EXHIBIT 10.10
as of December 22, 2004
Quaker Fabric Corporation of Fall River
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
Re: Waiver to Note Agreements
Ladies and Gentlemen:
Reference is hereby made to the Note Agreement dated as of October 10,
1997 (as amended and in effect on the date hereof, the "1997 Note Agreement")
and the Note Purchase and Private Shelf Agreement dated as of February 14, 2002
(as amended and in effect on the date hereof, the "2002 Note Agreement" and,
together with the 1997 Note Agreement, the "Note Agreements") in each case
between Quaker Fabric Corporation of Fall River, a Massachusetts corporation
(the "Company"), and the Purchasers identified therein. All capitalized terms
used herein without definition that are defined in the Note Agreements shall
have the same meanings herein as therein. All accounting terms used herein and
not otherwise defined shall be used in accordance with generally accepted
accounting principles.
The Company and the Guarantor have informed Prudential that for the
fiscal quarter ending on January 1, 2005, they anticipate that the Fixed Charge
Ratio for the prior four (4) consecutive fiscal quarters ending on January 1,
2005 will be less than 1.75 to 1.00. Each of the Company and the Guarantor
acknowledges and agrees that such performance results will constitute an Event
of Default (the "Specified Default") under Subparagraph 6D of each Note
Agreement.
The Company and the Guarantor have now requested, and by its signature
below each of the Purchasers agrees to grant, a limited waiver in respect of the
Specified Default subject to the terms and conditions provided herein. In
consideration of the Purchasers' agreement to waive the Specified Default
through the period ending February 27, 2005 (the "Limited Waiver Period"), the
Company and the Guarantor agree that:
1. an Event of Default will exist on February 28, 2005 and
that at such time the Purchasers will have all of their rights and
remedies as a result of the existence of an Event of Default under the
Note Agreements, the Guaranties and any other document, instrument or
agreement executed in connection therewith or otherwise evidencing any
extensions of credit made by the Purchasers to the Company;
2. notwithstanding the waiver set forth herein, the Purchasers
shall be entitled to the inspection rights set forth in Subparagraph 5C
of each Note Agreement at the Company's expense;
3. except as expressly set forth herein, this letter shall not
alter, release, discharge or otherwise affect any of their obligations
under the Note Agreeements, the Guaranties or otherwise under any other
document, instrument or agreement executed in connection therewith
under which such Person acts as a primary or secondary obligor; and
4. each of the Company and the Guarantor will comply and will
continue to comply with all of the terms, covenants and provisions
contained in the Note Agreements and the Guaranties.
The Purchasers' agreements contained herein shall become effective upon
the satisfaction of the following conditions:
(a) each of the Company and the Guarantor shall have executed
and delivered to Prudential counterparts of this letter; and
(b) the Purchasers shall have received fully executed copies
of waiver documentation, in form and substance satisfactory to
Prudential, to the Second Amended and Restated Credit Agreement dated
as of February 14, 2002 (as amended, the "Credit Agreement") between
the Company and the bank lenders identified therein pursuant to which
the bank lenders have waived compliance with the provisions of the
Credit Agreement and any other applicable document relating thereto
with respect to the Debt Service Coverage Ratio and EBIT requirements
set forth therein, in each case for the duration of the Limited Waiver
Period.
This letter agreement may be executed in any number of counterparts,
but all such counterparts shall together constitute but one instrument. In
making proof of this letter agreement it shall not be necessary to produce or
account for more than one counterpart signed by each party hereto by and against
which enforcement hereof is sought.
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If the foregoing terms are acceptable to you, we request that you
indicate your agreement to these provisions by signing the counterpart of this
letter enclosed herewith and returning such counterpart to us.
Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: /s/ Xxxxx Xxxxxx
-------------------
Name: Xxxxx Xxxxxx
Title: Vice President
PRUCO LIFE INSURANCE COMPANY
By: /s/ Xxxxx Xxxxxx
-------------------
Name: Xxxxx Xxxxxx
Title: Asst Vice President
ACCEPTED AND AGREED
as of December 22, 2004
QUAKER FABRIC CORPORATION OF FALL RIVER
By: /s/ Xxxx X. Xxxxx
-----------------
Name: Xxxx X. Xxxxx
Title: Vice President Finance & CFO
QUAKER FABRIC CORPORATION
By: /s/ Xxxx X. Xxxxx
-----------------
Name: Xxxx X. Xxxxx
Title: Vice President Finance & CFO
