QUAKER FABRIC CORPORATION
OF FALL RIVER
000 XXXXXXXX XXXXXX
XXXX XXXXX, XXXXXXXXXXXXX 00000
As of October 10, 1997
The Prudential Insurance Company of America
("Prudential")
Pruco Life Insurance Company ("Pruco")
Each Prudential Affiliate (as hereinafter defined)
which becomes bound by the provisions of this
Agreement as hereinafter provided (together with
Prudential and Pruco, the "Purchasers")
c/o Prudential Capital Group
Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Ladies and Gentlemen:
The undersigned, Quaker Fabric Corporation of Fall River (herein called
the "COMPANY"), hereby agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will authorize the
issue of its senior promissory notes, to be dated the date of issue thereof, in
the aggregate principal amount of (a) $15,000,000, to mature October 10, 2005,
to bear interest on the unpaid balance thereof until the principal thereof shall
have become due and payable at the rate of 7.09% per annum (the "7.09% Notes")
and on overdue payments at the rate specified therein, and to be substantially
in the form of Exhibit A-1 attached hereto, and (b) $30,000,000, to mature
October 10, 2007, to bear interest on the unpaid balance thereof from the date
thereof until the principal thereof shall have become due and payable at the
rate of 7.18% per annum (the "7.18% Notes") and on overdue payments at the rate
specified therein, and to be substantially in the form of Exhibit A-2 attached
hereto. The term "Notes" as used herein shall include each such senior
promissory note delivered pursuant to any provision of this Agreement and each
such senior promissory note delivered in substitution or exchange for any other
Note pursuant to any such provision.
2. PURCHASE AND SALE OF NOTES. The Company hereby agrees to sell to
Prudential and Pruco and, subject to the terms and conditions herein set forth,
Prudential and Pruco agree to purchase from the Company Notes in the aggregate
principal amount of
$45,000,000 at 100% of such aggregate principal amount. The Company will deliver
to each of Prudential and Pruco, at the offices of Prudential Capital Group at
Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000, one or more Notes
registered in its name, evidencing the aggregate principal amount of Notes to be
purchased by Prudential and Pruco and in the denomination or denominations
specified in the Purchaser Schedule attached hereto, against payment of the
purchase price thereof by transfer of immediately available funds for credit to
the Company's account #511-91331 at BankBoston, N.A., Boston, Massachusetts, ABA
routing number 000000000 on the date of closing, which shall be October 10, 1997
or any other date on or before October 10, 1997 upon which the Company and you
may mutually agree (herein called the "CLOSING" or the "DATE OF CLOSING").
3. CONDITIONS OF CLOSING. Your obligation to purchase and pay for the
Notes to be purchased by you hereunder is subject to the satisfaction, on or
before the date of closing, of the following conditions:
3A. EXECUTION AND DELIVERY OF DOCUMENTS. The Company shall have
delivered, or cause to be delivered, to you duly executed, original or certified
copies of the following documents, each to be dated the date of closing unless
otherwise indicated:
(i) the Note(s) in substantially the form of Exhibits A-1 and A-2
attached hereto.
(ii) a favorable opinion of Xxxxxxx X. Xxxxxx, General Counsel of the
Company and the Guarantor (or such other counsel designated by the
Company and the Guarantor and acceptable to you) satisfactory to you
and substantially in the form of Exhibit B attached hereto and as to
such other matters as you may reasonably request. Each of the Company
and the Guarantor hereby directs each such counsel to deliver such
opinion, agrees that the issuance and sale of any Notes will constitute
a reconfirmation of such direction, and understands and agrees that you
will and are hereby authorized to rely on such opinion.
(iii) the Certificate of Incorporation of the Company and the
Guarantor, each certified as of a recent date by the Secretaries of
State of the State of Delaware and the Commonwealth of Massachusetts,
respectively, and the Bylaws of the Company and the Guarantor certified
by their respective Secretaries.
(iv) an incumbency certificate signed by the Secretary or an Assistant
Secretary and one other officer (who is not signing any other document
or agreement in connection herewith) of each of the Company and the
Guarantor certifying as to the names, titles and true signatures of the
officers of the Company and the Guarantor authorized to sign this
Agreement and the Notes and the other documents to be delivered
hereunder.
(v) certificate of the Secretary of the Company and the Guarantor (A)
attaching resolutions of the Board of Directors of the Company and the
Guarantor evidencing approval of the transactions contemplated by this
Agreement and the Guaranty and the
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issuance of the Notes and the Guaranty and the execution, delivery and
performance thereof, and authorizing certain officers to execute and
deliver the same, and certifying that such resolutions were duly and
validly adopted at a meeting duly held and such resolutions have not
since been amended, revoked or rescinded, (B) certifying that no
dissolution or liquidation proceedings as to the Company or the
Guarantor have been commenced or are contemplated, and (C) identifying
and attaching any proposed or effected amendments to or changes in the
Certificate of Incorporation of the Company and the Guarantor since the
date of the certified copies thereof provided pursuant to clause (iii)
above or, if none, so certifying.
(vi) an Officer's Certificate of the Company and the Guarantor
certifying that (A) the representations and warranties contained in
paragraph 8 shall be true on and as of the date of closing, except to
the extent of changes caused by the transactions herein contemplated;
(B) there shall exist on the date of closing no Event of Default or
Default; and (C) no condition, event or act that has or would
materially and adversely affect its business, property or assets,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole has occurred since July 5, 1997 nor is
threatened or reasonably likely to occur.
(vii) good standing certificates as to (A) the Company, from the
Commonwealth of Massachusetts and (B) the Guarantor, from the State of
Delaware.
(viii) certified copies of Requests for Information or Copies (Form
UCC-11) or equivalent reports listing all effective financing
statements which name the Company, the Guarantor or any Subsidiary
(under its present name and previous names) as debtor and which are
filed in the offices of the Secretaries of State of the Commonwealth of
Massachusetts and the State of Delaware together with copies of such
financing statements.
(ix) Additional documents or certificates with respect to such legal
matters or corporate or other proceedings related to the transactions
contemplated hereby as may be reasonably requested by you.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. You shall have received
from Xxxxxx X.X. Xxxxxxxx, Assistant General Counsel of Prudential or such other
counsel who is acting as special counsel for it in connection with this
transaction, a favorable opinion satisfactory to you as to such matters incident
to the matters herein contemplated as it may reasonably request.
3C. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and payment
for the Notes to be purchased by you on the date of closing on the terms and
conditions herein provided (including the use of the proceeds of such Notes by
the Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation G,
T or X of the Board of Governors of the Federal Reserve System) and shall not
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subject you to any tax, penalty, liability or other onerous condition
under or pursuant to any applicable law or governmental regulation, and you
shall have received such certificates or other evidence as you may request to
establish compliance with this condition.
3D. PAYMENT OF STRUCTURING FEE. The Company shall have paid you a
structuring fee of $22,500.
3E. GUARANTY. The Guaranty shall have been duly authorized, executed
and delivered by the Guarantor, each Purchaser shall have received a fully
executed counterpart thereof, and on the closing day, the Guaranty shall be in
full force and effect.
3F. PLEDGE AGREEMENT. The Pledge Agreement shall have been duly
authorized, executed and delivered by the parties thereto, each Purchaser shall
have received a fully executed counterpart thereof, and on the closing day, the
Pledge Agreement shall be in full force and effect.
4. PREPAYMENTS. The Notes shall be subject to prepayment with respect
to the required prepayments specified in paragraph 4A and the optional
prepayments permitted by paragraph 4B.
4A. REQUIRED PREPAYMENTS. Until the Notes shall be paid in full, the
Company shall apply to the prepayment of the Notes, without Yield-Maintenance
Amount, (i) with respect to the 7.18% Notes, the sum of $15,000,000 on October
10, 2006 and (ii) with respect to the 7.09% Notes, the sum of $5,000,000 on
October 10 in each of the years 2003 and 2004, and such principal amounts of the
Notes, together with interest thereon to the prepayment dates, shall become due
on such prepayment dates. The remaining principal amount of the Notes, together
with interest accrued thereon, shall become due on the maturity date of the
Notes.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes shall
be subject to prepayment, in whole at any time or from time to time in part (in
integral multiples of $100,000 and in a minimum amount of $1,000,000), at the
option of the Company, at 100% of the principal amount so prepaid plus interest
thereon to the prepayment date and the Yield-Maintenance Amount, if any, with
respect to each Note. Any partial prepayment of the Notes pursuant to this
paragraph 4B shall be applied in satisfaction of required payments of principal
in inverse order of their scheduled due dates.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder of
each Note irrevocable written notice of any prepayment pursuant to paragraph 4B
not less than 10 Business Days prior to the prepayment date, specifying such
prepayment date and the principal amount of the Notes, and of the Notes held by
such holder, to be prepaid on such date and stating that such prepayment is to
be made pursuant to paragraph 4B. Notice of prepayment having been given as
aforesaid, the principal amount of the Notes specified in such notice, together
with interest thereon to the prepayment date and together with the Yield-
Maintenance Amount, if any, with respect thereto, shall become due and payable
on such prepayment date. The Company
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shall, on or before the day on which it gives written notice of any prepayment
pursuant to paragraph 4B, give telephonic notice of the principal amount of the
Notes to be prepaid and the prepayment date to each Significant Holder which
shall have designated a recipient of such notices in the Purchaser Schedule
attached hereto or by notice in writing to the Company.
4D. APPLICATION OF REQUIRED PREPAYMENTS. In the case of each prepayment
of less than the entire unpaid principal amount of all outstanding Notes
pursuant to paragraphs 4A or 4B the amount to be prepaid shall be applied pro
rata to all outstanding Notes according to the respective unpaid principal
amounts thereof.
4E. NO ACQUISITION OF NOTES. The Company shall not, and shall not
permit any of its Subsidiaries of Affiliates to, prepay or otherwise retire in
whole or in part prior to their stated final maturity (other than by prepayment
pursuant to paragraphs 4A or 4B upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder.
5. AFFIRMATIVE COVENANTS.
5A. FINANCIAL STATEMENTS. The Company covenants that it will deliver to
Prudential (on behalf of Pruco and any Prudential Affiliate which may become a
party to this Agreement) and to each Significant Holder in triplicate:
(i) as soon as practicable and in any event within 60 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, consolidating and consolidated statements
of income and cash flows and a consolidated statement of shareholders'
equity of the Company and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of such quarterly
period, and a consolidating and consolidated balance sheet of the
Company and its Subsidiaries as at the end of such quarterly period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and certified by an authorized financial officer of the Company,
subject to changes resulting from year-end adjustments; provided,
however, that delivery pursuant to clause (iii) below of copies of the
Quarterly Report on Form 10-Q of the Guarantor for such quarterly
period filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this clause (i) with respect to
consolidated statements;
(ii) as soon as practicable and in any event within 95 days
after the end of each fiscal year, consolidating and consolidated
statements of income and cash flows and a consolidated statement of
shareholders' equity of the Company and its Subsidiaries for such year,
and a consolidating and consolidated balance sheet of the Company and
its Subsidiaries as at the end of such year, setting forth in each case
in comparative form corresponding consolidated figures from the
preceding annual audit, all in reasonable detail and satisfactory in
form to the Required Holder(s) and, as to the consolidated
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statements, reported on by independent public accountants of recognized
national standing selected by the Company whose report shall be without
limitation as to the scope of the audit and satisfactory in substance
to the Required Holder(s) and, as to the consolidating statements,
certified by an authorized financial officer of the Company; provided,
however, that delivery pursuant to clause (iii) below of copies of the
Annual Report on Form 10-K of the Guarantor for such fiscal year filed
with the Securities and Exchange Commission shall be deemed to satisfy
the requirements of this clause (ii) with respect to consolidated
statements;
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as the
Company or the Guarantor shall send to its public stockholders and
copies of all registration statements (without exhibits) and all
reports which it files with the Securities and Exchange Commission (or
any governmental body or agency succeeding to the functions of the
Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other
report submitted to the Company, the Guarantor or any Subsidiary by
independent accountants in connection with any annual, interim or
special audit made by them of the books of the Company, the Guarantor
or any Subsidiary; and
(v) with reasonable promptness, such other financial data as
such Significant Holder may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each Significant Holder an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Subsidiaries with the provisions of paragraphs 6A through
and including 6H and stating that there exists no Event of Default or Default,
or, if any Event of Default or Default exists, specifying the nature and period
of existence thereof and what action the Company proposes to take with respect
thereto. Together with each delivery of financial statements required by clause
(ii) above, the Company will deliver to each Significant Holder a certificate of
such accountants stating that, in making the audit necessary for their report on
such financial statements, they have obtained no knowledge of any Event of
Default or Default, or, if they have obtained knowledge of any Event of Default
or Default, specifying the nature and period of existence thereof. Such
accountants, however, shall not be liable to anyone by reason of their failure
to obtain knowledge of any Event of Default or Default which would not be
disclosed in the course of an audit conducted in accordance with generally
accepted auditing standards. The Company also covenants that immediately and in
no event, later than 5 Business Days after any Responsible Officer obtains
knowledge of an Event of Default or Default, it will deliver to each Significant
Holder an Officer's Certificate specifying the nature and period of existence
thereof and what action the Company has taken, is taking or proposes to take
with respect thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company and the Guarantor
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covenant that they will, upon the request of the holder of any Note, provide
such holder, and any qualified institutional buyer designated by such holder,
such financial and other information as such holder may reasonably determine to
be necessary in order to permit compliance with the information requirements of
Rule 144A under the Securities Act in connection with the resale of Notes,
except at such times as the Company or the Guarantor are subject to and in
compliance with the reporting requirements of section 13 or 15(d) of the
Exchange Act. For the purpose of this paragraph 5B, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that (i) as long as
no Default or Event of Default has occurred, once each fiscal quarter it will
permit any Person designated by any Significant Holder in writing, at such
Significant Holder's expense, to visit and inspect any of the properties of the
Company and its Subsidiaries, to examine the corporate books and financial
records of the Company and its Subsidiaries and make copies thereof or extracts
therefrom and to discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company and its independent
public accountants, and (ii) if a Default or Event of Default has occurred or is
continuing, it will permit any Person designated by any Significant Holder in
writing, at the Company's expense, to visit and inspect any of the properties of
the Company and its Subsidiaries, to examine the corporate books and financial
records of the Company and its Subsidiaries and make copies thereof or extracts
therefrom and to discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company and its independent
public accountants, all at such reasonable times and as often as such
Significant Holder may reasonably request.
5D. COVENANT TO SECURE NOTE EQUALLY. The Company covenants that, if it
or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6G (unless prior written consent to the creation or
assumption thereof shall have been obtained pursuant to paragraph 11C), it will
make or cause to be made effective provision whereby the Notes will be secured
by such Lien equally and ratably with any and all other Debt thereby secured so
long as any such other Debt shall be so secured; provided that the creation and
maintenance of such equal and ratable Lien shall not in any way limit or modify
the right of the holders of the Notes to enforce the provisions of paragraph 6G.
5E. MAINTENANCE OF BUSINESS. The Company covenants that it will not and
will not permit any Subsidiary to engage in any business if, as a result, the
general nature of the business, taken on a consolidated basis, which would then
be engaged in by the Company and its Subsidiaries would be substantially changed
from the general nature of the business engaged in by the Company and its
Subsidiaries on the date of this Agreement.
6. NEGATIVE COVENANTS. So long as any Note or amount owing under this
Agreement shall remain unpaid, the Company covenants that:
7
6A. INCURRENCE OF DEBT. The Company will not, and will not permit any
Subsidiary to, incur, assume, or in any manner become liable with respect to any
Debt except
(i) Debt represented by the Notes;
(ii) Current Debt outstanding on the date of this Agreement;
(iii) Funded Debt outstanding on the date of this Agreement
listed on Schedule 6A;
(iv) Funded Debt of any Subsidiary owing to the Company or a
Wholly- Owned Subsidiary, or Funded Debt of the Company owing to any
Wholly-Owned Subsidiary; and
(v) other Debt of the Company or any Subsidiary provided that,
after giving effect to the amount of Debt proposed to be created,
incurred or assumed and to the application of proceeds thereof required
under the terms on which it is created, incurred or assumed, Debt of
the Company and its Subsidiaries, on a consolidated basis, does not
exceed 400% of Consolidated EBITDA for the preceding four fiscal
quarters taken as one accounting period, provided further that, any
incurrence of Debt under the Revolving Credit Facility which does not
result in the aggregate balance outstanding under the Revolving Credit
Facility to exceed $5,000,000 shall not be subject to the provisions of
this clause (v).
6B. PRIORITY DEBT. The Company will not permit Priority Debt at any
time to exceed 20% of Consolidated Capital.
6C. MAINTENANCE OF TANGIBLE NET WORTH. The Company will not permit
Consolidated Tangible Net Worth at any time to be less than the sum of (a)
$45,000,000, (b) 50% of the sum of Consolidated Net Income Available for Net
Worth for the period from December 31, 1995 to and including the last day of the
fiscal year most recently ended prior to the measurement date and (c) the
aggregate amount of any net proceeds of private or public placement(s) of equity
securities by the Company.
6D. MAINTENANCE OF FIXED CHARGE COVERAGE. The Company will not permit
the Fixed Charge Ratio at any time to be less than 1.50 to 1.00.
6E. CONSOLIDATIONS AND MERGERS. The Company will not and will not
permit any Subsidiary to merge or consolidate with or into any Person, except as
follows:
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(i) any Subsidiary may merge into the Company, provided that
the Company shall be the surviving corporation;
(ii) any Subsidiary may merge with or into any other
Wholly-Owned Subsidiary; and
(iii) the Company may merge with any corporation provided that
the surviving or continuing corporation (a) is a corporation organized
under the laws of any state of the United States, (b) expressly assumes
the punctual payments under the Notes and the observance of all the
covenants contained in this Agreement in form and substance
satisfactory to the Required Holder(s), (c) at the time of such
consolidation or merger and after giving effect thereto no Default or
Event of Default shall have occurred and be continuing, and (d) after
giving effect to such consolidation or merger the surviving or
continuing corporation would be permitted to incur at least $1.00 of
additional Debt under the provisions of paragraph 6A(v).
6F. SALE OF ASSETS. The Company will not and will not permit any
Subsidiary to sell, lease, transfer or otherwise dispose (any such sale, lease,
transfer or disposition, a "Disposition") of any assets (including, without
limitation, except as permitted by paragraph 6I, shares of capital stock or Debt
of a Subsidiary), except
(i) sales of inventory in the ordinary course of business;
(ii) Dispositions of assets between Wholly-Owned Subsidiaries
and Dispositions between any Wholly-Owned Subsidiary and the Company;
(iii) Dispositions of assets that are obsolete, worn out or
are no longer useful in the Company's or any Subsidiary's business; and
(iv) the Company and its Subsidiaries may Dispose of their
respective assets for consideration provided that, after giving effect
thereto
(a) no Default or Event of Default exists, and
(b) the aggregate book value of, or if higher, the
fair market value (in each case determined at the time of the
Disposition) of all assets which have been Disposed of
pursuant to this clause (b) during any fiscal year shall not
have constituted more than 20% of Consolidated Assets as at
the end of the immediately preceding full fiscal year of the
Company, and
(c) the portions of Consolidated Net Income which
were contributed during the preceding fiscal year of the
Company most recently ended prior to the date of such
Disposition by all assets which have been Disposed of pursuant
to this
9
clause (c) during any fiscal year shall not have constituted
more than 20% of Consolidated Net Income during any such
preceding fiscal year,
provided further that the Company or any Subsidiary may Dispose of
assets in excess of 20% of Consolidated Assets (as calculated in clause
(b)) or which have contributed in excess of 20% of Consolidated Net
Income (as calculated in clause (c)) if the Company shall, prior to or
contemporaneously with such Disposition, deliver an Officer's
Certificate to each holder of Notes certifying that the Company will
apply the proceeds of the assets which are in excess of 20% of
Consolidated Assets (as calculated in clause (b)) or which have
contributed in excess of 20% of Consolidated Net Income (as calculated
in clause (c)), within 180 days after such Disposition to purchase
assets of at least equivalent value to be used in the business of the
Company or any Subsidiary.
6G. LIENS. The Company will not, and will not permit any Subsidiary to,
directly or indirectly create, incur, assume or permit to exist any Lien on or
with respect to any property or asset (including any documents or instrument in
respect of goods or accounts receivable) of the Company or any Subsidiary,
whether now owned or held or hereafter acquired, or any income or profits
therefrom (whether or not provision is made for the equal and ratable securing
of the Notes in accordance with paragraph 5D), except:
(i) Liens existing on property or assets of the Company or any
Subsidiary as of the date of this Agreement that are described in
Schedule 6G to this Agreement;
(ii) Liens for taxes, assessments or other governmental
charges (a) not then due or payable or (b) or which can be paid without
penalty, or (c) the validity of which is being contested in good faith
and by proper proceedings and with respect to which adequate reserves
are maintained in accordance with GAAP;
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary course
of business which secure payment of obligations not more than 60 days
past due or which are being contested in good faith and by proper
proceedings and with respect to which adequate reserves are maintained
in accordance with GAAP;
(iv) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure (or to obtain letters of credit or surety or
performance bonds which secure) the performance of bids, tenders,
statutory obligations, in each case not incurred in connection with the
borrowing of money, the obtaining of advances or credit or the payment
of the deferred purchase price of property;
10
(v) any attachment of judgment Lien, unless the judgment it
secures shall not, within 60 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not
have been discharged within 60 days after the expiration of any such
stay, or Liens securing surety, supersedeas or appeal bonds, or bonds
otherwise resulting from litigation or legal proceedings;
(vi) Liens consisting of encumbrances in the nature of zoning
restrictions, easements, rights and restrictions on the use of real
property, which in any case do not materially detract from the value of
such property or impair the Company's or any Subsidiary's use thereof;
(vii) any Lien created to secure all or any part of the
purchase price, or to secure Indebtedness incurred or assumed to pay
all of the purchase price, of property acquired by the Company after
the date of this Agreement, provided that (a) any such Lien shall be
confined solely to the item or items of property so acquired and, if
required by the terms of the instrument originally creating such Lien,
other property which is an improvement to or is acquired for specific
use in connection with such acquired property or which is real property
being improved by such acquired property, (b) the principal amount of
the Indebtedness secured by any such Lien shall at no time exceed an
amount equal to 100% of the lesser of (x) the cost to the Company of
the property so acquired and (y) the fair market value of such property
(as determined in good faith by the Board or chief executive officer of
the Company) at the time of such acquisition, and (c) any such Lien
shall be created, in the case of property, at the time of its
acquisition or within 180 days after its acquisition, or, in the case
of improvements, at the time of their completion or within 180 days
after their completion;
(viii) any Lien existing on property of a Person immediately
prior to its being consolidated with or merged into the Company or its
becoming a Subsidiary, or any Lien existing on any property acquired by
the Company or any Subsidiary at the time such property is so acquired
(whether or not the Indebtedness secured thereby shall have been
assumed), provided that no such Lien shall have been created or assumed
in contemplation of such consolidation or merger or such Person's
becoming a Subsidiary or such acquisition of property, and provided
further that each such Lien shall at all times be confined solely to
the item or items of property so acquired and, if required by the terms
of the instrument originally creating such Lien, other property which
is an improvement to or is acquired for specific use in connection with
such acquired property;
(ix) Liens securing Recourse Obligations, provided that the
aggregate amount of Recourse Obligations secured thereby does not
exceed $1,000,000;
(x) Liens on the stock of Subsidiaries permitted by paragraph
6L; and
(xi) other Liens not otherwise permitted by clauses (i)
through (x) of this
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paragraph 6G, provided that the Indebtedness secured by such Lien shall
be permitted by paragraph 6A and such Indebtedness, when aggregated
with Indebtedness securing Liens permitted by clauses (i), (vii) and
(viii) of this paragraph 6G and all other Priority Debt, does not
exceed 20% of Consolidated Capital, and provided further that such
Indebtedness (other than with respect to clause (vii) of this paragraph
6G) does not exceed the book value, or if less, the fair market value
of the property subject to such Lien at the time such Lien is incurred.
6H. RESTRICTED INVESTMENTS. The Company will not make or permit any
Subsidiary to make any Investment, except:
(i) loans or advances to any Subsidiary or the Company;
(ii) stock, obligations or securities of a Subsidiary or a
corporation which immediately after such purchase or acquisition will
be a Subsidiary;
(iii) notes receivable and securities received in connection
with the insolvency or inability to pay of any of the Company's account
debtors in the aggregate amount not to exceed at the time received the
greater of (a) $3,000,000 or (b) 10% of the outstanding face amount of
the Company's accounts receivable at such time;
(iv) Investments acquired solely in exchange for capital stock
(other than mandatorily redeemable preferred stock) of the Company;
(v) demand deposit accounts maintained in the ordinary course
of business;
(vi) the following investments, provided they are payable in
the United States in United States dollars:
(a) commercial paper of a United States issuer due
within 270 days of acquisition and rated A-1 or better by
Standard & Poor's Corporation or P-1 or better by Xxxxx'x
Investors Service, Inc., or, if any such rating agency shall
change its rating system, the equivalent rating to A-1 or P-1,
as the case may be;
(b) certificates of deposits or repurchase agreements
due within one year from the date of acquisition of commercial
banks organized under the laws of the United States, whose
deposits are at all times insured by the Federal Deposit
Insurance Corporation, having combined capital and surplus in
excess of $500,000,000 and a long-term deposit rating of A or
better from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc.; or
(c) marketable direct obligations of the United
States Government or obligations of any instrumentality or
agency thereof maturing one year or less after
12
acquisition, the payment of the principal and interest of
which is unconditionally guaranteed by the United States; or
(vii) other investments not listed above, provided, that in no
event shall the aggregate amount of investments made pursuant to this
clause (vii) exceed at any time 15% of Consolidated Capital.
6I. RESTRICTIONS ON SUBSIDIARIES. The Company will not permit any
Subsidiary to issue, sell or dispose of any shares of its stock of any class
except to the Company or a Wholly-Owned Subsidiary.
6J. DIVIDENDS AND PURCHASE OF STOCK. At any time when a Default has
occurred and is continuing, the Company will not declare any dividends (except
dividends payable solely in shares of its capital stock) on any shares of any
class of its capital stock, or make any distributions or apply any of its
property or assets to the purchase, redemption or other retirement of, or set
apart any sum for the payment of any dividends on, any class of capital stock of
the Company.
6K. TRANSACTIONS WITH AFFILIATES. The Company will not and will not
permit any Subsidiary to effect any transaction with any Affiliate or Subsidiary
by which any asset or services of the Company or a Subsidiary is transferred to
such Affiliate or Subsidiary, or from such Affiliate or Subsidiary, or enter
into any other transaction with an Affiliate or Subsidiary on terms less
favorable to the Company or any Subsidiary than those that could be obtained in
an arm's-length transaction.
6L. PLEDGE OF SUBSIDIARY STOCK. Notwithstanding any provision contained
in this Agreement to the contrary, the Company will not and will not permit any
Subsidiary to xxxxx x Xxxx on the stock of any Subsidiary, except that the
Company may pledge the stock of any Subsidiary, provided that, contemporaneous
with any such pledge, the Company shall cause all obligations owing to the
holders of Notes (including any Shelf Note) to be equally and ratably secured
and shall execute and deliver to each holder of Notes a duly executed Pledge
Agreement in the form attached hereto as Exhibit F.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of or
Yield- Maintenance Amount payable with respect to any Note when the
same shall become due, either by the terms thereof or otherwise as
herein provided; or
(ii) the Company defaults in the payment of any interest on
any Note for more
13
than 5 days after the date due; or
(iii) (A) the Company or any Subsidiary defaults (whether as
primary obligor or as guarantor or other surety) in any payment of
principal of or interest on any other obligation for money borrowed (or
any Capitalized Lease Obligation, any obligation under a conditional
sale or other title retention agreement, any obligation issued or
assumed as full or partial payment for property whether or not secured
by a purchase money mortgage or any obligation under notes payable or
drafts accepted representing extensions of credit) beyond any period of
grace provided with respect thereto, or (B) the Company or any
Subsidiary fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such obligation is
created (or if any other event thereunder or under any such agreement
shall occur and be continuing) and the effect of such failure or other
event is to cause, or to permit the holder or holders of such
obligation (or a trustee on behalf of such holder or holders) to cause,
such obligation to become due (or to be repurchased by the Company or
any Subsidiary) prior to any stated maturity (provided that if any such
default (other than a payment default) shall have occurred with respect
to any Debt incurred under the Revolving Credit Facility, it shall not
be a Default under this clause (B) until the earliest of (x) the
acceleration of any Debt under the Revolving Credit Facility, (y) 30
days after the occurrence of such default with respect to the Revolving
Credit Facility, or (z) any default under clause (A) hereof), and
provided that the aggregate amount of all obligations as to which such
a payment default shall occur and be continuing or such a failure or
other event causing or permitting acceleration (or resale to the
Company or any Subsidiary) shall occur and be continuing exceeds
$5,000,000; or
(iv) any representation or warranty made by or on behalf of
the Company or any of its officers herein or in any other writing
furnished in connection with or pursuant to this Agreement or the
transactions contemplated hereby shall be false in any material respect
on the date as of which made; or
(v) the Company fails to perform or observe any agreement
contained in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall
not be remedied within 30 days after any Responsible Officer obtaining
actual knowledge thereof; or
(vii) the Company, the Guarantor or any Significant Subsidiary
makes an assignment for the benefit of creditors or is generally not
paying its debts as such debts become due; or
14
(viii) any decree or order for relief in respect of the
Company, the Guarantor or any Significant Subsidiary is entered under
any bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law,
whether now or hereafter in effect (herein called the "Bankruptcy
Law"), of any jurisdiction; or
(ix) the Company, the Guarantor or any Significant Subsidiary
petitions or applies to any tribunal for, or consents to, the
appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of the Company or any
Significant Subsidiary, or of any substantial part of the assets of the
Company, the Guarantor or any Significant Subsidiary, or commences a
voluntary case under the Bankruptcy Law of the United States or any
proceedings (other than proceedings for the voluntary liquidation and
dissolution of a Subsidiary that is not a Significant Subsidiary)
relating to the Company, the Guarantor or any Significant Subsidiary
under the Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company, the Guarantor or any
Significant Subsidiary and the Company, the Guarantor or such
Significant Subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order, judgment or
decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Significant Subsidiary decreeing
a split-up of the Company or such Significant Subsidiary which requires
the divestiture of Significant Assets, or the divestiture of the stock
of a Significant Subsidiary, and such order, judgment or decree remains
unstayed and in effect for more than 60 days; or
(xiii) one or more final judgments in an aggregate amount in
excess of $1,000,000 is rendered against the Company or any Significant
Subsidiary and, within 90 days after entry thereof, any such judgment
is not discharged or execution thereof stayed pending appeal, or within
90 days after the expiration of any such stay, any such judgment is not
discharged; or
(xiv) the Guaranty or the Pledge Agreement, for any reason
other than satisfaction in full of the obligations of the Company
hereunder and under the Notes, ceases to be in full force and effect or
is declared null and void, or the validity or enforceability
15
thereof is contested in a judicial proceeding or the Guarantor or
Pledgor denies that it has any further liability under the Guaranty or
the Pledge Agreement, as the case may be.
(xv) the Company or any ERISA Affiliate, in its capacity as an
employer under a Multiemployer Plan, makes a complete or partial
withdrawal from such Multiemployer Plan resulting in the incurrence by
such withdrawing employer of a withdrawal liability in an amount
exceeding $1,000,000;
then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, the holder of any Note (other than the Company or any of its
Subsidiaries or Affiliates) may at its option during the continuance of such
Event of Default, by notice in writing to the Company, declare all of the Notes
held by such holder to be, and all of the Notes held by such holder shall
thereupon be and become, immediately due and payable at par, together with
interest accrued thereon, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Company, (b) if such event is
an Event of Default specified in clause (viii), (ix) or (x) of this paragraph 7A
with respect to the Company, all of the Notes at the time outstanding shall
automatically become immediately due and payable, together with interest accrued
thereon and the Yield-Maintenance Amount, if any, with respect to each Note,
without presentment, demand, protest or notice of any kind, all of which are
hereby waived by the Company, and (c) with respect to any other event
constituting an Event of Default, the Required Holder(s) may at its or their
option, by notice in writing to the Company, declare all of the Notes to be, and
all of the Notes shall thereupon be and become, immediately due and payable
together with interest accrued thereon and together with the Yield-Maintenance
Amount, if any, with respect to each Note, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Company.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes shall have been declared immediately due and payable pursuant to paragraph
7A, the Required Holder(s) may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if (i) the Company shall have paid
all overdue interest on the Notes, the principal of and Yield-Maintenance
Amount, if any, payable with respect to any Notes which have become due
otherwise than by reason of such declaration, and interest on such overdue
interest and overdue principal and Yield-Maintenance Amount at the rate
specified in the Notes, (ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes or this Agreement. No such
rescission or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded
16
and annulled pursuant to paragraph 7B, the Company shall forthwith give written
notice thereof to the holder of each Note at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur and
be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company, as of the
date hereof, represents, covenants and warrants as follows:
8A. ORGANIZATION. The Company is a corporation duly organized and
existing in good standing under the laws of the Commonwealth of Massachusetts,
each Subsidiary is duly organized and existing in good standing under the laws
of the jurisdiction in which it is incorporated, and the Company and each
Subsidiary has the corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.
8B. FINANCIAL STATEMENTS. The Company has furnished you with the
following financial statements, certified by a principal financial officer of
the Company: (i) consolidating and consolidated balance sheets of the Company
and its Subsidiaries as at the last day of each fiscal year in each of the three
fiscal years of the Company most recently completed prior to the date as of
which this representation is made or reaffirmed in writing to such Purchaser
(other than the fiscal year completed within 90 days prior to the date this
representation is reaffirmed for which audited financial statements have not
been released) and consolidating and consolidated statements of income and a
consolidated statement and cash flows of shareholders' equity of the Company and
its Subsidiaries for each such year, such consolidated statements reported on by
Xxxxxx Xxxxxxxx L.L.P. (or such other independent public accountants of
recognized national standing selected by the Company) and (ii) consolidating and
consolidated balance sheets of the Company and its Subsidiaries as at the end of
the quarterly period (if any) most recently completed prior to the date this
representation is made or reaffirmed (other than quarterly periods completed
within 60 days prior to such date for which financial statements have not been
released) and the comparable quarterly period in the preceding fiscal year and
consolidating and consolidated statements of income and a consolidated
statements and cash flows of shareholders' equity for the periods from the
beginning of the fiscal years in which such quarterly periods are included to
the end of such quarterly periods, prepared by the Company. Such financial
statements (including any related schedules and/or notes) are true and correct
in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end
17
adjustments), have been prepared in accordance with GAAP consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of the Company and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the statements of income,
stockholders' equity and cash flows fairly present the results of the operations
of the Company and its Subsidiaries and their cash flows for the periods
indicated. There has been no material adverse change in the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole since July 5, 1997.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any properties or rights of the Company
or any of its Subsidiaries, by or before any court, arbitrator or administrative
or governmental body which might result in any material adverse change in the
business, property or assets, condition (financial or otherwise) or operations
of the Company and its Subsidiaries taken as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any of its Subsidiaries
has outstanding any Debt except as permitted by paragraph 6A. There exists no
default under the provisions of any instrument evidencing such Debt or of any
agreement relating thereto which could have a material adverse effect on the
business, condition (financial or otherwise) or operations of the Company and
its Subsidiaries taken as a whole.
8E. TITLE TO PROPERTIES. The Company has and each of its Subsidiaries
has good and indefeasible title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, including the properties and assets reflected in the
balance sheet as at referred to in paragraph 8B (other than properties and
assets disposed of in the ordinary course of business), subject to no Lien of
any kind except Liens permitted by paragraph 6G. All leases necessary in any
material respect for the conduct of the respective businesses of the Company and
its Subsidiaries are valid and subsisting and are in full force and effect.
8F. TAXES. The Company has and each of its Subsidiaries has filed all
federal, state and other income tax returns which, to the knowledge of the
officers of the Company, are required to be filed, and each has paid all taxes
as shown on such returns and on all assessments received by it to the extent
that such taxes have become due, except such taxes as are being contested in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting principles.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement or subject to
any charter or other corporate restriction which materially and adversely
affects its business, property or assets, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole. Neither the
execution nor delivery of this Agreement or the Notes, nor the offering,
18
issuance and sale of the Notes, nor fulfillment of nor compliance with the terms
and provisions hereof and of the Notes will conflict with, or result in a breach
of the terms, conditions or provisions of, or constitute a default under, or
result in any violation of, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its Subsidiaries pursuant to,
the charter or by-laws of the Company or any of its Subsidiaries, any award of
any arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
the Company or any of its Subsidiaries is subject. Neither the Company nor any
of its Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing Indebtedness of the Company or such
Subsidiary, any agreement relating thereto or any other contract or agreement
(including its charter) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Debt of the Company of the type to be
evidenced by the Notes except as set forth in the agreements listed in Schedule
8G attached hereto.
8H. OFFERING OF NOTES. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security of
the Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than institutional investors, and neither the
Company nor any agent acting on its behalf has taken or will take any action
which would subject the issuance or sale of the Notes to the provisions of
section 5 of the Securities Act or to the provisions of any securities or Blue
Sky law of any applicable jurisdiction.
8I. USE OF PROCEEDS. The proceeds of sale of the Notes will be used (i)
to repay (a) all outstanding notes issued pursuant to the Note Purchase and
Private Shelf Agreement, dated December 18, 1995, by and between the Company and
Prudential, and (b) the outstanding balance of the Revolving Credit Facility
debt, and (ii) for general corporate purposes. None of such proceeds will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock or for the purpose of
maintaining, reducing or retiring any Indebtedness which was originally incurred
to purchase or carry any stock that is currently a margin stock or for any other
purpose which might constitute this transaction a "purpose credit" within the
meaning of such Regulation G. Neither the Company nor any Subsidiary owns or has
any present intention of acquiring any "margin stock" as defined in Regulation G
(12 CFR Part 207) of the Board of Governors of the Federal Reserve System
(herein called "margin stock"). Neither the Company nor any agent acting on its
behalf has taken or will take any action which might cause this Agreement or the
Notes to violate Regulation G, Regulation T or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the Exchange Act, in
each case as in effect now or as the same may hereafter be in effect.
8J. ERISA. (i) No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived, exists
with respect to any Plan (other than a Multiemployer Plan).
19
(ii) No liability to the PBGC has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan (other than a
Multiemployer Plan) by the Company, any Subsidiary or any ERISA Affiliate which
is or would be materially adverse to the business, condition (financial or
otherwise) or operations of the Company and its Subsidiaries taken as a whole.
(iii) Neither the Company, any Subsidiary nor any ERISA Affiliate has
incurred or presently expects to incur any withdrawal liability under Title IV
of ERISA with respect to any Multiemployer Plan which is or would be materially
adverse to the business, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole.
(iv) The execution and delivery of this Agreement and the issuance and
sale of the Notes will be exempt from, or will not involve any transaction which
is subject to, the prohibitions of section 406 of ERISA and will not involve any
transaction in connection with which a penalty could be imposed under section
502(i) of ERISA or a tax could be imposed pursuant to section 4975 of the Code.
The representation by the Company in the next preceding sentence is made in
reliance upon and subject to the accuracy of your representation in paragraph
9B.
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Notes is such as to require any authorization, consent, approval, exemption or
other action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the date of closing with the
Securities and Exchange Commission and/or state Blue Sky authorities) in
connection with the execution and delivery of this Agreement, the offering,
issuance, sale or delivery of the Notes or fulfillment of or compliance with the
terms and provisions hereof or of the Notes.
8L. COMPLIANCE WITH LAWS. The Company and its Subsidiaries and all of
their respective properties and facilities have complied at all times and in all
respects with all federal, state, local and regional statutes, laws, ordinances
and judicial or administrative orders, judgments, rulings and regulations,
including those relating to protection of the environment except, in any such
case, where failure to comply would not result in a material adverse effect on
the business, condition (financial or otherwise) or operations of the Company
and its Subsidiaries taken as a whole.
8M. ENVIRONMENTAL COMPLIANCE. The Company and each Subsidiary and all
of their respective properties and facilities have complied at all times and in
all material respects with all applicable material Environmental and Safety Laws
except, in any such case, where failure to comply would not result in a material
adverse effect on the business, condition (financial or otherwise) or operations
of the Company and its Subsidiaries taken as a whole.
8N. DISCLOSURE. Neither this Agreement nor any other document,
certificate or
20
statement furnished to you by or on behalf of the Company in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading. There is no fact peculiar to the Company or any of its Subsidiaries
which materially adversely affects or in the future may (so far as the Company
can now foresee) materially adversely affect the business, property or assets,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole and which has not been set forth in this Agreement
or in the other documents, certificates and statements furnished to you by or on
behalf of the Company prior to the date hereof in connection with the
transactions contemplated hereby.
8O. HOSTILE TENDER OFFERS. None of the proceeds of the sale of any
Notes will be used to finance a Hostile Tender Offer.
9. REPRESENTATIONS OF THE PURCHASER. Each Purchaser represents
as follows:
9A. NATURE OF PURCHASE. You are not acquiring the Notes to be purchased
by you hereunder with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act, provided that the disposition
of your property shall at all times be and remain within your control.
9B. REGISTRATION OF NOTES. Such Purchaser understands that the Notes
have not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
from registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
9C. SOURCE OF FUNDS. The source of the funds being used by you to pay
the purchase price of the Notes constitutes assets: (i) allocated to the
"insurance company general account" of such Purchaser (as such term in defined
under Section V of the United States Department of Labor's Prohibited
Transaction Class Exemption ("PTCE") 95-60), and as of the date of the purchase
of the Notes such Purchaser satisfies all of the applicable requirements for
relief under Sections I and IV of PTCE 95-60; (ii) allocated to a separate
account maintained by such Purchaser in which no employee benefit plan, other
than employee benefit plans identified on a list which has been furnished by
such Purchaser to the Company, participates to the extent of 10% or more; or
(iii) of an investment fund, the assets of which do not include assets of any
employee benefit plan within the meaning of ERISA. For the purpose of this
paragraph 9B, the terms "SEPARATE ACCOUNT" and "EMPLOYEE BENEFIT PLAN" shall
have the respective meanings specified in section 3 of ERISA.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this
Agreement, the terms defined in paragraphs 10A and 10B (or within the text of
any other paragraph) shall have the respective meanings specified therein and
all accounting matters shall be
21
subject to determination as provided in paragraph 10C.
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to paragraph 4B or is
declared to be immediately due and payable pursuant to paragraph 7A, as the
context requires.
"DISCOUNTED VALUE" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (as converted to reflect the periodic basis on which interest on the
Notes is payable, if interest is payable other than on a semi-annual basis)
equal to the Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Note, [0.50%] over the yield to maturity implied by (i) the
yields reported, as of 10:00 a.m. (New York City time) on the Business Day next
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Access Service (or such other
display as may replace Page 678 on the Telerate Access Service) for actively
traded U.S. Treasury securities having a maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date, or if such yields
shall not be reported as of such time or the yields reported as of such time
shall not be ascertainable, (ii) the Treasury Constant Maturity Series yields
reported, for the latest day for which such yields shall have been so reported
as of the Business Day next preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury xxxx quotations to bond-equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between yields reported for various maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and interest
thereon that would be
22
due on or after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be prepaid
pursuant to paragraph 4B or is declared to be immediately due and payable
pursuant to paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted Value of the
Called Principal of such Note over the sum of (i) such Called Principal plus
(ii) interest accrued thereon as of (including interest due on) the Settlement
Date with respect to such Called Principal. The Yield-Maintenance Amount shall
in no event be less than zero.
10B. OTHER TERMS.
"AFFILIATE" shall mean with respect to any designated entity,
any other entity (a) directly or indirectly controlling or controlled by or
under direct or indirect common control with such designated entity, (b) which
other entity beneficially owns or holds 5% or more of the shares of any class of
the Voting Stock of such designated entity or (c) 5% or more of any class of the
Voting Stock of which is beneficially owned or held by such designated entity.
For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any entity, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such entity, whether through the ownership of Voting Stock or by contract or
otherwise. Affiliate shall not include Subsidiaries.
"AUTHORIZED OFFICER" shall mean (i) in the case of the
Company, its chief executive officer, its chief financial officer, any vice
president of the Company designated as an "Authorized Officer" of the Company in
the Information Schedule attached hereto or any vice president of the Company
designated as an "Authorized Officer" of the Company for the purpose of this
Agreement in an Officer's Certificate executed by the Company's chief executive
officer or chief financial officer and delivered to Prudential, and (ii) in the
case of Prudential, any officer of Prudential designated as its "Authorized
Officer" in the Information Schedule or any officer of Prudential designated as
its "Authorized Officer" for the purpose of this Agreement in a certificate
executed by one of its Authorized Officers. Any action taken under this
Agreement on behalf of the Company by any individual who on or after the date of
this Agreement shall have been an Authorized Officer of the Company and whom
Prudential in good faith believes to be an Authorized Officer of the Company at
the time of such action shall be binding on the Company even though such
individual shall have ceased to be an Authorized Officer of the Company, and any
action taken under this Agreement on behalf of Prudential by any individual who
on or after the date of this Agreement shall have been an Authorized Officer of
Prudential and whom the Company in good faith believes to be an Authorized
Officer of Prudential at the time of such action shall be binding on Prudential
even though such individual shall have ceased to be an Authorized Officer of
Prudential.
23
"BANKRUPTCY LAW" shall have the meaning specified in clause
(viii) of paragraph 7A.
"BUSINESS DAY" shall mean any day other than (i) a Saturday, a
Sunday or, (ii) a day on which commercial banks in New York City are required or
authorized to be closed.
"CAPITAL LEASE" shall mean any lease or rental obligation
which, under GAAP, would be required to be capitalized on the books of the
Company or any Subsidiary, taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with GAAP.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"CONSOLIDATED ASSETS" shall mean, on any date of
determination, the net assets of the Company and its Subsidiaries determined on
a consolidated basis.
"CONSOLIDATED CAPITAL" shall mean Consolidated Net Worth plus
Consolidated Debt (less any Guarantees of Debt of Persons other than the Company
or a Subsidiary included therein).
"CONSOLIDATED DEBT" shall mean, on any date of determination,
Debt of the Company and its Subsidiaries on a consolidated basis.
"CONSOLIDATED EBITDA" shall mean Consolidated Net Income
before deducting the amount of interest expenses, taxes, and depreciation and
amortization, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" shall mean, for any period and
without duplication the aggregate of the Net Income of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP,
provided that, Consolidated Net Income shall not include any net income (or net
loss) of a Subsidiary for any periods during which it was not a Subsidiary, or
any net income (or net loss) of any business, properties or assets acquired (by
way of merger, consolidation, purchase or otherwise) by the Company or any
Subsidiary for any period prior to the acquisition thereof. In determining
Consolidated Net Income, any portion of the Net Income of any Subsidiary which
for any reason is unavailable for payment of dividends to the Company or another
Subsidiary, shall be excluded. In case of an acquisition, for purposes of
calculating Consolidated EBITDA and Pretax Income pursuant to paragraph 6A and
paragraph 6D, Net Income will be calculated on a pooling basis from the
Company's and the acquiree's audited financial statements.
"CONSOLIDATED NET INCOME AVAILABLE FOR NET WORTH" shall mean,
with reference to any period, Consolidated Net Income for all fiscal years of
the Company occurring during such period (taken as a cumulative whole),
determined in accordance with generally accepted accounting principles, without
deducting therefrom any deficit or net loss with respect to
24
any fiscal year of the Company occurring therein.
"CONSOLIDATED NET WORTH" shall mean on any date of
determination, consolidated stockholders' equity of the Company and its
Subsidiaries determined in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean on any date of
determination, consolidated stockholders' equity of the Company and its
Subsidiaries determined in accordance with GAAP, minus the book value of the
intangible assets of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"CURRENT DEBT" shall mean, with respect to any Person, all
Indebtedness of such Person for borrowed money (including all obligations,
evidenced by bonds, debentures, notes or other similar instruments) which by its
terms or by the terms of any instrument or agreement relating thereto matures on
demand or within one year from the date of the creation thereof and is not
directly or indirectly renewable or extendible at the option of the debtor to a
date more than one year from the date of the creation thereof, provided that
Indebtedness for borrowed money outstanding under a revolving credit or similar
agreement which obligates the lender or lenders to extend credit over a period
of more than one year shall constitute Funded Debt and not Current Debt, even
though such Indebtedness by its terms matures on demand or within one year from
the date of the creation thereof.
"DEBT" shall mean Current Debt and Funded Debt.
"ENVIRONMENTAL AND SAFETY LAWS" shall mean all laws relating
to pollution, the release or other discharge, handling, disposition or treatment
of Hazardous Materials and other substances or the protection of the environment
or of employee health and safety, including without limitation, CERCLA, the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et. seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 7401 et. seq.), the
Clean Air Act (42 U.S.C. Section 401 et. seq.), the Toxic Substances Control Act
(15 U.S.C. Section 2601 et. seq.), the Occupational Safety and Health Act (29
U.S.C. Section 651 et. seq.) and the Emergency Planning and Community Right-To-
Know Act (42 U.S.C. Section 11001 et. seq.), each as the same may be amended and
supplemented.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA AFFILIATE" shall mean any corporation which is a member
of the same controlled group of corporations as the Company within the meaning
of section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
25
"EVENT OF DEFAULT" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, and "DEFAULT" shall mean
any of such events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"FIXED CHARGE RATIO" shall mean, on any date of determination,
the ratio of (a) the sum of (i) Pretax Income, plus (ii) interest expense
(including amortization of debt discount and imputed interest on Capitalized
Leases) plus (iii) rental expense of the Company and its Subsidiaries, in each
case during the four fiscal quarters then preceding, taken on a consolidated
basis and determined in accordance with GAAP, over (b) Fixed Charges.
"FIXED CHARGES" shall mean, on the date of determination, the
aggregate amount of interest expense (including amortization of debt discount
and imputed interest on Capitalized Leases) and rental expense of the Company
and its Subsidiaries during the four fiscal quarters then preceding, taken on a
consolidated basis and determined in accordance with GAAP.
"FUNDED DEBT" shall mean, with respect to any Person, (a) all
Indebtedness of such Person for borrowed money (including all obligations
evidenced by bonds, debentures, notes or other similar instruments) which by its
terms or by the terms of any instrument or agreement relating thereto matures,
or which is otherwise payable or unpaid, more than one year from, or is directly
or indirectly renewable or extendible at the option of the debtor to a date more
than one year (including an option of the debtor under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of more than one year) from, the date of the creation thereof, (b)
Capital Leases, (c) obligations to pay the deferred purchase price of property
or services other than credit on an open account basis customarily extended and
in fact extended in connection with normal purchases of goods and services, and
(d) Guarantees of the foregoing.
"GAAP" shall have the meaning set forth in paragraph 10C.
"GUARANTEE" shall mean, with respect to any Person, any direct
or indirect liability, contingent or otherwise, of such Person with respect to
any indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation or service, regardless of the non-delivery or non-furnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide
26
assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof. The amount of any
Guarantee shall be equal to the outstanding principal amount of the obligation
guaranteed or such lesser amount to which the maximum exposure of the guarantor
shall have been specifically limited.
"GUARANTOR" shall mean Quaker Fabric Corporation, the sole
shareholder of the Company.
"GUARANTY" shall mean the Guaranty Agreement, dated the date
hereof, executed by the Guarantor in favor of the Purchasers.
"HAZARDOUS MATERIALS" shall mean (i) any material or substance
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous material," "toxic substances" or any other formulations
intended to define, list or classify substances by reason of their deleterious
properties, (ii) any oil, petroleum or petroleum derived substance, (iii) any
flammable substances or explosives, (iv) any radioactive materials, (v) asbestos
in any form, (vi) electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million, (vii) pesticides or (viii) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental agency
or authority or which may or could pose a hazard to the health and safety of
persons in the vicinity thereof.
"HOSTILE TENDER OFFER" shall mean, with respect to the use of
proceeds of any Note, any offer to purchase, or any purchase of, shares of
capital stock of any corporation or equity interests in any other entity, or
securities convertible into or representing the beneficial ownership of, or
rights to acquire, any such shares or equity interests, if such shares, equity
interests, securities or rights are of a class which is publicly traded on any
securities exchange or in any over-the-counter market, other than purchases of
such shares, equity interests, securities or rights representing less than 5% of
the equity interests or beneficial ownership of such corporation or other entity
for portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company makes
the Request for Purchase of such Note.
"INCLUDING" shall mean, unless the context clearly requires
otherwise, "including without limitation".
27
"INDEBTEDNESS" shall mean, with respect to any Person, without
duplication, (i) all items (excluding items of contingency reserves or of
reserves for deferred income taxes) which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person as of the date on which Indebtedness is to be
determined, (ii) all indebtedness secured by any Lien on, or payable out of the
proceeds or production from, any property or asset owned or held by such Person,
whether or not the indebtedness secured thereby shall have been assumed, and
(iii) all indebtedness and other obligations of others with respect to which
such Person has become liable by way of a Guarantee.
"INVESTMENT" shall mean any loans or advances to, or purchases
or acquisitions of the securities or obligations of, any Person or the
assumption of any liability of another Person which, in each case, did not arise
from sales in the ordinary course of business.
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, minimum or compensating deposit arrangement, lien (statutory or
otherwise) or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction) or any other
type of preferential arrangement for the purpose, or having the effect, of
protecting a creditor against loss or securing the payment or performance of an
obligation.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA).
"NET INCOME" shall mean, with respect to any Person, net
income (or net loss) of such Person determined in accordance with GAAP, but
excluding therefrom:
(a) proceeds of life insurance policies exceeding $250,000 in a
year;
(b) gains arising from (i) the sale or other disposition of
capital assets outside the ordinary course of business to the
extent the aggregate gains from such transactions exceed
losses from such transactions, abandonment's or other
disposition of such assets, (ii) any write-up of assets or
(iii) the acquisition of debt securities for a cost less than
principal and accrued interest;
(c) extraordinary items or transactions of a non-recurring or
non-operating and material nature or arising from gains or
sales relating to the discontinuance of operations;
(d) any portion of the net earnings (included in the determination
of such consolidated net earnings or such consolidated net
loss) of any Subsidiary which for any reason shall be
unavailable for payment of dividends;
28
(e) any earnings, prior to the date of acquisition, of any other
person acquired in any manner;
(f) in the case of successor to the Company by consolidation or
merger or a transfer of its assets, any earnings of such
successor or transferee corporation prior to such
consolidation, merger or transfer of assets; and
(g) any deferred credit (or authorization of a deferred credit)
arising from the acquisition in any manner of any other
person.
"NOTES" shall have the meaning specified in paragraph 1.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by an Authorized Officer of the Company.
"PERSON" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"PLAN" shall mean any employee pension benefit plan (as such
term is defined in section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company or
any ERISA Affiliate.
"PLEDGE AGREEMENT" shall mean the Collateral Agency and Pledge
Agreement, substantially in the form of Exhibit C attached to this Agreement.
"PRETAX INCOME" shall mean, on any date of determination,
Consolidated Net Income, plus federal, state or other income taxes provisions
recorded by the Company and its Subsidiaries, during the four fiscal quarters
then preceding, taken on a consolidated basis.
"PRIORITY DEBT" shall mean the sum of (a) all Debt of any
Subsidiary (other than Debt owed to the Company or a wholly-owned Subsidiary)
plus (b) Consolidated Debt secured by Liens permitted by paragraph 6G(i), (vii),
(viii) and (xi) (without duplication), plus (c) preferred stock of any
Subsidiary not held by the Company or any wholly-owned Subsidiary, and in the
case of clauses (a) and (b) such Debt is permitted by paragraph 6A.
"PRUDENTIAL" shall mean The Prudential Insurance Company of
America.
"PRUDENTIAL AFFILIATE" shall mean any corporation or other
entity all of the Voting Stock (or equivalent voting securities or interests) of
which is owned by Prudential either directly or through Prudential Affiliates.
"PURCHASERS" shall mean Prudential and [Pruco Life Insurance
Company].
29
"RECOURSE OBLIGATIONS" shall mean, at any time, the aggregate
amount that the Company or any Subsidiary may be required to pay to the
purchaser of any accounts receivable or other payment obligation of any Person
to the Company or any Subsidiary pursuant to any sale of accounts receivable or
any factoring arrangement, whether or not such amounts are contingent.
"REQUIRED HOLDER(S)" shall mean the holder or holders of at
least 51% of the aggregate principal amount of the Notes, as the context may
require, from time to time outstanding.
"RESPONSIBLE OFFICER" shall mean the chief executive officer,
chief operating officer, chief financial officer or chief accounting officer of
the Company, general counsel of the Company or any other officer of the Company
involved principally in its financial administration or its controllership
function.
"REVOLVING CREDIT FACILITY" shall mean the Amended and
Restated Credit Agreement, dated as of December 18, 1995, among the Guarantor,
the Company, Quaker Fabric Mexico, S.A. de C.V., Quaker Textile Corporation and
the banking institutions listed on the signature pages thereto, as it may be
amended from time to time.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SIGNIFICANT HOLDER" shall mean (i) Prudential, so long as
Prudential or any Prudential Affiliate shall hold any Note, or (ii) any other
holder of at least 5% of the aggregate principal amount of the Notes from time
to time outstanding.
"SUBSIDIARY" shall mean any corporation at least 50% of the
total combined voting power of all classes of Voting Stock of which shall, at
the time as of which any determination is being made, be owned by the Company
either directly or through Subsidiaries.
"SIGNIFICANT SUBSIDIARY" shall mean any Subsidiary (i) whose
assets, as of the last day of the preceding fiscal year, constituted 5% or more
of the total assets of the Company and its Subsidiaries, taken as a whole, or
(ii) that during the preceding fiscal year contributed on a consolidated basis
5% or more of Consolidated Net Income.
"SIGNIFICANT ASSETS" shall mean assets of the Company or any
Subsidiary that as of the last day of the preceding fiscal year, constituted 5%
or more of the total assets of the Company and its Subsidiaries, taken as a
whole, or (ii) that during the preceding fiscal year contributed on a
consolidated basis 5% or more of Consolidated Net Income.
"TRANSFEREE" shall mean any direct or indirect transferee of
all or any part of any Note purchased by any Purchaser under this Agreement.
"VOTING STOCK" shall mean, with respect to any corporation,
any shares of stock
30
of such corporation whose holders are entitled under ordinary circumstances to
vote for the election of directors of such corporation (irrespective of whether
at the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
"WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary all the
capital stock of which (except qualifying shares) is owned by the Company or any
Wholly-Owned Subsidiary.
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All
references in this Agreement to "generally accepted accounting principles" shall
be deemed to refer to generally accepted accounting principles in effect in the
United States at the time of application thereof. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all unaudited financial statements and certificates and reports as to financial
matters required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with the
most recent audited financial statements delivered pursuant to clause (ii) of
paragraph 5A or, if no such statements have been so delivered, the most recent
audited financial statements referred to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal of, interest
on, and any Yield- Maintenance Amount payable with respect to, such Note, which
comply with the terms of this Agreement, by wire transfer of immediately
available funds for credit (not later than 12:00 noon, New York City local time,
on the date due) to the account or accounts of such Purchaser specified in the
Purchaser Schedule attached hereto or such other account or accounts in the
United States as such Purchaser may from time to time designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to the
place of payment. Each Purchaser agrees that, before disposing of any Note, it
will make a notation thereon (or on a schedule attached thereto) of all
principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as the
Purchasers have made in this paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the
transactions contemplated hereby shall be consummated, to pay, and save
Prudential, each Purchaser and any Transferee harmless against liability for the
payment of, all out-of-pocket expenses arising in connection with such
transactions, including (i) all document production and duplication charges and
the fees and expenses of any special counsel engaged by the Purchasers or any
Transferee in connection with this Agreement, the transactions contemplated
hereby and any subsequent proposed modification of, or proposed consent under,
this Agreement, whether or not such proposed modification shall be effected or
proposed consent granted (provided that the Company shall not be required to pay
any fees or expenses with respect to the closing other than the
31
structuring fee referred to in section 3D hereof), and (ii) the costs and
expenses, including attorneys' fees, incurred by any Purchaser or any Transferee
in enforcing (or determining whether or how to enforce) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement or the
transactions contemplated hereby or by reason of any Purchaser's or any
Transferee's having acquired any Note, including without limitation costs and
expenses incurred in any bankruptcy case. The obligations of the Company under
this paragraph 11B shall survive the transfer of any Note or portion thereof or
interest therein by any Purchaser or any Transferee and the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company shall obtain the written
consent to such amendment, action or omission to act, of the Required Holder(s)
of the Notes except that, (i) with the written consent of the holders of all
Notes, and if an Event of Default shall have occurred and be continuing, of the
holders of all Notes, at the time outstanding (and not without such written
consents), the Notes may be amended or the provisions thereof waived to change
the maturity thereof, to change or affect the principal thereof, or to change or
affect the rate or time of payment of interest on or any Yield-Maintenance
Amount payable with respect to the Notes and (ii) without the written consent of
the holder or holders of all Notes at the time outstanding, no amendment to or
waiver of the provisions of this Agreement shall change or affect the provisions
of paragraph 7A or this paragraph 11C insofar as such provisions relate to
proportions of the principal amount of the Notes, or the rights of any
individual holder of Notes, required with respect to any declaration of Notes to
be due and payable or with respect to any consent, amendment, waiver or
declaration. Each holder of any Note at the time or thereafter outstanding shall
be bound by any consent authorized by this paragraph 11C, whether or not such
Note shall have been marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such consent. No course of
dealing between the Company and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as a waiver of
any rights of any holder of such Note. As used herein and in the Notes, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST
NOTES. The Notes are issuable as registered notes without coupons in
denominations of at least $1,000,000, except as may be necessary to reflect any
principal amount not evenly divisible by $1,000,000. The Company shall keep at
its principal office a register in which the Company shall provide for the
registration of Notes and of transfers of Notes. Upon surrender for registration
of transfer of any Note at the principal office of the Company, the Company
shall, at its expense, execute and deliver one or more new Notes of like tenor
and of a like aggregate principal amount, registered in the name of such
transferee or transferees. At the option of the holder of any Note, such Note
may be exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the principal office of the Company. Whenever any Notes are
so surrendered for exchange, the Company shall, at its
32
expense, execute and deliver the Notes which the holder making the exchange is
entitled to receive. Each installment of principal payable on each installment
date upon each new Note issued upon any such transfer or exchange shall be in
the same proportion to the unpaid principal amount of such new Note as the
installment of principal payable on such date on the Note surrendered for
registration of transfer or exchange bore to the unpaid principal amount of such
Note. No reference need be made in any such new Note to any installment or
installments of principal previously due and paid upon the Note surrendered for
registration of transfer or exchange. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes issued in
exchange for any Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of any
Note of the loss, theft, destruction or mutilation of such Note and, in the case
of any such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due
presentment for registration of transfer, the Company may treat the Person in
whose name any Note is registered as the owner and holder of such Note for the
purpose of receiving payment of principal of and interest on, and any
Yield-Maintenance Amount payable with respect to, such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and the Company
shall not be affected by notice to the contrary. Subject to the preceding
sentence, the holder of any Note may from time to time grant participations in
all or any part of such Note to any Person on such terms and conditions as may
be determined by such holder in its sole and absolute discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained herein or made in
writing by or on behalf of the Company in connection herewith shall survive the
execution and delivery of this Agreement and the Notes, the transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any Transferee, regardless of any
investigation made at any time by or on behalf of any Purchaser or any
Transferee. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.
33
11G. SUCCESSORS AND ASSIGNS. All covenants and other
agreements in this Agreement contained by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto (including, without limitation, any Transferee)
whether so expressed or not.
11H. INDEPENDENCE OF COVENANTS. All covenants hereunder shall
be given independent effect so that if a particular action or condition is
prohibited by any one of such covenants, the fact that it would be permitted by
an exception to, or otherwise be in compliance within the limitations of,
another covenant shall not avoid the occurrence of a Default or Event of Default
if such action is taken or such condition exists.
11I. NOTICES. All written communications provided for
hereunder (other than communications provided for under paragraph 2) shall be
sent by first class mail or nationwide overnight delivery service (with charges
prepaid) and (i) if to any Purchaser, addressed as specified for such
communications in the Purchaser Schedule attached hereto or at such other
address as any such Purchaser shall have specified to the Company in writing,
(ii) if to any other holder of any Note, addressed to it at such address as it
shall have specified in writing to the Company or, if any such holder shall not
have so specified an address, then addressed to such holder in care of the last
holder of such Note which shall have so specified an address to the Company and
(iii) if to the Company, addressed to it at 000 Xxxxxxxx Xxxxxx, Xxxx Xxxxx, XX
00000, Attn: President, provided, however, that any such communication to the
Company may also, at the option of the Person sending such communication, be
delivered by any other means either to the Company at its address specified
above or to any Authorized Officer of the Company. Any communication pursuant to
paragraph 2 shall be made by the method specified for such communication in
paragraph 2, and shall be effective to create any rights or obligations under
this Agreement only if, in the case of a telephone communication, an Authorized
Officer of the party conveying the information and of the party receiving the
information are parties to the telephone call, and in the case of a telecopier
communication, the communication is signed by an Authorized Officer of the party
conveying the information, addressed to the attention of an Authorized Officer
of the party receiving the information, and in fact received at the telecopier
terminal the number of which is listed for the party receiving the communication
in the Information Schedule or at such other telecopier terminal as the party
receiving the information shall have specified in writing to the party sending
such information.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or interest on, or Yield-Maintenance Amount payable with respect to, any Note
that is due on a date other than a Business Day shall be made on the next
succeeding Business Day. If the date for any payment is extended to the next
succeeding Business Day by reason of the preceding sentence, the period of such
extension shall be included in the computation of the interest payable on such
Business Day.
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11K. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11L. DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
11M. SATISFACTION REQUIREMENT. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to any Purchaser, to any holder of Notes
or to the Required Holder(s), the determination of such satisfaction shall be
made by such Purchaser, such holder or the Required Holder(s), as the case may
be, in the sole and exclusive judgment (exercised in good faith) of the Person
or Persons making such determination.
11N. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE INTERNAL LAW OF THE STATE OF NEW YORK.
11O. SEVERALTY OF OBLIGATIONS. The sales of Notes to the
Purchasers are to be several sales, and the obligations of Prudential and the
Purchasers under this Agreement are several obligations. No failure by
Prudential or any Purchaser to perform its obligations under this Agreement
shall relieve any other Purchaser or the Company of any of its obligations
hereunder, and neither Prudential nor any Purchaser shall be responsible for the
obligations of, or any action taken or omitted by, any other such Person
hereunder.
11P. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
11Q. BINDING AGREEMENT. When this Agreement is executed and
delivered by the Company, Pruco and Prudential, it shall become a binding
agreement between the Company, Pruco and Prudential.
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If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Company, whereupon this letter shall become a binding agreement between the
Company and you.
Sincerely,
QUAKER FABRIC CORPORATION OF
FALL RIVER
By: /s/ Xxxx X. Xxxxx
--------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President--Finance
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
PRUCO LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Assistant Vice President
36
