease by the Parent or such Subsidiary of Capital Assets that
would be required
to be capitalized
and shown on the
balance sheet of such
Person in accordance
with GAAP or (ii) the lease of any assets by the Parent or such
Subsidiary
as
lessee under any Synthetic Lease to the extent that such
assets would have been
Capital Assets had the Synthetic Lease been treated for accounting
purposes as a
Capitalized Lease.
CAPITALIZED LEASES.
Leases under which the Parent or any of its
Subsidiaries is the
lessee or obligor, the
discounted
future rental
payment
obligations under
which are required to be capitalized on the balance sheet
of
the lessee or obligor in accordance with GAAP.
CAPITAL STOCK. Any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation,
any and all
equivalent ownership
interests in a Person
(other than a corporation) and any
and all warrants,
rights or options to purchase any of the foregoing (including
convertible debt instruments).
CASH MANAGEMENT BANK. Bank of America, in its capacity as the
provider
of cash management services to the Parent and its Subsidiaries.
CASH MANAGEMENT
OBLIGATIONS.
All present and future liabilities,
obligations and
Indebtedness of the
Parent and its
Subsidiaries owing to
any
Lender, the
Administrative
Agent, the Cash Management Bank or any
Affiliate
thereof under or in connection with any cash management or related services or
products provided by any Lender, the Administrative Agent, the Cash Management
Bank or any
Affiliate thereof to or for the account of the Parent or any
Subsidiary of
the Parent, including, without limitation, liabilities,
obligations or
Indebtedness
in respect of
automated clearing
house and other
fund transfers,
checks, money orders, drafts, instruments, funds, payments and
other items and forms of remittances paid, deposited or otherwise
credited to
any deposit,
disbursement or other
account of the Parent or any Subsidiary of
the Parent, any
overdraft or other
extension of credit made to cover any funds
transfer, check,
draft, instrument or amount paid for the account or benefit of
the Parent or any Subsidiary of the Parent, and all fees, charges,
indemnities,
expenses and
other amounts from time to time owing to any Lender, the
Administrative Agent,
the Cash Management Bank or any Affiliate thereof in
connection therewith
(all whether accruing
before or after the commencement of
any bankruptcy
proceeding
by or against the
Parent or any
Subsidiary of the
Parent and regardless of whether allowed as a claim in any such
proceeding).
<PAGE>
CASUALTY EVENT. With respect to any property (including any
interest in
property) of the Parent or any Subsidiary of the Parent, any loss
of, damage to,
or condemnation
or other taking of,
such property for which the Parent or such
Subsidiary receives
insurance proceeds, proceeds of a condemnation
award or
other compensation.
CHANGE OF CONTROL. An
event or series of events by which:
(a) any "person"
or "group" (as such terms are used in
Sections 13(d) and
14(d) of the
Securities Exchange
Act of 1934, but
excluding any employee benefit plan of such person or its
subsidiaries,
and any person or entity acting in its capacity as trustee, agent or
other fiduciary or administrator of any such plan), other than Nortex
Holdings, Inc. or any Affiliate thereof, becomes the "beneficial
owner"
(as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act
of 1934, except that a person or group shall be deemed to have
"beneficial ownership"
of all securities that such person or group has
the right to acquire
(such right,
an "OPTION
RIGHT"), whether such
right is exercisable
immediately
or only after the
passage of time),
directly or indirectly, of 30% or more of the equity
securities of the
Parent entitled
to vote for
members of the board of directors or
equivalent governing
body of the Parent on a fully-diluted basis (and
taking into account all such securities that such person or group has
the right to acquire pursuant to any option right);
(b) during any period of 12 consecutive months, a majority of
the members of the board of directors or other equivalent governing
body of the Parent
ceases to be composed of individuals (i) who were
members of that board or equivalent governing body on the first day
of
such period,
(ii) whose election or nomination to that board or
equivalent governing
body was approved by
individuals referred
to in
clause (i)
above constituting at the time of such election or
nomination at least a
majority of that board or equivalent governing
body or (iii) whose
election or nomination to that board or other
equivalent governing
body was approved by
individuals referred
to in
clauses (i) and (ii) above constituting at the time of such
election or
nomination at least a
majority of that board or equivalent governing
body (excluding, in
the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of
office as, a
member of that board or equivalent governing body occurs as a
result of
an actual or
threatened
solicitation of
proxies or consents
for the
election or
removal of one or more
directors by any person or group
other than a solicitation for the election of one or more
directors by
or on behalf of the board of directors); or
(c) any Person,
other than Nortex Holdings, Inc. or any
Affiliate thereof, or
two or more Persons acting in concert shall have
acquired by
contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation thereof, will
result in
its or their
acquisition
of the power to exercise, directly or
indirectly, a
controlling influence over the management or policies of
the Parent,
or control over the equity securities of the Parent
entitled to vote for members of the board of directors or equivalent
governing body of the Parent on a fully-diluted basis (and taking into
account all such
securities that such Person or group has the right to
acquire pursuant to
any option right)
representing 30% or more of the
combined voting power of such securities.
<PAGE>
CLOSING DATE.
The first date on which the conditions set forth in
ss.ss.10 and 11 have been satisfied and any Loans are to be
made or any Letters
of Credit are to be issued hereunder.
CLOSING FEE. See
ss.5.1.2.
CODE. The Internal Revenue Code of 1986.
COLLATERAL. All of the
property, rights and interests of (a) the
Borrower, (b) the
Parent, (c) each
Subsidiary of the Parent, and (d) all other
Guarantors from time to time party to the Guaranties, that are or are intended
to be subject to the Liens created by the Security Documents.
COLLATERAL UPDATE
CERTIFICATE.
A certificate signed by the senior
financial officer
(or another
officer designated by such senior financial
officer) of the Borrower in substantially the form of EXHIBIT D-2
hereto.
COMMITMENT. With
respect to each
Lender, (a) the Dollar amount set
forth on SCHEDULE 1 hereto as the amount of such Lender's
commitment (i) to make
Revolving Loans
to the Borrower and (ii) to participate in the issuance,
extension and
renewal of Letters of Credit issued for the account of the
Borrower or Quaker Textile, as the same may be reduced from time to
time; or (b)
if such commitment is terminated pursuant to the provisions hereof,
zero.
COMMITMENT FEE. See
ss.2.2.
COMMITMENT PERCENTAGE.
With respect to each Lender, the percentage set
forth on SCHEDULE 1 hereto reflecting such Lender's commitment to
make Revolving
Loans and to
participate in the
issuance, extension
and renewal of Letters of
Credit issued for the account of the Borrower or Quaker
Textile.
COMPLIANCE CERTIFICATE. See ss.7.4(d).
CONCENTRATION ACCOUNT.
See ss.7.17.1.
CONSOLIDATED OR
CONSOLIDATED.
With reference to any term defined
herein, shall mean
that term as applied to the accounts of the Parent and its
Subsidiaries, consolidated in accordance with GAAP.
CONSOLIDATED EBITDA. For any period, (a) the net income (or
deficit) of
the Parent and its
Subsidiaries
(determined on a
consolidated
basis without
duplication in
accordance
with GAAP) for such
period, PLUS (b) to
the extent
deducted in calculating net income (i) income taxes
accrued during such period,
(ii) interest and fees in respect of Indebtedness (including amounts accrued or
paid in respect of
Derivative Agreements)
during such period
(whether or not
actually paid in cash during such period), (iii) depreciation,
amortization and
other non-cash charges
(including asset
impairment
charges) accrued for
such
period, (iv)
extraordinary
losses during such
period, (v) costs and
expenses
incurred by the Parent and its Subsidiaries in connection with the Parent's
retention of the Financial Consultant (as defined in ss.7.20),
(vi) severance
charges incurred by
the Parent and its
Subsidiaries, (vii) up
to $300,000 per
month of plant consolidation expenses specifically identified to the
satisfaction of the Administrative Agent, and (viii) transaction
costs incurred
during such period in connection with the transactions contemplated hereby and
in the Term Loan Agreement not to exceed $2,600,000 in the
aggregate, MINUS
(c)
to the extent such items were added in calculating net income (i)
extraordinary
gains during
such period and (ii) proceeds received during such period in
respect of
Casualty Events and dispositions of any property (other than
dispositions in the ordinary course of business on ordinary
business terms).
<PAGE>
CONSOLIDATED INTEREST
EXPENSE. For any period, the sum, without
duplication, for the
Parent and its Subsidiaries (determined on a consolidated
basis without
duplication in accordance with GAAP), of the following: (a) all
interest in respect of
Indebtedness required
to be paid or accrued during such
period (whether
or not actually paid during such period), but excluding
capitalized debt acquisition costs (including fees and expenses
related to this
Credit Agreement and
the Term Loan
Agreement) PLUS (b) the net amounts payable
(or MINUS the net
amounts receivable)
in respect of Derivative Agreements
accrued during such period (whether or not actually paid or
received during such
period) excluding
reimbursement
of legal fees and
other similar
transaction
costs and further excluding payments required by reason of the
early termination
of Derivative
Agreements
in effect on the date hereof PLUS (c) all fees,
including letter of
credit fees and expenses (but excluding reimbursement of
legal fees and any early termination fee paid by the Borrower
pursuant to ss.2.3
of the Existing Credit Agreement in connection with the Borrower's
reduction of
the Total Commitment (as defined in the Existing Credit Agreement)
effective as
of February 3, 2006) incurred hereunder during such period.
CONVERSION
REQUEST. A
notice given by the Borrower to the
Administrative Agent of the Borrower's election to convert or
continue a Loan in
accordance with ss.2.7.
COPYRIGHT MORTGAGE.
The Memorandum of Grant of Security
Interest in
Copyrights, dated as
of the Original Closing Date, made by the Borrower and the
Guarantors in
favor of the Administrative Agent, in form and substance
satisfactory to the Administrative Agent.
CREDIT AGREEMENT. This Amended and Restated Revolving Credit
Agreement,
including the Schedules and Exhibits hereto.
DEFAULT. See ss.12.1.
DEFAULT RATE.
(a) When used with
respect to
Obligations
other than
Letter of Credit Fees, an interest rate equal to (i) the Base Rate
PLUS (ii) the
Applicable Margin
applicable
to the Base Rate
Loans PLUS (iii) 2%
per annum;
PROVIDED, HOWEVER,
that with respect to a LIBOR Rate Loan,
the Default
Rate
shall be an interest
rate equal to the
LIBOR Rate PLUS the
Applicable Margin
applicable to such
Loan PLUS 2% per
annum, and (b) when
used with respect
to
Letter of Credit Fees,
a rate equal to the
Applicable
Margin applicable to
Revolving Loans
bearing interest at the LIBOR Rate PLUS 2%
per annum, in all
cases to the fullest extent permitted by applicable laws.
DELINQUENT LENDER. See
ss.14.5.3.
DERIVATIVE AGREEMENT.
Any forward contract,
futures contract,
swap,
option or other similar agreement or arrangement (including,
without limitation,
caps, floors, collars
and similar agreements), the value of which is
dependent
upon interest rates,
currency exchange rates, commodities or other indices
(including foreign exchange lines).
DISTRIBUTION. The
declaration
or payment of any dividend on or in
respect of any
shares of any class of Capital Stock of the Parent or any
Subsidiary of the
Parent, other than dividends payable solely in shares of
common stock of the
Parent or such
Subsidiary; the
payment or prepayment
of
principal of,
premium, if any, or interest on, or purchase, redemption,
defeasance, retirement or other acquisition of with respect to any
shares of any
class of Capital Stock of the Parent or any Subsidiary of the Parent,
directly
or indirectly through
a Subsidiary of such Person or otherwise (including the
setting apart of
assets for a sinking
or other analogous
fund to be used
for
such purpose);
the return of capital
by the Parent or any
Subsidiary
of the
Parent to its
shareholders as such; or any other distribution on or in respect
of any shares of any class of Capital Stock of the Parent or any
Subsidiary of
the Parent.
<PAGE>
DOLLARS OR $.
Dollars in lawful currency of the United States of
America.
DOMESTIC LENDING
OFFICE. Initially, the office of each Lender
designated as such in SCHEDULE 1 hereto; thereafter, such other office of such
Lender, if any,
located within the United States that will be making or
maintaining Base Rate Loans.
DOMESTIC SUBSIDIARY. Any Subsidiary that is organized under the
laws of
the United States of America, any state or territory thereof or
the District of
Columbia.
DRAWDOWN DATE. The date on which any Revolving Loan is made or is
to be
made, and the date on
which any Revolving
Loan is converted or continued in
accordance with ss.2.7.
ELIGIBLE ACCOUNTS
RECEIVABLE.
With respect to the Borrower, the
aggregate of the
unpaid portions
of Accounts Receivable (net of any contra
accounts,
credits, rebates,
offsets, holdbacks or other adjustments or
commissions payable to
third parties
that are adjustments to such Accounts
Receivable) of the Borrower, except any Account Receivable to which any of the
exclusionary criteria
set forth below applies. The Administrative Agent shall
have the right to
establish, modify or
eliminate Reserves against Eligible
Accounts Receivable
from time to time in
its reasonable credit
judgment. In
addition, the Administrative Agent reserves the right, at any time
and from time
to time after the Closing Date, to adjust any of the criteria set forth below
and to establish new criteria, in its reasonable credit judgment, reflecting
changes in the collectibility or realization values of such
Accounts
Receivable
arising or discovered
by the Administrative Agent after the Closing Date,
subject to the approval of the Required Lenders in the case of
adjustments
or
new criteria
which have the effect of making additional credit available
hereunder. Eligible Accounts Receivable shall not include any
Account Receivable
if:
(i) it is unpaid for
more than sixty (60) days after the
original due date shown on the invoice; or
(ii) (x) with respect
to Accounts
Receivable
from account
debtors listed on
SCHEDULE 1.2 (as such
schedule may be
updated from
time to time by the
Borrower with the
prior written
consent of the
Administrative Agent) arising from sample book orders from such
account
debtors, such
Account Receivable is due and unpaid more than one
hundred and twenty (120) days after the original invoice date and (y)
with respect to all other Accounts Receivable, such Account Receivable
is due and unpaid more than ninety (90) days after the original
invoice
date; or
(iii) 50% or more of the Accounts Receivable from the account
debtor are not deemed Eligible Accounts Receivable; or
(iv) the total
unpaid Accounts Receivable of the account
debtor exceed
25% of the net amount of all Eligible Accounts
Receivable, to the extent of such excess; or
(v) any material covenant, representation or warranty
contained in the agreement with respect to such Account
Receivable has
been breached by the Borrower; or
(vi) the account
debtor is also the
Borrower's
creditor or
supplier, or the
account debtor has disputed liability with respect to
such Account Receivable, or the account debtor has made any
claim with
respect to any other Account Receivable due from such account
debtor to
the Borrower,
or the Account
Receivable
otherwise is or may become
subject to any right of setoff by the account debtor; PROVIDED that,
only the portion of the Account Receivable equal to the amount of
such
dispute, claim or
setoff shall not be an Eligible Account Receivable
pursuant to this clause (vi); or
<PAGE>
(vii) the account
debtor has commenced a voluntary case under
the federal bankruptcy
laws, as now constituted or hereafter amended,
or other insolvency,
reorganization
or adjustment
laws of any other
jurisdiction, or made
an assignment for the benefit of creditors, or a
decree or order for relief has been entered by a court having
jurisdiction in the
premises in respect of
the account
debtor in an
involuntary case under the federal bankruptcy laws, as now
constituted
or hereafter amended, or other insolvency, reorganization or
adjustment
laws of any other jurisdiction, or any other petition or other
application
for relief under the federal bankruptcy laws or other
insolvency, reorganization or adjustment laws of any other
jurisdiction
has been filed against the account debtor, or if the account debtor
has
failed, suspended
business, ceased to be solvent, or consented
to or
suffered a receiver,
trustee, liquidator or
custodian to be appointed
for it or for all or a significant portion of its assets or
affairs; or
(viii) it arises from a sale to an account debtor outside the
United States and
Canada or is
denominated in a
currency other
than
Dollars, unless, in
each case, the sale is covered by credit insurance
or on letter of credit, guaranty or acceptance terms, in each case
acceptable to Administrative Agent in its sole discretion; or
(ix) it arises from a sale to the account debtor on a bill and
hold, guaranteed sale, sale or return, sale on approval,
consignment or
any other repurchase or return basis; or
(x) the account debtor
is the United States of America or any
state located
therein or any
department,
agency or instrumentality
thereof, unless
the Borrower assigns its right to payment of such
Account
Receivable to
the Administrative Agent, in a manner
satisfactory to the
Administrative
Agent, so as to comply with the
Assignment of Claims Act of 1940 (31 U.S.C. ss.203 ET SEQ.), as
amended
or any equivalent state law; or
(xi) it is not at all
times subject to the Administrative
Agent's duly perfected, first priority security interest and no other
Lien except a Permitted Lien; or
(xii) the goods giving
rise to such Account
Receivable have
not been delivered to and accepted by the account debtor or the
services giving rise to such Account Receivable have not been
performed
by the Borrower
and accepted by the account debtor or the Account
Receivable otherwise does not represent a final sale; or
(xiii) the Account Receivable is evidenced by chattel paper or
an instrument of any kind, or has been reduced to judgment; or
(xiv) the Borrower
has made any
agreement with the account
debtor for any deduction therefrom, except for discounts or
allowances
which are made in the ordinary course of business for prompt
payment or
quality credits related to such Account Receivable; or
<PAGE>
(xv) the Borrower
has made an agreement with the account
debtor to extend the time of payment thereof; or (xvi) it arises
out of
a sale made by the
Borrower to a
Subsidiary
of the Borrower or an
Affiliate of the Borrower or to a Person controlled by an Affiliate of
the Borrower.
ELIGIBLE ASSIGNEE.
Any of (a) a Lender,
(b) an Affiliate of a Lender,
(c) an Approved Fund
and (d) any other
Person (other
than a natural
person)
approved by (i) the
Administrative Agent
and (ii) unless a Default or an Event
of Default has occurred and is continuing, the Borrower (each such approval
not
to be unreasonably withheld or delayed).
ELIGIBLE FINISHED GOODS INVENTORY. That portion of Eligible
Inventory
consisting of finished goods.
ELIGIBLE INVENTORY.
With respect to the Borrower, all of the inventory
owned by the Borrower shall be "Eligible Inventory" for purposes of this
Credit
Agreement, excluding any inventory to which any of the exclusionary
criteria set
forth below applies. The Administrative Agent shall have the right
to establish,
modify or eliminate Reserves against Eligible Inventory from time
to time in its
reasonable credit judgment. In addition, the Administrative Agent reserves
the
right, at any time and
from time to time after the Closing Date, to adjust the
criteria set forth below and to establish new criteria, in its
reasonable credit
judgment, reflecting
changes in the saleability or realization values of
inventory arising or
discovered by the
Administrative Agent
after the Closing
Date, subject to the approval of the Required Lenders in the case
of adjustments
or new criteria
which have the effect
of making additional
credit available
hereunder. Eligible Inventory shall not include any inventory
if:
(i) it is not readily marketable in its current form; or
(ii) it is not in good, new and saleable condition; or
(iii) it
is slow moving, obsolete, defective or
unmerchantable; or
(iv) it consists of
supplies, packing materials, shipping
materials or work-in-process; or
(v) it does not meet all standards imposed by any governmental
agency or authority,
including,
without limitation, the Fair Labor
Standards Act; or
(vi) it does not conform in all respects to the warranties and
representations set forth in this Credit Agreement; or
(vii) it is not at all
times subject
to the Administrative
Agent's duly perfected, first priority security interest and no other
Lien except a Permitted Lien; or
(viii) it is not
situated at a location
in compliance
with
this Credit Agreement or is in transit; or
(ix) it is not located in the United States of America; or
(x) it is held on
consignment, or not
otherwise owned by the
Borrower; or
<PAGE>
(xi) it has been shipped to a customer, regardless of whether
such shipment is on a consignment basis; or
(xii) it is held at a location leased by the Borrower, unless
the Administrative Agent has received a waiver from the lessor (and
any
sublessor) of such property, in form and substance satisfactory to the
Administrative Agent; or
(xiii) it has been
returned by a
customer and has not been
qualified by the
Borrower within
thirty (30) days as
being Eligible
Inventory; or
(xiv) it is not in the possession of the Borrower, unless the
Administrative Agent has received a waiver from the party in
possession
of such inventory in form and substance satisfactory to the
Administrative Agent; or
(xv) it is subject
to a third
party's trademark or other
proprietary right unless the Administrative Agent determines that such
inventory could be
sold pursuant
to the exercise of remedies by the
Administrative Agent
hereunder or under applicable law on terms
satisfactory to the Administrative Agent in its sole discretion;
or
(xvi) it is subject to capitalized variances.
ELIGIBLE RAW MATERIALS
INVENTORY. That
portion of Eligible
Inventory
consisting of raw materials.
EMPLOYEE BENEFIT PLAN.
Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by the Parent, the
Borrower or any
ERISA Affiliate, other than a Guaranteed Pension Plan or a
Multiemployer Plan.
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA AFFILIATE. Any
Person which is treated as a single employer with
the Parent or any Subsidiary of the Parent under ss.414 of the
Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a
Guaranteed
Pension Plan
within the meaning of ss.4043 of ERISA and the regulations
promulgated thereunder
as to which
the requirement of notice has not been
waived.
EUROCURRENCY RESERVE
RATE. For any day, the maximum rate (expressed as
a decimal) at which
any bank subject
thereto would be required to maintain
reserves under
Regulation D of the
Board of Governors of
the Federal
Reserve
System (or any
successor or similar regulations relating to such reserve
requirements) against
"EUROCURRENCY
LIABILITIES"
(as that term is used in
Regulation D), if such liabilities were outstanding. The Eurocurrency Reserve
Rate shall be adjusted
automatically
on and as of the
effective date of any
change in the Eurocurrency Reserve Rate.
EVENT OF DEFAULT. See
ss.12.1.
EXCESS AVAILABILITY.
As of any date of determination thereof, the
difference between (a)
the lesser of (i) the Total Commitment at such time and
(ii) the Borrowing
Base at such time, and
(b) the Revolving
Exposure at such
time.
EXCLUDED TAXES. With respect to the Administrative Agent, any Lender,
the Issuing Bank, the Cash Management Bank or any other recipient
of any payment
to be made by or on account of any obligation of the Borrower hereunder, (a)
taxes imposed on or
measured by its overall net income (however denominated),
and franchise
taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the laws
of which such
recipient is
organized or in which
its principal
office is located,
(b) any
branch profits taxes
imposed by the United States or any similar tax imposed by
any other jurisdiction
in which the Borrower
is located, (c) in the
case of a
Non-U.S. Lender, any
withholding tax that is imposed on amounts payable to such
Non-U.S. Lender at the
time such Non-U.S. Lender becomes a party hereto and (d)
any taxes imposed
on a Lender as a
result of such
Lender's failure to
comply
with ss.5.2.3.
<PAGE>
EXISTING CREDIT
AGREEMENT.
The Revolving Credit and Term Loan
Agreement, dated as of May 18, 2005 (as amended as of July 27,
2005, October 25,
2005, December 30,
2005, March 22, 2006 and May 6, 2006), among the Parent, the
Borrower, the Lenders,
the Administrative
Agent, the Issuing Bank and the Cash
Management Bank.
EXISTING LETTERS OF CREDIT. See ss.4.7 hereof.
FEE LETTER.
The fee letter, dated as November 9, 2006, among the
Borrower and Bank of America.
FEES. Collectively,
the Commitment Fee, the Letter of Credit Fees, the
Administrative Agent's Fee and the Closing Fee.
FISCAL QUARTER(S). The thirteen (13) or fourteen (14) week periods,
the
first of which shall
commence on the first day of each Fiscal Year, and each of
which shall be referred to as "FQ1", "FQ2", "FQ3" and "FQ4",
respectively.
FISCAL YEAR. The fifty-two (52) or fifty-three (53) week period ending
on the Saturday closest to January 1 of each calendar year.
FIXED ASSET COLLATERAL. All of the Real Estate,
Equipment (as
defined
in the UCC) and
Fixtures (as defined in the UCC) of the Borrower, the Parent,
each Subsidiary of the Parent, and all other Guarantors from time
to time party
to the Guaranties,
which is subject to a
mortgage, lien or
security interest
pursuant to the Term Loan Documents, together with all identifiable
proceeds of
the foregoing.
FIXED CHARGE COVERAGE RATIO. As at any date of determination, the
ratio
of (a) (i) Consolidated EBITDA for the four Fiscal Quarter period
ending on such
date of determination
MINUS (ii) the aggregate amount of all Non-Financed
Capital Expenditures
made during such
period MINUS (iii) the aggregate amount
paid, or required to
be paid (without
duplication), in cash
in respect of the
current portion of all
income taxes for such
period MINUS (iv) the
aggregate
amount of dividends and distributions permitted to be paid by the Parent
under
ss.8.4 (if any) and
actually paid in cash during such period PLUS (v) tax
refunds received
in cash during such period to (b) the sum
for the Parent and
its Subsidiaries
(determined
on a consolidated
basis without
duplication in
accordance with GAAP),
of (i) the aggregate
amount of Consolidated Interest
Expense for such period and (ii) the aggregate amount of regularly scheduled
payments of principal in respect of Indebtedness for borrowed money (including
the principal
component of any payments in respect of Capitalized Leases) paid
or required to be paid during such period (excluding payments made pursuant to
3.1.3, 3.1.4,
3.1.5 and 3.1.6 of the
Term Loan Agreement
as in effect on
the
date hereof).
FOREIGN SUBSIDIARY.
Any Subsidiary that is not a Domestic Subsidiary.
<PAGE>
FUND. Any Person
(other than a natural
person) that is (or will be)
engaged in making,
purchasing, holding or
otherwise investing
in commercial
loans and similar extensions of credit in the ordinary course of
its business.
GAAP. (i) When used in
ss.9, 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 31, 2005, and (B) to the extent consistent with such
principles, the accounting practice of the Parent and its
Subsidiaries reflected
in the Parent's
financial statements
for the period ended on the Balance Sheet
Date, 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 and its Subsidiaries 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
qualifications
regarding
changes in
GAAP and as to normal year-end adjustments) as to financial
statements in which such principles have been properly applied.
GOVERNING DOCUMENTS.
With respect to any
Person, its
certificate or
articles of
incorporation,
certificate of
formation, or, as the
case may be,
certificate of limited partnership, its by-laws, operating agreement
or, as the
case may be,
partnership agreement
or other constitutive documents and all
shareholder agreements, voting trusts and similar arrangements
applicable to any
of its Capital Stock.
GOVERNMENTAL
AUTHORITY. Any
foreign, federal, state, provincial,
regional, local
municipal or other government, or any department, commission,
board, bureau, agency, public authority or instrumentality thereof,
or any court
or arbitrator.
GUARANTEED PENSION
PLAN. Any employee
pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by the Parent, the
Borrower or any
ERISA Affiliate, the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of
ERISA, other
than a Multiemployer Plan.
GROSS AVAILABILITY.
At any time, the
lesser of (a) the Borrowing Base
at such time and (b) the Total Commitment at such time.
GUARANTIES. The
Guaranties
made by each
Guarantor in favor of the
Lenders and the Administrative Agent pursuant to which such
Guarantor guaranties
to the Lenders and the Administrative Agent the payment and performance
in full
of the Obligations.
GUARANTORS.
Collectively, (i) the
Parent, Quaker Mexico and Quaker
Textile and (ii) any direct or indirect Domestic Subsidiary of the
Parent.
INDEBTEDNESS. As to any Person and whether recourse is secured by
or is
otherwise available
against all or only a
portion of the assets of such Person
and whether or not contingent, but without duplication:
(a) every obligation of such Person for money borrowed,
(b) every obligation of such Person evidenced by bonds,
debentures, notes or
other similar instruments, including obligations
incurred in connection
with the acquisition of property, assets or
businesses,
<PAGE>
(c) every reimbursement obligation of such Person with respect
to letters of
credit, bankers' acceptances, or similar facilities
issued for the account
of such Person,
(d) every obligation
of such Person issued
or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements
but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business),
(e) every obligation
of such Person under any Capitalized
Lease,
(f) every obligation of such Person under any Synthetic Lease,
(g) all sales
by such Person of (i) accounts or general
intangibles for
money due or to become due, (ii) chattel paper,
instruments or
documents creating or
evidencing a right to payment of
money or (iii) other receivables (collectively "RECEIVABLES"),
whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person
relating
thereto or a
disposition of defaulted receivables for collection (or as
a sale of claims in bankruptcy) and not as a financing arrangement,
and
together with
any obligation of such Person to pay any discount,
interest, fees,
indemnities,
penalties, recourse,
expenses or other
amounts in connection therewith,
(h) every obligation of such Person (an "EQUITY RELATED
PURCHASE OBLIGATION") to purchase, redeem, retire or otherwise
acquire
for value any shares
of Capital
Stock issued by such Person or any
rights measured by the value of such Capital Stock,
(i) every obligation
of such Person under any Derivative
Agreement,
(j) every obligation
in respect of
Indebtedness of any other
entity (including
any partnership in which such Person is a
general
partner) to the extent that such Person is liable therefor as a result
of such Person's
ownership interest in or other relationship with such
entity, except
to the extent that the terms of such Indebtedness
provide that such
Person is not
liable therefor and such terms are
enforceable under applicable law, and
(k) every obligation,
contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or
otherwise
acting as surety for,
any obligation
of a type described in any of
clauses (a) through (j) (the "PRIMARY obligation") of another Person
(the "PRIMARY OBLIGOR"), in any manner, whether directly or
indirectly,
and including, without limitation, any obligation of such Person
(i) to
purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, (ii) to purchase
property, securities
or services for the purpose of assuring the
payment of such
primary obligation, or (iii) to maintain working
capital, equity
capital or other
financial statement condition or
liquidity of the primary obligor so as to enable the primary
obligor to
pay such primary obligation.
The "AMOUNT" or "PRINCIPAL AMOUNT" of any Indebtedness at
any
time of determination represented by (1) any Indebtedness,
issued at a
price that is less than the principal amount at maturity thereof,
shall
be
the amount
of the liability in respect thereof determined in
accordance with GAAP,
(2) any Capitalized
Lease shall be the
present
value of the aggregate of the rentals obligation under such
Capitalized
Lease payable over the term thereof that is not subject to
termination
by the lessee,
(3) any sale of
receivables
shall be the
amount of
unrecovered capital or
principal investment
of the purchaser
(other
than the Parent or any of its wholly-owned Subsidiaries) thereof,
excluding amounts
representative
of yield or interest
earned on such
investment, (4) any Synthetic Lease shall be the stipulated loss
value,
termination value
or other equivalent amounts, (5) any derivative
contract shall be the maximum amount of any termination or loss
payment
required to be paid by such Person if such derivative contract
were, at
the time of
determination, to be
terminated by reason of any event of
default or early
termination
event thereunder, whether or not such
event of default or early termination event has in fact occurred,
(6)
any equity related
purchase obligation shall be the maximum fixed
redemption or
purchase price thereof inclusive of any accrued and
unpaid dividends to be
comprised in such
redemption or purchase price
and (7) any guaranty
or other contingent liability referred to in
clause (k) shall be an
amount equal to the stated or determinable
amount of the primary
obligation in respect
of which such guaranty or
other contingent
obligation is made or, if not stated or determinable,
the maximum
reasonably
anticipated
liability in respect thereof
(assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
<PAGE>
INTERCREDITOR AGREEMENT. That certain Intercreditor Agreement,
dated as
of the date hereof,
among the Borrower,
the Guarantors the Term Loan Agent and
the
Administrative
Agent, in
form and substance satisfactory to the
Administrative Agent.
INTEREST PAYMENT DATE.
(i) As to any Base
Rate Loan, the first day of
each calendar
month (including the month which includes the Drawdown Date
thereof) and the Maturity Date and (ii) as to any LIBOR Rate Loan,
the last day
of each Interest Period applicable to such Loan and the Maturity
Date; PROVIDED,
HOWEVER, that if any
Interest Period for a
LIBOR Rate Loan
exceeds three (3)
months, the respective dates that fall every three months after the
beginning of
such Interest Period shall also be Interest Payment Dates.
INTEREST PERIOD.
With respect to each
Revolving Loan, (i)
initially,
the period commencing
on the Drawdown Date
of such Loan and ending on the last
day of one of the periods set forth below, as selected by the
Borrower in a Loan
Request or as otherwise required by the terms of this
Credit Agreement (A)
for
any Base Rate Loan,
the last day of the
calendar month and (B) for any LIBOR
Rate Loan 1, 2, 3, or 6 months, and (ii) thereafter, each period commencing on
the last day of the next preceding Interest Period applicable to such
Revolving
Loan and ending
on the last day of one
of the periods
set forth above, as
selected by the
Borrower in a
Conversion
Request; PROVIDED that all of the
foregoing provisions relating to Interest Periods are subject to
the following:
(a) if any Interest
Period with respect to
a LIBOR Rate Loan
would otherwise end on
a day that is not a Business Day, that Interest
Period shall be extended to the next succeeding Business Day unless
the
result of such
extension would be to
carry such Interest
Period into
another calendar
month, in which event
such Interest Period shall end
on the immediately preceding Business Day;
(b) if any Interest
Period with
respect to a Base Rate
Loan
would end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(c) if the Borrower
fails to give notice as provided in
ss.2.7, the Borrower
shall be deemed to have requested a conversion of
the affected LIBOR Rate Loan to a Base Rate Loan and the
continuance of
all Base Rate Loans as Base Rate Loans on the last day of the
then
current Interest Period with respect thereto;
(d) any Interest
Period relating to any
LIBOR Rate Loan that
begins on the last
Business Day of a
calendar month (or on
a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last
Business Day
of a calendar month; and
0
<PAGE>
(e) any
Interest Period relating to any LIBOR Rate Loan that would
otherwise extend
beyond the
Maturity Date shall end on the Maturity
Date.
INVESTMENTS. All
loans, advances (other
than commission,
travel and
similar advances to
officers, directors and employees made in the ordinary
course of business),
extensions
of credit (other than accounts receivable
arising in the ordinary course of business provided that in no event shall
such
extension of credit
exceed 180 days in
accordance
with its terms), deposit
account or
contribution
of capital
to any Person or any investment in, or
purchase or other
acquisition of, the
Capital Stock of, or in respect of any
guaranty of the obligations of, any 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 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.
ISSUING BANK. Bank of
America.
LC GUARANTY. A guaranty or indemnity in form and substance
satisfactory
to the Administrative
Agent and the Issuing Bank pursuant to which the
Administrative Agent
shall guaranty the
payment or performance by the Borrower
of its reimbursement obligations in respect of Letters of
Credit.
LENDER OR LENDERS.
Bank of America and the other lending institutions
listed on SCHEDULE 1 hereto and any other person who becomes an assignee of
any
rights and obligations
of a Lender
pursuant to ss.18 and,
unless the context
otherwise requires, the Issuing Bank and the Cash Management
Bank.
LETTER OF CREDIT. See
ss.4.1.
LETTER OF CREDIT
APPLICATION. With
respect to any Letter of Credit
issued for
the account of the Borrower or Quaker Textile hereunder, an
application for such
Letter of Credit made to the Issuing Bank on its customary
form.
LETTER OF CREDIT FEE.
See ss.4.6.
LIBOR BUSINESS DAY. Any day on which commercial banks are open for
international business (including dealings in U.S. dollar deposits)
in London.
LIBOR LENDING OFFICE.
Initially, the office
of each Lender designated
as such by notice to the Borrower; thereafter, such other office of
such Lender,
if any, that shall be making or maintaining LIBOR Rate Loans.
LIBOR RATE. For any Interest Period with respect to a LIBOR
Rate Loan,
the rate of interest
equal to (i) the rate
determined
by the Administrative
Agent at which Dollar
deposits for such
Interest Period are
offered based on
information presented
on Page 3750 of the
Dow Jones Market
Service (formerly
known as the Telerate
Service) or such other commercially available source
providing such
information and
designated by the
Administrative Agent,
as of
11:00 a.m. London time
on the second LIBOR
Business Day prior to the first day
of such Interest
Period, divided by (ii) a number equal to 1.00 minus the
Eurocurrency Reserve
Rate. If the rate
described above does
not appear on the
Dow Jones Market Service or such other commercially available source providing
such information and
designated by the
Administrative Agent
on any applicable
interest determination
date, the LIBOR Rate
shall be the rate (rounded upward,
if necessary,
to the nearest one
hundred-thousandth
of a percentage
point),
determined on the
basis of the offered
rates for deposits in Dollars for a
period of time
comparable to such
LIBOR Rate Loan
which are offered by four
major banks in the London interbank market at approximately 11:00 a.m. London
time, on the second
LIBOR Business Day
prior to the first day of such Interest
Period as selected by the Administrative Agent. The principal London office
of
each of the four major
London banks will be requested to provide a quotation of
its Dollar deposit
offered rate. If at least two such quotations are provided,
the rate for that date will be the arithmetic mean of the
quotations.
If fewer
than two quotations
are provided as
requested, the rate
for that date will be
determined on the
basis of the rates
quoted for loans in
Dollars to leading
European banks for a period of time comparable to such Interest
Period offered
by major banks in New York City at approximately 11:00 a.m. New York City time,
on the second LIBOR Business Day prior to the first day of such
Interest Period.
In the event
that the Administrative Agent is unable to obtain any such
quotation as provided above, it will be considered that LIBOR Rate
pursuant to a
LIBOR Rate Loan cannot be determined.
<PAGE>
LIBOR RATE LOANS. All
or any portion of the
Revolving Loans
bearing
interest calculated by reference to the LIBOR Rate.
LICENSES. See ss.6.26.
LIENS. Any
encumbrance,
mortgage,
deed
of trust, assignment,
attachment, deposit
arrangement,
lien (statutory, judgment or otherwise),
pledge, hypothecation,
charge, restriction or other security interest, security
agreement, or any
interest of any kind securing any obligation of any entity or
person, whether
such interest is based on common law,
civil law,
statute or
contract.
LOAN DOCUMENTS. This
Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Guaranties, the Security
Documents, the
LC Guaranty, the Fee
Letter, the
Intercreditor
Agreement,
the Amendment and
Reaffirmation of Loan
Documents and any
other agreement
between the
Borrower
and/or any Guarantor and the Administrative Agent and/or any Lender relating
to
fee arrangements.
LOAN REQUEST. See
ss.2.6.1.
LOANS. The Revolving Loans.
MATURITY DATE. May 18,
2010.
MAXIMUM DRAWING
AMOUNT. The maximum aggregate amount that the
beneficiaries may at
any time draw under
outstanding Letters of
Credit issued
for the account of the Borrower or Quaker Textile, as such aggregate amount may
be reduced
from time to time
pursuant to the terms of the Letters of Credit
issued for the account of the Borrower or Quaker Textile.
MORTGAGED PROPERTY.
Any Real Estate which is subject to any Mortgage.
MORTGAGES. (a) The
mortgage(s) and, if
applicable, deed(s) of
trust,
dated on or prior to the Closing Date, from the Borrower to the
Administrative
Agent with respect to
the fee and, if
applicable, leasehold
interests of the
Borrower in the
properties listed on
SCHEDULE 1.1(A) hereto
and (b) any other
deeds of mortgage,
deeds of trust, or deeds of leasehold mortgage executed and
delivered to the Administrative Agent after the Closing Date
pursuant to ss.7.16
hereof, in each case, in form and substance satisfactory to the Administrative
Agent.
<PAGE>
MULTIEMPLOYER PLAN.
Any multiemployer plan within the meaning of
ss.3(37) of ERISA
maintained or contributed to by the Parent, the Borrower or
any ERISA Affiliate.
NET BOOK VALUE. At the relevant time of reference thereto, the net
book
value of Eligible Inventory determined on a first-in first-out
basis at lower of
cost or market as expressed on the Borrower's perpetual inventory
report.
NET ORDERLY
LIQUIDATION VALUE. With respect to any inventory, the net
appraised orderly
liquidation value of such inventory, as determined from time
to time by the Administrative Agent by reference to the most recent
appraisal of
the inventory of the Borrower performed by an appraisal firm
acceptable to the
Administrative Agent.
NON-FINANCED CAPITAL EXPENDITURES Capital Expenditures paid in cash
and
not financed
with Indebtedness for borrowed money; PROVIDED that Capital
Expenditures financed
with the proceeds of
Revolving Loans shall
be deemed to
constitute "Non-Financed Capital Expenditures" for purposes of this
Agreement.
NON-U.S. LENDER. See ss.5.2.3.
NOTES. The Revolving Notes.
OBLIGATIONS. All
indebtedness,
obligations
and liabilities of the
Parent and its
Subsidiaries
to any of the
Lenders, the Issuing Bank, the
Administrative Agent,
the Cash Management Bank or any of their Affiliates,
individually or
collectively, existing
on the date of this Credit Agreement or
arising thereafter,
direct
or indirect, joint or several, absolute or
contingent, matured
or unmatured, liquidated or unliquidated, secured or
unsecured, arising
by contract, operation of law or otherwise, arising or
incurred under this
Credit Agreement or
any of the other Loan Documents or any
Derivative Agreement
or in respect of any of the Loans made, or any obligations
under Derivative
Agreements or Cash
Management
Obligations or
Reimbursement
Obligations incurred
or any of the Letter
of Credit
Applications, Letters
of
Credit or other instruments at any time evidencing any thereof.
ORIGINAL CLOSING DATE.
May 18, 2005.
OUTSTANDING or
OUTSTANDING. With
respect to the Loans,
the aggregate
unpaid principal thereof as of any date of determination.
PARENT. As defined in the preamble hereto.
PATENT AGREEMENT.
The Patent Collateral Assignment and Security
Agreement, dated as of
the Original Closing
Date, made by the Borrower and the
Guarantors in
favor of the Administrative Agent, in form and substance
satisfactory to the Administrative Agent.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar
responsibilities.
PERFECTION CERTIFICATES. The Perfection Certificates,
dated as of the
Closing Date,
in each case, in form and substance satisfactory to the
Administrative Agent.
<PAGE>
PERMITTED LIENS. Liens
permitted by ss.8.3 hereof.
PERSON. Any
individual,
corporation,
limited
liability company,
partnership, limited
partnership, trust, unincorporated association, business,
or other legal entity, or any Governmental Authority.
PLEDGE
AGREEMENT. The Pledge Agreement, executed by the Parent and the
Borrower in
favor of the Administrative Agent, in form and substance
satisfactory to the Administrative Agent.
PROJECTIONS. Those certain treasury cash flow forecasts of receipts
and
disbursements
delivered to the Administrative Agent pursuant to Section 3(e)
of
the Fifth Amendment
(as defined in the
Existing Credit Agreement), as such
forecasts may be updated from time to time pursuant to Section
7.4(n).
QUAKER MEXICO.
Quaker Fabric Mexico, S.A. de C.V., a corporation
organized under the laws of Mexico.
QUAKER TEXTILE Quaker Textile Corporation, a Massachusetts
corporation.
REAL ESTATE. All real
property at any time
owned or leased (as lessee
or sublessee) by the Parent or any Subsidiary of the Parent.
RECORD. The grid
attached to a Note, or the continuation of such grid,
or any other similar
record, including computer records, maintained by any
Lender with respect to any Loan referred to in such Note.
REGISTER. See ss.18.3.
REIMBURSEMENT
OBLIGATION. The
Borrower's obligation
to reimburse the
Administrative Agent
and the Lenders on account of any drawing under any Letter
of Credit issued for
the account of the Borrower or Quaker Textile as provided
in ss.4.2.
RELATED PARTIES. With
respect to any specified Person, such Person's
Affiliates and
the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.
REQUIRED LENDERS.
As of any date, any combination of two or more
Lenders, excluding Delinquent Lenders, holding Loans and
participating interests
in the risks relating
to Letters
of Credit constituting at least fifty-one
percent (51%) of the outstanding Loans and Letters of Credit; or,
if no Loans or
Letters of Credit are then outstanding, any combination of two or more
Lenders,
excluding Delinquent
Lenders, having at least fifty-one
percent (51%) of
the
Total Commitment.
RESERVES. As
determined by the Administrative Agent in the exercise of
its reasonable discretion and upon written notice to the Borrower,
such amounts
as the Administrative
Agent may from time to
time establish and
revise (a) to
reflect (i) any
Default or Event of Default or (ii) events, conditions,
contingencies or risks
which do or may have a
material adverse
effect on the
business, assets,
operations
or financial condition of the Borrower and
the
Guarantors (taken as a whole), or the ability of the Parent and its
Subsidiaries
to fulfill their
obligations
under this
Credit Agreement or the other Loan
Documents or (b) to
reflect the belief of the Administrative Agent that any
Borrowing Base Certificate or other collateral report or financial information
furnished by or on behalf of the Parent and the Borrower to the Administrative
Agent or any of the
Lenders is or may have been incomplete, inaccurate or
misleading in
any material respect or (c) to reflect events, conditions,
contingencies or risks
which would
reasonably
be expected to have a
material
adverse effect on the value of the Collateral, taken as a whole, or
the value of
the security
interests and other rights of the
Administrative
Agent and the
Lenders in the Collateral (including the enforceability,
perfection or
priority
thereof) or (d) to
reflect any costs and
expenses (or
anticipated
costs and
expenses) determined
by the Administrative Agent in order to realize on the
Collateral or (e) in respect of any Derivative Agreements or cash management
or
similar arrangements.
<PAGE>
RESTRICTED PAYMENT. In relation to the Parent and any Subsidiary of
the
Parent, any (a)
Distribution
or (b) any payment
made to any Affiliates of the
Parent or a Subsidiary
of the Parent in respect of management, consulting or
other similar services provided to the Parent or a Subsidiary of
the Parent.
REVOLVING EXPOSURE.
At any time, the sum
of the outstanding amount of
all Revolving Loans PLUS the Maximum Drawing Amount and all Unpaid
Reimbursement
Obligations.
REVOLVING LOANS.
The revolving credit
loans to be made by the Lenders
to the Borrower (including Swing Line Loans) pursuant to ss.2.
REVOLVING NOTES. See
ss.2.4.
SARBANES-OXLEY ACT.
The Sarbanes-Oxley Act of 2002.
SECURITY AGREEMENT.
The Security
Agreement, dated as of
the Original
Closing Date, among the Parent, the Borrower, Quaker Textile, Quaker Mexico
and
the Administrative Agent.
SECURITY DOCUMENTS.
The Guaranties, the Security Agreement, the
Copyright Mortgage, the Patent Agreement, the Pledge Agreement, the Mortgages,
the Trademark
Agreement, and all
other instruments
and documents,
including
without limitation
Uniform Commercial Code financing statements and other
equivalent registration documents, control agreements and the like,
required to
be executed
or delivered pursuant to, or in connection with, this Credit
Agreement or any other Loan Document.
SENIOR MANAGEMENT. The
chairman, president,
chief executive
officer,
chief financial
officer, any executive vice president, any senior vice
president, the
vice-president - legal
and environmental,
the treasurer,
the
controller, or the general counsel of the Parent or a Subsidiary of
the Parent.
SETTLEMENT. With
respect to any Swing Line Loans, the making or
receiving of payments,
in immediately
available funds, by the Lenders, to the
extent necessary to
cause each Lender's actual share of the outstanding amount
of Revolving Loans (after giving effect to any Loan Request) to be
equal to such
Lender's Commitment Percentage of the outstanding amount of such
Revolving Loans
(after giving
effect to any Loan
Request), in any case where, prior to such
event or action, the actual share is not so equal.
SETTLEMENT AMOUNT. See
ss.2.10.1.
SETTLEMENT DATE.
(a) Friday of each week, or if a Friday is not a
Business Day, the Business Day immediately following such Friday, (b) at the
option of the Administrative Agent, on any Business Day following a
day on which
the account officers
of the Administrative
Agent active upon the Borrower's
account become aware
of the existence of an Event of Default, (c) the Business
Day immediately
following any day on which the Administrative Agent gives
written notice to the Lenders to effect a Settlement, (d) the Maturity Date and
(e) on the third (3rd)
Business Day
following any date on which the Borrower
requests a conversion of a Swing Line Loan to a LIBOR Rate
Loan.
SETTLING LENDER. See
ss.2.10.1.
<PAGE>
SUBSIDIARY. Any
corporation,
association,
trust, or other business
entity of which
the designated parent shall at any time own directly or
indirectly through a
Subsidiary or
Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
SWING LINE LOANS. See
ss.2.6.2.
SYNTHETIC LEASE. Any lease of goods or other property, whether real or
personal, which is
treated as an
operating lease
under GAAP and as a
loan or
financing for U.S. income tax purposes.
TAXES. All
present or future taxes, levies, imposts, duties,
deductions,
withholdings,
assessments, fees or
other charges
imposed by any
Governmental
Authority, including
any interest,
additions to tax or penalties
applicable thereto.
TERM LOANS. The "Term
Loans" as defined in the Term Loan Agreement as
in effect on the date hereof.
TERM LOAN AGENT. GB Merchant Partners, LLC, a Delaware limited
liability company.
TERM LOAN AGREEMENT. The Term Loan Agreement, dated as of the date
hereof, by and among the Credit Parties, certain financial institutions party
thereto and the Term Loan Agent, as agent for such financial
institutions.
TERM LOAN DOCUMENTS.
The "Loan Documents"
as defined in the Term Loan
Agreement.
TERM LOAN OBLIGATIONS.
The "Obligations" as defined in the
Term Loan
Agreement as in effect on the date hereof.
TOTAL COMMITMENT.
The sum of the
Commitments
of the Lenders,
as in
effect from time to time.
TRADEMARK
AGREEMENT.
The Trademark Collateral Security and Pledge
Agreement, dated as of
the Original Closing
Date, made by the Borrower and the
Guarantors in
favor of the Administrative Agent and the Assignments of
Trademarks executed in connection therewith, in form and substance
satisfactory
to the Administrative Agent.
TYPE. As to any Revolving Loan, its nature as a Base Rate Loan or
LIBOR
Rate Loan.
UCC. The Uniform
Commercial Code, as
the same may, from time to time,
be enacted and in effect in the Commonwealth of Massachusetts;
PROVIDED, that to
the extent that the
UCC is used to define any term herein or in any other Loan
Document and such term is defined differently in different Articles
or Divisions
of the UCC, the definition of such term contained in Article or
Division 9 shall
govern; PROVIDED FURTHER, that if, by reason of mandatory
provisions of law, any
or all of the attachment, perfection or priority of, or remedies
with respect to
the Administrative
Agent's Lien on any
Collateral
is governed by the
Uniform
Commercial Code as
enacted and in effect in a jurisdiction other than the
Commonwealth of Massachusetts, the term "UCC" shall mean the
Uniform Commercial
Code as enacted and in effect in such other jurisdiction
solely for purposes
of
the provisions thereof
relating to such
attachment,
perfection,
priority or
remedies and for purposes of definitions related to such
provisions.
UNPAID REIMBURSEMENT
OBLIGATION.
The Reimbursement Obligations for
which the Borrower does not reimburse the Administrative Agent and the Lenders
on the date specified in, and in accordance with, ss.4.3.
<PAGE>
VOTING STOCK.
Stock or similar interests, of any class or classes
(however designated),
the holders of which
are at the time
entitled, as such
holders, to vote for
the election of a
majority of the
directors (or
persons
performing similar
functions) of the corporation, association, trust or other
business entity
involved, whether or
not the right so to vote exists by reason
of the happening of a contingency.
1.2.
RULES OF INTERPRETATION.
(a) 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 Credit
Agreement.
(b) The singular
includes the plural and the plural includes the
singular.
(c) Unless otherwise
expressly indicated, a reference to any law or
regulation includes any amendment or modification to such law or
regulation.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting
terms not otherwise
defined herein have the meanings
assigned to them by GAAP applied on a consistent basis by the
accounting entity
to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not
specifically defined
herein or by GAAP, which terms
are defined in the Uniform Commercial Code as in effect in
the Commonwealth
of
Massachusetts, have
the meanings assigned to them therein, with the term
"instrument" being that defined under Article 9 of the Uniform
Commercial Code.
(h) Reference
to a particular "ss." refers to that section of this
Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import
shall refer
to this Credit Agreement as a whole and not to any particular
section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation of
periods
of time from a specified date to a later specified date, the word "from" means
"from and including,"
the words "to" and
"until" each mean "to but excluding,"
and the word "through" means "to and including."
(k) This Credit
Agreement and the other Loan Documents may use several
different limitations,
tests or measurements to regulate the same or
similar
matters. All such limitations, tests and measurements are,
however,
cumulative
and are to be performed in accordance with the terms thereof.
(l) This Credit
Agreement and the other Loan Documents are the result
of negotiation among,
and have been reviewed
by counsel to, among others, the
Administrative Agent,
the Parent and the Borrower and are the product of
discussions and
negotiations
among all parties. Accordingly, this Credit
Agreement and the other Loan Documents are not intended to be
construed against
the Administrative
Agent or any of the Lenders merely on account of the
Administrative Agent's
or any Lender's
involvement in the
preparation of such
documents.
<PAGE>
(m) If at any time any change in GAAP would affect the computation of
any financial ratio or
requirement set forth
in any Loan Document,
and either
the Borrower or the Required Lenders shall so request, the
Administrative Agent,
the Lenders and the Borrower shall negotiate in good faith to amend
such ratio
or requirement to
preserve the original
intent thereof in light of such change
in GAAP (subject to the approval of the Required Lenders);
provided that,
until
so amended,
(i) such ratio or
requirement
shall continue to be computed in
accordance with GAAP
prior to such change
therein and (ii) the Borrower shall
provide to the
Administrative Agent
and the Lenders
financial statements
and
other documents required under this Credit Agreement or as
reasonably
requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in
GAAP.
2. REVOLVING LOANS.
2.1. REVOLVING LOANS.
Subject to the terms and conditions set forth in
this Credit
Agreement,
each of the
Lenders severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time
to time from
the Closing Date up to but not including the Maturity Date upon notice by the
Borrower to the Administrative Agent given in accordance with
ss.2.6, such sums
as are requested by the Borrower up to a maximum aggregate amount outstanding
(after giving
effect to all amounts
requested)
at any one time equal
to such
Lender's Commitment MINUS such Lender's Commitment Percentage of the sum of (a)
the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations and (b)
the
outstanding Swing Line Loans; PROVIDED that the Revolving Exposure
(after giving
effect to all
amounts requested) shall not at any time exceed the Gross
Availability. The Revolving Loans shall be made PRO RATA in
accordance with each
such Lender's Commitment Percentage. Each request for a Revolving
Loan hereunder
shall constitute
a representation and warranty by the Borrower that the
conditions set forth
in ss.10 and ss.11, in
the case of the initial Revolving
Loans to be made on the Closing Date, and ss.11, in the case of all other
Revolving Loans, have been satisfied on the date of such
request.
2.2. COMMITMENT FEE.
The Borrower agrees to pay to the Administrative
Agent for the accounts
of the Lenders in accordance with their respective
Commitment Percentages a commitment fee (the "Commitment Fee")
calculated at the
rate of 0.50% per annum on the average daily amount during each calendar month
or portion thereof
from the date hereof to the Maturity Date by which the Total
Commitment MINUS
the sum of the Maximum Drawing Amount and all Unpaid
Reimbursement
Obligations exceeds
the outstanding
amount of Revolving
Loans
(excluding Swing Line
Loans) during such calendar month. The Commitment Fee
shall be payable
monthly in arrears on the first day of each calendar month for
the immediately
preceding calendar month commencing on the first such date
following the date
hereof, with a final
payment on the
Maturity Date or any
earlier date on which the Commitments shall terminate.
2.3. REDUCTION OF COMMITMENTS. The Borrower shall have the right at
any
time and from time to time upon five (5) Business Days prior
written notice to
the Administrative
Agent to reduce by
$5,000,000
or an integral
multiple of
$1,000,000 in excess
thereof or to terminate entirely the Total Commitment in
excess of the Revolving Exposure at such time, whereupon the Commitments of
the
Lenders shall be reduced pro rata in accordance with their
respective Commitment
Percentages of the
amount specified in such notice or, as the case may be,
terminated. Promptly
after receiving any notice of the Borrower delivered
pursuant to this ss.2.3, the Administrative Agent will notify the
Lenders of the
substance thereof. Upon the effective date of any such reduction or
termination,
the Borrower shall pay to the Administrative Agent for the respective
accounts
of such Lenders the full amount of any Commitment Fee then accrued
on the amount
of the reduction. No reduction or termination of the Commitments may be
reinstated. If the
Total Commitment is terminated or reduced by the Borrower in
whole or in part on or prior to the second anniversary of the Closing Date,
the
Borrower shall pay to the Administrative Agent for the benefit of
the Lenders an
early termination fee in an amount calculated as follows:
<PAGE>
(a) if such
termination or reduction is concluded on or prior
to the second anniversary of the Original Closing Date, an amount
equal
to one-half of one percent (0.5%) of the Total Commitment immediately
prior to such termination or in the case of a partial reduction,
one-half of one percent (0.5%) of the amount of such reduction;
or
(b) if such
termination
or reduction is
concluded after
the
second anniversary of
the Original Closing Date, the Borrower will not
be required to pay an early termination fee.
For greater clarity,
the Borrower
acknowledges and agrees that as a direct and
proximate result of
such termination
under the aforesaid
circumstances,
the
Lenders will suffer a loss in an amount which is difficult to calculate and
determine with certainty and, therefore, as a result of the Borrower's and
each
Lender's reasonable
endeavour to ascertain
and agree in advance
to the amount
necessary to
compensate the Lenders
for said loss, the
Borrower has agreed to
pay the aforesaid
early termination fees described in this ss.2.3 in the
circumstances described.
2.4. THE REVOLVING
NOTES. The
Revolving Loans shall be evidenced by
separate promissory notes of the Borrower in substantially the form
of EXHIBIT E
hereto (each a
"Revolving Note"),
dated as of the
Closing Date (or such other
date on which a Lender
may become a party
hereto in accordance with ss.18
hereof) and completed with appropriate insertions. One Revolving Note shall be
payable to the order of each Lender in a principal amount equal to
such Lender's
Commitment Percentage
of the Total
Commitment
or, if less,
the outstanding
amount of all
Revolving Loans made by such Lender, plus interest accrued
thereon, as set forth
below. The
Borrower irrevocably authorizes each such
Lender to make or cause to be made, at or about the time of the
Drawdown Date of
any Revolving Loan or at the time of receipt of any payment of
principal on such
Lender's Revolving Note, an appropriate notation on such Lender's
Revolving Note
Record reflecting the
making of such Revolving Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the Revolving
Loans set forth
on such Lender's
Revolving Note Record shall be PRIMA FACIE evidence of the
principal amount
thereof owing and unpaid to such Lender,
but the failure to
record, or any error in so recording, any such amount on such
Lender's Revolving
Note Record shall not limit or otherwise affect the obligations of the
Borrower
hereunder or under any
Revolving Note to make payments of principal of or
interest on any Revolving Note when due.
2.5. INTEREST ON
REVOLVING LOANS. Except as otherwise provided in
ss.5.11,
(a) Each Revolving
Loan which is a Base
Rate Loan shall bear
interest for the period commencing with the Drawdown Date thereof
and
ending on the last day of the Interest Period with respect thereto at
the rate per annum equal to the Base Rate PLUS the Applicable
Margin as
in effect from time to
time applicable
to Revolving Loans bearing
interest at the Base Rate.
(b) Each Revolving
Loan which is a LIBOR Rate Loan shall bear
interest for the period commencing with the Drawdown Date thereof
and
ending on the last day of the Interest Period with respect thereto at
the rate per annum equal to the LIBOR Rate determined for such
Interest
Period PLUS the
Applicable
Margin as in effect from time to time
applicable to Revolving Loans bearing interest at the LIBOR
Rate.
The Borrower promises
to pay interest on each Revolving Loan in arrears on each
Interest Payment Date with respect thereto.
0
<PAGE>
2.6. REQUESTS FOR REVOLVING LOANS.
2.6.1. GENERAL. The
Borrower shall give to the Administrative
Agent written notice
in the form of EXHIBIT A hereto of each Revolving
Loan requested
hereunder (a "Loan
Request") no less than
(a) one (1)
Business Day prior to the proposed Drawdown Date of any Base Rate
Loan
and (b) three (3) Business Days prior to the proposed Drawdown Date of
any LIBOR Rate Loan.
Each such notice shall
specify (i) the principal
amount of the Revolving Loan requested, (ii) the proposed Drawdown
Date
of such Revolving
Loan, (iii) the
Interest Period for
such Revolving
Loan and (iv) the Type of such Revolving Loan. Promptly upon
receipt of
any such notice,
the Administrative Agent shall notify each of the
Lenders thereof. Each
Loan Request shall be irrevocable and binding on
the Borrower and shall
obligate the Borrower
to accept the
Revolving
Loan requested from
such Lenders on the proposed Drawdown Date. Each
Loan Request
with respect to a Base Rate Loan shall be in a
minimum
aggregate amount of
$500,000 or an
integral multiple of $100,000 in
excess thereof and
each Loan Request with respect to a LIBOR Rate Loan
shall be in a minimum
aggregate amount of
$1,000,000
or an integral
multiple of $100,000 in excess thereof.
2.6.2. SWING
LINE. Notwithstanding the notice and minimum
amount requirements
set forth in ss.2.6.1
but otherwise in accordance
with the terms and conditions of this Credit Agreement, the
Administrative Agent may, in its sole discretion and without
conferring
with the Lenders, make
Revolving Loans to the Borrower (a) by entry of
credits to
the Borrower's operating account (No. 51191331) (the
"Operating Account")
with the Cash
Management Bank to cover checks or
other charges which the Borrower has drawn or made against such
account
or (b) in an amount as otherwise requested by the Borrower; provided
that the maximum outstanding amount of advances made by the
Administrative Agent
pursuant to this ss.2.6.2 (each a "Swing Line
Loan") shall not, at any time, exceed $5,000,000. The Borrower hereby
requests and authorizes the Administrative Agent to make from time to
time the Swing
Line Loans by means of appropriate entries of such
credits sufficient to cover checks and other charges then presented
for
payment from the Operating Account or as otherwise so
requested.
The
Borrower acknowledges
and agrees that the making of the Swing Line
Loans shall, in each case, be subject in all respects to the
provisions
of this Credit
Agreement as if they were Revolving Loans covered by a
Loan Request including, without limitation, the limitations set forth
in ss.2.1 and the requirements that the applicable provisions of ss.10
(in the case of Swing Line Loans made on the Closing Date) and
ss.11 be
satisfied. Swing Line
Loans made pursuant to
this ss.2.6.2
shall be
Base Rate Loans until
converted in accordance with the provisions of
this Credit Agreement
and, prior to a Settlement, such interest shall
be for the account of the Administrative Agent.
2.7. CONVERSION OPTIONS.
2.7.1. CONVERSION TO
DIFFERENT TYPE OF
REVOLVING LOAN.
The
Borrower may
elect from time to time to convert any outstanding
Revolving Loan to a Revolving Loan of another Type, provided that (a)
with respect to any such conversion of a LIBOR Rate Loan to a Base
Rate
Loan, the Borrower shall give the Administrative Agent at least three
(3) Business
Days prior
written notice of such election; (b) with
respect to any such
conversion
of a Base Rate
Loan to a LIBOR
Rate
Loan, the Borrower shall give the Administrative Agent at least three
(3) Business
Days prior
written notice of such election; (c) with
respect to any such
conversion
of a LIBOR Rate Loan
into a Base Rate
Loan, such
conversion
shall only be made on the last day of the
Interest Period with
respect thereto and
(d) no Revolving Loan may be
converted into, or
continued as, a LIBOR Rate Loan when any Default or
Event of Default has
occurred and is
continuing.
Promptly upon the
receipt of any such election, the Administrative Agent shall notify
the
Lenders thereof.
On the date on which
such conversion is
being made,
each Lender shall take
such action as is
necessary to transfer its
Commitment Percentage
of such Revolving Loans to its Domestic Lending
Office or its LIBOR Lending Office, as the case may be. All or any
part
of outstanding
Revolving Loans of any Type may be
converted into a
Revolving Loan of
another Type as PROVIDED herein, provided that any
partial conversion with respect to -------- Revolving Loans shall
be in
an aggregate principal
amount of $1,000,000 or a whole multiple of
$100,000 in excess
thereof. Each
Conversion Request
relating to the
conversion of
a Revolving Loan to a LIBOR Rate Loan shall be
irrevocable by the Borrower.
1
<PAGE>
2.7.2. CONTINUATION
OF TYPE OF REVOLVING
LOAN. Any Revolving
Loan of any Type may be continued as a Revolving Loan of the same Type
upon the expiration
of an Interest Period with respect thereto by
compliance by the
Borrower with the notice provisions contained in
ss.2.7.1; PROVIDED
that no LIBOR Rate
Loan may be continued
as such
when any Default or Event of Default has occurred and is continuing,
but shall be
automatically
converted to a Base
Rate Loan on the last
day of the first
Interest Period
relating thereto ending during the
continuance of any Default or Event of Default of which officers of
the
Administrative Agent
active upon the
Borrower's
account have
actual
knowledge. In the
event that the
Borrower fails to
provide any such
notice with respect to the continuation of any LIBOR Rate Loan,
then
such LIBOR Rate Loan shall be automatically converted to a Base Rate
Loan on the last day of the first Interest Period relating thereto.
The
Administrative Agent shall notify the Lenders thereof promptly when
any
such automatic
conversion
contemplated by this ss.2.7 is scheduled to
occur.
2.7.3. LIBOR RATE
LOANS. Any conversion to or from LIBOR Rate
Loans shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal
amount of
all LIBOR Rate Loans having the same Interest Period shall not be less
than $1,000,000 or a whole multiple of $100,000 in excess
thereof. No
more than ten (10) LIBOR Rate Loans having different Interest Periods
may be outstanding at any time.
2.8. FUNDS FOR REVOLVING LOANS.
2.8.1. FUNDING
PROCEDURES FOR REVOLVING LOANS. Not later than
2 p.m. (Boston
time) on the proposed
Drawdown Date of any Revolving
Loans, each of the
Lenders will make
available to the
Administrative
Agent, at the Administrative Agent's Office, in immediately
available
funds, the amount of such Lender's Commitment Percentage of the amount
of the requested Revolving Loans. Upon receipt from such Lender of
such
amount, and upon
receipt of the documents required by ss.ss.10 and 11
and the satisfaction of the other conditions set forth therein,
to the
extent applicable, the
Administrative Agent will make available to the
Borrower the aggregate amount of such Revolving Loans made
available to
the Administrative Agent by such Lenders. The failure or refusal of
any
such Lender
to make available to the Administrative Agent at the
aforesaid time
and place on any Drawdown Date the amount of its
Commitment Percentage
of the requested Revolving Loans shall not
relieve
any other Lender of
its several obligation
hereunder to make
available to the Administrative Agent the amount of such other
Lender's
Commitment Percentage of any requested Revolving Loans.
2.8.2. ADVANCES BY
ADMINISTRATIVE AGENT
FOR REVOLVING LOANS.
The Administrative
Agent may,
unless notified to the
contrary by any
Lender prior to a
Drawdown Date, assume that such Lender has made
available to the Administrative Agent on such Drawdown Date the
amount
of such Lender's
Commitment Percentage
of the Revolving
Loans to be
made on such Drawdown
Date, and the
Administrative Agent
may (but it
shall not be required
to), in reliance upon such assumption, make
available to the Borrower a corresponding amount. If any such Lender
makes available to the Administrative Agent such amount on a date
after
such Drawdown Date, such Lender shall pay to the Administrative Agent
on demand an amount
equal to the product of (a) the average computed
for the period referred to in clause (c) below, of the weighted
average
interest rate
paid by the
Administrative
Agent for federal funds
acquired by the
Administrative Agent
during each day included in such
period, times (b) the amount of such Lender's Commitment
Percentage of
such Revolving Loans,
times (c) a fraction,
the numerator of which is
the number of days that elapse from and including such Drawdown
Date to
the date on which the amount of such Lender's Commitment
Percentage of
such Revolving
Loans shall become immediately available to the
Administrative Agent,
and the denominator of which is 360. A statement
of the Administrative
Agent submitted to such Lender with
respect to
any amounts owing under this paragraph shall be prima facie
evidence of
the amount due and owing to the Administrative Agent by such
Lender. If
the amount of such Lender's Commitment Percentage of such Revolving
Loans is not made available to the Administrative Agent by such Lender
within three (3)
Business Days
following such Drawdown Date, the
Administrative Agent
shall be entitled to recover such amount from the
Borrower on
demand, with interest thereon at the rate per annum
applicable to the Revolving Loans made on such Drawdown Date.
2
<PAGE>
2.9. CHANGE IN
BORROWING BASE. The
Borrowing Base shall be determined
weekly (or at such other interval as may be specified pursuant to ss.7.4(f)) by
the Administrative
Agent by reference to the Borrowing Base Certificate
delivered to the Lenders and the Administrative Agent pursuant to ss.7.4(f)
and
other information
obtained by or provided to the Administrative Agent. The
Administrative Agent
shall give to the Borrower written notice of any change in
the Borrowing Base determined by the Administrative Agent, which
notice shall be
effective upon its receipt by the Borrower.
2.10. SETTLEMENTS.
2.10.1. GENERAL.
On each Settlement
Date, the Administrative
Agent shall, not later than 11:00 a.m. (Boston time), give telephonic
or facsimile
notice (a) to the Lenders and the Borrower of the
respective
outstanding amount
of Swing Line Loans made by the
Administrative Agent
on behalf of the
Lenders from the immediately
preceding Settlement
Date through the close of business on
the prior
day and (b) to such Lenders of the amount (a "Settlement
Amount") that
each such Lender (a "Settling Lender") shall pay to effect a
Settlement
of any Swing
Line Loan. A statement of the Administrative Agent
submitted to such
Lenders and the
Borrower or to the Lenders with
respect to any amounts
owing under this
ss.2.10 shall be PRIMA
FACIE
evidence of the amount due and owing. Each Settling Lender shall,
not
later than 2:00 p.m.
(Boston time) on such Settlement Date, effect a
wire transfer of
immediately
available funds to the Administrative
Agent in the amount of the Settlement Amount for such Settling
Lender.
All funds advanced by such Lender as a Settling Lender pursuant to
this
ss.2.10 shall for all
purposes be treated as a Revolving Loan made by
such Settling
Lender to the Borrower
and all funds
received by such
Lender pursuant to
this ss.2.10
shall for all purposes
be treated as
repayment of amounts owed with respect to Revolving Loans made by such
Lender. In the event that any bankruptcy, reorganization,
liquidation,
receivership or similar cases or proceedings in which the Borrower
is a
debtor prevent a
Settling Lender
from making any
Revolving Loan to
effect a Settlement as contemplated hereby, such Settling Lender will
make such dispositions
and arrangements with the other Lenders with
respect to
such Revolving Loans, either by way of purchase of
participations,
distribution,
pro tanto assignment of claims,
subrogation or
otherwise as shall result in each Lender's share of the
outstanding Revolving
Loans being equal, as
nearly as may be, to such
Lender's Commitment
Percentage
of the outstanding amount of the
Revolving Loans.
2.10.2. FAILURE TO
MAKE FUNDS AVAILABLE.
The Administrative
Agent may, unless notified to the contrary by any Settling Lender
prior
to a Settlement Date, assume that such Settling Lender has made or
will
make available to the Administrative Agent on such Settlement Date
the
amount of such Settling Lender's Settlement Amount, and, if
applicable,
the Administrative
Agent may (but it
shall not be required
to), in
reliance upon
such assumption, make available to the Borrower a
corresponding amount.
If any Settling
Lender makes
available to the
Administrative Agent
such amount on a date after such Settlement Date,
such Settling Lender shall pay to the Administrative Agent on
demand an
amount equal to the product of (a) the average computed for the period
referred to in clause (c) below, of the weighted average interest rate
paid by the
Administrative Agent
for federal
funds acquired by the
Administrative Agent during each day included in such period, times
(b)
the amount
of such Settlement Amount, times (c) a fraction, the
numerator of which is the number of days that elapse from and
including
such Settlement Date to the date on which the amount of such
Settlement
Amount shall become immediately available to the Administrative
Agent,
and the denominator of which is 360. A statement of the
Administrative
Agent submitted
to such Settling Lender with respect to any
amounts
owing under this ss.2.10.2 shall be prima facie evidence of
the amount
due and owing to the
Administrative Agent
by such Settling Lender. If
such Settling Lender's
Settlement Amount is
not made available to the
Administrative Agent
by such Settling Lender within three (3) Business
Days following such Settlement Date, the Administrative
Agent shall be
entitled to recover
such amount
from the Borrower on demand, with
interest thereon
at the rate per annum
applicable
to the Revolving
Loans as of such Settlement Date.
3
<PAGE>
2.10.3. NO EFFECT ON OTHER LENDERS. The failure or refusal of
any Settling Lender to
make available to the
Administrative Agent
at
the aforesaid time and place on any Settlement Date the amount of such
Settling Lender's
Settlement
Amount shall not (a) relieve any
other
Settling Lender
from its several obligations hereunder to make
available to the Administrative Agent the amount of such other
Settling
Lender's Settlement
Amount or (b) impose
upon any Lender, other
than
the Settling Lender so failing or refusing, any liability with respect
to such failure or refusal or otherwise increase the Commitment of
such
other Lender.
2.11. REPAYMENTS OF REVOLVING LOANS PRIOR TO EVENT OF DEFAULT.
2.11.1. CREDIT FOR
FUNDS RECEIVED IN
CONCENTRATION
ACCOUNT.
Prior to the
occurrence of an Event of Default as to which the account
officers of the Administrative Agent active upon the Borrower's
account
have actual knowledge,
(a) all funds and cash
proceeds in the form of
money, checks and like items received in the Concentration
Account (as
defined in and as contemplated by ss.7.17.1) shall be credited to the
Borrower, on the same
Business Day on which the Administrative Agent
determines that good collected funds have been received,
and, prior to
the receipt of
good collected funds, on a provisional basis until final
receipt of good collected funds, (b) all funds and cash proceeds in
the
form of a wire
transfer received in the Concentration Account as
contemplated by
ss.7.17 shall be
credited to the Borrower on the same
Business Day as the Cash Management Bank's receipt of such amounts
in
good collected funds, (c) all funds and cash proceeds in the form
of an
automated clearing house transfer received in the Concentration
Account
as contemplated
by ss.7.17 shall be
credited to the Borrower, on the
next Business Day following the Cash Management Bank's receipt of such
amounts in
good collected funds. For purposes of the foregoing
provisions of this
ss.2.11.1, the Cash
Management
Bank shall not be
deemed to have
received any such
funds or cash
proceeds on any day
unless received by the Cash Management Bank before 2:30 p.m. (Boston
time) on such day. The Borrower further acknowledges and agrees that
any such provisional credits or credits in respect of wire or
automatic
clearing house funds
transfers shall be subject to reversal if
final
collection in good
funds of the related
item is not received
by, or
final settlement
of the funds
transfer is not made in favor of, the
Cash Management
Bank in accordance with Cash Management Bank's
customary
procedures and practices for collecting provisional items or
receiving settlement of funds transfers.
4
<PAGE>
2.11.2. APPLICATION OF PAYMENTS PRIOR TO EVENT OF DEFAULT.
(a) [Intentionally Omitted].
(b) Prior to the
occurrence of an Event
of Default of
which
the account
officers of the Administrative Agent active on the
Borrower's account
have knowledge, all funds transferred to the
Concentration Account
and for which the Borrower has received credits
shall, subject
to the Intercreditor Agreement, be applied to the
Obligations of the Borrowers as follows:
(i) first, to pay amounts then due and payable by the
Borrower under this Credit Agreement, the Notes and the other
Loan Documents and in respect of any other Obligations of the
Borrower;
(ii) second,
to repay Swing Line Loans made by the
Administrative Agent
pursuant to ss.2.6.2 and for which
Settlement has not then been made;
(iii) third, to repay
Revolving Loans which are Base
Rate Loans;
(iv) fourth, to repay Revolving Loans which are LIBOR
Rate Loans; and
(v) fifth,
except
as otherwise required by
ss.ss.4.2(b) and (c), to the Operating Account.
(c) All prepayments of LIBOR Rate Loans prior to the end of an
Interest Period shall
obligate the Borrower
to pay any breakage costs
associated with
such LIBOR Rate Loans in accordance with ss.5.10. Prior
to the occurrence
of an Event of
Default, the
Borrower may elect
to
avoid such breakage costs by providing to the Administrative Agent
cash
in an amount
sufficient to cash
collateralize such
LIBOR Rate Loans,
but in no event shall
the Borrower
be deemed to have paid
such LIBOR
Rate Loans until such
cash has been paid to the Administrative Agent
and has been applied to such LIBOR Rate Loans. Until such application,
the Administrative
Agent may elect to cause such cash collateral to be
deposited into either
(i) a cash collateral
account pursuant to the
terms of a cash collateral agreement executed by the Borrower and
the
Administrative Agent
and in form and
substance satisfactory to the
Administrative Agent
or (ii) the Operating
Account with
appropriate
instructions
prohibiting the
Borrower's
withdrawal of such
funds so
long as they remain cash collateral. In each such case, the Borrower
agrees to execute and deliver to the Administrative Agent such
instruments and documents, including Uniform Commercial Code or other
financing statements
and agreements
with any third party
depository
banks, as the Administrative Agent may request.
(d) All prepayments
of the Revolving
Loans pursuant to
this
ss.2.11.2 shall be
allocated among the
Lenders making such
Revolving
Loans, in proportion, as nearly as practicable, to the respective
unpaid principal
amount of such
Revolving Loans outstanding, with
adjustments to the extent practicable to equalize any prior
payments or
repayments not exactly
in proportion. Prior
to any Settlement
Date,
however, all
prepayments
of the Revolving
Loans shall be applied
in
accordance with this ss.2.11.2, first to outstanding Revolving
Loans of
the Administrative Agent.
2.12. REPAYMENTS
OF LOANS AFTER EVENT OF DEFAULT. Following the
occurrence and
during the continuance of an Event of Default of which the
account officers of the Administrative Agent active on the Borrower's
account
have knowledge, all funds transferred to the Concentration Account
and for which
the Borrower
has received credits shall be, subject to the Intercreditor
Agreement, applied to the Obligations in accordance with
ss.12.4.
<PAGE>
2.13. [INTENTIONALLY OMITTED].
2.14. [INTENTIONALLY OMITTED].
2.15. [INTENTIONALLY OMITTED].
2.16. ADMINISTRATIVE
AGENT ADVANCES.
Notwithstanding
anything to the
contrary contained
herein (including, without limitation, the borrowing
limitations set forth
in ss.2.1 hereof),
but subject to the
limitations
set
forth in the proviso
contained in this
ss.2.16, the
Administrative
Agent is
hereby authorized
by the Borrower
and the Lenders, from time to time at the
request of the Borrower but in the Administrative Agent's sole discretion,
(a)
after the occurrence
and during the continuance of a Default or an Event of
Default, or (b) at any
time that any of the other applicable conditions
precedent set forth in ss.11 have not been satisfied, to make
Revolving Loans to
the Borrower on behalf of the Lenders which the Administrative Agent, in its
reasonable business
judgment, deems necessary or desirable (i)
to preserve or
protect the Collateral, or any portion thereof,
(ii) to enhance the
likelihood
of, or maximize
the amount of,
repayment of the Loans and other
Obligations
(other than amounts in respect of Cash Management Obligations),
or (iii) to pay
any other amount chargeable to the Borrower pursuant to the terms of this
Agreement (other
than amounts in respect of Cash Management Obligations),
including, without
limitation,
costs, fees and
expenses as described in ss.15
(any of the advances described in this ss.2.16 being hereinafter
referred to as
"Administrative Agent
Advances"); PROVIDED,
that (w) the
Administrative Agent
Advances shall
be due and payable on the earlier of (1) demand by the
Administrative Agent
and (2) sixty (60) days after the making thereof, (x) the
aggregate outstanding
principal amount of all Administrative Agent Advances
shall not exceed $2,500,000 and (y) the Administrative Agent shall not make any
Administrative Agent
Advance to the Borrower if the amount thereof would cause
the Revolving Exposure to exceed the Total Commitment. The Administrative Agent
Advances shall be
repayable on demand and secured by the Collateral, shall
constitute Revolving Loans and Obligations hereunder, and shall
bear interest at
the rate applicable to
Base Rate Loans which are Revolving Loans from time to
time. The Administrative Agent shall notify each Lender and the
Borrower in
writing of each such Administrative Agent Advance promptly following
the making
thereof, which
notice shall include a description of the purpose of such
Administrative Agent
Advance. Each Lender
irrevocably agrees to
purchase from
the Administrative
Agent, upon demand,
its pro rata share (in
accordance with
its Commitment Percentage) of the amount of the outstanding
Administrative Agent
Advances. Until such
purchase, all payments in respect of the
Administrative
Agent Advances shall be for the account of the Administrative
Agent.
3. REPAYMENT OF LOANS.
3.1. REVOLVING LOANS.
3.1.1. MATURITY. The
Borrower promises to pay on the Maturity
Date, and there shall become absolutely due and payable on the
Maturity
Date, all of the Revolving Loans outstanding on such date, together
with any and all accrued and unpaid interest thereon and all other
fees
and other amounts then accrued and outstanding with respect
thereto.
3.1.2. MANDATORY REPAYMENTS OF REVOLVING LOANS. If at any time
the sum of the Revolving Exposure exceeds the Gross Availability,
then
the Borrower
shall immediately pay the amount of such excess to
the
Administrative Agent
for the respective
accounts of the Lenders for
application: first, to any Swing Line Loans outstanding, second, to
any
Unpaid Reimbursement
Obligations;
third,
to all Revolving Loans
advanced to the Borrower; and fourth, to provide to the
Administrative
Agent cash collateral for Reimbursement Obligations as contemplated by
ss.4.2(b) and (c). Each payment of any Unpaid Reimbursement
Obligation
or prepayment of Revolving Loans shall be allocated among the
Lenders,
in proportion,
as nearly as practicable, to each Reimbursement
Obligation or (as the
case may be) the
respective
unpaid principal
amount of each Lender's Revolving Note or loan account (as the case
may
be) with
adjustments
to the extent
practicable to
equalize any prior
payments or repayments
not exactly in
proportion.
In addition,
the
Borrower shall
repay the Revolving Loans in accordance with
ss.3.2.1(d).
<PAGE>
3.1.3. OPTIONAL
REPAYMENTS OF
REVOLVING LOANS. The
Borrower
shall have the
right, at their election, to repay the outstanding
amount of the
Revolving Loans, as a whole or in part, at any time
without penalty
or premium, provided that any full or partial
prepayment of the
outstanding amount of
any LIBOR Rate Loans pursuant
to this ss.3.1.3
may be made
only on the
last day of the Interest
Period relating thereto (unless breakage costs are paid by the
Borrower
pursuant to ss.5.10 or cash collateral is provided in
accordance with
ss.2.11.2(c)) . The Borrower shall provide to the Administrative
Agent,
no later than 10:00 a.m., Boston time, at least three (3) Business
Days
prior written
notice of any proposed prepayment pursuant to this
ss.3.1.3, specifying
the proposed date of prepayment of any LIBOR Rate
Loans and the
principal amount to be prepaid. Each such partial
prepayment of the Revolving Loans shall be accompanied by the payment
of accrued interest on the principal prepaid to the date of
prepayment
and shall be applied,
in the absence of
instruction by the
Borrower,
first to the principal of Base Rate Loans which are Revolving Loans
and
second to the principal of LIBOR Rate Loans which are Revolving
Loans.
Each partial
prepayment
shall be allocated among the Lenders, in
proportion, as
nearly as practicable, to the respective unpaid
principal amount of each such Lender's Revolving Note or loan
account,
as the case may be,
with adjustments
to the extent practicable to
equalize any prior repayments not exactly in proportion.
3.2. MANDATORY PREPAYMENTS.
3.2.1. ADDITIONAL MANDATORY PREPAYMENTS OF REVOLVING LOANS.
(a) [Intentionally Omitted].
(b) [Intentionally Omitted].
(c) Concurrently
with the receipt by the Parent or any
Subsidiary of the Parent of:
(i) net cash proceeds
from any Asset Sales by the
Parent or such Subsidiary (other than the sale, lease, license
or other disposition
of assets in the ordinary course of
business consistent with past practices);
(ii) net cash
proceeds from the issuance by the
Parent or such Subsidiary of any debt (other than debt
permitted under
ss.8.2) or equity securities (other than
equity securities
issued in connection
with any compensatory
employee benefit or option plan); or
(iii) net cash
proceeds received
by the Parent or
such Subsidiary
from Casualty Events which have not been
utilized by the Parent or such Subsidiary to repair or replace
the property so damaged, destroyed or taken within one hundred
and eighty (180) days of receipt of such proceeds;
0
<PAGE>
the Borrower
shall pay to the
Administrative
Agent for the
respective accounts
of the Lenders an amount equal to one
hundred percent (100%) of such proceeds, to be applied in the
manner set
forth in ss.3.2.1(d); PROVIDED that (A) to the
extent that any such amounts received as a result of any Asset
Sale of, or any Casualty Event related to, Fixed Asset
Collateral, are applied to prepay the Term Loans, such amounts
shall not be
required to be applied to prepay the Loans
pursuant to this
ss.3.2.1(c) and (B)
the Borrower shall only
be required to apply 50% pursuant to this ss.3.2.1(c) of the
net cash proceeds
from the issuance by the Parent or any
Subsidiary of any debt or equity securities so long as 50% of
such proceeds
are applied to prepay the Term Loans.
Notwithstanding
the foregoing,
the provisions of this
ss.3.2.1(c) shall not impair any restrictions set forth in the
Loan Documents with respect to the incurrence of Indebtedness
or Asset Sales by the Parent or any of its Subsidiaries.
(d) All payments made pursuant to ss.3.2.1(c) shall be applied
to repay the outstanding principal amount of the Revolving
Loans, with
a permanent reduction
of the Total
Commitment
in the amount of
such
Revolving Loan
prepayment
required
under
this ss.3.2.1 and
corresponding
permanent reductions of each Lender's Commitment. Such
mandatory
prepayments
shall be allocated among the Lenders in
proportion, as nearly
as practicable,
to the respective
outstanding
amounts of each such Lender's Notes or loan accounts, as the case may
be, with adjustments
to the extent
practicable to
equalize any prior
prepayments not exactly in proportion.
4. LETTERS OF CREDIT.
4.1. LETTER OF CREDIT COMMITMENTS.
4.1.1. COMMITMENT TO
ISSUE LETTERS OF CREDIT. Subject to the
terms and conditions
hereof and the
execution and delivery by the
Borrower of a letter
of credit application on the Issuing Bank's
customary form (a "Letter of Credit Application"), the Administrative
Agent on behalf of the Lenders and in reliance upon the agreement of
such Lenders set forth
in ss.4.1.4 and upon
the representations
and
warranties of the Borrower contained herein, agrees to (a) cause the
Issuing Bank to issue, extend and renew for the account of the
Borrower
or Quaker Textile one or more standby or documentary letters of credit
(each individually,
a "Letter of Credit"), in such form as may be
requested from
time to time by the Borrower and agreed to by the
Administrative Agent
and the Issuing
Bank and (b)
enter into an LC
Guaranty to support the reimbursement obligations of the Borrower
with
respect to Letters
of Credit requested by the Borrower; PROVIDED,
HOWEVER, that after
giving effect to such request, (i) the sum of the
aggregate Maximum
Drawing Amount on all Letters of Credit and all
Unpaid Reimbursement Obligations shall not exceed $7,500,000 at any
one
time and (ii) the
Revolving Exposure shall not exceed the Gross
Availability at such time.
4.1.2. LETTER OF
CREDIT APPLICATIONS.
Each Letter of
Credit
Application
shall be
completed
to the satisfaction of the
Administrative Agent
and the Issuing Bank. In the event that any
provision of any
Letter of Credit
Application shall be
inconsistent
with any provision of
this Credit Agreement,
then the provisions of
this Credit Agreement
shall, to the extent of any such inconsistency,
govern.
4.1.3. TERMS OF
LETTERS OF CREDIT. Each Letter of Credit
issued, extended or
renewed hereunder shall, among other things, (a)
provide for the
payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when
accompanied by
the documents
described therein, and
(b) have an expiry date no later
than the date which is fourteen (14) days (or, if the Letter of
Credit
is confirmed
by a confirmer
or otherwise provides for one or more
nominated persons,
forty-five
(45) days) prior to
the Maturity Date.
Subject to clause
(b) above, each Letter of Credit shall expire
(without giving
effect to any extension thereof by reason of an
i
