FLEET NATIONAL BANK
as of February 28, 2005
Quaker Fabric Corporation of Fall River
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
Re: Waiver and Amendment to Second Amended and Restated
Credit Agreement
Ladies and Gentlemen:
Reference is hereby made to the Second Amended and Restated Credit
Agreement dated as of February 14, 2002 (as amended and in effect from time to
time, the "Credit Agreement"), by and among (a) Quaker Fabric Corporation of
Fall River, a Massachusetts corporation (the "Company"), Quaker Textile
Corporation, a Massachusetts corporation ("Quaker Textile") and Quaker Fabric
Mexico, S.A. de C.V., a Mexican corporation ("Quaker Mexico", and collectively
with the Company and Quaker Textile, the "Borrowers"), (b) Quaker Fabric
Corporation, a Delaware corporation (the "Parent"), and (c) Fleet National Bank
(formerly known as The First National Bank of Boston, "Fleet"). All capitalized
terms used herein without definition that are defined in the Credit Agreement,
as amended and in effect on the date hereof, 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 Borrowers and the Parent have informed Fleet that, for the fiscal
quarter ending on January 1, 2005, (i) the Debt Service Coverage Ratio for the
prior four (4) consecutive fiscal quarters ending on January 1, 2005 was less
than 1.50 to 1.00 and (ii) EBIT for the prior two (2) consecutive fiscal
quarters ending on January 1, 2005 was less than $1.00. Each of the Borrowers
and the Parent acknowledges and agrees that such performance results constitute
Events of Default (the "Specified Defaults") under ss.ss.5.23(b) and (e),
respectively, of the Credit Agreement.
The Borrowers and the Parent have now requested, and by its signature
below Fleet agrees to grant, a limited waiver in respect of the Specified
Defaults subject to the terms and conditions provided herein. In consideration
of Fleet's agreement to waive the Specified Defaults through the period ending
March 6, 2005 (the "Limited Waiver Period"), the Borrowers and the Parent agree
that:
1. an Event of Default will exist on March 7, 2005 and that at
such time Fleet will have all of it's rights and remedies as a result
of the existence of an Event of Default under the Credit Agreement and
any other document, instrument or agreement executed in connection
therewith or otherwise evidencing any extensions of credit made by
Fleet to the Borrowers;
2. from and after the date hereof through the Maturity Date,
the "Commitment" under and as defined in the Credit Agreement shall be
reduced from $40,000,000 to $20,000,000, as such amount may be further
reduced pursuant to the provisions of the Credit Agreement;
3. Fleet has no obligation to make Advances to the Borrowers
or issue, extend or renew Letters of Credit; provided, however, without
creating any obligation to do so (and the agreement to do so on any one
occasion shall not constitute an agreement to do so on a future
occasion), Fleet may in its sole discretion make Advances to the
Borrowers and may continue to issue, extend or renew any Letters of
Credit for the Borrowers' accounts;
4. except as expressly set forth herein, this letter shall not
alter, release, discharge or otherwise affect any of their obligations
under the Credit Agreement or otherwise under any other document,
instrument or agreement executed in connection therewith under which
such Person acts as a secondary obligor; and
5. each of the Borrowers and the Parent will comply and
continue to comply will all of the terms, covenants and provisions
contained in the Credit Agreement.
Fleet's agreements contained herein shall become effective the upon
satisfaction of the following conditions:
(a) Each of the Borrowers and the Parent shall have executed
and delivered to Fleet counterparts of this letter; and
(b) Fleet shall have received fully executed copies of waiver
documentation, in form and substance satisfactory to Fleet, between one
or more of the Borrowers and the holders of the Senior Notes pursuant
to which the holders of the Senior Notes have waived compliance with
the provisions of the Note Agreement, the Additional Note Agreement and
any other applicable document relating to the Senior Notes with respect
to the fixed charge coverage 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,
FLEET NATIONAL BANK,
(f/k/a The First National Bank of Boston)
By:
-------------------------------------
Name:
Title:
ACCEPTED AND AGREED
as of February __, 2005
QUAKER FABRIC CORPORATION OF FALL RIVER
By:
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Name:
Title:
QUAKER TEXTILE CORPORATION
By:
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Name:
Title:
QUAKER FABRIC MEXICO, S.A. de C.V.
By:
---------------------------------------------
Name:
Title:
QUAKER FABRIC CORPORATION
By:
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Name:
Title:
