-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GgNlxNbtsfIwG0rZYZrSysHRCwFHDiR1HU0CtHBJwB1EQsD1GJ7Sh15YIjvpBZTI zZbaOwqMtmo5z8SE/1w2gA== 0001157523-06-011912.txt : 20061205 0001157523-06-011912.hdr.sgml : 20061205 20061205161121 ACCESSION NUMBER: 0001157523-06-011912 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061201 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061205 DATE AS OF CHANGE: 20061205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUAKER FABRIC CORP /DE/ CENTRAL INDEX KEY: 0000103341 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILS, MAN MADE FIBER & SILK [2221] IRS NUMBER: 041933106 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07023 FILM NUMBER: 061257522 BUSINESS ADDRESS: STREET 1: 941 GRINNELL ST. CITY: FALL RIVER STATE: MA ZIP: 02721 BUSINESS PHONE: 5086781951 MAIL ADDRESS: STREET 1: 941 GRINNELL ST CITY: FALL RIVER STATE: MA ZIP: 02721 FORMER COMPANY: FORMER CONFORMED NAME: VERTIPILE INC DATE OF NAME CHANGE: 19870811 8-K 1 a5288132.txt QUAKER FABRIC CORPORATION 8-K - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 December 1, 2006 Date of Report (Date of earliest event reported) QUAKER FABRIC CORPORATION (Exact name of registrant as specified in its charter) Delaware 1-7023 04-1933106 (State of incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 941 Grinnell Street, Fall River, Massachusetts 02721 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (508) 678-1951 (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement On November 9, 2006, Quaker Fabric Corporation of Fall River ("Quaker"), a wholly-owned subsidiary of Quaker Fabric Corporation (the "Company"), entered into a $25.0 million amended and restated senior secured revolving credit agreement with Bank of America, N.A. (the "Bank") and two other lenders (the "2006 Revolving Credit Agreement"). Quaker's obligations to the revolving credit lenders are secured by all of the Company's assets, with a junior interest in Quaker's real estate and machinery and equipment. Simultaneously, Quaker entered into two (2) senior secured term loans in the aggregate amount of $24.6 million, with GB Merchant Partners, LLC as Agent for the term loan lenders (the "2006 Term Loan Agreement"). The two term loans consist of a $12.5 million real estate loan and a $12.1 million equipment loan (the "Real Estate Term Loan" and the "Equipment Term Loan", respectively, and together, the "Term Loans"). The Term Loans are secured by all of the Company's assets, with a first priority security interest in the Company's machinery and equipment and real estate. The proceeds of the Term Loans were used to: (i) repay, in full, all outstanding obligations under the term loan previously provided by the Bank pursuant to the terms of Quaker's May 18, 2005 senior secured credit facility with the Bank (the "2005 Credit Agreement"), (ii) reduce Quaker's obligations to the Bank under the revolving credit portion of the 2005 Credit Agreement by approximately $8.9 million, (iii) fund a $1.0 million environmental escrow account required by the Term Loan Lenders to cover certain environmental site assessment and remediation expenses potentially arising out of Environmental Conditions at the various parcels of real estate serving as collateral for Quaker's obligations to the Term Loan Lenders, and (iv) pay for approximately $2.6 million of transaction and related costs required by the Bank and the Term Loan Lenders to be paid at the Closing, including fees to the various lenders of approximately $1.5 million and professional and consulting fees of approximately $1.1 million. Both the 2006 Revolving Credit Agreement and the 2006 Term Loan Agreement have maturity dates of May 17, 2010. Advances to Quaker under the 2006 Revolving Credit Facility are limited to a formula based on Quaker's accounts receivable and inventory minus an "Availability Reserve" (and such other reserves as the Bank may establish from time to time in its reasonable credit judgment.) Pursuant to the terms of the 2006 Term Loan Agreement, mandatory prepayments of the Real Estate and Equipment Term Loans are required as Quaker sells the assets securing those loans pursuant to the terms of the restructuring plan Quaker has in place (the "Restructuring Plan"). Following the sale in 2008 of the last parcel of real estate contemplated by the Restructuring Plan, amortization of the Real Estate Term Loan would be at the rate of $1.1 million per year, payable at the rate of $100,000 per month in each month other than July. In addition, in the event sales of certain parcels of real estate are not consummated on or before the dates assumed for such sales in the Restructuring Plan, Quaker would be responsible for making Late Sale Amortization Payments (as defined in the 2006 Term Loan Agreement) at the rate of $150,000 per month until such payments equal 92.5% of the net proceeds the Term Loan Lenders would have received on the sale of such real estate. Mandatory prepayments of the Equipment Term Loan and the Real Estate Term Loan are also required in the event of Equipment Appraisal and/or Real Property Appraisal Shortfalls, respectively (as defined in the 2006 Term Loan Agreement). 2 In addition, both the 2006 Revolving Credit Agreement and the 2006 Term Loan Agreement contain a "springing" Fixed Charge Coverage Ratio covenant with which Quaker would need to comply in the event Quaker's "Excess Availability" under the 2006 Revolving Credit Agreements were to fall below certain levels. Both Loan Agreements also include customary reporting obligations and certain affirmative and negative covenants including, but not limited to, restrictions on dividend payments, capital expenditures, indebtedness, liens and acquisitions and investments. On December 1, 2006, the Company and the other parties to the 2006 Term Loan Agreement entered into Amendment No. 1, effective as of December 1, 2006, to the 2006 Term Loan Agreement (the "Amendment") to: (i) place certain restrictions on the terms and conditions on which the Company may agree to sell excess machinery and equipment going forward, including restrictions on the Company's ability to agree to the payment of the purchase price for such equipment over time and the minimum price at which such equipment may be sold, and (ii) acknowledge and consent to the Company's sale of certain machinery and equipment no longer needed to support the Company's operations to International Textile Machinery Sales, Inc. ("International") for $2.1 million, payable in six (6) equal monthly installments of $315,000 each, beginning January 15, 2007, and a deposit of $210,000 paid upon execution of the contract between the Company and International. Pursuant to the terms of the 2006 Revolving Credit Agreement, Bank of America, N.A. consented to the Amendment. As of December 2, 2006, there were $ 9.5 million of loans outstanding under the 2006 Revolving Credit Agreement, including approximately $4.5 million of letters of credit and unused availability of $ 4.4 million, net of the Availability Reserve. In addition, as of the same date, Quaker's outstanding obligations under the Term Loans were approximately $ 24.4 million. The foregoing descriptions of the 2006 Term Loan Agreement, as amended by the Amendment, and the 2006 Revolving Credit Agreement, the Security Agreements, the Guaranties, the Intercreditor Agreement and the Environmental Indemnity Agreements are qualified in their entirety by reference to the 2006 Revolving Credit Agreement, the 2006 Term Loan Agreement, the Security Agreements, the Guaranties, the Intercreditor Agreement and the Environmental Indemnity Agreements previously filed with the SEC and the Amendment filed as Exhibit 10.45 to this Form 8-K and are incorporated by reference herein. 3 Item 9.01 Financial Statements and Exhibits (c) Exhibits 10.45 Amendment No. 1 (dated as of December 1, 2006) to the Term Loan Agreement (dated as of November 9, 2006) by and among Quaker Fabric Corporation of Fall River, as Borrower; 1903 Debt Fund, LP, and the Other Lending Institutions which are or may become parties thereto (the "Term Loan Lenders") and GB Merchant Partners, LLC, as Administrative Agent for the Term Loan Lenders (the "2006 Term Loan Agreement"). 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. QUAKER FABRIC CORPORATION (Registrant) Date: December 5, 2006 /s/ Paul J. Kelly ---------------------------- Paul J. Kelly Vice President - Finance and Treasurer 5 EXHIBIT INDEX 10.45 Amendment No. 1 (dated as of December 1, 2006) to the Term Loan Agreement (dated as of November 9, 2006) by and among Quaker Fabric Corporation of Fall River, as Borrower; 1903 Debt Fund, LP, and the Other Lending Institutions which are or may become parties thereto (the "Term Loan Lenders") and GB Merchant Partners, LLC, as Administrative Agent for the Term Loan Lenders (the "2006 Term Loan Agreement"). 6 EX-10.45 2 a5288132ex1045.txt QUAKER FABRIC CORPORATION EXHIBIT 10.45 Exhibit 10.45 AMENDMENT NO 1. TO TERM LOAN AGREEMENT This Amendment No. 1 to Term Loan Agreement dated as of November 29, 2006 (this "Amendment") is entered into among Quaker Fabric Corporation of Fall River, a Massachusetts corporation (the "Borrower"), Quaker Fabric Corporation, a Delaware corporation (the "Parent", and, collectively with the Borrower, the "Credit Parties"), 1903 Debt Fund, LP, Bernard National Loan Investors, Ltd., and Bernard Global Loan Investors, Ltd. (collectively, the "Lenders"), and GB Merchant Partners, LLC, as administrative agent for the Lenders (the "Administrative Agent"). Capitalized terms used herein but not defined herein shall have the meanings provided in the Credit Agreement referred to below. W I T N E S S E T H: WHEREAS, the Credit Parties, the Lenders, and the Administrative Agent are parties to that certain Term Loan Agreement dated as of November 9, 2006 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"); and WHEREAS, the Credit Parties, the Lenders and the Administrative Agent have agreed, on the terms and conditions set forth herein, to amend certain provisions of the Credit Agreement. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Amendment. Subject to the conditions precedent set forth in Section 2 hereof, the Credit Agreement is hereby amended by deleting Section 8.5.2. in its entirety, and inserting the following new Section 8.5.2. in its stead: "8.5.2 Disposition of Assets. (a) Neither the Parent nor the Borrower will, or will permit any of their Subsidiaries to, become a party to or agree to or effect any disposition of any assets, other than: (i) the sale of inventory, the licensing of intellectual property and the disposition of obsolete assets, in each case in the ordinary course of business consistent with past practices, (ii) sales of Real Property, as contemplated by the Business Plan; provided, that (x) the Adjusted Net Proceeds received on account of any Real Property Sale is greater than or equal to the amount of Minimum Proceeds for the applicable parcel of Real Property, or if less than such amount, the Borrower receives the prior written consent of the Administrative Agent for such sale, and (y) all of the Net Proceeds from such Real Property Sale are applied, contemporaneously upon receipt, as a mandatory prepayment of the Term Loans in accordance with Sections 3.1.3(a) and 3.1.7; (iii) sales of machinery and equipment; provided, that (x) all of the Net Proceeds from such Equipment Sale are applied, contemporaneously upon receipt, as a mandatory prepayment of the Term Loans in accordance with Sections 3.1.4(b) and 3.1.7, and (y) in the case of Equipment Sales generating Net Proceeds in excess of $75,000 in the case of any individual Equipment Sale or $250,000 in the aggregate for all such Equipment Sales in any Fiscal Year, (A) prior to consummating any such Equipment Sale, the Borrower, the Parent or such Subsidiary shall have solicited offers to purchase the applicable assets from at least two (2) nationally recognized dealers of the subject assets and shall have provided the Administrative Agent with copies of any offers or bids so received, (B) not less than 100% of the aggregate consideration attributable to any item of Equipment constituting part of such Equipment Sale is payable by the purchaser of such Equipment in cash prior to or contemporaneously with the delivery of such item of Equipment, (C) 100% of the aggregate consideration payable by the purchaser under such Equipment Sale is payable within sixty (60) days after the date of execution of the applicable agreement relating to such Equipment Sale, and (D) the aggregate purchase price for the Equipment subject to such Equipment Sale is equal to or greater than 70% of the Net Orderly Liquidation Value of all such Equipment. (b) In connection with any disposition of assets permitted under this Section 8.5.2., each of the Lenders hereby authorizes the Administrative Agent to execute and deliver any collateral releases necessary to release its Liens on such assets; provided, that in the case of any Mortgaged Property, the Lenders hereby authorizes the Administrative Agent to release its Lien on any parcel of Mortgaged Property upon consummation of any Real Property Sale yielding Adjusted Net Proceeds equal to or greater than the Minimum Proceeds for such parcel of Mortgaged Property (or such lesser amount to which the Administrative Agent shall have consented)." SECTION 2. Condition Precedent; Effective Date. The Administrative Agent, the Lenders and the Credit Parties agree that this Amendment shall become effective upon the satisfaction of the following conditions precedent, each in form and substance satisfactory to the Administrative Agent: (i) the execution hereof by the Credit Parties, the Required Lenders and the Administrative Agent; and (ii) the execution and delivery of a consent under the Revolving Credit Agreement. SECTION 3. Borrower Representations and Warranties. Each Credit Party hereby represents and warrants that (a) this Amendment constitutes its legal, valid and binding obligation, enforceable against such Credit Party in accordance with the terms hereof, (b) after giving effect to this Amendment, (i) the representations and warranties contained in the Credit Agreement are correct in all material respects as though made on and as of the date of this Amendment, and (ii) no Default or Event of Default has occurred and is continuing. 2 SECTION 4. Reference to and Effect on the Credit Agreement. 4.1 Upon the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein", or words of like import shall mean and be a reference to the Credit Agreement, as modified hereby, and each reference to the Credit Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Credit Agreement shall mean and be a reference to the Credit Agreement, as modified hereby. 4.2 Except as specifically set forth in Section 1 hereof, the Credit Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed. 4.3 The execution, delivery and effectiveness of this Amendment shall not operate or be construed as a waiver or forbearance with respect to any Defaults or Events of Default under the Credit Agreement which may now or hereafter exist, or the waiver of any right, power or remedy which the Administrative Agent and the Lenders may have with respect thereto under the Credit Agreement or applicable law. The Lenders hereby reserve any and all rights which may now or hereafter exist in favor of the Lenders under the Credit Agreement. SECTION 5. Consent and Acknowledgment. Pursuant to the terms of a letter agreement dated November 15, 2006, between International Textile Machinery Sales, Inc. ("International") and the Borrower (the "International Letter Agreement"), the Borrower has agreed to sell and International has agreed to purchase certain Equipment of the Borrower (the "International Equipment Sale"). The Administrative Agent and the Lenders hereby consent to the International Equipment Sale on the terms set forth in the International Letter Agreement, and agree that the Administrative Agent shall release its liens on the Equipment sold as part of the International Equipment Sale; provided, that the Administrative Agent shall only release its liens on specific items of Equipment delivered to International as and to the extent the Borrower has received the applicable purchase price attributable to such items of Equipment pursuant to the International Letter Agreement. The Administrative Agent and the Lenders acknowledge that the first Equipment Appraisal Report required to be delivered to the Administrative Agent pursuant to Sections 3.1.4(a)(i) and 7.15.2 of the Credit Agreement shall be delivered in April, 2007; provided that the foregoing shall not limit the right of the Administrative Agent to request or require appraisals of the Equipment on a more frequent basis upon the occurrence of a Default or Event of Default. SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. SECTION 7. Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws (as opposed to the conflicts of laws provisions) of the Commonwealth of Massachusetts. 3 SECTION 8. Section Titles. The section titles contained in this Amendment are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. (Signature pages follow) 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 Term Loan Agreement to be duly executed and delivered as of the date first above written. QUAKER FABRIC CORPORATION OF FALL RIVER By: /s/ Paul J. Kelly ------------------------------ Name: Paul J. Kelly Title: Chief Financial Officer and Vice President Finance QUAKER FABRIC CORPORATION By: /s/ Paul J. Kelly ------------------------------ Name: Paul J. Kelly Title: Chief Financial Officer and Vice President Finance GB MERCHANT PARTNERS, LLC, as Administrative Agent By: /s/ Alan Goldstein ------------------------------ Name: Alan Goldstein Title: Chief Financial Officer and Manager 1903 DEBT FUND, LP By: /s/ Alan Goldstein ------------------------------ Name: Alan Goldstein Title: Manager BERNARD NATIONAL LOAN INVESTORS, LTD. By: Bernard Capital Funding, LLC Its Investment Advisor By: /s/ Daniel B. Zwirn ------------------------------ Name: Daniel B. Zwirn Title: Managing Partner BERNARD GLOBAL LOAN INVESTORS, LTD. By: Bernard Capital Funding, LLC Its Investment Advisor By: /s/ W. Ginsberg ------------------------------ Name: W. Ginsberg Title: Director 2 -----END PRIVACY-ENHANCED MESSAGE-----