EXHIBIT 10.28
AMENDMENT XX. 0
XXXXXXXXX XX. 0 dated as of October 25, 2005 (this
"Amendment") 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 party hereto (collectively, the "Lenders", and individually, a
"Lender") and Bank of America, N.A., as Administrative Agent, Issuing Bank and
Cash Management Bank.
WHEREAS, the Parent, the Borrower, the Lenders party
thereto, the Administrative Agent, the Issuing Bank and the Cash Management Bank
are parties to that certain Revolving Credit and Term Loan Agreement, dated as
of May 18, 2005 (as amended and in effect from time to time, the "Credit
Agreement"); and
WHEREAS, the Parent and the Borrower have requested that the
Administrative Agent and the Lenders agree to amend certain of the terms and
provisions of the Credit Agreement, as specifically set forth in this Amendment.
NOW THEREFORE, in consideration of the premises and the
mutual agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section l. Definitions. Except as otherwise defined in this
Amendment, terms defined in the Credit Agreement are used herein as defined
therein.
Section 2. Amendments. Subject to the satisfaction of the
conditions precedent specified in Section 3 herein, the Credit Agreement shall
be amended as follows:
(a) The Section 1.1 of the Credit Agreement is hereby
amended by deleting clause (a) contained in the definition of "Applicable
Margin", relettering clause (b) contained therein as clause (a), relettering
clause (c) contained therein as clause (b) and relettering clause (d) contained
therein as clause (c).
(b) Section 1.1 of the Credit Agreement is hereby amended by
deleting the definition of "Availability Reserve" contained therein and
substituting in lieu thereof the following new definition:
"Availability Reserve. (a) $8,500,000 during the
period commencing on the Closing Date and ending on
October 31, 2005 and (b) $7,500,000 at all other times."
(c) Section 1.1 of the Credit Agreement is hereby amended by
adding the following new definition and inserting the same in the appropriate
alphabetical location:
"Two Quarter Fixed Charge Coverage Ratio. As at any
date of determination, the ratio of (a) (i) Consolidated
EBITDA for the two 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 ss.3.2.1(b))."
(d) The Credit Agreement is hereby further amended by
deleting Section 9.1 thereof and substituting in lieu thereof the following:
"9.1. Minimum Consolidated EBITDA. The Parent and the
Borrower shall not permit Consolidated EBITDA, determined as
at the end of FQ4 of 2005 for the period of four (4)
consecutive Fiscal Quarters then ending, to be less than
$3,875,000."
(e) The Credit Agreement is hereby further amended by
deleting Section 9.2 thereof and substituting in lieu thereof the following:
"9.2. Fixed Charge Coverage Ratios.
(a) Fixed Charge Coverage Ratio. The Parent and the Borrower
shall not permit the Fixed Charge Coverage Ratio, determined
as of the end of each Fiscal Quarter set forth in the table
below, to be less than the ratio set forth opposite such
Fiscal Quarter in such table:
--------------------------------------------- -------------------------------------------
Fiscal Quarter Minimum Fixed Charge Coverage Ratio
--------------------------------------------- -------------------------------------------
FQ1 of 2006 0.75:1.00
--------------------------------------------- -------------------------------------------
FQ2 of 2006 1.10:1.00
--------------------------------------------- -------------------------------------------
FQ3 of 2006 1.10:1.00
--------------------------------------------- -------------------------------------------
FQ4 of 2006 1.10:1.00
--------------------------------------------- -------------------------------------------
FQ1 of 2007 and each Fiscal Quarter ending 1.15:1.00
thereafter
--------------------------------------------- -------------------------------------------
(b) Two Quarter Fixed Charge Coverage Ratio. The Parent and
the Borrower shall not permit the Two Quarter Fixed Charge
Coverage Ratio, determined as of the end of each Fiscal
Quarter set forth in the table below (or at the end of each
Fiscal Quarter ending during the period set forth in the table
below, as the case may be), to be less than the ratio set
forth opposite such Fiscal Quarter in such table:
-2-
--------------------------------------------- -------------------------------------------
Fiscal Quarter Minimum Two Quarter Fixed Charge Coverage
Ratio
--------------------------------------------- -------------------------------------------
FQ1 of 2006 0.90:1.00
--------------------------------------------- -------------------------------------------
FQ2 of 2006 through FQ1 of 2007 1.00:1.00
--------------------------------------------- -------------------------------------------
Section 3. Conditions Precedent. The Administrative Agent, the
Lenders, and each of the Parent and the Borrower agree that this Amendment shall
become effective as of October 21, 2005, upon the satisfaction of the following
conditions precedent, each in form and substance reasonably satisfactory to the
Agent:
(a) The Borrower, each Guarantor and each of the Lenders shall
have executed and delivered to the Administrative Agent this Amendment;
(b) The Administrative Agent shall have received payment from
the Borrower for the account of each Lender executing this Amendment an
amendment fee in the amount of 0.25% of the sum of (i) the Commitment of such
Lender and (ii) the outstanding principal amount of the Term Loan owning to such
Lender;
(c) The representations and warranties of each of the Borrower
and each Guarantor in each of the Loan Documents to which it is a party shall be
true and correct on and as of the date hereof, except to the extent of changes
resulting from transactions contemplated or permitted by the Credit Agreement
and the other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and to the
extent that such representations and warranties relate expressly to an earlier
date;
(d) As of the date hereof, there shall have occurred no
Default or Event of Default; and
(e) The Administrative Agent and the Lenders shall have
received payment for all fees and expenses including, without limitation,
reasonable legal fees and expenses, for which invoices or reasonable estimates
therefor have been provided to the Borrower on or prior to the date hereof.
Section 4. Representations and Warranties. Each of the Parent
and the Borrower hereby represents and warrants to the Lenders as follows:
(a) The execution and delivery by the Borrower and each
Guarantor and the performance by each of the Borrower and each Guarantor of each
of its obligations and agreements under this Amendment and the Credit Agreement
and the other Loan Documents, as amended hereby, are within the organizational
authority of each such Person, have been duly authorized by all necessary
proceedings on behalf of each such Person, and do not and will not contravene
any provision of law, statute, rule or regulation to which any such Person is
subject or any of such Person's organizational documents or of any agreement or
other instrument binding upon any such Person;
-3-
(b) This Amendment and the Credit Agreement and the other Loan
Documents, as amended hereby, constitute legal, valid and binding obligations of
each of the Borrower and each Guarantor, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors' rights in general, and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
(c) No approval or consent of, or filing with, any
governmental agency or authority is required to make valid and legally binding
the execution, delivery or performance by the Borrower and/or each Guarantor of
this Amendment or the Credit Agreement and the other Loan Documents as amended
hereby, except for such filings which have been made prior to the date hereof
and are in full force and effect;
(d) The representations and warranties contained in Section 6
of the Credit Agreement are true and correct at and as of the date made and as
of the date hereof, except to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date; and
(e) Each of the Borrower and each Guarantor has performed and
complied in all material respects with all terms and conditions herein required
to be performed or complied with by it prior to or at the time hereof, and as of
the date hereof, after giving effect to the provisions hereof, there exists no
Event of Default or Default.
Section 5. Affirmation and Acknowledgment.
(a) The Borrower hereby ratifies and confirms all of its
Obligations to the Administrative Agent and the Lenders and the Borrower hereby
affirms its absolute and unconditional promise to pay to the Lenders the Loans
and all other amounts due under the Credit Agreement, as amended hereby. The
Borrower hereby confirms that the Obligations are and remain secured pursuant to
the Security Documents, and pursuant to all other instruments and documents
executed and delivered by the Borrower as security for the Obligations.
(b) Each Guarantor hereby acknowledges the provisions of this
Amendment and hereby confirms and ratifies all of its obligations under the
Guaranty and each Loan Document (as amended hereby) to which such Guarantor is a
party. Each Guarantor hereby confirms (i) that the Guaranties and each of the
other Loan Documents remain in full force and effect and (ii) that its
obligations under the Guaranty to which it is a party are and remain secured
pursuant to the Security Documents to which it is a party.
Section 6. No Waiver. Except as otherwise expressly provided
for in this Amendment, all of the terms and conditions of the Credit Agreement
and the other Loan Documents shall remain in full force and effect without
modification or waiver.
-4-
Section 7. Expenses. The Borrower agrees to pay to the
Administrative Agent and the Lenders upon written demand therefor an amount
equal to any and all reasonable out-of-pocket costs, expenses, and liabilities
incurred or sustained by the Administrative Agent in connection with the
preparation of this Amendment. Amounts payable pursuant to this Section 7 shall
be subject to the provisions of Section 15 of the Credit Agreement, as fully as
if set forth therein.
Section 8. Miscellaneous.
(a) This Amendment shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Massachusetts.
(b) This Amendment shall constitute a Loan Document under
the Credit Agreement, and all obligations included in
this Amendment (including, without limitation, all obligations for the payment
of principal, interest, fees, and other amounts and expenses) shall constitute
obligations under the Loan Documents and be secured by the collateral security
for the Obligations.
(c) This Amendment may be executed in any number of
counterparts, and all such counterparts shall together constitute but one
instrument. In making proof of this Amendment 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.
[Remainder of page intentionally left blank]
-5-
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first above
written.
QUAKER FABRIC CORPORATION OF
FALL RIVER
QUAKER FABRIC CORPORATION
QUAKER TEXTILE CORPORATION
QUAKER FABRIC MEXICO, S.A. de C.V.
By: /s/ Xxxx X. Xxxxx
-------------------
Name: Xxxx X. Xxxxx
Title: Vice President Finance
-6-
BANK OF AMERICA, N.A. individually and
as Administrative Agent, Issuing Bank and
Cash Management Bank
By: /s/ Xxxxxxx X. X'Xxxxx
------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Senior Vice President
XXXXX FARGO FOOTHILL, LLC
By: /s/ Xxxxx Xxxxxxx
----------------------
Name: Xxxxx Xxxxxxx
Title: Assistant Vice President
XXXXXXX XXXXX CAPITAL, A DIVISION
OF XXXXXXX XXXXX BUSINESS
FINANCIAL SERVICES INC.
By: /s/ X. Xxxxxxxx
------------------
Name: X. Xxxxxxxx
Title: Director
