FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended April 1, 1995
_________ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission file number 0-3305
NCC INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 62-0643336
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
165 MAIN STREET, CORTLAND, NEW YORK 13045
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (607) 756-2841
NOT APPLICABLE
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No _______
At April 1, 1995, there were outstanding 4,375,492 shares of
registrant's Common Stock, par value $1.00 per share.
NCC INDUSTRIES, INC.
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Income and Retained Earnings
Consolidated Statements of Cash Flows
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION:
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
NCC INDUSTRIES, INC. AND SUBSIDIARY
BALANCE SHEETS
(UNAUDITED)
April 1, December 31,
1995 1994
ASSETS
Current assets
Cash and cash equivalents $ 1,025,421 $1,034,820
Accounts receivable, net 18,398,875 16,448,704
Inventories (Note 2) 45,907,475 39,104,654
Other current assets 2,676,180 2,002,917
Total Current Assets 68,007,951 58,591,095
Property, plant and equipment at cost, net 10,844,670 11,186,318
Other assets 1,734,690 1,810,590
$80,587,311 $71,588,003
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $17,369,000 $12,000,000
Accounts payable and accrued expenses 12,954,947 10,997,312
Current portion of long-term debt 445,000 445,000
Total Current Liabilities 30,768,947 23,442,312
Long term debt, less current portion 10,361,415 9,361,415
Other liabilities 2,828,762 2,800,628
Shareholder's equity 36,628,187 35,983,648
$80,587,311 $71,588,003
See notes to financial statements.
NCC INDUSTRIES, INC. AND SUBSIDIARY
STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended
April 1, April 2,
1995 1994
STATEMENTS OF INCOME:
Net Sales $27,785,598 $23,866,096
Cost and expenses:
Cost of sales, shipping, selling,
general and administrative expenses 26,538,137 22,725,643
Interest expense 384,139 434,706
26,922,276 23,160,349
Income before taxes 863,322 705,747
Income taxes:
Current 337,112 33,381
Deferred (118,329) 59,681
Net Income $ 644,539 $ 612,685
Income per common share $0.15 $0.14
Weighted average shares used in
computing per share amounts 4,375,492 4,375,751
STATEMENTS OF RETAINED EARNINGS:
Retained earnings, beginning $28,721,924 $22,890,162
Net income $644,539 $612,685
Retained earnings, ending $29,366,463 $23,502,847
See notes to financial statements.
NCC INDUSTRIES, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<S> <C> <C>
Three Months Ended
April 1, 1995 April 2, 1994
Cash flows from operating activities
Net income $ 644,539 $ 612,685
Adjustments to reconcile net income to net cash
used in operating activities
Depreciation 383,646 349,281
Amortization 5,093 5,902
Provision for losses on accounts receivable 27,000 33,750
Loss from retirement of equipment 11,574 -
Net change in operating assets and liabilities
Increase in accounts receivables ( 1,977,171) ( 1,774,540)
Increase in inventory ( 6,802,821) ( 4,458,085)
Increase (decrease) in accounts
payable and accrued expenses 1,957,635 ( 2,331)
(Increase) decrease in other assets 70,807 ( 108,255)
Increase in other liabilities 28,134 141,081
Increase in other current assets ( 673,263) ( 174,636)
Net cash used in operating activities ($ 6,324,827) ($ 5,375,148)
Cash flows from investing activities
Purchase of plant & equipment ($ 53,572) ($ 188,719)
Decrease in investments - 28,336
Net cash used in investing activities ($ 53,572) ($ 160,383)
See notes to financial statements.
</TABLE>
NCC INDUSTRIES, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<S> <C> <C>
(UNAUDITED)
Three Months Ended
April 1, 1995 April 2, 1994
Cash flows from financing activities
Long term debt borrowings $ 1,000,000 -
Net borrowings under notes payable, banks
5,369,000 $ 5,496,133
Treasury stock purchases - ( 1,600)
Net cash provided by financing activities $ 6,369,000 $ 5,494,533
Net decrease in cash ($ 9,399) ($ 40,998)
Cash, beginning of year $ 1,034,820 $ 442,085
Cash, end of quarter $ 1,025,421 $ 401,087
Supplemental disclosure of cash flow
information
Cash paid during the quarter for interest $ 445,545 $ 418,990
Cash paid during the quarter for income taxes $ 16,146 $ 67,583
</TABLE>
See notes to financial statements.
NCC INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and
Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been
included. Operating results for the three month period ended
April 1, 1995 are not necessarily indicative of the results
that may be expected for the year ending December
31, 1995. The balance sheet at December 31, 1994 has been
derived from the audited balance sheet at that date.
For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
2. Inventory:
a) Inventories at April 1, 1995 are stated at the lower
of cost (first-in, first-out) or market (generally realizable
net amount), and are obtained from the perpetual
inventory records of the Company. No physical inventory was taken.
b) Inventories consist of:
April 1, December 31,
1995 1994
(unaudited)
Raw Materials $ 8,101,034 $ 7,287,229
Work in process 12,160,061 9,639,312
Finished goods 25,646,380 22,178,113
Total $45,907,475 $39,104,654
3. Net income per share:
Per share amounts are based on the weighted average number
of shares outstanding during the period.
ITEM 2. Management's Discussion and Analysis of Financial
Condition and
Results of Operations.
Results of Operations
Net sales for the first quarter of 1995 were 16% higher
than the the first quarter of 1994 due to higher volume of
shipments in both branded and unbranded products and higher average
prices received on shipments of branded products. Because of the sales
mixture achieved, average revenue per unit sold
decreased 1% in the first quarter of 1995 as compared
to the first quarter of 1994. Unit volume increased
by 16% in the first three months of 1995 as compared to the first
three months of 1994 because of an increased demand for Registrant's
unbranded products.
Cost of sales as a percentage of sales increased in the first
quarter of 1995 as compared to the first quarter of 1994
because of higher shipments of lower margin products during the first
quarter of 1995. Shipping, selling, advertising and general and
administrative expenses were generally consistent as a percentage of
sales in the first quarter of 1995 as compared to the
first quarter of 1994. Interest expense was lower
during the first quarter of 1995 as compared to the
first quarter of 1994 due primarily to lower average borrowings.
As a result of the aforementioned items, net income
increased 5.2% in the first quarter of 1995 as compared to the first
quarter of 1994.
Financial Condition
Net cash flows used in operating activities increased
$950,000 during the first three months of 1995 as compared with the
first three months of 1994, primarily due to increases in funds used
in inventory, receivables, and other current assets. Inventory
increased primarily due to lower-than-anticipated shipments in the
first quarter of 1995 and to meet anticipated shipments in the second
quarter.
Net cash flows used in operating activities during the first three
months of 1995 was funded by increases in short and long term bank
debt under the Registrant's lines of credit. As a result, net cash
provided by financing activities increased $902,000 during the first
three months of 1995 as compared to the first three months of 1994.
Working capital increased approximately $2,000,000 during the
first three months of 1995. However, the current ratio declined from
2.5:1, at December 31, 1994 to 2.2:1, at April 1, 1994. Registrant's
debt/equity ratio also declined from 1.4:1 to 1.2:1 during the
same period.
Net cash flows used in investing activities decreased slightly in the
first quarter of 1995 as compared to the first quarter of 1994,
primarily as a result of reduced expenditures on plant and equipment.
In connection with the purchase by Maidenform
Worldwide, Inc. ("Worldwide") of approximately 92.4% of
the common stock of Registrant (see Part II - Item 5.
"Other Information" below) on April 26, 1995,
Registrant repaid all of its previously held lines of
credit and has entered into an agreement with
CoreStates Bank, N.A., Nations Bank, N.A., The Chase
Manhattan Bank N.A., National City Bank, NBD Bank,
Comerica Bank, European American Bank and United Jersey
Bank (the "Lenders") for continued financing at rates
ranging approximately from the London Interbank Offered
Rate ("LIBOR") plus 1.25% to Prime rate. The maximum
borrowing under this line of credit for Registrant,
Worldwide, Registrant's majority shareholder, and
Worldwide's subsidiaries (collectively, the
"Borrowers") is $120,000,000 in the aggregate. Subject
to the terms of the agreement, the principal amount
outstanding under the revolving credit facility is
payable on April 26, 1998, with interest payable
monthly prior to such maturity. In addition, such
agreement provides for a $50,000,000 term loan
facility, the proceeds of which were used to finance
the acquisition of Registrant's common stock by
Worldwide and repay said lines of credit. These
advances carry rates which range from approximately
LIBOR plus 2.25% to Prime plus 1% with interest payable
monthly and principal payable in quarterly installments
commencing March 31, 1996 through March 31, 2001. In
addition, annual payments of principal are due April
30, 1996, April 30, 1997 and April 30, 1998. As part
of the new financing arrangements, Registrant also
became a party to an Amended and Restated Note Purchase
Agreement dated as of April 1, 1995 among Registrant,
the other Borrowers and Massachusetts Mutual Life
Insurance Company, Principal Life Insurance Company and
TMG Life Insurance Company (the "Note Purchasers"),
pursuant to which outstanding term indebtedness of $30
million was refinanced. Such refinanced indebtedness
matures on September 30, 2003 and bears interest,
payable quarterly, at 10.75% per annum.
To secure their obligations under these borrowings, the
Borrowers, including Registrant, have granted a
security interest in favor of the Lenders and the Note
Purchasers in substantially all of their respective
assets, which includes a pledge by Maidenform, Inc.
(the immediate parent of Registrant) of the shares of
Registrant's common stock owned by it. Upon the
occurrence of an event of default, as such term is
defined in the loan documents, the Lenders and the Note
Purchasers would be entitled, among other things, to
sell the pledged common stock and thereby effect a
change of control of Registrant.
NCC INDUSTRIES, INC.
PART II - OTHER INFORMATION
Item 5. Other Information
Pursuant to a Stock Purchase Agreement (the "Purchase
Agreement"), dated as of April 26, 1995, among
Worldwide, Triumph International Overseas, Limited, a
Liechtenstein corporation ("Triumph"), Gunther
Spiesshoffer ("Spiesshoffer") and Frank Magrone
("Magrone"; together with Triumph and Spiesshoffer, the
"Sellers"), Sellers sold to Worldwide 4,042,479 shares
of Registrant's common stock, constituting all of the
shares of Registrant's common stock owned by Sellers
(the "Purchased Shares"). The Purchased Shares
constitute approximately 92.4% of Registrant's issued
and outstanding common stock. Following the closing of
this acquisition, Worldwide contributed all of the
purchased shares to Maidenform, Inc. ("Maidenform"), a
wholly owned subsidiary of Worldwide. As the sole
shareholder of Maidenform, Worldwide beneficially owns,
indirectly through Maidenform, such 4,042,479 shares of
Registrant's common stock.
Pursuant to the Purchase Agreement, Worldwide, in the
aggregate: (i) acquired from Triumph and Spiesshoffer
approximately 84% of the common stock for a purchase
price consisting of (x) approximately $26,900,000 cash
and (y) shares of Class A common stock of Worldwide
valued at approximately $37,300,000, and (ii) acquired
from Magrone approximately 8% of the common stock for a
purchase price consisting of (z) approximately
$2,900,000 cash and (a) shares of Class A common stock
of Worldwide valued at approximately $3,255,000.
The consideration paid by Worldwide for the Purchased
Shares equaled approximately $17.55 per purchased share
before giving effect to combining the business of
Worldwide and Registrant.
Concurrent with the consummation of the transactions
provided for in the Purchase Agreement, Triumph,
pursuant to a related stock sale agreement, utilized
$20,000,000 of the approximately $26,900,000 cash paid
to it and Spiesshoffer for their shares of Registrant
(as described above) to purchase from certain
shareholders of Worldwide additional shares of the
Class A common stock of Worldwide valued at
$20,000,000. In the aggregate, Triumph, Spiesshoffer,
and Magrone acquired approximately 28% of the
outstanding shares of Class A common stock of Worldwide
with an aggregate value of approximately $57,300,000.
In accordance with the terms of the Purchase Agreement,
concurrent with the consummation of the acquisitions
contemplated thereby, all members of Registrant's Board
of Directors (with the exception of Magrone) resigned
effective as of the date of the closing, and four
designees of Worldwide were elected to replace the
resigning directors. As a result, the closing of the
transactions contemplated by the Purchase Agreement had
the effect of changing the control of Registrant's
Board of Directors.
Worldwide obtained the cash funds for the transaction
from a group of banks, on whose behalf CoreStates, N.A.
acted as agent, pursuant to a loan made in the ordinary
course of business (the "Financing Loan"). For a
description of the Financing Loan, including the pledge
of the Purchased Shares, see "Management's Discussion
and Analysis of Financial Condition and Results of
Operations - Financial Condition."
Item 6. Exhibits and Reports on Form 8-K
Exhibits No. Description
(a) 10.1 Stock Purchase Agreement dated April 26, 1995
between Maidenform Worldwide, Inc. and Certain
Stockholders of NCC Industries, Inc., as Sellers.
10.2 Stock Sale Agreement dated April 26, 1995
between Triumph International Overseas Ltd.,
various Sellers and Catherine C. Brawer,
as agent for the Sellers.
10.3 Loan Agreement dated April 26, 1995.
Confidential treatment requested.
10.4 Amended and Restated Note Purchase Agreement
dated April 1, 1995. Confidential treatment requested.
10.5 Security Agreement dated April 26, 1995.
10.6 Pledge Agreement dated April 26, 1995.
10.7 Amendment to Employment Agreement dated as of
April 10, 1995 between the Registrant and
Peter Muehlbauer.
10.8 Amendment to Series A Credit and Reimbursement
Agreement.
10.9 Consent to Second Lien.
10.10 Financial Data Schedule
(b) Reports on Form 8-K
No Reports on Form 8-K have been filed during the quarter ended
April 1, 1995.
EXHIBIT INDEX
Title of Document Page
Stock Purchase Agreement, dated April 26, 1995,
between Maidenform Worldwide, Inc. and Certain
Stockholders of NCC Industries, Inc., as Sellers. 15
Stock Sale Agreement, dated April 26, 1995,
between Triumph International Overseas Ltd.,
various Sellers and Catherine C. Brawer, as
agent for the Sellers. 108
Loan Agreement, dated as of April 26, 1995. 126
Amended and Restated Note Purchase Agreement dated
as of April 1, 1995. 239
Security Agreement dated as of April 26, 1995. 329
Pledge Agreement dated as of April 26, 1995. 356
Amendment to Employment Agreement dated as of
April 10, 1995 between the Registrant and
Peter Muehlbauer. 376
Amendment to Series A Credit and Reimbursement Agreement. 379
Consent to Second Lien. 387
Financial Schedule. 395
SIGNATURES
Pursuant to the requirements to 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.
NCC INDUSTRIES, INC.
Date 05-10-95 By:
/s/ Peter Muehlbauer
Peter Muehlbauer
Treasurer
Date 05-10-95 By:
/s/ David C. Masket
David C. Masket
President
STOCK PURCHASE AGREEMENT
Between
MAIDENFORM WORLDWIDE, INC.
As Buyer
and
CERTAIN STOCKHOLDERS OF NCC INDUSTRIES, INC.
as Sellers
_____________________________________
Dated as of April 26, 1995
_____________________________________
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
SECTION 1.1 Definitions 1
SECTION 1.2 Interpretation 10
ARTICLE II PURCHASE AND SALE; CLOSING11
SECTION 2.1 Purchase and Sale of Purchased
Shares 11
SECTION 2.2 Consideration 11
SECTION 2.3 Closing 11
SECTION 2.4 12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS13
SECTION 3.1 Status of the Purchased Shares 13
SECTION 3.2 Title to the Purchased Shares 14
SECTION 3.3 Authority Relative to this
Agreement 14
SECTION 3.4 No Conflicts; Consents 14
SECTION 3.5 Corporate Existence and Power 15
SECTION 3.6 Company Subsidiaries 15
SECTION 3.7 Charter Documents and
Corporate Records 16
SECTION 3.8 Capitalization 17
SECTION 3.9 Reports and Financial
Statements 17
SECTION 3.10 Liabilities 18
SECTION 3.11 Company Receivables 18
SECTION 3.12 Inventories 19
SECTION 3.13 Absence of Certain Changes 19
SECTION 3.14 Properties 22
SECTION 3.15 Contracts 24
SECTION 3.16 Intangible Property 27
SECTION 3.17 Claims and Proceedings 28
SECTION 3.18 Restrictions on Business
Activities 29
SECTION 3.19 Taxes 29
SECTION 3.20 Employee Benefits Plans 31
SECTION 3.21 Officers, Directors and Key
Employees 35
SECTION 3.22 EmploymentRelated Matters 35
SECTION 3.23 Potential Conflicts of
Interest 36
SECTION 3.24 Insurance 36
SECTION 3.25 Suppliers, Customers and
Contractors 37
SECTION 3.26 Compliance with Laws 37
SECTION 3.27 Permits 38
SECTION 3.28 Environmental Matters 38
SECTION 3.29 Finders; Fees 39
SECTION 3.30 Depositaries; Powers of
Attorney, etc. 39
SECTION 3.31 Acquisition for Investment 40
SECTION 3.32 Disclosure 40
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER40
SECTION 4.1 Buyer Common Stock 40
SECTION 4.2 Acquisition for Investment 40
SECTION 4.3 Authority Relative to This
Agreement 41
SECTION 4.4 No Conflicts; Consents 41
SECTION 4.5 Corporate Existence and Power 42
SECTION 4.6 Subsidiaries 42
SECTION 4.7 Charter Documents 43
SECTION 4.8 Capitalization 43
SECTION 4.9 Financial Information 44
SECTION 4.10 Liabilities 44
SECTION 4.11 Receivables 45
SECTION 4.12 Inventories 45
SECTION 4.13 Absence of Certain Changes 46
SECTION 4.14 Title to Properties 48
SECTION 4.15 Contracts 51
SECTION 4.16 Intangible Property 54
SECTION 4.17 Claims and Proceedings 55
SECTION 4.18 Restrictions on Business
Activities 55
SECTION 4.19 Taxes 55
SECTION 4.20 Employee Benefits Plans 57
SECTION 4.21 Officers, Directors and Key
Employees 61
SECTION 4.22 Employment Related Matters 61
SECTION 4.23 Potential Conflicts of
Interest 62
SECTION 4.24 Insurance 62
SECTION 4.25 Suppliers, Customers and
Contractors 63
SECTION 4.26 Compliance with Laws 63
SECTION 4.27 Permits 63
SECTION 4.28 Environmental Matters 64
SECTION 4.29 Finders; Fees 65
SECTION 4.30 Disclosure 65
ARTICLE V COVENANTS AND AGREEMENTS 65
SECTION 5.1 Conduct of Business of Company 65
SECTION 5.2 Conduct of Business of Buyer 67
SECTION 5.3 Corporate Examinations and
Investigations 68
SECTION 5.4 Additional Financial
Statements 69
SECTION 5.5 Filings and Authorizations 70
SECTION 5.6 Efforts to Consummate 70
SECTION 5.7 Negotiations With Others 71
SECTION 5.8 Notices of Certain Events 72
SECTION 5.9 Public Announcements 72
SECTION 5.10 Confidentiality 73
SECTION 5.11 Expenses. 74
SECTION 5.12 Tax Matters 74
SECTION 5.13 Restrictive Covenant. 75
SECTION 5.14 Possible Future Ventures 77
ARTICLE VI CONDITIONS TO CLOSING78
SECTION 6.1 Conditions to the Obligations
of Sellers and Buyer 78
SECTION 6.2 Conditions to the Obligations
of Sellers 79
SECTION 6.3 Conditions to the Obligations
of Buyer 81
ARTICLE VII INDEMNIFICATION83
SECTION 7.1 Survival of Representations
and Warranties 83
SECTION 7.2 Obligation of Sellers to
Indemnify 84
SECTION 7.3 Obligation of Buyer to
Indemnify 84
SECTION 7.4 Notice and Opportunity to
Defend Third Party Claims 85
SECTION 7.5 Limits on Indemnification 86
SECTION 7.6 Tax Impact 87
SECTION 7.7 Indemnity Sole Remedy 87
ARTICLE VIII TERMINATION 87
SECTION 8.1 Termination 87
SECTION 8.2 Effect of Termination; Right
to Proceed 88
ARTICLE IX MISCELLANEOUS89
SECTION 9.1 Notices 89
SECTION 9.2 Entire Agreement 91
SECTION 9.3 Waivers and Amendments; Non-
Contractual
Remedies; Preservation of Remedies 91
SECTION 9.4 Governing Law 91
SECTION 9.5 Consent to Jurisdiction and
Service of Process 92
SECTION 9.6 Designated Buyer 92
SECTION 9.7 Binding Effect; No Assignment 92
SECTION 9.8 Exhibits 92
SECTION 9.9 Severability 93
SECTION 9.10 Counterparts 93
EXHIBITS
Exhibit A - List of Sellers
Exhibit B - Form of Legal Opinion of Counsel to Buyer
Exhibit C - Form of Legal Opinion of Counsel to Sellers
A. SELLER SCHEDULES
Schedule 3.1 Restrictions on Purchased Shares
Schedule 3.4 Seller Required Consents
Schedule 3.5 Jurisdictions in which Authorized to
Transact Business
Schedule 3.6 Company Subsidiaries
Schedule 3.8 Capitalization
Schedule 3.10A Certain Liabilities
Schedule 3.10B Company Debt
Schedule 3.11 Certain Company Receivables
Schedule 3.13 Recent Developments
Schedule 3.14A Company Real Property
Schedule 3.14BCompany Leased Tangible Property
Schedule 3.14C Company Permitted Liens
Schedule 3.15 Contracts
Schedule 3.16 Company Intellectual Property Rights
Schedule 3.17 Claims and Proceedings
Schedule 3.19 Tax Matters
Schedule 3.20 Employee Benefit Plans
Schedule 3.22 Employment-Related Matters
Schedule 3.23 Potential Conflicts of Interest
Schedule 3.24 Insurance
Schedule 3.25A Suppliers and Customers
Schedule 3.25B Contractors
Schedule 3.27 Permits
Schedule 3.28 Environmental Matters
Schedule 3.30 Depositories; Powers of Attorney
Schedule 5.1 Certain Matters Prior to Closing
B. BUYER SCHEDULES
Schedule 4.4 Buyer Required Consents
Schedule 4.6 Buyer Subsidiaries
Schedule 4.8 Capitalization
Schedule 4.10A Liabilities
Schedule 4.10B Buyer Debt
Schedule 4.11 Certain Buyer Receivables
Schedule 4.13 Recent Developments
Schedule 4.14A Buyer Real Property
Schedule 4.14B Buyer Leased Tangible Property
Schedule 4.14C Buyer Permitted Liens
Schedule 4.15 Contracts
Schedule 4.16 Buyer Intellectual Property Rights
Schedule 4.17 Claims and Proceedings
Schedule 4.19 Taxes
Schedule 4.9 Employee Benefit Plans
Schedule 4.22 Employment - Related Matters
Schedule 4.23 Potential Conflicts of Interest
Schedule 4.25A Suppliers and Customers
Schedule 4.25B Contractors
Schedule 4.28 Environmental Matters
Schedule 5.2 Certain Matters Prior to Closing
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of April 26, 1995
between MAIDENFORM WORLDWIDE, INC., a Delaware corporation,
and each of the security-holders listed on the signature
page of this Agreement (each a "Seller" and collectively the
"Sellers"):
W I T N E S S E T H:
WHEREAS, each Seller owns the number of shares of Common
Stock, par value $1.00 per share (the "Company Common
Stock"), set out in Exhibit A next to the name of such
Seller under the caption "Total Number of Purchased Shares"
(collectively, the "Purchased Shares"), which Purchased
Shares constitute approximately 92% of the issued and
outstanding shares of capital stock of NCC Industries, Inc.,
a Delaware corporation (the "Company"); and
WHEREAS, each Seller desires to sell and Maidenform
Worldwide, Inc. desires to purchase all of the Purchased
Shares owned by such Seller on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises,
covenants and other agreements contained herein, the parties
hereby agree as follows:
I DEFINITIONS
I.1 Definitions. (a) The following terms, as used
herein, have the following meanings:
"Acquisition Proposal" shall mean any proposal for the
acquisition of, or merger or other business combination
involving the Company or any Company Subsidiary or the sale
of the Purchased Shares or the sale of any equity interest
in, or a substantial portion of the Assets of, the Company
or any Company Subsidiary, other than the transactions
contemplated by this Agreement.
"Affiliate" of any person means any other person directly
or indirectly through one or more intermediary persons,
controlling, controlled by or under common control with such
person.
"Agreement" or "this Agreement" shall mean, and the words
"herein", "hereof" and "hereunder" and words of similar
import shall refer to, this agreement as it from time to
time may be amended.
"Ancillary Agreements" shall mean the following
instruments to be entered on the Closing Date: (i)
Retirement Agreement between Maidenform, Inc. and Robert A.
Brawer with a guaranty appended thereto of Buyer; (ii)
Employment Agreement between Maidenform, Inc. and Elizabeth
J. Coleman with a guaranty appended thereto of Buyer; (iii)
Employment Agreement between Maidenform, Inc. and Catherine
C. Brawer with a guaranty appended thereto of Buyer; (iv)
Employment Agreement between Maidenform, Inc. and Magrone
with a guaranty appended thereto of Buyer; (v) Purchase
Agreement between Robert A. Brawer and Buyer with a guaranty
appended thereto of Maidenform, Inc.; and (vi) Call
Agreement by and among the stockholders of Buyer other than
Triumph, Spiesshofer and Magrone.
"Assets" shall mean properties, rights, interests and
assets of every kind, real, personal or mixed, tangible and
intangible.
"Audit" or "audited" when used in regard to financial
statements shall mean an examination of the financial
statements by a firm of independent certified public
accountants in accordance with generally accepted auditing
standards for the purpose of expressing an opinion thereon.
"Business" in relationship to any person shall mean the
business currently conducted by such person.
"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions in the Borough of Manhattan, the City of New
York, are authorized or obligated by law or executive order
to close.
"Buyer" shall mean Maidenform Worldwide, Inc., a Delaware
corporation and the successor by operation of law to
Maidenform Worldwide, Inc., a New York corporation (the
"Predecessor"). Unless specifically stated otherwise,
references herein to "Buyer" shall include the Predecessor.
"Buyer Balance Sheet" shall mean the consolidated balance
sheet of Buyer included in its audited financial statements
as at and for the fiscal year ended December 31, 1994.
"Buyer Balance Sheet Date" shall mean December 31, 1994.
"Buyer Common Stock" shall mean Buyer's Class A shares of
Common Stock, par value $.01 per share, entitling the
holders thereof to ten votes per share.
"Certificate of Incorporation" shall mean, in the case of
Buyer, its Restated Certificate of Incorporation, dated the
date hereof, and, in the case of any other corporation, the
certificate of incorporation, articles of incorporation or
charter of a corporation, howsoever denominated under the
laws of the jurisdiction of its incorporation.
"Close of Business" on any given date shall mean 5:00
p.m., Eastern Time, on such date; provided, however, that if
such date is not a Business Day, "Close of Business" shall
mean 5:00 p.m., Eastern Time, on the next succeeding
Business Day.
"Company Balance Sheet" shall mean the consolidated
balance sheet of the Company included in its audited
financial statements as at and for its fiscal year ended
December 31, 1994.
"Company Balance Sheet Date" shall mean December 31, 1994.
"Company Merger" shall mean (i) a merger of the Company
with and into Buyer or one of Buyer's Affiliates; (ii) a
merger of Buyer or one of Buyer's Affiliates with and into
the Company; (iii) any other consolidation or business
combination between the Company and Buyer or one of Buyer's
Affiliates and (iv) any one of the foregoing transactions
involving any Company Subsidiary.
"Contingency" with respect to a person shall mean any
unasserted Liability of which there is a reasonable
possibility of assertion and with respect to which the
possibility of such person incurring a Liability materially
adverse to the Condition of the Business or the Condition of
Buyer, as applicable, is not remote.
"Contract" shall mean any contract, agreement, indenture,
note, bond, lease, conditional sale contract, mortgage,
license, franchise, instrument, commitment or other binding
arrangement.
"Contractor" shall mean a person retained to design, cut,
assemble, produce or package products.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
The term "control", with respect to any person, shall mean
the power to direct the management and policies of such
person, directly or indirectly, by or through stock
ownership, agency or otherwise, or pursuant to or in
connection with an agreement, arrangement or understanding
(written or oral) with one or more other persons by or
through stock ownership, agency or otherwise; and the terms
"controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Environmental Laws" shall mean any and all statutes, laws
(including case law), codes, regulations, ordinances, rules,
judgments, orders, decrees, franchises, licenses, agreements
or any other requirement or restriction promulgated,
imposed, enacted or issued by any federal, state, local and
foreign Governmental Bodies relating to human health or the
environment, including the emission, discharge or Release of
pollutants, contaminants, Hazardous Substances or wastes
into the environment (which includes, without limitation,
ambient air, surface water, ground water, or land), or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation
thereof. "Environmental Laws" shall include but not be
limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. 9601, et
seq.), as amended by the Superfund Amendments and
Reauthorization Act of 1986 (42 U.S.C. 9601, et seq.) as
amended ("CERCLA"); the Resource Conservation and Recovery
Act of 1976, as amended (42 U.S.C. 6901, et seq.); the
Clean Water Act (Water Pollution Control Act), as amended
(33 U.S.C. 1251, et seq.); the Clean Air Act, as amended
(42 U.S.C. 7401, et seq.); the Insecticide, Fungicide and
Rodenticide Act, Pesticide Act of 1978, as amended (7 U.S.C.
136, et seq.); the Toxic Substances Control Act of 1976,
as amended (15 U.S.C. 2601 et seq.) the Safe Drinking
Water Act (42 U.S.C. 300(f) et seq.) as amended; and the
Hazardous Materials Transportation Control Act (49 U.S.C.
1801 et seq.).
"Environmental Liabilities" shall mean all Liabilities
arising from, relating to, or otherwise in connection with
the Company Real Property or Buyer Real Property, as
applicable, which (i) arise under or relate to Environmental
Laws and (ii) arise from or relate in any way to actions
occurring or conditions existing on or prior to the Closing
Date, including but not limited to Third Party Claims and
Regulatory Actions.
"Environmental Permits" with respect to a person shall
mean those material Permits required by such person in
connection with its Business or the use and operation of the
real property owned or leased by it.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Group" shall mean all persons which are treated as
being under common control or as a single employer with the
Company or any of its Subsidiaries or Buyer or any of its
Subsidiaries, as applicable, under Section 414(b), (c), (m)
or (o) of the Code.
"GAAP" shall mean generally accepted accounting principles
in effect on the date hereof as set forth in the opinions
and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the
accounting profession of the United States.
"Hazardous Substances" shall mean any dangerous, toxic,
radioactive, caustic or otherwise hazardous material,
pollutant, contaminant, chemical, waste or substance
defined, listed or described as any of such in or governed
by any Environmental Law, including but not limited to urea-
formaldehyde, polychlorinated biphenyls, asbestos or
asbestos-containing materials, nuclear or radioactive fuel
or waste, radon, explosives, known carcinogens, petroleum
and its derivatives, petroleum products, or any other waste,
material, substance, pollutant or contaminant having any
constituent elements displaying any of the foregoing
characteristics, or which might cause any injury to human
health or safety or to the environment or might subject the
owner or operator of the Company Real Property or Buyer Real
Property, as applicable, to any Regulatory Actions or Third
Party Claims.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" with respect to (a) any individual shall mean
actual knowledge and (b) any corporation shall mean the
actual knowledge of the directors and the executive officers
of such corporation; and "knows" has a correlative meaning.
"Liability" shall mean any direct or indirect
indebtedness, liability, assessment, claim, loss, damage,
deficiency, obligation or responsibility, fixed or unfixed,
choate or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, actual or potential,
contingent or otherwise (including any liability under any
guaranties, letters of credit or performance credits), of a
kind required by GAAP to be set forth on a financial
statement or in the notes thereto.
"Lien" shall mean, with respect to any Asset, any
mortgage, lien (including mechanics, warehousemen, laborers
and landlords liens), claim, pledge, charge, security
interest, preemptive right, right of first refusal, option,
judgment, title defect, or encumbrance of any kind in
respect of or affecting such Asset.
"Magrone" shall mean Frank Magrone, one of the Sellers.
"Multiemployer Plan" shall mean a multiemployer plan (as
defined in Section 4001(a)(3) of ERISA) to which any ERISA
Group member makes, or is obligated to make, contributions
for which there may be any liability.
"1934 Act" shall mean the Securities Exchange Act of 1934,
as amended, and all rules and regulations promulgated
thereunder.
"1933 Act" shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated
thereunder.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions.
"Pension Plan" shall mean a pension plan (as defined in
Section 3(2) of ERISA) which the Company or any of its
Subsidiaries or the Buyer or any of its Subsidiaries, as
applicable, sponsors, maintains or to which the Company or
any of its Subsidiaries or the Buyer or any of its
Subsidiaries, as applicable, makes or is obligated to make
contributions.
The term "person" shall mean an individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity, including a
government or political subdivision or an agency or
instrumentality thereof.
"Plan" shall mean any employee benefit plan (as defined in
Section 3(3) of ERISA), severance bonus or other incentive
compensation, vacation, change of control, stock option,
stock appreciation right, service award, company car, club
membership, relocation, educational assistance, patent
award, employee loan, policy, practice or arrangement,
employment or consultancy as to which the Company or any of
its Subsidiaries or Buyer or any of its Subsidiaries, as
applicable, sponsors, maintains or makes or is obligated to
make contributions or payments or for which there may be any
liability.
"412 Plan" shall mean a pension plan (as defined in
Section 3(2) of ERISA) which any member of the applicable
ERISA Group sponsors or maintains, and is covered under
Section 412 of the Code.
"Recapitalization Transactions" shall mean, collectively,
the following transactions which are also described in
Schedule 5.2 of Buyer's Schedules: (i) the reincorporation
merger on or prior to the date hereof of the Predecessor
into Buyer (the "Reincorporation Merger"); (ii) the
redemption prior to the date hereof by the Predecessor of
88,697 Class B shares of its common stock for a price of
$3,050,112; (iii) the merger prior to the date hereof of
Chranima, Inc., a New York corporation, with and into the
Predecessor; (iv) the payment prior to the date hereof of a
dividend by the Predecessor in the amount of $2,456,000; (v)
the redemption prior to the date hereof by Elizabeth Needle
Craft, Inc., a New York corporation, of its shares of non-
voting preferred stock; (vi) the transfer of shares (but not
the registration of such transfer) on or prior to the date
hereof held by Robert A. Brawer in Maidenform (UK) Limited
and Creaciones Textiles de Merida, S.A. de C.V. to a nominee
of Maidenform, Inc. and (vii) the filing on the date hereof
of Buyer's Certificate of Incorporation to reclassify its
capital stock and make other changes to its Certificate of
Incorporation.
"Regulatory Actions" shall mean any claim, demand, action,
suit or proceeding brought or instigated by any Governmental
Body in connection with any Environmental Law, including,
without limitation, civil, criminal and/or administrative
proceedings, and whether or not seeking costs, damages,
penalties or expenses.
"Release" shall mean the intentional or unintentional,
spilling, leaking, disposing, discharging or disturbance of,
or emitting, depositing, injecting, leaching, escaping, or
any other release or threatened release to or from, however
defined, any Hazardous Substance in violation of any
Environmental Law.
"Reportable Event" shall mean any of the events described
in Section 4043(b)(1), (2), (3), (5), (6), (8) or (9) of
ERISA.
"SEC" shall mean Securities and Exchange Commission.
"Sellers' Accountants" shall mean Coopers & Lybrand
L.L.P., independent certified public accountants, or such
other "Big 6" accounting firm selected by Sellers.
"Spiesshofer" shall mean Guenther Spiesshofer, one of the
Sellers.
"Stockholders' Agreement" shall mean the Stockholders'
Agreement among the Buyer and all its stockholders to be
entered into on the Closing Date after the consummation of
the Recapitalization Transactions and upon the acquisition
by Sellers of Buyer Common Stock.
"Subsidiary" as to any person shall mean any entity of
which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are
owned directly or indirectly through one or more
intermediaries, or both, by such person.
"Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") shall mean (i) any net income, gross
income, gross receipts, sales, use, ad valorem, transfer,
transfer gains, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits tax, alternative or
add-on minimum tax, customs duty or other tax, fee,
assessment or charge of any kind whatsoever (including but
not limited to taxes assessed to real property and water and
sewer rents relating thereto), together with any interest
and any penalty, addition to tax or additional amount
imposed by any Governmental Body (domestic or foreign)
responsible for the imposition of any such tax (a "Taxing
Authority"), with respect to the Company, any Company
Subsidiary or the Company Real Property (or the transfer
thereof) or Buyer or any Buyer Subsidiary, as applicable;
(ii) any liability for the payment of any amount of the type
described in the immediately preceding clause (i) as a
result of the Company or any Company Subsidiary or Buyer or
any Buyer Subsidiary, as applicable, being a member of an
affiliated or combined group with any other corporation at
any time on or prior to the Closing Date and (iii) any
liability of the Company or any Company Subsidiary or Buyer
or any Buyer Subsidiary, as applicable, for the payment of
any amounts of the type described in the immediately
preceding clause (i) as a result of a contractual obligation
to indemnify any other person.
"Taxable Year" with respect to a person shall mean, with
respect to any Tax of such person, the calendar or fiscal
year, or shorter period, for which the Tax is computed and
the Tax return for such Tax is made.
"Third Party Claims" shall mean any claim, action, demand,
suit or proceeding (other than Regulatory Actions) based on
negligence, trespass, strict liability, nuisance, toxic tort
or detriment to human health or welfare and, with respect to
any of the foregoing, due to Release or other contamination
or alleged contamination, or other violation of
Environmental Law and whether or not seeking costs, damages,
penalties or expenses brought by any person or entity other
than a Governmental Body.
"Triumph" shall mean Triumph International Overseas
Limited, a Liechtenstein corporation and one of the Sellers.
"Transaction Documents" shall mean, collectively, this
Agreement, the Stockholders' Agreement, and each of the
other agreements and instruments to be executed and
delivered by all or some of the parties hereto in connection
with the consummation of the transactions contemplated
hereby.
"Unfunded Pension Liability" shall mean, as of any
determination date, the amount, if any, by which the present
value of all accrued benefits under a Plan subject to Title
IV of ERISA exceeds the fair market value of all assets of
such plan all determined using the actuarial assumptions set
forth in the Plan.
The term "voting power" when used with reference to the
capital stock of, or units of equity interests in, any
person shall mean the power under ordinary circumstances
(and not merely upon the happening of a contingency) to vote
in the election of directors of such person (if such person
is a corporation) or to participate in the management and
control of such person (if such person is not a
corporation).
"Welfare Plan" shall mean an employee welfare benefit plan
within the meaning of Section 3(1) of ERISA.
"Withdrawal Liabilities" shall mean the amount of
liability determined or which may be determined pursuant to
Section 4201 of ERISA with respect to a Multiemployer Plan.
(a) The following terms are defined in the following
sections of this Agreement:
Term Section
Asserted Liability 7.4(a)
Authorized Agent 9.5
Brawer Stock Sale Agreement 6.1(e)
Buyer's Accountants 2.4(c)
Buyer Debt 4.10(b)
Buyer ERISA Group Plans 3.20(a)
Buyer Intellectual Property Rights 4.16(a)
Buyer Products 4.17
Buyer Proposed Contracts 4.15(c)
Buyer Real Property 4.14(a)
Buyer Receivables 4.11
Buyer Required Consents 4.4
Buyer Returns 4.19(a)
Buyer Subsidiary 4.6(a)
Buyer Tangible Property 3.14(b)
Claims 3.17
Claims Notice 7.4(a)
Closing 2.3
Closing Date 2.3
Company Recital
Company Common Stock Recital
Company Debt 3.10(b)
Company Intellectual Property
Rights 3.16
Company Leased Real Property 3.14(a)
Company Owned Real Property 3.14(a)
Company Permitted Liens 3.14(d)
Company Products 3.17
Company Proposed Contracts 3.15(c)
Company Real Property 3.14(a)
Company Returns 3.19
Company Subsidiary 3.6(a)
Company Tangible Property 3.14(b)
Condition of the Business 3.5
Condition of Buyer 4.5
Contemplated Transactions 3.3
Contingencies 3.10(a)
Designated Buyer 9.6
Governmental Bodies 3.26
Indemnifying Party 7.4(a)
Indemnitee 7.4(a)
Laws 3.26
Losses 7.2
Orders 3.26
Permits 3.27
Pre-Closing Tax Period 3.19(b)
Purchase Price 2.2
Purchased Shares Recital
Representatives 5.3
Restrictive Covenants 5.13(c)
Restricted Period 5.13(a)(i)
Seller ERISA Group Plans 4.20(a)
Seller Permitted Liens 4.14(d)
Seller Required Consents 3.4
Seller Tangible Property 4.14(b)
Sellers Recital
Stipulated Amount 7.5(a)
WARN 3.22
I.2 Interpretation. Unless the context otherwise
requires, the terms defined in Section 1.1 shall have the
meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms
of any of the terms defined herein. All accounting terms
defined in Section 1.1, and those accounting terms used in
this Agreement not defined in Section 1.1, except as
otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. When a
reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this
Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation". The use
of the neuter gender herein shall be deemed to include the
masculine and feminine genders wherever necessary or
appropriate, the use of the masculine gender shall be deemed
to include the neuter and feminine genders and the use of
the feminine gender shall be deemed to include the neuter
and masculine genders wherever necessary or appropriate.
II PURCHASE AND SALE; CLOSING
II.1 Purchase and Sale of Purchased Shares. Subject to
the terms and conditions set forth herein, each Seller
severally agrees to sell, transfer and deliver to Buyer, and
Buyer agrees to purchase, acquire and accept from each
Seller, the Purchased Shares of such Seller.
II.2 Consideration. Subject to the terms and conditions
set forth herein, the purchase price (the "Purchase Price")
payable by Buyer for the Purchased Shares shall be payable
on the Closing Date to the Sellers in cash and/or in shares
of Buyer Common Stock, as indicated below. The cash portion
of the Purchase Price shall be payable by wire transfer of
immediately available funds to accounts designated by
Sellers by written notice given to Buyer at least two (2)
Business Days prior to the Closing Date.
Name of Cash Number of shares of Buyer
Seller portion of Common
Purchase Stock to be issued to such
Price Seller
Triumph and $26,860,496 81,925.17
Spiesshofer
Magrone 2,891,010 7,155.83
Total $29,751,506 89,081.00
II.3 Closing. The closing (the "Closing") of the purchase
and sale of the Purchased Shares hereunder shall take place
at the offices of Baer Marks & Upham, 805 Third Avenue, New
York, New York at 10:00 a.m., local time, on the date hereof
(the time and date of the Closing being hereinafter called
the "Closing Date"). All transactions consummated at the
Closing shall be deemed to have taken place simultaneously.
II.4 Purchase Price Adjustment. (a) The Purchase Price
payable to Triumph shall be increased by an amount (the
"Adjustment"), if any, equal to 45% of the excess, if any,
of $110,880,000 over the sum of (i) the aggregate cumulative
consolidated earnings before interest and taxes ("EBIT") of
Buyer and its Subsidiaries for the three-year period
commencing January 1, 1995 and ending December 31, 1997 (the
"Three-Year Period"), plus (ii) the consolidated EBIT for
the Company and the Company Subsidiaries for the period from
January 1, 1995 through the Closing Date, provided that (A)
the amount of the Adjustment shall not exceed $5,500,000 and
(B) the Adjustment shall be reduced by an amount equal to
8 1/2% of the excess, if any, of $436,152,000 over the "NCC Net
Sales" (determined as provided in sub-sections (b) and (c)
below) during the Three-Year Period. The amount, if any,
payable to Triumph pursuant to the provisions of this
Section 2.4 (a) shall be paid not later than April 30, 1998.
(a) In the event of the consummation of a Company Merger,
Buyer will operate the Company as a separate sales division
and will maintain separate books and records for such
division so that the determination of NCC Net Sales will be
auditable. As used in this Section 2.4(b), the Company, or
if the Company is operated as a separate sales division of
Buyer such division, is referred to herein as the "NCC
Division". For purposes hereof, "NCC Net Sales" shall mean
the total net sales (determined in accordance with GAAP,
consistently applied from year to year) of the NCC Division
to unaffiliated entities as well as intercompany sales of
the NCC Division to other divisions of Buyer. To the extent
intercompany NCC Net Sales include sales of the NCC Division
to other divisions of Buyer that are not made on an arms-
length basis, intercompany sales of the NCC Division to
other divisions of Buyer shall be recomputed on a basis as
if such sales were on terms which were no less favorable to
the NCC Division than the terms of sales by the Company to
Buyer or an Affiliate thereof prior to Closing and shall be
priced on an arms-length basis. With respect to sales made
by the NCC Division to outlet stores of Maidenform, Inc.
such pricing, consistent with past practice, shall be on a
"close-out" basis.
(b) The EBIT of Buyer and NCC Net Sales shall each be
determined by the independent certified public accountants
engaged by Buyer with respect to the applicable calendar
year for which the determination is made (the "Buyer's
Accountants") and shall be based upon Buyer's audited
consolidated financial statements for the respective
calendar year. The EBIT of the Company and Company
Subsidiaries and the NCC Net Sales for the period from
January 1, 1995 through the Closing Date shall be based on
reviewed financial statements of the Company for such period
and shall be determined by Buyer's Accountants. The Buyer's
Accountants shall determine the elements included in EBIT in
accordance with GAAP, consistently applied from year to
year; and shall compute EBIT on a basis consistent with the
methodology used in formulating the projections included as
Exhibit 3 in the Appraisal of the Capital Stock of
Maidenform Worldwide, Inc. and NCC Industries, Inc. as of
November 30, 1994 prepared by Core States Investment
Banking. Within 120 days after the end of the respective
calendar year, Buyer shall deliver to Sellers a copy of the
EBIT of Buyer and NCC Net Sales computations of Buyer's
Accountants for the respective calendar year.
(c) If Triumph does not agree with the determinations
made by Buyer's Accountants, in accordance with the
provisions of Section 2.4(c), and Triumph and Buyer are
unable to resolve such disagreements within 30 days after
receipt of such determinations, or such longer period as the
parties may mutually agree upon, the matters in dispute
shall be referred for settlement to KPMG Peat Marwick LLP,
independent certified public accountants, or such other "Big
6" accounting firm as may be mutually agreed upon (the
"Accounting Firm"). Promptly thereafter, the Accounting
Firm shall review the matters in dispute (the "Disputed
Matters") and make any adjustments necessary to EBIT and NCC
Net Sales over the relevant periods. Each of Triumph and
Buyer will make available to the Accounting Firm all
information reasonably requested by the Accounting Firm in
connection with such review. All written communications to
or from the Accounting Firm by one party shall be furnished
simultaneously to the other party, and each party shall be
afforded reasonable opportunity to participate in all non-
written communications with the Accounting Firm in
connection with such review. Any determination by the
Accounting Firm pursuant to this Section 2.4(d) shall be
delivered by the Accounting Firm to Triumph and Buyer and
shall be final, conclusive and non-appealable. Triumph, on
the one hand, and Buyer on the other hand, shall bear the
fees and expenses of the Accounting Firm in equal shares.
III REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of Spiesshofer and Magrone, severally, as to the
matters relating to himself and the Purchased Shares owned
by him referred to in Sections 3.1, 3.2, 3.3, 3.4 and 3.31
(it being understood and agreed that neither Spiesshofer nor
Magrone is making any representations or warranties as to
any other Section of this Agreement), and Triumph as to all
matters referred to in this Article III, represent and
warrant to Buyer that:
III.1 Status of the Purchased Shares. Except as set
forth on Schedule 3.1, the Purchased Shares are subject to
no restrictions on transferability other than restrictions
imposed by (a) the 1933 Act and (b) applicable state
securities Laws. Except as set forth on Schedule 3.1, there
are no outstanding options, warrants, calls, preemptive
rights, rights of first refusal, or other rights to purchase
or acquire from any Seller, or any plans, contracts or
commitments providing for the issuance of, or the granting
of rights to any Seller to acquire: (i) any capital stock
of the Company or (ii) any securities convertible into or
exchangeable for any capital stock of the Company. No
Seller is contractually obligated or entitled to repurchase
or otherwise acquire any outstanding shares of capital stock
of the Company.
III.2 Title to the Purchased Shares. Except as set
forth on Schedule 3.1, each Seller owns and holds title to
such Seller's Purchased Shares free and clear of any Lien of
any kind. At the Closing, Buyer will acquire title to such
Seller's Purchased Shares, free and clear of any Lien of any
kind other than Liens created by Buyer.
III.3 Authority Relative to this Agreement. Each
Seller has full power, capacity and authority to execute and
deliver this Agreement and each other Transaction Document
to which he or it is a party and to consummate the
transactions contemplated hereby and thereby (the
"Contemplated Transactions"). The execution and delivery of
this Agreement and the consummation of the Contemplated
Transactions to which such Seller is a party have been duly
and validly authorized by each Seller and no other
proceedings on the part of any Seller (or any other person)
are necessary to authorize the execution and delivery by
such Seller of this Agreement or the consummation of the
Contemplated Transactions to which such Seller is a party.
This Agreement has been duly and validly executed and
delivered by each Seller, and (assuming the valid execution
and delivery of this Agreement by the other parties hereto)
constitutes the legal, valid and binding agreement of such
Seller enforceable against such Seller in accordance with
its terms except as such obligations and their
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable
remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor
may be brought (whether at law or in equity).
III.4 No Conflicts; Consents. The execution, delivery
and performance by each Seller of this Agreement and each
other Transaction Document to which he or it is a party, the
consummation of the Contemplated Transactions to which such
Seller is a party or the contemplated change of control of
the stock ownership of the Company, will not (i) violate any
provision of the Certificate of Incorporation or By-laws (or
comparable instruments) of Triumph, the Company or any of
the Company Subsidiaries; (ii) require the Sellers, the
Company or any of the Company Subsidiaries to amend any
Contract, obtain any consent, approval or action of or
waiver from, or make any filing with, or give any notice to,
any Governmental Body or any other person, except for
compliance with the HSR Act and as set forth on Schedule 3.4
(the "Seller Required Consents"); (iii) if the Seller
Required Consents are obtained, violate, conflict with or
result in the breach of any of the terms of, result in a
material modification of the effect of, or otherwise cause
the termination of, give any other contracting party the
right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any Contract to
which any Seller, the Company or any of the Company
Subsidiaries is a party or by or to which any of them or any
of their Assets may be bound or subject, or result in the
creation of any Lien upon the Purchased Shares or upon the
properties of the Company or any of the Company Subsidiaries
pursuant to the terms of any such Contract other than such
violations, conflicts, breaches, modifications,
terminations, rights to terminate, defaults or Liens that,
individually or in the aggregate, would not have a material
adverse effect on the Condition of the Business; (iv) if the
Seller Required Consents are obtained, violate any Law or
Order of any Governmental Body against, or binding upon, any
Seller, the Company or any of the Company Subsidiaries or
upon their respective Assets or Business other than such
violations that, individually or in the aggregate, would not
have a material adverse effect on the Condition of the
Business; (v) if the Seller Required Consents are obtained,
violate or result in the revocation or suspension of any
Permit other than such violations that, individually or in
the aggregate, would not have a material adverse effect on
the Condition of the Business; or (vi) if the Seller
Required Consents are not obtained, have a material adverse
effect on the Condition of the Business.
III.5 Corporate Existence and Power. Each of Triumph
and the Company is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite powers
and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as
now conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each
continental United States jurisdiction where the character
of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a material
adverse effect on the business, its Assets, financial
condition or the results of operations of the Company and
the Company Subsidiaries taken as a whole (collectively, the
"Condition of the Business"). The Company is duly qualified
to do business as a foreign corporation in each of the
jurisdictions listed on Schedule 3.5 hereto.
III.6 Company Subsidiaries. (a) Each Company
Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation or other organization, has all corporate or
other powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted and is duly qualified to do
business as a foreign person and is in good standing in each
jurisdiction where the character of the property owned or
leased by it or the nature of its activities make such
qualification necessary, except for such jurisdictions where
the failure to be so qualified would not, individually or in
the aggregate, have a material adverse effect on the
Condition of the Business.
(a) Schedule 3.6 sets out the name of each Subsidiary of
the Company ("Company Subsidiary"), its jurisdiction of
incorporation or other organization, each jurisdiction in
which it is duly qualified to do business as a foreign
corporation, the authorized capital stock or other ownership
interests of, and the securities issued by, each Company
Subsidiary, together with the holders of all such
outstanding securities. Except for the Company Subsidiaries
set forth on Schedule 3.6, the Company does not directly or
indirectly own any interest in any other person.
(b) Except as set forth on Schedule 3.6, all of the
outstanding capital stock or other ownership interests of
each Company Subsidiary is owned by the Company, directly or
indirectly, free and clear of any Lien and any other
limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). All of the outstanding
capital stock or other ownership interests of each Company
Subsidiary is validly issued, fully paid and nonassessable
and was not issued in violation of any preemptive rights,
rights of first refusal or any other contractual or legal
restrictions of any kind. Except as set forth on Schedule
3.6, there are no outstanding (i) securities of the Company
or any Company Subsidiary convertible into or exchangeable
for capital stock or other ownership interests in any
Company Subsidiary and (ii) options, warrants, calls or
other rights to acquire from the Company or any Company
Subsidiary, and no obligation of the Company or any Company
Subsidiary to issue, any capital stock or other ownership
interests of, or any securities convertible into or
exchangeable for any capital stock of or ownership interests
in, any Company Subsidiary. Except as set out in Schedule
3.6, there are no outstanding obligations of any Company
Subsidiary to repurchase, redeem or otherwise acquire any
securities of the Company or any Company Subsidiary.
III.7 Charter Documents and Corporate Records. (a)
Triumph has heretofore delivered to the Buyer true and
complete copies of the Certificate of Incorporation
(certified by the Secretaries of State or other appropriate
official of their respective jurisdictions of incorporation)
and By-laws (certified by the respective corporation's
secretary or an assistant secretary), or comparable
instruments, of Triumph, the Company and each of the Company
Subsidiaries as in effect on the date hereof. The stock and
transfer books of the Company and each of the Company
Subsidiaries have been made available to the Buyer for its
inspection and are true and complete.
(a) All financial, business and accounting books,
ledgers, accounts and official and other records relating to
the Company and each Company Subsidiary have been properly
and accurately kept and completed in all material respects,
and there are no material inaccuracies or discrepancies
contained or reflected therein. Neither the Company nor any
Company Subsidiary has any records, systems, Contracts, data
or information, recorded, stored, maintained, operated or
otherwise wholly or partly dependent upon or held by any
means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all
means of access thereto and therefrom) are not under their
exclusive ownership and direct control.
III.8 Capitalization. The authorized capital stock of
the Company consists of 10,000,000 shares of Common Stock,
par value $1.00 per share, and 500,000 shares of preferred
stock, par value $1.00 per share. There are: (a) 4,375,492
shares of Company Common Stock issued and outstanding,
4,042,479 of which are owned by the Sellers in the
respective amounts set forth on Exhibit A; (b) 491,349
shares of Company Common Stock held by the Company in its
treasury; and (c) no shares of preferred stock of the
Company issued and outstanding. All outstanding shares of
capital stock of the Company are duly authorized and validly
issued, are fully paid and nonassessable and were not issued
in violation of any preemptive rights, rights of first
refusal or any other contractual or legal restrictions of
any kind. There are no outstanding (i) securities of the
Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company and (ii)
options, warrants, calls, preemptive rights, rights of first
refusal or other rights to acquire from the Company, and no
obligation of the Company to issue, any capital stock,
voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the
Company. There are no outstanding obligations of the
Company to repurchase, redeem or otherwise acquire any
securities of the Company or any Company Subsidiary.
III.9 Reports and Financial Statements. Triumph has
previously furnished to the Buyer true and complete copies
of (i) the Company's Annual Reports on Form 10-K for each of
the two fiscal years ended December 31, 1994 and 1993 as
filed with the SEC; and (ii) all other reports or
registration statements filed by the Company with the SEC
since January 1, 1993. Except for the Information Statement
pursuant to Section 14(f) of the 1934 Act furnished to
stockholders of the Company in connection with the
Contemplated Transactions, the Company has not issued or
distributed any proxy or information statements since
January 1, 1992. As of their respective dates, the
Company's Annual Reports on Form 10-K, and all other reports
filed with the SEC since January 1, 1994 did not contain any
untrue statement of a material fact, or omit to state a
material fact, required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading, which untrue
statement or omission has not been corrected or updated in a
document subsequently filed with the SEC. The consolidated
balance sheet and statements of cash flows and operations of
the Company and statements of income and retained earnings
as of and for the years ended December 31, 1994, 1993, 1992
and 1991 audited by Coopers & Lybrand, L.L.P., copies of all
of which have been furnished to Buyer, have been prepared in
accordance with GAAP applied on a consistent basis (except
as may be indicated therein or in the notes thereto), are
accurate, show all material Liabilities, and fairly present
in accordance with GAAP the consolidated financial position
of the Company and the Company Subsidiaries as of the dates
thereof and the consolidated results of operations and cash
flows (or changes in financial position, as the case may
be), of the Company and the Company Subsidiaries for each of
the periods then ended. Since January 1, 1993, the Company
has filed with the SEC all reports and registration
statements and all other filings required to be filed with
the SEC under the rules and regulations of the SEC.
III.10 Liabilities. (a) Except as set forth in
Schedule 3.10A, Triumph is not aware of any unasserted
Contingency, except (i) Contingencies which are accrued or
reserved against in the consolidated balance sheet of the
Company as of December 31, 1994 or reflected in the notes to
the audited financial statements of the Company for the
fiscal year ended December 31, 1994; and (ii) Liabilities
incurred after the Company Balance Sheet Date in the
ordinary course of business and consistent with past
practice.
(a) Schedule 3.10B sets forth, as of the date hereof, a
brief description of all Liabilities of the Company and each
of its Company Subsidiaries in respect of (i) money borrowed
from and owed to any bank, financial institution or other
person; (ii) any indebtedness arising under leases required
to be capitalized under GAAP; (iii) any indebtedness arising
under purchase money obligations and (iv) any indebtedness
or potential indebtedness under any guaranty, letter of
credit or performance credit (the indebtedness or potential
indebtedness described in the foregoing clauses being
referred to, herein, collectively, as "Company Debt").
Except as set forth on Schedule 3.10B, all Company Debt may
be repaid or prepaid upon no more than 30 days' notice
without premium or penalty.
III.11 Company Receivables. (a) All the accounts
receivable of the Company and each Company Subsidiary (the
"Company Receivables") reflected in the Company Balance
Sheet and all Company Receivables that have arisen since the
Company Balance Sheet Date (except such Company Receivables
as have been collected since such date) are valid and
enforceable claims, and constitute bona fide Company
Receivables resulting from the sale of goods and services in
the ordinary course of business in conformity with
applicable purchase orders, agreements and specifications.
To the knowledge of Triumph, the Company Receivables are
subject to no valid defense, offsets, returns, allowances or
credits of any kind other than in the ordinary course of
business and are fully collectible within 90 days from the
date they are invoiced except to the extent of the amount of
the reserve for doubtful accounts reflected in the Company
Balance Sheet, it being understood and agreed that nothing
contained herein shall be deemed to guarantee the
collectibility of the Company Receivables. Triumph has
heretofore delivered to Buyer a schedule as at March 31,
1995 setting forth the total amount of Company Receivables
and a schedule of the aging of such Company Receivables
based on 0-30 days, 31-60 days, 61-90 days and over 90 days.
All chargebacks with customers to which the Company or any
Company Subsidiary has agreed have been credited to the
customers concerned.
(a) Schedule 3.11 sets forth a brief description and list
(including the principal amount and maturity date) of any
loan made by the Company or any Company Subsidiary: (i) in
excess of $15,000 to any employee of the Company or any
Company Subsidiary and (ii) to any person other than
employees of the Company or any Company Subsidiary.
III.12 Inventories. The inventories of the Company and
each of the Company Subsidiaries reflected in the Company
Balance Sheet and all inventory items acquired since the
Company Balance Sheet Date consist of raw materials,
supplies, work-in-process and finished goods of such quality
and in such quantities as are being used or are reasonably
anticipated to be usable, or are being sold or are suitable
for sale, in the ordinary course of its business. Such
inventories are valued at the lower of cost or market and
were determined in accordance with GAAP consistently
applied. Since the Company Balance Sheet Date, the Company
and each of the Company Subsidiaries have continued to
replenish its inventories in a normal and customary manner
consistent with prior practice and prudent business
judgment. The Company and each Company Subsidiary have
established adequate reserves for inventory that no longer
constitutes part of their current line. The amount of such
reserves and the methodology used to determine same have
been disclosed in writing by Triumph to Buyer with specific
reference to this Section 3.12.
III.13 Absence of Certain Changes. Since the Company
Balance Sheet Date, except as set forth in this Agreement or
disclosed or referred to in Schedule 3.13, each of the
Company and the Company Subsidiaries has conducted its
business in the ordinary course consistent with past
practices and there has not been:
(a) Any event that has had or would reasonably be
expected to have a material adverse effect on the Condition
of the Business;
(b) Any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
capital stock of the Company or any of the Company
Subsidiaries;
(c) Any amendment to the Certificate of Incorporation or
By-laws of the Company or any of the Company Subsidiaries or
any amendment to any term of any outstanding security of the
Company or any of the Company Subsidiaries;
(d) Any (i) incurrence, assumption or guarantee by the
Company or any of the Company Subsidiaries of any Liability
other than in the ordinary course of business in amounts and
on terms consistent with past practices, (ii) issuance or
sale of any securities convertible into or exchangeable for
debt securities of the Company or any of the Company
Subsidiaries, or (iii) issuance or sale of options or other
rights to acquire from Seller, the Company or any of the
Company Subsidiaries, directly or indirectly, debt
securities of the Company or any of the Company Subsidiaries
or any securities convertible into or exchangeable for any
such debt securities;
(e) Any creation, incurrence or assumption by the Company
or any of the Company Subsidiaries of any Lien on any Asset
other than (i) Liens for Taxes not yet due or being
contested in good faith (and for which adequate reserves
have been established); (ii) Liens which do not materially
detract from the value of such Asset as now used, or
materially interfere with any present or intended use of
such Asset; or (iii) Permitted Liens.
(f) Any making or forgiving of any loan, advance or
capital contribution to or investment in any person other
than loans, advances or capital contributions to or
investments in Company Subsidiaries made in the ordinary
course of business consistent with past practices;
(g) Any damage, destruction or other casualty loss
(whether or not covered by insurance), condemnation or other
taking affecting the business or Assets of the Company or
any of the Company Subsidiaries which, individually or in
the aggregate, has had or will reasonably be expected to
have a material adverse effect on the Condition of the
Business;
(h) Except in the ordinary course of business, any
transaction or commitment made, or any Contract entered
into, by the Company or any of the Company Subsidiaries
relating to its Assets or business (including the
acquisition or disposition of any substantial Assets) or any
relinquishment by the Company or any of the Company
Subsidiaries of any Contract or other right;
(i) Any change in any method of accounting or accounting
practice by the Company or any of the Company Subsidiaries;
(j) Any assumption or guarantee of the obligations of any
person other than a Company Subsidiary;
(k) Any grant of any severance or termination pay to any
stockholder or officer of the Company or any of the Company
Subsidiaries, any entering into of any employment, deferred
compensation or other similar agreement (or any amendment to
any such existing agreement) with any stockholder, officer
or director of the Company or any of the Company
Subsidiaries or any increase in benefits payable under any
existing severance or termination pay policies or employment
agreements, or any increase in compensation, bonus or other
benefits payable to any stockholder, officer or director of
the Company or any of the Company Subsidiaries in each case,
other than routine increases in the ordinary course of
business or disclosed to Buyer in writing with specific
reference to this Section 3.13(k) or on any Schedule.
(l) Any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union
or representative thereof to organize any employees of the
Company or any of the Company Subsidiaries, which employees
were not subject to a collective bargaining agreement at the
Company Balance Sheet Date, or any lockouts, strikes,
slowdowns, work stoppages or, to the knowledge of Triumph,
threats thereof by or with respect to such employees;
(m) Any waiver of any material right under any Contract
of the type required to be set forth on any Schedule;
(n) Except for any changes made in the ordinary course of
business, any material change in any of the Company's or any
of the Company Subsidiaries' business policies, including
advertising, investment, marketing, pricing, purchasing,
production, personnel, sales, returns, budget or product
acquisition policies;
(o) Except in the ordinary course of business, any
payment, directly or indirectly, of any material Liability
before the same became due in accordance with its terms;
(p) Any termination or failure to renew, or the receipt
of any written threat (that was not subsequently withdrawn)
to terminate or fail to renew, any Contract that is or was
material to the Condition of the Business; or
(q) Any Contract or arrangement made by the Company or
any of the Company Subsidiaries to take any action which, if
taken prior to the date hereof, would have made any
representation or warranty in this Section untrue or
incorrect in any material respect.
III.14 Properties. (a) Schedule 3.14A sets forth a
complete list and brief description of all real property
owned by the Company or any of the Company Subsidiaries (the
"Company Owned Real Property") and all real property leased
or operated by the Company or any of the Company
Subsidiaries (the "Company Leased Real Property") (together,
the Company Owned Real Property and the Company Leased Real
Property shall be referred to as the "Company Real
Property"). With respect to the Company Owned Real
Property, Schedule 3.14A also sets forth for each Company
Owned Real Property a list of any title insurance policies,
appraisal reports and environmental reports in the
possession or under the control of the Company or any of the
Company Subsidiaries, copies of all of which have been
provided to Buyer. With respect to the Company Leased Real
Property, Schedule 3.14A also sets forth the date of each
lease and any amendments thereto, the term thereof,
including any renewal options, options to purchase, rights
of first refusal, and the aggregate monthly rental payable
thereunder.
(a) With respect to the Company Real Property and the
Company's or the Company Subsidiaries' operations thereat,
except as set forth in Schedule 3.14A:
(i) To the knowledge of Triumph, there are no violations
of any Law (including but not limited to zoning and setback
requirements) where the effect of any such violation,
individually or in the aggregate, would have a materially
adverse effect on the Condition of the Business;
(ii) The Company or the Company Subsidiaries have obtained
and complied with all Permits and Orders, except where the
failure to obtain such Permits and Orders or comply
therewith, individually or in the aggregate, would not have
a material adverse effect on the Condition of the Business;
(iii) All buildings, structures and other improvements
located thereon that are owned or leased are in working
condition and repair, reasonable wear and tear excepted,
except where such failure to be in working condition and
repair, reasonable wear and tear excepted, would not have a
material adverse effect on the Condition of the Business,
and neither the Company nor any Company Subsidiary has done
or performed, or caused to be done or performed, any work or
required any services within the past year except for which
payment in full has been made and lien waivers obtained;
(iv) There is no pending or, to the knowledge of Triumph,
threatened Claim (including Third Party Claims), or any
existing condition or basis which may give rise to any such
Claim, or which may otherwise result in the imposition of a
Lien or forfeiture of any of the Company Owned Real
Property, or otherwise prohibit, restrict or materially
interfere with its use as presently conducted except for
Claims which would not have a material adverse effect on the
Condition of the Business;
(v) To the knowledge of Triumph, there is no pending or
threatened Claim (including Third Party Claims), or any
existing condition or basis which may give rise to any such
Claim, or which may otherwise result in the imposition of a
Lien or forfeiture of any of the Company Leased Real
Property, or otherwise prohibit, restrict or materially
interfere with its use as presently conducted except for
Claims which would not have a material adverse effect on the
Condition of the Business,
(vi) There are no pending, or to the knowledge of Triumph,
threatened proceedings, which may result in a total or
partial condemnation, eminent domain or other taking of any
Company Owned Real Property;
(vii) To the knowledge of Triumph, there are no
pending or threatened proceedings, which may result in a
total or partial condemnation, eminent domain or other
taking of any Company Leased Real Property;
(viii) There are no claims of or rights to possession,
or any claims of adverse possession, with respect to all or
any portion of any of the Company Owned Real Property;
(ix) To the knowledge of Triumph, there are no claims of
or rights to possession, or any claims of adverse
possession, with respect to all or any portion of any of the
Company Leased Real Property; and
(x) The Company or a Company Subsidiary has good and
insurable fee title to the Company Owned Real Property and a
valid and existing leasehold interest in the Company Leased
Real Property subject to no Liens except for Company
Permitted Liens.
(b) Triumph has heretofore provided to Buyer a complete
and correct list and description of all tangible property
(the "Company Tangible Property") owned or used by the
Company or any Company Subsidiary or which the Company or
any of the Company Subsidiaries holds an option to acquire
having a value individually of $500,000 or more or $500,000
or more in the aggregate in case of any group of similar
items of Company Tangible Property, including, without
limitation, all machinery, sewing or cutting machines,
equipment, furniture, furnishings, leasehold improvements,
fixtures and vehicles. All Company Tangible Property has
been maintained in the ordinary course and is in working
order, reasonable wear and tear excepted, except for a
nonmaterial portion of such Company Tangible Property that
may be undergoing repairs or maintenance in the ordinary
course and except where such failure to maintain would not
have a material adverse effect on the Condition of the
Business.
(c) Schedule 3.14B sets forth the date of each lease of
Company Tangible Property and any amendments thereto, the
term thereof including renewal options, options to purchase
and the aggregate monthly rent payable thereunder.
(d) Except as set out in Schedule 3.14C, the Company or a
Company Subsidiary has good title to all Company Tangible
Property reflected on the Company Balance Sheet or acquired
after the Company Balance Sheet Date except for Company
Tangible Property sold or disposed of since the Company
Balance Sheet Date in the ordinary course of business
consistent with past practice. The Company or a Company
Subsidiary has good title to all raw materials, work in
process or finished Company Products located at the premises
of any Contractor. Except as set forth on Schedule 3.14C,
none of such Company Tangible Property is subject to any
Liens, except for the following (collectively, "Company
Permitted Liens"):
(i) Liens disclosed on the Company Balance Sheet or the
notes thereto;
(ii) Liens for Taxes not yet due or payable or being
contested in good faith (and for which adequate reserves
have been established on the Company Balance Sheet);
(iii) Liens, easements, zoning or other planning
restrictions or limitations on use or other irregularities
in title, none of which materially detracts from the value
of such Assets as now used, or materially interferes with
any present use of such Assets;
(iv) Liens arising in the ordinary course of business
which do not materially detract from the value of such
Assets as now used or materially interfere with any present
use of such Assets; and
(v) Liens of carriers, warehousemen, mechanics,
materialmen, vendors, lessors and landlords incurred in the
ordinary course of business.
III.15 Contracts. (a) Except for Contracts pursuant
to the terms of which there is either a current or future
obligation or right of the Company or a Company Subsidiary
to make payments or receive payments not in excess
(individually or, in the case of any group of similar items,
in the aggregate) of $50,000, Schedule 3.15 sets forth as of
the date hereof a complete and accurate list of all
Contracts to which either the Company or any of the Company
Subsidiaries is a party, or by or to which it or its Assets
are bound or subject, including, without limitation:
(i) Contracts with any current or former employee,
independent contractor, consultant, agent or other
representative or with any Affiliate of any of the
foregoing;
(ii) Contracts relating to the design of any Company
Products;
(iii) Other than in the ordinary course of business:
(A) Contracts for the sale of any of its Assets or
(B) Contracts for the grant to any person of any
preferential rights to purchase any of its Assets;
(iv) Contracts under which the Company and/or any of the
Company Subsidiaries agree to indemnify any person;
(v) Contracts under which the Company and/or any of the
Company Subsidiaries agree to share Tax liability of, or
with, any party;
(vi) Contracts that cannot be cancelled without material
Liability, premium or penalty;
(vii) Contracts with any person to advertise or market
any of the Company's or any of the Company Subsidiaries'
Company Products other than in the ordinary course of
business;
(viii) Contracts relating to the acquisition of any
operating business or the capital shares of any other
person;
(ix) Options for the purchase or sale of any Asset;
(x) Contracts requiring the payment to any person of an
override or similar commission or fee;
(xi) Contracts with customers, independent suppliers,
Contractors and manufacturers other than in the ordinary
course of business;
(xii) Sales agency, licensing, manufacturer's
representative or distributorship agreements;
(xiii) Contracts pursuant to which any party is
required to purchase or sell a stated portion of its
requirements or output to another party;
(xiv) Contracts for the payment of fees or other
consideration to any officer or director of the Company or
any of the Company Subsidiaries or to any other entity in
which any of the foregoing has an interest; and
(xv) Management Contracts and other similar agreements
with any person.
(b) Schedule 3.15 also sets forth as of the date hereof a
complete and accurate list of the following Contracts to
which either the Company or any of the Company Subsidiaries
is a party, or by which it or its Assets are bound or
subject:
(i) Contracts with any current or former stockholder,
officer or director that will impose, after the Closing
Date, continuing obligations on the Company or any Company
Subsidiary;
(ii) Contracts with any labor union or association
representing any employee;
(iii) Partnership or joint venture agreements;
(iv) Contracts containing covenants not to compete in any
line of business or with any person in any geographical area
(or not to solicit or accept any business) or covenants of
any other person not to compete in any line of business or
in any geographical area with the Company or any Company
Subsidiary (or not to solicit or accept any business);
(v) Contracts relating to any Company Debt relating to
indebtedness in excess of $250,000; and
(vi) Contracts providing rights of exclusivity to
distributors or retailers for definite or indefinite periods
for any products or product lines or for the use of any
trademark or tradename.
(c) Schedule 3.15 also lists and describes the status of
all Contracts currently in negotiation or proposed by the
Company or any of the Company Subsidiaries as to which there
exists a draft agreement, letter of intent or similar
instrument and which is of a type which if entered into by
the Company or any of the Company Subsidiaries would be
required to be listed on Schedule 3.15 or on any other
Schedule (the "Company Proposed Contracts").
(d) There are no Contracts, other than those set forth on
Schedule 3.15, on any other Schedule to this Agreement or
which are not required to be disclosed hereunder. Except as
set forth on Schedule 3.15, all Contracts (individually or,
in the case of any group of similar Contracts, in the
aggregate) material to the Condition of the Business are
valid, subsisting, in full force and effect and binding upon
the Company or any of the Company Subsidiaries, as the case
may be, and, to the knowledge of Triumph, on the other
parties thereto in accordance with their terms, and the
Company and each of the Company Subsidiaries has paid in all
material respects or accrued all amounts due thereunder and
has satisfied in all material respects or provided for all
of its liabilities and obligations thereunder to be
satisfied or provided for through the date hereof, and is
not in default under any of them in any material respect,
nor, to the knowledge of Triumph, is any other party to any
Contract (individually or, in the case of any group of
similar Contracts, in the aggregate) material to the
Condition of the Business in default thereunder in any
material respect, nor, to the knowledge of Triumph, does any
condition exist that with notice or lapse of time or both
would constitute a material default thereunder. Except as
separately identified on Schedule 3.15 hereto, neither the
Company nor any of the Company Subsidiaries is a party to or
bound by any Contract that materially adversely affects the
Condition of the Business. Except as separately identified
on Schedule 3.15 hereto or on any other Schedule, no
approval or consent of any person is needed in order that
the Contracts (individually or, in the case of any group of
similar Contracts, in the aggregate) material to the
Condition of the Business continue in full force and effect
following the consummation of the Contemplated Transactions
and the operation of the Business of the Company and the
Company Subsidiaries together with that of the Buyer and the
Buyer Subsidiaries except for such approvals or consents
which, if not obtained, would not have a material adverse
effect on the Condition of the Business. Except as set
forth on Schedule 3.15 or any other Schedule, the
termination of any Contract will not cause the Buyer, the
Company or any Company Subsidiary of the Company to incur
any material penalty, loss, expense or termination payment.
(e) There have been delivered to Buyer, true and complete
copies of (i) all of the Contracts required to be set forth
on Schedule 3.15 or on any other Schedule and (ii) the most
recent draft, letter of intent or term sheet of all of the
Company Proposed Contracts required by the provisions of
Section 3.15(c) to be set forth on Schedule 3.15.
III.16 Intangible Property. (a) Schedule 3.16 sets
forth all patents, trademarks, registered copyrights,
service marks and trade names owned or used by the Company
or any of the Company Subsidiaries, all applications for any
of the foregoing, and all permits, grants and licenses or
other rights running to or from the Company or any of the
Company Subsidiaries relating to any of the foregoing, and
there are no other patents, models, industrial designs,
trademarks, copyrights, service marks and trade names that
are material to the Condition of the Business (the "Company
Intellectual Property Rights").
(a) To the knowledge of Triumph, with respect to Company
Intellectual Property Rights owned by the Company material
to the Condition of the Business: (i) all United States
renewals and other maintenance actions in respect of the
registrations set forth in Schedule 3.16 have been
appropriately filed; (ii) the Company has exercised its best
efforts to ensure compliance with all United States
registration and recording requirements, and has paid all
necessary government fees; and (iii) the United States
trademark registrations and licenses thereof are valid with
respect to Company Products that are covered by the
registrations. Triumph or, as disclosed in Schedule 3.16,
the Company owns the "Lilyette" trademark or any variant
thereof and Schedule 3.16 identifies all jurisdictions in
which such trademark has been registered or is in use.
(b) Except as set forth in Schedule 3.16 or except for
any restrictions of an immaterial nature, the Company has
the right to use, free and clear of any Claims or rights of
others, all material trade secrets, know-how, processes,
technology, blue prints, art work, films, negatives,
photographs, separations, patterns and package and other
designs utilized in the conduct of its business, except
where such failure to have such rights would not,
individually or in the aggregate, have a material adverse
effect on the Condition of the Business. The Company has
the right to use in its advertising materials, without
liability to any person, the photographs or other depictions
of models that it does use.
(c) Except as set forth on Schedule 3.16, no material
Company Intellectual Property Right is subject to any Lien
or outstanding Order or Contract restricting the use or
licensing thereof. Except as set forth on Schedule 3.16,
(i) neither the Company nor any of the Company Subsidiaries
during the three years preceding the date hereof has been
sued or charged in writing with or been a defendant in any
Claim which has not been terminated prior to the date hereof
and which involves a Claim of infringement arising out of
the use, registration or ownership of any Company
Intellectual Property Rights material to the Condition of
the Business; and (ii) Triumph has no knowledge of any such
charge or Claim of any infringement during the three years
preceding the date hereof by any other person arising out of
the use, registration or ownership of any material Company
Intellectual Property Rights.
III.17 Claims and Proceedings. Except as set forth on
Schedule 3.17, there are no outstanding material Orders of
any Governmental Body against or involving the Company, any
of the Company Subsidiaries or their respective Assets other
than Orders affecting the apparel industry generally.
Except as set forth on Schedule 3.17, there are no actions,
suits, claims or counterclaims or legal, administrative or
arbitral proceedings or investigations (collectively,
"Claims") (whether or not the defense thereof or Liabilities
in respect thereof are covered by insurance), pending or
threatened in writing, against or involving the Company or
any of the Company Subsidiaries or any of their respective
Assets which (i) involve a claim for the payment of money
damages of $100,000 or more; (ii) relate to employment,
regardless of amount other than workers' compensation
Claims, severance Claims or Claims under Plans; or (iii)
individually or in the aggregate, would have a material
adverse effect upon the Contemplated Transactions or upon
the Condition of the Business other than Claims affecting
the apparel industry generally. Except as set forth on
Schedule 3.17, to the knowledge of Triumph, the Company or
the Company Subsidiaries, there is no fact, event or
circumstances that would give rise to any Claim that would
be required to be set forth on Schedule 3.17 if currently
pending or threatened. All notices required to have been
given to any insurance company listed as insuring against
any Claim set forth on Schedule 3.17 have been timely and
duly given and, except as set forth on Schedule 3.17, no
insurance company has asserted in writing that such Claim is
not covered by the applicable policy relating to such Claim.
Except as set forth on Schedule 3.17 there are no material
product liability Claims against or involving the Company or
any of the Company Subsidiaries or, to the knowledge of
Triumph, any product manufactured, marketed or distributed
at any time by the Company or any of the Company
Subsidiaries ("Company Products") and no such Claims have
been settled, adjudicated or otherwise disposed of since
January 1, 1992. There are no material Claims pending or,
to the knowledge of Triumph, threatened that would give rise
to any right of indemnification on the part of any director
or officer of the Company or any of the Company Subsidiaries
or the heirs, executors or administrators of such director
or officer, against the Company or any of the Company
Subsidiaries or any successor to the business of the Company
or any of the Company Subsidiaries.
III.18 Restrictions on Business Activities. There is
no Order binding upon the Company or any of the Company
Subsidiaries which has or would reasonably be expected to
have the effect of prohibiting or adversely affecting (i)
competition by the Company or any of the Company
Subsidiaries, (ii) any business practice of the Company or
any of the Company Subsidiaries, (iii) any acquisition of
property by the Company or any of the Company Subsidiaries,
or (iv) to the knowledge of Triumph, the Condition of the
Business.
III.19 Taxes. (a) Except as set forth in the Company
Balance Sheet (including the notes thereto) or on Schedule
3.19, (i) all Tax returns, statements, applications, reports
and forms required by law to be filed with any Taxing
Authority on or before the Closing Date with respect to any
Pre-Closing Tax Period (as hereinafter defined) by or on
behalf of the Company or any Company Subsidiary
(collectively, the "Company Returns") have been timely filed
through the date hereof or will be filed when due (taking
into account any extension granted by the appropriate Taxing
Authority); (ii) as of the time of filing, the Company
Returns correctly reflected (and, as to any Company Returns
not filed as of the date hereof and required to be filed on
or before the Closing Date, will correctly reflect) the
facts regarding the income, business, Assets, operations,
activities and status of the Company, the Company
Subsidiaries and any other information required to be shown
therein; (iii) the Company and Company Subsidiaries have
timely paid or made provision for in reserves shown in the
Company Balance Sheet all Taxes that are due and payable for
any period ended on or prior to the date of the Company
Balance Sheet; (iv) the Company and Company Subsidiaries
have made or on or before the Closing Date will make
provision for all Taxes payable by the Company and Company
Subsidiaries for any Pre-Closing Tax Period for which no
Company Return has been filed; (v) the charges, accruals and
reserves for Taxes reflected or that will be reflected on
the books of the Company and the Company Subsidiaries are
adequate to cover the Tax liabilities accruing or payable by
the Company and the Company Subsidiaries in respect of any
Pre-Closing Tax Period; (vi) all Liabilities of the Company
and the Company Subsidiaries with respect to federal income
Taxes have been finally determined except for the fiscal
years 1988 through 1993, the only years not closed by the
expiration of the statute of limitations; (vii) no
deficiency for any Tax or claim for additional Taxes by any
Taxing Authority has been proposed, asserted or assessed in
writing against the Company or any Company Subsidiary (or
any member of any affiliated or combined group of which the
Company or any Company Subsidiary is or has been a member);
(viii) neither the Company nor any Company Subsidiary (or
any member of any affiliated or combined group of which the
Company or any Company Subsidiary is or has been a member)
has been granted any extension or waiver of the limitation
period applicable to any Company Returns; (ix) neither the
Company nor any Company Subsidiary has filed any consent or
election under the Code, other than such consents and
elections, if any, reflected in the Company Returns or
otherwise disclosed in writing to Buyer with specific
reference to this Section 3.19(a)(ix) or which could have a
material adverse effect on the Condition of the Business;
(x) neither the Company nor any Company Subsidiary has
entered into or will enter into any agreement or consent
under Section 341(f) of the Code; (xi) neither the Company
nor any Company Subsidiary owns any interest in real
property in the State of New York or in any other
jurisdiction which would result, as a result of the
consummation of the Contemplated Transactions, in the
imposition of the New York State Real Property Transfer
Gains Tax for real property located in New York or a similar
tax for real property located in any other jurisdiction;
(xii) there are no Liens for Taxes upon the Assets of the
Company or any Company Subsidiary other than for Taxes not
yet due and payable; (xiii) neither the Company nor any
Company Subsidiary will be required, as a result of a change
in method of accounting for a Pre-Closing Tax Period, to
include any adjustment under Section 481(c) of the Code in
taxable income for any Tax period (or portion thereof)
ending on the Closing Date; (xiv) neither the Company nor
any Company Subsidiary has been a member of an affiliated
group other than one of which the Company was the common
parent, or filed or been included in a combined,
consolidated or unitary Company Return together other than
one filed by the Company; (xv) neither the Company nor any
Company Subsidiary is currently under any contractual
obligation to indemnify any other person with respect to
Taxes; (xvi) the Company is not and has not been a United
States real property holding corporation as defined in
Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) thereof; and (xvii)
since its organization on February 6, 1992, Crescent
Industries Inc. has been a possessions corporation that
qualified for the Puerto Rico and possessions tax credit and
since April 27, 1992 has been exempt from Puerto Rican
income Taxes.
(a) As used herein, "Pre-Closing Tax Period" means any
tax period (or portion thereof) ending on or before the
Closing Date.
(b) True and correct copies of the Company Returns for
the years 1991, 1992 and 1993 have been delivered to Buyer.
(c) Neither the Company nor any Company Subsidiary is
party to any tax-sharing or tax allocation agreement
pursuant to which it is obligated to pay any amount to
anyone else.
(d) Except as set forth on Schedule 3.19, neither the
Company nor any Company Subsidiary holds or has held a
permit, registration, certificate or like instrument as a
"dealer" or other collecting agent from a state Taxing
Authority under which it collects sales tax from its
business operations and remits such tax to such Taxing
Authority.
III.20 Employee Benefits Plans. (a) Schedule 3.20
contains a true and complete list of (i) all of the Plans of
the Company, any of the Company Subsidiaries, and of any
other companies or entities which constitute a member of the
Company ERISA Group, which are presently in effect or, in
the case of Pension Plans, have been in effect at any time
prior to the date hereof and for which there is any
liability; (ii) any other pension, profit sharing,
retirement, deferred compensation, stock purchase, stock
option, incentive, bonus, sabbatical leave, vacation, all
employment or severance Contracts (including, without
limitation, arrangements providing for benefits in the event
of a change of ownership in whole or in part of the
Company), disability, hospitalization, health and medical
insurance plans, relocation, child care, educational
assistance or other employee benefit plan or program which
any member of the Company ERISA Group maintains or to which
any member of the Company ERISA Group has any present or
future obligation to contribute; and (iii) separately
identifies all Plans providing retiree benefits. (The Plans
or programs described in clauses (i), (ii) and (iii)
including all non-qualified plans are herein collectively
referred to as the "Company ERISA Group Plans".) Except as
set forth in Schedule 3.20, the Company has delivered or
made available to Buyer true and complete copies of all
documents (including plan documents and related trust
agreements) as they may have been amended to the date of
delivery or availability, embodying or relating to clauses
(i), (ii) and (iii) hereinabove and a written description of
each non-written plan. Since such date of delivery or
availability, the Company ERISA Group Plans have not been
amended to materially change the terms thereof. The Company
has also delivered to Buyer true and complete copies of
annual reports (Form 5500) for the last three (3) years,
summary annual reports, summary plan descriptions and a
summary of material modifications with respect to each
Company ERISA Group Plan, as applicable.
(a) Except as listed on Schedule 3.20, the Company ERISA
Group maintains no tax qualified Pension Plans nor has the
Company ERISA Group ever maintained any other tax-qualified
Pension Plan for the benefit of employees.
(b) With respect to each 412 Plan, there has been no
failure to make any contribution or pay any amount due as
required by Section 412 of the Code, Section 302 of ERISA or
the terms of any such 412 Plan, and no request or receipt of
any funding waiver has been requested or received from the
Internal Revenue Service.
(c) Except as set forth in Schedule 3.20, no trust has
been established in connection with any 412 Plan pursuant to
Section 4049 of ERISA (as in effect on December 17, 1987)
and no liabilities that would have a material adverse effect
on the Condition of the Business have been asserted against
the Company or any Company Subsidiary or any member of the
Company ERISA Group in connection with any such 412 Plan by
the PBGC or by a trustee appointed pursuant to Section
4042(b) or (c) of ERISA, and no Lien has been attached and
neither the PBGC nor the Internal Revenue Service has
threatened to attach a Lien on any Assets of or any member
of the Company ERISA Group as a result of any failure to
comply with the Code or the Treasury regulations thereunder
or ERISA.
(d) Except as set forth on Schedule 3.20, the IRS has
issued favorable determination letters to the effect that
each qualified Company ERISA Group Plan as amended for The
Tax Reform Act of 1986 and subsequent legislation qualifies
under Section 401(a) of the Code and that the related trusts
are exempt from taxation under Section 501(a) of the Code
and such determination letters remain in effect and have not
been revoked. To the knowledge of Triumph, nothing has
occurred or is expected to occur that would adversely affect
the qualified status of any Company ERISA Group Plan or any
related trusts subsequent to the issuance of such
determination letters.
(e) Except as set forth on Schedule 3.20, all Plans
maintained by the Company or any member of the Company ERISA
Group have been and continue to be in compliance in all
material respects (i) in operation with the requirements
prescribed by any and all Laws and Orders applicable to the
Company ERISA Group Plans including but not limited to ERISA
and the Code and with any other contractual obligations and,
except as set forth in Schedule 3.20, all reports and
disclosures including Form 5500s relating to the Company
ERISA Group Plans required to be filed with or furnished to
Governmental Bodies, participants or beneficiaries prior to
the Closing Date have been or will be filed or furnished in
a timely manner and in accordance with applicable law; and
(ii) in form with those requirements of the Code and the
regulations thereunder and ERISA which must be met on the
date hereof.
(f) To the knowledge of Triumph, no member of the Company
ERISA Group nor any other "disqualified person" or "party in
interest" (as defined in Section 4975 of the Code and
Section 3 of ERISA, respectively) has engaged in any
"prohibited transaction," as such term is defined in Section
4975 of the Code or Section 406 of ERISA, which could
subject any of the Company ERISA Group Plans (or their
related trusts), any officer, director or employee of any
entity within the ERISA Group or any trustee, administrator
or any other fiduciary of any of the Company ERISA Group
Plans to a tax or penalty imposed under Section 4975 of the
Code or Section 502(i) of ERISA and which would have a
material adverse effect on the Condition of the Business.
(g) Except as set forth on Schedule 3.20, there are no
Claims (other than routine claims for benefits in the
ordinary course) pending or, to the knowledge of Triumph,
threatened against any of the Company ERISA Group Plans or
the Assets of any of the Company ERISA Group Plans or
against any fiduciary of any of the Company ERISA Group
Plans for which the Company or the Company Subsidiaries may
be directly or indirectly liable, through indemnification
obligations or otherwise.
(h) No member of the Company ERISA Group has provided or
is required to provide, security to any single-employer plan
pursuant to Section 401(a) of the Code.
(i) The consummation of the Contemplated Transactions
will not accelerate any liability under any of the Company
ERISA Group Plans because of an acceleration of any rights
or benefits to which employees may be entitled thereunder.
(j) With respect to any Company ERISA Group Plan that is
a Welfare Plan, (i) each such Welfare Plan, the
contributions to which are claimed as a deduction under any
provision of the Code, is in compliance in all material
respects with all applicable requirements pertaining to such
deduction, (ii) with respect to any welfare benefit fund
within the meaning of Section 419 of the Code that comprises
part of a Welfare Plan, there is no disqualified benefit
within the meaning of Section 4976(b) of the Code that would
subject the Company or any of the Company Subsidiaries to a
tax under Section 4976(a) of the Code which would have a
material adverse effect on the Condition of the Business,
(iii) any Welfare Plan which is a group health plan within
the meaning of Section 5000(b) of the Code satisfies in all
material respects the requirements of Section 4980(B) of the
Code, and (iv) all employer contributions due have been
fully and timely paid or accrued on the books of the Company
or the Company Subsidiaries.
(k) Schedule 3.20 sets forth the present value of the
liability of each Company ERISA Group Plan that is a Welfare
Plan and that provides benefits or coverage extending beyond
a participant's termination of employment with the Company,
excluding the liability for those benefits required by
Section 4980B of the Code or those which are provided at the
sole expense of the participant or beneficiary of the
participant.
(l) Except as set forth on Schedule 3.20, neither the
Company nor any member of the Company ERISA Group has
incurred or reasonably expects to incur (i) any Withdrawal
Liabilities (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result
in Withdrawal Liability), or (ii) any Liabilities under
Title IV of ERISA with respect to any 412 Plan. Schedule
3.20 also identifies (A) each Multiemployer Plan to which
the Company or Company ERISA Group Member currently makes,
is obligated to make, or has made or been obligated to make
contributions; (B) provides a schedule of the contributions
made to each such Multiemployer Plan over the past five
years; and (C) provides a schedule of any withdrawal
liability payments which a Company ERISA Group Member is
obligated to make or has made in the last 10 years to any
Multiemployer Plan; and (D) the amount of withdrawal
liability that would be due assuming complete withdrawal
from all Multiemployer Plans to which Company or any member
of the Company ERISA Group contribute. With the exception
of the representation contained in this Section 3.20(m), any
representation contained herein with regard to Multiemployer
Plans shall be limited to matters of which the Company has
knowledge.
(m) Except as set forth in Schedule 3.20, within the last
five years, neither the Company nor any member of the
Company ERISA Group has transferred any Assets or
Liabilities of a 412 Plan subject to Title IV of ERISA which
had, at the date of such transfer, Unfunded Pension
Liabilities or has engaged in a transaction which may
reasonably be subject to Section 4212(c) of ERISA.
(n) Neither the Company nor any member of the Company
ERISA Group sponsors or maintains or has obligations direct,
contingent or otherwise, with respect to any benefit plan
that is subject to the laws of any country other than the
United States.
(o) No Company ERISA Group Plan holds securities of the
Company or the Company's Subsidiaries.
(p) There has been no Reportable Event with respect to
any 412 Plan within the last five years.
(q) With respect to any supplemental employee retirement
plans, excess benefit plans (as defined in Section 3(36) of
ERISA), severance arrangements with individual employees,
whether written or not, or other non qualified plans or
arrangements, Schedule 3.20 identifies the individuals or
class of individuals covered by each such plan or
arrangement.
(r) Except as set forth on Schedule 3.20, as of December
31, 1994, no 412 Plan sponsored by Company or any member of
the Company ERISA Group has any amount of Unfunded Pension
Liability.
III.21 Officers, Directors and Key Employees. Sellers
have provided to Buyer a schedule setting forth (a) the
name, total compensation (as reflected on the applicable
forms W-2), date of hire and salary history for the two
years ended December 31, 1994 of each existing director,
executive officer or management employee of the Company and
the Company Subsidiaries earning total compensation for the
year ended December 31, 1994, (as reflected on the
applicable forms W-2) in excess of $75,000, (b) the wage
rates and earnings of production workers employed by the
Company or any Company Subsidiary in its Cortland, New York
and Puerto Rico facilities, and (c) any payments or
commitments to pay any severance or termination pay to any
such person. Except as set forth on such schedule, the
employment of all such persons is terminable at will.
III.22 Employment-Related Matters. Except as set forth
in Schedule 3.22, (a) the Company and the Company
Subsidiaries are not a party to any Contract with any labor
organization or other representative of their employees; (b)
there is no unfair labor practice charge or complaint
pending or, to the knowledge of Triumph, threatened against
the Company or any of the Company Subsidiaries; (c) there is
no labor strike, slowdown, work stoppage or other material
labor controversy in effect or, to the knowledge of Triumph,
threatened against or otherwise affecting the Company or any
of the Company Subsidiaries; (d) the Company and the Company
Subsidiaries have not experienced any labor strike,
slowdown, work stoppage or similar material labor
controversy within the past three years; (e) no
representation question has been raised respecting any of
the Company's or any of the Company Subsidiaries' employees
working within the past three years, nor, to the knowledge
of Triumph, are there any campaigns being conducted to
solicit authorization from the Company's employees or any of
the Company Subsidiaries' employees to be represented by any
labor organization; (f) no collective bargaining agreement
relating to any of the Company's employees or any of the
Company Subsidiaries' employees is being negotiated other
than extensions or renewals of existing agreements set forth
in Schedule 3.22; (g) no material Claim before any
Governmental Body brought by or on behalf of any employee,
prospective employee, former employee, retiree, labor
organization or other representative of the Company's
employees or any of the Company Subsidiaries' employees, is
pending or, to the knowledge of Triumph, threatened against
the Company or any of the Company Subsidiaries; (h) to the
knowledge of Triumph, neither the Company nor any of the
Company Subsidiary is a party to, or otherwise bound by, any
material Order relating to its employees or employment
practices relating to the employees other than those
affecting the industry generally; (i) the Company and the
Company Subsidiaries are in compliance with all applicable
Laws, policies, procedures, agreements and Contracts,
relating to employment, employment practices, wages, hours,
and terms and conditions of employment, except where the
failure to comply would not, individually or in the
aggregate, have a material adverse effect on the Condition
of the Business; (j) except with respect to ongoing disputes
of a routine nature involving immaterial amounts, the
Company and the Company Subsidiaries have paid in full to
all of their employees all wages, salaries, commissions,
bonuses, benefits and other compensation due and payable to
such employees on or prior to the date hereof; (k) and the
Company and the Company Subsidiaries are in compliance with
their obligations with respect to their employees pursuant
to the Worker Adjustment and Retraining Notification Act of
1988 ("WARN"), and all other notification and bargaining
obligations arising under any collective bargaining
agreement, statute or otherwise.
III.23 Potential Conflicts of Interest. Except as set
forth in Schedule 3.23, no officer, director or Affiliate of
the Company or any of the Company Subsidiaries, no spouse of
any such officer, director or Affiliate, nor, to the
knowledge of Triumph, no entity controlled by one or more of
the foregoing:
(a) owns, directly or indirectly, any interest in
(excepting less than 1% stock holdings for investment
purposes in securities of publicly held and traded
companies), or is an officer, director, employee or
consultant of, any person that carries on business in
competition with the Company or any of the Company
Subsidiaries;
(b) owns, directly or indirectly, in whole or in part,
any material Asset that the Company or any of the Company
Subsidiaries uses in the conduct of its business; or
(c) has any material Claim whatsoever against, or owes
any amount to, the Company or any of the Company
Subsidiaries, except for claims in the ordinary course of
business such as for accrued vacation pay and accrued
benefits under employee benefit plans.
III.24 Insurance. Schedule 3.24 sets forth a list of
all insurance policies, fidelity and surety bonds and
fiduciary liability policies covering the Assets, Business,
operations, employees, officers and directors of the Company
and the Company Subsidiaries and true and complete copies of
all such policies and bonds have been delivered to Buyer.
Schedule 3.24 also sets forth with respect to each policy
and bond the applicable deductible amounts and any material
limitations to coverage. There is no Claim by the Company
or any of the Company Subsidiaries pending under any of such
policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or
bonds, or requirement by any insurer to perform work which
has not been satisfied. All premiums payable under all such
policies and bonds have been paid and the Company and the
Company Subsidiaries are otherwise in compliance in all
material respects with the terms and conditions of all such
policies and bonds. Such policies of insurance and bonds
(or other policies and bonds providing substantially similar
insurance coverage) other than those relating to director
and officer liability insurance have been in effect since
January 1, 1994 and remain in full force and effect. The
insurance in effect with respect to Company Owned Real
Property is in an amount of the full replacement value of
the buildings and improvements. Triumph does not know of
any threatened termination of, premium increase with respect
to, or uncompleted requirements under any of such policies
or bonds.
III.25 Suppliers, Customers and Contractors. Schedule
3.25A lists, by dollar volume paid for the 12 months ended
December 31, 1994, the 15 largest raw material suppliers and
the 25 largest customers of the Company or Company
Subsidiary. Schedule 3.25B lists the names and addresses of
those Contractors retained by the Company or any of the
Company Subsidiaries involving payments, for the 12 months
ended December 31, 1994, in excess of $50,000. The
relationships of the Company and the Company Subsidiaries
with such suppliers, customers and Contractors are
reasonable commercial working relationships and: (i) no
supplier or Contractor has refused to provide credit, or has
suspended the provision of credit, to the Company or any of
the Company Subsidiaries as a result of the failure or delay
in payment of amounts due to such suppliers or Contractors;
(ii) all amounts owing to such suppliers and Contractors, if
not in dispute, have been paid in accordance with their
respective terms; (iii) no person within the last twelve
months has threatened in writing to cancel, or otherwise
terminate, the relationship of such person with the Company
or any of the Company Subsidiaries, and (iv) no person
during the last twelve months has decreased materially or,
to the knowledge of Triumph, threatened in writing to
decrease or limit materially, its relationship with the
Company or any of the Company Subsidiaries or, to the
knowledge of Triumph, intends to decrease or limit
materially its services or supplies to the Company or any of
the Company Subsidiaries or its usage or purchase of the
services or products of the Company or any of the Company
Subsidiaries.
III.26 Compliance with Laws. Neither the Company nor
any of the Company Subsidiaries is in violation of any
applicable order, judgment, injunction, award, citation,
decree, consent decree or writ (collectively, "Orders"), or
any applicable law, statute, code, ordinance, rule,
regulation or other requirement (collectively, "Laws"), of
any government or political subdivision thereof, whether
federal, state, local or foreign, or any agency or
instrumentality of any such government or political
subdivision, or any court or arbitrator (collectively,
"Governmental Bodies") affecting its Assets, affairs or
business, where the effect of any such violation,
individually or in the aggregate, would have a materially
adverse effect on the Condition of the Business. Neither
the Company nor any of the Company Subsidiaries has made any
illegal payment to officers or employees of any Governmental
Body, or made any illegal payment to customers for the
sharing of fees or to customers or suppliers for rebating of
charges, or engaged in any other illegal reciprocal
practice, or made any illegal payment or given any other
illegal consideration to purchasing agents or other
representatives of customers in respect of sales made or to
be made by the Company or any of the Company Subsidiaries.
III.27 Permits. The Company and the Company
Subsidiaries have obtained all licenses, permits,
certificates, certificates of occupancy, orders,
authorizations and approvals of (collectively, "Permits"),
and have made all required registrations and filings with,
any Governmental Body that are necessary to the conduct of
their respective businesses, except for such Permits which,
if not in the possession of the Company or the Company
Subsidiaries, would not have a materially adverse effect on
the Condition of the Business. All Permits material to the
Condition of the Business are listed on Schedule 3.27 and
are in full force and effect; no material violations are or
have been recorded in respect of any such Permit; and no
proceeding is pending or threatened to revoke or limit any
Permit.
III.28 Environmental Matters. (a) Except as set forth
in Schedule 3.28, with respect to each of the Company and
each of the Company Subsidiaries, there has been no
manufacture, refining, storage, transport, disposal or
treatment of Hazardous Substances by such party (or, to the
knowledge of such party, its predecessor in interest), or
any Release at, on or under any Company Real Property by the
Company or any Company Subsidiary or, to knowledge of
Triumph, by any other person, in violation of any
Environmental Law or which would require remedial action
under any Environmental Law; to the knowledge of Triumph,
none of the soil, ground water or surface water of such
Company Real Property is contaminated by any Release.
(a) During the past five years neither the Company nor
any of the Company Subsidiaries has received any written (i)
notice of any violation with respect to any Environmental
Law; (ii) notice of any actual, pending or threatened
Regulatory Action involving such party, or any present or
former owner, lessee or operator of the Company Real
Property; or (iii) notice of any Third Party Claim.
(b) Except as set forth in Schedule 3.28, to the
knowledge of Triumph: (i) there are no incinerators, septic
tanks, underground tanks or cesspools located on, at or
under the Company Real Property, (ii) all sewage from the
Company Real Property is discharged into a public sanitary
sewer system, and (iii) there has been no Release by the
Company or any of the Company Subsidiaries into the
atmosphere, adjoining or adjacent to any body of water, or
on to adjacent property.
(c) Each of the Company and the Company Subsidiaries, as
applicable, has obtained, and is in compliance with, all
material Environmental Permits, except where the failure to
obtain or be in compliance with any such Environmental
Permits would not, singly or in the aggregate, have a
material adverse effect on the Condition of the Business.
(d) Except as set forth on Schedule 3.28 or as would not,
singly or in the aggregate, have a material adverse effect
on the Condition of the Business, all such Environmental
Permits are in full force and effect, and the Company and
each Company Subsidiary has made all appropriate filings for
issuance or renewal of such Environmental Permits.
(e) Except as set forth on Schedule 3.28 or as would not,
singly or in the aggregate, have a material adverse effect
on the Condition of the Business, there are no facts,
events, conditions, circumstances, activities, practices,
incidents, actions, omissions or plans known to Triumph, the
Company or the Company Subsidiaries that: (i) may give rise
to any Regulatory Action including the Company or any of the
Company Subsidiaries or the Company Real Property, or (ii)
is reasonably likely to form the basis of any Third Party
Claim involving the Company, any of the Company Subsidiaries
or the Company Real Property. Except as set forth on
Schedule 3.28, there are no Regulatory Actions or Third
Party Claims relating to, arising from or otherwise
affecting the Company Real Property.
III.29 Finders; Fees. Except for Tucker Anthony
Incorporated whose fees will be paid in accordance with the
provisions by Section 5.11, there is no investment banker,
broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of any Seller, the
Company or any of the Company Subsidiaries who might be
entitled to any fee or commission from the Company or any of
the Company Subsidiaries upon consummation of the
Contemplated Transactions.
III.30 Depositaries; Powers of Attorney, etc. Schedule
3.30 sets forth (i) the name of each bank or similar entity
in which the Company or each of the Company Subsidiaries has
an account, lock box or safe deposit box and the names of
all persons authorized to draw thereon or to have access
thereto; and (ii) the name of each person holding a general
or special power of attorney from the Company or each of the
Company Subsidiaries and a description of the terms thereof.
III.31 Acquisition for Investment. Those Sellers who
are acquiring Buyer Common Stock are acquiring such stock
for their own account and not with a present intention to
make any sale, disposition, distribution or other transfer
of Buyer Common Stock in a manner that will be in violation
of any applicable securities Laws and understand that the
Buyer Common Stock has not been registered under the 1933
Act or under the securities Laws of any state.
III.32 Disclosure. Neither this Agreement, the
Schedules hereto, nor any audited or unaudited financial
statements, documents or certificates furnished or to be
furnished to Buyer by or on behalf of any Seller pursuant to
this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary in order to
make the statements contained herein or therein not
misleading. There are no facts which would materially
adversely affect the Condition of the Business which have
not been set forth herein, or in any Schedule hereto, or in
any certificate or statement furnished or to be furnished to
Buyer by Seller.
IV REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that:
IV.1 Buyer Common Stock. The Buyer Common Stock to be
issued as part of the Purchase Price is validly authorized
and, when issued and delivered in accordance with this
Agreement, will be validly issued, fully paid and non-
assessable and will not be issued in violation of any
preemptive rights, rights of first refusal or other
contractual restrictions of any kind of the shareholders of
Buyer, and the applicable Sellers will receive good title to
the Buyer Common Stock free and clear of all Liens.
IV.2 Acquisition for Investment. Buyer is acquiring the
Purchased Shares for its own account and not with a present
intention to make any sale, disposition, distribution or
other transfer of the Purchased Shares in a manner that will
be in violation of any applicable securities Laws and
understands that the Purchased Shares have not been
registered under the 1933 Act or under the securities Laws
of any state.
IV.3 Authority Relative to This Agreement. Buyer has full
corporate power and authority to execute and deliver this
Agreement and each other Transaction Document to which it is
a party and to consummate the Contemplated Transactions.
The execution and delivery of this Agreement and the
consummation of the Contemplated Transactions to which Buyer
is a party have been duly and validly authorized and
approved by the Board of Directors and shareholders of Buyer
and no other corporate proceedings on the part of Buyer are
necessary to authorize the execution and delivery by Buyer
of this Agreement or the consummation of the Contemplated
Transactions to which Buyer is a party. This Agreement has
been duly and validly executed and delivered by Buyer and
(assuming the valid execution and delivery of this Agreement
by the other parties hereto) constitutes the legal, valid
and binding agreement of Buyer, enforceable against Buyer in
accordance with its terms, except as such obligations and
their enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable
remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor
may be brought (whether at law or in equity).
IV.4 No Conflicts; Consents. Except as set forth in
Schedule 4.4, the execution, delivery and performance by
Buyer of this Agreement and each other Transaction Document
to which it is a party and the consummation of the
Contemplated Transactions to which Buyer is a party will not
(i) violate any provision of the Certificate of
Incorporation or By-laws of Buyer or any Buyer Subsidiary;
(ii) require Buyer or any Buyer Subsidiary to amend any
Contract, obtain any consent, approval or action of or
waiver from, or make any filing with, or give any notice to,
any Governmental Body or any other person, except for
compliance with the HSR Act and as set forth in Schedule 4.4
(the "Buyer Required Consents"); (iii) if the Buyer Required
Consents are obtained, violate, conflict with or result in
the breach of any of the terms of, result in a material
modification of the effect of, or otherwise cause the
termination of, give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time
or both constitute) a default under, any Contract to which
Buyer or any Buyer Subsidiary is a party or by or to which
any of them or any of their Assets may be bound or subject,
or result in the creation of any Lien upon the Buyer Common
Stock being issued to Sellers or upon the properties of
Buyer or any Buyer Subsidiary pursuant to the terms of any
such Contract other than such violations, conflicts,
breaches, modifications, terminations, rights to terminate,
defaults or Liens that, individually or in the aggregate,
would not have a material adverse effect on the Condition of
Buyer; (iv) if the Buyer Required Consents are obtained,
violate any Law or Order of any Governmental Body against,
or binding upon, Buyer or any Buyer Subsidiary or upon their
respective Assets or Business other than such violations
that, individually or in the aggregate, would not have a
material adverse effect on the Condition of Buyer; (v) if
the Buyer Required Consents are obtained, violate or result
in the revocation or suspension of any Permit other than
such violations that, individually or in the aggregate,
would not have a material adverse effect on the Condition of
Buyer or (vi) if the Buyer Required Consents are not
obtained, have a material adverse effect on the Condition of
Buyer.
IV.5 Corporate Existence and Power. Buyer is a
corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and
has all requisite corporate powers and all material
governmental licenses, authorizations, consents and
approvals required to carry on its business as now
conducted. Buyer is duly qualified to do business as a
foreign corporation and is in good standing in each
continental United States jurisdiction where the character
of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a material
adverse effect on the business, its Assets, financial
condition or the results of operations of Buyer or the Buyer
Subsidiaries taken as a whole (collectively, the "Condition
of Buyer"). Buyer is duly qualified to do business as a
foreign corporation in each of the United States
jurisdictions listed on Schedule 4.6 hereto.
IV.6 Subsidiaries. (a) Each Subsidiary of Buyer (each, a
"Buyer Subsidiary") is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation or other organization, and has
all corporate or other powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted and is duly qualified
to do business as a foreign person and is in good standing
in each continental United States jurisdiction where the
character of the property owned or leased by it or the
nature of its activities make such qualification necessary,
except for such jurisdictions where the failure to be so
qualified would not, individually or in the aggregate, have
a material adverse effect on the Condition of Buyer.
(a) Schedule 4.6 sets out the name of each Buyer
Subsidiary, its jurisdiction of incorporation or other
organization, each United States jurisdiction in which it is
duly qualified to do business as a foreign corporation, the
authorized capital stock or other ownership interests of,
and the securities issued by, each Buyer Subsidiary,
together with the holders of all such outstanding
securities. Except for the Buyer Subsidiaries set forth on
Schedule 4.6, Buyer does not directly or indirectly own any
interest in any other person.
(b) Except as set forth on Schedule 4.6, all of the
outstanding capital stock or other ownership interests of
each Buyer Subsidiary is owned by Buyer, directly or
indirectly, free and clear of any Lien and any other
limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). All of the outstanding
capital stock or other ownership interests of each Buyer
Subsidiary is validly issued, fully paid and nonassessable
and was not issued in violation of any preemptive rights,
rights of first refusal or any other contractual or legal
restrictions of any kind. Except as set forth on Schedule
4.6, there are no outstanding (i) securities of Buyer or any
Buyer Subsidiary convertible into or exchangeable for
capital stock or other ownership interests in any Buyer
Subsidiary and (ii) options, warrants, calls or other rights
to acquire from any Buyer Subsidiary, and no obligation of
Buyer or any Buyer Subsidiary to issue, any capital stock or
other ownership interests of, or any securities convertible
into or exchangeable for any capital stock of or ownership
interests in, any Buyer Subsidiary. Except as set out in
Schedule 4.6, there are no outstanding obligations of Buyer
or any Buyer Subsidiary to repurchase, redeem or otherwise
acquire any securities of the Buyer or any Buyer Subsidiary.
IV.7 Charter Documents. (a) Buyer has heretofore
delivered to the Sellers true and complete copies of the
Certificate of Incorporation (certified by the Secretary of
State of the State of Delaware or, if unavailable on the
date hereof, by the Secretary of Buyer) and By-laws
certified by the Secretary of Buyer in effect on the date
hereof. The stock and transfer books of Buyer and each of
the Buyer Subsidiaries have been made available to the
Sellers for their inspection and are true and complete.
(a) All financial, business and accounting books,
ledgers, accounts and official and other records relating to
Buyer and each Buyer Subsidiary have been properly and
accurately kept and completed in all material respects, and
there are no material inaccuracies or discrepancies
contained or reflected therein. Neither Buyer nor any Buyer
Subsidiary has any records, systems, Contracts, data or
information, recorded, stored, maintained, operated or
otherwise wholly or partly dependent upon or held by any
means (including any electronic, mechanical or photograph
process, whether computerized or not) which (including all
means of access thereto and therefrom) are not under their
exclusive ownership and direct control.
IV.8 Capitalization. (a) Immediately prior to the filing
of Buyer's Certificate of Incorporation on the date hereof,
the authorized capital stock of Buyer consisted of: (i)
200,000 Class A Common Shares, par value $.01 per share, of
which 145,642 shares were issued and outstanding;
(ii) 1,000,000 Class B Common Shares, par value $.01 per
share, of which 697,493 were issued and outstanding and of
which 423,207 were owned by Subsidiaries; (iii) 100,000
First Preferred Shares, par value $.01 per share, of which
no shares were issued and outstanding; and (d) 100,000
Second Preferred Shares, par value $.01 per share, of which
56,670 were issued and outstanding. All of such shares were
duly authorized and validly issued, were fully paid and
nonassessable.
(a) The Recapitalization Transactions affecting Buyer or
any United States Subsidiary have been duly and validly
consummated in accordance with applicable law except that
the Reincorporation Merger has not become effective, as of
the date hereof, under New York law. The authorized capital
stock of Buyer consists of (i) $1,500,000 shares of Common
Stock, par value $.01 per share, of which no shares are
issued or outstanding, (ii) 1,000,000 shares of Class A
Common Stock, par value $.01 per share, of which, after
giving effect to the issuance of shares thereof to the
Sellers pursuant to this Agreement, there will be 900,189
shares issued and outstanding, of which 423,207 shares are
owned by Subsidiaries, (iii) one share of Special Preferred
Stock, par value $.01 per share, of which one share is
issued and outstanding, and (iv) 500,000 shares of Preferred
Stock, par value $.01 per share, of which no shares are
issued and outstanding. All outstanding shares of capital
stock of Buyer have been duly authorized and validly issued,
fully paid and are non-assessable and have not been issued
in violation of any preemptive rights, rights of first
refusal or any other contractual legal restrictions of any
kind. Except for the restrictions contained in the
Stockholders' Agreement, there are no outstanding
(A) securities of Buyer convertible into or exchangeable for
shares of capital stock or voting securities of Buyer, and
(B) options, warrants, calls, preemptive rights, rights of
first refusal or other rights to acquire from Buyer, and no
obligation of Buyer to issue, any capital stock, voting
securities or securities convertible into or exchangeable
for capital stock or voting securities of Buyer. Except as
set forth in the Stockholders' Agreement, there are no
outstanding obligations of Buyer or any Buyer Subsidiary to
repurchase, redeem or otherwise acquire any securities of
Buyer.
IV.9 Financial Information. The consolidated balance
sheet and statements of cash flows and operations of Buyer
and statement of income and retained earnings as of and for
the years ended December 31, 1994, 1993, 1992 and 1991
audited by Ernst & Young, copies of all of which have been
furnished to the Sellers, have been prepared in accordance
with GAAP applied on a consistent basis (except as may be
indicated therein or in the notes thereto), are accurate,
show all material Liabilities, and fairly present in
accordance with GAAP the consolidated financial position of
Buyer and the Buyer Subsidiaries as of the dates thereof and
the consolidated results of operations and cash flows (or
changes in financial position, as the case may be), of Buyer
and the Buyer Subsidiaries for each of the periods then
ended.
IV.10 Liabilities. (a) Except as set forth in
Schedule 4.10A, Buyer and the Buyer Subsidiaries are not
aware of any unasserted Contingency, except
(i) Contingencies which are accrued or reserved against in
the consolidated balance sheet of Buyer as of December 31,
1994 or reflected in the notes to the audited financial
statements of Buyer for the fiscal year ended December 31,
1994; and (ii) Liabilities incurred after December 31, 1994
in the ordinary course of business and consistent with past
practice.
(a) Schedule 4.10B sets forth, as of the date hereof, a
brief description of all Liabilities of Buyer and each Buyer
Subsidiaries in respect of (i) money borrowed from and owed
to any bank, financial institution or other person; (ii) any
indebtedness arising under leases required to be capitalized
under GAAP; (iii) any indebtedness arising under purchase
money obligations and (iv) any indebtedness or potential
indebtedness under any guaranty, letter of credit or
performance credit (the indebtedness or potential
indebtedness described in the foregoing clauses being
referred to, herein, collectively, as "Buyer Debt"). Except
as set forth on Schedule 4.10B, all Buyer Debt may be repaid
or prepaid upon no more than 30 days' notice without premium
or penalty.
IV.11 Receivables. (a) All the accounts receivable
of Buyer and each Buyer Subsidiary (the "Buyer Receivables")
reflected in the Buyer Balance Sheet and all Buyer
Receivables that have arisen since the Buyer Balance Sheet
Date (except such Buyer Receivables as have been collected
since such date) are valid and enforceable claims, and
constitute bona fide Buyer Receivables resulting from the
sale of goods and services in the ordinary course of
business in conformity with applicable purchase orders ,
agreements and specifications. To Buyer's knowledge, the
Buyer Receivables are subject to no valid defense, offsets,
returns, allowances or credits of any kind other than in the
ordinary course of business and are fully collectible within
90 days from the date they are invoiced except to the extent
of the amount of the reserve for doubtful accounts reflected
in the Buyer Balance Sheet, it being understood and agreed
that nothing contained herein shall be deemed to guarantee
the collectibility of the Buyer Receivables. Buyer has
heretofore delivered to Sellers a schedule as at March 31,
1995 setting forth the total amount of Buyer Receivables and
a schedule of the aging of such Buyer Receivables based on 0-
30 days, 31-60 days, 61-90 days and over 90 days. All
chargebacks with customers to which Buyer or any Buyer
Subsidiary has agreed have been credited to the customers
concerned.
(a) Schedule 4.11 sets forth a brief description and list
(including the principal amount and maturity date) of any
loan made by Buyer or any Buyer Subsidiary: (i) in excess of
$15,000 to any employee of Buyer or any Buyer Subsidiary and
(ii) to any person other than employees of Buyer or any
Buyer Subsidiary.
IV.12 Inventories. The inventories of Buyer and of
each Buyer Subsidiary reflected in the Buyer Balance Sheet
and all inventory items acquired since the Buyer Balance
Sheet Date consist of raw materials, supplies,
work-in-process and finished goods of such quality and in
such quantities as are being used or are reasonably
anticipated to be usable, or are being sold or are suitable
for sale, in the ordinary course of its business. Such
inventories are valued at the lower of cost or market and
were determined in accordance with GAAP consistently
applied. Since the Buyer Balance Sheet Date, Buyer and each
of the Buyer Subsidiaries have continued to replenish its
inventories in a normal and customary manner consistent with
prior practice and prudent business judgment. Buyer and
each Buyer Subsidiary have established adequate reserves for
inventory that no longer constitutes part of their current
line. The amount of such reserves and the methodology used
to determine same have been disclosed in writing by Buyer to
Sellers with specific reference to this Section 4.12.
IV.13 Absence of Certain Changes. Since the Buyer
Balance Sheet Date, except as set forth in this Agreement or
disclosed or referred to in Schedule 4.13, each of Buyer and
the Buyer Subsidiaries has conducted its business in the
ordinary course consistent with past practices and there has
not been:
(a) Any event that has had or would reasonably be
expected to have a material adverse effect on the Condition
of Buyer;
(b) Any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
capital stock of Buyer or any of the Buyer Subsidiaries;
(c) Any amendment to the Certificate of Incorporation or
By-laws of Buyer or any of the Buyer Subsidiaries or any
amendment to any term of any outstanding security of the
Buyer or any of the Buyer Subsidiaries;
(d) Any (i) incurrence, assumption or guarantee by Buyer
or any of the Buyer Subsidiaries of any Liability other than
in the ordinary course of business in amounts and on terms
consistent with past practices, (ii) issuance or sale of any
securities convertible into or exchangeable for debt
securities of Buyer or any of the Buyer Subsidiaries, or
(iii) issuance or sale of options or other rights to acquire
from Buyer or any of the Buyer Subsidiaries, directly or
indirectly, debt securities of Buyer or any of the Buyer
Subsidiaries or any securities convertible into or
exchangeable for any such debt securities;
(e) Any creation, incurrence or assumption by Buyer or
any of the Buyer Subsidiaries of any Lien on any Asset other
than (i) Liens for Taxes not yet due or being contested in
good faith (and for which adequate reserves have been
established); (ii) Liens which do not materially detract
from the value of such Asset as now used, or materially
interfere with any present or intended use of such Asset; or
(iii) Permitted Liens.
(f) Any making or forgiving of any loan, advance or
capital contribution to or investment in any person other
than loans, advances or capital contributions to or
investments in Buyer Subsidiaries made in the ordinary
course of business consistent with past practices;
(g) Any damage, destruction or other casualty loss
(whether or not covered by insurance), condemnation or other
taking affecting the business or Assets of Buyer or any of
the Buyer Subsidiaries which, individually or in the
aggregate, has had or will reasonably be expected to have a
material adverse effect on the Condition of Buyer;
(h) Except in the ordinary course of business, any
transaction or commitment made, or any Contract entered
into, by Buyer or any of the Buyer Subsidiaries relating to
its Assets or business (including the acquisition or
disposition of any substantial Assets) or any relinquishment
by Buyer or any of the Buyer Subsidiaries of any Contract or
other right;
(i) Any change in any method of accounting or accounting
practice by Buyer or any of the Buyer Subsidiaries;
(j) Any assumption or guarantee of the obligations of any
person other than a Buyer Subsidiary;
(k) Any grant of any severance or termination pay to any
stockholder or officer of Buyer or any of the Buyer
Subsidiaries, any entering into of any employment, deferred
compensation or other similar agreement (or any amendment to
any such existing agreement) with any stockholder, officer
or director of Buyer or any of the Buyer Subsidiaries or any
increase in benefits payable under any existing severance or
termination pay policies or employment agreements, or any
increase in compensation, bonus or other benefits payable to
any stockholder, officer or director of Buyer or any of the
Buyer Subsidiaries in each case, other than routine
increases in the ordinary course of business or disclosed to
Sellers in writing with specific reference to his
Section 4.13(k) or on any Schedule;
(l) Any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union
or representative thereof to organize any employees of Buyer
or any of the Buyer Subsidiaries, which employees were not
subject to a collective bargaining agreement at the Buyer
Balance Sheet Date, or any lockouts, strikes, slowdowns,
work stoppages or, to the knowledge of Buyer, threats
thereof by or with respect to such employees;
(m) Any waiver of any material right under any Contract
of the type required to be set forth on any Schedule;
(n) Except for any changes made in the ordinary course of
business, any material change in any of Buyer's or any of
the Buyer Subsidiaries' business policies, including
advertising, investment, marketing, pricing, purchasing,
production, personnel, sales, returns, budget or product
acquisition policies;
(o) Except in the ordinary course of business, any
payment, directly or indirectly, of any material Liability
before the same became due in accordance with its terms;
(p) Any termination or failure to renew, or the receipt
of any written threat (that was not subsequently withdrawn)
to terminate or fail to renew, any Contract that is or was
material to the Condition of Buyer; or
(q) Any Contract or arrangement made by Buyer or any of
the Buyer Subsidiaries to take any action which, if taken
prior to the date hereof, would have made any representation
or warranty in this Section untrue or incorrect in any
material respect.
IV.14 Title to Properties. (a) Schedule 4.14A sets
forth a complete list and brief description of all real
property owned by Buyer or any of the Buyer Subsidiaries
(the "Buyer Owned Real Property") and all real property
leased or operated by Buyer or any of the Buyer Subsidiaries
if the annual base rent thereunder exceeds $250,000 (all
real property leased or operated by Buyer or any of the
Buyer Subsidiaries (including those with an annual base rent
of less than $250,000) is hereinafter referred to as the
"Buyer Leased Real Property") (together, the Buyer Owned
Real Property and the Buyer Leased Real Property shall be
referred to as the "Buyer Real Property"). With respect to
the Buyer Owned Real Property, Schedule 4.14 also sets forth
for each Buyer Owned Real Property a list of the most recent
title insurance policies, appraisal reports and
environmental reports in the possession or under the control
of the Buyer or any of the Buyer Subsidiaries, copies of all
of which have been provided to Buyer. With respect to the
Buyer Leased Real Property with annual base rent in excess
of $250,000, Schedule 4.14A also sets forth the date of each
lease, the term thereof, the address and square footage of
the property, and the aggregate monthly rental payable
thereunder.
(a) With respect to the Buyer Real Property and the
respective operations thereat by Buyer or any Buyer
Subsidiary:
(i) To the knowledge of Buyer, there are no violations of
any Law (including but not limited to zoning and setback
requirements) where the effect of any such violation,
individually or in the aggregate, would have a materially
adverse effect on the Condition of Buyer;
(ii) Buyer or the Buyer Subsidiaries have obtained and
complied with all Permits and Orders, except where the
failure to obtain such Permits and Orders or comply
therewith, individually or in the aggregate, would not have
a material adverse effect on the Condition of Buyer;
(iii) All buildings, structures and other improvements
located thereon that are owned or leased are in working
condition and repair, reasonable wear and tear excepted,
except where such failure to be in working condition and
repair, reasonable wear and tear excepted, would not have a
material adverse effect on the Condition of Buyer, and
neither Buyer nor any of the Buyer Subsidiaries has done or
performed, or caused to be done or performed, any work or
required any services within the past year except for which
payment in full has been made and lien waivers obtained;
(iv) There is no pending or, to the knowledge of Buyer,
threatened Claim (including Third Party Claims), or any
existing condition or basis which may give rise to any such
Claim, or which may otherwise result in the imposition of a
Lien or forfeiture of any of the Buyer Owned Real Property,
or otherwise prohibit, restrict or materially interfere with
its use as presently conducted except for Claims which would
not have a material adverse effect on the Condition of
Buyer;
(v) To the knowledge of Buyer, there is no pending or
threatened Claim (including Third Party Claims), or any
existing condition or basis which may give rise to any such
Claim, or which may otherwise result in the imposition of a
Lien or forfeiture of any of the Buyer Leased Real Property,
or otherwise prohibit, restrict or materially interfere with
its use as presently conducted except for Claims which would
not have a material adverse effect on the Condition of
Buyer;
(vi) There are no pending, or to the knowledge of Buyer,
threatened proceedings, which may result in a total or
partial condemnation, eminent domain or other taking of any
Buyer Owned Real Property;
(vii) To the knowledge of Buyer, there are no pending
or threatened proceedings, which may result in a total or
partial condemnation, eminent domain or other taking of any
Buyer Leased Real Property;
(viii) There are no claims of or rights to possession,
or any claims of adverse possession, with respect to all or
any portion of any of the Buyer Owned Real Property;
(ix) To the knowledge of Buyer, there are no claims of or
rights to possession, or any claims of adverse possession,
with respect to all or any portion of any of the Buyer
Leased Real Property; and
(x) Buyer or a Buyer Subsidiary has good and insurable
fee title to the Buyer Owned Real Property or a Buyer
Subsidiary and a valid and existing leasehold interest in
Buyer Leased Real Property or a Buyer Subsidiary subject to
no Liens except for Buyer Permitted Liens.
(b) The tangible property owned or used by Buyer ("Buyer
Tangible Property") including, without limitation, all
machinery, sewing or cutting machines, equipment, furniture,
furnishings, leasehold improvements, fixtures and vehicles
have been maintained in the ordinary course and is in
working order, reasonable wear and tear excepted, except for
a nonmaterial portion of such Buyer Tangible Property that
may be undergoing repairs or maintenance in the ordinary
course and except where such failure to maintain would not
have a material adverse effect on the Condition of Buyer.
(c) Schedule 4.14B sets forth, with respect to each lease
of Buyer Tangible Property with an annual base rent in
excess of $250,000, the commencement date of the lease, and
any amendment thereto, the term thereof, and the aggregate
monthly rent payable thereunder.
(d) Except as set out in Schedule 4.14C, Buyer or a Buyer
Subsidiary has good title to all Buyer Tangible Property
reflected on the Buyer Balance Sheet or acquired after the
Buyer Balance Sheet Date except for Buyer Tangible Property
sold or disposed of since the Buyer Balance Sheet Date in
the ordinary course of business consistent with past
practice. Buyer or a Buyer Subsidiary has good title to all
raw materials, work in process or finished Buyer Products
located at the premises of any Contractor. Except as set
forth on Schedule 4.14C, none of such Buyer Tangible
Property is subject to any Liens, except for the following
(collectively, "Buyer Permitted Liens"):
(i) Liens disclosed on the Buyer Balance Sheet or the
notes thereto;
(ii) Liens for Taxes not yet due or payable or being
contested in good faith (and for which adequate reserves
have been established on the Buyer Balance Sheet);
(iii) Liens, easements, zoning or other planning
restrictions or limitations on use or other irregularities
in title, none of which materially detracts from the value
of such Assets as now used, or materially interferes with
any present use of such Assets;
(iv) Liens arising in the ordinary course of business
which do not materially detract from the value of such
Assets as now used or materially interfere with any present
use of such Assets; and
(v) Liens of carriers, warehousemen, mechanics,
materialmen, vendors, lessors, and landlords incurred in the
ordinary course of business.
IV.15 Contracts. (a) Except for Contracts pursuant
to the terms of which there is either a current or future
obligation or right of Buyer or a Buyer Subsidiary to make
payments or receive payments not in excess individually of
$250,000 during any calendar year, Schedule 4.15 sets forth
as of the date hereof a complete and accurate list of all
Contracts to which either Buyer or any of the Buyer
Subsidiaries is a party, or by or to which it or its Assets
are bound or subject, including, without limitation:
(i) Contracts with any current or former employee,
independent contractor, consultant, agent or other
representative or with any Affiliate of any of the
foregoing;
(ii) Contracts relating to the design of any Buyer
Products;
(iii) Other than in the ordinary course of business:
(A) Contracts for the sale of any of its Assets or
(B) Contracts for the grant to any person of any
preferential rights to purchase any of its Assets;
(iv) Contracts under which Buyer and/or any of the Buyer
Subsidiaries agree to indemnify any person;
(v) Contracts under which Buyer and/or any of the Buyer
Subsidiaries agree to share Tax liability of, or with, any
party;
(vi) Contracts that cannot be cancelled without material
Liability, premium or penalty;
(vii) Contracts with any person to advertise or market
any of Buyer's or any of the Buyer Subsidiaries' Products
other than in the ordinary course of business;
(viii) Contracts relating to the acquisition of any
operating business or the capital shares of any other
person;
(ix) Options for the purchase or sale of any Asset;
(x) Contracts requiring the payment to any person of an
override or similar commission or fee;
(xi) Contracts with customers, independent suppliers,
Contractors and manufacturers other than in the ordinary
course of business;
(xii) Sales agency, licensing, manufacturer's
representative or distributorship agreements;
(xiii) Contracts pursuant to which any party is
required to purchase or sell a stated portion of its
requirements or output to another party;
(xiv) Contracts for the payment of fees or other
consideration to any officer or director of Buyer or any of
the Buyer Subsidiaries or to any other entity in which any
of the foregoing has an interest; and
(xv) Management Contracts and other similar agreements
with any person.
(b) Schedule 4.15 also sets forth as of the date hereof a
complete and accurate list of the following Contracts to
which either Buyer or any of the Buyer Subsidiaries is a
party, or by which it or its Assets are bound or subject:
(i) Contracts with any current or former stockholder,
officer or director that impose, after the Closing Date,
continuing obligations on a Buyer or a Buyer Subsidiary;
(ii) Contracts with any labor union or association
representing any employee;
(iii) Partnership or joint venture agreements;
(iv) Contracts containing covenants not to compete in any
line of business or with any person in any geographical area
(or not to solicit or accept any business) or covenants of
any other person not to compete in any line of business or
in any geographical area with Buyer or any Buyer Subsidiary
(or not to solicit or accept any business);
(v) Contracts relating to any Buyer Debt in respect of:
(A) money borrowed from and owed to any bank, financial
institution or other person; (B) any indebtedness in excess
of $500,000 arising under leases required to be capitalized
under GAAP; (C) any indebtedness in excess of $500,000
arising under purchase money obligations and (D) any
indebtedness or potential indebtedness in excess of $500,000
under any guaranty, letter of credit or performance credit;
and
(vi) Contracts providing rights of exclusivity to
distributors or retailers for definite or indefinite periods
for any products or product lines or for the use of any
trademark or tradename.
(c) Schedule 4.15 also lists and describes the status of
all Contracts currently in negotiation or proposed by Buyer
or any of the Buyer Subsidiaries as to which there exists a
draft agreement, letter of intent or similar instrument and
which is of a type which if entered into by Buyer or any of
the Buyer Subsidiaries would be required to be listed on
Schedule 4.15 or on any other Schedule (the "Buyer Proposed
Contracts").
(d) There are no Contracts, other than those set forth on
Schedule 4.15, on any other Schedule to this Agreement or
which are not required to be disclosed hereunder. Except as
set forth on Schedule 4.15, all Contracts (individually or,
in the case of any group of similar Contracts, in the
aggregate) material to the Condition of Buyer are valid,
subsisting, in full force and effect and binding upon Buyer
or any of the Buyer Subsidiaries, as the case may be, and,
to the knowledge of Buyer, on the other parties thereto in
accordance with their terms and Buyer and each of the Buyer
Subsidiaries has paid in all material respects or accrued
amounts due thereunder and has satisfied in all material
respects or provided for all of its liabilities and
obligations thereunder to be satisfied or provided for
through the date hereof, and is not in default under any of
them in any material respect, nor, to the knowledge of
Buyer, is any other party to any Contract (individually or,
in the case of any group of similar Contracts, in the
aggregate) material to the Condition of Buyer in default
thereunder in any material respect, nor, to the knowledge of
Buyer, does any condition exist that with notice or lapse of
time or both would constitute a material default thereunder.
Except as separately identified on Schedule 4.12 hereto,
neither Buyer nor any of the Buyer Subsidiaries is a party
to or bound by any Contract that materially adversely
affects the Condition of Buyer. Except as separately
identified on Schedule 4.15 hereto or on any other Schedule,
no approval or consent of any person is needed in order that
the Contracts (individually or, in the case of any group of
similar Contracts, in the aggregate) material to the
Condition of Buyer continue in full force and effect
following the consummation of the Contemplated Transactions
and the operation of the Business of the Company and the
Company Subsidiaries together with that of the Buyer and the
Buyer Subsidiaries except for such approvals or consents
which, if not obtained, would not have a material adverse
effect on the Condition of the Buyer. Except as set forth
on Schedule 4.15 or any other Schedule, the termination of
any Contract will not cause Buyer or any Buyer Subsidiary to
incur any material penalty, loss, expense or termination
payment.
(e) Buyer has given Triumph access to true and complete
copies of (i) all of the Contracts required to be set forth
on Schedule 4.15 or on any other Schedule or (ii) the most
recent draft, letter of intent or term sheet of all of the
Buyer Proposed Contracts required by the provisions of
Section 4.15(c) to be set forth on Schedule 4.15.
IV.16 Intangible Property. (a) Buyer or the Buyer
Subsidiaries own or have the right to use all material
trademarks, tradenames, servicemarks, patents, models,
industrial designs and registered copyrights (collectively,
"Buyer Intellectual Property Rights") necessary to the
conduct of their respective businesses. Schedule 4.16 sets
forth a list of those trademarks that are material to the
Condition of Buyer.
(a) To the knowledge of Buyer, with respect to Buyer
Intellectual Property Rights material to the Condition of
Buyer (i) all United States renewals and other maintenance
actions in respect of the registration relating to such
trademarks have been appropriately filed; (ii) Buyer or a
Buyer Subsidiary has exercised its best efforts to ensure
compliance with all United States registration and recording
requirements, and has paid all necessary government fees;
and (iii) the United States trademark registrations and
licenses thereof are valid with respect to Buyer Products
that are covered by the registrations.
(b) Except for restrictions of an immaterial nature,
Buyer or Buyer Subsidiary has the right to use, free and
clear of any Claims or rights of others, all material trade
secrets, know-how, processes, technology, blue prints, art
work, films, negatives, photographs, separations, patterns
and package and other designs utilized in the conduct of its
business, except where such failure to have such rights
would not, individually or in the aggregate, have a material
adverse effect on the Condition of Buyer.
(c) Except as set forth on Schedule 4.16, no material
Buyer Intellectual Property Right is subject to any Lien or
outstanding Order or Contract restricting the use or
licensing thereof. Except as set forth on Schedule 4.16,
(i) neither Buyer nor any of the Buyer Subsidiaries during
the three years preceding the date hereof has been sued or
charged in writing with or been a defendant in any Claim
which has not been terminated prior to the date hereof and
which involves a Claim of infringement arising out of the
use, registration or ownership of any Buyer Intellectual
Property Rights material to the Condition of Buyer; and (ii)
Buyer has no knowledge of any such charge or Claim of any
infringement during the three years preceding the date
hereof by any other person arising out of the use,
registration or ownership of any material Buyer Intellectual
Property Rights.
IV.17 Claims and Proceedings. Except as set forth on
Schedule 4.17, there are no outstanding material Orders of
any Governmental Body against or involving Buyer, any of the
Buyer Subsidiaries or their respective Assets other than
Orders affecting the apparel industry generally. Except as
set forth on Schedule 4.17, there are no Claims (whether or
not the defense thereof or Liabilities in respect thereof
are covered by insurance), pending or threatened in writing,
against or involving Buyer or any of the Buyer Subsidiaries
or any of their respective Assets which (i) involve a claim
for the payment of money damages of $100,000 or more; (ii)
relate to employment, regardless of amount, other than
workers' compensation Claims, severance Claims or Claims
under Plans or (iii) individually or in the aggregate, would
have a material adverse effect upon the Contemplated
Transactions or upon the Condition of Buyer other than
Claims affecting the apparel industry generally. Except as
set forth on Schedule 4.17, to the knowledge of Buyer, there
is no fact, event or circumstances that would give rise to
any Claim that would be required to be set forth on Schedule
4.17 if currently pending or threatened. All notices
required to have been given to any insurance company listed
as insuring against any Claim set forth on Schedule 4.17
have been timely and duly given and, except as set forth on
Schedule 4.17, no insurance company has asserted in writing
that such Claim is not covered by the applicable policy
relating to such Claim. Except as set forth on Schedule
4.17 there are no material product liability Claims against
or involving Buyer or any of the Buyer Subsidiaries or, to
the knowledge of Buyer, any product manufactured, marketed
or distributed at any time by Buyer or any of the Buyer
Subsidiaries ("Buyer Products") and no such Claims have been
settled, adjudicated or otherwise disposed of since January
1, 1992. There are no material Claims pending or, to the
knowledge of Buyer, threatened that would give rise to any
right of indemnification on the part of any director or
officer of Buyer or any of the Buyer Subsidiaries or the
heirs, executors or administrators of such director or
officer, against Buyer or any of the Buyer Subsidiaries or
any successor to the business of Buyer or any of the Buyer
Subsidiaries.
IV.18 Restrictions on Business Activities. There is
no Order binding upon Buyer or any of the Buyer Subsidiaries
which has or would reasonably be expected to have the effect
of prohibiting or adversely affecting (i) competition by
Buyer or any of the Buyer Subsidiaries, (ii) any business
practice of Buyer or any of the Buyer Subsidiaries, (iii)
any acquisition of property by Buyer or any of the Buyer
Subsidiaries, or (iv) to the knowledge of Buyer, the
Condition of Buyer.
IV.19 Taxes. (a) Except as set forth in the Buyer
Balance Sheet (including the notes thereto) or on Schedule
4.19, (i) all Tax returns, statements, applications, reports
and forms required by law to be filed with any Taxing
Authority on or before the Closing Date with respect to any
Pre-Closing Tax Period (as hereinafter defined) by or on
behalf of Buyer or any Buyer Subsidiary (collectively, the
"Buyer Returns") have been timely filed through the date
hereof or will be filed when due (taking into account any
extension granted by the appropriate Taxing Authority); (ii)
as of the time of filing, the Buyer Returns correctly
reflected (and, as to any Buyer Returns not filed as of the
date hereof and required to be filed on or before the
Closing Date, will correctly reflect) the facts regarding
the income, business, Assets, operations, activities and
status of Buyer, the Buyer Subsidiaries and any other
information required to be shown therein; (iii) Buyer and
the Buyer Subsidiaries have timely paid or made provision
for in reserves shown in the Buyer Balance Sheet all Taxes
that are due and payable for any period ended on or prior to
the date of the Buyer Balance Sheet; (iv) the Buyer and
Buyer Subsidiaries have made or on or before the Closing
Date will make provision for all Taxes payable by the Buyer
and Buyer Subsidiaries for any Pre-Closing Tax Period for
which no Buyer Return has been filed; (v) the charges,
accruals and reserves for Taxes reflected or that will be
reflected on the books of the Buyer and the Buyer
Subsidiaries are adequate to cover the Tax liabilities
accruing or payable by Buyer and the Buyer Subsidiaries in
respect of any Pre-Closing Tax Period; (vi) all Liabilities
of Buyer and the Buyer Subsidiaries with respect to federal
income Taxes have been finally determined except for fiscal
years 1988 through 1993, the only years not closed by the
expiration of the statute of limitations; (vii) no
deficiency for any Tax or claim for additional Taxes by any
Taxing Authority has been proposed, asserted or assessed in
writing against the Buyer or any Buyer Subsidiary (or any
member of any affiliated or combined group of which the
Buyer or any Buyer Subsidiary is or has been a member);
(viii) neither Buyer nor any Buyer Subsidiary (or any member
of any affiliated or combined group of which Buyer or any
Buyer Subsidiary is or has been a member) has been granted
any extension or waiver of the limitation period applicable
to any Buyer Returns or otherwise disclosed in writing to
Triumph or which could have a material adverse effect on the
Condition of Buyer; (ix) neither Buyer nor any Buyer
Subsidiary has filed any consent or election under the Code,
other than such consents and elections, if any, reflected in
the Buyer Returns or otherwise disclosed in writing to
Sellers with specific reference to this Section 4.19(a)(ix)
or which could have a material adverse effect on the
condition of Buyer; (x) neither Buyer nor any Buyer
Subsidiary has entered into or will enter into any agreement
or consent under Section 341(f) of the Code; (xi) neither
Buyer nor any Buyer Subsidiary owns any interest in real
property in the State of New York or in any other
jurisdiction which would result, as a result of the
consummation of the Contemplated Transactions, in the
imposition of the New York State Buyer Real Property
Transfer Gains Tax for real property located in New York or
a similar tax for real property located in any other
jurisdiction; (xii) there are no Liens for Taxes upon the
Assets of the Buyer or any Buyer Subsidiary other than Taxes
not yet due and payable; (xiii) neither Buyer nor any Buyer
Subsidiary will be required, as a result of a change in
method of accounting for a Pre-Closing Tax Period, to
include any adjustment under Section 481(c) of the Code in
taxable income for any Tax period (or portion thereof)
ending on the Closing Date; (xiv) neither Buyer nor any
Buyer Subsidiary has been a member of an affiliated group
other than one of which Buyer was the common parent, or
filed or been included in a combined, consolidated or
unitary Buyer Return together other than one filed by Buyer;
(xv) neither Buyer nor any Buyer Subsidiary is currently
under any contractual obligation to indemnify any other
person with respect to Taxes; (xvi) Buyer is not and has not
been a United States real property holding corporation as
defined in Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii)
thereof; and (xvii) since its organization, Buyer has been a
possessions corporation that qualified for the Puerto Rico
and possessions tax credit and since such date has been
exempt from Puerto Rican income Taxes.
(a) As used herein, "Pre-Closing Tax Period" means any
tax period (or portion thereof) ending on or before the
Closing Date.
(b) True and correct copies of the Buyer Returns for the
years 1991, 1992 and 1993 have been delivered to Sellers.
(c) Neither Buyer nor any Buyer Subsidiary is party to
any tax-sharing or tax allocation agreement pursuant to
which it is obligated to pay any amount to anyone else.
(d) Except with respect to sales taxes collected at the
"outlet" stores of Buyer Subsidiaries, neither Buyer nor any
Buyer Subsidiary holds or has held a permit, registration,
certificate or like instrument as a "dealer" or other
collecting agent from a state Taxing Authority under which
it collects sales tax from its business operations and
remits such tax to such Taxing Authority.
IV.20 Employee Benefits Plans. (a) Schedule 4.20
contains a true and complete list of (i) all of the Plans of
the Buyer, any of the Buyer Subsidiaries, and of any other
companies or entities which constitute a member of the Buyer
ERISA Group, which are presently in effect or, in the case
of Pension Plans, have been in effect at any time prior to
the date hereof and for which there is any liability; (ii)
any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive,
bonus, sabbatical leave, vacation, all employment or
severance Contracts (including, without limitation,
arrangements providing for benefits in the event of a change
of ownership in whole or in part of the Buyer), disability,
hospitalization, health and medical insurance plans,
relocation, child care, educational assistance or other
employee benefit plan or program which any member of the
Buyer ERISA Group maintains or to which any member of the
Buyer ERISA Group has any present or future obligation to
contribute; and (iii) separately identifies all Plans
providing retiree benefits. (The Plans or programs
described in clauses (i), (ii) and (iii) including all non-
qualified plans are herein collectively referred to as the
"Buyer ERISA Group Plans".) Except as set forth in
Schedule 4.20, the Buyer has delivered or made available to
Sellers true and complete copies of all documents (including
plan documents and related trust agreements) as they may
have been amended to the date of delivery or availability,
embodying or relating to clauses (i), (ii) and (iii)
hereinabove and a written description of each non-written
plan. Since such date of delivery or availability, the
Buyer ERISA Group Plans have not been amended to materially
change the terms thereof. The Buyer has also delivered to
Sellers true and complete copies of annual reports (Form
5500) for the last three (3) years, summary annual reports,
summary plan descriptions and a summary of material
modifications with respect to each Buyer ERISA Group Plan,
as applicable.
(a) Except as set forth in Schedule 4.20, the Buyer ERISA
Group maintains no tax qualified Pension Plans nor has the
Buyer ERISA Group ever maintained any other tax-qualified
Pension Plan for the benefit of employees.
(b) With respect to each 412 Plan, there has been no
failure to make any contribution or pay any amount due as
required by Section 412 of the Code, Section 302 of ERISA or
the terms of any such 412 Plan, and no request or receipt of
any funding waiver has been requested or received from the
Internal Revenue Service.
(c) Except as set forth in Schedule 4.20, no trust has
been established in connection with any 412 Plan pursuant to
Section 4049 of ERISA (as in effect on December 17, 1987)
and no liabilities that would have a material adverse effect
on the Condition of the Buyer have been asserted against the
Buyer or any Buyer Subsidiary or any member of the Buyer
ERISA Group in connection with any such 412 Plan by the PBGC
or by a trustee appointed pursuant to Section 4042(b) or (c)
of ERISA, and no Lien has been attached and neither the PBGC
nor the Internal Revenue Service has threatened to attach a
Lien on any Assets of or any member of the Buyer ERISA Group
as a result of any failure to comply with the Code or the
Treasury regulations thereunder or ERISA.
(d) Except as set forth in Schedule 4.20, the IRS has
issued favorable determination letters to the effect that
each qualified Buyer ERISA Group Plan as amended for the Tax
Reform Act of 1986 and subsequent legislation qualifies
under Section 401(a) of the Code and that the related trusts
are exempt from taxation under Section 501(a) of the Code
and such determination letters remain in effect and have not
been revoked. To the knowledge of Buyer, nothing has
occurred or is expected to occur that would adversely affect
the qualified status of any Buyer ERISA Group Plans or any
related trusts subsequent to the issuance of such
determination letters.
(e) Except as set forth in Schedule 4.20, all Plans
maintained by the Buyer or any member of the Buyer ERISA
Group have been and continue to be in compliance in all
material respects (i) in operation with the requirements
prescribed by any and all Laws and Orders applicable to the
Buyer ERISA Group Plans including but not limited to ERISA
and the Code and with any other contractual obligations and,
except as set forth in Schedule 4.20, all reports and
disclosures including Form 5500s relating to the Buyer ERISA
Group Plans required to be filed with or furnished to
Governmental Bodies, participants or beneficiaries prior to
the Closing Date have been or will be filed or furnished in
a timely manner and in accordance with applicable law; and
(ii) in form with those requirements of the Code and the
regulations thereunder and ERISA which must be met on the
date hereof.
(f) To the knowledge of Buyer, no member of the Buyer
ERISA Group nor any other "disqualified person" or "party in
interest" (as defined in Section 4975 of the Code and
Section 3 of ERISA, respectively) has engaged in any
"prohibited transaction," as such term is defined in Section
4975 of the Code or Section 406 of ERISA, which could
subject any of the Buyer ERISA Group Plans (or their related
trusts), any officer, director or employee of any entity
within the ERISA Group or any trustee, administrator or any
other fiduciary of any of the Buyer ERISA Group Plans to a
tax or penalty imposed under Section 4975 of the Code or
Section 502(i) of ERISA and which would have a material
adverse effect on the Condition of the Buyer.
(g) Except as set forth in Schedule 4.20, there are no
Claims (other than routine claims for benefits in the
ordinary course) pending or, to the knowledge of Buyer,
threatened against any of the Buyer ERISA Group Plans or the
Assets of any of the Buyer ERISA Group Plans or against any
fiduciary of any of the Buyer ERISA Group Plans for which
the Buyer or the Buyer Subsidiaries may be directly or
indirectly liable, through indemnification obligations or
otherwise.
(h) No member of the Buyer ERISA Group has provided or is
required to provide, security to any single-employer plan
pursuant to Section 401(a) of the Code.
(i) The consummation of the Contemplated Transactions
will not accelerate any liability under any of the Buyer
ERISA Group Plans because of an acceleration of any rights
or benefits to which employees may be entitled thereunder.
(j) With respect to any Buyer ERISA Group Plan that is a
Welfare Plan, (i) each such Welfare Plan, the contributions
to which are claimed as a deduction under any provision of
the Code, is in compliance in all material respects with all
applicable requirements pertaining to such deduction, (ii)
with respect to any welfare benefit fund within the meaning
of Section 419 of the Code that comprises part of a Welfare
Plan, there is no disqualified benefit within the meaning of
Section 4976(b) of the Code that would subject the Buyer or
any of the Buyer Subsidiaries to a tax under Section 4976(a)
of the Code which would have a material adverse effect on
the Condition of the Business, (iii) any Welfare Plan which
is a group health plan within the meaning of Section 5000(b)
of the Code satisfies in all material respects all of the
requirements of Section 4980(B) of the Code, and (iv) all
employer contributions due have been fully and timely paid
or accrued on the books of the Buyer or the Buyer
Subsidiaries.
(k) Schedule 4.20 sets forth the present value of the
liability of each Buyer ERISA Group Plan that is a Welfare
Plan and that provides benefits or coverage extending beyond
a participant's termination of employment with the Buyer,
excluding the liability for those benefits required by
Section 4980B of the Code or those which are provided at the
sole expense of the participant or beneficiary of the
participant.
(l) Except as set forth on Schedule 4.20, neither the
Buyer nor any member of the Buyer ERISA Group has incurred
or reasonably expects to incur (i) any Withdrawal
Liabilities (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result
in Withdrawal Liability), or (ii) any Liabilities under
Title IV of ERISA with respect to any 412 Plan. Schedule
4.20 also identifies (A) each Multiemployer Plan to which
the Buyer or a Buyer ERISA Group Member currently makes, is
obligated to make, or has made or been obligated to make
contributions, (B) provides a schedule of the contributions
made to each such Multiemployer Plan over the past five
years; (C) provides a schedule of any withdrawal liability
payments which a Buyer ERISA Group is obligated to make or
has made in the last 10 years to any Multiemployer Plan and
(D) the amount of withdrawal liability that would be due
assuming complete withdrawal from all Multiemployer Plans to
which Buyer or any member of the Buyer ERISA Group
contribute. With the exception of the representation
contained in this Section 4.20(m), any representation
contained herein with regard to Multiemployer Plans shall be
limited to matters of which the Company has knowledge.
(m) Except as set forth in Schedule 4.20, within the last
five years, neither the Buyer nor any member of the Buyer
ERISA Group has transferred any Assets or Liabilities of a
412 Plan subject to Title IV of ERISA which had, at the date
of such transfer, Unfunded Pension Liabilities or has
engaged in a transaction which may reasonably be subject to
Section 4212(c) of ERISA.
(n) Neither the Buyer nor any member of the Buyer ERISA
Group sponsors or maintains or has obligations direct,
contingent or otherwise, with respect to any benefit plan
that is subject to the laws of any country other than the
United States.
(o) No Buyer ERISA Group Plan holds securities of the
Buyer or any of the Buyer's Subsidiaries.
(p) There has been no Reportable Event with respect to
any 412 Plan within the last five years.
(q) With respect to any supplemental employee retirement
plans, excess benefit plans (as defined in Section 3(36) of
ERISA), severance arrangements with individual employees,
whether written or not, or other nonqualified plans or
arrangements, Schedule 4.20 identifies the individuals or
class of individuals covered by each such plan or
arrangement.
(r) Except as set forth on Schedule 4.20, as of
December 31, 1994, no 412 Plan sponsored by Buyer or any
member of the Buyer ERISA Group has any amount of Unfunded
Pension Liability.
IV.21 Officers, Directors and Key Employees. Buyer
has provided to Sellers a schedule setting forth (a) the
name, total compensation (as reflected on the applicable
forms W-2), date of hire and salary history for the two
years ended December 31, 1994 of each existing director,
executive officer or management employee of Buyer or the
Buyer Subsidiaries earning total compensation for the year
ended December 31, 1994 (as reflected on the applicable
forms W-2) in excess of $75,000, and (b) any payments or
commitments to pay any severance or termination pay to any
such person. Except as set forth on such schedule, the
employment of all such persons is terminable at will.
IV.22 Employment-Related Matters. Except as set forth
in Schedule 4.22, (a) Buyer and the Buyer Subsidiaries are
not a party to any Contract with any labor organization or
other representative of their employees; (b) there is no
unfair labor practice charge or complaint pending or, to the
knowledge of Buyer, threatened against Buyer or any of the
Buyer Subsidiaries; (c) there is no labor strike, slowdown,
work stoppage or other material labor controversy in effect
or, to the knowledge of Buyer, threatened against or
otherwise affecting Buyer or any of the Buyer Subsidiaries;
(d) Buyer and the Buyer Subsidiaries have not experienced
any labor strike, slowdown, work stoppage or similar
material labor controversy within the past three years; (e)
no material Claim before any Governmental Body brought by or
on behalf of any employee, prospective employee, former
employee, retiree, labor organization or other
representative of Buyer's employees or any of the Buyer
Subsidiaries' employees, is pending or, to the knowledge of
Buyer, threatened against Buyer or any of the Buyer
Subsidiaries; (f) to the knowledge of Buyer, neither Buyer
nor any of its Subsidiaries is a party to, or otherwise
bound by, any material Order relating to its employees or
employment practices relating to the employees other than
those affecting the industry generally; (g) Buyer and the
Buyer Subsidiaries are in compliance with all applicable
Laws, policies, procedures, agreements and Contracts,
relating to employment, employment practices, wages, hours,
and terms and conditions of employment except where the
failure to comply would not, individually, or in the
aggregate, have a material adverse effect on the Condition
of Buyer; (h) except with respect to ongoing disputes of a
routine nature, involving immaterial amounts Buyer and the
Buyer Subsidiaries have paid in full to all of their
employees all wages, salaries, commissions, bonuses,
benefits and other compensation due and payable to such
employees on or prior to the date hereof and (i) Buyer and
the Buyer Subsidiaries are in compliance with their
obligations with respect to their employees pursuant to the
WARN, and all other notification and bargaining obligations
arising under any collective bargaining agreement, statute
or otherwise.
IV.23 Potential Conflicts of Interest. Except as set
forth in Schedule 4.23, no officer, director or Affiliate of
Buyer or any of the Buyer Subsidiaries, no spouse of any
such officer, director or Affiliate, nor, to the knowledge
of any Buyer, no entity controlled by one or more of the
foregoing:
(a) owns, directly or indirectly, any interest in
(excepting less than 1% stock holdings for investment
purposes in securities of publicly held and traded
companies), or is an officer, director, employee or
consultant of, any person that carries on business in
competition with Buyer or any Buyer Subsidiary;
(b) owns, directly or indirectly, in whole or in part,
any material Asset that Buyer or any of the Buyer
Subsidiaries uses in the conduct of its business; or
(c) has any material Claim whatsoever against, or owes
any amount to, Buyer or any of the Buyer Subsidiaries,
except for claims in the ordinary course of business such as
for accrued vacation pay and accrued benefits under employee
benefit plans.
IV.24 Insurance. The insurance policies, fidelity and
surety bonds and fiduciary liability policies covering the
Assets, Business, operations, employees, officers and
directors of Buyer and the Buyer Subsidiaries are of the
type and in amounts customarily carried by persons
conducting businesses similar to those of Buyer and the
Buyer Subsidiaries. There is no Claim by Buyer or any of
the Buyer Subsidiaries pending under any of such policies or
bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds, or
requirement by any insurer to perform work which has not
been satisfied. All premiums payable under all such
policies and bonds have been paid and Buyer and the Buyer
Subsidiaries are otherwise in compliance in all material
respects with the terms and conditions of all such policies
and bonds. Such policies of insurance and bonds (or other
policies and bonds providing substantially similar insurance
coverage) other than those relating to director and officer
liability insurance have been in effect since January 1,
1994 and remain in full force and effect. The insurance in
effect with respect to the Buyer Real Property is in an
amount of the full replacement value of the buildings and
improvements. Buyer does not know of any threatened
termination of, premium increase with respect to, or
uncompleted requirements under any of such policies or
bonds.
IV.25 Suppliers, Customers and Contractors. Schedule
4.25A lists, by dollar volume paid for the 12 months ended
December 31, 1994, the 15 largest raw material suppliers and
the 25 largest customers of Buyer or Buyer Subsidiary.
Schedule 4.25B lists the names and addresses of those
Contractors retained by Buyer or any of the Buyer
Subsidiaries involving payments, for the 12 months ended
December 31, 1994, in excess of $50,000. The relationships
of Buyer and the Buyer Subsidiaries with such suppliers,
customers and Contractors are reasonable commercial working
relationships and: (i) no supplier or Contractor has
refused to provide credit, or has suspended the provision of
credit, to Buyer or any of the Buyer Subsidiaries as a
result of the failure or delay in payment of amounts due to
such suppliers or Contractors; (ii) all amounts owing to
such suppliers and Contractors, if not in dispute, have been
paid in accordance with their respective terms; (iii) no
person within the last twelve months has threatened in
writing to cancel, or otherwise terminate, the relationship
of such person with Buyer or any of the Buyer Subsidiaries,
and (iv) no person during the last twelve months has
decreased materially or, to the knowledge of Buyer,
threatened in writing to decrease or limit materially, its
relationship with Buyer or any of the Buyer Subsidiaries or,
to the knowledge of Buyer intends to decrease or limit
materially its services or supplies to Buyer or any of the
Buyer Subsidiaries or its usage or purchase of the services
or products of Buyer or any of the Buyer Subsidiaries.
IV.26 Compliance with Laws. Neither Buyer nor any of
the Buyer Subsidiaries is in violation of any applicable
Order or Law of any Governmental Bodies affecting its
Assets, affairs or business, where the effect of any such
violation, individually or in the aggregate, would have a
materially adverse effect on the Condition of Buyer.
Neither Buyer nor any of the Buyer Subsidiaries has made any
illegal payment to officers or employees of any Governmental
Body, or made any illegal payment to customers for the
sharing of fees or to customers or suppliers for rebating of
charges, or engaged in any other illegal reciprocal
practice, or made any illegal payment or given any other
illegal consideration to purchasing agents or other
representatives of customers in respect of sales made or to
be made by Buyer or any of the Buyer Subsidiaries.
IV.27 Permits. Buyer and the Buyer Subsidiaries have
obtained all Permits of, and have made all required
registrations and filings with, any Governmental Body that
are necessary to the conduct of their respective businesses,
except for such Permits which, if not in the possession of
Buyer or the Buyer Subsidiaries, would not have a materially
adverse effect on the Condition of Buyer. All Permits
material to the Condition of Buyer are in full force and
effect; no material violations are or have been recorded in
respect of any such Permit; and no proceeding is pending or
threatened to revoke or limit any such Permit.
IV.28 Environmental Matters. (a) With respect to
each of Buyer and each of the Buyer Subsidiaries, there has
been no manufacture, refining, storage, transport, disposal
or treatment of Hazardous Substances by such party (or, to
the knowledge of such party, its predecessor in interest),
or any Release at, on or under, any Buyer Real Property by
the Buyer or any Buyer Subsidiary or, to Buyer's knowledge,
by any other person, in violation of any Environmental Law
or which would require remedial action under any
Environmental Law; to the knowledge of Buyer, except as set
forth in Schedule 4.28, none of the soil, ground water or
surface water of such Buyer Real Property is contaminated by
any Release.
(a) During the past five years neither Buyer nor any of
the Buyer Subsidiaries has received any written (i) notice
of any violation with respect to any Environmental Law; (ii)
notice of any actual, pending or threatened Regulatory
Action involving such party, or any present or former owner,
lessee or operator of the Buyer Real Property; or (iii)
notice of any Third Party Claim.
(b) To the knowledge of Buyer, except as set forth in
Schedule 4.28, (i) there are no incinerators, septic tanks,
underground tanks or cesspools located on, at or under the
Buyer Real Property, (ii) all sewage from the Buyer Real
Property is discharged into a public sanitary sewer system,
and (iii) there has been no Release by Buyer or any of the
Buyer Subsidiaries into the atmosphere, adjoining or
adjacent to any body of water, or on to adjacent property.
(c) Each of Buyer and the Buyer Subsidiaries, as
applicable, has obtained, and is in compliance with, all
material Environmental Permits except where the failure to
obtain or be in compliance with any such Environmental
Permits would not, singly or in the aggregate, have a
material adverse effect on the Condition of Buyer.
(d) Except as set forth on Schedule 4.28 or as would not,
singly or in the aggregate, have a material adverse effect
on the Condition of Buyer, all such Environmental Permits
are in full force and effect, and Buyer and each Subsidiary
has made all appropriate filings for issuance or renewal of
such Environmental Permits.
(e) Except as set forth on Schedule 4.28 or as would not,
singly or in the aggregate, have a material adverse effect
on the Condition of Buyer, there are no facts, events,
conditions, circumstances, activities, practices, incidents,
actions, omissions or plans known to Buyer or the Buyer
Subsidiaries that: (i) may give rise to any Regulatory
Action including Buyer or any of the Buyer Subsidiaries or
the Buyer Real Property, or (ii) is reasonably likely to
form the basis of any Third Party Claim involving Buyer, any
of the Buyer Subsidiaries or the Buyer Real Property.
Except as set forth on Schedule 4.28, there are no
Regulatory Actions or Third Party Claims relating to,
arising from or otherwise affecting the Buyer Real Property.
IV.29 Finders; Fees. Except for Corestates Investment
Banking whose fees will be paid by Buyer, there is no
investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf
of Buyer or any Buyer Subsidiary who might be entitled to
any fee or commission from Buyer or any Buyer Subsidiary
upon consummation of the Contemplated Transactions.
IV.30 Disclosure. Neither this Agreement, the
Schedules hereto, nor any audited or unaudited financial
statements, documents or certificates furnished or to be
furnished to Sellers by or on behalf of Buyer pursuant to
this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary in order to
make the statements contained herein or therein not
misleading. There are no facts which would materially
adversely affect the Condition of Buyer which have not been
set forth herein, or in any Schedule hereto, or in any
certificate or statement furnished or to be furnished to
Sellers by Buyer.
V COVENANTS AND AGREEMENTS
V.1 Conduct of Business of Company. (a) From the date
hereof through the Closing Date, except as set forth in
Schedule 5.1, Triumph agrees to use reasonable efforts to
cause the Company and each Company Subsidiary:
(i) To conduct their operations according to their
ordinary and usual course of business consistent with past
practice, to preserve intact their present business
organization, to keep available the services of their
present officers and employees, to use reasonable efforts to
preserve and maintain their Assets and to use reasonable
efforts to preserve their relationships with customers,
suppliers, Contractors and others having business dealings
with them.
(ii) To maintain in the ordinary course of business
consistent with past practice and in accordance with all
Contracts, the Real Property, all their material structures,
equipment and other Tangible Property in their present
repair, order and condition, except for depletion,
depreciation and ordinary wear and tear.
(iii) To keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now
carried by them.
(iv) To perform all of their obligations under the
Contracts disclosed on any Schedule hereto and not enter
into any material amendments or modifications thereof other
than in the ordinary course of business or as required by
this Agreement.
(v) To maintain their books of account and records in the
usual, regular and ordinary manner.
(vi) To comply in all material respects with all Laws
applicable to them and pay all Taxes, which become due and
payable other than Taxes contested in good faith and for
which adequate reserves have been established.
(vii) Not to incur any material Liability nor to enter
into any Contract with a value in excess of $250,000, except
in the ordinary course of business.
(viii) Not to cause or permit any Liens to be created
or any conditions to exist which may become a Lien.
(ix) Not to undertake (nor permit to be undertaken) any of
the actions specified in Section 3.13 which are within the
control of a Seller.
(x) With respect to any employees of the Company or any
Company Subsidiary not to: (A) make, institute, agree to or
change any bonus, profit sharing, pension, retirement,
severance, termination, "parachute" or other similar
arrangement or plan for employees; and (B) otherwise than in
accordance with past practices and in similar amounts: (1)
increase the compensation payable or to become payable to
any employee, and (2) accrue any bonus, percentage of
compensation or other like benefit to or for the credit of
any employee.
(xi) Not to authorize or make any capital expenditures in
excess of $250,000 or not listed on Schedule 5.1.
(xii) Not to effectuate a "plant closing" or "mass
layoff," as those terms are defined in WARN, affecting in
whole or in part any of its facilities or operating units or
any of its employees.
(b) From the date hereof through the Closing Date, each
Seller agrees to use reasonable efforts to cause the affairs
of the Company and each Company Subsidiary to be conducted
in such a manner so that the representations and warranties
of Sellers contained herein shall continue to be true and
correct on and as of the Closing Date as if made on and as
of the Closing Date.
V.2 Conduct of Business of Buyer. (a) Except as set
forth in Schedule 5.2, from the date hereof through the
Closing Date, Buyer agrees, and will cause each Buyer
Subsidiary, to comply with all the terms and condition set
forth in Section 7 of the Stockholders' Agreement. In
addition, from the date hereof through the Closing Date,
Buyer agrees, and will cause each Buyer Subsidiary:
(i) To conduct their operations according to their
ordinary and usual course of business consistent with past
practice, to use reasonable efforts to preserve intact their
present business organization, to keep available the
services of their present officers and employees, to use
reasonable efforts to preserve and maintain their Assets and
to use reasonable efforts to preserve their relationships
with customers, suppliers, Contractors and others having
business dealings with them.
(ii) To maintain in the ordinary course of business
consistent with past practice and in accordance with all
Contracts, the Buyer Real Property, all their material
structures, equipment and other Tangible Property in their
present repair, order and condition, except for depletion,
depreciation and ordinary wear and tear.
(iii) To keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now
carried by them.
(iv) To perform all of their obligations under the
Contracts disclosed on any Schedule hereto and not enter
into any material amendments or modifications thereof other
than in the ordinary course of business or as required by
this Agreement.
(v) To maintain their books of account and records in the
usual, regular and ordinary manner.
(vi) To comply in all material respects with all Laws
applicable to them and pay all Taxes, which become due and
payable other than Taxes contested in good faith and for
which adequate reserves have been established.
(vii) Not to incur any material Liability nor to enter
into any Contract with a value in excess of $250,000, except
in the ordinary course of business.
(viii) Not to cause or permit any Liens to be created
or any conditions to exist which may become a Lien, except
in the ordinary course of business.
(ix) Not to undertake (nor permit to be undertaken) any of
the actions specified in Section 4.13 which are within the
control of Buyer.
(x) With respect to any employees of Buyer or any Buyer
Subsidiary not to: (A) make, institute, agree to or change
any bonus, profit sharing, pension, retirement, severance,
termination, "parachute" or other similar arrangement or
plan for employees, except in accordance with past
practices; and (B) otherwise than in accordance with past
practices and in similar amounts: (1) increase the
compensation payable or to become payable to any employee,
and (2) accrue any bonus, percentage of compensation or
other like benefit to or for the credit of any employee.
(xi) Not to authorize or make any capital expenditures in
excess of $250,000 or not listed on Schedule 5.2.
(xii) Not to effectuate a "plant closing" or "mass
layoff," as those terms are defined in WARN, affecting in
whole or in part any of its facilities or operating units or
any of its employees.
(b) From the date hereof through the Closing Date, except
in the ordinary course of business and for changes disclosed
in any Schedule or otherwise contemplated hereby, Buyer
agrees to use reasonable efforts to conduct the affairs of
Buyer (and to cause the affairs of each Buyer Subsidiary to
be conducted) in such a manner so that the representations
and warranties of Buyer contained herein shall continue to
be true and correct on and as of the Closing Date as if made
on and as of the Closing Date.
V.3 Corporate Examinations and Investigations. (a)
Prior to the Closing Date, Sellers agree that Buyer shall be
entitled, through the directors, officers, employees,
attorneys, accountants, representatives, consultants and
other agents (collectively, "Representatives") of Buyer to
make such investigation of the Assets, Businesses and
operations of the Company and the Company Subsidiaries, and
such examination of the books, records and financial
condition of the Company and the Company Subsidiaries, as
Buyer reasonably deems necessary. Any such investigation
and examination shall be conducted at reasonable times,
under reasonable circumstances and upon reasonable notice,
and the Sellers shall, and shall cause the Company and the
Company Subsidiaries to, cooperate fully therein. No
investigation by Buyer shall diminish or obviate any of the
representations, warranties, covenants or agreements of a
Seller contained in this Agreement. In order that Buyer may
have full opportunity to make such physical, business,
accounting and legal review, examination or investigation as
it may reasonably deem necessary of the affairs of the
Company and the Company Subsidiaries, Sellers shall make
available and shall cause the Company and the Company
Subsidiaries to make available to the Representatives of
Buyer during such period, without however causing any
unreasonable interruption in the operations of the Company,
all such information and copies of such documents and
records concerning the affairs of the Company and the
Company Subsidiaries as such Representatives may reasonably
request, shall permit the Representatives of Buyer access to
the Assets of Company and the Company Subsidiaries and all
parts thereof and to their respective customers, suppliers,
Contractors and others, and shall cause the Company and the
Company Subsidiaries' Representatives to cooperate fully in
connection with such review and examination.
(b) Prior to the Closing Date, Buyers agree that
Sellers shall be entitled, through their Representatives to
make such investigation of the assets, Businesses and
operations of Buyer and the Buyer Subsidiaries, and such
examination of the books, records and financial condition of
Buyer and the Buyer Subsidiaries, as Sellers reasonably deem
necessary. Any such investigation and examination shall be
conducted at reasonable times, under reasonable
circumstances and upon reasonable notice, and Buyer shall,
and shall cause the Buyer Subsidiaries to, cooperate fully
therein. No investigation by Sellers shall diminish or
obviate any of the representations, warranties, covenants or
agreements of Buyer contained in this Agreement. In order
that Sellers may have full opportunity to make such
physical, business, accounting and legal review, examination
or investigation as they may reasonably deem necessary of
the affairs of Buyer and the Buyer Subsidiaries, Buyer shall
make available and shall cause the Buyer Subsidiaries to
make available to the Representatives of Sellers during such
period, without however causing any unreasonable
interruption in the operations of Buyer or the Buyer
Subsidiaries, all such information and copies of such
documents and records concerning the affairs of Buyer and
the Buyer Subsidiaries as such Representatives may
reasonably request, shall permit the Representatives of
Sellers access to the assets of Buyer and the Buyer
Subsidiaries and all parts thereof and to their respective
customers, suppliers, Contractors and others, and shall
cause Buyer's and the Buyer Subsidiaries' Representatives to
cooperate fully in connection with such review and
examination.
V.4 Additional Financial Statements. (a) Prior to the
Closing Date, as soon as available and in any event within
thirty (30) calendar days after the end of each monthly
accounting period of the Company, Sellers shall furnish
Buyer, with a management report with respect to gross sales,
receivables, estimated inventories, capital expenditures and
related information if and only to the extent such
management report is prepared for the use of the management
of the Company and the Company Subsidiaries, but in no
event, in any less detail than is consistent with past
practice.
(a) Prior to the Closing Date, as soon as available and
in any event within thirty (30) calendar days after the end
of each monthly accounting period of Buyer, Buyer shall
furnish Sellers with a management report with respect to
gross sales, receivables, estimated inventories, capital
expenditures and related information if and only to the
extent such management report is prepared for the use of the
management of Buyer and Buyer Subsidiaries, but in no event,
in any less detail than is consistent with past practice.
V.5 Filings and Authorizations. Sellers and Buyer,
before or promptly after the execution and delivery of this
Agreement, shall file or supply, or cause to be filed or
supplied, all notifications, reports and other information
required to be filed or supplied pursuant to the HSR Act in
connection with the Contemplated Transactions and which are
required by Law to effectuate the consummation of the
Contemplated Transactions. Sellers and Buyer shall
cooperate with each other in connection with such filing and
furnish each other with copies of such filings and any
correspondence received from any Governmental Body in
connection therewith. Sellers and Buyer, as promptly as
practicable, shall make, or cause to be made, all such other
filings and submissions under such Laws as are applicable to
them or to their respective Subsidiaries and Affiliates, as
may be required for them to consummate the Contemplated
Transactions in accordance with the terms of this Agreement.
All such filings shall comply in form and content in all
material respects with applicable Law.
V.6 Efforts to Consummate. (a) Subject to the terms and
conditions herein provided, each party hereto, without
payment or further consideration, shall use its reasonable,
good faith efforts to take or cause to be taken all action
and to do or cause to be done all things necessary, proper
or advisable under applicable Laws, Permits and Orders to
consummate and make effective, as soon as reasonably
practicable, the Contemplated Transactions, including, but
not limited to, the obtaining of all Seller Required
Consents and Buyer Required Consents and Permits of any
third party, whether private or governmental, required in
connection with such party's performance of such
transactions and each party hereto shall cooperate with the
other in all of the foregoing.
(a) Without limiting the generality of the foregoing,
prior to the Closing:
(i) Bill Blass, Ltd., pursuant to the License Agreement
dated as of October 1, 1989, by and between Bill Blass, Ltd.
and Wundies Enterprises, Inc., pursuant to the License
Agreement, dated June 15, 1991 between Wundies Enterprises,
Inc. and the Company, shall have consented to (A) the
continued distribution by the Company pursuant to such
Agreements of Company Products under the name of "Bill
Blass" as part of a combined enterprise that also
distributes products under the name of "Oscar de La Renta";
(B) the change of control of the Company contemplated by
this Agreement and (C) a Company Merger, if one is effected.
(ii) Sellers shall cause the Company to have complied with
the provisions of Section 14(f) of the 1934 Act to permit
the Board of Directors of the Company to be reconstituted as
of the Closing Date with nominees designated by Buyer.
(iii) Sellers shall use reasonable efforts to obtain
the Seller Required Consents in form that will permit,
without further consent, a Company Merger, if one is
effected; provided that the failure to obtain any such
consent in such form will not constitute a default
hereunder.
(iv) The Contracts identified by means of an asterisk on
Schedule 3.15 shall have been terminated without liability
on the part of the Company, any Company Subsidiary, Buyer or
any Buyer Subsidiary.
(b) Whenever this Agreement requires the Company or the
Company Subsidiaries to take any action (or to use any
effort to take such action) or refrain from taking any
action, such requirement shall be deemed to include an
undertaking on the part of Triumph to cause the Company or
the Company Subsidiaries concerned to take (or use the
required effort to take) or refrain from taking such action.
V.7 Negotiations With Others. (a) From and after the
date hereof unless and until this Agreement shall have
terminated in accordance with its terms, Triumph and each of
Spiesshofer and Magrone acting solely in the capacity as
stockholders of the Company, agree that none of them will
directly or indirectly to (i) solicit, engage in discussions
or engage in negotiations with any person (other than Buyer
or any of its Affiliates) with respect to an Acquisition
Proposal; (ii) provide information to any person (other than
Buyer or any of its Affiliates) in connection with an
Acquisition Proposal; or (iii) enter into any transaction
with any person (other than Buyer or any of its Affiliates)
with respect to an Acquisition Proposal. If any Seller, the
Company, any Company Subsidiary or Representative receives
any offer or proposal to enter into discussions or
negotiations relating to any of the above, Sellers will
immediately notify Buyer in writing as to the identity of
the offeror or the party making any such proposal and the
specific terms of such offer or proposal.
(a) In addition, from and after the date hereof unless
and until this Agreement shall have been terminated in
accordance with its terms, Triumph agrees that it will not,
directly or indirectly, vote its securities in the Company
to authorize; (i) the sale of all or substantially all of
the assets of the Company to any person other than Buyer or
any of its Affiliates, or (ii) a merger or other business
combination with any Person other than Buyer or any of its
Affiliates.
(b) Neither Spiesshofer nor Magrone shall be deemed to be
in breach of the terms hereof by reason of either or both of
them taking or refusing to take any action that, in either
of his or their reasonable judgment, would cause them, in
their capacities as directors of the Company, to breach
their fiduciary duties to the Company and its stockholders.
V.8 Notices of Certain Events. Prior to the Closing
Date, Sellers shall advise Buyer promptly after learning,
after the date thereof, of any management employee of the
Company or any of the Company Subsidiaries whose base
compensation in the Company's 1994 fiscal year exceeded
$75,000, who intends to cancel or otherwise terminate his or
her relationship with the Company or any of the Company
Subsidiaries. Prior to the Closing Date, Buyer shall advise
Triumph promptly after learning, after the date thereof, of
any management employee of Buyer or any Buyer Subsidiary
whose base compensation in its 1994 fiscal year exceeded
$75,000, who intends to cancel or otherwise terminate his or
her relationship with Buyer or any of the Buyer
Subsidiaries. In addition, prior to the Closing Date, each
of Sellers and Buyer shall promptly notify the other of:
(a) any notice or other communication from any person
alleging that the consent of such person is or may be
required in connection with the Contemplated Transactions;
(b) any notice or other communication from any
Governmental Body in connection with the Contemplated
Transactions; and
(c) any event, condition or circumstance occurring from
the date hereof through the Closing Date that would
constitute a violation or breach of any representation or
warranty, whether made as of the date hereof or as of the
Closing Date, or that would constitute a violation or breach
of any covenant of any party contained in this Agreement.
V.9 Public Announcements. Prior to the Closing Date,
Sellers and Buyer will consult with each other before
issuing any press release or otherwise making any public
statement with respect to the Contemplated Transactions, and
will not issue any such press release or make any such
public statement without the prior approval of the other
party, except as may be required by applicable Law in which
event the other party shall have the right to review and
comment upon any such press release or public statement
prior to its issuance. The fact that a party has the
foregoing right to review or comment shall not mean that
such party's consent is needed prior to the issuance of such
press release or public statement.
V.10 Confidentiality. (a) Buyer, on the one hand, and
each Seller, on the other hand, each shall hold in strict
confidence, and shall use its best efforts to cause all its
Representatives to hold in strict confidence, unless
compelled to disclose by judicial or administrative process,
or by other requirements of Law, all information concerning
the Sellers, the Company and the Company Subsidiaries (in
the case of Buyer) and Buyer and the Buyer Subsidiaries (in
the case of the Sellers) which is created or obtained prior
to, on or after the dates hereof in connection with the
Contemplated Transactions, and Buyer and Sellers each shall
not use or disclose to others, or permit the use of or
disclosure of, any such information created or obtained
except to the extent that such information can be shown (i)
to have been previously known by Buyer or any Seller as the
case may be and (ii) to have been made known to Buyer or
Seller, as the case may be, from a third-party not in breach
of any confidentiality requirement or (iii) to have been
made public through no fault of Buyer or any Seller, as the
case may be, or any of their respective Representatives, and
will not release or disclose such information to any other
person, except its officers, directors, employees,
Representatives and lending institutions who need to know
such information in connection with this Agreement and who
shall be advised of the provisions of this Section 5.10 and
shall agree to be bound by the terms hereof.
(a) In the event that a party (the "First Party") or its
Representatives are requested or required (by oral
questions, interrogatories, requests for information or
documents subpoena, civil investigative demand or similar
process) to make a disclosure in violation of the provisions
of this Section 5.10, it is agreed that the First Party will
provide the other (the "Second Party") with prompt notice of
such request(s) so that the Second Party may seek an
appropriate protective order and/or waive compliance with
the provisions of this Agreement. If in the absence of a
protective order or the receipt of a waiver hereunder, the
First Party or its Representatives are nonetheless, in the
opinion of the First Party's counsel, compelled to make any
such disclosure to any Governmental Body or else stand
liable for contempt or suffer other censure or penalty, the
First Party or its Representative may make any such
disclosure to such Governmental Body without liability
hereunder, provided, however, that such disclosure may be
made only after the First Party has given the Second Party
notice of such requirement and the Second Party has had 48
hours (or such lesser time as is reasonably available) to
obtain a protective order or restrictions on any such
requirement.
(c) If the Contemplated Transactions are not
consummated, such confidence shall be maintained except (i)
as required by Law or (b) to the extent such information is
made public through no fault of Buyer or any Seller, as the
case may be, or any of their respective Representatives. If
the Contemplated Transactions are not consummated and if
requested by any Seller or Buyer, as the case may be, Buyer
shall return to Sellers' Agent all tangible evidence of such
information regarding Sellers, the Company and the Company
Subsidiaries and Sellers shall return to Buyer all tangible
evidence of such information regarding Buyer and Buyer
Subsidiaries.
V.11 Expenses. (a) Buyer will pay or reimburse the
Company or Sellers, as appropriate, for the following fees
and expenses incurred in connection with the negotiation and
consummation of the Contemplated Transactions: (i) any and
all sales, gains, transfer or documentary Taxes and
recording and filing fees applicable to the transfers or
deemed transfers under applicable United States Law of any
Asset located in the United States and the Purchased Shares
to Buyer; (ii) the reasonable legal fees and expenses of
counsel to Sellers; (iii) the fees and expenses of Tucker
Anthony Incorporated under Contract numbered 33 referred to
in Schedule 3.15; (iv) up to $65,175 in respect of the fees
and expenses of Coopers & Lybrand L.L.P., in connection with
their due diligence investigation relating to the
Contemplated Transactions, and any balance of such fees and
expenses will be borne and paid by Triumph; and (v) any
other fees or expenses incurred by the Company or the
Sellers to any persons other than persons enumerated in the
foregoing subclauses of this Section 5.11(a) provided that
Buyer shall not be required to pay or reimburse fees or
expenses in accordance with the provisions of this Section
5.11(a)(v) in an amount exceeding $78,705.30 unless such
fees or expenses shall have been authorized by Buyer in
writing.
(a) Except as otherwise specifically provided herein,
Buyer and Sellers shall bear their respective expenses
incurred in connection with the preparation, execution and
performance of this Agreement and the Contemplated
Transaction, including, without limitation, all fees and
expenses of their respective Representatives.
V.12 Tax Matters. (a) From the date hereof through the
Closing Date, Sellers shall cause the Company and the
Company Subsidiaries to file in a timely manner all required
Returns to be filed on or before the Closing Date, taking
into account any extensions obtained from the appropriate
taxing authority, and pay Taxes of any kind or nature that
are due and payable thereon. From the date hereof through
the Closing Date, Buyer shall, and shall cause the Buyer
Subsidiaries to, file in a timely manner all required
Returns to be filed on or before the Closing Date, taking
into account any extensions obtained from the appropriate
taxing authority, and pay Taxes or any kind or nature that
are due and payable thereon.
(a) Between the date hereof and the Closing Date, without
the prior written consent of Buyer which consent shall not
be unreasonably withheld or delayed, neither the Company nor
any of the Company Subsidiaries shall make or change any
election, change an annual accounting period, adopt or
change any accounting method, relating to the Company or the
Company Subsidiaries or surrender any right to claim a
refund of Taxes. Between the date hereof and the Closing
Date, the Company or any Company Subsidiary shall be
permitted to file any amended Return, enter into any closing
agreement, settle any Tax Claim, consent to any extension or
waiver of the limitation period applicable to any Tax Claim
relating to the Company or any Company Subsidiaries, take
any action or omit to take any action, even if any such
election, adoption, change, amendment, agreement,
settlement, surrender, consent or other action or omission
would have the effect of increasing the current or future
Tax liability of the Company, any Company Subsidiary, Buyer
or any Affiliate of Buyer provided that promptly after
taking any such action or omitting to take any such action,
Triumph promptly gives written notice thereof to Buyer.
V.13 Restrictive Covenant. (a) Each of Triumph,
Spiesshofer and Magrone and, by its signature to this
Agreement, Triumph International Spiesshofer & Braun, a
Swiss Kollektivgesellschaft (partnership), agree as follows:
(i) during the seven (7) year period commencing on the
Closing Date, he or it will not, directly or indirectly,
sell or distribute for resale in the United States (the
"Territory") through any person other than Buyer or a Buyer
Subsidiary any identical style of foundation garment
distributed on the Closing Date by the Company or by Triumph
through the Company unless the Company, Buyer and the Buyer
Subsidiaries have discontinued the sale or distribution of
such style, or gross sales of such style for the then most
recently completed fiscal year shall have been less than
$25,000, in which event he or it shall have the right to
distribute such style free of any restrictions contained in
this Agreement;
(ii) during the period commencing on the Closing Date and
terminating on the date six (6) months after the date that
Triumph ceases for any reason whatsoever (including, without
limitation, by reason of voluntary resignation of Triumph's
designees or pursuant to Section 1(b) of the Stockholders
Agreement) to have any designees on the Board of Directors
of Buyer and waives in writing all of its rights under
Section 8 (g) of the Stockholders Agreement, he or it will
not purchase a business which on the date of such purchase
is engaged in the foundation garment business in the
Territory; provided, however that if he or it shall desire
to engage in bona fide negotiations with respect to the
purchase of any such business prior to he or it engaging in
such negotiations, Triumph shall cause any designees of
Triumph then on the Board of Directors of Buyer to resign
from such Board and shall waive all of its rights under
Sections 8(g) and 1(b) of the Stockholders Agreement (as
well as its rights thereafter to designate persons to serve
on the Board of Directors of Buyer but Triumph shall
continue to be obligated to vote as set forth in the
Stockholders Agreement until such obligation would otherwise
terminate in accordance with the Stockholders Agreement);
provided further, however, that (I) nothing contained in
this clause (ii) shall limit his or its right to effect a
purchase of a company or business that includes a foundation
garment business in the Territory which foundation garment
business does not constitute a significant portion of the
purchased company or business if the principal purpose of
effecting such purchase is to purchase other businesses and
(II) the passive ownership of not more than 4% of the issued
and outstanding shares of a class of securities regularly
traded on a national securities exchange or quoted in an
automated inter-dealer quotation system shall not be
prohibited by this clause (ii); and
(iii) during the two (2) year period commencing on the
Closing Date, he or it will not, directly or indirectly,
sell or distribute, or seek to sell or distribute, to Wal-
Mart, J.C. Penney, K-Mart, Sears, Mervyns, Target Stores or
Dillards any foundation garments that will be sold by such
retailers; it being understood and agreed that nothing
contained in this clause (iii) shall, or shall be construed
to, preclude Triumph or its affiliates from selling or
distributing foundation garments to, or manufacturing
foundation garments for, Mast Industries, Inc. or Goddess
which are to be sold or distributed to such retailers so
long as Triumph or its affiliates have not (x) arranged with
such retailers to buy foundation garments from Mast
Industries, Inc. or Goddess in a manner intended to
circumvent this Section 5.13(a)(iii), or (y) participated in
any way, other than having acted as a contractor or a
subcontractor, in the sale or distribution arrangements to
such retailers.
(b) Notwithstanding anything to the contrary contained
herein, (I) Triumph, Spiesshofer and Triumph International
Spiesshofer & Braun shall be permitted, directly or
indirectly, to continue to sell or otherwise provide
products, including foundation garments, to Mast Industries,
Inc. and Goddess (and to their respective successors and
affiliates) regardless of to whom Mast Industries, Inc. or
Goddess distributes or sells such products so long as
Triumph or its affiliates have not (x) arranged with such
retailers to buy foundation garments from Mast Industries,
Inc. or Goddess in a manner intended to circumvent Section
5.13(a)(iii), or (y) participated in any way, other than
having acted as a contractor or a subcontractor, in the sale
or distribution arrangement to such retailers, (II) except
as otherwise expressly prohibited by Sections 5.13 (a) (i)
and (iii) and subject to Buyer's rights, if any, pursuant to
Section 5.14 hereof, Triumph, Spiesshofer and Triumph
International Spiesshofer & Braun shall not be prohibited,
directly or indirectly, from engaging in any way in the
manufacture, sale or distribution for resale of foundation
garments, whether branded or unbranded, to retailers (or to
distributors who sell to retailers), and (III) Triumph,
Spiesshofer and Triumph International Spiesshofer & Braun
shall not be prohibited, directly or indirectly, from
engaging in the manufacture, as a contractor or
subcontractor, of foundation garments for a third party
(other than to a third party which is primarily a retailer,
or affiliated with a party that is primarily a retailer,
except that they shall not be so prohibited from acting as a
contractor or subcontractor to any such third party that is
primarily a retailer, or affiliated with a party that is
primarily a retailer, unless they are otherwise expressly
prohibited from selling or distributing to such party
pursuant to Section 5.13(a)(iii)) engaged in the sale or
distribution of foundation garments in the Territory.
(c) Each Seller acknowledges and agrees that the
restrictive covenants set forth in this Section 5.13
(collectively, the "Restrictive Covenants") are reasonable
and valid in geographical and temporal scope and in all
other respects. If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants
shall not thereby be affected and shall be given full force
and effect, without regard to the invalid or unenforceable
parts.
(d) If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable
for any reason, such court shall have the power to modify
such Restrictive Covenant, or any part thereof, and, in its
modified form, such Restrictive Covenant shall then be valid
and enforceable.
(e) In the event of a breach or threatened breach by a
Seller of any of the covenants contained in this Section
5.13, Buyer shall be entitled to a temporary restraining
order, a preliminary injunction and/or a permanent
injunction restraining such Seller from breaching or
continuing to breach any of said covenants.
V.14 Possible Future Ventures. Until the earlier to occur
of (i) the Second Sale Date (as such term is defined in the
Stockholders' Agreement) and (ii) five years from the
Closing Date, Triumph agrees that if it wishes to appoint a
distributor, agent or licensee in the United States with
respect to the foundation garments it manufacturers or
distributes under the Triumph trademark, Triumph will so
advise Buyer and give Buyer a reasonable opportunity to
conduct negotiations with respect to Triumph's appointment
of Buyer as such distributor, agent or licensee; provided,
however, that nothing contained herein shall be construed as
an obligation of Triumph to so appoint Buyer and Buyer shall
have no rights against Triumph of any nature whatsoever
arising by reason of Triumph's decision, for any reason, not
to so appoint Buyer.
VI CONDITIONS TO CLOSING
VI.1 Conditions to the Obligations of Sellers and Buyer.
The obligations of Buyer and Sellers to consummate the
Contemplated Transactions are subject to the satisfaction
of the following conditions:
(a) HSR Act. Any applicable waiting period under the HSR
Act relating to the Contemplated Transactions shall have
expired.
(b) No Injunction. No provision of any applicable Law
and no Order shall prohibit the consummation of the
Contemplated Transactions.
(c) No Proceeding or Litigation. No Claim instituted by
any person (other than a Governmental Body) including any
Third Party Claim, shall have been commenced or pending
against a Seller, the Company or the Company Subsidiaries,
Buyer, any Buyer Subsidiary or any of their respective
Affiliates, associates, officers or directors which Claim
seeks to restrain, prevent, change or delay in any material
respect the Contemplated Transactions or seeks to challenge
any of the terms or provisions of this Agreement or seeks
material damages in connection with any of such transactions
or seeks to restrain or prevent the ownership and operations
by Buyer after the Closing Date of the Company and the
Company Subsidiaries.
(d) Recapitalization Transactions. Except for the
Reincorporation Merger which has not become effective in New
York on the date hereof, the Recapitalization Transactions,
affecting Buyer or any United States Subsidiary, shall have
been consummated.
(e) Stock Sale Agreement. The transactions contemplated
by the Stock Sale Agreement, dated the date hereof, between
Triumph and Catherine C. Brawer (and the related trusts
identified therein) (the "Brawer Stock Sale Agreement")
shall have closed concurrently with the Closing hereunder.
(f) Stockholders' Agreement. The Stockholders' Agreement
shall have been executed and delivered by and to the
applicable parties.
(g) Ancillary Agreements. Each of the Ancillary
Agreements shall have executed and delivered by and to the
applicable parties.
(h) Letter Agreements. The following letter agreements
shall have been executed and delivered by and to the
applicable parties:
(i) Letter agreement among Maidenform, Inc., the Company
and Triumph as to the use of the Lillyettes and Lilyette
trademarks;
(ii) Letter agreement between Maidenform, Inc. and Triumph
as to certain manufacturing services; and
(iii) Letter agreement between Buyer and its
stockholders in connection with the possible reestablishment
of the Predecessor.
(i) Gains Tax Filings. The parties shall have complied
with all pre-transfer audit requirements with respect to all
pre-transfer filings relating to real property located in
New York in which the Company has an interest.
VI.2 Conditions to the Obligations of Sellers. All
obligations of Sellers hereunder are subject, at the option
of Sellers, to the fulfillment prior to or at the Closing of
each of the following further conditions:
(a) Performance. Buyer shall have performed and complied
in all material respects with all agreements, obligations
and covenants required by this Agreement to be performed or
complied with by it at or prior to the Closing Date.
(b) Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement and in
any certificate or other writing delivered by Buyer pursuant
hereto shall be true in all material respects at and as of
the Closing Date as if made at and as of such time (except:
(i) that the representations and warranties that are subject
to a materiality qualification shall be true in all respects
(ii) to the extent such representations and warranties speak
as of an earlier time; (iii) for the representation and
warranty set forth in Section 4.19(a)(viii); and (iv) for
the failure to obtain any Buyer Required Consents if such
failure will not have a materially adverse effect on the
Condition of the Business).
(c) Cash Portion of Purchase Price. Buyer shall have
paid by wire transfer of immediately available funds to
Sellers the cash portion of the Purchase Price payable to
them.
(d) No Adverse Change. During the period from the Buyer
Balance Sheet Date to the Closing Date, there shall not have
been (i) any material adverse change in the Condition of
Buyer; (ii) any damage, destruction, casualty, determination
or other event to or affecting the Assets of Buyer or any
Buyer Subsidiary which has a material adverse effect on the
Assets or the Business of Buyer; or (iii) any Claims or
Liens filed, or to the knowledge of Buyer threatened,
against or affecting Buyer, any Buyer Subsidiary or their
respective Assets which, if adversely determined, is
reasonably likely to have a material adverse effect on the
Condition of Buyer.
(e) Delivery of Buyer Common Stock. Buyer shall cause to
be delivered to those Sellers receiving Buyer Common Stock
as part of the Purchase Price stock certificates, registered
in the names of the applicable Sellers (with the legends
required by the Stockholders' Agreement), evidencing the
shares of Buyer Common Stock to be acquired by them.
(f) Buyer Required Consents. All Buyer Required Consents
shall have been obtained except for those approvals,
authorizations and consents which the failure to obtain
would not, individually or in the aggregate, have a material
adverse effect upon the Condition of Buyer or the
consummation of the Contemplated Transactions.
(g) Documentation. There shall have been delivered to
Sellers the following:
(i) A certificate, dated the Closing Date, of the
President or a Vice-President of Buyer confirming the
matters set forth in Section 6.2(a), (b) and (d) hereof.
(ii) A certificate, dated the Closing Date, of the
Secretary or Assistant Secretary of Buyer certifying, among
other things, that attached or appended to such certificate
(A) is a true and correct copy of its Certificate of
Incorporation and all amendments if any thereto as of the
date thereof; (B) is a true and correct copy of its By-laws
as of the date hereof; (C) is a true copy of all corporate
actions taken by it, including resolutions of its board of
directors authorizing the execution, delivery and
performance of this Agreement, and each other document to be
delivered by Buyer pursuant hereto; and (D) are the names
and signatures of its duly elected or appointed officers who
are authorized to execute and deliver this Agreement and any
certificate, document or other instrument in connection
herewith.
(iii) A signed opinion of Buyer's counsel, dated the
Closing Date and addressed to Sellers, substantially in the
form of opinion annexed as Exhibit B hereto.
(iv) Copies of all Buyer Required Consents.
(v) The written designation, if any, by Buyer pursuant to
the provisions of Section 9.6 hereof.
(h) Environmental Matters. With respect to each Buyer
Owned Real Property that Buyer's lenders required Buyer to
deliver a Phase I Environmental report, Sellers shall have
received a copy of such reports.
VI.3 Conditions to the Obligations of Buyer. All
obligations of Buyer hereunder are subject, at their option,
to the fulfillment prior to or at the Closing of each of the
following further conditions:
(a) Performance. Sellers shall have performed and
complied in all material respects with all agreements,
obligations and covenants required by this Agreement to be
performed or complied with by them at or prior to the
Closing Date. In addition to the foregoing, whether or not
Sellers shall have used the reasonable efforts required by
Sections 5.1 and 5.6, the Company and each Company
Subsidiary shall be in actual compliance with the provisions
of Section 5.1.
(b) Representations and Warranties. The representations
and warranties of Sellers contained in this Agreement and in
any certificate or other writing delivered by the Sellers
pursuant hereto shall be true in all material respects at
and as of the Closing Date as if made at and as of such time
(except: (i) that the representations and warranties that
are subject to a materiality qualification shall be true in
all respects), (ii) for the representations and warranties
set forth in Section 3.19(a)(viii), (iii) to the extent such
representations and warranties speak of an earlier time; and
(iv) except for the failure to obtain any Seller Required
Consents if such failure will not have a materially adverse
effect on the Condition of the Business).
(c) No Adverse Change. During the period from the
Company Balance Sheet Date to the Closing Date, there shall
not have been (i) any material adverse change in the
Condition of the Business; (ii) any damage, destruction,
casualty, determination or other event to or affecting the
Assets of the Company or any Company Subsidiary which has a
material adverse effect on the Assets or the Business of the
Company; or (iii) any Claims or Liens filed, or to the
knowledge of any Seller threatened, against or affecting
the Company, any Company Subsidiary or the Assets which, if
adversely determined, is reasonably likely to have a
material adverse effect on the Condition of the Business.
(d) Environmental Matters. Buyer shall have received a
Phase I Environmental Report for each of the Company Owned
Real Properties.
(e) Payment of Gains Taxes. Buyer shall have received
evidence reasonably satisfactory to it that all applicable
real property transfer and transfer gain Taxes, imposed in
connection with the deemed transfer of the Company Real
Property, shall have been paid or tendered in compliance
with applicable Laws.
(f) Company Required Consents. All Company Required
Consents shall have been obtained except for those
approvals, authorizations and consents which the failure to
obtain would not, individually or in the aggregate, have a
material adverse effect upon the Condition of the Business
or the consummation of the Contemplated Transactions.
(g) Documentation. There shall have been delivered to
Buyer the following:
(i) the stock certificates of each Seller representing
the number of Purchased Shares set forth opposite such
Seller's name on Exhibit A, duly endorsed in blank or
accompanied by stock powers duly executed in blank, in
proper form for transfer.
(ii) A certificate dated the Closing Date, of each Seller
confirming the matters set forth in Sections 6.3(a), (b) and
(c) and 3.19(a)(xvi) hereof, to the extent applicable to
such Seller.
(iii) A certificate, dated the Closing Date, of the
Secretary or Assistant Secretary of Triumph certifying,
among other things, that attached or appended to such
certificate (A) is a true and correct copy of its
Certificate of Incorporation and By-laws (or comparable
instruments) and all amendment if any thereto as of the date
thereof; (B) is a true copy of all corporate actions taken
by it, including resolutions of its board of directors (or
comparable governing body) authorizing the execution,
delivery and performance of this Agreement, and each other
document to be delivered by Triumph pursuant hereto; and
(C) are the names and signatures of its duly elected or
appointed officers who are authorized to execute and deliver
this Agreement and any certificate, document or other
instrument in connection herewith.
(iv) A certificate, dated the Closing Date, of the
Secretary or Assistant Secretary of the Company or
applicable Company Subsidiary certifying, among other
things, that attached or appended to such certificate (A) is
a true and correct copy of the Certificate of Incorporation
and By-laws (or comparable instruments) of the Company and
each of its Subsidiaries, and all amendments if any thereto
as of the date thereof; (B) are the names of the directors
and officers of the Company and each of the Company
Subsidiaries; and (C) is a true copy of all corporate
actions taken by the Board of Directors of the Company
(which actions shall have been taken prior to the date of
entering into this Agreement) to authorize the Contemplated
Transactions in accordance with Section 203 of the Delaware
General Corporation Law.
(v) The resignations, dated on or before the Closing
Date, of such directors and officers of the Company and each
Subsidiary and such trustees of Benefit Plans as previously
may have been requested by Buyer.
(vi) A signed opinion(s) of Sellers' counsel, dated the
Closing Date, addressed to Buyer, substantially in the form
of opinion annexed as Exhibit C hereto.
(vii) Copies of all Company Required Consents,
material Permits and, to the extent not previously
delivered, appraisal reports, title insurance policies and
deeds to Company Owned Real Property.
(viii) The written acceptance of the Authorized Agent
of its appointment pursuant to Section 9.5 hereof.
VII INDEMNIFICATION
VII.1 Survival of Representations and Warranties. (a)
Notwithstanding any right of Buyer fully to investigate the
affairs of the Company and its Subsidiaries and
notwithstanding any knowledge of facts determined or
determinable by Buyer pursuant to such investigation or
right of investigation, Buyer has the right to rely fully
upon the representations, warranties, covenants and
agreements of Seller contained in this Agreement, or listed
or disclosed on any Schedule hereto or in any instrument
delivered in connection with or pursuant to any of the
foregoing. All such representations, warranties, covenants
and agreements shall survive the execution and delivery of
this Agreement and the Closing hereunder. Notwithstanding
the foregoing, all representations and warranties of Sellers
contained in this Agreement, on any Schedule hereto or in
any instrument delivered in connection with or pursuant to
this Agreement (other than the representations and
warranties relating to: (i) title matters, ERISA matters,
Tax matters and the matters contained in Sections 3.3 and
3.8, all of which shall survive the Closing until the
expiration of any applicable statutes of limitation; and
(ii) Environmental Matters, which shall survive the Closing
for a period of three years after the Closing Date), shall
terminate and expire 18 months after the Closing Date;
provided, however, that the liability of Sellers shall not
terminate as to any specific claim or claims of the type
referred to in Section 7.2 hereof, whether or not fixed as
to Liability or liquidated as to amount, with respect to
which Sellers have been given specific notice on or prior to
the date on which such liabilities would otherwise terminate
pursuant to the express terms of this Section 7.1(a).
(a) Notwithstanding any right of the Sellers fully to
investigate the affairs of Buyer and its Subsidiaries and
notwithstanding any knowledge of facts determined or
determinable by the Sellers pursuant to such investigation
or right of investigation, the Sellers have the right to
rely fully upon the representations, warranties, covenants
and agreements of Buyer contained in this Agreement, or
listed or disclosed on any Schedule hereto or in any
instrument delivered in connection with or pursuant to any
of the foregoing. All representations, warranties,
covenants and agreements of Buyer shall survive the
execution and delivery of this Agreement and the Closing
hereunder. Notwithstanding the foregoing, all such
representations, warranties, covenants and agreements of
Buyer (other than the representations and warranties
relating to: (i) title matters, ERISA matters, Tax matters
and the matters contained in Sections 4.3 and 4.8, all of
which shall survive the Closing until the expiration of any
applicable statutes of limitation; and (ii) Environmental
Matters, which shall survive the Closing for a period of
three years after the Closing Date), shall terminate and
expire 18 months after the Closing Date; provided, however,
that the liability of Buyer shall not terminate as to any
specific claim or claims of the type referred to in Section
7.3 hereof, whether or not fixed as to Liability or
liquidated as to amount, with respect to which Buyer has
been given specific notice on or prior to the date on which
such Liability would otherwise terminate pursuant to the
express terms of this Section 7.1(b).
VII.2 Obligation of Sellers to Indemnify. Each of
Spiesshofer and Magrone, severally, as to the matters
relating to himself or the Purchased Shares owned by him
referred to in Section 3.1, 3.2, 3.3, 3.4 and 3.31 and as to
covenants relating to themselves contained in Article V (it
being understood and agreed that neither Spiesshofer nor
Magrone shall be liable under the provisions of this
Section 7.2 as to any other sections of this Agreement) and
Triumph as to all matters, agree to indemnify, defend and
hold harmless Buyer (and its directors, officers, employees,
Affiliates, successors and assigns) from and against all
uninsured Claims, losses, liabilities, damages,
deficiencies, judgments, settlements, costs of investigation
or other expenses (including interest, penalties and
reasonable attorneys' fees and disbursements but excluding
indirect or consequential damages or claims for lost
profits) (collectively, the "Losses") suffered or incurred
by Buyer or any of the foregoing persons by reason of any
inaccuracy in or any breach of any representation, warranty,
covenant or agreement of Sellers contained in this Agreement
or in any Schedules or documents delivered by a Seller
pursuant to this Agreement.
VII.3 Obligation of Buyer to Indemnify. (a) Buyer
agrees to indemnify, defend and hold harmless each Seller
from and against any uninsured Losses suffered by such
Seller by reason of:
(i) any inaccuracy in or breach of any representation,
warranty, covenant or agreement of Buyer contained in this
Agreement, the Brawer Stock Sale Agreement or in any
document or other papers delivered pursuant to either of
such Agreements; and
(ii) Any Claim brought by any stockholder of the Company
(other than Sellers) as a result of the consummation of the
Contemplated Transactions or the Company Merger.
(b) For purposes of this Section 7.3, the term "Losses"
shall include any Losses suffered by Triumph under the
Brawer Stock Sale Agreement.
VII.4 Notice and Opportunity to Defend Third Party
Claims. (a) Promptly after receipt by any party hereto
(the "Indemnitee") of notice of any demand, claim,
circumstance or Tax audit which would or might give rise to
a claim or the commencement (or threatened commencement) of
any action, proceeding or investigation (an "Asserted
Liability") that may result in a Loss, the Indemnitee shall
give prompt notice thereof (the "Claims Notice") to the
party obligated to provide indemnification pursuant to
Section 7.2 or 7.3 (the "Indemnifying Party"). The Claims
Notice shall describe the Asserted Liability in reasonable
detail and shall indicate the amount (estimated, if
necessary, and to the extent feasible) of the Loss that has
been or may be suffered by the Indemnitee.
(a) The Indemnifying Party may elect to compromise or
defend, at its own expense and by its own counsel, any
Asserted Liability. If the Indemnifying Party elects to
compromise or defend such Asserted Liability, it shall
within thirty days (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnitee of its intent
to do so, and the Indemnitee shall cooperate, at the expense
of the Indemnifying Party, in the compromise of, or defense
against, such Asserted Liability. If the Indemnifying Party
elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein
provided or contests its obligation to indemnify under this
Agreement, the Indemnitee may pay, compromise or defend such
Asserted Liability. Notwithstanding the foregoing, neither
the Indemnifying Party nor the Indemnitee may settle or
compromise any claim over the objection of the other;
provided, however, that (i) except as set forth in the
immediately succeeding clause (ii), consent to settlement or
compromise shall not be unreasonably withheld and (ii) the
Indemnifying Party may settle any Asserted Liability by
paying a money payment only without the consent of the
Indemnitee. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in
the defense of such Asserted Liability. If the Indemnifying
Party chooses to defend any claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or
other documents within its control that are necessary or
appropriate for such defense.
(b) Anything in Section 7.4(b) to the contrary
notwithstanding, in the case of any Asserted Liability by
any supplier, distributor, sales agent or customer of the
Company or any of its Subsidiaries prior to the Closing in
connection with which Buyer may make a claim against Sellers
for indemnification pursuant to Section 7.2, Buyer promptly
shall give a Claims Notice with respect thereto but, unless
Buyer and the Indemnifying Party otherwise agree, Buyer
shall have the exclusive right at its option to defend, at
its own expense, any such matter, subject to the duty of
Buyer to consult with the Indemnifying Party and its
attorneys in connection with such defense and provided that
no such matter shall be compromised or settled by Buyer
without the prior consent of the Indemnifying Party, which
consent shall not be unreasonably withheld. The
Indemnifying Party shall have the right to recommend in good
faith to Buyer proposals to compromise or settle claims
brought by a supplier, distributor, sales agent or customer,
and Buyer agrees to present such proposed compromises or
settlements to such supplier, distributor or customer. All
amounts required to be paid in connection with any such
Asserted Liability and all amounts required to be paid in
connection with any such compromise or settlement consented
to by the Indemnifying Party, shall be borne and paid by the
Indemnifying Party. The parties agree to cooperate fully
with one another in the defense, compromise or settlement of
any such Asserted Liability.
VII.5 Limits on Indemnification. Notwithstanding
anything contained in this Article VII or elsewhere in this
Agreement to the contrary:
(a) Sellers shall not have any obligation to indemnify
Buyer pursuant to Section 7.2 hereof with respect to any
Claim unless and until Buyer shall have incurred Losses in
an aggregate amount in excess of $1,000,000 (the "Stipulated
Amount") in which event Buyer shall be entitled to be
indemnified for all of its Losses commencing at $1; provided
that the foregoing limitation shall not apply to the
obligations of Triumph under Section 5.11; and provided,
further, that if any Claim is based upon a breach by Triumph
of a representation, warranty, covenant or agreement
contained in this Agreement in which the dollar thresholds
thereof are less than the dollar thresholds in the
corresponding representation, warranty, covenant or
agreement of Buyer ("Buyer's Dollar Thresholds") then the
liability of Triumph for such breach shall be determined as
if Buyer's Dollar Thresholds had applied to Triumph.
(b) Buyer shall have no obligation to indemnify Sellers
pursuant to Section 7.3 hereof with respect to any Claim
unless and until the Sellers shall have incurred Losses in
an aggregate amount in excess of the Stipulated Amount in
which event Sellers shall be entitled to be indemnified for
all of their Losses commencing at $1; provided that the
foregoing limitation shall not apply to the obligations of
Buyer under Sections 5.11 and 7.3(a)(ii).
(c) The liability hereunder of Triumph, Spiesshofer and
Magrone shall in no event exceed, respectively,
$64,422,171.45, $377,325 and $6,146,010. Sellers may
satisfy their indemnification obligations by transferring to
Buyer shares of Buyer Common Stock valued, for this purpose,
at $454.94 per share, as adjusted for any subdivision,
combination or reclassification of Buyer Common Stock or the
payment of a dividend on Buyer Common Stock in shares of
Buyer Common Stock.
(d) The liability of Buyer hereunder shall in no event
exceed $61,194,000.
VII.6 Tax Impact. It is the intent of the parties
that any amounts paid under Sections 7.2 or 7.3 shall
represent an adjustment of the Purchase Price and the
parties will report such payments consistent therewith.
Nevertheless, if the payment of any Loss which Sellers are
obligated to make to Buyer pursuant to Section 7.2 of this
Agreement or which Buyer is obligated to make to Sellers
pursuant to Section 7.3 of this Agreement, is required to be
reported in income by Buyer or any of its Affiliates or
Sellers or any of their Affiliates, as applicable, then the
amount of the Loss which Sellers are obligated to pay to
Buyer or which Buyer is obligated to pay to Sellers, as
applicable, shall be adjusted so that the indemnitee is
fully and completely Indemnified on an after-tax basis.
VII.7 Indemnity Sole Remedy. With respect to any
money claim, in the absence of fraud or a suit seeking
specific performance as contemplated by this Agreement, the
remedies provided by the foregoing provisions of this
Article 7, after the Closing Date, shall be in lieu of any
other remedies to which the respective party is entitled at
law or in equity for any breach or noncompliance by a party
with the provisions of this Agreement.
VIII TERMINATION
VIII.1 Termination. If the Brawer Stock Purchase
Agreement is terminated, this Agreement shall be terminated
concurrently therewith. In addition, this Agreement may be
terminated and the Contemplated Transactions may be
abandoned at any time prior to the Closing:
(a) By mutual written consent of Sellers and Buyer;
(b) By Sellers if (i) there has been a material
misrepresentation or breach of warranty on the part of Buyer
in the representations and warranties contained herein and
such material misrepresentation or breach of warranty, if
curable, is not cured within 15 days of written notice
thereof from Sellers (ii) Buyer has committed a material
breach of any covenant imposed upon it hereunder and fails
to cure such breach within 15 days of written notice thereof
from Sellers; or (iii) any condition to a Seller's
obligations hereunder becomes incapable of fulfillment
through no fault of such parties and is not waived by such
parties;
(c) By Buyer, if (i) there has been a material
misrepresentation or breach of warranty on the part of a
Seller in the representations and warranties contained
herein and such material misrepresentation or breach of
warranty, if curable, is not cured within 15 days of written
notice thereof from Buyer; (ii) a Seller has committed a
material breach of any covenant imposed upon it hereunder
and fails to cure such breach within 15 days of written
notice thereof from Buyer; or (iii) any condition to Buyer's
obligations hereunder becomes incapable of fulfillment
through no fault of Buyer and is not waived by Buyer.
(d) By Sellers' Agent on behalf of Sellers, or Buyer, if
the Closing shall not have occurred on or before June 30,
1995; provided that no party may terminate this Agreement
pursuant to this clause if such party's failure (or in the
case of termination by Sellers, the failure of a Seller) to
fulfill any of its obligations under this Agreement shall
have been the reason that the Closing shall not have
occurred on or before said date; and
(e) By Sellers or by Buyer, if there shall be any Law
that makes consummation of the Contemplated Transactions
illegal or otherwise prohibited or if any Order enjoining
Buyer, or any Seller from consummating the Contemplated
Transactions is entered and such Order shall become final
and nonappealable.
VIII.2 Effect of Termination; Right to Proceed. In the
event that this Agreement shall be terminated pursuant to
Section 8.1, all further obligations of the parties under
the Agreement shall terminate without further liability of
any party hereunder except (i) to the extent that a party
has made a material misrepresentation hereunder or committed
a breach of the material covenants and agreements imposed
upon it hereunder; (ii) to the extent that any condition to
a party's obligations hereunder became incapable of
fulfillment because of the breach by a party of its
obligations hereunder and (iii) that the agreements
contained in Sections 5.9, 5.10 and 5.11 shall survive the
termination hereof. In the event that a condition precedent
to its obligation is not met, nothing contained herein shall
be deemed to require any party to terminate this Agreement,
rather than to waive such condition precedent and proceed
with the Contemplated Transactions. Notwithstanding
anything to the contrary contained herein, no party shall
have any obligation to the other hereunder arising out of
the occurrence of an event or circumstance not within the
control of such party which event or circumstance resulted
in a representation or warranty of such party ceasing to be
true.
IX MISCELLANEOUS
IX.1 Notices. (a) Any notice or other communication
required or permitted hereunder shall be in writing and
shall be delivered personally by hand or by recognized
overnight courier, telecopied or mailed (by registered or
certified mail, postage prepaid) as follows:
(i) if to Buyer, one copy to:
Maidenform Worldwide, Inc.
90 Park Avenue
New York, New York 10016
Telecopier: (212) 983-5834
Attention: Steven N. Masket
Senior Vice President and General Counsel
with a simultaneous copy to:
Baer Marks & Upham
805 Third Avenue
New York, New York 10022
Telecopier: (212) 702-5941
Attn: Stanley E. Bloch, Esq.
(ii) if to Spiesshofer or
Triumph, one copy to:
Triumph International Overseas Limited
133 Hoi Bun Road
7th Floor Piazza Building
Kwun Tong, Kowloon
Hong Kong
Attention: Mr. W.
Engelman/Mr. K. Haertkorn
Facsimile No.: 011-852-2341-
9847
-and-
Triumph International
Spiesshofer & Braun
Promenadenstrasse 26
CH-8437 Zurzach
Switzerland
Attention: Mr. Wolfgang
Spiesshofer
Facsimile No.: 011-4156-
499219
with a simultaneous copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Telecopier: (212) 698-7825
Attn: Barry A. Adelman, Esq.
(iii) if to Magrone, one copy
to:
Frank Magrone
Cosmos Heights, R.D. 4
Cortland, New York 13045
with a simultaneous copy to:
Rubin Baum Levin Constant &
Friedman
30 Rockefeller Plaza
New York, New York 10012
Telecopier: (212) 698-7825
Attn: Barry A. Adelman, Esq.
(a) Each such notice or other communication shall be
effective (i) if given by telecopier, when such telecopy is
transmitted to the telecopier number specified in Section
9.1(a) (with confirmation of transmission) or (ii) if given
by any other means, when delivered at the address specified
in Section 9.1(a). Any party by notice given in accordance
with this Section 9.1 to the other party may designate
another address (or telecopier number) or person for receipt
of notices hereunder. Notices by a party may be given by
counsel to such party.
IX.2 Entire Agreement. This Agreement (including the
Stockholders' Agreement, the Schedules and Exhibits hereto)
and the collateral agreements executed in connection with
the consummation of the Contemplated Transactions contain
the entire agreement between the parties with respect to the
subject matter hereof and related transactions and supersede
all prior agreements, written or oral, with respect thereto.
IX.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms
hereof may be waived, only by a written instrument signed by
the parties hereto or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall
operate as a waiver thereof. Nor shall any waiver on the
part of any party of any such right, power or privilege, nor
any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege.
Except as otherwise provided herein, the rights and remedies
herein provided are cumulative and are not exclusive of any
rights or remedies that any party may otherwise have at law
or in equity. The rights and remedies of any party based
upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty,
covenant or agreement contained in this Agreement shall in
no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of
any such inaccuracy or breach is based may also be the
subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any
other agreement between the parties) as to which there is no
inaccuracy or breach.
IX.4 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed
entirely within such State, without regard to the conflict
of laws rules thereof.
IX.5 Consent to Jurisdiction and Service of Process. The
parties hereto irrevocably: (a) agree that any suit, action
or other legal proceeding arising out of this Agreement may
be brought in the courts of the State of New York or the
courts of the United States located in New York County, New
York, (b) consent to the jurisdiction of each court in any
such suit, action or proceeding, (c) waive any objection
which they, or any of them, may have to the laying of venue
of any such suit, action or proceeding in any of such
courts, and (d) waives the right to a trial by jury in any
such suit, action or other legal proceeding. Each Seller
hereby designates and appoints Rubin Baum Levin Constant &
Friedman, 30 Rockefeller Plaza, New York, New York 10112
(the "Authorized Agent"), as its agent to accept and
acknowledge on its behalf, service of any and all process
which may be served in any such suit, action or other
proceeding, and agrees that service upon such Authorized
Agent shall be deemed in every respect service of process on
a Seller or its successors or assigns and, to the extent
permitted by applicable law, shall be taken and held to be
valid personal service. Each Seller represents and warrants
that the Authorized Agent has agreed to act as such agent
for service of process.
IX.6 Designated Buyer. It is understood and agreed
between the parties that Buyer may cause one or more
Affiliates, direct or indirect Subsidiaries or other
entities designated by it (the "Designated Buyer" or
Designated Buyer") to carry out all or part of the
Contemplated Transactions to be carried out by Buyer;
provided, however, that Buyer nevertheless shall remain
liable (as principal and not as guarantor) for all of its
obligations and those of any Designated Buyer hereunder.
IX.7 Binding Effect; No Assignment. This Agreement and
all of its provisions, rights and obligations shall be
binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs and legal
representatives. Except as otherwise provided in Section
9.6, this Agreement may not be assigned by a party without
the express written consent of the others and any purported
assignment, unless so consented to, shall be void and
without effect. Nothing herein express or implied is
intended or shall be construed to confer upon or to give
anyone other than the parties hereto and their respective
heirs, legal representatives and successors any rights or
benefits under or by reason of this Agreement and no other
party shall have any right to enforce any of the provisions
of this Agreement.
IX.8 Exhibits. All Exhibits and Schedules attached hereto
are hereby incorporated by reference into, and made a part
of, this Agreement. The disclosure contained in any one
Schedule to this Agreement, if by its description in such
Schedule is clearly applicable to other Sections of this
Agreement, will also be deemed to have been made with
respect to such other Sections even if such disclosure is
not repeated in any other Schedules.
IX.9 Severability. If any provision of this Agreement for
any reason shall be held to be illegal, invalid or
unenforceable, such illegality shall not affect any other
provision of this Agreement, but this Agreement shall be
construed as if such illegal, invalid or unenforceable
provision had never been included herein.
IX.10 Counterparts. The Agreement may be executed in
any number of counterparts, each of which shall be deemed to
be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and
the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties
reflected hereon as the signatories.
IN WITNESS WHEREOF, the undersigned have executed this
Stock Purchase Agreement as of the date set forth above.
MAIDENFORM WORLDWIDE, INC.
By:/s/ Steven N. Masket
Steven N. Masket
Executive Vice President
TRIUMPH INTERNATIONAL
OVERSEAS, LIMITED
By:/s/ Guenther Spiesshofer
Name:Guenther Spiesshofer
Title:
Guenther Spiesshofer
Frank Magrone
The undersigned is signing this
Agreement solely to agree to the
provisions of Section 5.13
TRIUMPH INTERNATIONAL SPIESSHOFER & BRAUN
By:
___/s/ _Frank Magrone___________________________
Name:Frank Magrone
Title:President
EXHIBIT A
LIST OF SELLERS
Total Number of
Name Purchased Shares
Triumph International
Overseas Limited 3,670,779
Guenther Spiesshofer 21,500
Frank Magrone 350,200
4,042,479
STOCK SALE AGREEMENT
STOCK SALE AGREEMENT dated as of April 26, 1995 between
TRIUMPH INTERNATIONAL OVERSEAS LIMITED, a Liechtenstein
corporation ("Triumph"), and each of the security-holders
listed on the signature page of this Agreement in her or its
individual and/or fiduciary capacity as indicated on Exhibit
A to this Agreement (each a "Seller" and collectively the
"Sellers") and Catherine C. Brawer, as agent for the Sellers
(the "Agent"):
W I T N E S S E T H:
WHEREAS, each Seller owns, in part, the number of shares
of Class A Common Stock, par value $.01 per Share, ("MWI
Common Stock") of Maidenform Worldwide, Inc., a Delaware
corporation ("MWI"), set out in Exhibit A next to the name
of such Seller (collectively, the "Purchased Shares"); and
WHEREAS, each Seller desires to sell and Triumph desires
to purchase all of the Purchased Shares owned by such Seller
on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises,
covenants and other agreements contained herein, the parties
hereby agree as follows:
I PURCHASE AND SALE;
CLOSING
.1 Certain Defined Terms. Terms which are not defined
in this Agreement shall have the respective meanings
ascribed to them in that certain Stock Purchase Agreement of
even date herewith (the "NCC Purchase Agreement") by and
among MWI, Triumph and certain other Sellers (as defined
therein).
.2 Purchase and Sale of Purchased Shares. Subject to
the terms and conditions set forth herein, each Seller
severally agrees to sell, transfer and deliver to Triumph,
and Triumph agrees to purchase, acquire and accept from each
Seller, the Purchased Shares of such Seller.
.3
.3 Consideration. Subject to the terms and conditions
set forth herein, the purchase price (the "Purchase Price")
payable by Triumph for the Purchased Shares shall be $20
million in the aggregate, to be allocated among the Sellers
in the proportions set forth on Exhibit A. Such Purchase
Price shall be payable on the Closing Date (as hereinafter
defined) to the Sellers by wire transfer of immediately
available funds to accounts designated by Agent by written
notice given to Triumph at least two (2) Business Days prior
to the Closing Date.
.4 Closing. The closing (the "Closing") of the
purchase and sale of the Purchased Shares hereunder shall
take place at the offices of Baer Marks & Upham, 805 Third
Avenue, New York, New York at 10:00 a.m., local time, on the
date on which the closing under the NCC Purchase Agreement
occurs (the time and date of the Closing being hereinafter
called the "Closing Date"). All transactions consummated at
the Closing shall be deemed to have taken place
simultaneously.
.5 Appointment of Sellers' Agent. Each Seller
irrevocably appoints and authorizes Agent to do all such
acts and things as agent (and not as principal) on its
behalf and to exercise all such rights, powers and
privileges in relation to this Agreement as fully and
completely as each Seller could on its own behalf, together
with all such powers as are reasonably incidental thereto.
Each Seller agrees that the foregoing appointment and powers
are coupled with an interest and every party acting
hereunder shall be entitled to rely on any action taken or
omitted by Agent on Sellers' behalf.
II REPRESENTATIONS AND
WARRANTIES OF SELLERS
Sellers severally represent and warrant to Triumph and MWI
that:
.1 Status of the Purchased Shares. Except as set
forth in the Stockholders' Agreement, the Purchased Shares
that are owned by such Seller are subject to no restrictions
on transferability other than restrictions imposed by
(a) the 1933 Act and (b) applicable state securities Laws.
Except as set forth in the Stockholders' Agreement, as of
the Closing Date, there will be no outstanding options,
warrants, calls, preemptive rights, rights of first refusal,
or other rights to purchase or acquire from any Seller or
any plans or Contracts providing for the issuance of, or the
granting of rights to any Seller to acquire: (i) any
capital stock of MWI or (ii) any securities convertible into
or exchangeable for any capital stock of MWI. As of the
Closing Date, except as set forth in the Stockholders
Agreement, no Seller will be contractually obligated or
entitled to repurchase or otherwise acquire any outstanding
shares of capital stock of MWI.
.2 Title to and Validity of the Purchased Shares. The
Purchased Shares have been duly authorized, validly issued,
fully paid and are nonassessable. Each Seller owns and
holds title to such Seller's Purchased Shares free and clear
of any Lien of any kind. At the Closing, except as set
forth in the Stockholders' Agreement, Triumph will acquire
title to the Purchased Shares, free and clear of any Lien of
any kind.
.3 Authority Relative to this Agreement. Each Seller
has full power, capacity and authority to execute and
deliver this Agreement and each other document contemplated
hereby and to which she or it is a party (the "Transaction
Documents") and to consummate the transactions contemplated
hereby and thereby (the "Contemplated Transactions"). The
execution and delivery of this Agreement and the
consummation of the Contemplated Transactions to which such
Seller is a party have been duly and validly authorized by
each Seller that is an entity and no other proceedings on
the part of any such Seller (or any other person) are
necessary to authorize the execution and delivery by such
Seller of this Agreement or the consummation of the
Contemplated Transactions to which such Seller is a party.
This Agreement has been duly and validly executed and
delivered by each Seller, and (assuming the valid execution
and delivery of this Agreement by the other parties hereto)
constitutes the legal, valid and binding agreement of such
Seller enforceable against such Seller in accordance with
its terms except as such obligations and their
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and except
that the availability of equitable remedies, including
specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought
(whether at law or in equity).
.4 No Conflicts; Consents. The execution and delivery
by any Seller of this Agreement and the performance of her
or its obligations hereunder will not (i) violate any
provision of the trust agreement of any Seller which is a
trust; (ii) require any Seller to obtain any consent,
approval or action of or waiver from, or make any filing
with, or give any notice to, any Governmental Body or any
other person, except for compliance with the HSR Act (the
"MWI Required Consent"); (iii) violate, conflict with or
result in the breach of any of the terms of, result in a
material modification of the effect of, or otherwise cause
the termination of, give any other contracting party the
right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any material
Contract, to which any Seller is a party or by or to which
any of them may be bound or subject, or result in the
creation of any Lien upon the Purchased Shares pursuant to
the terms of any such Contract other than such violations,
conflicts, breaches, modifications, terminations, rights to
terminate, defaults or Liens that, individually or in the
aggregate, would not have a material adverse effect on the
Condition of Buyer; or (iv) if the MWI Required Consent is
obtained, violate any Law, Order or Permit of any
Governmental Body against, or binding upon, any Seller other
than such violations that, individually or in the aggregate,
would not have a material adverse effect on the Condition of
Buyer.
III
REPRESENTATIONS AND WARRANTIES OF TRIUMPH
Triumph represents and warrants to Sellers and MWI that:
.1 Corporate Existence and Power. Triumph is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation
and has all requisite corporate powers and all material
governmental licenses, authorizations, consents and
approvals required to carry on its business as now
conducted.
.2 Acquisition for Investment. Triumph is acquiring
the Purchased Shares for its own account and not with a
present intention to make any sale, disposition,
distribution or other transfer of the Purchased Shares in a
manner that will be in violation of any applicable
securities Laws and understands that the Purchased Shares
have not been registered under the 1933 Act or under the
securities Laws of any state.
.3 Authority Relative to This Agreement. Triumph has
full corporate power and authority to execute and deliver
this Agreement and to consummate the Contemplated
Transactions to which it is party. The execution and
delivery of this Agreement and the consummation of the
Contemplated Transactions have been duly and validly
authorized and approved by the Board of Directors of Triumph
and no other corporate proceedings on the part of Triumph
are necessary to authorize this Agreement or the
Contemplated Transactions to which it is party. This
Agreement has been duly and validly executed and delivered
by Triumph and (assuming the legal, valid execution and
delivery of this Agreement by the other parties hereto)
constitutes the valid and binding agreement of Triumph,
enforceable against Triumph in accordance with its terms,
except as such obligations and their enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and except
that the availability of equitable remedies, including
specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought
(whether in law or at equity).
.4 No Conflicts; Consents. Except for compliance with
the HSR Act (referred to herein as the "NCC Required
Consent"), the execution and delivery of this Agreement by
Triumph and the performance of its obligations hereunder
will not (i) violate any provision of the Certificate of
Incorporation or By-laws of Triumph; (ii) except for
obtaining the NCC Required Consent, require Triumph to
obtain any consent, approval or action of, or make any
filing with or give any notice to, any Governmental Body or
any other person (iii) violate, conflict with or result in
the breach of any of the terms of, result in a material
modification of the effect of, or otherwise cause the
termination of or give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time
or both constitute) a default under any material Contract to
which Triumph is a party or by or to which it or any of its
assets may be bound or subject, or result in the creation of
any Lien upon the Assets of Triumph pursuant to the terms of
any such Contract other than such violations, conflicts,
breaches, modifications, terminations, rights to terminate,
defaults or Liens that individually or in the aggregate,
would not have material adverse effect on the Condition of
the Business; or (iv) if the NCC Required Consent is
obtained, violate any Law, Order or Permit of any
Governmental Body against, or binding upon, Triumph other
than such violations that, individually or in the aggregate,
would not have a material adverse effect on the Condition of
the Business.
IV REPRESENTATIONS AND
WARRANTIES OF MWI
In order to induce Triumph and Sellers to enter into this
Agreement, MWI hereby repeats each of the representations
and warranties made by it in Article IV of the NCC Purchase
Agreement to Triumph and Sellers as if each of such
representations or warranties had been set forth herein at
length.
V COVENANTS AND AGREEMENTS
.1 Efforts to Consummate. Subject to the terms and
conditions herein provided, each party hereto, without
payment or further consideration, shall use its reasonable,
good faith efforts to take or cause to be taken all action
and to do or cause to be done all things necessary, proper
or advisable under applicable Laws, Permits and Orders to
consummate and make effective, as soon as reasonably
practicable, the Contemplated Transactions, and each party
hereto shall cooperate with the other in all of the
foregoing.
.2 Notices of Certain Events. Each of Agent and
Triumph shall promptly notify the other of:
(a) any notice or other communication from any person
alleging that the consent of such person is or may be
required in connection with the Contemplated Transactions;
(b) any notice or other communication from any
Governmental Body in connection with the Contemplated
Transactions; and
(c) any event, condition or circumstance occurring from
the date hereof through the Closing Date that would
constitute a violation or breach of any representation or
warranty, whether made as of the date hereof or as of the
Closing Date, or that would constitute a violation or breach
of any covenant of any party contained in this Agreement.
.3 Public Announcements. Agent and Triumph will
consult with each other before issuing any press release or
otherwise making any public statement with respect to the
Contemplated Transactions, and will not issue any such press
release or make any such public statement without the prior
approval of the other party, except as may be required by
applicable Law in which event the other party shall have the
right to review and comment upon any such press release or
public statement prior to its issuance. The fact that a
party has the foregoing right to review or comment shall not
mean that such party's consent is needed prior to the
issuance of such present release or public statement.
.4 Expenses. Except as otherwise specifically
provided herein, MWI shall bear the respective expenses of
the parties hereto in connection with the preparation,
execution and delivery of this Agreement.
VI CONDITIONS TO CLOSING
.1 Conditions to the Obligations of Sellers. All
obligations of Sellers hereunder are subject, at the option
of Agent, to the fulfillment prior to or at the Closing of
each of the following conditions:
(a) Closing Under NCC Purchase Agreement. The closing
under the NCC Purchase Agreement shall have occurred, or
shall occur concurrently with the Closing hereunder.
(b) Performance. Triumph shall have performed in all
material respects all of its obligations hereunder required
to be performed by it at or prior to the Closing Date.
(c) Representations and Warranties. The representations
and warranties of Triumph and MWI contained in this
Agreement and in any certificate or other writing delivered
by Triumph pursuant hereto shall be true in all material
respects at and as of the Closing Date as if made at and as
of such time (except: (i) that the representations and
warranties that are subject to a materiality qualification
shall be true in all respects and (ii) to the extent such
representations and warranties speak as of an earlier time).
(d) Purchase Price. In accordance with the provisions of
Section 1.3 hereof, Triumph shall have paid the Purchase
Price by wire transfer of immediately available funds to
Sellers.
.2 Conditions to the Obligations of Triumph. All
obligations of Triumph hereunder are subject, at its option,
to the fulfillment prior to or at the Closing of each of the
following conditions:
(a) Closing Under NCC Purchase Agreement. The closing
under the NCC Purchase Agreement shall have occurred, or
shall occur concurrently with the Closing hereunder.
(b) Performance. Sellers shall have performed in all
material respects all of their obligations hereunder
required by them at or prior to the Closing Date.
(c) Representations and Warranties. The
representations and warranties of Sellers and MWI contained
in this Agreement and in any certificate or other writing
delivered by the Sellers pursuant hereto shall be true in
all material respects at and as of the Closing Date as if
made at and as of such time (except: (i) that the
representations and warranties that are subject to a
materiality qualification shall be true in all respects and
(ii) to the extent such representations and warranties speak
of an earlier time).
(d) Delivery of Purchased Shares. Agent shall have
caused to be delivered to Triumph certificates (with the
legends contemplated by the Stockholders' Agreement)
representing all of the Purchased Shares, together with duly
endorsed stock transfer powers.
(e) Legal Opinion. Triumph shall have received a signed
legal opinion of counsel to Sellers, dated the Closing Date,
substantially in the form of the opinion annexed as
Exhibit B hereto.
VII INDEMNIFICATION
.1 Survival of Representations and Warranties. Except
for the representations and warranties set forth in Sections
2.4 and 3.4 which shall survive for 18 months after the
Closing Date, the representations, warranties, covenants and
agreements contained herein shall survive the execution and
delivery of this Agreement and the Closing hereunder until
the expiration of any applicable statutes of limitation.
.2 Obligation of Sellers to Indemnify. Sellers
severally agree to indemnify, defend and hold harmless
Triumph (and its directors, officers, employees, Affiliates,
successors and assigns) from and against all Claims, losses,
liabilities, damages, deficiencies, judgments, settlements,
costs of investigation or other expenses (including
interest, penalties and reasonable attorneys' fees and
disbursements but excluding indirect or consequential
damages or claims for lost profits) (collectively, the
"Losses") suffered or incurred by Triumph by reason of any
material inaccuracy in or any material breach of any
representation, warranty, covenant or agreement of Sellers
contained in this Agreement or in any documents or other
papers delivered by Sellers pursuant to this Agreement.
.3 Obligation of Triumph to Indemnify. Triumph agrees
to indemnify, defend and hold harmless each Seller from and
against any Losses suffered or incurred by such Seller by
reason of any material inaccuracy in or material breach of
any representation, warranty, covenant or agreement of
Triumph contained in this Agreement or in any document or
other papers delivered by Triumph pursuant to this
Agreement.
.4 Indemnity Sole Remedy. With respect to any money
claim, in the absence of fraud, the remedies provided by the
foregoing provisions of this Article VI shall be in lieu of
any other remedies to which the respective party is entitled
at law or in equity for any breach or noncompliance by a
party with the provisions of this Agreement.
.5 Remedies Prior to Closing Date. Notwithstanding
anything to the contrary contained in this Agreement, if any
party commits a breach of any of the terms hereof, prior to
the Closing Date, of a type that would permit the non-
breaching party to terminate this Agreement, then the sole
remedy of the non-breaching party will be to terminate this
Agreement. Upon any such termination, no party will have
any further liability hereunder to the other.
VIII TERMINATION
.1 Termination. If the NCC Purchase Agreement is
terminated, this Agreement shall be terminated concurrently
therewith. In addition, this Agreement may be terminated
and the Contemplated Transactions may be abandoned at any
time prior to the Closing:
(a) By mutual written consent of Agent and Triumph;
(b) By Agent on behalf of Sellers if (i) there has been a
material misrepresentation or breach of warranty on the part
of Triumph in the representations and warranties contained
herein and such material misrepresentation or breach of
warranty, if curable, is not cured within 15 days of written
notice thereof from Agent; (ii) Triumph has committed a
material breach of any covenant imposed upon it hereunder
and fails to cure such breach within 15 days of written
notice thereof from Agent; or (iii) any condition to a
Seller's obligations hereunder becomes incapable of
fulfillment through no fault of such parties and is not
waived by such parties;
(c) By Triumph, if (i) there has been a material
misrepresentation or breach of warranty on the part of a
Seller in the representations and warranties contained
herein and such material misrepresentation or breach of
warranty, if curable, is not cured within 15 days of written
notice thereof from Triumph; (ii) a Seller has committed a
material breach of any covenant imposed upon it hereunder
and fails to cure such breach within 15 days of written
notice thereof from Triumph; or (iii) any condition to
Triumph's obligations hereunder becomes incapable of
fulfillment through no fault of Triumph and is not waived by
Triumph.
IX MISCELLANEOUS
.1 Notices. (a) Any notice or other communication
required or permitted hereunder shall be in writing and
shall be delivered personally by hand or by recognized
overnight courier, telecopied or mailed (by registered or
certified mail, postage prepaid) as follows:
(i) if to Triumph, one copy to:
Triumph International Overseas Limited
133 Hoi Bun Road
7th Floor Piazza Building
Kwun Tong, Kowloon
Attention: Mr. W. Engelman/Mr. K.
Haertkorn
Facsimile No.: 011-852-2341-9847
-and-
Triumph International Spiesshofer & Braun
Promenadenstrasse 26
CH-8437 Zurzach
Switzerland
Attention: Mr. Wolfgang Spiesshofer
Facsimile No.: 011-4156-499219
with a simultaneous copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Telecopier: (212) 698-7825
Attention: Barry A. Adelman, Esq.
(ii) if to Agent or to any
Seller, one copy to:
Catherine C. Brawer
7 Quaker Lane
Chappaqua, New York 10514
with a simultaneous copy to:
Sills Cummis Zuckerman
Radin Tischman Epstein
& Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102-
5400
Telecopier (201) 643-6500
Attn: Michael B. Tischman,
Esq.
(a) Each such notice or other communication shall be
effective (i) if given by telecopier, when such telecopy is
transmitted to the telecopier number specified in Section
9.1(a) (with confirmation of transmission) or (ii) if given
by any other means, when delivered at the address specified
in Section 9.1(a). Any party by notice given in accordance
with this Section 9.1 to the other party may designate
another address (or telecopier number) or person for receipt
of notices hereunder. Notices by a party may be given by
counsel to such party.
.2 Entire Agreement. This Agreement (including the
Schedules and Exhibits hereto), as read with the NCC
Purchase Agreement, contain the entire agreement between the
parties with respect to the subject matter hereof and
related transactions and supersede all prior agreements,
written or oral, with respect thereto.
.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms
hereof may be waived, only by a written instrument signed by
the parties hereto or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall
operate as a waiver thereof. Nor shall any waiver on the
part of any party of any such right, power or privilege, nor
any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege.
Except as otherwise provided herein, the rights and remedies
herein provided are cumulative and are not exclusive of any
rights or remedies that any party may otherwise have at law
or in equity. The rights and remedies of any party based
upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty,
covenant or agreement contained in this Agreement shall in
no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of
any such inaccuracy or breach is based may also be the
subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any
other agreement between the parties) as to which there is no
inaccuracy or breach.
.4 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed
entirely within such State, without regard to the conflict
of laws rules thereof.
.5 Consent to Jurisdiction and Service of Process.
The parties hereto irrevocably: (a) agree that any suit,
action or other legal proceeding arising out of this
Agreement may be brought in the courts of the State of New
York or the courts of the United States located in New York
County, New York, (b) consent to the jurisdiction of each
court in any such suit, action or proceeding, (c) waive any
objection which they, or any of them, may have to the laying
of venue of any such suit, action or proceeding in any of
such courts, and (d) waives the right to a trial by jury in
any such suit, action or other legal proceeding. Triumph
hereby designates and appoints Rubin Baum Levin Constant &
Friedman, 30 Rockefeller Plaza, New York, New York 10112
(the "Authorized Agent"), as its agent to accept and
acknowledge on its behalf, service of any and all process
which may be served in any such suit, action or other
proceeding, and agrees that service upon such Authorized
Agent shall be deemed in every respect service of process on
Triumph or its successors or assigns and, to the extent
permitted by applicable law, shall be taken and held to be
valid personal service. Triumph represents and warrants
that the Authorized Agent has agreed to act as such agent
for service of process.
.6 Binding Effect; No Assignment. This Agreement and
all of its provisions, rights and obligations shall be
binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs and legal
representatives. This Agreement may not be assigned by a
party without the express written consent of the others and
any purported assignment, unless so consented to, shall be
void and without effect. Nothing herein express or implied
is intended or shall be construed to confer upon or to give
anyone other than the parties hereto and their respective
heirs, legal representatives and successors any rights or
benefits under or by reason of this Agreement, and no other
person shall have any right to enforce any of the provisions
of this Agreement.
.7 Severability. If any provision of this Agreement
for any reason shall be held to be illegal, invalid or
unenforceable, such illegality shall not affect any other
provision of this Agreement, but this Agreement shall be
construed as if such illegal, invalid or unenforceable
provision had never been included herein.
.8 Counterparts. The Agreement may be executed in any
number of counterparts, each of which shall be deemed to be
an original as against any party whose signature appears
thereon, and all of which shall together constitute one and
the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties
reflected hereon as the signatories.
IN WITNESS WHEREOF, the undersigned have executed this
Stock Sale Agreement as of the date set forth above.
BUYER:
TRIUMPH INTERNATIONAL OVERSEAS
LIMITED
By: /s/ Wolfgang Spiesshofer
Name: Wolfgang Spiesshofer
Title: Director
SELLERS:
/s/ Catherine C. Brawer
Catherine C. Brawer , as
Agent
/s/ Catherine C. Brawer
Catherine C. Brawer
ARTICLE 4 TRUST U/W/O BEATRICE COLEMAN
F/B/O THE BRAWER FAMILY
By: /s/ Catherine C. Brawer
Catherine C. Brawer,
Trustee
By: /s/ Elizabeth J. Coleman
Elizabeth J. Coleman,
Trustee
The undersigned is signing this
Agreement solely to agree to the
provisions of Article IV and Section 5.4 hereof.
MAIDENFORM WORLDWIDE, INC.
By: /s/ Elizabeth J. Coleman
Name: Elizabeth J. Coleman
Title: Chief Executive Officer
EXHIBIT A
LIST OF SELLERS
Name Number of Allocable
Class A Portion of
Shares of MWI Purchase
Common Stock Price
Catherine C. Brawer 27,256.14 $12,000,000
Article 4 Trust 18,170.76 8,000,000
u/w/o
Beatrice Coleman
f/b/o the
Brawer Family
TOTAL: 45,426.90 $20,000,000
LOAN AGREEMENT
Dated as of April 26, 1995
among
MAIDENFORM WORLDWIDE, INC. (a Delaware corporation)
MAIDENFORM WORLDWIDE, INC. (a New York corporation)
MAIDENFORM, INC.
BETEX, S.A.
CREACIONES TEXTILES de MERIDA, S.A. de C.V.
ELIZABETH NEEDLE CRAFT, INC.
JAMAICA NEEDLECRAFT, LTD.
MAIDENFORM INTERNATIONAL, LTD.
NICHOLAS NEEDLECRAFT, INC.
NCC INDUSTRIES, INC.
CRESCENT INDUSTRIES, INC.
collectively, the Borrowers
and
CORESTATES BANK, N.A.
NATIONSBANK, N.A.
THE CHASE MANHATTAN BANK N.A.
NATIONAL CITY BANK
NBD BANK
COMERICA BANK
EUROPEAN AMERICAN BANK
UNITED JERSEY BANK
collectively, the Banks
CORESTATES BANK, N.A., the Agent,
and the Issuing Bank
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS 2
SECTION 1.1 Certain Defined Terms 2
SECTION 1.2 Accounting Terms 21
ARTICLE II THE FACILITIES 21
SECTION 2.1 The Facilities 21
SECTION 2.2 The Term Loan. 22
SECTION 2.3 The Revolving Credit 23
SECTION 2.4 Making the Advances under the Revolving Credit 25
SECTION 2.5 Fees 27
SECTION 2.6 Mandatory Prepayment of the Term Loan 28
SECTION 2.7 Interest Rate Options 29
SECTION 2.8 Computation of Interest and Fees 29
SECTION 2.9 Payments 29
SECTION 2.10 Payment on Non-Business Days 30
SECTION 2.11 Reimbursement to Banks for Cost Increases
Imposed by Law 31
SECTION 2.12 Reimbursement to Banks for Increased Costs
Due to Capital Adequacy Requirements 31
SECTION 2.13 Illegality 32
SECTION 2.14 Interest and Commissions After Event of Default 32
SECTION 2.15 Special Provisions for LIBO Loans 32
SECTION 2.16 Availability of Rate Quotations 34
SECTION 2.17 Prepayment 34
SECTION 2.18 Letter of Credit Cash Collateral Account 35
SECTION 2.19 Letters of Credit 35
ARTICLE III CONDITIONS OF LENDING 44
SECTION 3.1 Conditions Precedent to the Initial
Advance and Term Loan Disbursement 44
SECTION 3.2 Conditions Precedent to All Disbursements 50
SECTION 3.3 Conditions to Issuance of Letters of Credit 50
ARTICLE IV REPRESENTATIONS AND WARRANTIES 51
SECTION 4.1 Existence 51
SECTION 4.2 Authorization 51
SECTION 4.3 Validity 52
SECTION 4.4 Financial Information 52
SECTION 4.5 Litigation 52
SECTION 4.6 Contingent Liabilities 52
SECTION 4.7 Taxes 52
SECTION 4.8 Encumbrances 53
SECTION 4.9 Consents 53
SECTION 4.10 ERISA 53
SECTION 4.11 Ownership 55
SECTION 4.12 Subsidiaries and Ownership of Stock 55
SECTION 4.13 Margin Stock 55
SECTION 4.14 Environmental Matters 55
SECTION 4.15 Debt and Guarantees 56
SECTION 4.16 Credit Arrangements 56
SECTION 4.17 Regulation U, Etc 56
SECTION 4.18 Licenses, Permits, Etc 56
SECTION 4.19 Compliance with Laws 56
SECTION 4.20 Labor Matters 57
SECTION 4.21 Outstanding Judgments or Orders 57
SECTION 4.22 No Defaults on Other Agreements 57
SECTION 4.23 Public Utility Holding Company Act 57
SECTION 4.24 Patents. 57
SECTION 4.25 Full Disclosure 57
ARTICLE V COVENANTS OF THE BORROWERS 58
SECTION 5.1 Use of Proceeds 58
SECTION 5.2 Financial Statements 58
SECTION 5.3 Insurance 60
SECTION 5.4 Taxes 60
SECTION 5.5 Encumbrances 60
SECTION 5.6 Compliance with Laws 61
SECTION 5.7 Inspection by Banks; Future Appraisals 61
SECTION 5.8 Reports 61
SECTION 5.9 ERISA 62
SECTION 5.10 Environmental Matters 65
SECTION 5.11 Nature of Business 66
SECTION 5.12 Regulation U 66
SECTION 5.13 Disposal of Assets 66
SECTION 5.14 Loans, Investments, Guarantees and Other
Contingent Liabilities 66
SECTION 5.15 Maintenance of Property 67
SECTION 5.16 Merger; Corporate Structure 67
SECTION 5.17 Transactions with Affiliates and Subsidiaries 67
SECTION 5.18 Quick Ratio. 67
SECTION 5.19 Leverage Ratio 67
SECTION 5.20 Tangible Net Worth 68
SECTION 5.21 Fixed Charge Coverage Ratio 68
SECTION 5.22 Funded Debt to Operating Cash Flow. 69
SECTION 5.23 Dividends and Distributions 69
SECTION 5.24 Other Debt 69
SECTION 5.25 Licenses, Permits 70
SECTION 5.26 Fiscal Year 70
SECTION 5.27 Change of Ownership or Management 70
SECTION 5.28 RICO 70
SECTION 5.29 Indemnification 70
SECTION 5.30 Interest Rate Protection Agreements. 71
ARTICLE VI
DEFAULT 71
SECTION 6.1 Events of Default 71
SECTION 6.2Termination of Commitments; Acceleration 73
SECTION 6.3 Remedies 74
ARTICLE VII
AGENT 74
SECTION 7.1 Appointment and Authorization 74
SECTION 7.2 General Immunity 74
SECTION 7.3 Consultation with Professionals 75
SECTION 7.4 Documents 75
SECTION 7.5 Rights as a Bank 75
SECTION 7.6 Responsibility of Agent 75
SECTION 7.7 Action by Agent 75
SECTION 7.8 Notices of Event of Default, Etc 76
SECTION 7.9 Indemnification of Agent 76
SECTION 7.10 Resignation of Agent 76
ARTICLE VIII
MISCELLANEOUS 77
SECTION 8.1 No Waiver; Cumulative Remedies 77
SECTION 8.2 Waiver of Jury Trial 78
SECTION 8.3 Set-Off; Sharing of Recoveries 78
SECTION 8.4 Amendments 79
SECTION 8.5 Notices 79
SECTION 8.6 Exchange of Information among Banks 80
SECTION 8.7 Knowledge 80
SECTION 8.8 Nature of Obligations 80
SECTION 8.9 Costs and Expenses 80
SECTION 8.10 Counterparts 81
SECTION 8.11 Binding Effect 81
SECTION 8.12 Governing Law 81
SECTION 8.13 Headings 81
SECTION 8.14 Participations and Assignments 81
SECTION 8.15 Borrowers' Replacement of Banks. 82
SECTION 8.16 Judgment. 82
Exhibits:
1.1A Form of Borrowing Base Certificate
1.1B Prior Letters of Credit
2.1 The Term Loan and the Commitments
2.2 Form of Term Loan Note
2.3 Form of Revolving Credit Note
3.1(B) Matters covered by Opinion of Counsel
4.5 Litigation
4.8 Permitted Encumbrances
4.9 Consents
4.10 Employee Benefits Plans
4.11 Exceptions to Ownership
4.12 Subsidiaries and Stock Ownership
4.15 Existing Debt
4.16 Credit Arrangements
5.2 Form of Compliance Certificate
5.14 Investments
LOAN AGREEMENT, dated as of April 26, 1995, among MAIDENFORM
WORLDWIDE, INC. ("Worldwide-NY"), a New York corporation,
MAIDENFORM WORLDWIDE, INC. ("Worldwide-DE"), a Delaware
corporation, MAIDENFORM, INC. ("Maidenform"), a New York
corporation, BETEX, S.A. ("Betex"), a Costa Rican corporation,
CREACIONES TEXTILES de MERIDA, S.A. de C.V. ("Creaciones"), a
Mexican corporation, ELIZABETH NEEDLE CRAFT, INC. ("Elizabeth"),
a New York corporation, JAMAICA NEEDLECRAFT, LTD. ("Jamaica"), a
Jamaican corporation, MAIDENFORM INTERNATIONAL, LTD.
("International"), a New York corporation, NICHOLAS NEEDLECRAFT,
INC. ("Nicholas"), a New York corporation, NCC INDUSTRIES, INC.
("NCC"), a Delaware corporation, CRESCENT INDUSTRIES, INC.
("Crescent"), a Delaware corporation (Worldwide-DE, Worldwide-NY,
Maidenform, Betex, Creaciones, Elizabeth, Jamaica, International,
Nicholas, Crescent and NCC are each hereinafter referred to as a
"Borrower" and collectively as the "Borrowers"), CORESTATES BANK,
N.A. ("CoreStates"), a national banking association, NATIONSBANK,
N.A. ("Nationsbank"), a national banking association, THE CHASE
MANHATTAN BANK N.A. ("Chase"), a national banking association,
NATIONAL CITY BANK ("City"), a national banking association, NBD
BANK ("NBD"), a Michigan banking corporation, COMERICA BANK
("Comerica"), a Michigan banking corporation, EUROPEAN AMERICAN
BANK ("EAB"), a New York banking corporation and UNITED JERSEY
BANK ("UJB"), a New Jersey banking corporation (CoreStates,
Chase, City, NBD, Comerica, EAB, UJB and Nationsbank are
hereinafter each referred to as a "Bank", and collectively as the
"Banks"), CoreStates, as agent for the Banks (CoreStates, in such
capacity, and any successor agent shall be hereinafter referred
to as the "Agent"), and CoreStates, as issuing bank for the
Letters of Credit (CoreStates, in such capacity and any successor
issuing bank shall be referred to as the "Issuing Bank").
BACKGROUND
The Borrowers are engaged in the design, manufacture,
distribution and sale of women's intimate apparel. The Borrowers
have requested that the Banks provide to the Borrowers the Term
Loan and the Revolving Credit (as those terms are hereinafter
defined) and the Banks have agreed to provide the Term Loan and
the Revolving Credit on the terms and conditions herein
contained. The purposes of the Term Loan and the Revolving
Credit are to finance a portion of the purchase price for the
acquisition of 92.389% of the outstanding shares of NCC by
Worldwide-DE or Maidenform on or about the Closing Date, to
finance the acquisition of the remaining outstanding shares of
NCC by Worldwide-DE or Maidenform after the Closing Date, to
finance the fees relating to such transaction, to refinance long
term debt, to refinance existing short term debt, to finance
working capital, to provide Letters of Credit (as such term is
hereinafter defined) and for general corporate purposes.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1 Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Accounts" has the meaning given to such term in the
Pennsylvania Uniform Commercial Code as in effect on the date
hereof.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Margin. The Adjusted Base Rate shall change simultaneously with
each change in the Base Rate.
"Adjusted Earnings" at any time means the Borrowers' net income
(without giving effect to either extraordinary income or extraordinary losses
and without giving effect to (a) the one-time charge, not to exceed
XXXXXXXXXXXXX accrued in the second quarter of 1995 in connection with XXX
XXXXXXXXXXXXXX XXXXXXXXXXXXX, or (b) a one-time charge, not to
exceed XXXXXXXXXXXXX, which the Borrowers may accrue in
connection with XXX XXXXXXXX XXXXXXX XX XXX XXXXX XX XXXXXXXX
XXXXXX XXXXXX XXXXXXX) before income taxes for the previous
twelve (12) month period determined (i) based on the Combined Pro
Forma for that portion of such twelve month period, if any,
occurring prior to the date of this Agreement, and (ii) otherwise
on a Consolidated basis (but expressly excluding any net amounts
accrued under FASB 87) plus (A) interest, depreciation,
amortization, and payments made under operating leases during
such period, minus (B) Capital Expenditures during such period.
"Adjusted LIBO Rate" means the LIBO Rate plus the Applicable
Margin.
"Advance" has the meaning given to such term in Section 2.1
hereof.
"Affiliate" of a Borrower means any Person, except for any
Subsidiary of such Borrower, directly or indirectly controlling
or controlled by or under direct or indirect common control with
such Borrower. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing. In
addition, Triumph and its Affiliates shall be deemed Affiliates
of the Borrowers if and when Triumph or any of its Affiliates
would constitute Affiliates of the Borrowers under the first two
sentences of this definition.
"Agent" has the meaning given to such term in the
introductory paragraph hereof.
"Agent's Fee" has the meaning given to such term in Section
2.5(B) hereof.
"Agreement" means this Loan Agreement, as such document may
be modified or amended from time to time.
"Amount of Unfunded Benefit Liabilities" has the meaning
given to such term in 4001(a)(18) of ERISA.
"Applicable Margin" means for Revolving Credit Base Rate
Tranches, 0.50% per annum, for Revolving Credit LIBO Rate
Tranches, 2.25% per annum, for Term Loan Base Rate Tranches,
1.50% per annum, and for Term Loan LIBO Rate Tranches, 3.25% per
annum, provided that from and after March 31, 1996, the foregoing
shall continue in effect unless otherwise specified in accordance
with the table and text below:
With respect to the Revolving Credit:
<TABLE>
<S> <C> <C> <C>
If Fixed Charge Coverage Then Applicable Margin is
Ratio is: If the Leverage Ratio is: Base Rate Tranches: LIBO Rate Tranches:
1.25 or greater and 0.60 or less 0% 1.75%
UNLESS:
1.50 or greater and 0.55 or less (.25%) 1.50%
UNLESS:
2.25 or greater and 0.50 or less (.50%) 1.25%
With respect to the Term Loan:
If Fixed Charge Coverage The Applicable Margin is
Ratio is: If the Leverage Ratio is: Base Rate Tranches: LIBO Rate Tranches:
1.25 or greater and 0.60 or less 1.00% 2.75%
UNLESS:
1.50 or greater and 0.55 or less .75% 2.50%
UNLESS:
2.25 or greater and 0.50 or less .50% 2.25%
</TABLE>
The calculation of the Applicable Margin pursuant to the above
table shall be made quarterly, commencing with the fiscal quarter
ending March 31, 1996, for the immediately preceding twelve month
period, and shall be based upon the Consolidated balance sheet
and income statement of the Borrowers for such period, provided
that for calculations made for any period which includes any time
prior to the Closing Date, such calculation shall also be based
on the portion of the Combined Pro Forma relating to such period
prior to the Closing Date. In the event that the Applicable
Margin changes, such change shall become effective, for all Loans
then existing or thereafter made, as of the first day of the
month immediately following the month in which the Borrowers'
quarterly financial statements are delivered to Agent except that
the Applicable Margin, once reset, shall remain in effect for not
less than ninety (90) days.
"Bank" and "Banks" have the meanings given to such terms in
the introductory paragraph hereof.
"Base Rate" means at any time the higher of (A) Federal
Funds Rate plus one-half percent (1/2%), or (B) the Prime Rate.
"Base Rate Loan" means each Revolving Credit Base Rate
Tranche and each Term Loan Base Rate Tranche.
"Betex" has the meaning given to such term in the
introductory paragraph hereof.
"Borrower and "Borrowers" have the meanings given to such
terms in the introductory paragraph hereof.
"Borrowing Base" at any time, means the sum of (A) 80% of
Eligible Accounts plus (B) 50% of Eligible Inventory.
"Borrowing Base Certificate" means a certificate of the
Borrowers in the form attached hereto as Exhibit 1.1A and made a
part hereof.
"Business Day" means any day other than a Saturday, Sunday,
or other day on which commercial banks in Philadelphia,
Pennsylvania, Detroit, Michigan, Princeton, New Jersey,
Charlotte, North Carolina, or New York, New York are authorized
or required to close under the laws of the Commonwealth of
Pennsylvania, the State of New York, the State of Michigan, the
State of New Jersey or State of North Carolina.
"Capital Asset" means any property or asset (real, personal
or mixed, tangible or intangible) which is of a kind subject to
an allowance for depreciation or amortization under GAAP.
"Capital Expenditures" means any expenditures made or cost
incurred by any Borrower whether paid or due and owing, for the
acquisition, purchase, alteration or improvement of any Capital
Asset under GAAP, excluding expenditures for assets acquired or
created by virtue of the purchase of NCC stock by Maidenform or
Worldwide-DE (including, without limitation, by virtue of the
financing of such purchase), however reflected on Borrowers'
Financial Statements.
(B) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or
issued by any agency thereof and backed by the full faith and
credit of the United States, or the Commonwealth of Puerto Rico
in each case maturing within one year from the date of
acquisition thereof, (B) marketable direct obligations issued by
any state of the United States of America or any political
subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest
rating obtainable from either Standard & Poor's Corporation or
Moody's Investors Service, Inc., (C) commercial paper maturing no
more than one year from the date of creation thereof and, at the
time of acquisition, having the highest rating obtainable from
either Standard & Poor's Corporation or Moody's Investors
Service, Inc., (D) certificates of deposit, demand accounts or
bankers' acceptances maturing within one year from the date of
acquisition thereof issued by any Bank or commercial banks
organized under the laws of the United States of America or any
state thereof, the District of Columbia or the Commonwealth of
Puerto Rico, each having combined capital and surplus of not less
than $500,000,000.00, and (E) repurchase agreements and reverse
repurchase agreements with securities dealers of recognized
national standing relating to any of the obligations referred to
in the foregoing clause (A); provided that the terms of such
agreement comply with the guidelines set forth in the Supervisory
Policy; and further provided that possession or control of the
underlying securities is established as provided in the
Supervisory Policy.
"CERCLA" means the federal Comprehensive Environmental
Response, Compensation, and Liability Act, as amended from time
to time.
"Chase" has the meaning given to such term in the
introductory paragraph hereof.
"City" has the meaning given to such term in the
introductory paragraph hereof.
"Closing Date" means the date on which all of the conditions
precedent contained in Section 3.1 are satisfied.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means all property of the Borrowers which may
serve as collateral for any of the Liabilities under the Security
Documents or otherwise.
"Collateral Agent" means CoreStates in its capacity as
Collateral Agent under and in accordance with the Intercreditor
Agreement.
"Collateral Assignments" has the meaning given to such term
in Section 3.1(J) hereof.
"Combined Pro Forma" means the pro forma financial
statements prepared by the Borrowers and delivered and to be
delivered to the Agent and the Banks pursuant to Section 3.1 and
Section 5.2, which restate the financial condition of the
Borrowers for the five fiscal quarters prior to the fiscal
quarter in which this Agreement is executed and for the "stub"
period from April 1, 1995 to the Closing Date, by combining,
using GAAP standards of combination, the Financial Statements for
such periods with the financial statements of NCC and its
Affiliates for such periods as reflected on NCC's Form 10Q's and
Form 10K's as filed with the Securities and Exchange Commission
for the periods ending on or before March 31, 1995, and financial
statements performed for NCC for the period from April 1, 1995 to
the Closing Date.
"Comerica" has the meaning given to such term in the
introductory paragraph hereof.
"Commitment" has the meaning given to such term in Section
2.1 hereof.
"Commitment Fee" has the meaning given to such term in
Section 2.5(A) hereof.
"Consolidated" refers to the consolidation of the accounts
of the Borrowers in accordance with GAAP, including principles of
consolidation.
"Consolidating" refers to the separation of the accounts of
the Borrowers in accordance with GAAP.
"Controlled Group" means a group of employers, of which any
Borrower is a member and which group constitutes:
(C) a controlled group of corporations (as defined in 414(b)
of the Code and the Department of the Treasury regulations
thereunder); or
(D) trades or businesses (whether or not incorporated) which
are under common control (as defined in 414(c) of the Code and
the Department of the Treasury regulations thereunder); or
(E) trades or businesses (whether or not incorporated) which
constitute an affiliated service group (as defined in 414(m) of
the Code and the Department of the Treasury regulations
thereunder); or
(F) any other entity required to be aggregated with any
Borrower pursuant to 414(o) of the Code and the Department of
the Treasury regulations thereunder.
"CoreStates" has the meaning given to such term in the
introductory paragraph hereof.
"Creaciones" has the meaning given to such term in the
introductory paragraph hereof.
(H) the Borrowing Base plus the Overadvance, or (B) the
aggregate of the Banks' Commitments.
"Credit Obligation" means any obligation for the payment of
interest on or principal of borrowed money or other interest-
bearing debt (whether or not the instrument or agreement
evidencing such debt designates as "interest" payments in excess
of the original principal amount of such debt), or obligation
under any capital lease, or the installment purchase price of
property, or any obligation in respect of banker's acceptances,
other acceptances, letters of credit on which a draw has been
made, or other instruments serving a similar function issued or
accepted by financial institutions for the account of any
Borrower (whether or not incurred in connection with the
borrowing of money), and shall include, without limitation, the
Private Placement and the Subordinated Debt.
"Crescent" has the meaning given to such term in the
introductory paragraph hereof.
"Current Assets" means all assets of the Borrowers on a
Consolidated basis that would, in accordance with GAAP, be
classified as current assets of the Borrowers on a Consolidated
basis.
"Current Liabilities" means all liabilities of the Borrowers
on a Consolidated basis that would, in accordance with GAAP, be
classified as current liabilities of the Borrowers on a
Consolidated basis, including without limitation the Revolving
Credit and the current portion of the Term Loan, but excluding
the Subordinated Debt.
"Current Maturities" means those portions of Credit
Obligations of the Borrowers (other than Subordinated Debt),
including without limitation capital leases and the Term Loan
(excluding amounts payable on the Term Loan solely by virtue of
the Borrower's Net Cash Flow), that are payable within one year.
"Defined Benefit Pension Plan" means a defined benefit plan
(other than a Multiemployer Plan) as defined in 3(35) of ERISA,
subject to Title IV of ERISA.
"Defined Contribution Plan" means an individual account plan
as defined in 3(34) of ERISA.
"Delinquent Purchaser" means a Purchaser more than 50% of
whose aggregate Account indebtedness to Domestic Borrowers fails
the test for Eligible Accounts set out in clause (J) of that
definition.
"Documentary Letters of Credit" means one or more letters of
credit issued by the Issuing Bank for the account of a Borrower
in accordance with the provisions of Section 2.19 in order to
provide the primary payment mechanism in connection with the
purchase of any materials, goods or services by such Borrower.
"Dollars" and the "$" mean lawful money of the United States
of America.
"Domestic Borrower" means Worldwide-DE, Worldwide-NY,
Crescent, Elizabeth, International, Nicholas, NCC and Maidenform
or any of them.
"EAB" has the meaning given to such term in the introductory
paragraph hereof.
"Effective Date" means, for LIBO Loans, the date a Borrower
designates as the date on which a LIBO Interest Period is to
commence pursuant to Article II hereof.
(J) the Account is lawfully owned by a Domestic
Borrower free and clear of all liens, security interests or
prior assignments except as set forth in subsection (B) hereof,
and such Borrower has the right of assignment thereof and the
power to grant a security interest therein; (B) the Account is
subject to a first priority perfected security interest in favor
of the Collateral Agent; (C) the Account is valid and
enforceable, representing the undisputed indebtedness of a
Purchaser to a Domestic Borrower provided that if the Account is
subject to any defense, set-off, counter-claim, credit, allowance
or adjustment, only that portion of the Account, if any, not so
subject and otherwise eligible shall be included as an Eligible
Account; (D) the Purchaser has accepted the goods, the sale of
which to such Purchaser has given rise to the Account provided
that if any part of the goods the sale of which has given rise to
an Account have been returned, rejected, lost or damaged, only
that part of the Account, if any, representing the sale of goods
not so returned, rejected, lost or damaged, and otherwise
eligible, shall be included as an Eligible Account; (E) if the
Account arises from the sale of goods, such sale was an absolute
sale and not on consignment or on approval or on a sale-or-return
basis nor subject to any other repurchase or return agreements,
and such goods have been shipped to the Purchaser; (F) if the
Account arises from the performance of services, such services
have actually been performed; (G) the Account arose in the
ordinary course of a Domestic Borrower's business; (H) no notice
of the bankruptcy, receivership, reorganization, or insolvency of
the Purchaser owing such Account has been received by the Agent,
any Bank or any Borrower unless the Agent determines in its sole
discretion that the Purchaser's ability to pay such Account is
not compromised by such bankruptcy, receivership, reorganization
or insolvency because of post petition financing, collateral or
other adequate support for such payment; (I) an invoice has been
sent to the Purchaser for such Account; (J) the Account has
remained unpaid for less than 60 days from the due date and less
than 120 days from the date of the initial invoice for such
Account; (K) the Purchaser is not the United States Federal
government or any United States Federal governmental agency
except to the extent (1) such agency and the Account are subject
to the Federal Assignment of Claims Act, and (2) such Account has
been assigned to Collateral Agent and notice has been given
thereof under the Federal Assignment of Claims Act, provided
however that up to Two Million Dollars ($2,000,000.00) of
otherwise Eligible Accounts owing from the United States Federal
government or governmental agency thereof shall be deemed
Eligible Accounts notwithstanding their failure to satisfy
conditions (1) and/or (2) in this clause (K); (L) the Account is
not owed by a Purchaser who is, and does not arise out of
transactions between a Borrower and (1) a non-United States
government, governmental agency or government-controlled
business, (2) a Person who is not subject to the jurisdiction of
the court system of the United States and any state of the United
States or Canada, or (3) a Person who does not maintain in the
United States or Canada an office to which such Account is
invoiced, unless the payment of such Account is secured by a
letter of credit opened or confirmed by a national bank or other
bank incorporated under the laws of a state of the United States
or similar credit support in form and amount, and with terms
acceptable to the Agent in its sole discretion, which has been
assigned to the Collateral Agent pursuant to the Security
Documents unless, in any such case, the Purchaser is Triumph,
Triumph's parent corporation or one of Triumph's direct
Subsidiaries and the Agent determines, and so notifies the
Borrowers in writing, that the Purchaser is sufficiently credit-
worthy taking into account the aggregate amount of the Accounts
owed by such Purchaser and such other factors as the Agent may
determine; (M) the Purchaser for such Account has not submitted a
medium of payment therefor which has been returned uncollected
for any reason; (N) the Purchaser owing such Account is not an
Affiliate of any Borrower; (O) such Account is not a contra
Account; (P) such Account is not owed by a Delinquent Purchaser;
and (Q) such Account is otherwise acceptable to the Agent in its
reasonable discretion.
(L) is lawfully owned by a Domestic Borrower; (B)
conforms in all respects to the representations and warranties
relating thereto contained in the Security Agreement; (C) is in
good condition and repair and is not damaged, outdated or
obsolete or otherwise deemed unsalable by the Agent in its
reasonable judgment; (D) with respect to finished goods, is held
for sale in the ordinary course of business of such Borrower as
conducted on the date hereof; (E) is not being held on
consignment; (F) is not subject to a security interest other than
a security interest in favor of the Collateral Agent; and (G) is
otherwise acceptable to the Agent in its reasonable judgment.
"Elizabeth" has the meaning given to such term in the
introductory paragraph hereof.
"Employee Benefit Plan" has the meaning given to such term
in 3(3) of ERISA.
"Environmental Indemnity" has the meaning given to such term
in Section 3.1(K) hereof.
"Environmental Law" means any federal, state, or local
statute, law, ordinance, regulation, rule, standard, permit or
requirement, including but not limited to those statutes,
ordinances, laws, regulations, rules, standards, permits and
requirements promulgated under the laws of the United States of
America or any other nation, concerning or relating to the
protection of health and the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations
thereunder.
(N) any category of liabilities which
includes deposits by reference to which the LIBO Interest Rate
for LIBO Loans is to be determined or (B) any category of
extension of credit or other assets that include LIBO Loans.
"Event of Default" has the meaning given to such term in
Section 6.1 hereof.
"Facilities" means, collectively, the Term Loan and the
Revolving Credit.
"Facility Fee" has the meaning given to such term in Section
2.5(C) hereof.
"Federal Funds Rate" means for each day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) which
is the weighted average of the rates on overnight federal funds
transactions arranged on such day by federal funds brokers,
computed and released by the Federal Reserve Bank of New York (or
any successor).
"Fees" means all payments except for interest and principal
which the Borrowers are required to make to the Agent, the
Issuing Bank, and/or the Banks hereunder and shall include,
without limitation, amounts owing in connection with any
prepayment under any LIBO Loan, the Commitment Fee, the Agent's
Fee, the Facility Fee, any fees associated with the issuance of
any Letter of Credit or otherwise required under Section 2.19
hereof, the costs of hedging and any amounts payable pursuant to
Section 8.9.
"Financial Statements" means an audited Consolidated balance
sheet, statement of income and retained earnings, statement of
cash flows and statement of changes in stockholder's equity,
together with all notes pertaining thereto, and an audited
Consolidating balance sheet, statements of income and retained
earnings, all as at and for a designated period and all in
accordance with GAAP and any other statements that the Borrowers
may be required to deliver and, with respect to fiscal year
periods ending prior to the date this Agreement is executed, the
portion of the Combined Pro Forma applicable thereto.
"Fixed Charge Coverage Ratio" means at any time the ratio of
(A) Adjusted Earnings to (B) Fixed Charges.
(P) amounts paid over the prior twelve (12) months by the
Borrowers (determined on a Consolidated basis for quarters
commencing with the quarter ending September 30, 1995, determined
with reference to the Combined Pro Forma for quarters ending
prior to the date hereof, and determined on a Consolidated basis
and with reference to the Combined Pro Forma for the quarter
ending June 30, 1995) under operating leases, whether
characterized as rents or otherwise (other than payments under
such leases in respect of insurance, real estate taxes,
utilities, maintenance or similar charges, and additional
rentals, in excess of the minimum based on percentage of sales),
interest in connection with any Credit Obligation (including
without limitation the Revolving Credit and the Term Loan but
excluding the Subordinated Debt), and the cash payments,
consistent with the one-time charge accrued in the second quarter
of 1995, in connection with the retirement of Robert Brawer, and
(B) Current Maturities.
"Florida Mortgage" has the meaning given to such term in
Section 3.1(G) hereof.
"Florida Property" has the meaning given to such term in
Section 3.1(G) hereof.
(R) all Credit Obligations (including without
limitation the Term Loan and the Revolving Credit but excluding
the Subordinated Debt) which have a final maturity of one or more
years from the date of origination, (B) the maximum aggregate
liability under all guarantees other than guarantees of the
tenant's obligations to pay rent and operating expenses under
operating leases, (C) the indebtedness attributed to all
capitalized leases, and (D) short term indebtedness (other than
the Subordinated Debt) which has not been paid in full for a
period of 60 consecutive days or more during the immediately
previous four fiscal quarters.
"GAAP" means generally accepted accounting principles in the
United States in effect from time to time as promulgated in
statements, opinions and pronouncements by the American Institute
of Certified Public Accountants, the Financial Accounting
Standards Board and any successor entities consistently applied;
provided however that for the purposes of the calculation of (A)
the financial covenants set forth in Article V hereof, and (B)
the Applicable Margin, FASB 109 shall not be given effect.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings
with, and reports to all governmental bodies.
"Guaranties" has the meaning given to such term in Section
5.14 hereof.
"Individual Loans" has the meaning given to such term in
Section 5.14 hereof.
"Intercreditor Agreement" has the meaning given to such term
in Section 3.1(O) hereof.
"Interest Period" means a LIBO Interest Period or any period
during which the Interest Rate is the Adjusted Base Rate, as
appropriate.
"Interest Rate" means the Adjusted LIBO Rate or the Adjusted
Base Rate, as appropriate.
"Interim Financial Statements" means an unaudited
Consolidated balance sheet, statement of income and retained
earnings, statement of cash flows all as, at and for a designated
period, and, with respect to interim periods ending prior to the
date this Agreement is executed, the portion of the Combined Pro
Forma applicable thereto, and all in accordance with GAAP subject
only to usual year-end adjustments and the absence of footnotes.
"International" has the meaning given to such term in the
introductory paragraph hereof.
"Inventory" has the meaning given to such term in the
Pennsylvania Uniform Commercial Code as in effect on the date
hereof.
"Issuing Bank" has the meaning given to such term in the
introductory paragraph hereof.
"Jamaica" has the meaning given to such term in the
introductory paragraph hereof.
"Letter of Credit" means one of the Standby Letters of
Credit and/or Documentary Letters of Credit issued by the Issuing
Bank or any of the Prior Letters of Credit.
"Letter of Credit Cash Collateral Account" has the meaning
given to such term in Section 2.18 hereof.
"Letter of Credit Documents" means the documents and
instruments required by the Issuing Bank to be executed by the
Borrowers in connection with the issuance of Letters of Credit.
(a) the date on which the Letter of Credit is
returned to Issuing Bank, undrawn, for cancellation, or (b) that
date which is thirty (30) Business Days after the expiration date
thereof.
"Letter of Credit Sublimit" means the least of (A) the
aggregate Commitments, (B) $5,000,000.00 or (C) such lesser
amount as reduced by the Borrowers pursuant to Section 2.3(c)
hereof.
"Leverage Ratio" means at any time the ratio of (A) Funded
Debt to (B) Tangible Net Worth plus Funded Debt.
"LIBO Interest Period" means for each LIBO Loan a period of
time, beginning on an Effective Date, of one, two, three or six
months in length (as such periods are commonly used), selected by
a Borrower by telephone or in writing (and if by telephone,
confirmed by such Borrower promptly thereafter in writing),
during which the Interest Rate is the Adjusted LIBO Rate. If a
LIBO Interest Period would otherwise end on a day that is not a
Business Day, such LIBO Interest Period shall be extended to the
next Business Day, unless such Business Day would fall in the
next calendar month, in which event such LIBO Interest Period
shall end on the immediately preceding Business Day.
"LIBO Loan" means each Revolving Credit LIBO Rate Tranche
and each Term Loan LIBO Rate Tranche.
"LIBO Rate" means, for each LIBO Loan, the rate per annum
(rounded upwards, if necessary, to the nearest 1/16th of 1%)
determined by the Agent according to the following formula:
R = X
1-Y
where R = LIBO Rate
X = London Interbank Offered Rate for such
LIBO Loan for the applicable LIBO
Interest Period
Y = Eurocurrency Reserve Requirement for such
LIBO Loan for the applicable LIBO
Interest Period
"Loan Documents" means the documents associated with this
transaction, including but not limited to this Agreement, the
Notes, the Intercreditor Agreement, the Environmental Indemnity,
the Protection Agreements, and the Security Documents.
"Loans" means all Advances under the Revolving Credit and
the Term Loan.
"London Business Day" means any Business Day on which
commercial banks are open for international business (including
dealing in Dollar deposits) in London, England, Philadelphia,
Pennsylvania and New York, New York.
"London Interbank Offered Rate" applicable to any elected
LIBO Interest Period for a LIBO Loan means the rate per annum
(rounded upwards, if necessary, to the nearest 1/16th of 1%)
quoted at approximately 11:00 a.m. London time, by the principal
London branch of the Agent two London Business Days prior to the
first day of such LIBO Interest Period for the offering to
leading banks in the London interbank market of Dollar deposits
in immediately available funds for a period, and in an amount,
comparable to the LIBO Interest Period and principal amount of
the LIBO Loan which shall be outstanding during such LIBO
Interest Period.
"Maidenform" has the meaning given to such term in the
introductory paragraph hereof.
"Majority Banks" means those Banks which are then in
compliance with their obligations hereunder holding not less than
66-2/3% of the outstanding principal amount of the aggregate
Loans of those Banks which are then in compliance with their
obligations hereunder.
"Margin Stock" has the same meaning that Regulation U of the
Board of Governors of the Federal Reserve System gives to that
term.
"Maturity Date" means March 31, 2001.
"Mortgages" means the Florida Mortgage, the New York
Mortgage and the North Carolina Mortgage.
"MPPAA" means Multiemployer Pension Plan Amendments Act of
1980, as amended from time to time.
"Multiemployer Plan" has the meaning given to such term in
4001(a)(3) of ERISA.
"Nationsbank" has the meaning given to such term in the
introductory paragraph hereof.
"NBD" has the meaning given to such term in the introductory
paragraph hereof.
"NCC" has the meaning given to such term in the introductory
paragraph hereof.
(T) cash used in the Borrowers' investing activities
provided such activities are consistent with that described in
the Borrowers' Financial Statements for fiscal year 1994 (other
than cash expended for assets acquired or created by virtue of
the purchase of NCC stock by Maidenform or Worldwide-DE), (B)
cash used to retire long term debt (other than Subordinated Debt
and principal payments on the Revolving Credit) all as determined
for the Borrowers for the preceding fiscal year period and (C)
cash payments made by the Borrowers to Sidney Goldberg, Edward
Goldberg and Ellen Goldberg pursuant to consulting agreements and
non-competition agreements with each of the above each dated
February 18, 1992.
"New York Mortgage" has the meaning given to such term in
Section 3.1(H) hereof.
"New York Property" has the meaning given to such term in
Section 3.1(H) hereof.
"Nicholas" has the meaning given to such term in the
introductory paragraph hereof.
"North Carolina Mortgage" has the meaning given to such term
in Section 3.1(I) hereof.
"North Carolina Property" has the meaning given to such term
in Section 3.1(I) hereof.
"Noteholders" means the holders of the Private Placement
Notes, which, as of the date hereof, are Massachusetts Mutual
Life Insurance Company, Principal Mutual Life Insurance Company
and TMG Life Insurance Company.
"Notes" means the Revolving Credit Notes and the Term Loan
Notes.
"Offshore Borrower" means Betex, Creaciones and Jamaica or
any of them.
"Offshore Loans" has the meaning given to such term in
Section 5.14 hereof.
"Offshore Tangible Net Worth" means without duplication (A)
the amount by which aggregate tangible assets of the Offshore
Borrowers on a Consolidated basis exceed the sum of (i) total
liabilities of the Offshore Borrowers on a Consolidated basis,
plus (ii) all obligations of the Offshore Borrowers on a
Consolidated basis with respect to contingent liabilities not
otherwise included in (i) above, minus (B) the sum of the
Offshore Borrowers' (i) loans to or interest or investments in
Triumph, Affiliates, joint ventures or partnerships, (ii)
investments in equity securities of companies if such securities
are not traded on a national securities exchange or in the
National Market System of the NASDAQ, and (iii) investments in
other securities which do not have an investment grade rating of
Baa or higher by Moody's Investors Service, Inc. or BBB or higher
by Standard and Poor's Corporation, but only the extent that the
assets described in clauses (i), (ii), or (iii) otherwise
constitute tangible assets according to GAAP.
"Operating Cash Flow" means net income from operations
(without giving effect to either extraordinary income or
extraordinary losses, or the one-time charge not to exceed
XXXXXXXXXXXXX, accrued in the second quarter of 1995 in
connection with XXX XXXXXXXXXX XX XXXXXX XXXXXX, or a one-time
charge, not to exceed XXXXXXXXXXXXX, which the Borrowers may
accrue in connection with XXX XXXXXXXX XXXXXXX XX XXX XXXXX XX
XXXXXXXX XXXXXX XXXXXX XXXXXXX, and expressly excluding any net
amounts accrued under FASB 87) of the Borrowers for the previous
twelve (12) month period (determined on a Consolidated basis for
quarters commencing with the quarter ending September 30, 1995,
determined with reference to the Combined Pro Forma for quarters
ending prior to the date hereof, and determined on a Consolidated
basis and with reference to the Combined Pro Forma for the
quarter ending June 30, 1995) before income taxes, plus
depreciation, amortization and interest expense.
"Other Currency" has the meaning given to such term in
Section 8.16 hereof.
"Overadvance" means an amount, not to exceed One Million
Dollars ($1,000,000.00) by which the aggregate amount of
outstanding Advances plus the Letter of Credit Liability exceeds
the Borrowing Base, provided that the Overadvance shall be zero
for the two calendar month period following any calendar month
during which at any time the amount outstanding under the
Revolving Credit plus the Letter of Credit Liability exceeds the
Borrowing Base.
"Participant Bank" means any bank to which a Bank has sold a
participation in the Loans under Section 8.14 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means any individual, corporation, partnership,
joint venture, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
(V) a Defined Benefit Pension Plan or Defined Contribution
Plan maintained for employees of a Borrower or any member of any
Borrower's Controlled Group, or (B) any other Employee Benefit
Plan (other than a Multiemployer Plan) maintained for employees
of a Borrower or any member of any Borrower's Controlled Group
for which the Borrowers' total potential liability is likely to
have a material adverse effect on the financial condition,
prospects, property or business of the Borrowers taken as a whole
or the Domestic Borrowers taken as a whole.
"Pledge Agreement" has the meaning given to such term in
Section 3.1(L) hereof.
"Prime Rate" means for each day, the rate of interest for
loans established and publicly announced by the Agent from time
to time as its prime rate as in effect on such day. The Prime
Rate is not necessarily the lowest rate of interest which the
Agent charges any of its customers.
"Prior Letters of Credit" means letters of credit
outstanding on the date hereof issued by the Issuing Bank and
listed on Exhibit 1.1B attached hereto and made a part hereof.
"Private Placement" means those certain loans to the
Borrowers in the original aggregate amount of $30,000,000.00 made
by the Noteholders pursuant to amended and restated note purchase
agreements dated as of April 1, 1995.
"Private Placement Notes" means the notes issued by the
Borrowers in the original principal amount of $30,000,000
pursuant to the Private Placement, becoming due on September 30,
2003.
"Proceeds" has the meaning given to such term in the
Pennsylvania Uniform Commercial Code as in effect on the date
hereof.
"Prohibited Transaction" has the meaning given to such term
in 406 of ERISA, 4975(c) of the Code and any Treasury
regulations issued thereunder.
"Properties" means the Florida Property, the New York
Property, and the North Carolina Property.
"Pro Rata Share" of a Bank means such Bank's pro rata
percentage of the Loans as set forth on Exhibit 2.1 hereof.
"Protection Agreements" means (a) any interest rate
protection agreements entered into with respect to not more than
$50,000,000.00 in principal for a term not exceeding the Maturity
Date, provided that the Borrowers' obligations thereunder shall
be limited to not more than $5,000,000.00 in the aggregate, and
(b) foreign currency exchange agreements with a maximum aggregate
exposure at any one time not exceeding $5,000,000.00 and for a
maximum term not exceeding 180 days, entered into between any
Borrower and any Bank in the ordinary course of such Borrower's
business and not for speculation.
"Purchaser" means a buyer of goods from a Borrower, or a
customer for whom services have been rendered or materials
furnished by a Borrower.
(X) Current Assets less Inventory to (B) Current
Liabilities.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as amended or supplemented from
time to time.
"Reimbursement Date" has the meaning given to such term in
Section 2.19(E).
"Reportable Event" has the meaning given to such term in
4043(b) of ERISA, but does not include any event to which the
provision of 30 days notice to the PBGC is waived under
applicable regulations unless the Borrowers' potential liability
therefor is likely to have a material adverse effect on the
financial condition, prospects, property or business of the
Borrowers taken as a whole or the Domestic Borrowers taken as a
whole.
"Restricted Loans" has the meaning given to such term in
Section 5.14 hereof.
"Revolving Credit" means the credit facilities being
extended by the Banks to the Borrowers pursuant to Section 2.3
hereof.
"Revolving Credit Base Rate Tranche" means any portion of
the Revolving Credit to which the Adjusted Base Rate is
applicable.
"Revolving Credit LIBO Rate Tranche" means any portion of
the Revolving Credit to which the Adjusted LIBO Rate applies
having the same LIBO Interest Period.
"Revolving Credit Notes" has the meaning given to such term
in Section 2.3 hereof.
"Revolving Credit Tranches" means the Revolving Credit Base
Rate Tranches and the Revolving Credit LIBO Rate Tranches.
"RICO" means the Racketeer Influenced and Corrupt
Organization Act, as amended by the Comprehensive Act of 1984, 18
U.S.C. 1961-68.
"Security Agreement" has the meaning given to such term in
Section 3.1(P) hereof.
"Security Documents" means the Collateral Assignments, the
Security Agreement, the Mortgages, the Pledge Agreement, the
Trademark Agreement, any financing statements executed in
connection herewith and all other documents delivered to the
Collateral Agent in accordance with the Security Agreement.
"Standby Letters of Credit" means one or more standby
letters of credit issued by the Issuing Bank for the account of a
Borrower or any Borrowers in accordance with the provisions of
Section 2.19.
"Subordinated Debt" means indebtedness of any Borrower under
that certain note dated April 26, 1995 in the principal amount of
$2,538,896.00 payable to the Estate of Beatrice Coleman, which by
its terms is subordinated in right of payment to the Banks and
the Noteholders on terms satisfactory to the Agent.
"Subsidiary" means any corporation or other entity, more
than 50% of the voting capital stock, partnership or other
ownership interests of which is owned, directly or indirectly, by
any Borrower.
"Supervisory Policy" means the Federal Financial
Institutions Examination Council Supervisory Policy-Repurchase
Agreements of Depository Institutions with Security Dealers and
Others as adopted by the Comptroller of the Currency on
October 31, 1985.
"Tangible Assets" means all assets of the Borrowers on a
Consolidated basis that would, in accordance with GAAP, be
classified as tangible assets of the Borrowers on a Consolidated
basis.
(Z) the amount by which Tangible Assets exceed Total
Liabilities, minus (B) the sum of the Borrowers' and any
Subsidiaries' (1) loans to or interests or investments in any
joint ventures or partnerships (except for joint ventures or
partnerships solely with Triumph and/or any corporation or other
entity, more than 50% of the voting equity interest of which is
owned directly by Triumph), (2) investments in equity securities
of companies if such securities are not traded on a national
securities exchange or in the National Market System of the
NASDAQ, and (3) investments in other securities which do not have
an investment grade rating of Baa or higher by Moody's Investors
Service, Inc. or BBB or higher by Standard and Poor's Corporation
but only to the extent that the assets described in clauses (1),
(2) and (3) otherwise constitute Tangible Assets according to
GAAP, plus (C) Subordinated Debt.
"Term Loan" has the meaning given to such term in Section
2.2(A) hereof.
"Term Loan Base Rate Tranche" means each portion of the Term
Loan to which the Adjusted Base Rate is applicable.
"Term Loan LIBO Rate Tranche" means each portion of the Term
Loan to which the Adjusted LIBO Rate is applicable having the
same LIBO Interest Period.
"Term Loan Notes" has the meaning given to such term in
Section 2.2(D) hereof.
(BB) the third anniversary of the Closing Date (subject to
extension as set forth in Section 2.3(B)), or (B) the date on
which the Banks' obligations to make Advances under the Revolving
Credit are terminated in whole pursuant to the terms of this
Agreement.
"Third Party Guarantees" has the meaning given to such term
in Section 5.14 hereof.
"Total Liabilities" means the sum of all liabilities (both
direct and contingent, other than liabilities arising under the
Protection Agreements) of the Borrowers on a Consolidated basis
(and for periods prior to the Closing Date, with reference to the
Combined Pro Forma) that would, in accordance with GAAP, be
classified as liabilities of the Borrowers on a Consolidated
basis.
"Trademark Agreement" has the meaning given to such term in
Section 3.1(N) hereof.
"Triumph" means Triumph International Overseas Limited.
"UCC" means the Pennsylvania Uniform Commercial Code as in
effect from time to time.
"UJB" has the meaning given to such term in the introductory
paragraph hereof.
"Unmatured Event of Default" means and refers to any event,
act or occurrence, which with the passing of time or the giving
of notice or both, would constitute an Event of Default.
"Withdrawal Liability" has the meaning given to such term in
4201 of ERISA.
"Worldwide-DE" has the meaning given to such term in the
introductory paragraph hereof.
"Worldwide-NY" has the meaning given to such term in the
introductory paragraph hereof.
2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed, and all financial
data submitted pursuant to this Agreement shall be prepared, in
accordance with GAAP.
ARTICLE II
THE FACILITIES
3 The Facilities. Subject to the terms and
conditions hereinafter provided, each Bank, for itself only,
agrees: (A) to make on the Closing Date its portion of the Term
Loan in the principal amount set forth opposite its name on
Exhibit 2.1 hereto, and (B) to make its portion of advances
requested under the Revolving Credit to the Borrowers (including
such sums deemed requested by the Borrowers pursuant to Section
2.19 hereof) (such advances under the Revolving Credit are
hereinafter referred to as the "Advances"), from time to time
during the period from the date hereof to and including the
Termination Date, provided that the aggregate outstanding
principal amount of each Bank's portion of the Advances under the
Revolving Credit when added to such Bank's participation in the
Letter of Credit Liability at any time shall not exceed the
amount set forth opposite such Bank's name under the heading
"Revolving Credit" on Exhibit 2.1 hereto, as such amount may be
reduced pursuant to Section 2.3 hereof (such respective amounts
relating to the Revolving Credit being the "Commitment" of each
Bank). Each Advance of the Revolving Credit shall be from all of
the Banks ratably according to their respective Commitments.
4 The Term Loan. (A) Subject to the terms and
conditions of this Agreement, the Banks shall extend to the
Borrowers a term loan in the principal amount of Fifty Million
Dollars ($50,000,000.00) (the "Term Loan"). The Term Loan shall
be advanced by the Banks on the Closing Date and shall be used by
the Borrowers for the purposes set forth in the Background
Section hereof. The Term Loan shall initially earn interest at
the Adjusted Base Rate. Amounts repaid or prepaid by the
Borrowers under the Term Loan shall not be available to the
Borrowers for reborrowing.
(A) The Borrowers shall pay interest on the principal amount
of the Term Loan outstanding from time to time at the Interest
Rate applicable to each portion of the Term Loan in accordance
with Section 2.7 hereof. The Borrowers shall repay the principal
balance of the Term Loan in quarterly installments, in the
amounts set forth below, commencing on March 31, 1996, and on the
last day of each June, September, December and March thereafter
through the Maturity Date, on which date the Borrowers shall
repay in full the unpaid principal amount of the Term Loan:
Each Quarterly
Period Principal Repayment
6/30/1996 through 3/31/1997 $2,000,000.00
6/30/1997 through 3/31/1998 $2,250,000.00
6/30/1998 through 3/31/1999 $2,500,000.00
6/30/1999 through 3/31/2000 $2,750,000.00
6/30/2000 through 3/31/2001 $3,000,000.00
(1) on or before April 30, 1996, an amount equal to 50% of
the Borrowers' Net Cash Flow for the fiscal year ending December
31, 1995 (determined in accordance with the Financial
Statements), (2) on or before April 30, 1997, an amount equal to
the lesser of (a) 25% of the Borrowers' Net Cash Flow for the
fiscal year ending December 31, 1996 (determined in accordance
with the Financial Statements), or (b) $4,000,000.00, and (3) on
or before April 30, 1998, an amount equal to the lesser of (a)
25% of the Borrowers' Net Cash Flow for the fiscal year ending
December 31, 1997 (determined in accordance with the Financial
Statements), or (b) $3,000,000.00; provided that in the event
that the Private Placement Notes or related documents require a
prepayment of the Private Placement Notes or permit the holders
thereof to require such a prepayment, then the Borrowers shall
pay to the Agent for the ratable benefit of each Bank as and when
required under this sentence an amount equal to (i) the amount
which otherwise would be payable but for this proviso times a
fraction the numerator of which shall be the aggregate principal
amount of the Term Loan then outstanding plus the aggregate
Commitments and the denominator of which shall be the sum of the
principal amount of the Private Placement Notes then outstanding
plus the aggregate principal amount of the Term Loan then
outstanding plus the aggregate of the Commitments, plus (ii) if
positive, the amount which otherwise would be payable but for
this proviso minus the amount of prepayment actually required by
the Private Placement Notes, the related documents and/or the
holders of the Private Placement Notes, and minus the amount of
prepayment required under (i). Amounts paid in accordance with
clauses (1), (2) and (3) of the immediately preceding sentence
shall be applied to the principal installments of the Term Loan
otherwise coming due on the Maturity Date and shall in no way
postpone, decrease or otherwise affect the Borrowers' obligations
to make, the regularly scheduled quarterly principal installments
on the Term Loan as set forth in the table above.
(2)
(B) The Term Loan shall earn interest at the Adjusted Base
Rate, the Adjusted LIBO Rate, or both. The Borrowers shall have
the right to convert all or a portion of the Term Loan Base Rate
Tranches to Term Loan LIBO Rate Tranches subject to Section 2.7
hereof and provided that at any time when a principal payment is
due under Section 2.2(B), there is then earning interest at the
Adjusted Base Rate an amount of the Term Loan equal to or greater
than the amount of such payment.
(C) The joint and several obligation of the Borrowers to repay
the Term Loan shall be evidenced by promissory notes of the
Borrowers dated the date hereof, each payable to the order of a
Bank in a principal amount equal to the amount set forth opposite
such Bank's name with respect to the Term Loan on Exhibit 2.1
hereto and otherwise substantially in the form of Exhibit 2.2
attached hereto (the "Term Loan Notes").
5 The Revolving Credit. (A) Subject to the terms
and conditions set forth in this Agreement, each Bank, for itself
only, agrees to lend to the Borrowers from time to time during
the period from the Closing Date to but not including the
Termination Date, such sums as the Borrowers may request provided
that (1) the aggregate outstanding principal amount thereof shall
not exceed at any time the amount set forth as such Bank's
Commitment on Exhibit 2.1, (2) the total outstanding principal
under the Revolving Credit when added to the Letter of Credit
Liability at any one time shall not exceed the Credit Limit, and
(3) the Letter of Credit Liability shall at no time exceed the
Letter of Credit Sublimit. If the outstanding principal under
the Revolving Credit at any time exceeds the Credit Limit, the
Borrowers shall immediately repay the amount of the excess,
together with accrued interest thereon and any amount which may
be due pursuant to Section 2.17(B) on account of such payment.
If, at any time, the aggregate Letter of Credit Liability exceeds
the Letter of Credit Sublimit, the Borrowers shall pledge to the
Agent for the benefit of the Banks cash collateral in an amount
equal to or greater than the amount by which such Letter of
Credit Liability exceeds the Letter of Credit Sublimit, which
cash collateral shall be deposited and held in the Letter of
Credit Cash Collateral Account. The Borrowers shall use the
Revolving Credit for the purposes set forth in the Background
section hereof and for no other purposes.
(A) The Borrowers shall pay interest on the principal amount
of the Revolving Credit outstanding from time to time at the
Interest Rate applicable to each Revolving Credit Tranche in
accordance with Section 2.7 hereof. On the Termination Date, the
Borrowers shall (1) repay in full (a) the aggregate principal
amount of any and all Revolving Credit Tranches, (b) the amount
of any drawings under Letters of Credit which have not been
previously reimbursed by the Borrowers and (c) all other amounts
then outstanding hereunder, or under the Revolving Credit Notes,
and (2) if there remain any unexpired Letters of Credit on such
date, deposit into the Letter of Credit Cash Collateral Account
an amount equal to or greater than (as determined by the Issuing
Bank in its sole discretion) such Letter of Credit Liability.
The Termination Date may be extended up to three times by one
year each, effective as of each of the third, fourth and fifth
anniversaries of the Closing Date provided that (1) the Borrowers
and each of the Banks consent to each such extension in writing
prior to the Termination Date (as then in effect), which consent
shall be given or withheld in the sole discretion of such party
and (2) there does not occur any Unmatured Event of Default or
Event of Default between the date of any such parties' consent
and the Termination Date (as determined without giving effect to
such new extension). With each such extension the following
anniversary of the Closing Date shall become the "Termination
Date" for purposes of this Agreement.
(B)
(B) The Borrowers shall have the right at any time and from
time to time, upon at least five (5) Business Days prior written
notice executed by each of the Borrowers to the Agent (which
shall promptly give notice thereof to each other Bank), to
terminate the Commitments in whole or reduce them in part
ratably, provided, however, that: (1) the Borrowers shall
simultaneously with such reduction pay to the Agent for the
benefit of the Banks (a) the amount by which the outstanding
principal amount of the Revolving Credit Tranches plus the Letter
of Credit Liability exceeds the Credit Limit as and if so
reduced, with such repaid principal to be applied first against
Revolving Credit Base Rate Tranches and thereafter against
Revolving Credit LIBO Rate Tranches, and (b) all accrued and
unpaid interest thereon; (2) to the extent application of this
subsection requires a paydown of any Revolving Credit LIBO Rate
Tranches prior to the end of the applicable Interest Period(s),
the Borrowers shall pay any prepayment compensation provided by
Section 2.17(B) herein; and (3) while any Letters of Credit
remain outstanding the Borrowers shall not be permitted to
terminate the Banks' Commitments in whole or reduce the Banks'
Commitments below the aggregate amount of Letter of Credit
Liability then outstanding other than as provided in Section
2.3(D) below. Any partial reduction of the Commitments shall be
in the minimum amount of $5,000,000.00 or in multiples of
$1,000,000.00 in excess thereof. Any termination or reduction of
the Commitments hereunder shall be permanent, and the Commitments
cannot thereafter be restored or increased without the written
consent of all Banks. Upon the termination of the Commitments in
whole, the Borrowers shall pay any accrued Commitment Fees and
repay the aggregate principal amount of all Revolving Credit
Tranches outstanding on such Termination Date together with
interest thereon and any other sums due hereunder including,
without limitation, under Section 2.17(B).
(C) The Borrowers shall have the right to reduce the Letter of
Credit Sublimit below the aggregate amount of the Letter of
Credit Liability only upon the Borrowers' pledge of cash
collateral in an amount equal to or greater than the amount by
which such Letter of Credit Liability exceeds the Letter of
Credit Sublimit as reduced. Such cash collateral shall be
deposited in the Letter of Credit Cash Collateral Account.
(D) Each Advance shall be in an aggregate amount of
$1,000,000.00 or in multiples of $500,000.00 in excess thereof.
Each Revolving Credit LIBO Rate Tranche shall be in an aggregate
amount of $5,000,000.00 or in multiples of $500,000.00 in excess
thereof. The Borrowers may borrow, repay and reborrow under the
Revolving Credit until the Termination Date subject to the terms
and conditions of this Agreement.
(E) The joint and several obligation of the Borrowers to repay
the Revolving Credit shall be evidenced by promissory notes of
the Borrowers dated the date hereof, each payable to the order of
a Bank in a principal amount equal to the amount set forth
opposite such Bank's name under the heading "Revolving Credit" on
Exhibit 2.1 and otherwise substantially in the form of Exhibit
2.3 attached hereto (the "Revolving Credit Notes"). In the event
that any Bank assigns all or a portion of its Commitment as
permitted under Section 8.14 hereof, the Borrowers will execute
and deliver replacement Revolving Credit Note(s) in the form of
Exhibit 2.3 upon the request of the Agent and against return of
the Revolving Credit Note being replaced.
6 Making the Advances under the Revolving Credit.
(A) A Borrower shall notify the Agent by telephone no later than
11:00 A.M. on the date of each proposed Advance to which only the
Adjusted Base Rate will apply, specifying the date and amount of
the proposed Advance. Subject to subsection (B) hereof, the
Agent in turn shall promptly notify each other Bank of the
proposed Advance. A Borrower shall notify the Agent, by
telephone or in writing, by 11:00 A.M. at least three London
Business Days before each proposed Advance, any portion of which
is to earn interest at the Adjusted LIBO Rate, specifying the
date and the amount of the proposed Advance, the amount of such
proposed Advance to which the Adjusted LIBO Rate will apply, and
the length of the proposed LIBO Interest Period(s). The Agent
shall in turn notify each other Bank of the proposed Advance by
11:00 A.M. on the second London Business Day preceding the
proposed Advance. Such Borrower will confirm promptly in writing
any telephonic notice of a proposed Advance. Each notice by a
Borrower to the Agent under this Section 2.4 shall constitute a
representation by the Borrowers that, at the time thereof and
giving effect to the Advance requested thereby, all conditions
precedent described in Sections 3.1 and 3.2 have been satisfied.
Subject to subsection (B) hereof, upon notice from the Agent of
the proposed Advance, each Bank shall wire transfer to the Agent,
at the Agent's office at 1345 Chestnut Street, Philadelphia,
Pennsylvania, in immediately available funds, which funds shall
be in Dollars, prior to 2:00 p.m. on the date of the proposed
Advance, an amount equal to such Bank's Pro Rata Share of such
Advance. Upon receipt of such funds by the Agent and upon
Agent's determination that the applicable conditions set forth in
Article III hereof have been fulfilled, the Agent will
immediately make such funds available to the Borrowers. The
Agent shall have no obligation to make funds available to the
Borrowers in excess of amounts received by it from the Banks.
(A) The Agent shall have the right (but not the obligation) to
make any Advance which is to earn interest only at the Adjusted
Base Rate and to which the Borrowers are entitled pursuant to
subsection (A) above, in which event the Agent shall notify each
Bank, not later than 11:00 A.M. (i) on any Business Day on which
the aggregate amount of such Advances made for the account of
Banks other than CoreStates since the last such notice differs by
more than $7,500,000.00 from the aggregate of principal payments
made by the Borrowers for the account of Bank's other than
CoreStates since the last such notice and (ii) on the last
Business Day of each calendar week of the type(s), aggregate
amount(s) and such Bank's Pro Rata Share of such Advance(s) made
solely by the Agent and principal payments made by the Borrowers
and received by the Agent during such week on Base Rate Loans.
If the amount of such Advances exceeds the amount of such
principal received, then upon receipt of such notice, each Bank
shall wire transfer to the Agent, at the Agent's office at 1345
Chestnut Street, Philadelphia, Pennsylvania, in immediately
available funds, which funds shall be in Dollars, prior to 2:00
P.M. on such date, an amount equal to such Bank's Pro Rata Share
of such excess. If the amount of such principal payments
received exceeds the amount of such Advances(s), then
simultaneously with such notice, the Agent shall wire transfer
prior to 2:00 P.M. on such date to each Bank such Bank's Pro Rata
Share of such excess. In either such case, the Agent shall be
entitled to retain all principal payments on Base Rate Loans
during such week. All interest accrued on such Advances from the
date made to the date on which the Bank's wire transfer their Pro
Rata Shares to the Agent shall be for the Agent's own account.
The Agent and the Banks reserve the right, among themselves, to
agree to settlement procedures other than set forth in this
Section 2.4, provided that such procedures shall not affect the
obligations of the Borrowers hereunder.
(B) If one or more Banks fail to make available to the Agent
such Bank's Pro Rata Share of an Advance and the Agent elects to
advance the full amount of the Advance requested by a Borrower,
the Borrowers shall be obligated to repay to the Agent for the
Agent's account the amount, with interest, so advanced by the
Agent and not advanced by the Bank(s) (i) on demand, or (ii) if
no demand is made, in amounts and at the times the Borrowers
otherwise would be obligated to repay such Advance. Unless the
Agent receives notice from a Bank prior to the date any Advance
is to be made that such Bank does not intend to make its Pro Rata
Share of such Advance available to the Agent, the Agent may (but
shall not be obligated to) assume that such Bank has made or will
make such proceeds available to the Agent when due, and the
Agent, in reliance upon such assumption, may (but shall not be
obligated to) make available to the Borrowers a corresponding
amount. If such corresponding amount is not, in fact, made
available to the Agent by such Bank on the date the Advance is
made, the Agent shall be entitled to recover such amount on
demand from such Bank (or, if such Bank fails to pay such amount
immediately upon demand, from the Borrowers) together with
interest thereon at a rate per annum equal to the Interest Rate
applicable to the Advance for each day during the period between
the date that the Agent makes the Advance and the date on which
the Bank makes its Pro Rata Share of the Advance available to the
Agent.
7 Fees. (A) Commitment Fee. The Borrowers shall
pay to the Agent for the benefit of each Bank a commitment fee
(the "Commitment Fee") computed at the rate of 0.50% per year on
the average daily undisbursed portion of such Bank's Commitment
from the date hereof to and including the Termination Date,
provided that, in the event the Applicable Margin is reduced from
the level applicable on the Closing Date, the Commitment Fee
shall be computed at the rate of 0.375% per year on the average
daily amount portion of such Bank's Commitment so long as such
reduced Applicable Margin is in place and no Unmatured Event of
Default or Event of Default has occurred hereunder or under the
other Loan Documents. In the event that after any such reduction
in the Commitment Fee (1) the Applicable Margin increases back to
the level in effect on the Closing Date, or (2) there occurs an
Unmatured Event of Default or an Event of Default, the Commitment
Fee shall immediately increase to the rate of 0.50% per annum.
The Commitment Fee shall be payable (1) quarterly in arrears on
the last day of March, June, September, and December in each year
during the term of the Banks' Commitments, commencing June 30,
1995, (2) on the date or dates, if any, on which the Commitments
are reduced, and (3) on the Termination Date. Each installment
of the Commitment Fee shall be deemed fully earned and non-
refundable when due. For purposes of calculation of the
Commitment Fee, the amount of Letter of Credit Liability during
the period for which the Commitment Fee is calculated shall be
deemed "disbursed" under the Revolving Credit.
(A) Agent's Fee. The Borrowers shall pay to the Agent for the
Agent's account and not for the account of any Bank an annual fee
(the "Agent's Fee") pursuant to the agreement entered into by the
Borrowers and the Agent on or before the execution of this
Agreement.
(B) Facility Fee. The Borrowers shall pay to the Agent a one-
time facility fee (the "Facility Fee") pursuant to the agreement
entered into by the Borrowers and the Agent on or before the
execution of this Agreement. The Agent shall pay to each Bank
from the Facility Fee such Bank's portion thereof in accordance
with such Bank's commitment letter previously delivered by such
Bank to the Agent. The Facility Fee shall be deemed fully earned
and non-refundable when due.
8 Mandatory Prepayment of the Term Loan. The
Borrowers shall pay to the Agent, for the ratable benefit of each
Bank promptly upon consummation of each of the transactions set
forth below: (A) the gross proceeds of any private placement of
equity by the Borrowers otherwise permitted hereunder, net of any
reasonable costs and expenses thereof incurred to Persons other
than any Borrower or any of their Subsidiaries or Affiliates; and
(B) the gross proceeds of any public sale of equity by the
Borrowers otherwise permitted hereunder, net of any reasonable
costs and expenses thereof incurred to Persons other than any
Borrower or any of their Subsidiaries or Affiliates, provided
that if the Private Placement Notes or related documents require
a prepayment of the Private Placement Notes or permit the holders
thereof to require such a prepayment as a result of such private
placement or public sale, then the amount the Borrowers shall be
obligated to prepay hereunder as a result of the occurrences
described in clauses (A) and/or (B) of this sentence shall be
equal to (1) the amount which otherwise would be payable but for
this proviso times a fraction the numerator of which shall be the
aggregate principal amount of the Term Loan then outstanding plus
the aggregate of the Commitments and the denominator of which
shall be the sum of the principal amount of the Private Placement
Notes then outstanding plus the principal amount of the Term Loan
then outstanding, plus the aggregate of the Commitments, plus (2)
if positive, the amount which otherwise would be payable but for
this proviso minus the amount of prepayment actually required by
the Private Placement Notes, the related documents, and/or the
holders of the Private Placement Notes, and minus the amount of
prepayment required under (1). Amounts prepaid in accordance
with this Section shall be applied when received first against
the Term Loan Base Rate Tranche, and thereafter against the Term
Loan LIBO Rate Tranches, if any. To the extent the application
of this subsection requires a paydown of any LIBO Loan prior to
the end of the applicable Interest Period(s) the Borrowers shall
pay any prepayment compensation provided by Section 2.17(B)
herein. Mandatory repayments hereunder shall in no way postpone,
decrease or otherwise affect the Borrowers' obligations to make,
the regularly scheduled quarterly principal installments on the
Term Loan as set forth in Section 2.2.
9 Interest Rate Options. (A) Base Rate Loans. The
Borrowers shall pay to the Agent for the account of each Bank
interest at the Adjusted Base Rate in arrears on the unpaid
principal amount of each Base Rate Loan, from the date on which
such Base Rate Loan is advanced or converted from a LIBO Loan
until such principal amount has been repaid in full, or converted
to a LIBO Loan, (1) monthly on the last day of each month
commencing with the last day of the first month after this
Agreement is executed, (2) with respect to all Revolving Credit
Base Rate Tranches, on the Termination Date, and (3) with respect
to all Term Loan Base Rate Tranches, on the Maturity Date. The
Adjusted Base Rate shall change (i) simultaneously with each
change in the Base Rate and (ii) with each change in the
Applicable Margin in accordance with the definition thereof.
(A) Conversions to LIBO Loans. By notifying the Agent at
least three London Business Days prior to an Effective Date, the
Borrowers may convert into a LIBO Loan any Base Rate Loan(s) in
an aggregate principal amount of $5,000,000.00 and multiples of
$500,000.00 in excess thereof. At the end of the applicable LIBO
Interest Period, the LIBO Loan will convert back to a Base Rate
Loan unless the Borrowers notify the Agent at least three London
Business Days before the end of the existing LIBO Interest Period
that the Borrowers are electing to continue such LIBO Loan as a
LIBO Loan and are selecting a new LIBO Interest Period.
(B) LIBO Loans. The Borrowers shall pay interest in arrears
on the unpaid principal amount of each LIBO Loan at the Adjusted
LIBO Rate, (1) if the LIBO Interest Period is for fewer than six
months, on the last day of the applicable LIBO Interest Period,
and (2) if the LIBO Interest Period is six months, on the 90th
day of such LIBO Interest Period and on the last day of such LIBO
Interest Period.
(C) Limitation on LIBO Loans. The Borrowers shall not have more
than eight LIBO Loans outstanding at any one time.
10 Computation of Interest and Fees. The Fees and
all interest on the Loans and other sums payable hereunder shall
be computed on the basis of a year of 360 days for the actual
number of days elapsed.
11 Payments. (A) The Borrowers hereby authorize the
Agent to charge directly any account, maintained by the Borrowers
or any entity comprising the Borrowers with the Agent for any
payments of principal of the Loans, amounts drawn under Letters
of Credit not reimbursed by the Borrowers, interest and Fees, and
any other amounts owing under this Agreement, under the Notes, or
under any of the Loan Documents, as and when due. In the event
that the Borrowers maintain insufficient funds in such account(s)
to meet the Borrowers' obligations hereunder when due, the
Borrowers will make all payments of principal of the Loans, all
reimbursements of drawings under Letters of Credit, all payments
of interest on the Loans and all payments of Fees, to the Agent,
for the account of the Agent and/or the Banks as appropriate, not
later than 1:00 P.M. on the applicable due date, in immediately
available funds and in Dollars.
(A) Prior to an Event of Default and the acceleration of the
Loans as set forth in Section 6.2 hereof, and provided that the
Borrowers have paid all amounts which have come due on or prior
to such applicable due date, the Agent will, by wire transfer (or
by other means mutually acceptable to the Agent and the Banks),
immediately distribute to each Bank in immediately available
funds such Bank's Pro Rata Share of the amounts in which such
Bank has an interest, so received by the Agent.
(B) After the occurrence of an Event of Default and the
acceleration of the Loans as set forth in Section 6.2 hereof, or
if the Borrowers shall have failed to pay all amounts which have
come due on or prior to such applicable due date, the Agent shall
apply all payments and collections received by it, subject to the
terms of the Intercreditor Agreement, as follows: first, to all
of the Agent's costs and expenses incurred in connection with the
collection of such payments (including, without limitation,
reasonable attorneys' fees and expenses and the fees and expenses
of the Agent's experts and consultants); second, to interest on
and principal of any amounts funded by the Agent in excess of its
Pro Rata Share as contemplated by Section 2.4; third, to accrued
and unpaid Fees (other than attorneys' fees and expenses already
paid pursuant to "first" above); fourth, to accrued interest of
each Bank ratably in accordance with its Pro Rata Share; fifth,
to (i) the outstanding principal amount of the Term Loan, to each
Bank ratably in accordance with its Pro Rata Share, (ii) the
principal amount of the Advances, and (iii) obligations under the
Protection Agreements, all on a pro rata basis; sixth, all other
amounts which shall have come due hereunder, to each Bank ratably
in accordance with its Pro Rata Share; seventh, into the Letter
of Credit Cash Collateral Account to the extent the aggregate
amount of undrawn Letters of Credit then outstanding exceed the
balance in the Letter of Credit Cash Collateral Account, eighth,
to all amounts due under any Protection Agreement, and ninth, to
the Borrowers. The allocation of amounts within each level set
forth above shall be pro rata according to the respective amounts
due each party.
12 Payment on Non-Business Days. Whenever any
payment to be made hereunder or under any Notes shall be stated
to be due on a day that is not a Business Day, such payment shall
be made on the next succeeding Business Day, and, except as
otherwise specifically provided herein, such extension of time
shall in such case be included in the computation of payment of
interest hereunder or under the Notes or the Fees, as the case
may be.
13 Reimbursement to Banks for Cost Increases Imposed
by Law. (A) If any change in existing law or regulation, any
new law, change in regulatory interpretation or any other factor
having the force of law shall impose or change any tax (other
than taxes on income in general), reserve, insurance, special
deposit or similar requirements or charges with respect to funds
obtained by any Bank to make or maintain any of the Loans during
any Interest Period, and the result is to increase the cost to
such Bank of obtaining or maintaining such funds or to reduce the
return to such Bank on the Loans to which such Interest Period
applies, then such Bank shall so notify the Agent and the
Borrowers in writing, certifying the amount of, and the
computation thereof and reasons for such increased costs or
reduced return, and the Borrowers shall immediately pay to such
Bank an amount sufficient to compensate such Bank in full for
such increased costs or such reduced return.
(A) If any existing law or regulation or any new law or
regulation or regulatory interpretation or other factor having
the force of law imposes or changes any tax (other than taxes on
income in general), reserve, insurance, special deposit or
similar requirements or charges with respect to mortgages,
security agreements or other types of pledges of security, or
notes, loans, or other debts secured thereby, so as to require
the Agent or any Bank to pay, or collect, any such tax, reserve,
insurance, special deposit or similar charge, then the Borrowers
shall bear and pay the full amount thereof as and when due, and
to the extent there remains availability under the Revolving
Credit, the Borrowers hereby authorize the Banks to advance such
amounts under the Revolving Credit and to add the amount thereof
to the amount outstanding under the Revolving Credit.
14 Reimbursement to Banks for Increased Costs Due to
Capital Adequacy Requirements. If any law or regulation or the
interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof,
or compliance by any Bank with any request or directive (whether
or not having the force of law) of any such authority, applicable
from time to time, shall (A) impose, modify, deem applicable or
result in the application of any capital maintenance, capital
ratio or similar requirements against loan commitments or other
facilities made by such Bank and the result thereof shall be to
impose upon such Bank a fee or a requirement to increase any
capital requirement applicable as a result of the making or
maintenance of its portion of the Loans (which imposition of or
increase in capital requirements may be determined by such Bank's
reasonable allocation of the aggregate of such capital
impositions or increases), or (B) subject any Bank to any tax,
duty or other charge with respect to the Loans, the Notes which
it holds, or its obligation to advance under its Commitment, or
change the basis of taxation of payments to any Bank of the
principal of or interest on the Loans or any other amounts due
under this Agreement in respect of the Loans or its obligation to
advance under its Commitment (except for changes in the rate of
tax on the overall net income of such Bank imposed by any
jurisdiction in which such Bank is obligated to pay taxes), then,
upon demand by Agent, the Borrowers shall immediately pay to such
Bank from time to time as specified by such Bank, such additional
amounts or fees which shall be sufficient to compensate such Bank
for such impositions of or increases in capital requirements or
taxes from the date of such change, together with interest on
each such amount from the date demanded until payment in full
thereof at a rate equal to 3% in excess of the Adjusted Base Rate
with respect to amounts or fees not paid when due. Upon the
occurrence of any event referred to above, a certificate setting
forth in reasonable detail the amounts necessary to compensate
such Bank, and the computation thereof, as a result of an
imposition of or increase in capital requirements or taxes
submitted by such Bank to the Borrowers shall be conclusive,
absent manifest error or bad faith, as to the amount thereof.
For purposes of the application of this Section 2.12, and in
calculating the amount necessary to compensate such Bank for any
imposition of or increase in capital requirements or taxes
hereunder, such Bank shall determine the applicability of this
provision and calculate the amount payable to it hereunder in a
manner consistent with the manner in which it shall apply and
calculate similar compensation payable to it by other borrowers
having provisions in their credit agreements comparable to this
Section 2.12.
15 Illegality. Notwithstanding any other provision
in this Agreement, if the adoption of any applicable law, rule,
or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or its lending office) with any request or directive
(whether or not having the force of law) of any such authority,
central bank, or comparable agency shall make it unlawful or
impossible for any Bank (or its lending office) to maintain its
Commitment, then upon notice to the Borrowers and to the Agent by
Bank the Commitment of such Bank shall terminate.
16 Interest and Commissions After Event of Default.
After the occurrence of any Event of Default, (A) the Interest
Rate then in effect on the Loans shall be immediately converted
to the Adjusted Base Rate plus 3%, and (B) any Advances made or
other money advanced hereunder after the occurrence of an Event
of Default (unless and until cured or waived in writing by the
Agent with the consent of the Banks as required by Section 8.1)
shall bear interest at the Adjusted Base Rate plus 3%.
17 Special Provisions for LIBO Loans.
(A) Unavailability of Funds and Indeterminate Interest Rates.
If on or before the date the Banks are to make any LIBO Loan or
on or before any Effective Date (1) the Agent determines in good
faith that it is unable to obtain funds at the LIBO Rate for the
elected Interest Period for any reason, including, but not
limited to the unavailability of funds at such rate, any change
in existing law, any new law, the length of such Interest Period,
or otherwise or (2) the Agent determines in good faith that no
adequate means exists to determine the LIBO Rate for such
Interest Period, then the Agent shall so notify the Borrowers on
or before the Effective Date and the Borrowers shall have one
Business Day after notice to withdraw their request for a LIBO
Loan, and if the Borrowers fail to so withdraw their request,
then, at the Agent's option, the Borrowers shall be deemed to
have requested a Base Rate Loan or shall be required to elect an
Interest Period of a length for which the Agent may obtain funds
at the rate the adjustment of which determines the LIBO Rate.
(B) Changes Affecting Ability to Maintain Funds. If, during
any Interest Period, any change in existing law, any new law, or
any other factor beyond the control of any Bank prevents such
Bank in its good faith determination from maintaining funds at
the rate the adjustment of which determines the LIBO Rate for
such Interest Period and requires such Bank to cease so
maintaining funds actually so maintained prior to termination of
such Interest Period, then on the date of such required
cessation, the Borrowers shall be required to specify a different
Interest Rate for such Interest Period or, in the alternative, to
elect an Interest Period of a length for which all Banks may
maintain funds at the rate the adjustment of which determines the
LIBO Rate. In addition, within five days after the Agent
notifies the Borrowers of such required conversion, the Borrowers
shall reimburse each Bank (to the extent not otherwise reimbursed
pursuant to Section 2.11 hereof) for any loss or expense such
Bank has certified in writing to the Borrowers and the Agent that
such Bank has incurred as a result of any such required
cessation.
(C) Ineligible Interest Periods. If, on any date the Banks
are to make an Advance all or a portion of which is to earn
interest at the Adjusted LIBO Rate or on any Effective Date with
respect to a Revolving Credit LIBO Rate Tranche, the period of
time from such date or such Effective Date to the Termination
Date is less than an Interest Period which the Borrowers could
otherwise elect, the Borrowers will elect a Revolving Credit LIBO
Rate Tranche whose Interest Period will end on or before the
Termination Date, as necessary. If an appropriate Interest
Period is not available, then the requested Advance shall be made
at the Adjusted Base Rate. If on any date the Banks are to
convert a Term Loan Base Rate Tranche to a Term Loan LIBO Rate
Tranche or on any Effective Date with respect to a Term Loan LIBO
Rate Tranche, the period of time from such date or such Effective
Date to the Maturity Date is less than an Interest Period which
the Borrowers could otherwise elect, the Borrowers will elect a
Term Loan LIBO Rate Tranche whose Interest Period will end on or
before the Maturity Date, as necessary. If an appropriate
Interest Period is not available, then the requested Term Loan
LIBO Rate Tranche shall continue to earn interest at the Adjusted
Base Rate.
(D) Discretion of Banks as to Manner of Funding.
Notwithstanding any other provision of this Agreement, each Bank
may fund or maintain its funding of all or any part of the Loans
in any legal manner it chooses and such manner of funding shall
not in any way relieve the Borrowers of their obligations to pay
prepayment compensation in the event of a prepayment as set forth
in Section 2.17 hereof.
18 Availability of Rate Quotations. Notwithstanding
anything herein to the contrary, if the Agent reasonably
determines (which determination shall be conclusive) that
quotations of interest rates for the relevant deposits referred
to in the definition used to calculate the LIBO Rate are not
being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest on a
LIBO Loan as provided in this Agreement, then the Agent shall
forthwith give notice thereof to the Banks and the Borrowers,
whereupon until the Agent notifies the Banks and the Borrowers
that the circumstances giving rise to such suspension no longer
exist, (A) the obligation of the Banks to make LIBO Loans shall
be suspended; and (B) the Borrowers shall repay in full the then
outstanding principal amount of each LIBO Loan, together with
accrued interest thereon, on the last day of the then current
Interest Period applicable to such LIBO Loan by remitting
sufficient funds to the Agent or by conversion to a Base Rate
Loan.
19 Prepayment. (A) The Borrowers may prepay Base
Rate Loans in whole or in part at any time and from time to time
upon one Business Day's notice to the Agent, without premium or
penalty.
(A) The Borrowers agree not to prepay LIBO Loans prior to the
expiration of their Interest Periods more than three (3) times in
any fiscal year, unless otherwise expressly required hereunder or
after acceleration by the Agent pursuant to Section 6.2. In the
event that the Borrowers prepay any LIBO Loan prior to the
expiration of its Interest Period, whether or not in violation of
the previous sentence, or with the consent of the Agent, or in
compliance with the express requirement of this Agreement, the
Borrowers shall pay to the Agent for the account of each Bank,
upon the request of such Bank through the Agent, such amount or
amounts as shall be sufficient to compensate it for any loss,
cost or expense which such Bank determines is attributable to:
(1) any payment, prepayment, conversion or renewal of a LIBO
Loan made by such Bank on a date other than the last day of an
Interest Period for such Loan (whether by reason of acceleration
or otherwise); or
(2) any failure by the Borrowers to borrow, convert into or
renew a LIBO Loan to be made, converted into or renewed by such
Bank on the date specified therefor pursuant to a Borrower's
prior election.
A determination of any Bank as to the amounts payable
pursuant to this Section 2.17(B) shall be conclusive absent
manifest error or bad faith.
20 Letter of Credit Cash Collateral Account. Cash
collateral pledged by the Borrowers pursuant to this Agreement
shall be maintained in a deposit account of the Borrowers
maintained with the Agent, over which the Agent shall have sole
control (the "Letter of Credit Cash Collateral Account"). The
Borrowers hereby grant, bargain, convey and set over to the Agent
for the benefit of the Banks a security interest in and lien upon
the Letter of Credit Cash Collateral Account and all cash and any
other assets at any time hereafter contained therein as security
for the payment and performance of all of the Borrowers'
obligations now or hereafter incurred hereunder or under the
Notes or otherwise in connection herewith. The Borrowers shall
take such action and execute and deliver such documents,
including financing statements, as the Agent may determine
necessary or desirable to further the security interest hereby
created. Provided there does not then exist an Event of Default
or Unmatured Event of Default, if at any time the funds held in
the Letter of Credit Cash Collateral Account exceed the sum of
the then existing Letter of Credit Liability plus the amount of
any yet to be issued Letters of Credit then subject to a request
by the Borrowers under Section 2.19(D) hereof, the Agent shall
remit such excess to the Borrowers. After the occurrence of an
Event of Default and acceleration of the Loans as set forth in
Section 6.2 hereof, or if the Borrowers shall have failed to pay
all amounts which have come due on or prior to such applicable
due date, the Agent shall apply all funds held in the Letter of
Credit Cash Collateral Account in the manner provided in Section
2.19(E). On the Termination Date, all monies in the Letter of
Credit Cash Collateral Account in excess of the amount required
to repay the Loans, the Letter of Credit Liability and any other
amount then owing hereunder shall be returned to the Borrowers.
21 Letters of Credit. (A) Letters of Credit. In
addition to requests that the Banks make Advances pursuant to
Section 2.4, the Borrowers may request, in accordance with the
provisions of this Section 2.19, that on and after the date on
which all of the conditions set forth in Section 3.3 are
satisfied to that date which is thirty one (31) days prior to the
Termination Date, the Issuing Bank issue, subject to the terms
and conditions hereof, Letters of Credit for the account of a
Borrower or any Borrowers in an aggregate amount up to the Letter
of Credit Sublimit; provided, that (1) in no event shall the
Issuing Bank be obligated to issue any Letter of Credit having an
expiration date later than the Termination Date and (2) the
Borrowers shall not request that the Issuing Bank issue any
Letter of Credit if, after giving effect to such issuance the
Letter of Credit Liability would exceed the Letter of Credit
Sublimit. The issuance of any Letter of Credit in accordance
with the provisions of this Section 2.19 shall require the
satisfaction of each condition set forth in Section 3.1 and 3.2.
Immediately (a) upon the issuance of each Letter of Credit, and
(b) upon execution hereof with respect to each Prior Letter of
Credit, each Bank shall be deemed to have, and hereby agrees to
have, irrevocably purchased from the Issuing Bank a participation
in such Letter of Credit and all drawings thereunder in an amount
equal to the amount of such Letter of Credit multiplied by such
Bank's Pro Rata Share.
(A) Evergreen Letters of Credit. Notwithstanding the
provisions of Section 2.19(A), above, the Banks hereby agree that
the Issuing Bank may issue upon the Borrowers' request, one or
more Letter(s) of Credit which by its terms may be extended for
additional periods of up to one year each provided that (1) the
initial expiration date of each such Letter of Credit is not
later than the Termination Date, and (2) renewal of such Letters
of Credit, at the Issuing Bank's discretion, shall be available
upon written request from the Borrowers to Issuing Bank at least
30 days before the date upon which notice of renewal is otherwise
required.
(B) Issuing Bank's Reporting Obligations. The Issuing Bank
agrees to provide the Banks with quarterly reports of all
outstanding Letters of Credit issued by the Issuing Bank. Such
reports shall be delivered within 15 days of the end of each
March, June, September and December, commencing with the
quarterly period ending June 30, 1995, and shall specify the
following with respect to each outstanding Letter of Credit: (1)
the letter of credit number for such Letter of Credit, (2) the
beneficiary of such Letter of Credit, (3) the date of issuance of
such Letter of Credit, (4) the original face amount of such
Letter of Credit, and (5) the then current available amount of
such Letter of Credit.
(C) Notice of Issuance or Amendment. Whenever a Borrower
desires the issuance of a Letter of Credit or the amendment of a
Letter of Credit, the Borrowers shall deliver to the Issuing Bank
no later than 11:00 A.M. at least five (5) Business Days in
advance of the proposed date of issuance or such shorter period
as may be agreed to by the Issuing Bank an executed application
for such Letter of Credit in the form customarily required by the
Issuing Bank for the issuance of letters of credit, and an
accompanying written notice which shall specify (1) a precise
description of the documents and the verbatim text of any
certificate to be presented by the beneficiary which, if
presented by the beneficiary prior to the expiration date of the
Letter of Credit, would require the Issuing Bank to make payment
under the Letter of Credit; provided, that the Issuing Bank, in
its sole judgment, may require changes in any such documents and
certificates; and provided, further, that no Letter of Credit
shall require payment against a conforming draft to be made
hereunder on the same Business Day that such draft is presented
if presentation is made after 11:00 A.M. on such Business Day,
and (2) whether the Letter of Credit is being issued for the
benefit of an Offshore Borrower. On the proposed date of
issuance of any Letter of Credit, the Issuing Bank shall
determine to the best of its knowledge whether the proposed
Letter of Credit, when added to the then outstanding Letter of
Credit Liability, would be within the Letter of Credit Sublimit
and, when added to the then outstanding Letter of Credit
Liability and outstanding Advances, would be less than the total
amount of the Commitments. Unless both such criteria are
satisfied, the Issuing Bank shall not issue the requested Letter
of Credit. The Banks and the Borrowers shall hold the Issuing
Bank harmless for any miscalculations or other errors in making
such determinations except that if such miscalculations or other
errors resulted from the gross negligence or willful misconduct
of the Issuing Bank, the Issuing Bank shall not be entitled to be
held harmless under this sentence. In the event that, upon
issuance of such proposed Letter of Credit, the Letter of Credit
Sublimit is exceeded, the Borrowers shall immediately deposit
into the Letter of Credit Cash Collateral Account the amount of
such excess. In determining whether to pay under any Letter of
Credit, the Issuing Bank shall be responsible only to determine
in good faith that the documents and certificates required to be
delivered under that Letter of Credit have been delivered and
that they comply on their face with the requirements of that
Letter of Credit. Within one (1) Business Day after receipt of a
request for issuance of a Letter of Credit, the Issuing Bank
shall notify each other Bank of the proposed issuance and the
amount of each such Bank's respective participation therein
determined in accordance with this Section 2.19 and shall send
each Bank a copy of each Standby Letter of Credit.
(D) Payment of Amounts Drawn Under Letters of Credit. In the
event of any request for drawing under any Letter of Credit by
the beneficiary thereof, the Issuing Bank shall immediately
notify the Borrowers and the Banks, and the Borrowers shall
reimburse the Issuing Bank on the day on which such drawing is
honored in immediately available funds equal to the amount of
such drawing; provided that (1) if sufficient funds are then in
the Letter of Credit Cash Collateral Account to reimburse it in
full for the amount of such drawing, the Issuing Bank shall
immediately withdraw such amount necessary to reimburse it from
the Letter of Credit Cash Collateral Account, (2) if the funds
then in the Letter of Credit Cash Collateral Account are
insufficient to reimburse the Issuing Bank in full for the amount
of such drawing, the Issuing Bank shall withdraw all of the funds
in the Letter of Credit Cash Collateral Account and the
unreimbursed balance of such drawing shall be reimbursed in
accordance with clause (3) below, and (3) if there are no funds
then in the Letter of Credit Cash Collateral Account then (a)
unless the Borrowers shall have notified the Agent prior to 11:00
A.M. on the date of such drawing that the Borrowers intend to
reimburse the Issuing Bank for the amount of such drawing with
funds other than the proceeds of Advances, the Borrowers shall be
deemed to have given notice to the Agent requesting the Banks to
make an Advance which shall earn interest at the Adjusted Base
Rate (as such rate may change from time to time) in accordance
with Section 2.4 on the day on which such drawing is honored (the
"Reimbursement Date") in an aggregate amount equal to the amount
of such drawing less the amount, if any, withdrawn from the
Letter of Credit Cash Collateral Account pursuant to clause (2)
above, and (b) subject to satisfaction or waiver of the
conditions specified in Section 3.2, the Banks shall, on the
Reimbursement Date, make an Advance, which shall earn interest at
the Adjusted Base Rate, in an aggregate amount equal to the
amount of such drawing less the amount, if any, withdrawn from
the Letter of Credit Cash Collateral Account pursuant to clause
(2) above, the proceeds of which shall be applied directly by the
Agent to reimburse the Issuing Bank for such drawing; and
provided, further, that if for any reason the proceeds of such
Advance are not received by the Issuing Bank on the Reimbursement
Date in an aggregate amount equal to the amount of such drawing,
the Borrowers shall reimburse the Issuing Bank on the day
immediately following the Reimbursement Date, in same day funds,
in an amount equal to the excess of the amount of such drawing
over the aggregate amount of such Advance, if any, which are so
received plus accrued interest on such amount at the rate set
forth in Section 2.19(G)(1) less the amount, if any, withdrawn by
the Issuing Bank pursuant to clause (2) above.
(E) Payment By Banks. In the event that the Borrowers shall
fail to reimburse the Issuing Bank as provided in Section 2.19(E)
in an amount equal to the amount of any drawing honored by it
under a Letter of Credit issued by it, the Agent shall promptly
notify each Bank of the unreimbursed amount of such drawing and
of such Bank's respective participation therein in an amount
equal to such Bank's Pro Rata Share of such unreimbursed amount.
Each Bank shall make available to the Agent for payment to the
Issuing Bank an amount equal to its respective participation
therein (including without limitation its Pro Rata Share of
accrued but unpaid interest thereon), in same day funds, at the
office of the Agent specified in such notice, not later than
11:00 A.M. on the Business Day after the date the Agent notifies
each Bank. In the event that any Bank fails to make available to
the Agent the amount of such Bank's participation in such
unreimbursed amount as provided herein, the Issuing Bank shall be
entitled to recover such amount on demand from such Bank together
with interest thereon at a rate per annum equal to the Adjusted
Base Rate for each day during the period between the
Reimbursement Date and the date on which such Bank makes
available its participation in such unreimbursed amount. The
failure of any Bank to make available to the Agent its Pro Rata
Share of any such unreimbursed amount shall not relieve any other
Bank of its obligations hereunder to make available to the Agent
its Pro Rata Share of such unreimbursed amount on the date such
unreimbursed amount is to be reimbursed. The Agent shall
distribute to each Bank which has paid all amounts payable by it
under this Section 2.19(F) with respect to the unreimbursed
amount of any drawing under any Letter of Credit issued by the
Agent, such other Bank's Pro Rata Share of all payments received
by the Agent from the Borrowers in reimbursement of drawings
honored by the Issuing Bank under such Letter of Credit when such
payments are received. Notwithstanding anything to the contrary
herein, each Bank which has paid all amounts payable by it under
this Section 2.19(F) shall have a direct right to reimbursement
of such amounts from the Borrowers subject to the procedures for
reimbursing Banks set forth in this Section 2.19.
(F) Compensation. The Borrowers agree to pay the following
amounts to the Issuing Bank with respect to each Letter of Credit
issued by the Issuing Bank:
(1) a fee calculated at the greater of (a) the Issuing Bank's
minimum charge then in effect, as published, for documentary
letters of credit generally, or (b) 0.375% of the amount of any
draw under each Documentary Letter of Credit (other than a Prior
Letter of Credit), payable to the Issuing Bank on the date of
such draw such fee to be deemed fully earned and non-refundable
when due;
(2) in the case of each Standby Letter of Credit (other than a
Prior Letter of Credit) a commission equal to the then effective
Applicable Margin with respect to Revolving Credit LIBO Rate
Tranches to be paid on the issuance of such Standby Letter of
Credit and on each anniversary of such issuance while such
Standby Letter of Credit is outstanding, such fee to be deemed
fully earned and non-refundable when due;
(3) with respect to any drawing made under any Letter of
Credit which is not reimbursed in full on the date such drawing
is made, interest, payable on demand, on the amount paid by the
Issuing Bank in respect of each such drawing from the date of the
drawing to the date such amount is reimbursed by the Borrowers
(including any such reimbursement out of the proceeds of Advances
pursuant to Section 2.19(F) or out of the Letter of Credit Cash
Collateral Account) at a rate which is at all times equal to 3%
per annum in excess of the Adjusted Base Rate for the period from
the date of such drawing to and including the Business Day on
which the Issuing Bank is reimbursed in full; and
(4) with respect to the issuance, amendment, transfer,
administration, cancellation or conversion of each Letter of
Credit and each drawing made thereunder, documentary and
processing charges in accordance with the Issuing Bank's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer, administration, cancellation or drawing, as
the case may be, or as otherwise agreed to by the Issuing Bank.
Within thirty (30) days of receipt by the Issuing Bank
of any amount described in clause (1) or (2) of this Section
2.19(G), the Issuing Bank shall distribute to the Agent and the
Agent shall distribute to each Bank its Pro Rata Share of such
amount less the Issuing Bank's fee for issuance of each such
Letter of Credit which shall be an amount equal to the greater of
(i) the Issuing Bank's minimum charge then in effect, as
published, for documentary letters of credit generally, or
(ii) 0.125% of (a) the draw under such Letter of Credit with
respect to fees under clause (1), and (b) the face amount of such
Letter of Credit with respect to fees under clause (2). Within
30 days of the execution of this Agreement, the Issuing Bank
shall distribute to the Agent and the Agent shall distribute to
each Bank its pro rata share, if any, of the fees, if any,
collected by the Issuing Bank for the issuance of the Prior
Letters of Credit based on the time period from the date of this
Agreement until the expiration of such Letters of Credit. The
Issuing Bank shall be entitled to retain for its own account
payments made pursuant to clauses (3) and (4) above.
(G) Obligations Absolute. The obligation of the Borrowers to
reimburse the Issuing Bank for drawings made under the Letters of
Credit issued by it, and the obligations of the Banks under
Section 2.19(F), shall be unconditional and irrevocable and shall
be paid strictly in accordance with the terms of this Agreement
under all circumstances including, without limitation, the
following circumstances:
(1) any lack of validity or enforceability of any Letter of
Credit;
(2) the existence of any claim, set-off, defense or other
right which any Borrower may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any
persons or entities for whom any such transferee may be acting),
the Issuing Bank, the Agent or any other Person, whether in
connection with this Agreement, the transactions contemplated
herein or any unrelated transaction (including any underlying
transaction between any Borrower or one of its Subsidiaries and
the beneficiary for which the Letter of Credit was procured);
(3) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(4) payment by the Issuing Bank under any Letter of Credit
against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of
Credit; provided, that such payment does not constitute willful
misconduct or gross negligence on the part of the Issuing Bank;
(5) any breach of this Agreement or any document delivered in
connection herewith by any party hereto or thereto; or
(6) the fact that an Event of Default or an Unmatured Event of
Default shall have occurred and be continuing.
(H) Additional Payments. If by reason of (a) any change in
any applicable law, regulation, rule, decree or regulatory
requirement or any change in the interpretation or application by
any judicial or regulatory authority of any law, regulation,
rule, decree or regulatory requirement or (b) compliance by the
Agent or any Bank with any direction, request or requirement
(whether or not having the force of law) of any governmental or
monetary authority including, without limitation, Regulation D:
(1) Issuing Bank or any Bank shall be subject to any tax,
levy, charge or withholding of any nature or to any variation
thereof or to any penalty with respect to the maintenance or
fulfillment of its obligations under this Section 2.19(I)(1),
whether directly or by such being imposed on or suffered by the
Issuing Bank or any Bank;
(2) any reserve, special deposit, premium, FDIC assessment,
capital adequacy or similar requirement is or shall be
applicable, imposed or modified in respect of any Letters of
Credit issued by the Issuing Bank or participations therein
purchased or deemed purchased by any Bank; or
(3) there shall be imposed on the Issuing Bank or any Bank any
other condition regarding this Section 2.19, any Letter of Credit
or any participation therein;
and the result of the foregoing is to directly or indirectly
increase the cost to the Issuing Bank or any Bank of issuing,
making or maintaining any Letter of Credit or of purchasing or
maintaining any participation therein, or to reduce the amount
receivable in respect thereof by the Issuing Bank or any Bank,
then and in any such case the Issuing Bank or such Bank may, at
any time within a reasonable period after the additional cost is
incurred or the amount received is reduced, notify the Borrowers,
and Borrowers shall pay on demand to the Issuing Bank or such
Bank, as the case may be, such amounts as the Issuing Bank or
such Bank may specify to be necessary to compensate the Issuing
Bank or such Bank for such additional cost or reduced receipt,
together with interest on such amount from the date demanded
until payment in full thereof at a rate equal at all times to the
Adjusted Base Rate plus 3% per annum. The determination by the
Issuing Bank or any Bank, as the case may be, of any amount due
pursuant to this Section 2.19(I) as set forth in a certificate
setting forth the calculation thereof in reasonable detail shall,
in the absence of manifest error or bad faith, be final and
conclusive and binding on all of the parties hereto.
(I) Indemnification; Nature of Issuing Bank's Duties. In
addition to amounts payable as elsewhere provided in Section
2.19, the Borrowers hereby agree to protect, indemnify and save
the Agent, the Issuing Bank and each Bank harmless from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees and/or allocated costs of internal counsel) which
the Agent, Issuing Bank and each Bank may incur or be subject to
as a consequence, direct or indirect, of (1) the issuance of any
Letter of Credit, or (2) the failure of the Issuing Bank to honor
a drawing under any Letter of Credit unless due solely to the
willful misconduct of the Issuing Bank, or as a result of any act
or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or governmental authority.
Without limiting the foregoing, the Issuing Bank shall have no
obligation to ascertain whether the stated purpose of any
requested Letter of Credit is permitted by this Agreement and
shall not be liable for any Borrower's use of a Letter of Credit
issued pursuant to the terms hereof in violation of the
Borrowers' covenants contained herein.
(a) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of such
Letters of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (b) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (c) failure of the
beneficiary of any such Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit,
unless (i) such failure is material and substantive, and (ii) the
Issuing Bank's payment on such Letter of Credit constitutes gross
negligence or willful misconduct; (d) errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (e) errors in interpretation of
technical terms; (f) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (g)
the misapplication by the beneficiary of any such Letter of
Credit; or (h) any consequences arising from causes beyond the
control of the Issuing Bank. None of the above shall affect,
impair, or prevent the vesting of any of the Issuing Bank's
rights or powers hereunder.
In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken
or omitted by the Issuing Bank under or in connection with the
Letters of Credit issued by it or the related certificates, if
(y) taken or omitted in good faith and (z) substantially in
accordance with the terms thereof, shall not put the Issuing Bank
under any resulting liability to the Borrowers.
As between the Agent, the Issuing Bank and the Banks,
the Issuing Bank agrees that it will take the same care as it
takes in connection with letters of credit in which it alone is
interested. However, neither the Issuing Bank nor any of its
directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them hereunder or in
connection herewith except for its or their own gross negligence
or willful misconduct.
With respect to its Commitment (if any), its Pro Rata
Share of the Term Loan and its portion of the Advances and Letter
of Credit Liability (if any), the Issuing Bank shall have the
same rights and powers hereunder as any Bank and may exercise the
same as though it were not the Issuing Bank. The Issuing Bank
may accept deposits from, lend money to and generally engage in
any kind of banking or trust business with any Borrower and any
Subsidiaries or Affiliates of such Borrower as if the Issuing
Bank were not the Issuing Bank unless otherwise prohibited by the
terms of this Agreement.
It is expressly understood and agreed that the
obligations of the Issuing Bank hereunder are only those
expressly set forth in this Agreement and that the Issuing Bank
shall be entitled to assume that no Event of Default or Unmatured
Event of Default has occurred and is continuing unless the
Issuing Bank has actual knowledge of such fact or has received
written notice from a Bank or the Borrower that such Bank or
Borrower considers that an Event of Default or Unmatured Event of
Default has occurred and is continuing and specifying the nature
thereof.
So long as the Issuing Bank shall be entitled, pursuant
to the immediately preceding paragraph, to assume that no Event
of Default or Unmatured Event of Default, has occurred and is
continuing, the Issuing Bank shall be entitled to use its
discretion with respect to exercising or refraining from
exercising any rights that may be vested in it by, or with
respect to taking or refraining from taking any action or actions
that it may be able to take under or in respect of, this
Agreement. The Issuing Bank shall incur no liability under or in
respect of this Agreement by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it
to be genuine or authentic or to be signed by the proper party or
parties, or with respect to anything that it may do or refrain
from doing in the reasonable exercise of its judgment.
The Banks agree to indemnify the Issuing Bank (to the
extent not reimbursed by the Borrowers), ratably according to
their Pro Rata Share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted
against the Issuing Bank in any way relating to or arising out of
this Agreement or any action taken or omitted by the Issuing Bank
under this Agreement, provided that no Bank shall be liable for
any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Issuing Bank's gross negligence
or willful misconduct.
ARTICLE III
CONDITIONS OF LENDING
22 Conditions Precedent to the Initial Advance and
Term Loan Disbursement. The obligation of each Bank to make the
initial Advance of its portion of the Revolving Credit, to
disburse its portion of the Term Loan and to participate in any
Letters of Credit issued hereunder is subject to each Bank having
received, on or before the day on which such Advance,
disbursement or issuance is to be made, all of the following
which shall be in form and substance satisfactory to each Bank:
(A) A copy, certified in writing as of the date hereof by
the Secretary or Assistant Secretary of each Borrower, of (1)
resolutions of the Board of Directors of such Borrower evidencing
approval of this Agreement, the Notes and the other Loan
Documents and other matters contemplated hereby and (2) each
document evidencing any other necessary corporate action and any
required approvals from governmental authorities for each entity
comprising the Borrowers with respect to this Agreement, the
Notes and the Loan Documents;
(B) Favorable opinions of outside counsel for each Borrower
acceptable to the Banks dated the date hereof in form and
substance reasonably satisfactory to the Banks covering the
matters identified in Exhibit 3.1(B) attached hereto as to each
Borrower;
(C) Favorable opinions of local counsel for the Borrowers in
such jurisdictions as the Banks and the Agent may require dated
as of the Closing Date on such matters as the Banks shall require
and in form and substance reasonably satisfactory to the Banks,
the Agent and its counsel;
(D) A certificate dated the date hereof by the Secretary or an
Assistant Secretary of each Borrower as to the names and
signatures of the officers of such Borrower authorized to sign
this Agreement, the Notes and the Loan Documents and the other
documents or certificates of such Borrower to be executed and
delivered pursuant hereto. The Agent, Issuing Bank and each Bank
may conclusively rely on, and shall be protected in acting upon,
such certificate until they shall receive a further certificate
by the Secretary or an Assistant Secretary of such Borrower
amending the prior certificate;
(E) A Revolving Credit Note payable to the order of such
Bank;
(F) A Term Loan Note payable to the order of such Bank;
(G) A mortgage (the "Florida Mortgage") on certain real
properties and improvements located in Jacksonville, Florida (the
"Florida Property") duly executed and acknowledged in form
suitable for recording;
(H) A mortgage (the "New York Mortgage") on certain real
property and improvements located in Cortlandville, New York (the
"New York Property") duly executed and acknowledged in form
suitable for recording;
(I) A mortgage (the "North Carolina Mortgage") on certain
real property and improvements located in Fayetteville, North
Carolina (the "North Carolina Property") duly executed and
acknowledged in form suitable for recording;
(J) Collateral assignments of leases assigning to the
Collateral Agent all leases and all rents, issues and profits of
the Properties (the "Collateral Assignments") duly executed and
acknowledged in form suitable for recording;
(K) An Environmental Indemnity Agreement (the
"Environmental Indemnity") whereby each Borrower shall indemnify
the Agent, the Banks and the Noteholders for any loss or
liability and costs of defense incurred as a result of any
environmental condition on any of the Borrowers' property or
otherwise relating to any Borrower as set forth in such
Environmental Indemnity;
(L) A pledge agreement pledging to the Collateral Agent all
of the issued and outstanding stock of the Subsidiaries of
Worldwide-DE, NCC and Maidenform respectively, excluding
Maidenform UK, Ltd., executed by the holders of any such stock
(the "Pledge Agreement");
(M) The original certificates of all shares pledged under
the Pledge Agreement accompanied by stock powers duly endorsed in
blank to be held in escrow by the Collateral Agent;
(N) A trademark security agreement (the "Trademark
Agreement") assigning to the Collateral Agent all registered and
unregistered trademarks, trade names and trademark or trade name
applications owned by or (to the extent permitted by the
licensor) licensed to the Borrowers duly executed and
acknowledged and in form suitable for recording;
(O) An intercreditor agreement (the "Intercreditor Agreement")
among the Agent, the Collateral Agent, the Banks and the
Noteholders;
(P) A security agreement (the "Security Agreement") from each
of the Borrowers to the Collateral Agent granting a security
interest in all of the personal property, tangible or intangible,
of each Borrower, together with the Uniform Commercial Code
financing statements executed by the Borrowers, and any other
document which the Banks may reasonably request, including
without limitation any other document for filing or otherwise, in
order to perfect the Collateral Agent's security interest in the
Collateral;
(Q) Originals of all of the Borrowers' instruments, chattel
paper and letters of credit (drawn on a bank other than a Bank),
if any, supporting any Account owed by a Purchaser meeting the
requirements of clause (L) (1), (2) or (3) of the definition of
Eligible Account (whether or not such Account otherwise qualifies
as an Eligible Account), each properly endorsed and/or assigned
to the Collateral Agent to be held in escrow by the Collateral
Agent;
(R) Landlord's waiver(s) and estoppel certificates in form and
substance satisfactory to the Agent delivered in accordance with
the Security Agreement;
(S) Payment by the Borrowers of all Fees then due;
(T) From each Borrower a certificate stating that, as of
the date hereof, no Event of Default or Unmatured Event of
Default exists;
(U) A certificate of each Borrower on behalf of such
Borrower relating to its representations and warranties set forth
in Section 4.14 hereof;
(V) A certificate duly executed by the chief financial
officer of each Borrower on behalf of such Borrower that to his
knowledge after due inquiry no material adverse change in the
financial condition or assets or operations of the Borrowers,
taken as a whole, has occurred from and after December 31, 1994;
(W) Copies of the Articles of Incorporation, Bylaws and
other charter documents of each Borrower, certified as true,
correct and complete by such Borrower's Secretary or Assistant
Secretary on behalf of such Borrower and, with respect to the
Articles of Incorporation, by the appropriate governmental
official of the jurisdiction where such Borrower was formed;
(X) With respect to each Borrower, certificates dated within
thirty (30) days of the date hereof for United States
jurisdictions and, as the Agent may require, for jurisdictions
outside the United States, issued by the Secretary of State (or
similar official) of each jurisdiction in which such Borrower is
incorporated or does business, stating that such Borrower is a
corporation duly incorporated or authorized to do business, as
the case may be, and in good standing under the laws of such
jurisdiction;
(Y) For each Borrower, a certificate dated the date of this
Agreement and executed by the President or Executive Vice
President and by the chief financial officer, in each case on
behalf of such Borrower, confirming that to their knowledge after
due inquiry (1) each of the representations and warranties made
in this Agreement by such entity are true and correct in all
material respects as of the date of this Agreement and of the
Closing Date, (2) such entity has fully performed each and every
covenant to be performed by such Borrower on or prior to the date
of this Agreement, and (3) such entity has satisfied each of the
conditions set forth in this Article III (to the extent required
to be satisfied by such entity);
(Z) Five year Consolidated projections for the Borrowers
for each year and portion thereof through the Termination Date,
and such other financial statements, reports, projections and
information as the Banks may reasonably request, all of which
shall be certified by each Borrower as of the date hereof as
representing reasonable projections of anticipated results based
upon all of the information available to them;
(AA) The Combined Pro Forma relating to the four quarters
ending December 31, 1994;
(BB) The results of Uniform Commercial Code, judgment, and
bankruptcy searches of the jurisdictions listed in Exhibit 4.8
showing no prior liens or judgments against any Borrower or any
of their assets, except as disclosed on Exhibit 4.8 hereto;
(CC) Estoppel certificates, in form and substance acceptable
to the Agent from any other Person which has provided a credit
facility to any Borrower in excess of $1,000,000.00;
(DD) The following evidence of insurance coverage:
(1) a copy of all risk casualty insurance policies in an
amount equal to 100% of the replacement value of all improvements
on the Properties and each Borrower's Inventory, fixtures and
equipment, in form and substance satisfactory to the Agent and
its counsel identifying the Collateral Agent as loss payee under
a standard mortgagee clause (with respect to real property) and a
standard lender loss payee clause (with respect to personalty);
(2) a certificate of insurance issued to the Agent evidencing
workmen's compensation and public liability insurance, insuring
the interest of each Borrower in amounts and in form and
substance satisfactory to the Agent and its counsel; and
(3) evidence of all insurance required hereunder or under the
Mortgages.
Each policy of insurance must be issued by an
insurance company satisfactory to the Agent, must not be in
arrears as to the payment of premiums, and must provide that it
will not be terminated without at least 30 days prior written
notice to the Agent;
(EE) United States Trademark lien searches showing no perfected
liens against the trademarks of the Borrowers;
(FF) Termination statements from parties holding liens which are
not permitted in accordance herewith;
(GG) An appraisal of the Properties prepared by MAI appraisers
acceptable to the Agent and otherwise satisfactory in form and
substance to the Banks and the Agent;
(HH) Policies of title insurance or "marked-up" commitments to
issue policies of title insurance, with all premiums paid, issued
by a title company satisfactory to the Banks insuring the
Mortgages, as valid first priority mortgage liens, subject only
to exceptions approved by the Banks together with reinsurance or
coinsurance agreements (as the Agent may require) and direct
access agreements with such insurers and in such amounts as the
Agent may require;
(II) To the extent required by the title insurer as a condition
to removing the "survey exception" on the title insurance
policies referred to in subsection (AI) above, recent surveys of
each of the Properties subject to Mortgages for which title
insurance is required under subsection (AI) above, prepared by a
surveyor licensed by the State where such property is located or
professional engineer acceptable to the Banks conforming to the
requirements of the title insurance issuer showing all lot and
street lines and the location of all improvements and easements
and means of ingress and egress to and from such property;
(JJ) Flood insurance for the Properties or evidence that none of
the improvements on the Properties are located in a flood hazard
area;
(KK) Copies of all easements, agreements, restrictions and
conditions pertaining to the Properties;
(LL) Copies of all material licenses, permits, and other
Governmental Approvals required for operation of the Properties
required by the Banks, the Agent or its counsel;
(MM) Phase I environmental audits of the Properties each in form
and substance and indicating results satisfactory to the Agent;
(NN) Satisfactory completion of the Agent's audit and due
diligence;
(OO) The Borrowers' December 31, 1994, Financial Statements;
(PP) Evidence that the acquisition of NCC by Worldwide-DE and/or
Maidenform has been completed and that closing has occurred under
the Private Placement;
(QQ) Certified copies of all documents related to the
acquisition of NCC by Worldwide-DE and/or Maidenform, all of
which shall be satisfactory to the Agent in form, substance and
structure;
(RR) Certified copies of all shareholder agreements, management
agreements and similar agreements relating to the present or
future ownership, operations or management of the Borrowers, or
any of them;
(SS) Certified copy of all documents evidencing the Subordinated
Debt, all in form and substance satisfactory to the Agent;
(TT) A completed Borrowing Base Certificate;
(UU) Certified copies of all documents, agreements and contracts
relating to the retirement of Robert Brawer and consequent
payments to be made by the Borrowers or any of them to him;
(VV) A certificate from the Borrowers stating that the
conditions set forth in Section 3.2 are satisfied as of the
Closing Date and that there has been no material adverse change
to the financial condition or business operations of the
Borrowers since December 31, 1994;
(WW) executed resolutions, signature cards and such other
documents required by the Issuing Bank to establish the Letter of
Credit Cash Collateral Account; and
(XX) such other documents as may be reasonably requested by the
Banks, the Agent or its counsel.
23 Conditions Precedent to All Disbursements. The
obligation of each Bank to disburse its portion of the Term Loan
and to make Advances under the Revolving Credit (including the
initial Advance) and the rights of the Borrowers to select
Interest Rates under Section 2.7 are subject to the further
conditions precedent that:
(A) The representations and warranties contained herein shall
be accurate on and as of the date of such Advance, disbursement
or selection as though made on and as of such date except for
changes permitted hereby or in writing by the Banks or Majority
Banks, in accordance with Sections 8.1 or 8.4, as applicable;
(B) No Event of Default or Unmatured Event of Default shall
have occurred and be continuing or will result from the making of
such Advance, disbursement or selection; and
(C) No strike, slowdown, picketing or work stoppage by
employees against any Borrower, any lockouts by any Borrower of
its employees or any other occurrence, event or condition of a
similar character which, in any such case or in the aggregate,
has a material adverse effect on the business, prospects or
financial condition of the Borrowers taken as a whole or the
Domestic Borrowers taken as a whole.
24 Conditions to Issuance of Letters of Credit. The
obligation of the Issuing Bank to issue any Letter of Credit
hereunder is subject to the prior or concurrent satisfaction of
all of the following conditions:
(A) On or before the date of issuance of each Letter of
Credit, the Agent shall have received (unless waived by all of
the Banks), in accordance with the provisions of Section 2.19(A),
a notice requesting the issuance of such Letter of Credit, an
executed application for such Letter of Credit in the form
customarily required by the Agent for the issuance of letters of
credit, all other information specified in Section 2.19(A), and
such other documents as the Agent may reasonably require in
connection with the issuance of such Letter of Credit;
(B) On the date of issuance of each Letter of Credit, all
conditions precedent described in Sections 3.2(A) and 3.2(B)
shall be satisfied to the same extent as though the issuance of
such Letter of Credit were the making of an Advance, and each
request by the Borrowers to the Agent to issue a Letter of Credit
shall constitute a representation by the Borrowers that at the
time thereof (1) all conditions precedent described in Sections
3.2(A) and 3.2(B) have been satisfied and (2) the sum of the
proposed Letter of Credit plus the Letter of Credit Liability
plus the Advances then outstanding would not exceed the Credit
Limit and (3) the sum of the proposed Letter of Credit plus the
Letter Credit Liability will not exceed the Letter of Credit
Sublimit; and
(C) On or before the date of issuance of such Letter of
Credit, the Borrowers shall have paid the fees required under
Section 2.19(G).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Agent, the
Issuing Bank and the Banks as follows:
25 Existence. Each Borrower is a corporation duly
incorporated, validly existing and in good standing under the
laws of its state or other jurisdiction of incorporation. Each
Borrower has all requisite power and authority, corporate and
otherwise, to conduct its business and to own its properties and
is duly qualified as a foreign corporation in good standing in
all jurisdictions in which its failure so to qualify could have a
material adverse effect on the financial condition or business of
the Borrowers taken as a whole or the Domestic Borrowers taken as
a whole; provided that Worldwide-DE is in the process of
qualifying to do business in Puerto Rico, and Borrowers hereby
agree to complete such process within thirty (30) days from the
date hereof. The Banks acknowledge that as of the date hereof,
Worldwide-NY is in the process of merging into Worldwide-DE and
Borrowers agree to complete such process within one-hundred
twenty (120) days of the date hereof.
26 Authorization. The execution, delivery and
performance by each Borrower of this Agreement, the Notes and the
Loan Documents have been duly authorized by all necessary
corporate action, and do not and will not violate any current
provision of any government regulation or statute, or of the
charter or by-laws of such Borrower or result in a breach of or
constitute a default under any instrument or other material
agreement to which such Borrower is a party or by which it or its
properties are bound or affected.
27 Validity. This Agreement constitutes, and the
Notes and the Loan Documents when duly executed and delivered
will constitute, valid and legally binding obligations of such
Borrower, enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights generally and subject to the availability of
equitable remedies.
28 Financial Information. The Consolidated balance
sheet and statements of cash flows and operations of the
Borrowers and statement of income and retained earnings as of and
for the year ended December 31, 1994, audited by Ernst & Young
(or in the case of NCC and Crescent, Coopers & Lybrand), copies
of all of which have been furnished to the Banks, are accurate,
show all material liabilities, direct and contingent, and present
fairly the financial positions, the results of operations and
cash flows at such dates and for the periods ended on such dates,
all in accordance with GAAP. Since December 31, 1994, to the
date hereof, there has been no material adverse change to the
financial condition (other than as reflected on the Combined Pro
Forma), business or prospects of the Borrowers taken as a whole
or the Domestic Borrowers taken as a whole either in such
financial positions or in such results of operations. The
projections delivered pursuant to Section 3.1 hereof have been
prepared and delivered to the Banks in good faith, and are based
upon reasonable assumptions.
29 Litigation. Except as set forth in Exhibit 4.5,
there are no actions, suits or proceedings pending or, to the
knowledge of the Borrowers, threatened against any Borrower, or
any of their respective properties before any court or
governmental department, commission, board, bureau, agency or
instrumentality (domestic or foreign) which if adversely
determined are likely individually or in the aggregate to have a
material adverse effect on the business, prospects or financial
condition of the Borrowers taken as a whole or the Domestic
Borrowers taken as a whole.
30 Contingent Liabilities. There are no suretyship
agreements, guarantees or other contingent liabilities of any
Borrower other than guarantees and other contingent liabilities
that are disclosed in the financial statements mentioned in
Section 4.4, or identified on Exhibit 4.15 attached hereto,
except for those arising in the ordinary courses of business and
which are not in the aggregate material.
31 Taxes. Each Borrower has filed all tax returns
and reports required to be filed before the date of this
Agreement and has paid all taxes, assessments and charges imposed
upon it or its property, or that it is required to withhold and
pay over, to the extent that they were required to be paid before
the date of this Agreement except where (A) an extension for
filing is available and such Borrower has taken the necessary
steps to qualify for such extension, or (B) where the failure to
file would not have a material adverse effect on the business,
prospects or financial condition of any Borrower.
32 Encumbrances. Except as disclosed in Exhibit 4.8
attached hereto, or permitted pursuant to Section 5.5, none of
the properties or assets of any Borrower are subject to any lien,
encumbrance or security interest, other than in favor of the
Collateral Agent.
33 Consents. Except as set forth in Exhibit 4.9, no
authorization, consent, approval, license, exemption by or filing
(except for filings or recordings of security documents as
contemplated by Section 3.1 hereof) or registration with any
court or governmental department, commission, board (including
the Board of Governors of the Federal Reserve System), bureau,
agency or instrumentality, domestic or foreign, is or will be
necessary for the valid execution, delivery or performance by any
Borrower of this Agreement, the Notes or any of the Loan
Documents. Each Borrower has obtained all Governmental
Approvals necessary for the conduct of the Borrower's business,
and the conduct of the Borrower's business is not and has not
been in violation of any such Governmental Approval or any
applicable federal or state law, rule or regulation, the failure
of the Borrower to obtain or to comply with would, in any such
case, have a material adverse effect on any Borrower.
34 ERISA. As of the date hereof, the Borrowers and
the members of their Controlled Group maintain only those Defined
Benefit Pension Plans, Defined Contribution Plans and other Plans
listed on Exhibit 4.10 attached hereto and contribute to only
those Multiemployer Plans listed on Exhibit 4.10 attached hereto.
All such Defined Benefit Pension Plans and Defined Contribution
Plans, as of the date hereof, meet the minimum funding standards
of 412 of the Code, the regulations thereunder and 302 of ERISA
without regard to any funding waiver. No material Prohibited
Transaction has occurred with respect to any Plan. No Reportable
Event has occurred with respect to any Defined Benefit Pension
Plan which Reportable Event would have a material adverse effect
on the financial condition, prospects, property or business of
the Borrowers taken as a whole or the Domestic Borrowers taken as
a whole. Except as set forth in Exhibit 4.10 hereof, as of
December 31, 1994 (which, the Borrowers represent, was the last
day of the fiscal year of the Defined Benefit Pension Plan
sponsored by the Borrowers last ended), no Defined Benefit
Pension Plan sponsored by any Borrower or any member of its
Controlled Group has any Amount of Unfunded Benefit Liabilities.
No trust was established in connection with any such Defined
Benefit Pension Plan pursuant to 4049 of ERISA (as in effect on
December 17, 1987) and no liabilities which would have a material
adverse effect on the financial condition, prospects, property or
business of the Borrowers taken as a whole or the Domestic
Borrowers taken as a whole (whether or not such liability is
being litigated) have been asserted against any Borrower or any
member of its Controlled Group in connection with any such
Defined Benefit Pension Plan by the PBGC or by a trustee
appointed pursuant to 4042(b) or (c) of ERISA, and no lien has
been attached and neither the PBGC nor the Internal Revenue
Service has threatened to attach a lien on any property of any
Borrower or any member of its Controlled Group as a result of any
failure to comply with the Code or the Treasury regulations
thereunder or ERISA. All Plans maintained by any Borrower or any
member of its Controlled Group comply (A) in operation with the
applicable requirements of the Code and the regulations
thereunder and ERISA, and (B) in form with those requirements of
the Code and the regulations thereunder and ERISA which must be
met on the date hereof, unless noncompliance therewith is not
likely to have a material adverse effect on the financial
condition, prospects, property or business of the Borrowers taken
as a whole or the Domestic Borrowers taken as a whole. If any
Borrower or any member of its Controlled Group was obligated to
pay the potential Withdrawal Liabilities for which any of them
would be liable if each of them were to withdraw from the
Multiemployer Plans to which any of them makes contributions over
the period and in the amount prescribed pursuant to MPPAA, such
obligation would not have a material adverse effect on the
financial condition, prospects, property or business of the
Borrowers taken as a whole or the Domestic Borrowers taken as a
whole. There is not now, and has not been, any violation of the
Code or the regulations thereunder or ERISA with respect to the
filing of applicable reports, documents, and notices regarding
the Plans of the Borrowers or any member of its Controlled Group
with the Secretary of Labor, the Secretary of the Treasury, the
PBGC or any other governmental entity or the furnishing of such
documents to the participants or beneficiaries of the Plans the
effect of which is likely to have a material adverse effect on
the financial condition, prospects, property or business of the
Borrowers taken as a whole or the Domestic Borrowers taken as a
whole. Except as set forth in Exhibit 4.10, neither the Borrower
nor any member of its Controlled Group has any unfunded
liabilities of unfunded and uninsured "employee welfare benefit
plans" (as defined in 3(1) of ERISA) which are likely to have a
material adverse effect on the financial condition, prospects,
property or business of the Borrowers taken as a whole or the
Domestic Borrowers taken as a whole. There is not now, and has
not been, any violation of the "continuation coverage
requirements" of "group health plans" of former 162(k) of the
Code and the regulations thereunder (as in effect for tax years
beginning on or before December 31, 1988) and of 4980B of the
Code and the regulations thereunder (as in effect for tax years
beginning on or after January 1, 1989) and Part 6 of Subtitle B
of Title I of ERISA with respect to any Employee Benefit Plan of
the Borrower or of any member of its Controlled Group to which
such continuation coverage requirements apply which has a
material adverse effect directly or indirectly on the financial
condition, prospects, property or business of the Borrowers taken
as a whole or the Domestic Borrowers taken as a whole.
35 Ownership. Except as listed on Exhibit 4.11, the
Borrowers have title to, or valid leasehold interests in, all of
its properties and assets, real and personal, including the
properties and assets, and leasehold interests reflected on the
financial statements referred to in Section 4.4 hereof.
36 Subsidiaries and Ownership of Stock. Exhibit 4.12
is a complete and accurate list of the entities comprising the
Borrowers, and shows (A) the jurisdiction of incorporation or
organization of each such entity, (B) the ownership of the
outstanding stock or other interest of Worldwide-DE and Worldwide-
NY, and (C) the chief executive office and each other business
location of each Borrower. All of the outstanding capital stock
or other interest of each Borrower has been validly issued and is
fully paid and nonassessable. Except as reflected on Exhibit
4.11 or Exhibit 4.12, Worldwide-DE owns all of the outstanding
capital stock of Maidenform and Maidenform owns all of the
outstanding capital stock of all other Borrowers, in all cases
free and clear of all liens, claims or encumbrances. No Borrower
has any Subsidiaries or Affiliates except for other Borrowers and
those Persons owning the capital stock of Worldwide-DE shown on
Exhibit 4.12.
37 Margin Stock. No Borrower engages in the business
of making loans for the purchase of Margin Stock.
38 Environmental Matters. Each Borrower is in
possession of and in compliance with all required permits and
Environmental Laws relating to the discharge or release of
liquids, gases or solids into the air, water, and soil except
where non-compliance would not have a material adverse effect on
the financial condition (including without limitation, asset
value), prospects, or business of the Borrowers taken as a whole
or the Domestic Borrowers taken as a whole. No Borrower
refines, processes, generates, stores, recycles, transports,
disposes of, or releases into the environment any "hazardous
substance" as that term is defined under Section 101(14) of
CERCLA or any hazardous or toxic substances as those terms are
defined by the provisions of any state or local environmental
statute or regulation, except in the ordinary course of its
business. Each Borrower which refines, processes, generates,
stores, recycles, transports, disposes of, or releases into the
environment any such "hazardous substance" does so in accordance
with all applicable Environmental Laws except where non-
compliance would not have a material adverse effect on the
financial condition (including without limitation, asset value),
prospects, or business of the Borrowers taken as a whole or the
Domestic Borrowers taken as a whole. No Borrower has received:
(A) written or, to its knowledge oral, notice from any
governmental agency that it is a potentially responsible party in
any proceeding under CERCLA or any similar state or local
environmental statute or regulation, or (B) any written or, to
its knowledge oral, notice of violation, citation, complaint,
request for information, order, directive, compliance schedule,
notice of claim, proceeding or litigation from any party
concerning such entity's compliance with any Environmental Law
which is presently outstanding or unresolved.
39 Debt and Guarantees. Except as set forth in
Exhibit 4.15 hereto, no Borrower has any debt and no Borrower has
guaranteed the payment or performance of the debts or obligations
of any other Person except for the guaranty of checks or other
documents for collection in the ordinary course of business or as
permitted pursuant to Section 4.16 hereof.
40 Credit Arrangements. Exhibit 4.16 hereto is a
list, complete and correct in all material respects, of all
credit agreements, indentures, purchase agreements, guaranties,
capital leases, and other investments, agreements and
arrangements presently in effect providing for or relating to
extensions of credit (including agreements and arrangements for
the issuance of any letters of credit or for acceptance
financing) in respect of which any Borrower is in any manner
directly or contingently obligated, excluding therefrom any
single agreement relating to the purchase of the machinery,
equipment, goods and supplies made in the ordinary course of
business of less than $500,000.00; and the maximum principal or
face amount of the credit in question is therein correctly stated
and all liens of any nature are therein correctly described.
41 Regulation U, Etc. The Loans will not constitute
a violation of Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System. No part of the proceeds of the
Loans will be used for any purposes which violate or are
inconsistent with the provisions of any of such regulations.
42 Licenses, Permits, Etc. Each Borrower is in
possession of and operating in compliance with all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders required for the conduct of its business
now conducted, and all of them are valid and in full force and
effect except to the extent that the failure to possess any such
franchise, grant, authorization, license, permit, easement,
consent, certificate or order does not and will not have a
material adverse effect on the financial condition, business
operations or prospects of the Borrowers taken as a whole or the
Domestic Borrowers taken as a whole.
43 Compliance with Laws. Each Borrower is in
compliance with all laws, rules, regulations, and orders of all
Federal, state and governmental agencies and courts (domestic and
foreign) which are applicable to it, to the conduct of its
business, or to the ownership and use of its properties except
where failure to so comply would not have a material adverse
effect on the financial condition, business or prospects of the
Borrowers taken as a whole or on the Domestic Borrowers taken as
a whole.
44 Labor Matters. On the date of execution of this
Agreement there are no existing, or to the best of the Borrowers'
knowledge threatened or contemplated, strikes, slowdowns,
picketing or work stoppages by any employees against any
Borrower, any lockouts by any Borrower of any of its employees or
any other occurrence, event or condition of a similar character
affecting, or which may materially affect the financial condition
or results of operations of any Borrower or the Domestic
Borrowers taken as a whole.
45 Outstanding Judgments or Orders. Each Borrower
has satisfied all judgments against it and no Borrower is in
default with respect to any judgment, writ, injunction, decree,
material rule or regulation of any court, arbitrator or
commission, board bureau, agency or instrumentality, domestic or
foreign, pertaining to such Borrower.
46 No Defaults on Other Agreements. No Borrower is
subject to any charter or corporate restriction which could have
a materially adverse effect on the business, properties, assets,
operations or conditions, financial or otherwise, of the
Borrowers taken as a whole or the Domestic Borrowers taken as a
whole, and no Borrower is a party to any indenture, loan or
credit agreement or any lease or other agreement or instrument or
subject to any charter or corporate restriction which could have
a materially adverse effect on the ability of such Borrower to
carry out its obligations under the Loan Documents. No Borrower
is in default in any material respect in the performance,
observance or fulfillment of any of the material obligations,
covenants or conditions contained in any agreement or instrument
material to its business to which it is a party.
47 Public Utility Holding Company Act. No Borrower
is a Public Utility Holding Company within the meaning of the
Public Utility Holding Company Act.
48 Patents. The Borrowers do not own, have not
obtained and have not applied for any patents from the United
States Patent and Trademark Office which are valid on the date
hereof.
49 Full Disclosure. No representation or warranty by
the Borrowers in this Agreement and no information in any
statement, certificate, schedule or other document furnished or
to be furnished to the Banks, the Agent or the Issuing Bank
pursuant hereto, contains or will contain any untrue statement of
a material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not
misleading. Except as disclosed in this Agreement and the
Exhibits attached hereto, there is no fact known to any Borrower
which it has not disclosed to the Banks, the Agent and the
Issuing Bank in writing which materially adversely affects, or,
so far as the Borrowers can now reasonably foresee, may
materially adversely affect, the business, financial condition or
results of operations of the Borrowers taken as a whole or the
Domestic Borrowers taken as a whole.
ARTICLE V
COVENANTS OF THE BORROWERS
So long as any amount due any Bank hereunder remains
outstanding, or any Bank shall have any Commitment hereunder,
unless the Majority Banks or Banks, as required under Section 8.1
hereof, shall otherwise consent in writing, each Borrower agrees
that:
50 Use of Proceeds. The proceeds of the Loans will
be used for the purposes set forth in the Background Section
hereof.
51 Financial Statements. (A) The Borrowers will
furnish to each Bank, not later than 90 days after the end of
each year, Financial Statements as of and for the 12 months
ending the last day of such year, audited by Ernst & Young or
other independent certified public accountants reasonably
satisfactory to the Agent. Concurrently with such year-end
Financial Statements, the Borrowers shall furnish to each Bank a
written statement by such accounting firm stating that, nothing
came to their attention that caused them to believe that a
Borrower failed to comply with the covenants contained in
Sections 5.16 through 5.24 hereof inclusive and Sections 5.4,
5.5, 5.13, 5.14, 5.26 and 5.27 hereof insofar as they relate to
accounting matters (which statement may contain such
qualifications and limitations as are customarily included in
such a report).
(A) In addition, the Borrowers will furnish to each Bank, (i)
within sixty (60) days from the date hereof the Combined Pro
Forma for the period from January 1, 1995 through the date
hereof, and (ii) within 60 days of the close of each fiscal
quarter other than the last fiscal quarter of each fiscal year,
the Borrowers' Interim Financial Statements for such fiscal
quarter and the period then ended prepared by the Borrowers in
accordance with GAAP, consistently applied, subject only to usual
year-end adjustments and the absence of footnotes.
(B) The Borrowers will also furnish to each Bank, within 20
days of the end of each month (as of the end of each previous
calendar month) prior to the Termination Date, a completed
Borrowing Base Certificate substantially in the form of Exhibit
1.1A hereto executed by the chief financial officer(s) of the
Borrowers.
(C) With all Financial Statements and Interim Financial
Statements, the Borrowers will provide to each Bank (i) a legal
opinion form the Borrower's General Counsel (with Interim
Financial Statements) or outside counsel (with Financial
Statements) as to whether an Event of Default has occurred under
Section 6.1(J), and (ii) the certificate of the chief financial
officer of the Borrowers, which certificate shall state that such
Financial Statements or Interim Financial Statements are complete
and correct in all material respects and prepared in accordance
with GAAP, subject only to usual year-end adjustments and the
absence of footnotes in the case of Interim Financial Statements.
The Borrowers shall furnish to each Bank together with all
Financial Statements, Interim Financial Statements and the
Combined Pro Forma delivered pursuant to section 5.2(B)(i) above,
a certificate executed by its chief financial officer on behalf
of the Borrowers, which certificate shall include all necessary
calculations, which shall state that the signer: (1) has reviewed
the terms of this Agreement and has made, or caused to be made
under his supervision, a review in reasonable detail of the
transactions and condition of the Borrowers during the accounting
period covered by such Financial Statements or Interim Financial
Statements and that such review has not disclosed the existence
during or at the end of such accounting period; and (2) does not
have knowledge of the existence as at the date of the
certificate, of any condition or event which constitutes an Event
of Default or Unmatured Event of Default or if any such condition
or event existed or exists, specifying the nature and period of
existence thereof and what action the Borrowers have taken, are
taking and propose to take with respect thereto. A compliance
certificate substantially in the form of Exhibit 5.2 hereto
executed by the Borrowers' chief financial officer(s) on behalf
of the Borrowers shall be delivered to each Bank at the same time
as all Financial Statements, Interim Financial Statements and the
Combined Pro Forma delivered pursuant to Section 5.2(B)(i) above
are delivered hereunder.
(D) Promptly upon receipt thereof, the Borrowers shall deliver
to the Banks copies of any management letters or other reports
submitted to the Borrowers by independent certified public
accountants in connection with the examination of the Financial
Statements of the Borrowers or a certification by the chief
financial officer of Borrowers that there is nothing in the
certified accountant's reports indicating any material adverse
effect on the condition (financial or otherwise), business,
operations or prospects of the Borrowers taken as a whole or the
Domestic Borrowers taken as a whole.
(E) Simultaneously with the filing thereof, the Borrowers
shall deliver to the Banks copies of all notices required by law
or regulation to be filed, reports, registrations and requests
for interpretive letters or rulings filed with the Securities and
Exchange Commission.
52 Insurance. Each Borrower will maintain insurance
with financially sound and reputable insurance companies or
associations as required in the Security Documents and otherwise
in such amounts and covering such risks as are usually carried by
companies engaged in similar businesses and owning similar
properties in the same general areas in which such Borrower
operates or owns such properties. The Borrowers may self-insure
such risks in such amounts as the Borrowers reasonably determine
in their prudent business judgment, to the Agent's satisfaction,
provided that adequate reserves are established therefor if
required by GAAP and provided further that the Borrowers maintain
an umbrella public liability issuance policy in the amount of not
less than $35,000,000 and with deductibles of not more than
$100,000.
53 Taxes. Each Borrower will pay all taxes,
assessments and charges imposed upon it or its property or that
it is required to withhold and pay over when due, except where
such taxes, assessments and charges are contested in good faith
and where adequate reserves have been set aside.
54 Encumbrances. (A) No Borrower will create,
incur, assume or suffer to exist, any mortgage, pledge, judgment,
lien or other encumbrance of any kind upon, or any security
interest in, any of its property, or assets, including, without
limitation, patents, trademarks, copyrights or any other general
intangible except for (1) liens for taxes not yet delinquent or
being contested in good faith and by appropriate proceedings, (2)
liens solely securing the performance of bids, tender contracts,
surety and appeal bonds, or similar obligations, arising in the
ordinary course of business, provided that the Borrowers remain
in compliance with the terms of such obligations, (3) liens in
connection with workmen's or worker's compensation, unemployment
insurance or other social security obligations, (4) mechanic's,
materialman's, landlord's, carrier's, or other similar liens
arising in the ordinary course of business with respect to
obligations that are not due, or which are being contested
diligently, in good faith and by appropriate proceedings,
provided that (a) such proceedings have the effect of staying
execution on such liens, and (b) adequate reserves have been set
aside or the obligation being contested has been bonded against,
(5) the encumbrances mentioned in Section 4.8 hereof, (6)
purchase money liens in amounts not to exceed, in the aggregate,
15% of Tangible Net Worth at any time outstanding, on any Capital
Asset hereafter acquired including the assumption of any lien on
such Capital Assets existing at the time of such acquisition, any
lien incurred in connection with any conditional sale or other
title retention agreement, a capital lease, or construction loans
or permanent financing for new construction; provided that (a)
any property subject to any of the foregoing is acquired by a
Borrower in the ordinary course of its business and the lien on
any such property is created contemporaneously with such
acquisition or in accordance with the construction financing or
permanent financing of a newly constructed facility; (b) the
obligation secured by any lien so created, assumed or existing
shall not exceed 100% of the lesser of cost or fair market value
as of the time of acquisition of the property covered thereby to
the Borrower acquiring the same; and (c) each such lien shall
attach only to the Capital Asset so acquired and fixed
improvements thereon, and (7) liens in favor of the Collateral
Agent.
(A) No Borrower will agree with any Person other than the
Noteholders to restrict its ability to grant mortgages, pledges,
liens, or other encumbrances upon, or security interests in, any
of its property or assets to the Banks hereunder.
55 Compliance with Laws. Each Borrower will comply
with all laws and regulations applicable to it in the operation
of its business except where the failure to so comply would not
have a material adverse effect on the financial condition,
business or prospects of the Borrowers taken as a whole or the
Domestic Borrowers taken as a whole.
56 Inspection by Banks; Future Appraisals. (A) Each
Borrower will permit representatives of each Bank to inspect the
property and books and records of such Borrower and to make
extracts therefrom at all reasonable times and, except after the
occurrence of an Event of Default, upon reasonable prior notice
from such Bank. The Borrowers agree to reimburse the Banks for
all reasonable costs and expenses incurred in connection with any
such inspection, including without limitation a per diem charge
for the Agent's personnel at rates typically charged by the Agent
for similar services, performed after there occurs an Event of
Default or an Unmatured Event of Default or if performed prior
thereto at the request of the Majority Banks.
(A) The Agent shall have the right at any time and from
time to time as long as any Loan or any Letter of Credit is
outstanding to require that a new fair market appraisal of the
Properties or any of them be prepared by an appraiser
satisfactory to the Agent and pursuant to a methodology
acceptable to the Agent, and if required after there has occurred
an Event of Default or an Unmatured Event of Default, or if such
appraisal is required by law or regulation or by any Bank's
regulator, then the costs of each such appraisal shall be paid by
the Borrowers upon demand.
57 Reports. The Borrowers will furnish to the Agent
and to each Bank:
(A) As soon as possible after any Borrower has knowledge of
the occurrence of any Event of Default or Unmatured Event of
Default, a written statement by the chief executive or chief
financial officer of such Borrower on behalf of such Borrower
setting forth details of such Event of Default or Unmatured Event
of Default, stating whether or not the same is continuing and, if
so, the action that such Borrower proposes to take with respect
thereto;
(B) Immediately after receiving notice thereof, notice in
writing of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign if an adverse result thereof
could have a material adverse effect on the financial condition,
prospects, property or business of the Borrowers taken as a whole
or the Domestic Borrowers taken as a whole;
(C) As soon as practicable after any Borrower has knowledge
of the occurrence of a change in the business, properties or the
operations and condition (financial or otherwise) of such
Borrower that such Borrower considers to be materially adverse
taking all Borrowers as a whole or the Domestic Borrowers taken
as a whole, a statement by such officer setting forth details of
such material adverse change and the action that the Borrowers
propose to take with respect thereto;
(D) Copies of any information, report or notice delivered
or required to be delivered by the Borrowers to the Noteholders;
and
(E) Such other information respecting the business,
properties, condition and operations (financial or otherwise
including but not limited to management letters issued by the
Borrowers' accountants) of each Borrower as the Agent or any Bank
may at any time and from time to time reasonably request be
furnished to it.
58 ERISA. (A) Each Borrower and all members of its
Controlled Group will comply in all material respects with the
applicable provisions of ERISA and the Code and the regulations
thereunder with respect to any Plan including the timely filing
of required annual reports and the payment of PBGC premiums.
(A) Each Borrower will cause to be made all contributions
required to avoid any accumulated funding deficiency (as defined
in 412(a) of the Code and the regulations thereunder and
302(a) of ERISA), unless waived until after the Commitment
Termination Date, with respect to any pension plan (as defined in
3(2) of ERISA) which is subject to Part 3 of Subtitle B of Title
I of ERISA or Section 412 of the Code and the regulations
thereunder and which is maintained by the Borrower or any member
of its Controlled Group.
(B) As soon as practicable (and in any event within five
days) after any Borrower has reason to know (1) that any
Reportable Event has occurred with respect to any Defined Benefit
Pension Plan maintained by a Borrower or any member of its
Controlled Group, (2) that any Defined Benefit Pension Plan
maintained by a Borrower or any member of its Controlled Group is
to be terminated in a "distress termination" (within the meaning
of 4041(c) of ERISA), (3) that the PBGC has instituted or will
institute proceedings under Title IV of ERISA to terminate any
Defined Benefit Pension Plan maintained by a Borrower or any
member of its Controlled Group, (4) that a Borrower has incurred
Withdrawal Liability from a Multiemployer Plan maintained by it
or any member of its Controlled Group, which is likely to have a
material adverse effect on the financial condition, prospects,
property or business of the Borrowers taken as a whole or the
Domestic Borrowers taken as a whole, or (5) that any
Multiemployer Plan to which a Borrower or any member of its
Controlled Group has made contributions is in Reorganization,
such Borrower will furnish a statement to the Agent and each Bank
setting forth the details of such Reportable Event, distress
termination, termination proceedings, Withdrawal Liability, or
Reorganization, and the action that the Borrowers propose to take
with respect thereto, together with a copy of any notice of such
Reportable Event or distress termination given to the PBGC, or a
copy of any notice of termination proceedings, Withdrawal
Liability, or Reorganization received by a Borrower or any member
of its Controlled Group.
(C) Each Borrower will furnish to the Agent and each Bank
as soon as possible after receipt thereof a copy of any notice
that a Borrower or any member of its Controlled Group receives
from the PBGC, the Internal Revenue Service, the Department of
Labor, any other governmental entity or from the sponsor of any
Multiemployer Plan that sets forth or proposes any action to be
taken or determination made by the PBGC, the Internal Revenue
Service, the Department of Labor, any other governmental entity
or the sponsor of any Multiemployer Plan with respect to any Plan
or Multiemployer Plan, which is likely to have a material adverse
effect on the financial condition, prospects, property or
business of the Borrowers taken as a whole or the Domestic
Borrowers taken as a whole.
(D) Each Borrower will promptly notify the Agent and each
Bank of any material taxes, penalties, interest charges and other
financial obligations that have been assessed or otherwise
imposed, or that such Borrower has reason to believe may be
assessed or otherwise imposed, against any Borrower or any member
of its Controlled Group by the Internal Revenue Service, the
PBGC, the Department of Labor or any other governmental entity
with respect to any Plan or Multiemployer Plan, provided,
however, that no notice shall be required with respect to amounts
that have been (or will be) reflected on the applicable
Borrower's tax return.
(E) Each Borrower will promptly notify the Agent and each
Bank of the adoption of any Plan or any obligation to contribute
to any Multiemployer Plan by any Borrower or any member of its
Controlled Group if the potential liability thereunder is likely
to have a material adverse effect on the financial condition,
prospects, property or business of the Borrowers taken as a whole
or the Domestic Borrowers taken as a whole.
(F) No Borrower will withdraw, or permit any member of its
Controlled Group to withdraw, from any Multiemployer Plan to
which any of them now or hereafter contribute if the Withdrawal
Liability which would thereupon be incurred and the payments
thereupon required over the time period required would have a
material adverse effect on the financial condition, prospects,
property or business of the Borrowers or the Domestic Borrowers
taken as a whole. No Borrower will permit (1) with respect to
any Employee Benefit Plan, any Prohibited Transaction or
Prohibited Transactions under ERISA or the Code and the Treasury
regulations thereunder resulting in liability of the Borrower or
any member of its Controlled Group which individually or in the
aggregate would have a material adverse effect on the financial
condition, prospects, property or business of the Borrowers taken
as a whole or the Domestic Borrowers taken as a whole or (2) with
respect to any Defined Benefit Pension Plan, any Reportable Event
under ERISA, if upon termination of the Plan or Plans with
respect to which one or more such Reportable Events has occurred
there is or would be any liability of any of the Borrower or any
members of their Controlled Group to the PBGC which individually
or in the aggregate would have a material adverse effect on the
financial condition, prospects, property or business of the
Borrowers taken as a whole or the Domestic Borrowers taken as a
whole. In either case, the Borrowers will promptly notify the
Agent and each Bank of any such Prohibited Transaction or
Reportable Event.
(G) No Borrower will fail to make required minimum
contributions, or permit any member of its Controlled Group to
fail to make required minimum contributions with respect to a
Defined Benefit Pension Plan, resulting in a lien (as provided in
the Code or 302(f) of ERISA) against any Borrower or any member
of its Controlled Group.
(H) No Borrower will permit the adoption of a plan
amendment which results in significant underfunding (as defined
in 307 of ERISA) of a Defined Benefit Pension Plan which
requires such Borrower or any member of its Controlled Group to
provide security if such underfunding would have a material
adverse effect on the financial condition, prospects, property or
business of the Borrowers taken as a whole or the Domestic
Borrowers taken as a whole.
(I) No Borrower will acquire, or permit the acquisition by
any member of its Controlled Group of, any trade or business
which has incurred either directly or indirectly any Amount of
Unfunded Benefit Liabilities under any Defined Benefit Pension
Plan, if such acquisition would have a material adverse effect on
the financial condition, prospects, property or business of the
Borrowers taken as a whole or the Domestic Borrowers taken as a
whole.
(J) No Borrower will permit a violation of the
"continuation coverage requirements" of "group health plans" of
4980B of the Code and the regulations thereunder and Part 6 of
Subtitle B of Title I of ERISA with respect to any Employee
Benefit Plan of any Borrower or of any member of its Controlled
Group to which such continuation coverage requirements apply if
such violation would have a material adverse effect on the
financial condition, prospects, property or business of the
Borrowers taken as a whole or the Domestic Borrowers taken as a
whole.
59 Environmental Matters. (A) Each Borrower will
obtain and comply with all required permits, licenses,
registrations, and approvals relating to the discharge or release
of liquids, gases or solids to the environment. To the extent
that such are applicable to the operation of its business, each
Borrower will comply with all laws, rules, regulations and
governmental orders and directives relating to the generation,
treatment, storage, transportation, disposal and release into the
environment and cleanup of any "hazardous substance" as that term
is defined under Section 101(14) of CERCLA, or any hazardous or
toxic substances as defined by the provisions of any state or
local environmental statute or regulation at all premises owned
or operated by such Borrower except where the consequences of
failing to do so will not have a material adverse effect on the
financial condition, business, prospects or asset value of the
Borrowers or any of them.
(A) Each Borrower will notify the Agent and each Bank in
writing of the receipt by it of (1) any written notice from any
governmental agency that it is a potentially responsible party in
any proceeding under CERCLA or any similar state or local
environmental statute or regulation, (2) any written notice of
any claim, proceeding, litigation, order, directive, citation, or
request for information concerning its compliance with the
Environmental Laws, (3) written notice of any alleged violation
of the Environmental Laws, or (4) any information known to it
concerning any potentially materially adverse environmental
condition on, above, or beneath its premises, including but not
limited to any spilling, leaking, discharge, release, or threat
of release of any hazardous or toxic waste or substance.
60 Nature of Business. No Borrower will make any
material change in the nature of its business as conducted at the
date of this Agreement.
61 Regulation U. No Borrower will: (A) use the
proceeds of the Loan to purchase or carry any Margin Stock; (B)
engage in the business of making loans for the purchase of Margin
Stock; or (C) purchase or carry Margin Stock.
62 Disposal of Assets. No Borrower will dispose of
any asset except (A) Inventory in the ordinary course of
business; (B) assets (other than trademarks, patents and other
intellectual property) which have become obsolete and which are
promptly replaced with assets having similar value and utility;
and (C) assets disposed of in arms-length transactions for fair
market value (as reasonably determined by Borrowers) having an
aggregate value over the term of this Agreement of not more than
Seven Million Five Hundred Thousand Dollars ($7,500,000.00).
63 Loans, Investments, Guarantees and Other
Contingent Liabilities. No Borrower will (A) become liable on
the obligation of anyone except (i) by endorsement of negotiable
instruments for deposit or collection in the usual course of
business, and (ii) Domestic Borrowers may become liable as
guarantors or otherwise for the obligations of (a) other Domestic
Borrowers, (b) Offshore Borrowers in commercial transactions in
the ordinary course of business and/or (c) any other Person (the
liabilities described in this subclause (c) shall be referred to
herein as "Third Party Guarantees" and, collectively with the
liabilities described in clause (b), the "Guarantees"), or (B)
except as set forth in Exhibit 5.14 hereto, make any loan or
investment except for (i) investments in Cash Equivalents, (ii)
investments in bank deposits as otherwise permitted hereby, (iii)
loans or investments in Domestic Borrowers, (iv) Protection
Agreements in the ordinary course of Borrowers' business and not
for speculation; (v) loans or investments in Offshore Borrowers
(such loans and investments, to the extent made by Domestic
Borrowers shall be referred to as "Offshore Loans"), (vi) loans
or advances by Domestic Borrowers to officers, employees, and
shareholders of Borrowers or any of them ("Individual Loans" and,
collectively with "Offshore Loans", the "Restricted Loans"),
provided however that, without duplication and without giving
effect to that certain guarantee heretofore agreed to by certain
Borrowers with respect to the obligations of Bratex Dominicana C.
por A. to Chase Manhattan Bank not to exceed $3,000,000.00 (1)
the aggregate amount of Individual Loans outstanding at any one
time shall not exceed $2,000,000.00, (2) the maximum exposure
under Third Party Guarantees at any one time shall not exceed
$5,000,000.00 in the aggregate, and (3) the maximum exposure of
the Borrowers under Guarantees, Restricted Loans and Offshore
Tangible Net Worth collectively shall not exceed fifteen percent
(15%) of the Tangible Net Worth of the Borrowers. Except as
otherwise set forth herein, no Borrower will incur any contingent
liability, other than contingent liabilities for Documentary
Letters of Credit and Standby Letters of Credit hereunder.
64 Maintenance of Property. Each Borrower will
maintain all of its property in reasonably good condition and
repair, ordinary and immaterial wear and tear excepted, and keep
all of its patents, trademarks, copyrights, licenses, and permits
which are of more than nominal value in full force and effect.
65 Merger; Corporate Structure. No Borrower will
enter into any merger or consolidation or, without the consent of
the Majority Banks, change its corporate structure or the nature
or character of its stock, except that any Borrower may merge
with any other Borrower provided that if a Domestic Borrower
merges with an Offshore Borrower, the survivor shall be a
Domestic Borrower. No Borrower shall acquire all or a
substantial portion of the assets of any other Person. No
Borrower shall create any new Subsidiaries unless such Subsidiary
becomes a Borrower or a surety for all of the obligation of the
Borrowers hereunder by executing an agreement in form and
substance reasonably satisfactory to the Agent.
66 Transactions with Affiliates and Subsidiaries.
(A) No Borrower will enter into any transaction with any
officer, director or shareholder of any Borrower or any Affiliate
or Subsidiary (which is not itself a Domestic Borrower) of any
Borrower for less than full value or on terms or conditions not
less favorable than could be obtained in an arm's length
transaction with a third party.
(A) No Domestic Borrower will enter into any transaction with
an Offshore Borrower unless (1) the Domestic Borrower receives
reasonably equivalent value, and (2) the transaction is on terms
not less favorable than could be obtained in an arm's length
transaction with a third party taking into account any
opportunity for the Borrowers to minimize taxes, duties and other
similar expenses and any requirements of law imposed by the
jurisdictions in which the Borrowers operate.
67 Quick Ratio. The Borrowers shall maintain a Quick
Ratio of not less than 0.35 to 1.00 as of the end of each fiscal
year from and after December 31, 1995.
68 Leverage Ratio. The Borrowers will maintain its
Leverage Ratio at not more than the following levels at any time
during the following periods:
Maximum Leverage
Period Ratio
as of the end of each fiscal
quarter, through December 30, 1995 0.70:1
as of the end of each fiscal
quarter from December 31, 1995 through
December 30, 1996 0.65:1
as of the end of each fiscal
quarter from December 31, 1996 through
December 30, 1997 0.60:1
as of the end of each fiscal
quarter from and after
December 31, 1997 0.55:1
69 Tangible Net Worth. Until the Borrowers provide
the Banks with the Combined Pro Forma for the period from
January 1, 1995 through the date hereof as required by subsection
5.2(B)(i) hereof, the Borrowers will not permit Tangible Net
Worth at any time to be less than XXXXXXXXXXXXXX. Thereafter,
the Borrowers will not permit Tangible Net Worth at any time to
be less than (A) 90% of Tangible Net Worth as of the date hereof
as disclosed on the Combined Pro Forma, minus (B) the amount
expended after the date hereof, if any, to acquire the remaining
7.611% of the outstanding shares of NCC stock not purchased on or
about the Closing Date as described in the Background Section
hereof, which amount shall not exceed $17.55 times the number of
such shares so purchased after the date hereof, plus (C) 70% of
aggregate Consolidated net profit after taxes since the Closing
Date, provided that Consolidated losses incurred for any
reporting period shall not be used to reduce aggregate
Consolidated net profit after taxes for purposes of this Section
5.20.
70 Fixed Charge Coverage Ratio. The Borrowers will
not permit the Fixed Charge Coverage Ratio for the immediately
preceding four fiscal quarters (including the fiscal quarter
ending on such date) to be less than the following amounts as of
the end of each fiscal quarter ending during the following
periods:
Minimum Fixed Charge
Period Coverage Ratio
Closing through
December 31, 1996 1.10:1
March 31, 1997 and each fiscal
quarter ending thereafter 1.25:1
71 Funded Debt to Operating Cash Flow. The Borrowers
will not permit the ratio of Funded Debt to Operating Cash Flow
for the immediately preceding four fiscal quarters (including the
fiscal quarter ending on such date) to be greater than the
following amounts as of the end of each fiscal quarter ending
during the following periods:
Date Maximum Ratio
Closing through
December 30, 1995 5.25:1
December 31, 1995 through
December 30, 1996 4.75:1
December 31, 1996 through
December 30, 1997 4.25:1
December 31, 1997 and each fiscal
quarter ending thereafter 4.00:1
72 Dividends and Distributions. Prior to June 30,
1997, no Borrower shall make or declare any dividend upon any
capital stock of any Borrower, or return any capital to any of
its shareholders, or make or declare any other payment or
distribution, or delivery of property to any Borrower's
shareholders in their capacity as such, or redeem, return,
purchase or acquire directly or indirectly, any shares of any
Borrower's capital stock now or hereafter outstanding except (A)
for the distribution of dividends from Borrowers to Domestic
Borrowers, which shall be permitted provided that there does not
then exist after giving effect to such distribution, an Event of
Default or Unmatured Event of Default, and (B) the Borrowers
shall be entitled to purchase the remaining outstanding shares of
NCC as described in the Background Section hereof. After
June 30, 1997, Borrowers shall be entitled to make or declare
dividends upon any capital stock of any Borrower or return any
capital to any of its shareholders, or make or declare any other
payment or distribution to any Borrower's shareholders in their
capacity as such, provided that there does not exist any Event of
Default or Unmatured Event of Default at the time such dividend,
payment or distribution is made or declared, provided further
that no Event of Default or Unmatured Event of Default would
otherwise result after giving effect to the making or declaring
of such dividend, payment or distribution.
73 Other Debt. (A) No Borrower will incur or
otherwise permit to exist any obligation for the payment of
borrowed money, whether as borrower or guarantor, except (1) debt
in connection herewith, (2) debt in connection with the Private
Placement, (3) debt listed on Exhibit 4.15 existing as of the
date hereof, (4) purchase money indebtedness permitted under
Section 5.5(A)(6), provided that any such debt in excess of
$7,500,000.00 shall only be incurred on terms reasonably
acceptable to the Agent, or (5) debt incurred in connection with
any additional private placement which is incurred only with the
consent of the Majority Banks, which consent may be conditioned
on any occurrence, circumstance or event, including without
limitation that some or all of the gross proceeds of such debt be
used to prepay the Term Loan.
(A) The Borrowers shall not enter into any substantive
amendment with respect to the Private Placement adverse to the
Banks including without limitation any amendment increasing the
principal amount outstanding thereunder, increasing the interest
or other sums payable thereunder, accelerating the payment
schedule for principal or interest or accelerating the maturity
date thereof or creating a security interest in connection
therewith (other than in favor of the Collateral Agent), unless
agreed to in writing by Majority Banks.
(B) The Borrowers shall not enter into or consent to any
amendment to the Subordinated Debt without the Majority Banks
prior written consent.
74 Licenses, Permits. Each Borrower will maintain
the validity, force and effect of, and operate in compliance
with, all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates and orders required for the
conduct of its businesses except to the extent that the failure
to possess any such franchise, grant, authorization, license,
permit, easement, consent, certificate or order does not and will
not have a material adverse effect on the financial condition,
business operations or prospects of such Borrowers taken as a
whole or the Domestic Borrowers taken as a whole.
75 Fiscal Year. Each Borrower shall maintain a
fiscal year ending on December 31.
76 Change of Ownership or Management. Upon
completion of the merger of Worldwide-NY into Worldwide-DE,
Worldwide-DE will at all times own all of the capital stock of
Maidenform. Except as set forth on Exhibit 4.12, Maidenform will
at all times own all of the capital stock of all of the other
Borrowers except Worldwide-DE and Worldwide-NY.
77 RICO. No Borrower shall engage in any conduct or
take or fail to take any action which will, or would, under the
facts and circumstances relative thereto, violate RICO.
78 Indemnification. Each Borrower jointly and
severally hereby indemnifies and agrees to protect, defend, and
hold harmless the Agent, the Issuing Bank, the Banks and all of
their directors, officers, employees, agents, attorneys and
shareholders from and against any and all losses, damages,
expenses or liabilities of any kind or nature and from any suits,
claims, or demands, including all reasonable counsel fees
incurred in investigating, evaluating, or defending such claims,
suffered by any of them and caused by, relating to, arising out
of, resulting from, or in any way connected with this Agreement,
the Notes, any other Loan Document and any transaction
contemplated herein or therein including, but not limited to,
claims based upon any act or omission not amounting to willful
misconduct or gross negligence by the Agent, the Issuing Bank
and/or Banks in connection with this Agreement, the Notes or any
Loan Document and any transaction contemplated herein or therein.
If any Borrower shall have knowledge of any claim or liability
hereby indemnified against, it shall promptly give written notice
to the Agent. THIS COVENANT SHALL SURVIVE THE PAYMENT OF THE
INDEBTEDNESS CREATED BY THIS AGREEMENT, THE NOTES OR THE LOAN
DOCUMENTS.
79 Interest Rate Protection Agreements. Within 30
days of the Closing Date, the Borrowers will enter into
Protection Agreements with respect to the interest rate on the
Term Loan with expiration dates of no earlier than the second
anniversary of the Closing Date, at rates and with counterparties
acceptable to the Agent.
ARTICLE VI
DEFAULT
80 Events of Default. Each of the following shall be
an event of default ("Event of Default"):
(A) if the Borrowers shall fail to pay any principal of the
Loans when due;
(B) if the Borrowers shall fail to pay any interest on the
Loans, any Fee, any payment with respect to the Letter of Credit
Liability, or any other amount owing hereunder, under the Notes,
the Letter of Credit Documents, or the Loan Documents when due
and such failure continues for two days thereafter, provided that
the Borrowers shall not be entitled to such grace period more
often than two times in any twelve month period;
(C) if any representation or warranty made by any of the
Borrowers in this Agreement, or in any certificate, agreement,
instrument, statement or report contemplated hereby or made or
delivered pursuant hereto or in connection herewith shall prove
to have been incorrect in any material respect as of the date on
which it is made or reaffirmed;
(D) if any Borrower (i) shall fail to pay any amount owing
under any Protection Agreement as and when due after applicable
notice and grace periods, if any, (ii) shall fail to pay any
Credit Obligation owing by it, or any interest or premium
thereon, when due, whether such Credit Obligation shall become
due by scheduled maturity, by required prepayment, by
acceleration, by demand or otherwise, if the aggregate of such
Credit Obligation to which such failure relates is at least
$1,000,000.00, or (iii) shall fail to perform any term, covenant
or agreement on its part to be performed under any agreement or
instrument evidencing or securing or relating to any such Credit
Obligation when required to be performed, if the effect of such
failure is to accelerate, or to permit the holder or holders of
such Credit Obligation to accelerate the maturity of such Credit
Obligation, provided that the principal amount of such Credit
Obligation subject to acceleration is at least $1,000,000.00,
whether or not such failure to perform shall be waived by the
holder or holders of such Credit Obligation, unless such waiver
has the effect of terminating the right of such holder or holders
to accelerate the maturity of such Credit Obligation as a result
of such failure;
(E) if any Borrower is adjudicated a bankrupt or insolvent
or the equivalent under any law or admits in writing its
inability to pay its debts as they mature, or makes an assignment
for the benefit of its creditors; or if any Borrower shall apply
for or consent to the appointment of any receiver, trustee, or
similar officer or the equivalent under any law for such
applicant or for all or any substantial part of its property; or
such receiver, trustee or similar officer or the equivalent under
any law shall be appointed without the application or consent of
such party and shall continue undischarged or unstayed for a
period of 60 days; or if any Borrower shall institute (by
petition, application, answer, consent or otherwise) any
bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, dissolution, liquidation or similar proceeding relating
to it under the laws of any jurisdiction; or if any such
proceeding shall be instituted (by petition, application or
otherwise) against any Borrower and an order for relief or
similar remedy shall be entered in such proceeding or such
proceeding shall remain undismissed for a period of 60 days; or
if any judgment, writ, warrant of attachment or execution or
similar process shall be issued or levied against any substantial
portion of the properties of any Borrower and such judgment,
writ, or similar process shall not be released, vacated or fully
bonded within 30 days after its issue or levy;
(F) if (1) any Reportable Event, or any failure of
compliance required by Section 5.9 hereof, that creates a
reasonable likelihood of the termination of any Defined Benefit
Pension Plan maintained by any Borrower or any member of its
Controlled Group, or of the appointment by the appropriate United
States District Court of a trustee to administer any such Plan
has occurred and is continuing 30 days after written notice to
such effect is given to the Borrowers by the Agent, or (2) any
Borrower or any member of its Controlled Group withdraws from any
Defined Benefit Pension Plan for which it was a substantial
employer within the meaning of 4063(b) of ERISA or from any
Multiemployer Plan, or (3) the plan administrator of any Defined
Benefit Pension Plan maintained by any Borrower or any member of
its Controlled Group files with the PBGC a notice of intention to
terminate such Plan in a "distress termination" (as defined in
4041(c) of ERISA), or (4) the PBGC institutes proceedings to
terminate any such Plan or to appoint a trustee to administer any
such Plan and such proceedings remain undismissed or unstayed for
three (3) Business Days and if, in any of the cases described in
the foregoing clauses (1) to (4), the Agent further reasonably
determines in good faith that the Amount of Unfunded Benefit
Liabilities resulting upon termination of such Plan (or resulting
from the imposition of Withdrawal Liability taking into account
the payments thereupon required over the time period required)
would have a material adverse effect on the business, properties,
operations, or condition (financial or otherwise) of any Borrower
or any member of its Controlled Group, or if a lien against the
assets of any Borrower or any member of its Controlled Group was
to result under ERISA;
(G) if any Borrower shall fail to perform or observe when
due any term, covenant or agreement contained in Sections 5.6,
5.9, 5.10, 5.14, 5.15, or 5.25 of this Agreement, on its part to
be performed or observed, and such failure continues uncured for
a period of thirty (30) days from the date any Borrower first
became aware of such failure, whether by written notice from the
Agent or otherwise, or if any Borrower shall fail to perform or
observe when due any other term, covenant or agreement contained
in this Agreement, on its part to be performed or observed;
(H) if any Borrower shall incur a loss as a result of
damage, destruction or other loss of assets and the aggregate
amount of such loss, after the recovery of any applicable
insurance proceeds thereon, shall be greater than $5,000,000.00
in the aggregate during any fiscal year;
(I) if there occurs any "event of default" (as defined
therein) under the Notes, the Mortgages or any of the other Loan
Documents; or
(J) if at any time (1) Elizabeth Coleman, her husband and
issue, together with any trusts controlled by her fails to have
the ability to appoint a majority of the members of the board of
directors of Worldwide-DE, or (2) Worldwide-DE fails to have the
ability, directly or indirectly, to appoint a majority of the
members of the board of directors of each of the other Borrowers.
81 Termination of Commitments; Acceleration. Unless
waived pursuant to Section 8.1 hereof, if any Event of Default
other than those described in Section 6.1(E) hereof shall occur
and be continuing, then upon notice by the Agent to the
Borrowers, at the Agent's option (A) the Commitments shall
terminate, at which time the obligations of the Banks to make
Advances under the Revolving Credit shall terminate, (B) the
Issuing Bank shall not have any further obligation to issue
Letters of Credit and the Banks shall have no further obligation
to participate in any Letters of Credit thereafter issued, (C)
the Borrowers shall pledge cash collateral and deposit in the
Letter of Credit Cash Collateral Account an amount equal to or
greater than (as determined by the Agent in its sole discretion)
the amount of any Letter of Credit Liability, and/or (D) the
entire unpaid principal amount of the Loans, the entire amount of
unreimbursed drawings under Letters of Credit, all interest
accrued and unpaid thereon and all other amounts payable
hereunder shall become immediately due and payable, without
presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrowers. If any
Event of Default described in Section 6.1(E) shall occur, then
automatically and without notice each of the events described in
(A) through (D) of the preceding sentence shall occur.
82 Remedies. (A) Upon the occurrence and during the
continuance of any one or more Events of Default, the Agent,
Issuing Bank and the Banks may proceed to protect and enforce
their rights under this Agreement and the other Loan Documents by
exercising such remedies as are available to the Agent in respect
thereof under applicable law, either by suit in equity or by
action at law, or both, whether for specific performance of any
provision contained in this Agreement or any of the other Loan
Documents or in aid of the exercise of any power granted in this
Agreement or the other Loan Documents.
(A) Upon the occurrence and during the continuance of any one
or more Events of Default, the Agent, in addition to all the
other rights and remedies herein contained or contained in any of
the Loan Documents, shall be entitled to exercise any and all
rights available to it in law or equity.
ARTICLE VII
AGENT
83 Appointment and Authorization. Each Bank hereby
irrevocably appoints and authorizes the Agent to take such action
on its behalf and to exercise such powers under this Agreement as
are delegated to the Agent by the terms hereof, together with
such powers as are reasonably incidental thereto.
84 General Immunity. In performing its duties as
Agent hereunder, the Agent will take the same care as it takes in
connection with loans in which it alone is interested. However,
neither the Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be
taken by it hereunder or in connection herewith except for its
own gross negligence or willful misconduct.
85 Consultation with Professionals. The Agent may
consult with legal counsel and other professionals selected by it
and shall not be liable for any action taken or suffered in good
faith by it in accordance with the advice of such counsel and
professionals in their respective areas of expertise.
86 Documents. The Agent shall be under no duty to
examine or pass upon the effectiveness, genuineness or validity
of this Agreement, the Notes, or Loan Documents pursuant hereto
or in connection herewith, and the Agent shall be entitled to
assume that the same are valid, effective, genuine and what they
purport to be. The Agent specifically disclaims any
representation or warranty respecting any such provision and each
Bank agrees to undertake its own examination of such provisions.
87 Rights as a Bank. With respect to its Commitment
and its Pro Rata Share of the Term Loan, the Agent shall have the
same rights and powers hereunder as any Bank and may exercise the
same as though it were not the Agent. The terms "Bank" and
"Banks" shall, unless the context otherwise indicates, include
the Agent in its individual capacity. The Agent may accept
deposits from, lend money to and generally engage in any kind of
commercial banking, investment banking or trust business with any
Borrower or Affiliates of such the Borrower as if Agent were not
the Agent.
88 Responsibility of Agent. It is expressly
understood and agreed that the obligations of the Agent hereunder
are only those expressly set forth in this Agreement and that the
Agent shall be entitled to assume that neither an Event of
Default or Unmatured Event of Default have occurred or are
continuing unless the Agent has actual knowledge of such fact or
has received notice from a Bank or the Borrowers that such Bank
or the Borrowers considers that an Event of Default or Unmatured
Event of Default has occurred and is continuing and specifying
the nature thereof. Without limiting the foregoing, the Agent
shall have no obligation to distribute to the Banks any
statements, reports or other information received from the
Borrowers pursuant to provisions hereof which obligate the
Borrowers to send such statements, reports or other information
to the Agent and the Banks.
89 Action by Agent. So long as the Agent shall be
entitled, pursuant to Section 7.6 hereof, to assume that no Event
of Default or Unmatured Event of Default has occurred and is
continuing, the Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any
rights that may be vested in it by, or with respect to taking or
refraining from taking any action or actions that it may be able
to take under or in respect of, this Agreement, the Loan
Documents, or any of them, provided that, as between the Agent
and the Banks only, after an Event of Default, Agent (A) shall be
entitled to exercise any rights or remedies granted to it
hereunder, or otherwise available to it at law or in equity
unless directed otherwise in writing by the Majority Banks (or
all of the Banks if otherwise required under Section 8.1 hereof)
and (B) upon the direction of the Majority Banks (or all of the
Banks if otherwise required under Section 8.1 hereof), shall
exercise such rights and remedies as so directed. The Agent
shall incur no liability under or in respect of this Agreement by
acting upon any notice, consent, certificate, warranty or other
paper or instrument believed by it to be genuine or authentic or
to be signed by the proper party or parties, or with respect to
anything that it may do or refrain from doing in the reasonable
exercise of its judgment, or that may seem to it to be necessary
or desirable under the circumstances.
90 Notices of Event of Default, Etc. In the event
that the Agent shall have acquired actual knowledge of any Event
of Default or Unmatured Event of Default, the Agent shall
promptly give notice thereof to Banks and, subject to Section 7.7
hereof, the Agent may take such action and assert such rights
with respect to taking or refraining from taking any action or
actions that it may be able to take under or in respect of this
Agreement, the Loan Documents, or any of them as it deems to be
advisable in its sole discretion for the protection of the
interests of the Banks including, without limitation, the
exercise of rights and remedies under Article VI hereof.
91 Indemnification of Agent. The Banks agree to
indemnify the Agent (to the extent not reimbursed by the
Borrowers), ratably according to their Pro Rate Share, from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement, the Loan Documents,
or any of them or any action taken or omitted by the Agent under
this Agreement, the Loan Documents, or any of them provided that
no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct (except to the
extent such gross negligence or willful misconduct was committed
at the expressed direction of Majority Banks and, in such event,
only the Majority Banks that actually voted in favor of such
direction shall be responsible for the indemnification
obligations under this Section, with the proportionate liability
of each such voting Bank to be a fraction, the numerator of which
is the Commitment and its Pro Rata Share of the Term Loan of such
voting Bank and the denominator of which is the aggregate
Commitment and Pro Rata Share of the Term Loans of such voting
Banks).
92 Resignation of Agent. The Agent may resign from
the performance of all of its functions and duties under this
Agreement at any time by giving 60 days' prior written notice to
the Borrowers and to the Banks whereupon the Majority Banks shall
elect another Bank as the Agent. The resignation of the Agent
of its duties as Agent shall not in any way affect its rights as
a Bank under this Agreement. Upon the resignation of the Agent,
the replacement Agent shall immediately become Issuing Bank and
assume the responsibility for the administration of all
outstanding Letters of Credit and shall issue replacement Letters
of Credit. The replacement Issuing Bank shall immediately
provide the resigning Issuing Bank with such security as the
resigning Issuing Bank deems necessary to reimburse it for
drawings under the outstanding Letters of Credit prior to the
successor Issuing Bank's issuance of replacement Letters of
Credit.
ARTICLE VIII
MISCELLANEOUS
93 No Waiver; Cumulative Remedies. No failure or
delay on the part of the Agent or any Bank in exercising any
right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy
hereunder. No waiver of any provision hereof shall be effective
unless the same shall be in writing and signed by the Majority
Banks, except that all Banks must join in (A) the deferral of the
payment of any interest or principal, Fees, or any other amounts
due hereunder beyond its due date, (B) any reduction in the
Borrowers' obligation to repay the principal amount of the Loans
or any Letter of Credit Liability or any downward change in any
Interest Rate or Fees hereunder, (C) any change in the amount of
the Commitment of any Bank, (D) any amendment to this Section 8.1
or Section 8.4, (E) the addition of any new Borrower hereunder
(except pursuant to the terms of this Agreement), the release of
any Borrower from its obligations hereunder, or a change in the
definition of the Borrowers, (F) a change in the definition of
Majority Banks, (G) a reduction or change to the provisions of
Section 5.5 hereof, (H) any writing waiving any payment-related
Event of Default hereunder, (I) the termination of the Letter of
Credit Cash Collateral Account or the release of any funds held
in such account following the occurrence of an Event of Default
which has not been waived or cured, (J) the release of any
Collateral except in connection with the Borrowers' transfer of
assets permitted under Section 5.13 hereof, or (K) the waiver of
any rights of or against the Issuing Bank under Section 2.19.
The remedies herein provided are cumulative and not exclusive of
any remedies provided by law. In the event of a dispute between
the Borrowers and Banks concerning the principal amount
outstanding hereunder, the interest rates applicable thereto, the
amounts available under the Commitments, the payment of
principal, interest and other amounts hereunder, or concerning
similar factual matters, absent manifest error the books and
records of the Agent shall be irrebuttably presumed to be
correct. In the event of a dispute between the Borrowers and the
Banks concerning Letters of Credit or Letter of Credit Liability,
or concerning similar factual matters, absent manifest error, the
books and records of the Issuing Bank shall be irrebuttably
presumed to be correct.
94 Waiver of Jury Trial. EACH BORROWER AND EACH BANK
EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTIONS BROUGHT
BY ANY PARTY WITH RESPECT TO THIS AGREEMENT OR THE LOANS.
95 Set-Off; Sharing of Recoveries. Each Bank shall
have a right of set-off against, a lien upon and a security
interest in all property of each Borrower now or at any time in
the possession of such Bank in any capacity whatever, including,
but not limited to, any such Borrower's interest in any deposit
account, as security for all liabilities of the Borrowers
hereunder. In the event that a Bank recovers funds from any
Borrower, whether by exercise of its right of set-off or the
foreclosure of a banker's lien, such Bank agrees that all sums
recovered from such Borrower shall be recovered on behalf of all
Banks and shall be shared by the Banks according to their
respective Pro Rata Share. If a Bank makes any such recovery, it
will promptly remit to the other Banks their respective Pro Rata
Shares of such recovery. No Bank's Pro Rata Share shall have
priority over any other Bank's Pro Rata Share. If any Bank
acquires title to any assets or property of any Borrower, through
foreclosure or otherwise, title to such asset shall be taken
(unless otherwise mutually agreed upon in writing by the Banks)
by the Banks as tenants in common according to each Bank's Pro
Rata Share. If at any time, as the result of exercising such
rights or otherwise, any Bank receives a payment on account of
its portion of the Loans and participation in the Letters of
Credit in a proportion greater than similar payments on account
of the portions of the Loans and participation in Letters of
Credit held by the other Banks, the Bank which receives such
greater proportionate payment will purchase a participation in
the portions of the Loans and participations in the Letters of
Credit held by the other Banks in such amount that after such
purchase each Bank shall hold a proportionate share in the
aggregate outstanding principal balance of the Loans equal to
their respective proportionate shares in the outstanding
principal balance of the Loans and participations in the Letters
of Credit before the disproportionate payment. If, however, any
payment on account of the Loans or participations in the Letters
of Credit is rescinded or invalidated or must otherwise be
restored or returned by the recipient in a bankruptcy or
insolvency proceeding or otherwise, then any participations
purchased as a result of such payment will be rescinded.
96 Amendments. Any of the provisions of this
Agreement may be modified or amended in writing by any agreement
or agreements entered into by the Borrowers and the Majority
Banks, except that (A) all Banks must agree to (1) the deferral
of the payment of any interest or principal, Fees, or any other
amounts due hereunder beyond its due date, (2) any reduction in
the Borrowers' obligation to repay the principal amount of the
Loans or any Letter of Credit Liability or any reduction in any
Interest Rate or Fees hereunder, (3) any change in the amount of
the Commitment of any Bank, (4) any amendment to Section 8.1 or
this Section 8.4, (5) the addition of any new Borrower hereunder
(except pursuant to the terms of this Agreement), the release of
any Borrower from its obligations hereunder, or a change in the
definition of the Borrower, (6) a change in the definition of
Majority Banks, or (7) a reduction or change to the provisions of
Section 5.5 hereof, (8) the termination of the Letter of Credit
Cash Collateral Account or the release of any funds held in such
account following the occurrence of an Event of Default which has
not been waived or cured, (9) the release of any Collateral
except to the extent otherwise consistent with the terms of this
Agreement and the Security Documents, or (10) the amendment of
any rights or against the Issuing Bank under Section 2.19 and (B)
no such modification or amendment shall extend to or affect any
obligation not expressly modified or amended, or impair any right
of the Banks related to such obligation.
97 Notices. Unless this Agreement specifically
provides otherwise, all notices, requests, demands and other
communications that this Agreement requires or permits any party
to give any other party shall be in writing (including telecopy)
and shall be given to such party at its address or telecopy
number specified on the signature pages of this Agreement or at
such other address or telecopy number as shall be designated by
such party in a notice to each other party complying with the
terms of this Section. Unless this Agreement specifically
provides otherwise, all notices, requests, demands and other
communications provided for hereunder shall be effective (A) if
given by mail, three days after placing in the United States
mail, postage prepaid, certified mail, return receipt requested,
(B) if given by telecopy, when such telecopy is transmitted to
the aforesaid telecopy number and the appropriate confirmation of
receipt is received by the sender or (C) if given by any other
means, when delivered to the carrier with postage prepaid to the
aforesaid address(es); provided, however, that notices from the
Borrowers to the Agent pursuant to any of the provisions of
Article II hereof shall not be effective until received by the
Agent; and provided further, however, that notices between the
Agent and any of the Banks may be given by telephone followed,
only where otherwise required hereby, by written confirmation
within five (5) Business Days. The Agent shall be entitled to
rely on any notice, oral or written, received by it from any
Borrower as if such notice were delivered by all of the Borrowers
and in the event of conflicting notices received by the Agent
from the Borrowers, the Agent shall be entitled to rely on any
notice as if such notice were the only notice received by the
Agent. Although the Borrowers are obligated to follow any
telephonic notice made to select an Interest Rate and/or Interest
Rate Period with written confirmation, the Agent and the Banks
shall be entitled to rely on such telephonic notice whether or
not the Borrowers thereafter confirm in writing, as if the
Borrowers did, in fact, confirm in writing.
98 Exchange of Information among Banks. Each Bank
will promptly give each other Bank notice of any matter coming to
its attention that, in its judgment, would materially and
adversely affect the interest of any Bank in connection with this
Agreement. No Bank will be liable for failure to give any other
Bank notice under this Section unless such Bank intentionally
fails to provide such notice with the knowledge that such failure
will materially and adversely affect the interest of the other
Banks hereunder.
99 Knowledge. Whenever there is any reference herein
to the Borrowers' knowledge or the Borrowers being aware, it is
intended that, unless otherwise specified, to refer to the actual
knowledge of the chief executive officer, the chief financial
officer, the chairman, any vice-chairmen, the chief operating
officer, the senior vice-president- counsel and the senior vice
president-finance of any Borrower.
100 Nature of Obligations. (A) The obligations of
the Banks hereunder are several and not joint. Nothing contained
in this Agreement, and no action taken by any Bank pursuant
hereto, shall be deemed to create a partnership, association,
joint venture or other entity.
(A) The obligations of each Borrower under this Agreement,
the Notes and/or the Loan Documents, except as otherwise provided
herein or therein, are joint and several.
101 Costs and Expenses. The Borrowers agree to pay on
demand (A) all reasonable costs and expenses of the Collateral
Agent, the Issuing Bank and the Agent in connection with the
preparation, printing, execution and delivery of this Agreement,
the Notes and the Loan Documents (including without limitation
the reasonable fees and out-of-pocket expenses of counsel and
other consultants of the Agent and the costs of recording
mortgages, financing statements and other instruments to perfect
the security interests granted under the Security Documents), (B)
all reasonable costs and expenses of the Agent, Collateral Agent
and Issuing Bank in connection with the administration and/or
amendment of this Agreement, the Notes and the Loan Documents
(including without limitation the reasonable fees and out-of-
pocket expenses of counsel and other consultants and a per diem
charge for internal personnel at rates typically charged for
similar services), and (C) all reasonable costs and expenses, if
any, of the Banks, the Collateral Agent, the Issuing Bank and the
Agent in connection with the enforcement against the Borrowers of
this Agreement, the Notes and the Loan Documents (including
without limitation the reasonable fees and out-of-pocket expenses
of counsel and other consultants with respect thereto of the
Agent, the Collateral Agent, the Issuing Bank and each of the
Banks).
102 Counterparts. This Agreement and any amendments
thereto may be executed in any number of counterparts, all of
which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart.
103 Binding Effect. This Agreement shall become
effective when it has been executed by the Borrowers, the Agent
and the Issuing Bank and the Agent has been notified by each
Bank that such Bank has executed it. It shall thereafter be
binding upon and inure to the benefit of the Borrowers, the
Agent, the Issuing Bank and each of the Banks and their
respective successors and assigns, except that no Borrower shall
have the right to assign its rights or obligations hereunder or
any interest herein.
104 Governing Law. This Agreement and each Notes
shall be governed in all respects by the law of the Commonwealth
of Pennsylvania and for all purposes shall be construed in
accordance with the law of the Commonwealth of Pennsylvania. The
parties acknowledge the jurisdiction of the state, federal and
local courts located within the Commonwealth of Pennsylvania over
controversies arising from or relating to this Agreement.
105 Headings. Article and Section headings used in
this Agreement are for convenience only and shall not affect the
construction of this Agreement.
106 Participations and Assignments. Any Bank may sell
participations in its Pro Rata Share of the Loans or, with the
prior approval of the Borrowers and the Agent, which approval
shall not be unreasonably withheld, assign up to 50% of its
Commitment (but in the case of assignments, in an amount not less
than $10,000,000.00) to another Person (each such Person, a
"Participant Bank"); provided, however, that (A) the Agent, and
the Borrowers shall only be obligated to deal with the Banks and
not any of the Participant Banks; (B) any Bank that sells a
participation in the Loans or assigns an interest in its
Commitment shall be obligated to deal with its Participant Banks
with respect to all matters relating to the Loans and this
Agreement; (C) any Bank that sells a participation in the Loans
or assigns an interest in its Commitment shall perform all
obligations of such Bank under this Agreement and shall remain
responsible for fulfilling its obligations hereunder; and (D) no
such Participant Bank shall have any voting rights or rights to
consent to approve any matter hereunder; provided, however, that
in addition to the assignments and participations permitted under
this Section 8.14, any Bank may assign and pledge all or any
portion of its Loans and Notes to (1) any affiliate of such Bank
or (2) any Federal Reserve Bank as collateral security pursuant
to Regulation A of the Board of Governors of the Federal Reserve
System and any Operating Circuit issued by such Federal Reserve
Bank without obtaining the Borrowers' approval. No such sale or
assignment shall release the selling or assigning Bank from its
obligations hereunder.
107 Borrowers' Replacement of Banks. The Borrowers
may replace any Bank with another bank reasonably acceptable to
the Agent upon sixty (60) days notice to the Agent so long as (A)
the replacement banks assume all the obligations of the Bank
being replaced, (B) if any Bank is so replaced within twelve (12)
months after the date hereof, the Borrowers shall pay to such
replaced Bank a fee equal to $50,000.00, and (C) the Borrowers
fulfill all of their obligations to the Bank being replaced,
including any prepayment compensation due under Section 2.17
hereof.
108 Judgment. (A) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due
hereunder or under any Notes in Dollars into another currency
(the "Other Currency"), the parties hereto agree, to the fullest
extent permitted by law, that the rate of exchange used shall be
that at which in accordance with normal banking procedure the
Agent could purchase the Dollars with the Other Currency on the
Business Day preceding that on which final judgment is given.
(A) The obligation of the Borrowers in respect of any sum
due from it to the Agent or any Bank hereunder or under any Notes
shall, notwithstanding any judgment in such Other Currency, be
discharged only to the extent that on the Business Day following
receipt by the Agent of any sum adjudged to be so due in the
Other Currency the Agent may in accordance with normal banking
procedures purchase the Dollars with the Other Currency; if the
amount of the Dollars so purchased is less than the sum
originally due to the Agent or any Bank in Dollars, each Borrower
agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Agent or any Bank against such loss.
(B)
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date
first above written.
MAIDENFORM WORLDWIDE, INC. Address:
(a New York Corporation)
BETEX, S.A. 90 Park Avenue
CREACIONES TEXTILES de New York, New York 10016
MERIDA, S.A. de C.V. Fax: (212) 983-5834
ELIZABETH NEEDLE CRAFT, INC. Attn: Steven Masket
JAMAICA NEEDLECRAFT, LTD.
MAIDENFORM INTERNATIONAL, LTD. With a copy to:
NICHOLAS NEEDLECRAFT, INC.
154 Avenue E
Bayonne, NJ 07002
By/s/ Ira Glazer Fax: (201) 436-1245
Name:Ira Glazer Attn: Ira Glazer
Title:Vice-President
(as to all Borrowers listed above)
Attest: /s/ Steven Masket
MAIDENFORM WORLDWIDE, INC. 90 Park Avenue
(a Delaware corporation) New York, New York 10016
MAIDENFORM, INC. Fax: (212) 983-5834
NCC INDUSTRIES, INC. Attn: Steven Masket
CRESCENT INDUSTRIES, INC.
With a copy to:
By /s/ Ira Glazer 154 Avenue E
Name:Ira Glazer Bayonne, NJ 07002
Title:Vice-President Fax: (201) 436-1245
Attn: Ira Glazer
(as to all Borrowers listed above)
Attest:/s/ Steven Masket
(signatures continued on next page)
CORESTATES BANK, N.A. 1345 Chestnut Street
Philadelphia, Pennsylvania 19101
Fax: (215) 973-5831
By_______________________
Name:
Title:
THE CHASE MANHATTAN BANK, N.A. 1411 Broadway, 5th Floor
New York, New York 10018
Fax: (212) 768-9514
By/s/ Elizabeth Feuerman
Name:Elizabeth Feuerman
Title:Second Vice President
CORESTATES BANK, N.A., as Agent 1345 Chestnut Street
Philadelphia, Pennsylvania 19101
Fax: (215) 973-5831
By
Name:
Title:
NBD BANK 611 Woodward Avenue
Detroit, Michigan 48232
Fax: (313) 225-1586
By /s/ Thomas W. Doddridge
Name:Thomas W. Doddridge
Title:Vice President
COMERICA BANK 500 Woodward Avenue
Detroit, MI 48275-3280
Fax: (313) 222-3330
By /s/ Martin G. Ellis
Name: Martin G. Ellis
Title:Asst. Vice President
NATIONSBANK, N.A. Nationsbank Corporate Center
100 N. Tryon Street
Charlotte, North Carolina 28255
By /s/ J. Timothy Martin Fax: (704) 386-1270
Name:J. Timothy Martin
Title:Senior Vice President
NATIONAL CITY BANK 1900 East 9th Street
Cleveland, Ohio 44ll4-3484
Fax: (216) 687-5177
By /s/ David A. Burns
Name:David A. Burns
Title:Asst. Vice President
(signatures continued on next page)
EUROPEAN AMERICAN BANK 335 Madison Avenue
New York, New York 10017
Fax: (212) 503-2667
By:/s/ Dennis Nochowitz
Name:Dennis Nochowitz
Title:Asst. Vice President
UNITED JERSEY BANK 300 Berwyn Park, Suite 211
Berwyn, Pennsylvania 19312
By: /s/ Christopher J. Annas Fax: (610) 251-7874
Name:Christopher J. Annas
Title:Vice President
MAIDENFORM WORLDWIDE, INC.
MAIDENFORM WORLDWIDE, INC.
MAIDENFORM, INC.
BETEX, S.A.
CREACIONES TEXTILES DE MERIDA, S.A. DE C.V.
ELIZABETH NEEDLE CRAFT, INC.
JAMAICA NEEDLECRAFT, LTD.
MAIDENFORM INTERNATIONAL, LTD.
NICHOLAS NEEDLECRAFT, INC.
NCC INDUSTRIES, INC.
CRESCENT INDUSTRIES, INC.
AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
Dated as of April 1, 1995
$30,000,000 10.75% Senior Notes due September 30, 2003
TABLE OF CONTENTS
(Not a Part of the Agreement)
PAGE
1. THE NOTES 2
1.1 Background. 2
1.2 Authorization of Amendment and Restatement. 2
1.3 Amendment and Restatement. 3
1.4 Purchase for Investment. 3
1.5 Failure to Tender, Failure of Conditions. 4
1.6 Expenses. 4
2. WARRANTIES AND REPRESENTATIONS 4
2.1 Nature of Business. 5
2.2Financial Statements; Debt; Material Adverse Change. 5
2.3 Subsidiaries and Affiliates. 6
2.4 Title to Properties. 6
2.5 Taxes. 6
2.6 Pending Litigation. 7
2.7 Full Disclosure. 7
2.8 Corporate Organization and Authority. 8
2.9 Charter Instruments, Other Agreements. 8
2.10 Restrictions on Companies. 9
2.11 Compliance with Law. 9
2.12 ERISA. 9
2.13 Environmental Compliance. 10
2.14Exchange of Notes is Legal and Authorized; Obligations
are Enforceable. 11
2.15 Governmental Consents. 11
2.16 No Defaults; Transactions Prior to Effective Date. 12
2.17 Margin Securities. 12
3. CLOSING CONDITIONS 12
3.1 Opinions of Counsel. 12
3.2 Warranties and Representations True. 13
3.3 Officers' Certificates. 13
3.4 Legality. 13
3.5 Private Placement Number. 13
3.6 Expenses. 13
3.7 Bank Loan Agreement. 13
3.8 Delivery of Intercreditor Agreement. 14
3.9 Delivery of Security Documents 14
3.10 Filings, Recording, Title Insurance 14
3.11 Other Purchasers. 14
3.12 Compliance with this Agreement. 14
3.13 Proceedings Satisfactory. 15
4. PAYMENTS 15
4.1 Mandatory Principal Amortization Payments. 15
4.2 Optional Prepayments. 15
4.3 Offer to Prepay upon Change in Control. 16
4.4 Mandatory Prepayments at Option of Noteholders. 18
4.5 Partial Prepayment Pro Rata. 18
4.6 Notation of Notes on Prepayment. 18
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES 19
5.1 Registration of Notes. 19
5.2 Exchange of Notes. 19
5.3 Replacement of Notes. 20
5.4 Issuance Taxes. 20
6. COVENANTS 21
6.1 Payment of Taxes and Claims. 21
6.2Maintenance of Properties; Corporate Existence; etc. 21
6.3 Payment of Notes and Maintenance of Office. 22
6.4 Guaranties and other Contingent Liabilities 22
6.5 Liens. 23
6.6 Consolidated Tangible Net Worth 24
6.7 Fixed Charge Coverage 25
6.8 Quick Ratio. 25
6.9 Leverage Ratio 25
6.10 Consolidated Funded Debt to Operating Cash Flow 25
6.11 Investments 26
6.12 Restricted Payments 26
6.13 Merger, Consolidation, etc 27
6.14 Transfers of Property 28
6.15 Debt Incurrence 28
6.16 Limitation on Foreign Assets 29
6.17 ERISA 29
6.18 Transactions with Affiliates 30
6.19 Ownership of Maidenform 30
6.20 Nature of Business 30
6.21 Guaranty of Certain Obligations 31
6.22 Pro-Rata Offers 31
6.23 Private Offering 31
6.24 Amendments to Bank Loan Agreement; Coleman Note 31
7. INFORMATION AS TO COMPANIES 32
7.1 Financial and Business Information. 32
7.2 Officers' Certificates. 36
7.3 Accountants' Certificates. 36
7.4 Inspection. 37
7.5 Additional Financial Statements. 37
8. EVENTS OF DEFAULT 37
8.1 Nature of Events. 37
8.2 Default Remedies. 39
8.3 Annulment of Acceleration of Notes. 41
9. INTERPRETATION OF THIS AGREEMENT 41
9.1 Terms Defined. 41
9.2 Principles of Financial Accounting. 59
9.3 Directly or Indirectly. 59
9.4 Section Headings; Table of Contents; Independent
Construction. 60
9.5 Governing Law. 60
10. MISCELLANEOUS 60
10.1 Communications. 60
10.2 Reproduction of Documents. 61
10.3 Survival. 62
10.4 Successors and Assigns. 62
10.5 Amendment and Waiver. 62
10.6 Payments on Notes. 64
10.7 Entire Agreement. 65
10.8 Jurisdiction; Service of Process 65
10.9 Duplicate Originals, Execution in Counterpart. 66
Annex 1 -- Information as to Purchasers
Annex 2 -- Information as to Companies
Exhibit A -- Form of Senior Note due September 30, 2003
Exhibit B1 -- Form of Companies' Counsel Closing Opinion
Exhibit B2 -- Form of Companies' General Counsel Closing
Opinion
Exhibit C1 -- Form of Officers' Certificate of Worldwide
Exhibit C2 -- Form of Officers' Certificate of Other
Companies
Exhibit D1 -- Form of Secretary's Certificate of Worldwide
Exhibit D2 -- Form of Secretary's Certificate of Other
Companies
Exhibit E -- Form of Intercreditor Agreement
MAIDENFORM WORLDWIDE, INC.
MAIDENFORM WORLDWIDE, INC.
MAIDENFORM, INC.
BETEX, S.A.
CREACIONES TEXTILES DE MERIDA, S.A. DE C.V.
ELIZABETH NEEDLE CRAFT, INC.
JAMAICA NEEDLECRAFT, LTD.
MAIDENFORM INTERNATIONAL, LTD.
NICHOLAS NEEDLECRAFT, INC.
NCC INDUSTRIES, INC.
CRESCENT INDUSTRIES, INC.
AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
$30,000,000
10.75% Senior Notes due September 30, 2003
Dated as of April 1, 1995
[Insert Name and Address
of Purchaser]
Ladies and Gentlemen:
MAIDENFORM WORLDWIDE, INC. ("Worldwide"), a Delaware
corporation, MAIDENFORM WORLDWIDE, INC., a New York corporation,
MAIDENFORM, INC. ("Maidenform"), a New York corporation, BETEX,
S.A., a Costa Rican corporation, CREACIONES TEXTILES DE MERIDA,
S.A. DE C.V., a Mexican corporation, ELIZABETH NEEDLE CRAFT,
INC., a New York corporation, JAMAICA NEEDLECRAFT, LTD., a
Jamaican corporation, MAIDENFORM INTERNATIONAL, LTD., a New York
corporation, NICHOLAS NEEDLECRAFT, INC., a New York corporation,
NCC INDUSTRIES, INC., a Delaware corporation, and CRESCENT
INDUSTRIES, INC., a Delaware corporation (each such entity,
together with Worldwide and Maidenform, individually, a "Company"
and collectively, the "Companies") hereby jointly and severally
agree with you as follows:
1. THE NOTES
1 Background.
Pursuant to separate Note Purchase Agreements, each dated as
of August 1, 1993 (collectively, the "Existing Note Purchase
Agreement"), the Original Companies issued Thirty Million Dollars
($30,000,000) in aggregate principal amount of their joint and
several eight and seventy-five one hundredths percent (8.75%)
Senior Notes due September 30, 2003 (the "Existing Notes"). The
Existing Notes are substantially in the form of Exhibit A
attached to the Existing Note Purchase Agreement.
Maidenform and Worldwide are preparing to acquire
approximately ninety-two and four-tenths percent (92.4%) of the
issued and outstanding common stock of NCC in a transaction more
fully described in Part 1.1 to Annex 2 hereto (the
"Acquisition"). The financing and consummation of the
Acquisition would violate several provisions of the Existing Note
Purchase Agreement. The Original Companies have requested that
the holders of the Existing Notes consent to the Acquisition by
amending any and all covenants in the Existing Note Purchase
Agreement which would be violated thereby, and have offered to
increase the rate of interest to ten and seventy-five one-
hundredths percent (10.75%) per annum. The Companies and the
holders of the Existing Notes are entering into this Amended and
Restated Note Purchase Agreement to make such modifications, and
other modifications herein set forth, to the Existing Note
Purchase Agreement.
2 Authorization of Amendment and Restatement.
Each of the Companies hereby authorizes, agrees and consents
to the Amendment and Restatement in their entirety of the
Existing Note Purchase Agreement and the Existing Notes as
provided for herein. The Existing Notes, as amended and restated
by Exhibit A to this Agreement, shall be hereinafter referred to
individually as a "Note" and, collectively, as the "Notes". The
Companies hereby authorize the execution and delivery to the
Purchasers of the Notes, which Notes shall:
(a) be substituted in the place of the Existing Notes;
(b) be dated March 31, 1995, the last date on which
interest was paid on the Existing Notes;
(c) mature on September 30, 2003;
(d) bear interest (computed on the basis of a 360-day
year of twelve thirty day months) on the unpaid principal balance
thereof from the date of such Note at the rate of ten and seventy-
five one hundredths percent (10.75%) per annum, payable quarterly
on the last day of each December, March, June and September in
each year, commencing on the payment date next succeeding the
date of such Note, until the principal amount thereof shall be
due and payable;
(e) bear interest, payable on demand, on any overdue
principal (including any overdue prepayment of principal) and
Make-Whole Amount, if any, and (to the extent permitted by
applicable law), on any overdue installment of interest, at a
rate equal to the lesser of
(i) the highest rate allowed by applicable law,
or
(ii) twelve and seventy-five one-hundredths
percent (12.75%) per annum; and
(f) be in the form of the Note set out in Exhibit A
hereto.
The term "Notes" as used herein shall include each Note delivered
pursuant to any provision of this Agreement, and each Note
delivered in substitution or exchange for any such Note pursuant
to any such provision.
3 Amendment and Restatement.
Subject to the satisfaction of the conditions precedent set
forth in Section 3 of this Agreement, you, by your execution of
this Agreement, hereby agree and consent to the Amendment and
Restatement in its entirety of the Existing Note Purchase
Agreement by this Agreement and, upon the satisfaction of such
conditions precedent, the Existing Note Purchase Agreement shall
be deemed so amended and restated. Subject to the satisfaction
of the conditions precedent set forth in Section 3 of this
Agreement, you, by your execution of this Agreement, hereby agree
and consent to the Amendment and Restatement in their entirety of
the Existing Notes and the substitution of the Notes therefor.
On the Effective Date, the Companies agree, subject to the
satisfaction of the conditions precedent set forth in Section 3
of this Agreement, to execute and deliver to you the aggregate
principal amount of Notes set forth opposite your name on the
Schedule attached to this Agreement as Annex 1 (the "Purchaser
Schedule"), in replacement of your Existing Notes.
Contemporaneously with the receipt by you of such Notes, you
agree to re-deliver to the Companies for cancellation the
Existing Notes held by you. All amounts owing under, and
evidenced by, the Existing Notes as of the Effective Date shall
continue to be outstanding under, and shall after the Effective
Date be evidenced by, the Notes, and shall be payable in
accordance with this Agreement.
4 Purchase for Investment.
You represent to the Companies, and by agreeing to the
amendment and restatement of the Existing Note Purchase
Agreement and the substitution of the Notes for the Existing
Notes it is specifically understood and agreed, that you are
acquiring the Notes listed on Annex 1 hereto below your name
for your own account for investment and with no present
intention of distributing the Notes or any part thereof, but
without prejudice to your right at all times to:
(i) sell or otherwise dispose of all or any part of the
Notes under a registration statement filed under the Securities
Act, or in a transaction exempt from the registration
requirements of the Securities Act; and
(ii) have control over the disposition of all of your assets
to the fullest extent required by any applicable insurance law.
It is understood that, in making the representations set out
in Section 2.14(a) hereof and Section 2.15 hereof, the
Companies are relying, to the extent applicable, upon your
representation in the immediately preceding sentence.
5 Failure to Tender, Failure of Conditions.
If the conditions specified in Section 3 hereof have not
been fulfilled on or prior to April 26, 1995, this Agreement shall
terminate, and the Existing Note Purchase Agreement and the
Existing Notes shall continue to be in full force and effect.
6 Expenses.
(a) Generally. Whether or not the transactions
contemplated by this Agreement are consummated, the Companies
will promptly (and in any event within thirty (30) days of
receiving any statement or invoice therefor) pay, on a joint and
several basis, all fees, expenses and costs relating hereto,
including, but not limited to:
(i) the cost of reproducing this Agreement, the Notes and
the other documents delivered in connection with this Agreement;
(ii) your out of pocket expenses, including travel, lodging
and meals, and
(iii) the fees, expenses and costs incurred in complying
with each of the conditions set forth in Section 3 hereof.
(b) Counsel. Without limiting the generality of the
foregoing, it is agreed and understood that the Companies will
pay, on the Effective Date, the statement for fees and
disbursements of your special counsel,and the Companies will also
pay upon receipt each additional statement for fees and
disbursements of your special counsel rendered after the
Effective Date in connection with the issuance of the Notes or
the matters referred to in Section 1.6(a) hereof.
(c) Survival. The obligations of the Companies under this
Section 1.6, Section 8.2(e) and Section 10.5(d) hereof shall
survive the payment of the Notes and the termination hereof.
2. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement, the Companies
jointly and severally warrant and represent to you that as of the
Acquisition Effective Time each of the following statements will
be true and correct:
1 Nature of Business.
Except as set forth in Part 2.1 of Annex 2 hereto,
Confidential Private Placement Memorandum, dated May 1993,
prepared by the Placement Agent as supplemented by the Financing
Memorandum regarding Project Bulldog prepared by the Placement
Agent (as so supplemented, together with all exhibits and annexes
thereto, the "Placement Memorandum"), correctly describes the
general nature of the business and principal Properties of the
Companies.
2 Financial Statements; Debt; Material Adverse Change.
(a) Maidenform Financial Statements. The Companies have
provided you with the financial statements described in Part
2.2(a) of Annex 2 hereto. Such audited financial statements have
been prepared in accordance with GAAP consistently applied, and
present fairly, in all material respects, the consolidated
financial position of Worldwide and its subsidiaries as of the
dates indicated and the results of their operations and cash
flows for the periods indicated.
(b) NCC Financial Statements. The Companies have provided
you with the financial statements described in Part 2.2(b) of
Annex 2 hereto. Such audited financial statements have been
prepared in accordance with GAAP consistently applied, and
present fairly, in all material respects, the consolidated
financial position of NCC and its subsidiaries as of the dates
indicated and the results of their operations and cash flows for
the periods indicated.
(c) Pro Forma Financial Statements. The five year
consolidated projections (copies of which have been provided to
you) have been prepared in good faith and are based upon
reasonable assumptions.
(d) Debt. Part 2.2(d) of Annex 2 hereto lists all Debt of
the Companies as of the Acquisition Effective Time (after giving
effect to the funding of the Bank Loan Agreement), and provides
the following information with respect to each item of such Debt:
(i) the holder and type thereof and the
obligor with respect thereto,
(ii) the outstanding amount,
(iii) the current portion, and
(iv) the collateral securing such Debt, if
any.
(e) Material Adverse Change. Since December 31, 1994,
there has been no change in the business, prospects, profits,
Properties or condition (financial or otherwise) of any of the
Companies except for the Acquisition and changes in the ordinary
course of business that, in the aggregate for all such changes,
have not had and could not reasonably be expected to have a
Material Adverse Effect.
3 Subsidiaries and Affiliates.
Part 2.3 of Annex 2 hereto sets forth:
(a) the name of each of the Subsidiaries, its jurisdiction
of incorporation and the percentage of its Voting Stock owned by
each of the Companies and each other Subsidiary, and
(b) a description of the Affiliates and the nature of their
affiliation.
Except as set forth in Part 2.3 of Annex 2, each of the Companies
has good title to all of the shares it purports to own of the
stock of each Subsidiary, free and clear in each case of any Lien
except Liens in favor of the Collateral Agent. All such shares
have been duly issued and are fully paid and nonassessable.
4 Title to Properties.
(a) Each of the Companies has good title to all of the real
Property, and good title to all of the other Property, reflected
in its most recent balance sheet referred to in Part 2.2(a) or
Part 2.2(b) of Annex 2 hereto (except as sold or otherwise
disposed of in the ordinary course of business), except for such
failures to have such good title as are immaterial to such
financial statements and that, in the aggregate for all such
failures, could not reasonably be expected to have a Material
Adverse Effect. All such Property is free from Liens not
permitted by Section 6.5 hereof.
(b) Each of the Companies owns, possesses or has the right
to use all of the patents, trademarks, service marks, trade
names, copyrights and licenses, and rights with respect thereto,
necessary for the present and currently planned future conduct of
its business, without any known conflict with the rights of
others, except for such failures to own, possess, or have the
right to use, that, in the aggregate for all such failures, could
not reasonably be expected to have a Material Adverse Effect.
5 Taxes.
(a) Returns Filed; Taxes Paid.
(i) All tax returns required to be filed by any one or more
of the Companies (and any other Person with which any of the
Companies files or has filed a consolidated return in any
jurisdiction) have been filed on a timely basis, and all taxes,
assessments, fees and other governmental charges upon each of the
Companies and any such Person, and upon any of their respective
Properties, income or franchises, that are due and payable have
been paid, except where extension for filing has been duly
obtained and has not expired and except for such tax returns and
such tax payments that could not, in the aggregate for all such
tax returns and payments, reasonably be expected to have a
Material Adverse Effect.
(ii) All liabilities of each of the Companies and the other
Persons referred to in the preceding clause (i) with respect to
federal income taxes have been finally determined except for the
fiscal years 1988 through 1993, the only years not closed by the
completion of an audit or the expiration of the statute of
limitations.
(b) Book Provisions Adequate.
(i) The amount of the liability for taxes reflected in each
of the balance sheets referred to in Part 2.2(a) or Part 2.2(b)
of Annex 2 hereof is in each case an adequate provision for taxes
as of the dates of such balance sheets (including, without
limitation, any payment due pursuant to any tax sharing
agreement) as are or may become payable by any one or more of the
Companies and the other Persons consolidated with any of the
Companies in such financial statements in respect of all tax
periods ending on or prior to such dates.
(ii) None of the Companies knows of any proposed additional
tax assessment against any of them or any such Person that is not
reflected in full in the most recent balance sheet referred to in
Part 2.2(a) or Part 2.2(b) of Annex 2 hereto.
6 Pending Litigation.
(a) Except as disclosed in the financial statements
described on Part 2.2(a) or Part 2.2(b) of Annex 2 hereto (or as
disclosed on Part 2.6(a) of Annex 2 hereto), there are no
proceedings, actions or investigations pending or, to the
knowledge of any of the Companies, threatened against or
affecting any of the Companies in any court or before any
Governmental Authority or arbitration board or tribunal that, in
the aggregate for all such proceedings, actions and
investigations, could reasonably be expected to have a Material
Adverse Effect.
(b) None of the Companies is in default with respect to any
judgment, order, writ, injunction or decree of any court,
Governmental Authority, arbitration board or tribunal that, in
the aggregate for all such defaults, could reasonably be expected
to have a Material Adverse Effect.
7 Full Disclosure.
The financial statements referred to in Part 2.2(a) and Part
2.2(b) of Annex 2 hereto do not, nor does this Agreement, the
Placement Memorandum or any written statement furnished by or on
behalf of any of the Companies to you in connection with the
negotiation or the closing of the sale of the Notes, contain any
untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not
misleading. There is no fact that the Companies have not
disclosed to you in writing that has had or, so far as any of the
Companies can now reasonably foresee, could reasonably be
expected to have a Material Adverse Effect.
8 Corporate Organization and Authority.
Each of the Companies:
(a) is a corporation duly incorporated, validly existing
and, with respect to the Domestic Companies, is in good standing
under the laws of its jurisdiction of incorporation;
(b) has all legal and corporate power and authority to own
and operate its Properties and to carry on its business as now
conducted and as presently proposed to be conducted;
(c) has all licenses, certificates, permits, franchises and
other governmental authorizations necessary to own and operate
its Properties and to carry on its business as now conducted and
as presently proposed to be conducted, except where the failure
to have such licenses, certificates, permits, franchises and
other governmental authorizations, in the aggregate for all such
failures, could not reasonably be expected to have a Material
Adverse Effect; and
(d) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a foreign
corporation, in each state within the continental United States
(each of such states being listed in Part 2.8 of Annex 2 hereto)
wherein the nature of the business or the Properties of such
Company makes such qualification, licensing or authorization
necessary or desirable, except where the failure to be so duly
qualified, duly licensed, authorized to do business or be in good
standing, in the aggregate for all such failures, could not
reasonably be expected to have a Material Adverse Effect;
provided that Worldwide is in the process of qualifying to do
business in Puerto Rico, and the Companies hereby agree to
complete such process within thirty (30) days from the date
hereof.
The Purchasers acknowledge that on the Effective Date
Worldwide N.Y. is in the process of merging into Worldwide and
the Companies agree to complete such process within one hundred
twenty (120) days of the date hereof.
9 Charter Instruments, Other Agreements.
None of the Companies is in violation in any respect of any
term of any charter instrument or bylaw. None of the Companies
is in violation in any respect of any term in any agreement or
other instrument to which it is a party or by which it or any of
its Properties may be bound, except for such failures that, in
the aggregate for all such failures, could not reasonably be
expected to have a Material Adverse Effect. No default beyond
any applicable grace period in respect of any payment due exists
in connection with any instrument evidencing Debt of any of the
Companies.
10 Restrictions on Companies.
None of the Companies:
(a) is a party to any contract or agreement, or subject to
any charter or other corporate restriction that, in the aggregate
for all such contracts, agreements, charters and corporate
restrictions, could reasonably be expected to have a Material
Adverse Effect;
(b) is (after giving effect to the funding of the Bank Loan
Agreement) a party to any contract or agreement that restricts
the right or ability of such corporation to incur Debt, other
than this Agreement, the Bank Loan Agreement and the agreements
listed in Part 2.10(b) of Annex 2 hereto (none of which restricts
the issuance and sale of the Notes or the performance by the
Companies hereunder or under the Notes, and true, correct and
complete copies of each of which such agreements have been
provided to you); and
(c) has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of
its Property, whether now owned or hereafter acquired, to be
subject to a Lien not permitted by Section 6.5 hereof.
11 Compliance with Law.
None of the Companies is in violation of any law, ordinance,
governmental rule or regulation to which it is subject, which
violations, in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
12 ERISA.
(a) Prohibited Transactions. Neither the execution of this
Agreement nor the acquisition of the Notes by you will constitute
a "prohibited transaction" (as defined in section 406 of ERISA
and section 4975 of the IRC).
(b) Pension Plans.
(i) Compliance with ERISA. Each of the Companies and the
ERISA Affiliates are in compliance with ERISA, except for such
failures to comply that, in the aggregate for all such failures,
could not reasonably be expected to have a Material Adverse
Effect.
(ii) Funding Status. No "accumulated funding deficiency"
(as defined in section 302 of ERISA and section 412 of the IRC),
whether or not waived, exists with respect to any Pension Plan.
(iii) PBGC. No liability to the PBGC has been or is
expected to be incurred by any of the Companies or any ERISA
Affiliate with respect to any Pension Plan that, individually or
in the aggregate, could reasonably be expected to have a Material
Adverse Effect. No circumstance exists that constitutes grounds
under section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, any
Pension Plan or trust created thereunder, nor has the PBGC
instituted any such proceeding.
(iv) Multiemployer Plans. Except with respect to withdrawal
liability which has been fully satisfied, none of the Companies
or any ERISA Affiliate has incurred any withdrawal liability
under Title IV of ERISA with respect to any Multiemployer Plan.
None of the Companies or any ERISA Affiliate believes as of the
Effective Date that it will incur any such liability which, after
giving effect to the amounts required to be paid over the time
period permitted by the Multiemployer Pension Plan Amendments Act
of 1980, would have a Material Adverse Effect. There have been
no "reportable events" (as defined in section 4043 of ERISA) with
respect to any Multiemployer Plan that could result in the
termination of such Multiemployer Plan and give rise to a
liability of any of the Companies or any ERISA Affiliate in
respect thereof.
(c) Foreign Pension Plans. The present value of all
benefits vested under each Foreign Pension Plan, determined as of
the most recent valuation date in respect thereof, does not
exceed the value of the assets of such Foreign Pension Plan and
all required payments in respect of funding such Foreign Pension
Plan have been made.
13 Environmental Compliance.
(a) Compliance. Each of the Companies is in compliance
with all Environmental Protection Laws in effect in each
jurisdiction where it is presently doing business and in which
the failure to so comply, in the aggregate for all such failures,
could reasonably be expected to have a Material Adverse Effect.
(b) Liability. None of the Companies is subject to any
liability under any Environmental Protection Laws that, in the
aggregate for all such liabilities, could reasonably be expected
to have a Material Adverse Effect.
(c) Notices. None of the Companies has received any:
(i) written notice from any Governmental Authority by which
any of its present or previously-owned or leased Properties has
been identified in any manner by any Governmental Authority as a
hazardous substance disposal or removal site, "Super Fund" clean-
up site or candidate for removal or closure pursuant to any
Environmental Protection Law;
(ii) written notice of any Lien arising under or in
connection with any Environmental Protection Law that has
attached to any revenues of, or to, any of its owned or leased
Properties; or
(iii) communication, written or oral, from any
Governmental Authority concerning action or omission by any of
the Companies in connection with its ownership or leasing of any
Property resulting in the release of any hazardous substance
resulting in any violation of any Environmental Protection Law;
in each case where the effect of which, in the aggregate for
all such notices and communications, could reasonably be
expected to have a Material Adverse Effect.
14 Exchange of Notes is Legal and Authorized; Obligations
are Enforceable.
(a) Exchange of Notes is Legal and Authorized. Each of the
issuance, exchange and delivery of the Notes by the Companies,
the execution and delivery hereof by each of the Companies and
compliance by each of the Companies with all of the provisions
hereof and of the Notes:
(i) is within the corporate powers of each of the
Companies; and
(ii) is legal and does not conflict with, result in any
breach of any of the provisions of, constitute a default under,
or result in the creation of any Lien upon any Property of any of
the Companies under the provisions of, any agreement, charter
instrument, bylaw or other instrument to which it is a party or
by which it or any of its Properties may be bound.
(b) Obligations are Enforceable. Each of this Agreement
and the Notes has been duly authorized by all necessary action on
the part of each of the Companies, has been executed and
delivered by duly authorized officers of each of the Companies
and constitutes the legal, valid and binding obligation of each
of the Companies, enforceable in accordance with its terms,
except that the enforceability hereof and of the Notes may be:
(i) limited by applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium or other similar laws
affecting the enforceability of creditors' rights generally; and
(ii) subject to the availability of equitable remedies.
15 Governmental Consents.
(a) Exchange of Notes. Except as set forth in Part 2.15 of
Annex 2, neither the nature of the Companies or of any of their
respective businesses or Properties, nor any relationship between
any of the Companies and any other Person, nor any circumstance
in connection with the offer, issuance, exchange or delivery of
the Notes and the execution and delivery of this Agreement, is
such as to require a consent, approval or authorization of, or
filing, registration or qualification with, any Governmental
Authority on the part of any of the Companies as a condition to
the execution and delivery of this Agreement or the offer,
issuance, sale or delivery of the Notes. None of the Companies
is subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
(b) Acquisition. All consents, approvals, filings,
registrations or qualifications required on the part of any or
more of the Companies in connection with the Acquisition or any
aspect thereof have been duly received or made, as the case may
be, except for consents, approvals, filings, registrations and
qualifications the absence of which will not have a Material
Adverse Effect. The Acquisition has been consummated in
compliance with all applicable laws.
16 No Defaults; Transactions Prior to Effective Date.
(a) No event has occurred and no condition exists
that, upon the execution and delivery of this Agreement and
the issuance of the Notes, would constitute a Default or an
Event of Default.
(b) Except as disclosed in Part 2.17(b) of Annex 2
hereto, none of the Companies has entered into any
transaction since the date of the most recent balance sheet
referred to in Part 2.2(a) or Part 2.2(b) of Annex 2 hereto
that would have been prohibited by Section 6.4 through
Section 6.18 hereof, inclusive, had such Sections applied
since such date.
17 Margin Securities.
None of the transactions contemplated hereby will violate or
will result in a violation of section 7 of the Exchange Act or
any regulations issued pursuant thereto, including, without
limitation, Regulations G, T, U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., Chapter II.
3. CLOSING CONDITIONS
The amendment and restatement of the Existing Note Purchase
Agreement and the Existing Notes, and the substitution of the
Notes for the Existing Notes are subject to the satisfaction of
the following conditions precedent:
1 Opinions of Counsel.
You shall have received from
(a) Baer Marks & Upham, counsel for the Companies, and
(b) Steven N. Masket, Esq., General Counsel for the
Companies
closing opinions, each dated as of the Effective Date,
substantially in the respective forms set forth in Exhibits B1
and B2 hereto and as to such other matters as you may reasonably
request. This Section 3.1 shall constitute direction by the
Companies to such counsel to deliver such closing opinions to
you.
2 Warranties and Representations True.
The warranties and representations contained in Section 2
hereof shall be true on the Effective Date with the same effect
as though made on and as of that date.
3 Officers' Certificates.
You shall have received:
(a) a certificate dated the Effective Date and signed by
two Senior Officers on behalf of Worldwide, substantially in the
form of Exhibit C1 hereto;
(b) a certificate dated the Effective Date and signed by
two Senior Officers on behalf of each of the Companies other than
Worldwide, substantially in the form of Exhibit C2 hereto;
(c) a certificate dated the Effective Date and signed by
the Secretary or an Assistant Secretary on behalf of Worldwide,
substantially in the form of Exhibit D1 hereto; and
(d) a certificate dated the Effective Date and signed by
the Secretary or an Assistant Secretary on behalf of each of the
Companies other than Worldwide, substantially in the form of
Exhibit D2 hereto.
4 Legality.
The Notes shall on the Effective Date qualify as a legal
investment for you under applicable insurance law (without regard
to any "basket" or "leeway" provisions), and such acquisition
shall not subject you to any penalty or other onerous condition
in or pursuant to any such law or regulation, and you shall have
received such evidence as you may reasonably request to establish
compliance with this condition.
5 Private Placement Number.
The Companies shall have obtained or caused to be obtained a
private placement number for the Notes from the CUSIP Service
Bureau of Standard & Poor's and you shall have been informed of
such private placement number.
6 Expenses.
All fees and disbursements required to be paid pursuant to
Section 1.6(a)(ii) and Section 1.6(b) hereof shall have been paid
in full.
7 Bank Loan Agreement.
The Bank Loan Agreement shall have been executed and
delivered by the parties thereto and you shall have received a
true and correct copy of such agreement, which shall be in form
and substance satisfactory to you and your counsel.
8 Delivery of Intercreditor Agreement. The Collateral
Agent, the Banks, the Purchasers and the Companies shall have
executed an Intercreditor Agreement (the "Intercreditor
Agreement"), to the effect and substantially in the form attached
hereto as Exhibit E, and such Agreement shall be in full force
and effect.
9 Delivery of Security Documents. The Companies and the
Collateral Agent shall have executed and delivered the Security
Documents, each Security Document shall be in full force and
effect, and each Purchaser shall have received a copy thereof.
10 Filings, Recording, Title Insurance.
(a) Filings, Recordings. Except as set forth in Part 3.10 of
Annex 2, financing statements shall have been filed in all
jurisdictions necessary to perfect the security interests in
personal property created by the Security Documents; each
Security Document consisting of a mortgage or deed of trust shall
be in due form for recording in the jurisdiction in which it is
to be recorded in all public offices necessary to perfect and
maintain the Lien thereof as a valid Lien on the real property
and interests in the real property described therein; and the
Liens created by the Security Documents shall be senior to all
other Liens upon the Property subject thereto, other than
Permitted Encumbrances.
(b) Title Insurance. The Collateral Agent shall have received
one or more policies of mortgagee title insurance (or commitments
therefor) acceptable to it with respect to each Security Document
which is a mortgage or deed of trust, each of which policies
shall (i) insure that the Company is the owner or leasehold
owner, as the case may be, of the subject mortgaged property,
(ii) insure that the subject mortgage or deed of trust
constitutes a first Lien on the mortgaged property covered
thereby, subject only to Permitted Encumbrances, (iii) be
satisfactory in form and substance to you and the Collateral
Agent, (iv) be in an amount acceptable to you and the Collateral
Agent, (v) be issued by a title insurance company which is
satisfactory to you and the Collateral Agent, and (vi) contain
such further endorsements and affirmative coverage as the
Collateral Agent may reasonably request and as is available
(including, without limitation, the deletion of all exceptions to
coverage in respect of survey disclosures, mechanics' liens,
creditors' rights, parties in possession and taxes). All
premiums in respect of such title insurance policies shall have
been paid in full and evidence thereof shall have been delivered
to the Collateral Agent.
11 Other Purchasers.
The Companies and all holders of the Existing Notes shall
have entered into the Restated Note Agreement, and each party
thereto shall be prepared to perform its respective obligations
thereunder.
12 Compliance with this Agreement.
Each of the Companies shall have performed and complied with
all agreements and conditions contained herein that are required
to be performed or complied with by the Companies on or prior to
the Effective Date, and such performance and compliance shall
remain in effect on the Effective Date.
13 Proceedings Satisfactory.
All proceedings taken in connection with the Acquisition and
the issuance of the Notes and all documents and papers relating
thereto shall be satisfactory to you and your special counsel.
You and your special counsel shall have received copies of such
documents and papers as you or they may reasonably request in
connection therewith, all in form and substance satisfactory to
you and your special counsel.
4. PAYMENTS
1 Mandatory Principal Amortization Payments.
The Companies shall pay, and there shall become due and
payable, Four Million Two Hundred Eighty-Five Thousand Seven
Hundred Fourteen and 30/100 Dollars ($4,285,714.30) in principal
amount of the Notes on September 30 in each year beginning on
September 30, 1997 and ending on September 30, 2003, inclusive
(each, a "Mandatory Principal Amortization Payment"). Each
Mandatory Principal Amortization Payment shall be at one hundred
percent (100%) of the principal amount paid, together with
interest accrued thereon to the date of payment. Without
limitation of the foregoing, all of the principal of the Notes
remaining outstanding on September 30, 2003 (if any), together
with interest accrued thereon, shall become due and payable on
September 30, 2003.
2 Optional Prepayments.
(a) Optional Prepayments. The Companies may, at any time
and from time to time, prepay the principal amount of the Notes
in part, in an aggregate principal amount of not less than One
Million Dollars ($1,000,000) at any time, or in whole, in each
case together with:
(i) an amount equal to the Make-Whole Amount on such date
in respect of the principal amount of the Notes being so prepaid;
and
(ii) interest on such principal amount then being prepaid
accrued to the prepayment date.
(b) Notice of Optional Prepayment. The Companies will give
notice of any optional prepayment of the Notes to each holder of
Notes not less than thirty (30) days or more than sixty (60) days
before the date fixed for prepayment, specifying:
(i) such date;
(ii) the Section hereof under which the prepayment is to be
made;
(iii) the principal amount of each Note to be prepaid on
such date;
(iv) the interest to be paid on each such Note, accrued to
the date fixed for payment; and
(v) the detailed calculation of an estimated Make-Whole
Amount, if any (calculated as if the date of such notice was the
date of prepayment), due in connection with such prepayment.
Notice of prepayment having been so given, the aggregate
principal amount of the Notes to be prepaid specified in
such notice, together with the Make-Whole Amount as of the
specified prepayment date with respect thereto, if any, and
accrued interest thereon shall become due and payable on the
specified prepayment date. Two (2) Business Days prior to
the making of such prepayment, the Companies shall deliver
to each holder of Notes by facsimile transmission a
certificate of a Senior Financial Officer on behalf of
Worldwide specifying the details of the calculation of such
Make-Whole Amount as of the specified prepayment date.
(c) Effect of Prepayment. Each prepayment of Notes
pursuant to this Section 4.2 shall be applied to the Mandatory
Principal Amortization Payments in inverse order of maturity.
(d) No Other Optional Prepayments. Except as provided in
this Section 4.2, the Companies may not make any optional
prepayment in respect of the Notes.
3 Offer to Prepay upon Change in Control.
(a) Notice and Offer. In the event of either
(i) a Change in Control, or
(ii) the obtaining of knowledge of a Control Event by any
Senior Officer of any of the Companies (including, without
limitation, via the receipt of notice of a Control Event from any
holder of Notes),
Worldwide will (on behalf of the Companies), within three
(3) Business Days of the occurrence of either of such
events, give written notice of such Change in Control or
Control Event to each holder of Notes by registered mail
(with a copy thereof sent via an overnight courier of
national reputation) and, simultaneously with the sending of
such written notice, give telephonic advice of such Change
in Control or Control Event to an investment officer or
other similar representative or agent of each such holder
specified on Annex 1 hereto at the telephone number
specified thereon, or to such other Person at such other
telephone number as any holder of a Note may specify to
Worldwide in writing. In the event of a Change in Control,
such written notice shall contain, and such written notice
shall constitute, an irrevocable offer by the Companies
(jointly and severally) to prepay all, but not less than
all, the Notes held by such holder on a date specified in
such notice (the "Control Prepayment Date") that is not less
than forty-five (45) days and not more than sixty (60) days
after the date of mailing of such notice. If the Control
Prepayment Date shall not be specified in such notice, the
Control Prepayment Date shall be the forty-fifth (45th) day
after the date of mailing of such notice. If Worldwide (on
behalf of the Companies) shall not have received a written
response to such notice from each holder of Notes within ten
(10) days after the date of posting of such notice to such
holder of Notes, then Worldwide (on behalf of the Companies)
shall immediately send a second written notice via an
overnight courier of national reputation to each such holder
of Notes who shall have not previously responded to
Worldwide, which notice shall contain the information
contained in the initial notice and a statement of the
Control Prepayment Date.
(b) Acceptance and Payment. To accept such offered
prepayment, a holder of Notes shall cause a notice of such
acceptance to be delivered to Worldwide not later than twenty
(20) days after the date of receipt by such holder of the most
recent written offer of such prepayment. If so accepted, such
offered prepayment shall be due and payable on the Control
Prepayment Date. Such offered prepayment shall be made at one
hundred percent (100%) of the principal amount of such Notes,
together with any Make-Whole Amount as of the Control Prepayment
Date with respect thereto and interest on the Notes then being
prepaid accrued to the Control Prepayment Date. Two (2) Business
Days prior to the making of such prepayment, Worldwide (on behalf
of the Companies) shall deliver to each holder of Notes from
which it is then purchasing Notes, by facsimile transmission, a
certificate of a Senior Financial Officer on behalf of Worldwide
specifying the details of the calculation of such Make-Whole
Amount as of the specified prepayment date.
(c) Officer's Certificate. Each offer to prepay the Notes
pursuant to this Section 4.3 shall be accompanied by a
certificate, executed by a Senior Financial Officer on behalf of
Worldwide and dated the date of such offer, specifying:
(i) the Control Prepayment Date;
(ii) the Section hereof under which such offer is made;
(iii) the principal amount of each Note offered to be
prepaid;
(iv) the interest that would be due on each such Note
offered to be prepaid, accrued to the date fixed for payment;
(v) the detailed calculation of an estimated Make-Whole
Amount, if any (calculated as if the date of such notice was the
date of prepayment), that would be due in connection with such
offered prepayment;
(vi) that the Companies must receive an acceptance by such
holder of such offered prepayment no later than twenty (20) days
after such holder's receipt of such certificate;
(vii) that the conditions of this Section 4.3 have been
fulfilled; and
(viii) in reasonable detail, the nature and date or
proposed date of the Change in Control.
(d) Effect of Prepayment. Each prepayment of the Notes
pursuant to this Section 4.3 shall reduce ratably each of the
Mandatory Principal Amortization Payments remaining after the
date of such prepayment on the Notes not so prepaid.
4 Mandatory Prepayments at Option of Noteholders. If at
any time the Companies become obligated to prepay a principal
amount of the Bank Loan (pursuant to Section 2.2(B) or Section
2.6 of the Bank Loan Agreement or any successor provisions
thereto) as a result of the generation of Net Cash Flow or the
realization of proceeds from an issuance of equity, Worldwide
will (on behalf of the Companies), within three (3) Business Days
of becoming aware of such obligation, give notice of such
obligation to each holder of Notes by registered mail (with a
copy thereof sent via an overnight courier of national
reputation) and, simultaneously with the sending of such written
notice, give telephone advice of such obligation to an investment
officer or other similar representative or agent of each such
holder specified on Annex 1 hereto at the telephone number
specified thereon, or to such other person at such other
telephone number as any holder of a Note may specify thereon, or
to such other person at such other telephone number as any holder
of Note may specify to Worldwide in writing. Such notice shall
set forth the nature of the prepayment which is required to be
made, the amount of Excess Cash Flow or equity proceeds, as the
case may be, and the minimum prepayment to which each holder of
Notes is entitled (together with detailed calculations supporting
such minimum amount). Upon receipt of such notice (or upon the
date such notice should have been received), each holder of Notes
shall have the right for ten days (by written notice to
Worldwide) to cause the Companies to prepay a principal amount of
the Notes held by it equal to such holder's Pro Rata Share of
such Excess Cash Flow or equity proceeds, as the case may be. If
a holder of Notes has not responded within such ten day period,
the Company shall give such holder a second notice containing the
same information as the first, and the holder shall have five
additional days within which to give notice of acceptance. If
such holder does not respond to such second notice within such
five day period, its rights under this Section 4.4 (as to such
prepayment) shall lapse. If a notice of acceptance is given by a
holder as to a principal amount of its Notes, such principal
amount of such holder's Notes shall thereupon become due and
payable on the fifteenth (15th) day following such notice by such
holder. Each such prepayment shall be at one hundred percent
(100%) of the principal amount so prepaid without Make-Whole
Amount, and shall be applied to the Mandatory Principal
Amortization Payments on the Notes so prepaid in inverse order of
maturity.
5 Partial Prepayment Pro Rata. If at the time any
required prepayment or optional prepayment under Section 4.1 or
Section 4.2 hereof is due there is more than one Note
outstanding, the aggregate principal amount of each such required
or optional partial prepayment of the Notes shall be allocated
among the holders of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid
principal amounts of the Notes then outstanding (but without
giving effect to any payments received by any holder of Notes
pursuant to Section 4.4), with adjustments, to the extent
practicable, to equalize for any prior prepayments not in such
proportion. For purposes of calculating the amount of any
prepayment to be made pursuant to Section 4.1 only, Maidenform
shall be deemed to be the holder of any Notes which have been
acquired by any one or more of the Companies.
6 Notation of Notes on Prepayment.
Upon any partial prepayment of a Note, such Note may be (but
shall not be required to be), at the option of the holder
thereof:
(a) surrendered to the Companies pursuant to Section 5.2
hereof in exchange for a new Note in a principal amount equal to
the principal amount remaining unpaid on the surrendered Note;
(b) made available to the Companies for notation thereon of
the portion of the principal so prepaid; or
(c) marked by such holder with a notation thereon of the
portion of the principal so prepaid.
In case the entire principal amount of any Note is paid, such
Note shall be surrendered to the Companies for cancellation and
shall not be reissued, and no Note shall be issued in lieu of the
paid principal amount of any Note.
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
1 Registration of Notes.
The Companies will cause to be kept at their office
maintained pursuant to Section 6.3 hereof a register for the
registration and transfer of Notes. The name and address of each
holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be
registered in such register. The Person in whose name any Note
shall be registered shall be deemed and treated as the owner and
holder thereof for all purposes hereof and the Companies shall
not be affected by any notice or knowledge to the contrary.
2 Exchange of Notes.
(a) Upon surrender of any Note at the office of the
Companies maintained pursuant to Section 6.3 hereof duly endorsed
or accompanied by a written instrument of transfer duly executed
by the registered holder of such Note or such holder's attorney
duly authorized in writing, the Companies will execute and
deliver, at the Companies' expense (except as provided below),
new Notes in exchange therefor, in denominations of at least One
Hundred Thousand Dollars ($100,000) (except as may be necessary
to reflect any principal amount not evenly divisible by One
Hundred Thousand Dollars ($100,000)), in an aggregate principal
amount equal to the unpaid principal amount of the surrendered
Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of
Exhibit A hereto. Each such new Note shall be dated and bear
interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if
no interest shall have been paid thereon. The Companies may
require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of
Notes.
(b) The Companies will pay the cost of delivering to or
from such holder's home office or custodian bank from or to the
Companies, insured to the reasonable satisfaction of such holder,
the surrendered Note and any Note issued in substitution or
replacement for the surrendered Note.
(c) Each holder of Notes agrees that, in the event it shall
sell or transfer any Note without surrendering such Note to the
Companies as set forth in Section 5.2(a) hereof, it shall:
(i) prior to the delivery of such Note, make a notation
thereon of all principal, if any, paid on such Note and shall
also indicate thereon the date to which interest shall have been
paid on such Note; and
(ii) promptly notify (or cause the transferee of any such
Note to notify) the Companies of the name and address of the
transferee of any such Note so transferred and the effective date
of such transfer.
(d) Notwithstanding anything to the contrary contained
herein, no holder of Notes shall sell or otherwise transfer any
Note to any Person that is a Competitor at the time of such
transfer.
3 Replacement of Notes.
Upon receipt by the Companies of evidence reasonably
satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be,
in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership (or of ownership by such
Institutional Investor's nominee) and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to the Companies (provided that if the
holder of such Note is an Institutional Investor or a nominee of
such Institutional Investor, such Institutional Investor's own
unsecured agreement of indemnity shall be deemed to be
satisfactory for such purpose), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Companies at their own expense will execute and deliver, in
lieu thereof, a new Note, dated and bearing interest from the
date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have
been paid thereon.
4 Issuance Taxes.
The Companies will pay all taxes (if any) due in connection
with and as the result of the initial issuance and sale of the
Notes and in connection with any modification of this Agreement
or the Notes and shall save each holder of Notes harmless without
limitation as to time against any and all liabilities with
respect to all such taxes. The obligations of the Companies
under this Section 5.4 shall survive the payment or prepayment of
the Notes and the termination hereof.
6. COVENANTS
The Companies jointly and severally covenant that on and
after the Effective Date and so long as any of the Notes shall be
outstanding:
1 Payment of Taxes and Claims.
Each of the Companies will, and will cause each Subsidiary
to, pay before they become delinquent:
(a) all taxes, assessments and governmental charges or
levies imposed upon it or its Property; and
(b) all claims or demands of materialmen, mechanics,
carriers, warehousemen, vendors, landlords and other like Persons
that, if unpaid, might result in the creation of a Lien upon its
Property;
provided, that items of the foregoing description need not be
paid
(i) while being actively contested in good faith and by
appropriate proceedings as long as adequate book reserves have
been established and maintained and exist with respect thereto,
and
(ii) so long as the title of such Company or such
Subsidiary, as the case may be, to, and its right to use, such
Property, is not materially adversely affected thereby.
In the case of any such item being contested as described in the
immediately preceding sentence involving in excess of Five
Hundred Thousand Dollars ($500,000), the appropriateness of the
proceedings will be supported by an opinion of the independent
counsel responsible for such proceedings and the adequacy of such
reserves will be supported by an opinion of the independent
accountants of the contesting Person (which opinions will be
delivered to the holders of Notes as provided in Section 7.1(c)
hereof), provided that, if the aggregate amount of all such items
shall exceed One Million Dollars ($1,000,000), regardless of the
amount of any individual item, the adequacy of the reserves for
all such items will be supported by opinions of the independent
accountants of the Companies (which opinions will be delivered to
the holders of the Notes as provided in Section 7.1(c) hereof).
2 Maintenance of Properties; Corporate Existence; etc.
Each of the Companies will, and each will cause each
Subsidiary to:
(a) Property -- maintain its Property in good condition and
working order, ordinary wear and tear excepted, and make all
necessary renewals, replacements, additions, betterments and
improvements thereto, except where such failures, in the
aggregate, would not have a Material Adverse Effect;
(b) Insurance -- maintain, with Acceptable Insurers,
insurance with respect to its Property and business against such
casualties and contingencies, of such types (including, without
limitation, insurance with respect to losses arising out of
Property loss or damage, public liability, business interruption,
larceny, workers' compensation, embezzlement or other criminal
misappropriation) and in such amounts as is customary in the case
of corporations of established reputations engaged in the same or
a similar business and similarly situated;
(c) Financial Records and Fiscal Year -- maintain the same
fiscal year as in effect on the Effective Date, and keep accurate
and complete books of records and accounts in which accurate and
complete entries shall be made of all its business transactions
in accordance with sound accounting principles consistently
applied that will permit the preparation of financial statements
in accordance with GAAP;
(d) Corporate Existence and Rights --
(i) do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence, rights
(charter and statutory) and franchises, and
(ii) maintain each Subsidiary as a Subsidiary,
in each case except as permitted by Section 6.13 and Section
6.14 hereof; and
(e) Compliance with Law -- not be in violation of any law,
ordinance or governmental rule or regulation to which it is
subject (including, without limitation, any Environmental
Protection Law) and not fail to obtain any license, certificate,
permit, franchise or other governmental authorization necessary
to the ownership of its Properties or to the conduct of its
business if such violations or failures to obtain, in the
aggregate, could reasonably be expected to have a Material
Adverse Effect.
3 Payment of Notes and Maintenance of Office.
Each of the Companies will punctually pay, or cause to be
paid, the principal of and interest (and Make-Whole Amount, if
any) on, the Notes, as and when the same shall become due
according to the terms hereof and of the Notes, and will maintain
an office at the address of the Companies set forth in Section
10.1 hereof where notices, presentations and demands in respect
hereof or of the Notes may be made upon it. Such office will be
maintained at such address until such time as the Companies shall
notify the holders of the Notes of any change of location of such
office, which will in any event be located within the United
States of America.
4 Guaranties and other Contingent Liabilities.
No Company will become liable on any Guaranty except
Domestic Companies may become liable as guarantors or otherwise
for the obligations of (i) other Domestic Companies, (ii)
Offshore Companies in commercial transactions in the ordinary
course of business and (iii) any other Person, provided that the
maximum exposure under Guaranties described in sub clause (iii)
other than the Bratex Guaranty shall not exceed Five Million
Dollars ($5,000,000) in the aggregate; and provided further that
the sum of (A) the aggregate maximum exposure under all
Guaranties other than the Bratex Guaranty plus (B) all Restricted
Loans plus (C) Offshore Tangible Net Worth, shall not at any time
exceed fifteen percent (15%) of Consolidated Tangible Net Worth.
The Companies will not at any time incur any other contingent
liability, except contingent liabilities in respect of
documentary letters of credit and standby letters of credit, not
to exceed Ten Million Dollars ($10,000,000) in the aggregate or
such lesser amount as may at such time constitute the "Letter of
Credit Sublimit" as defined in the Bank Loan Agreement.
5 Liens.
(a) Negative Pledge. No Company or Subsidiary will cause
or permit to exist, or agree or consent to cause or permit to
exist in the future (upon the happening of a contingency or
otherwise), any of its Property, whether now owned or hereafter
acquired, to be subject to any Lien except:
(i) Liens
(A) arising from judicial attachments and judgments,
(B) securing appeal bonds or supersedeas bonds, and
(C) arising in connection with court proceedings
(including, without limitation, surety bonds and letters of
credit or any other instrument serving a similar purpose),
provided that (1) the execution or other enforce
ment of such Liens is effectively stayed, (2) the
claims secured thereby are being actively contested in
good faith and by appropriate proceedings, (3) adequate
book reserves shall have been established and
maintained and shall exist with respect thereto, in
accordance with GAAP, and (4) the aggregate amount so
secured shall not at any time exceed One Million
Dollars ($1,000,000);
(ii) Liens incurred or deposits made in the ordinary course
of business
(A) in connection with workers' compensation,
unemployment insurance, social security and other like laws, and
(B) to secure the performance of letters of credit,
bids, tenders, sales contracts, leases, statutory obligations,
surety and performance bonds (of a type other than set forth in
Section 6.5(a)(i)) hereof) and other similar obligations not
incurred in connection with the borrowing of money, the obtaining
of advances or the payment of the deferred purchase price of
Property;
(iii) Liens in the nature of reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other similar title exceptions or
encumbrances affecting real Property, provided that such
exceptions and encumbrances (other than those Liens in existence
at the time of acquisition of a Property and the existence of
which is reflected in the purchase price thereof) do not in the
aggregate for all such Liens materially detract from the value of
such Properties or in the aggregate for all such Liens materially
interfere with the use of such Property in the ordinary conduct
of the business of the Companies and the Subsidiaries;
(iv) Liens securing Property taxes, assessments or
governmental charges or levies or the claims or demands of
materialmen, mechanics, carriers, warehousemen, vendors,
landlords and other like Persons, provided that the payment
thereof is not at the time required by Section 6.1 hereof;
(v) Liens in favor of the Collateral Agent and Liens
identified in Part 6.5(a)(v) of Annex 2 hereto;
(vi) Liens on Property arising in connection with a Capital
Lease, provided that such Lien encumbers only Property that is
the subject of such Capital Lease and no other Property; and
(vii) purchase money Liens on Property of any of the
Companies or the Subsidiaries acquired after the Effective Date
and not otherwise permitted pursuant to clause (i) through clause
(vi), inclusive, of this Section 6.5(a), provided that, at any
time, the aggregate amount of all Debt and other obligations
secured by Liens permitted by Section 6.5(a)(vi) and by Liens
permitted by this Section 6.5(a)(vii) shall not exceed fifteen
percent (15%) of Consolidated Tangible Net Worth at such time.
(b) Financing Statements. No Company or Subsidiary will
sign or file a financing statement under the Uniform Commercial
Code of any jurisdiction that names any of the Companies or any
of the Subsidiaries as debtor, or sign any security agreement
authorizing any secured party thereunder to file any such
financing statement, except, in any such case, a financing
statement filed or to be filed to perfect or protect a security
interest that any of the Companies or the Subsidiaries is
entitled to create, assume or incur, or permit to exist, under
the foregoing provisions of this Section 6.5 or to evidence for
informational purposes a lessor's interest in Property leased to
any of the Companies or the Subsidiaries.
6 Consolidated Tangible Net Worth.
Prior to June 1, 1995, the Companies will not at any
time permit Consolidated Tangible Net Worth to be less than
XXXXXXXXXXX XXXXXXX XXXXXXX XXXXXXXXXXXXX. From and after
June 1, 1995, the Companies will not permit Consolidated
Tangible Net Worth to be less than the sum of ninety percent
(90%) of Consolidated Tangible Net Worth as of the Effective
Date (as shown on the opening balance sheet referred to in
Section 7.1(k)(i)), plus seventy percent (70%) of
Consolidated Net Income for the period from the Effective
Date through June 30, 1995, plus the sum of the Quarter-
Annual Net Worth Increase Amounts for all fiscal quarters of
the Companies ended after June 30, 1995, minus the amount,
if any, expended to acquire the remaining common stock of
NCC not purchased on or about the Effective Date (provided
that such amount so expended shall not exceed the product of
$17.55 multiplied by the number of NCC shares so purchased).
7 Fixed Charge Coverage.
The Companies will not at any date permit the Fixed Charge
Coverage Ratio for the immediately preceding four fiscal quarters
(including any fiscal quarter ending on such date) to be less
than the following amounts during the following periods:
Minimum Fixed Charge
Period Coverage Ratio
Effective Date through December 31, 1996 1.10: 1.0
March 31, 1997 and thereafter 1.25 : 1.0
8 Quick Ratio.
The Companies shall maintain a Quick Ratio of not less than
0.35 to 1.00 as of the end of each fiscal year beginning with the
fiscal year ending December 31, 1995.
9 Leverage Ratio.
The Companies will not at any time permit the ratio of
(a) Consolidated Funded Debt at such time to
(b) Consolidated Capitalization at such time to exceed
(i) 0.7 to 1.0, if such time is on or before December 30, 1995,
(ii) 0.65 to 1.0, from December 31, 1995 until December 30, 1996,
(iii) 0.60 to 1.0 from December 31, 1996 until December 30,
1997, and
(iv) 0.55 to 1.0 from December 31, 1997 and thereafter
10 Consolidated Funded Debt to Operating Cash Flow.
The Companies will not at any time permit the ratio of
(a) Consolidated Funded Debt, determined as of the end of
the fiscal quarter of the Companies then most recently ended, to
(b) Consolidated Operating Cash Flow, for the period of
four (4) consecutive fiscal quarters of the Companies then most
recently ended, to be greater than
(i) 5.25 to 1.0, if such time is on or before December 30, 1995,
(ii) 4.75 to 1.0 from December 31, 1995 through
December 30, 1996,
(iii) 4.25 to 1.0 from December 31, 1996 through
December 30, 1997, and
(iv) 4.0 to 1.0 from December 31, 1997 and thereafter
11 Investments.
No Company shall make any Investment, except for Investments
in (a) Property to be used in the ordinary course of the business
of the Companies and the Subsidiaries, (b) Cash Equivalents, (c)
bank deposits in an Acceptable Bank, (d) Domestic Companies and
Offshore Companies, or companies which simultaneously with such
Investment become Domestic Companies or Offshore Companies, (e)
Offshore Loans, (f) Individual Loans, (g) the remaining NCC
Stock, (h) Triumph Investments, and (i) Protection Agreements,
provided however, that the sum of (i) Restricted Loans, plus (ii)
the maximum exposure under all Guaranties of the Companies and
the Subsidiaries other than the Bratex Guaranty, plus (iii)
Offshore Tangible Net Worth shall at no time exceed fifteen
percent (15%) of Consolidated Tangible Net Worth, and provided,
further that the aggregate amount of all Individual Loans shall
not at any time exceed Two Million Dollars ($2,000,000).
12 Restricted Payments.
No Company or Subsidiary will declare or make any Restricted
Payment on or prior to January 1, 1998; and no Company or
Subsidiary will declare or make any Restricted Payment thereafter
unless, at the time of such declaration and immediately before
and after giving effect to such Restricted Payment, (a) the
aggregate amount of all Restricted Payments made after January 1,
1998 would not exceed one hundred percent (100%) of Consolidated
Net Income earned after June 30, 1997 minus any amounts paid
pursuant to the final sentence of this Section 6.12, and (b) no
Default or Event of Default would exist. Notwithstanding the
foregoing sentence, the Companies may make Restricted Payments,
not exceeding one hundred percent (100%) of the lesser of (i)
Consolidated Net Income during the fiscal year beginning January
1, 1997, and (ii) Six Million Dollars ($6,000,000), during the
period July 1, 1997 through December 31, 1997, if at the time of
each such Restricted Payment and after giving effect thereto, no
Default or Event of Default would exist.
13 Merger, Consolidation, etc.
(a) Merger and Consolidation. No Company or Subsidiary
will merge with or into or consolidate with any other Person or
permit any other Person to merge or consolidate with or into it
provided that the foregoing restriction does not apply to the
merger or consolidation of
(i) a Subsidiary with any of the Companies or a Wholly-
Owned Subsidiary provided that,
(A) if such Subsidiary, such Company or such Wholly-
Owned Subsidiary is a corporation organized under the laws of any
state of the United States of America, the resulting corporation
shall be a corporation organized under the laws of any state of
the United States of America, and otherwise, the resulting
corporation shall be organized under the laws of the jurisdiction
of incorporation of any of the constituent corporations, and
(B) immediately prior to, and immediately after the
consummation of the transaction, and after giving effect thereto,
no Default or Event of Default exists or would exist, and
(ii) any Company with another Company provided that,
(A) if either such Company is a corporation organized
under the laws of any state of the United States of America, the
resulting corporation shall be a corporation organized under the
laws of any state of the United States of America, and otherwise,
the resulting corporation shall be organized under the laws of
the jurisdiction of incorporation of any of the constituent
corporations, and
(B) immediately prior to, and immediately after the
consummation of the transaction, and after giving effect thereto,
no Default or Event of Default exists or would exist, and
(iii) any of the Companies with another corporation
provided that
(A) the corporation that results from such merger or
consolidation (the "Surviving Corporation") is organized under
the laws of the jurisdiction of incorporation of such Company,
and
(B) the due and punctual payment of the principal of
and Make-Whole Amount, if any, and interest on all of the Notes,
according to their tenor, and the due and punctual performance
and observance of all the covenants in the Notes and this
Agreement to be performed or observed by such Company, are
expressly assumed by the Surviving Corporation pursuant to such
agreements and instruments as shall be approved by the Required
Holders, and the Companies cause to be delivered to each holder
of Notes an opinion, satisfactory in form and substance to the
Required Holders, of independent counsel to the effect that such
agreements and instruments are enforceable in accordance with
their terms, and
(C) immediately prior to, and immediately after the
consummation of the transaction, and after giving effect thereto,
no Default or Event of Default exists or would exist.
(b) Acquisition of Stock, etc. No Company or Subsidiary
will acquire any stock of any corporation if upon completion of
such acquisition such corporation would be a Subsidiary, or
acquire all of the Property of, or such of the Property as would
permit the transferee to continue any one or more integral
business operations of, any Person unless, immediately prior to,
and immediately after the consummation of such acquisition, and
after giving effect thereto, no Default or Event of Default
exists or would exist.
14 Transfers of Property;
No Company or Subsidiary will sell (including, without
limitation, any sale and subsequent leasing as lessee of such
Property), lease as lessor, transfer or otherwise dispose of
(including, without limitation, the liquidation for cash or other
consideration of the assets representing all or a portion of the
over-funding of any "employee pension benefit plan" (as defined
in section 3 of ERISA)) (collectively referred to as "Transfers")
any Property (including, without limitation, stock of a
Subsidiary), except:
(a) Transfers of inventory or obsolete or worn out Property
or Property no longer useful in the business of such Company or
such Subsidiary, in each case in the ordinary course of business
of such Company or such Subsidiary,
(b) Transfers from a Subsidiary to any of the Companies or
to a Wholly-Owned Subsidiary; and
(c) Transfers of assets disposed of in arm's length
transactions for not less than the greater of (i) Fair Market
Value (as reasonably determined by Maidenform) or (ii) book
value, provided that the aggregate Fair Market Value of all
assets disposed of pursuant to this clause (c) after the
Effective Date shall not exceed Seven Million Five Hundred
Thousand Dollars ($7,500,000).
15 Debt Incurrence.
The Companies will not, at any time, incur any Debt other
than the Notes, the Coleman Note, the Bank Term Loan, Debt not to
exceed One Hundred Thirty-Two Million Dollars ($132,000,000) in
principal amount outstanding under the Bank Revolver, Debt
secured by Capital Leases allowed by Section 6.5(a)(vi), Debt
secured by purchase money Liens allowed by Section 6.5(a)(vii)
and Debt outstanding on the Effective Date and listed on Part
2.2(d) of Annex 2, unless at the time of such incurrence and
after giving effect thereto, no Default or Event of Default would
exist and the Companies would be in compliance with all financial
covenants herein contained (including, in the case of financial
covenants which vary with the passage of time, compliance with
such covenants in their strictest form, regardless of whether or
not the strictest form of such financial covenants would
otherwise be applicable at such time). Nothing in this Section
6.15 shall be deemed to excuse compliance with any other covenant
or provision of this Agreement.
16 Limitation on Foreign Assets.
The Companies will not, at any time, permit (a) the
aggregate amount of Foreign Assets to exceed fifteen percent
(15%) of Consolidated Tangible Assets at such time, or (b) the
aggregate book value of Foreign Assets (other than inventory)
located within any one country other than the United States of
America and its possessions, Canada, Mexico, member countries of
the European Community on the Effective Date, Costa Rica, the
Dominican Republic and Jamaica to exceed Two Million Dollars
($2,000,000).
17 ERISA.
(a) Compliance. Each of the Companies will, and each will
cause each ERISA Affiliate to, at all times with respect to each
Pension Plan, make timely payment of contributions required to
meet the minimum funding standard set forth in ERISA or the IRC
with respect thereto, and to comply in all material respects with
all other applicable provisions of ERISA.
(b) Relationship of Vested Benefits to Pension Plan Assets.
Except as disclosed in Part 6.17(b) of Annex 2, none of the
Companies will, at any time, permit the present value of all
employee benefits vested under each Pension Plan to exceed the
assets of such Pension Plan allocable to such vested benefits at
such time, in each case determined pursuant to Section 6.17(c)
hereof.
(c) Valuations. All assumptions and methods used to
determine the actuarial valuation of vested employee benefits
under Pension Plans and the present value of assets of Pension
Plans will be reasonable in the good faith judgment of the
Companies and will comply with all requirements of law.
(d) Prohibited Actions. No Company or ERISA Affiliate
will:
(i) engage in any "prohibited transaction" (as defined in
section 406 of ERISA or section 4975 of the IRC) that would
result in the imposition of a material tax or penalty;
(ii) incur with respect to any Pension Plan any "accumulated
funding deficiency" (as defined in section 302 of ERISA), whether
or not waived;
(iii) terminate any Pension Plan in a manner that could
result in
(A) the imposition of a Lien on the Property of any of
the Companies or any Subsidiary pursuant to section 4068 of
ERISA, or
(B) the creation of any liability under section 4062
of ERISA;
(iv) fail to make any payment required by section 515 of
ERISA; or
(v) at any time be an "employer" (as defined in section
3(5) of ERISA) required to contribute to any Multiemployer Plan
if, at such time, it could reasonably be expected that any of the
Companies or any Subsidiary will incur withdrawal liability in
respect of such Multiemployer Plan and such liability, if
incurred, together with the aggregate amount of all other
withdrawal liability as to which there is a reasonable
expectation of incurrence by any of the Companies or any
Subsidiary under any one or more Multiemployer Plans (taking into
account required or permitted payment schedules and amounts)
could reasonably be expected to have a Material Adverse Effect.
(e) Foreign Pension Plans. Each of the Companies and the
ERISA Affiliates will make all required payments in respect of
funding any Foreign Pension Plan applicable to such Person and
otherwise fully comply with all applicable laws, statutes, rules
and regulations governing or affecting such Foreign Pension Plan
if the failure to make such payments or so comply would have a
Material Adverse Effect. The Companies will continue to manage
their Foreign Pension Plans, or cause such Foreign Pension Plans
to be managed, in substantially the same manner as they are
currently being managed, subject to any changes required by
applicable law.
18 Transactions with Affiliates; Offshore Borrowers.
(a) Affiliates, etc. No Company or Subsidiary will enter
into any transaction, including, without limitation, the
purchase, sale or exchange of Property or the rendering of any
service, with any Subsidiary (which is not itself a Domestic
Company) or Affiliate, or any officer or director of a Company, a
Subsidiary or an Affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of such Company's or such
Subsidiary's business and upon fair and reasonable terms no less
favorable to such Company or such Subsidiary than would obtain in
a comparable arm's-length transaction with a Person not having
such a relationship.
(b) Offshore Borrowers. No Domestic Company will enter into
any transaction with an Offshore Company unless (i) the Domestic
Company receives reasonably equivalent value, and (ii) the
transaction is on terms not less favorable than could be obtained
in an arm's length transaction with a third party taking into
account any opportunity for the Companies to minimize taxes,
duties and other similar expenses and any requirements of law
imposed by the jurisdictions in which the Companies operate.
19 Ownership of Maidenform.
Anything contained herein to the contrary notwithstanding,
Worldwide shall maintain direct legal and beneficial ownership of
all capital stock of Maidenform at all times.
20 Nature of Business.
No Company or Subsidiary will engage in any business if, as
a result thereof, the general nature of the businesses of the
Companies and the Subsidiaries, taken as a whole, would be other
than the manufacturing, distribution, marketing and selling of
women's undergarments and intimate apparel, sleepwear, swimwear
and related items.
21 Guaranty of Certain Obligations.
The Companies will cause each Person that becomes a
Subsidiary after the Effective Date to execute and deliver to
each holder of Notes, on the date such Person becomes a
Subsidiary, an unconditional guaranty of the obligations
evidenced by the Notes, in form and substance satisfactory to the
Required Holders.
22 Pro-Rata Offers.
No Company, Subsidiary or Affiliate will, directly or
indirectly, acquire or make any offer to acquire any Notes unless
such Company or such Subsidiary or Affiliate shall have offered
to acquire Notes, pro rata, from all holders of the Notes upon
the same terms. In case any Company acquires any Notes, such
Notes will immediately thereafter be cancelled and no Notes will
be issued in substitution therefor.
23 Private Offering.
The Companies will not, and will not permit any Person
acting on their behalf to, offer the Notes or any part thereof or
any similar Securities for issuance or sale to, or solicit any
offer to acquire any of the same from, any Person so as to bring
the issuance and sale of the Notes within the provisions of
section 5 of the Securities Act.
24 Amendments to Bank Loan Agreement; Coleman Note.
(a) Bank Loan Agreement. The Companies shall not
enter into any amendment to the Bank Loan Agreement the
effect of which is to increase the interest or other amounts
(other than increased amounts specifically allowed by
Section 6.24(a)) payable thereunder, increase the principal
amount of the Bank Term Loan, increase the "Commitment" as
defined in the Bank Loan Agreement to more than One Hundred
Thirty-Two Million Dollars ($132,000,000), accelerate the
payment schedule for principal or interest due under the
Bank Loan Agreement, accelerate the maturity date thereof or
create a security interest in connection therewith (other
than in favor of the Collateral Agent), unless agreed to in
writing by the Required Holders, provided that the Companies
may amend the Bank Loan Agreement to increase the Commitment
(as therein defined) to more than One Hundred Thirty-Two
Million Dollars ($132,000,000) so long as any incurrence of
Debt (in excess of One Hundred Thirty-Two Million Dollars
($132,000,000)) pursuant to such amendment complies with all
covenants contained in this Agreement, including, without
limitation, Section 6.15.
(b) Coleman Note. No Company will amend the Coleman
Note so as to increase the amount thereof or the rate of
interest payable thereon or to extend the maturity date
thereof.
7. INFORMATION AS TO COMPANIES
1 Financial and Business Information.
The Companies will deliver to each holder of Notes:
(a) Quarterly Statements -- as soon as practicable after
the end of each quarterly fiscal period in each fiscal year of
the Companies (other than the last quarterly fiscal period of
each such fiscal year), and in any event within sixty (60) days
(or, if Worldwide shall at such time have any class of Securities
required to be registered pursuant to section 12 of the Exchange
Act, within forty-five (45) days) thereafter, duplicate copies of
(i) consolidated balance sheets of Worldwide and its
subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
stockholders' equity and cash flows of Worldwide and its
subsidiaries for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with
such quarter,
setting forth in each case in comparative form the figures
for the corresponding periods in the previous fiscal year,
all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally and
certified as complete and correct in all material respects,
subject to changes resulting from year-end adjustments and
subject to the absence of footnotes, by a Senior Financial
Officer on behalf of Worldwide, and accompanied by the
certificates required by Section 7.2 hereof;
(b) Annual Statements -- as soon as practicable after the
end of each fiscal year of the Companies, and in any event within
ninety (90) days thereafter, duplicate copies of
(i) consolidating and consolidated balance sheets of
Worldwide and its subsidiaries and of Worldwide, Maidenform and
the Subsidiaries as at the end of such year,
(ii) consolidating and consolidated statements of income,
changes in stockholders' equity and cash flows of Worldwide and
its subsidiaries and of Worldwide, Maidenform and the
Subsidiaries for such year,
(iii) a statement of income as at the end of such year
separately setting forth the respective contributions of the
Maidenform, Trueform, NCC and retail divisions,
setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP and accompanied by
(A) in the case of such consolidated statements of
Worldwide and its subsidiaries referred to in clause (b) (i) and
clause (b)(ii) above, an opinion of independent certified public
accountants of recognized national standing, which opinion shall,
without qualification (including, without limitation,
qualifications related to the scope of the audit or the ability
of any of the Companies to continue as a going concern), state
that such financial statements present fairly, in all material
respects, the financial position of the companies being reported
upon and their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of
such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for
such opinion in the circumstances,
(B) a certification by a Senior Financial Officer on
behalf of Worldwide that such consolidated statements are
complete and correct in all material respects, and
(C) the certificates required by Section 7.2 and
Section 7.3 hereof;
(c) Opinions of Independent Accountants and Counsel -- as
soon as practicable after the end of each fiscal year of the
Companies, and in any event within ninety (90) days thereafter,
duplicate copies of all opinions of independent accountants and
counsel required pursuant to Section 6.1 hereof;
(d) Audit Reports -- promptly upon receipt thereof, a copy
of each other report (including, without limitation, each so-
called "management letter" or similar analysis) submitted to any
of the Companies or any Subsidiary by independent accountants in
connection with any annual, interim or special audit made by them
of the books of any of the Companies or any Subsidiary, provided
however that, with respect to any such individual report the
contents of which indicate that the issues addressed therein
could not reasonably be expected to have a Material Adverse
Effect, Worldwide may deliver, in lieu of such report, a
certificate of a Senior Financial Officer on behalf of Worldwide
attesting to such content;
(e) SEC and Other Reports -- promptly upon their becoming
available, one copy of each financial statement or proxy
statement sent by any of the Companies or any Subsidiary to
stockholders generally, and of each regular or periodic report
and any registration statement, prospectus or written
communication (other than transmittal letters), and each
amendment thereto, in respect thereof filed by any of the
Companies or any Subsidiary with, or received by, such Person in
connection therewith from, the National Association of Securities
Dealers, any securities exchange or the Securities and Exchange
Commission or any successor agency;
(f) ERISA --
(i) within three (3) Business Days after becoming aware of
the occurrence of any
(A) "reportable event" (as defined in section 4043 of
ERISA), or
(B) "prohibited transaction" (as defined in section
406 of ERISA or section 4975 of the IRC),
in connection with any Pension Plan or any trust
created thereunder, a written notice specifying the
nature thereof, what action the Companies are taking or
propose to take with respect thereto and, when known,
any action taken by the IRS, the Department of Labor or
the PBGC with respect thereto; and
(ii) prompt written notice of and, where applicable, a
description of
(A) any notice from the PBGC in respect of the
commencement of any proceedings pursuant to section 4042 of ERISA
to terminate any Pension Plan or for the appointment of a trustee
to administer any Pension Plan,
(B) any distress termination notice delivered to the
PBGC under section 4041 of ERISA in respect of any Pension Plan,
and any determination of the PBGC in respect thereof,
(C) the placement of any Multiemployer Plan in
reorganization status under Title IV of ERISA,
(D) any Multiemployer Plan becoming "insolvent" (as
defined in section 4245 of ERISA) under Title IV of ERISA, and
(E) the whole or partial withdrawal of the any of the
Companies or any ERISA Affiliate from any Multiemployer Plan and
the withdrawal liability incurred in connection therewith;
(g) Actions, Proceedings -- promptly after the commencement
thereof, notice of any action or proceeding relating to any of
the Companies or any Subsidiary in any court or before any
Governmental Authority or arbitration board or tribunal as to
which there is a reasonable possibility of an adverse
determination and that, if adversely determined, would have a
Material Adverse Effect;
(h) Certain Environmental Matters -- prompt written notice
of and a description of any event or circumstance that, had such
event or circumstance occurred or existed immediately prior to
the Effective Date, would have been required to be disclosed as
an exception to any statement set forth in Section 2.13 hereof;
(i) Notice of Default or Event of Default -- within one (1)
Business Day after a Senior Officer becomes aware of the
existence of any condition or event that constitutes a Default or
an Event of Default hereunder or an Event of Default or an
Unmatured Event of Default under the Bank Loan Agreement, a
written notice specifying the nature and period of existence
thereof and what action the Companies are taking or propose to
take with respect thereto;
(j) Notice of Claimed Default -- within one (1) Business
Day after a Senior Officer becomes aware that the holder of any
Note, or of any Debt or other Security of any of the Companies or
any Subsidiary evidencing Debt in excess of Two Hundred Thousand
Dollars ($200,000), shall have given notice or taken any other
action with respect to a claimed Default, Event of Default,
default or event of default, a written notice specifying the
notice given or action taken by such holder and the nature of the
claimed Default, Event of Default, default or event of default
and what action the Companies are taking or propose to take with
respect thereto;
(k) Special First Year Information -- the Companies shall
deliver to each holder of Notes:
(i) by June 1, 1995, an opening balance sheet of the
Companies prepared on a consolidated basis by Ernst & Young,
(ii) by June 1, 1995, a quarterly financial statement for
each of (A) Maidenform and its consolidated Subsidiaries (other
than NCC and Crescent), and (B) NCC and its consolidated
Subsidiaries, for the quarter ended March 31, 1995, and
(iii) by September 15, 1995, the Combined Pro Forma.
(l) Requested Information -- with reasonable promptness,
such other data and information as from time to time may be
reasonably requested by any holder of Notes, including, without
limitation,
(i) copies of any statement, report or certificate
furnished to any holder of Debt of any of the Companies or any
Subsidiary with respect to Debt in excess of Two Hundred Thousand
Dollars ($200,000),
(ii) information requested to comply with 17 C.F.R.
230.144A, as amended from time to time,
(iii) management letters with respect to which Worldwide
has delivered a certificate pursuant to Section 7.1(d) hereof,
and
(iv) appraisal reports delivered to the Agent pursuant to the
Bank Loan Agreement.
2 Officers' Certificates.
Each set of financial statements delivered to each holder of
Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof shall
be accompanied by a certificate of a Senior Officer and a Senior
Financial Officer on behalf of Worldwide setting forth the
information in (a) and (b) below and a certificate of the General
Counsel of Worldwide setting forth whether, in his or her
opinion, a Control Event has occurred:
(a) Covenant Compliance -- the information (including, to
the extent applicable, detailed calculations) required in order
to establish whether the Companies were in compliance with the
requirements of Section 6.4 through Section 6.16 hereof,
inclusive, during the period covered by the income statement then
being furnished (including with respect to each such Section,
where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible
under the terms of such Sections, and the calculation of the
amounts, ratio or percentage then in existence); and
(b) Event of Default -- a statement that the signers have
reviewed the relevant terms hereof and have made, or caused to be
made, under their supervision, a review of the transactions and
conditions of the Companies and the Subsidiaries from the
beginning of the accounting period covered by the income
statements being delivered therewith to the date of the
certificate and that such review shall not have disclosed the
existence during such period of any condition or event that
constitutes a Default or an Event of Default or, if any such
condition or event existed or exists, specifying the nature and
period of existence thereof and what action the Companies shall
have taken or propose to take with respect thereto.
3 Accountants' Certificates.
Each set of annual financial statements delivered pursuant
to Section 7.1(b) hereof shall be accompanied by:
(a) a certificate of the accountants who certify such
financial statements, stating that, without having
undertaken an extraordinary review, they have reviewed this
Agreement and stating further, whether, in making their
audit, any condition or event came to their attention that
caused the Companies to fail to comply with any one or more
of Sections 6.4 through 6.12, inclusive, and Sections 6.14
through 6.16, inclusive, of this Agreement as such Sections
relate to matters susceptible to verification by accounting
procedures, and, if such accountants are aware that any such
condition or event then exists, specifying the nature and,
to the extent known by them, the period of existence
thereof, and
(b) a legal opinion from outside counsel to the
Companies (acceptable to the holders of the Notes) that no
Control Event has occurred to and including the date of
delivery of such opinion.
4 Inspection.
The Companies will permit, upon reasonable prior notice to
Worldwide, the representatives of any holder of Notes to visit
and inspect any of the Properties of the Companies or any
Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts
therefrom and to discuss their respective affairs, finances and
accounts with their respective officers, employees and
independent public accountants (and by this provision the
Companies authorize such accountants to discuss the finances and
affairs of the Companies and the Subsidiaries), all at such
reasonable times and as often as may be reasonably requested.
The out-of-pocket costs of the holders of the Notes with respect
to any such inspection shall be borne by such inspecting holder
unless a Default or Event of Default exists, in which case such
costs shall be borne by the Companies.
5 Additional Financial Statements.
If, during any period while any of the Notes are
outstanding, any consolidated subsidiary of Worldwide (other than
Maidenform) shall not also be a Subsidiary, then during such
period the Companies shall deliver to you in addition to the
financial statements required by Section 7.1(a)(i) and Section
7.1(a)(ii) hereof, corresponding financial statements with
respect to Worldwide, Maidenform and the Subsidiaries, in the
form and within the time periods required by Section 7.1(a).
8. EVENTS OF DEFAULT
1 Nature of Events.
An "Event of Default" shall exist if any of the following
occurs and is continuing:
(a) Principal or Make-Whole Amount Payments -- the
Companies shall fail to make any payment of principal or Make-
Whole Amount on any Note on or before the date such payment is
due;
(b) Interest Payments -- the Companies shall fail to make
any payment of interest on any Note on or before five (5) days
after the date such payment is due;
(c) Particular Covenant Defaults -- any of the Companies or
any Subsidiary shall fail to perform or observe any covenant
contained in Section 6.4 through Section 6.16, inclusive, Section
7.1(i) or Section 7.1(j) hereof;
(d) Other Defaults -- any of the Companies or any
Subsidiary shall fail to comply with any other provision hereof,
and such failure continues for more than thirty (30) days after
such failure shall first become known to any Senior Officer of
any of the Companies;
(e) Warranties or Representations -- any warranty, repre
sentation or other statement by or on behalf of any of the
Companies contained herein or in the Existing Note Purchase
Agreement or in any certificate or instrument furnished in
compliance with or in reference hereto or thereto shall prove to
have been false or misleading in any material respect when made;
(f) Default on Debt or Security --
(i) any of the Companies or any Subsidiary shall fail to
make any payment on any Debt or any Security when due, or any
Protection Agreement when due after expiration of any applicable
notice and grace period; or
(ii) any event shall occur or any condition shall exist in
respect of any Debt or any Security of any of the Companies or
any Subsidiary, or under any agreement securing or relating to
any such Debt or Security, that immediately or with any one or
more of the passage of time or the giving of notice:
(A) causes (or permits any one or more of the holders
thereof or a trustee therefor to cause) such Debt or Security, or
a portion thereof, to become due prior to its stated maturity or
prior to its regularly scheduled date or dates of payment; or
(B) permits any one or more of the holders thereof or
a trustee therefor to require any of the Companies or any
Subsidiary to repurchase such Debt or Security from such holder
and any such holder or trustee exercises (or attempts to
exercise) such right;
provided that the aggregate amount of all
obligations in respect of all such Debt and Securities
referred to in this clause (f) exceeds at any time One
Million Dollars ($1,000,000);
(g) Involuntary Bankruptcy Proceedings --
(i) a receiver, liquidator, custodian or trustee of any of
the Companies or any Subsidiary, or of all or any part of the
Property of any, shall be appointed by court order and such order
shall remain in effect for more than sixty (60) days, or an order
for relief shall be entered with respect to any of the Companies
or any Subsidiary, or any of the Companies or any Subsidiary
shall be adjudicated a bankrupt or insolvent;
(ii) any of the Property of any of the Companies or any
Subsidiary shall be sequestered by court order and such order
shall remain in effect for more than sixty (60) days; or
(iii) a petition shall be filed against any of the
Companies or any Subsidiary under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect, and shall not be dismissed or stayed within sixty (60)
days after such filing;
(h) Voluntary Petitions -- any of the Companies or any
Subsidiary shall file a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now
or hereafter in effect, or shall consent to the filing of any
petition against it under any such law;
(i) Assignments for Benefit of Creditors, etc. -- any of
the Companies or any Subsidiary shall make an assignment for the
benefit of its creditors, or admits in writing its inability, or
fails, to pay its debts generally as they become due, or consent
to the appointment of a receiver, liquidator or trustee of itself
or of all or any part of its Property; or
(j) Undischarged Final Judgments -- a final judgment or
final judgments for the payment of money aggregating in excess of
Five Hundred Thousand Dollars ($500,000) is or are outstanding
against any one or more of any of the Companies and the
Subsidiaries and any one of such judgments shall have been
outstanding for more than thirty (30) days from the date of its
entry and shall not have been discharged in full or stayed.
If any action, condition, event or other matter would, at any
time, constitute an Event of Default under any provision of this
Section 8.1, then an Event of Default shall exist, regardless of
whether the same or a similar action, condition, event or other
matter is addressed in a different provision of this Section 8.1
and would not constitute an Event of Default at such time under
such different provision.
2 Default Remedies.
(a) Acceleration on Event of Default.
(i) If an Event of Default specified in clause (g), clause
(h) or clause (i) of Section 8.1 hereof shall exist, all of the
Notes at the time outstanding shall automatically become
immediately due and payable together with interest accrued
thereon and, to the extent permitted by applicable law, the Make-
Whole Amount at such time with respect to such principal amount
of such Notes, in each case without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived.
(ii) If an Event of Default other than those specified in
clause (g), clause (h) or clause (i) of Section 8.1 hereof shall
exist, the holder or holders of at least thirty-four percent
(34%) in principal amount of the Notes then outstanding
(exclusive of Notes then owned by any one or more of the
Companies, any Subsidiary or any Affiliate) may exercise any
right, power or remedy permitted to such holder or holders by law
and shall have, in particular, without limiting the generality of
the foregoing, the right to declare the entire principal of, and
all interest accrued on, all the Notes then outstanding to be,
and such Notes shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, and the Companies
shall forthwith pay to the holder or holders of all the Notes
then outstanding the entire principal of, and interest accrued
on, the Notes and, to the extent permitted by applicable law, the
Make-Whole Amount on the date of such declaration with respect to
such principal amount of such Notes.
(b) Acceleration on Payment Default. During the existence
of an Event of Default described in Section 8.1(a) or Section
8.1(b) hereof, and irrespective of whether the Notes then
outstanding shall have been declared to be due and payable
pursuant to Section 8.2(a)(ii) hereof, any holder of Notes that
shall have not consented to any waiver with respect to such Event
of Default may, at such holder's option, by notice in writing to
Worldwide, declare the Notes then held by such holder to be, and
such Notes shall thereupon become, forthwith due and payable
together with all interest accrued thereon, without any
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived, and the Companies shall
forthwith pay to such holder the entire principal of and interest
accrued on such Notes and, to the extent permitted by applicable
law, the Make-Whole Amount at such time with respect to such
principal amount of such Notes.
(c) Valuable Rights. The Companies acknowledge, and the
parties hereto agree, that the right of each holder to maintain
its investment in the Notes free from repayment by the Companies
(except as herein specifically provided for) is a valuable right
and that the provision for payment of a Make-Whole Amount by the
Companies in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default is intended to
provide compensation for the deprivation of such right under such
circumstances.
(d) Other Remedies. During the existence of an Event of
Default and irrespective of whether the Notes then outstanding
shall have been declared to be due and payable pursuant to
Section 8.2(a)(ii) hereof and irrespective of whether any holder
of Notes then outstanding shall otherwise have pursued or be
pursuing any other rights or remedies, any holder of Notes may
proceed to protect and enforce its rights hereunder and under
such Notes 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 agreement contained herein or in aid of the
exercise of any power granted herein, provided that the maturity
of such holder's Notes may be accelerated only in accordance with
Section 8.2(a) and Section 8.2(b) hereof.
(e) Nonwaiver and Expenses. No course of dealing on the
part of any holder of Notes nor any delay or failure on the part
of any holder of Notes to exercise any right shall operate as a
waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. If the Companies shall fail to pay when due
any principal of, or Make-Whole Amount or interest on, any Note,
or shall fail to comply with any other provision hereof, the
Companies shall pay to each holder of Notes, to the extent
permitted by law, such further amounts as shall be sufficient to
cover the costs and expenses (including, but not limited to,
reasonable attorneys' fees) incurred by such holder in collecting
any sums due on such Notes or in otherwise assessing, analyzing
or enforcing any rights or remedies that are or may be available
to it.
3 Annulment of Acceleration of Notes.
If a declaration is made pursuant to Section 8.2(a)(ii)
hereof, then and in every such case, the holders of at least
sixty-six and two-thirds percent (66 and 2/3%) in aggregate
principal amount of the Notes then outstanding (exclusive of
Notes then owned by any one or more of the Companies, any
Subsidiary and any Affiliate) may, by written instrument filed
with Worldwide, rescind and annul such declaration and the
consequences thereof, provided that at the time such declaration
is annulled and rescinded:
(a) no judgment or decree shall have been entered for the
payment of any moneys due on or pursuant hereto or the Notes;
(b) all arrears of interest upon all the Notes and all
other sums payable hereunder and under the Notes (except any
principal of, or interest or Make-Whole Amount on, the Notes that
shall have become due and payable by reason of such declaration
under Section 8.2(a)(ii) hereof) shall have been duly paid; and
(c) each and every other Default and Event of Default shall
have been waived pursuant to Section 10.5 hereof or otherwise
made good or cured;
and provided further that no such rescission and annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereon.
9. INTERPRETATION OF THIS AGREEMENT
1 Terms Defined.
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof
following such term:
Acceptable Bank -- means, at any time, any commercial
bank organized under the laws of the United States of
America or any state or territory thereof:
(a) that at such time has capital, surplus and undivided
profits aggregating at least Two Hundred Fifty Million Dollars
($250,000,000); and
(b) whose long-term unsecured debt obligations (or the long-
term unsecured debt obligations of the bank holding company
owning all of the capital stock of such bank) shall at such time
be rated "A" or higher by Standard & Poor's or "A2" or higher by
Moody's (or any future comparable ratings issued by Standard &
Poor's or Moody's).
Acceptable Control Persons -- means the issue and
spouses of issue of Beatrice Coleman, and with respect to
the board of directors, designees of any such Person.
Acceptable Insurer -- means, at any time, a financially
sound and reputable insurer at such time accorded a rating
by the A.M. Best Company of "A" or better and a size rating
of "XII" or better (or comparable ratings by any comparable
rating agency if the A.M. Best Company is no longer issuing
such ratings).
Acceptable Jurisdiction -- means the United States of
America and its possessions, Canada, Mexico, member
countries of the European Community as of the Effective
Date, Costa Rica, the Dominican Republic, Jamaica, Honduras,
Belize, Hong Kong, the Philippines, Japan, Taiwan, Brazil,
Columbia, Australia and Cuba (during such time as there are
no United States Governmental Authority prohibitions
applying to the Companies concerning trade with or within,
or the conduct of business with or within, Cuba).
Acquisition -- Section 1.1 hereof.
Acquisition Effective Time -- means that time on the
Effective Date when the Acquisition is consummated.
Adjusted Earnings -- at any time means the result of
(a) the Consolidated Net Income (without giving effect to
the one-time charge, not to exceed XXXX XXXXXXX XXXXXXX
XXXXXXXXXXXX, accrued in the second quarter of 1995 in
connection with XXX XXXXXXXXXX XX XXXXXX XXXXXX and a one-
time charge, not to exceed XXX XXXXXXX XXXX XXXXXXX XXXXXXXX
XXXXXXX XXXXXXXXXXXX, which the Companies may accrue during
1995 or 1996 in connection with XXX XXXXXXX XXXXXXX XX X
XXXXX XX XXXXXXXX XXXXXX XXXXXX XXXXXXX) before income taxes
for the period of four fiscal quarters then most recently
ended, determined on a consolidated basis (but expressly
excluding any net amounts accrued under FASB 87), plus (b)
interest, depreciation, amortization, and operating lease
payments during such period, minus (c) Capital Expenditures
during such period.
Adjusted Tangible Assets -- means, with respect to any
Person, all assets (including, without duplication, the
capitalized value of any leasehold interest under any
Capital Lease) of such Person determined in accordance with
GAAP, except:
(a) intangible assets;
(b) patents, copyrights, trademarks, trade names,
franchises, goodwill, organizational expense,
experimental expense and other similar intangible
assets;
(c) unamortized debt discount and expense; and
(d) assets not located in Acceptable
Jurisdictions.
Affiliate -- means, at any time, a Person (other than
any of the Companies or a Subsidiary)
(a) that directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or
is under common Control with, any of the Companies,
(b) that beneficially owns or holds five percent
(5%) or more of any class of the Voting Stock of any of
the Companies,
(c) five percent (5%) or more of the Voting Stock
(or in the case of a Person that is not a corporation,
five percent (5%) or more of the equity interest) of
which is beneficially owned or held by any of the
Companies or a Subsidiary, or
(d) who is an officer or director (or a member of
the immediate family of an officer or director) of any
of the Companies or any Subsidiary, at such time.
As used in this definition:
Control -- means the possession, directly or
indirectly, of the power to direct or cause the
direction of the management and policies of a Person,
whether through the ownership of voting securities, by
contract or otherwise.
Agreement, this -- means this agreement, as it may be
amended and restated from time to time.
Bank Loan Agreement -- means the loan agreement, dated
April 26, 1995, among the Companies, CoreStates Bank, N.A.,
as Agent, CoreStates Bank, N.A., Nationsbank, N.A., The
Chase Manhattan Bank N.A., National City Bank, National Bank
of Detroit, Comerica Bank, European American Bank, and
United Jersey Bank, as amended from time to time.
Bank Revolver -- means the Revolving Credit under and
as defined in the Bank Loan Agreement.
Bank Term Loan -- means the Term Loan made pursuant to
Section 2.2 of the Bank Loan Agreement.
Board of Directors -- means the board of directors of
any of the Companies, or any committee thereof that, in the
instance, shall have the lawful power to exercise the power
and authority of such board of directors.
Bratex Guaranty -- means that certain guaranty
heretofore agreed to by certain of the Companies with
respect to the obligations of Bratex Dominicana C. por A. to
Chase Manhattan Bank, not to exceed Three Million Dollars
($3,000,000) in the aggregate.
Business Day -- means, at any time, a day other than a
Saturday, a Sunday or a day on which the bank designated by
the holder of a Note to receive (for such holder's account)
payments on such Note is required by law (other than a
general banking moratorium or holiday for a period exceeding
four (4) consecutive days) to be closed.
Capital Asset -- means any property or asset (real,
personal or mixed, tangible or intangible) which is of a
kind subject to an allowance for depreciation or
amortization under GAAP.
Capital Expenditures -- means any expenditures made or
cost incurred by any Company whether paid or due and owing,
for the acquisition, purchase, alteration or improvement of
any Capital Asset, but excluding expenditures deemed to have
been made for assets acquired or created by virtue of the
purchase of NCC stock.
Capital Lease -- means, at any time, a capital lease
within the meaning of GAAP.
Cash Equivalents -- means
(a) marketable direct obligations issued or
unconditionally guarantied by the United States
Government or issued by any agency thereof and backed
by the full faith and credit of the United States, or
the Commonwealth of Puerto Rico, in each case maturing
within one year from the date of acquisition thereof,
(b) marketable direct obligations issued by any
state of the United States of America or any political
subdivision of any such state or any public
instrumentality thereof maturing within one year from
the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from
either Standard & Poor's or Moody's,
(c) commercial paper maturing no more than one year from
the date of creation thereof and, at the time of acquisition,
having the highest rating obtainable from either Standard &
Poor's or Moody's, and
(d) certificates of deposit, demand accounts or bankers'
acceptances maturing within one year from the date of acquisition
thereof issued by an Acceptable Bank.
Change in Control -- means any event or occurrence if
as a result thereof or immediately thereafter, (i) Elizabeth
Coleman, her husband and issue, together with any trusts
controlled by her, fails to have the ability to appoint a
majority of the members of the board of directors of
Worldwide, or (ii) Worldwide fails to have the ability,
directly or indirectly, to appoint a majority of the members
of the board of directors of each of the Companies.
Closing -- Section 1.2 hereof.
Coleman Note -- means that promissory note of Worldwide
N.Y. issued to the Estate of Beatrice Coleman in the initial
principal amount of $2,538,896 in connection with the
redemption of her stock in such corporation.
Collateral Agent -- CoreStates Bank, N.A. in its
capacity as Collateral Agent under the Intercreditor
Agreement, and any successor thereto in such capacity.
Combined Pro Forma -- means pro forma financial
statements which restate the financial condition of the
Companies for the five fiscal quarters ended March 31, 1995
and for the interim period from April 1, 1995 to the
Effective Date by combining, using GAAP standards of
combination, (i) the consolidated financial statements of
the Original Companies for such periods with (ii) the
financial statements of NCC and Crescent as reflected on
NCC's Form 10Qs and Form 10Ks as filed with the Securities
and Exchange Commission for the periods ending on or prior
to March 31, 1995 and the financial statements prepared by
NCC for the period April 1, 1995 to the Effective Date.
Companies, Company -- has the meaning specified in the
introductory sentence hereof.
Competitor -- means each Person (i) identified as a
"Competitor" on Part 9.1(C) of Annex 2 to this Agreement and
any successor thereof or (ii) who is engaged in the same
line of business as the Companies or any of the Subsidiaries
and who, after the Effective Date, shall have been
identified in good faith in a written notice delivered to
each of the holders of the Notes as a "Competitor," provided
that none of the Purchasers, their affiliates or any other
Institutional Investor shall be considered or deemed to be a
"Competitor" for the purposes of this definition.
Consolidated Capitalization -- means, at any time, the
sum of
(a) Consolidated Tangible Net Worth, plus
(b) Consolidated Funded Debt,
determined in each case at such time.
Consolidated Debt -- means, at any time, the aggregate
amount of all Debt of the Companies and the Subsidiaries,
determined at such time after eliminating intercompany
transactions among the Companies and the Subsidiaries.
Consolidated Funded Debt -- means, at any time, the
aggregate amount of all Funded Debt of the Companies and the
Subsidiaries, determined at such time after eliminating
intercompany transactions among the Companies and the
Subsidiaries.
Consolidated Interest Expense -- means, for any period,
the aggregate amount of interest accrued on or capitalized
with respect to Consolidated Debt for such period,
including, without limitation, amortization of debt
discount, imputed interest on Capital Leases and interest on
the Notes, but excluding any interest payable with respect
to the Coleman Note.
Consolidated Liabilities -- means, at any time, the
amount at which the liabilities of the Companies and the
Subsidiaries would be shown on a consolidated balance sheet
of such Persons at such time prepared in accordance with
GAAP.
Consolidated Net Income -- means, for any period, net
earnings (or loss) after income taxes of the Companies and
the Subsidiaries, determined on a consolidated basis for
such Persons from and after the Effective Date, and by
reference to the Combined Pro Forma for periods prior to the
Effective Date, but excluding:
(a) net earnings (or loss) of any Subsidiary
(other than NCC and Crescent) accrued prior to the date
it became a Subsidiary;
(b) any gain or loss (net of tax effects
applicable thereto) resulting from the sale, conversion
or other disposition of capital assets other than in
the ordinary course of business;
(c) any extraordinary, unusual or nonrecurring
gains or losses;
(d) any gain arising from any reappraisal or
write-up of assets;
(e) any portion of the net earnings of any
Subsidiary (other than NCC and Crescent for periods
ending prior to January 1, 1996) that for any reason is
unavailable for payment of dividends to the Companies
or a Subsidiary;
(f) any gain or loss (net of tax effects
applicable thereto) during such period resulting from
the receipt of any proceeds of any insurance policy;
(g) any earnings of any Person (other than NCC
and Crescent) acquired by the Companies or any
Subsidiary through purchase, merger or consolidation or
otherwise, or earnings of any Person substantially all
of whose assets have been acquired by the Companies or
any Subsidiary, for any period prior to the date of
acquisition;
(h) net earnings of any Person (other than a
Subsidiary) in which the Companies or any Subsidiary
shall have an ownership interest unless such net
earnings shall have actually been received by the
Companies or such Subsidiary in the form of cash
distributions; and
(i) any restoration during such period to income
of any contingency reserve, except to the extent that
(x) provision for such reserve was made during such
period out of income accrued during such period or (y)
the Companies shall have actually received, during such
period, cash in respect of such restoration.
Consolidated Operating Cash Flow -- means, for any
period, the sum of
(a) Consolidated Net Income for such period, plus
(b) the aggregate amount (to the extent, and only
to the extent, that such aggregate amount was deducted
in the computation of Consolidated Net Income for such
period) of
(i) federal, state and local income taxes,
(ii) Consolidated Interest Expense, and
(iii) depreciation and amortization,
in each case accrued for such period by the Companies and
the Subsidiaries, determined on a consolidated basis for
such Persons, but in no event including in such computation
the one-time charge, not to exceed XXXX XXXXXXX XXXXXXX
XXXXXXXXXXXX, incurred in the second quarter of 1995 in
connection with XXX XXXXXXXXXX XX XXXXXX XXXXXX, any net
amounts accrued under FASB 87, and a one-time charge, not to
exceed XXXX XXXXXXX XXXX XXXXXXX XXXXXXXX XXXXXXX
XXXXXXXXXXXX, which the Companies may accrue during 1995 or
1996 in connection with XXX XXXXXXX XXXXXXX XX X XXXXX XX
XXXXXXXX XXXXXX XXXXXX XXXXXXX.
Consolidated Tangible Assets -- means, at any time, the
aggregate amount of Adjusted Tangible Assets of the
Companies and the Subsidiaries, determined on a consolidated
basis for such Persons at such time.
Consolidated Tangible Net Worth -- means, at any time,
the remainder of
(a) the amount by which Consolidated Tangible
Assets plus the outstanding balance of the Coleman Note
exceeds Consolidated Liabilities, minus
(b) to the extent such amounts are included in
clause (a) above, the sum of the Companies' and any
Subsidiaries'
(i) Investments in joint ventures and partnerships
(except for Triumph Investments),
(ii) Investments in equity securities not traded on a
national securities exchange or in the National Market System of
the NASDAQ, and
(iii) Investments in other securities which do not have
an investment grade rating of Baa2 or higher by Moody's or BBB or
higher by Standard and Poor's.
Control Event -- means:
(a) the execution by any of the Companies or any
Subsidiary or Affiliate of any letter of intent or
similar agreement with respect to any proposed
transaction or event or series of transactions or
events that, individually or in the aggregate, could
reasonably be expected to result in a Change in
Control;
(b) the execution of any written agreement that,
when fully performed by the parties thereto, would
result in a Change in Control; or
(c) the making of any written offer by any person
(as such term is used in section 13(d) and section
14(d)(2) of the Exchange Act as in effect on the
Effective Date) or related persons constituting a group
(as such term is used in Rule 13d-5 under the Exchange
Act as in effect on the Effective Date) to the holders
of the Voting Stock of Worldwide or Maidenform which
offer, if accepted by the requisite number of such
holders, would result in a Change in Control.
Control Prepayment Date -- Section 4.3 hereof.
Crescent -- means Crescent Industries, Inc., a Delaware
corporation.
Current Debt -- means, with respect to any Person, at
any time, all Debt of such Person other than Funded Debt and
the Coleman Note.
Current Liabilities -- means, at any time, the amount
at which the current liabilities of the Companies and the
Subsidiaries would be shown on a consolidated balance sheet
of such Persons at such time prepared in accordance with
GAAP, including at all times the entire outstanding
principal amount of the revolving credit facility under the
Bank Loan Agreement, and excluding the Coleman Note and any
obligation to make a prepayment pursuant to Section 4.4
hereof or Section 2.2 of the Bank Loan Agreement in respect
of Net Cash Flow.
Debt -- means, at any time, with respect to any Person,
without duplication:
(a) its liabilities for borrowed money (whether
or not evidenced by a promissory note or a Security);
(b) any liabilities for borrowed money secured by
any Lien existing on Property owned by such Person
(whether or not such liabilities have been assumed);
(c) any obligations in respect of any Capital
Lease of such Person;
(d) the present value of all payments due under
any arrangement for retention of title or any
conditional sale agreement (other than a Capital Lease)
discounted at the implicit rate, if known, with respect
thereto or, if unknown, at eight percent (8%) per
annum;
(e) all obligations of such Person in respect of
banker's acceptances, other acceptances, letters of
credit and other instruments serving a similar function
issued or accepted by banks and other financial
institutions for the account of such Person (whether or
not incurred in connection with the borrowing of
money), but in no event including any contingent
obligations in respect of undrawn letters of credit;
(f) any Guaranty of such Person of any obligation
or liability of another Person; and
(g) any obligation of any partnership in which
such Person is a general partner.
For purposes of determining the amount of Debt of a Company
or a Subsidiary, the Guaranty of such Person of an operating
lease of a Subsidiary shall not constitute Debt.
Default -- means an event or condition the occurrence
of which would, with the lapse of time or the giving of
notice or both, become an Event of Default.
Domestic Companies -- means Worldwide, Worldwide N.Y.,
Maidenform, Elizabeth Needlecraft, Inc., Nicholas
Needlecraft, Inc., NCC Industries, Inc., Maidenform
International, Ltd. and Crescent Industries, Inc.
Effective Date -- the date (not later than April 26,
1995) upon which all of the conditions set forth in Section
3 shall have been satisfied.
Environmental Protection Law -- means any federal,
state, county, regional or local law, statute or regulation
(including, without limitation, CERCLA, RCRA and SARA)
enacted in connection with or relating to the protection or
regulation of the environment, including, without
limitation, those laws, statutes and regulations regulating
the disposal, removal, production, storing, refining,
handling, transferring, processing or transporting of
Hazardous Substances, and any regulations issued or
promulgated in connection with such statutes by any
Governmental Authority, and any orders, decrees or judgments
issued by any court of competent jurisdiction in connection
with any of the foregoing.
As used in this definition:
CERCLA -- means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as
amended from time to time (by SARA or otherwise), and
all rules and regulations promulgated in connection
therewith.
RCRA -- means the Resource Conservation and
Recovery Act of 1976, as amended from time to time, and
all rules and regulations promulgated in connection
therewith.
SARA -- means the Superfund Amendments and
Reauthorization Act of 1986, as amended from time to
time, and all rules and regulations promulgated in
connection therewith.
ERISA -- means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
ERISA Affiliate -- means any corporation or trade or
business that:
(a) is a member of the same "controlled group of
corporations" (within the meaning of section 414(b) of
the IRC) as any of the Companies; or
(b) is under "common control" (within the meaning
of section 414(c) of the IRC) with any of the
Companies.
Event of Default -- Section 8.1 hereof.
Exchange Act -- means the Securities Exchange Act of
1934, as amended.
Existing Notes -- Section 1.1 hereof.
Existing Note Purchase Agreement -- Section 1.1 hereof.
Fair Market Value -- means, at any time, with respect
to any Property, the sale value of such Property that would
be realized in an arm's-length sale at such time between an
informed and willing buyer and an informed and willing
seller under no compulsion to buy or sell, respectively.
Fixed Charges -- means, for any period, the sum of the
amounts payable by the Companies and the Subsidiaries
(determined on a consolidated basis) in respect of (a)
operating leases, whether characterized as rents or
otherwise, but excluding payments under such leases in
respect of insurance, taxes, utilities, maintenance and
similar charges and additional rentals based on percentage
of sales, (b) Consolidated Interest Expense, (c) cash
payments consistent with the one-time charge, not to exceed
Four Million Dollars ($4,000,000), accrued in the second
quarter of 1995 in connection with the retirement of Robert
Brawer, and (d) current maturities of Funded Debt, except
any obligation to make a prepayment pursuant to Section 4.4
hereof or Section 2.2 of the Bank Loan Agreement in respect
of Net Cash Flow, in each case for such period.
Fixed Charge Coverage Ratio -- means, at any time, the
ratio of Adjusted Earnings to Fixed Charges.
Foreign Assets -- means, at any time, the aggregate
book value of the assets of the Companies and the
Subsidiaries, determined on a consolidated basis for such
Persons at such time, which assets are
(a) located outside of the United States of
America and its possessions, Canada, Mexico or the
Republic of Ireland, or
(b) owned by a Company or Subsidiary organized
under the laws of a country other than the United
States of America and its possessions, Canada, Mexico
or the Republic of Ireland, or a political subdivision
of any thereof.
Foreign Pension Plan -- means any plan, fund or other
similar program
(a) established or maintained outside of the
United States of America by any one or more of the
Companies or the Subsidiaries primarily for the benefit
of the employees (substantially all of whom are aliens
not residing in the United States of America) of any of
the Companies or such Subsidiaries which plan, fund or
other similar program provides for retirement income
for such employees or results in a deferral of income
for such employees in contemplation of retirement, and
(b) not otherwise subject to ERISA.
Funded Debt -- means, at any time, with respect to any
Person, the sum of (a) all Debt of such Person (including
the portion of Debt expressed to mature more than one year
from its date of issuance which is, in fact, due within one
year) that is expressed to mature more than one year from
the date of the creation thereof or that is extendible or
renewable at the option of such Person to a time more than
one year after the date of the creation thereof (whether or
not at such time of determination such Debt is payable
within one year), plus (b) that portion of Current Debt of
such Person which was not paid in full for a period of at
least sixty consecutive days during the period of four
fiscal quarters then most recently ended.
GAAP -- means accounting principles as promulgated from
time to time in statements, opinions and pronouncements by
the American Institute of Certified Public Accountants, the
Financial Accounting Standards Board, and any successor
entities; provided, however, that for purposes of the
calculation of the financial covenants set forth herein,
Statement No. 109 of the Financial Accounting Standards
Board shall be given no effect.
Governmental Authority -- means:
(a) the government of
(i) the United States of America
and any state, local or other political
subdivision thereof, or
(ii) any other jurisdiction (y) in
which any of the Companies or any Subsidiary
conducts all or any part of its business or
(z) that asserts jurisdiction over the
conduct of the affairs or Properties of any
of the Companies or any Subsidiary; and
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
Guaranty -- means, with respect to any Person (for the
purposes of this definition, the "Guarantor"), any
obligation (except the endorsement in the ordinary course of
business of negotiable instruments for deposit or
collection) of the Guarantor guaranteeing any indebtedness,
dividend or other obligation of any other Person (the
"Primary Obligor") in any manner, including without
limitation, obligations incurred through an agreement,
contingent or otherwise, by the Guarantor,
(a) to purchase such indebtedness or obligation
or any Property constituting security therefor;
(b) to advance or supply funds
(i) for the purpose of payment of such
indebtedness or obligation, or
(ii) to maintain working capital or
other balance sheet condition or any income
statement condition of the Primary Obligor or
otherwise to advance or make available funds for
the purchase or payment of such indebtedness or
obligation;
(c) to lease Property or to purchase Securities
or other Property or services primarily for the purpose
of assuring the owner of such indebtedness or
obligation of the ability of the Primary Obligor to
make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of the
indebtedness or obligation of the Primary Obligor
against loss in respect thereof.
For purposes of computing the amount of any Guaranty in
connection with any computation of indebtedness or other
liability, it shall be assumed that the indebtedness or
other liabilities that are the subject of such Guaranty are
direct obligations of the issuer of such Guaranty.
Hazardous Substances -- means any and all pollutants,
contaminants, toxic or hazardous wastes and any other
substances that might pose a hazard to health or safety, the
removal of which may be required or the generation,
manufacture, refining, production, processing, treatment,
storage, handling, transportation, transfer, use, disposal,
release, discharge, spillage, seepage or filtration of which
is or shall be, in each of the foregoing cases, restricted,
prohibited or penalized by any applicable law.
Individual Loan -- means a loan or advance made by a
Domestic Company to an officer, shareholder or employee of a
Company.
Institutional Investor -- means the Purchasers, any
affiliate of any of the Purchasers, any bank, trust company,
insurance company, mutual fund, pension fund or other
similar institutional investor, and any holder or beneficial
owner of Notes that is an "accredited investor" as defined
in section 2(15) of the Securities Act.
Intercreditor Agreement -- Section 3.8.
Investment -- means any investment, made in cash or by
delivery of Property, by any of the Companies or any
Subsidiary:
(a) in any Person, whether by acquisition of
stock, indebtedness or other obligation or Security, or
by loan, Guaranty, advance, capital contribution or
otherwise; or
(b) in any Property.
Investments shall be valued at cost less any net return of
capital through the sale or liquidation thereof or other
return of capital thereon.
IRC -- means the Internal Revenue Code of 1986,
together with all rules and regulations promulgated pursuant
thereto, as amended from time to time.
IRS -- means the Internal Revenue Service and any
successor agency.
Lien -- means any interest in Property securing an
obligation owed to, or a claim by, a Person other than the
owner of the Property, whether such interest is based on the
common law, statute or contract, and including, but not
limited to, the security interest lien arising from a
mortgage, encumbrance, pledge, conditional sale, sale with
recourse or a trust receipt, or a lease, consignment or
bailment for security purposes. The term "Lien" includes,
without limitation, reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and
encumbrances affecting real Property and includes, without
limitation, with respect to stock, stockholder agreements,
voting trust agreements, buy-back agreements and all similar
arrangements. For the purposes hereof, the Companies and
each Subsidiary shall be deemed to be the owner of any
Property that they shall have acquired or hold subject to a
conditional sale agreement, Capital Lease or other
arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security
purposes, and such retention or vesting is deemed a Lien.
The term "Lien" does not include negative pledge clauses in
agreements relating to the borrowing of money.
Maidenform -- has the meaning specified in the
introductory sentence hereof.
Make-Whole Amount -- means, with respect to any date
(the "Payment Date") and any principal amount of Notes
required for any reason to be paid prior to the regularly
scheduled maturity thereof on such Payment Date:
(a) if the Make-Whole Discount Rate, determined
with respect to such principal amount and such Payment
Date, equals or exceeds eight and seventy-five one-
hundredths percent (8.75%), then Zero Dollars ($0); or
(b) if the Make-Whole Discount Rate, determined
with respect to such principal amount and such Payment
Date, is less than eight and seventy-five one-
hundredths percent (8.75%), then
(i) the sum of the present values of
the then remaining scheduled payments of principal
and interest that would be payable in respect of
such principal amount but for such prepayment or
acceleration, minus
(ii) such principal amount plus the
amount of interest accrued on such principal
amount since the scheduled interest payment date
immediately preceding such Prepayment Date.
In determining such present values, a discount rate equal to
the Make-Whole Discount Rate (with respect to the Payment
Date and such principal amount) divided by four (4), and a
discount period of three (3) months of thirty (30) days
each, shall be used.
As used in this definition:
Applicable H.15 -- means, at any time, United
States Federal Reserve Statistical Release H.15(519) or
its successor publication then most recently published
and available to the public or, if no such successor
publication is available, then any other source of
current information in respect of interest rates on
securities of the United States of America that is
generally available and, in the judgment of the
Required Holders, provides information reasonably
comparable to the H.15(519) report.
Make-Whole Discount Rate -- means, with respect to
any date and any principal amount of Notes required for
any reason to be paid prior to the regularly scheduled
maturity thereof on such date, the sum of
(a) the per annum percentage rate
(rounded to the nearest three decimal places)
equal to the bond equivalent yield to maturity
derived from the annual yield to maturity of the
United States Treasury obligation listed in the
Applicable H.15 as of the date two Business Days
prior to such Prepayment Date for the then most
recently available day in such Applicable H.15
with a Treasury Constant Maturity (as defined in
such Applicable H.15) equal to the Weighted
Average Life to Maturity of the principal amount
of the Notes being so prepaid, plus
(b) fifty one-hundredths percent
(0.50%) per annum.
For purposes of clause (a) of the preceding sentence,
if no United States Treasury obligation with a Treasury
Constant Maturity corresponding exactly to the Weighted
Average Life to Maturity on such date of the Notes
being so prepaid is listed, the yields for the two (2)
published United States Treasury obligations with
Treasury Constant Maturities most closely corresponding
to such Weighted Average Life to Maturity (one with a
longer maturity and one with a shorter maturity, if
available) shall be calculated pursuant to the
immediately preceding sentence and the Make-Whole
Discount Rate shall be interpolated or extrapolated
from such yields on a straight-line basis.
Remaining Dollar-Years -- means, with respect to
any date and any principal amount of Notes being paid
prior to the regularly scheduled maturity thereof for
any reason on such date, the result obtained by
(a) multiplying, in the case of each
required payment of principal (including payment
at maturity) that would be payable in respect of
such principal amount being so prepaid but for
such prepayment,
(i) an amount equal to such
required payment of principal, by
(ii) the number of years
(calculated to the nearest one-twelfth
(1/12)) that will elapse between such date
and the date such required principal payment
would be due if such prepayment had not
occurred, and
(b) calculating the sum, with respect
to each of such required payments of principal, of
each of the products obtained in the preceding
subsection (a).
Weighted Average Life to Maturity -- means, with
respect to any date and any principal amount of Notes
being paid on such date, the number of years obtained
by dividing the Remaining Dollar-Years on such date of
such principal amount by such principal amount.
Mandatory Principal Amortization Payments -- Section
4.1 hereof.
Margin Security -- means "margin stock" within the
meaning of Regulations G, T and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., Chapter II, as
amended from time to time.
Material Adverse Effect -- means a material adverse
effect on the business, prospects, profits, Properties or
condition (financial or otherwise) of the Companies and the
Subsidiaries, taken as a whole, or on the ability of either
of Worldwide or Maidenform to perform its respective
obligations set forth herein and in the Notes.
Moody's -- means Moody's Investors Service, Inc.
Multiemployer Plan -- means any "multiemployer plan"
(as defined in section 3 of ERISA) in respect of which any
of the Companies or any ERISA Affiliate is an "employer" (as
defined in section 3 of ERISA).
NCC -- means NCC Industries, Inc., a Delaware
corporation.
Net Cash Flow -- shall have the meaning ascribed to
such term as the Bank Loan Agreement.
Note Purchase Agreements -- Section 1.2 hereof.
Notes -- Section 1.1 hereof.
Offshore Companies -- means Betex, S.A., Creaciones
Textiles de Merida, S.A. de C.V., and Jamaica Needlecraft,
Ltd.
Offshore Loans -- means loans or other Investments in
one or more Offshore Companies made by one or more Domestic
Companies.
Offshore Tangible Net Worth -- means, without
duplication,
(a) the amount by which Consolidated Tangible
Assets attributable to the Offshore Companies exceeds
the sum of (i) Consolidated Liabilities attributable to
the Offshore Companies, plus (ii) all contingent
obligations of the Offshore Companies (on a
consolidated basis) not otherwise included in (a)
above, minus
(b) to the extent such amounts are included in
clause (a) above, the sum of the Offshore Companies'
(i) loans to or interest or investments in Triumph,
Affiliates, joint ventures or partnerships, (ii)
investments in equity securities not traded on a
national securities exchange or in the National Market
System of the NASDAQ, and (iii) investments in other
securities which do not have an investment grade rating
of Baa2 or higher by Moody's or BBB or higher by
Standard and Poor's.
Original Companies -- means Maidenform Worldwide, Inc.;
Maidenform, Inc.; Betex, S.A.; Creaciones Textiles de
Merida, S.A. de C.V.; Elizabeth Needle Craft, Inc.; Jamaica
Needlecraft, Ltd.; Maidenform International, Ltd.; Nicholas
Needlecraft, Inc.; and Maidenform GMBH.
Other Purchasers -- Section 1.2 hereof.
PBGC -- means the Pension Benefit Guaranty Corporation
and any successor corporation or governmental agency.
Pension Plan -- means, at any time, any "employee
pension benefit plan" (as defined in section 3 of ERISA)
subject to Title IV of ERISA, maintained at such time by any
of the Companies or any ERISA Affiliate for employees of
such Company or such ERISA Affiliate, excluding any
Multiemployer Plan.
Permitted Encumbrances -- Liens permitted by Section
6.5 hereof.
Person -- means an individual, sole proprietorship,
partnership, corporation, trust, joint venture,
unincorporated organization, or a government or agency or
political subdivision thereof.
Placement Agent -- means CoreStates Investment Banking.
Placement Memorandum -- Section 2.1 hereof.
Property -- means any interest in any kind of property
or asset, whether real, personal or mixed, and whether
tangible or intangible, and including, without limitation,
the over-funding of any "employee pension benefit plan" (as
defined in section 3 of ERISA).
Pro Rata Share -- shall have the meaning ascribed to
such term in Section 2.4(a)(i) of the Intercreditor
Agreement.
Protection Agreement -- means (i) any interest rate
protection agreement entered into with respect to not more
than Fifty Million Dollars ($50,000,000) in principal for a
term not exceeding the maturity of the Term Loan provided
that the Companies' obligations under all such agreements
shall be limited to not more than Five Million Dollars
($5,000,000), and (ii) foreign currency exchange agreements
with a maximum aggregate exposure at any one time not
exceeding Five Million Dollars ($5,000,000) and for a
maximum term not exceeding one hundred eighty (180) days, in
either case entered into between any Company and any Bank
(as such term is defined in the Bank Loan Agreement) in the
ordinary course of such Company's business and not for
speculation.
Purchasers -- means you and the Other Purchasers.
Quarter-Annual Net Worth Increase Amount -- means, for
any fiscal quarter of the Companies, the greater of
(i) seventy percent (70%) of Consolidated Net
Income for such fiscal quarter, and
(ii) Zero Dollars ($0).
Quick Ratio -- means, at any time, the ratio of (A)
current assets (excluding inventory) to (B) Current
Liabilities, of the Companies and the Subsidiaries at such
time determined on a consolidated basis in accordance with
GAAP.
Required Holders -- means, at any time, the holders of
at least sixty-six and two-thirds (66 and 2/3%) in principal
amount of the Notes at the time outstanding (exclusive of
Notes then owned by any one or more of the Companies, any
Subsidiary and any Affiliate).
Restated Note Agreement -- means individually and
collectively, this Agreement and the identical Amended and
Restated Note Purchase Agreements entered into by the
Companies and the other holders of the Notes.
Restricted Loans -- means, collectively, Offshore Loans
and Individual Loans.
Restricted Payment -- means:
(a) any dividend or other distribution, direct or
indirect, on account of any shares of capital stock of
any of the Companies or any Subsidiary (other than on
account of capital stock of a Subsidiary owned legally
and beneficially by any of the Companies or a Wholly-
Owned Subsidiary) now or hereafter outstanding, whether
in cash or other Property, except a dividend or other
distribution payable solely in shares of common stock
of such Person; and
(b) any redemption, retirement, purchase or other
acquisition, direct or indirect, of any shares of
capital stock of any of the Companies or any Subsidiary
(other than on account of capital stock of a Subsidiary
owned legally and beneficially by any of the Companies
or a Wholly-Owned Subsidiary) now or hereafter
outstanding, or of any warrants, rights or options to
acquire any shares of such stock, provided that neither
(i) the redemption of Beatrice Coleman described in
Part 1.1 of Annex 2 hereto, nor (ii) any acquisition by
NCC of the balance of its common stock not owned by the
Companies immediately after the Effective Date, shall
constitute a Restricted Payment.
Securities Act -- means the Securities Act of 1933, as
amended.
Security -- means "security" as defined by section 2(1)
of the Securities Act.
Security Documents -- security agreements, mortgages,
deeds of trust and other similar documents (in form and
substance acceptable to you) executed by one or more of the
Companies in favor of the Collateral Agent to secure the
obligations of the Companies hereunder, under the Notes,
under the Bank Loan Agreement and under the notes issued
pursuant to the Bank Loan Agreement.
Senior Financial Officer -- means, with respect to any
of the Companies, the chief financial officer, the principal
accounting officer, the treasurer or the comptroller of such
Company.
Senior Officer -- means, with respect to any of the
Companies, the chairman of the board, the chief executive
officer, the chief operating officer, the president, the
controller, the treasurer, the Senior Vice President-Finance
or the Senior Vice President-General Counsel of such
Company, or persons exercising responsibilities customarily
associated with such positions.
Standard & Poor's -- means Standard & Poor's, a
division of McGraw Hill, Inc.
Subsidiary -- means any corporation (other than
Maidenform)
(a) at least eighty percent (80%) by number of
votes (or potential votes in the case of non-voting
securities which are convertible into voting
securities) of each class of the Voting Stock of which
is legally and beneficially owned by any one or more of
Worldwide, Maidenform and the Wholly-Owned
Subsidiaries;
(b) that is organized under the laws of an
Acceptable Jurisdiction, and all or substantially all
of whose business is carried on in, and all or
substantially all of whose Property is located within,
such Acceptable Jurisdiction.
Surviving Corporation -- Section 6.13(a) hereof.
Transfer -- Section 6.14 hereof.
Triumph -- means Triumph International Overseas,
Limited, a Liechtenstein corporation.
Triumph Investments -- means Investments in joint
ventures or partnerships solely with Triumph and/or any
corporation or other entity, more than fifty percent (50%)
of the voting equity interest of which is owned directly by
Triumph, but only so long as Triumph is an Affiliate.
Voting Stock -- means capital stock of any class or
classes of a corporation the holders of which are
ordinarily, in the absence of contingencies, entitled to
elect corporate directors (or Persons performing similar
functions), and includes all equity Securities and all other
Securities convertible into, exchangeable for, or
representing the right to purchase, any such capital stock.
Worldwide -- has the meaning specified in the
introductory sentence hereof.
Worldwide N.Y. -- means Maidenform Worldwide, Inc., a
New York corporation, which is to be merged with and into
Worldwide.
Wholly-Owned Subsidiary -- means, at any time, any
Subsidiary
(a) one hundred percent (100%) of all of the
equity Securities (except directors' qualifying shares
or shares fulfilling a similar purpose) and voting
Securities of which are owned by any one or more of the
Companies and the other Wholly-Owned Subsidiaries at
such time, and
(b) all the Debt of which (other than direct
obligations in respect of the Notes and amounts owing
pursuant to the Bank Loan Agreement) is held by the
Companies and the other Wholly-Owned Subsidiaries at
such time.
2 Principles of Financial Accounting.
When any provision of this Agreement refers to a
consolidation of financial results of the Companies, such
reference shall be deemed to mean, for periods prior to the
Effective Date, a combination of results as set forth in the
Combined Pro Forma. Otherwise, the character or amount of
any asset or liability or item of income or expense, or any
consolidation or other accounting computation is required to
be made for any purpose hereunder, it shall be done in
accordance with GAAP as in effect on the date of, or at the
end of the period covered by, the financial statements from
which such asset, liability, item of income, or item of
expense, is derived, or, in the case of any such
computation, as in effect on the date as of which such
computation is required to be determined, provided, that if
any term defined herein includes or excludes amounts, items
or concepts that would not be included in or excluded from
such term if such term was defined with reference solely to
GAAP, such term will be deemed to include or exclude such
amounts, items or concepts as set forth herein.
3 Directly or Indirectly.
Where any provision herein refers to action to be taken
by any Person, or that such Person is prohibited from
taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person,
including actions taken by or on behalf of any partnership
in which such Person is a general partner.
4 Section Headings; Table of Contents; Independent
Construction.
(a) Section Headings and Table of Contents, etc. The
titles of the Sections of this Agreement and the Table of
Contents appear as a matter of convenience only, do not
constitute a part hereof and shall not affect the construction
hereof. The words "herein," "hereof," "hereunder" and "hereto"
refer to this Agreement as a whole and not to any particular
Section or other subdivision.
(b) Independent Construction. Each covenant contained
herein shall be construed (absent an express contrary provision
herein) as being independent of each other covenant contained
herein, and compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
5 Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK
LAW.
10. MISCELLANEOUS
1 Communications.
(a) Method; Address. All communications hereunder or under
the Notes (unless otherwise specified herein) shall be in
writing, shall be hand delivered, deposited into the United
States mail (registered or certified mail, return receipt
requested) postage prepaid, sent by overnight courier or sent by
facsimile transmission (confirmed by delivery by overnight
courier, sent on the date that such facsimile transmission is
made) and shall be addressed,
(i) if to Companies or any of them:
Maidenform Worldwide, Inc.
Maidenform, Inc.
90 Park Avenue
New York, New York 10016
Attention: Steven N. Masket, Esq.
Senior Vice President-General Counsel
Telephone: (212) 856-8913
Facsimile: (212) 983-5834
with a copy to:
Maidenform, Inc.
154 Avenue E
Bayonne, New Jersey 07002
Attention: Ira Glazer
Senior Vice President-Finance
Telephone: (201) 436-9200
Facsimile: (201) 436-1245
or at such other address as Worldwide shall have
furnished in writing to all holders of the Notes at the
time outstanding, and
(ii) if to any of the holders of the Notes,
(A) if such holders are Purchasers, at their
respective addresses set forth on Annex 1 hereto, and further
including any parties referred to on such Annex 1 that are
required to receive notices in addition to such holders of the
Notes, and
(B) if such holders are not the Purchasers, at
their respective addresses set forth in the register for the
registration and transfer of Notes maintained pursuant to Section
6.3 hereof,
or to any such party at such other address as such
party may designate by notice duly given in accordance
with this Section 10.1 to Worldwide (which other
address shall be entered in such register).
(b) When Given. Any communication so addressed and
deposited in the United States mail, postage prepaid, by
registered or certified mail (in each case, with return receipt
requested) shall be deemed to be received on the third (3rd)
succeeding Business Day after the day of such deposit (not
including the date of such deposit). Any notice so addressed and
otherwise delivered shall be deemed to be received when actually
received at the address of the addressee.
2 Reproduction of Documents.
This Agreement and all documents relating hereto,
including, without limitation,
(a) consents, waivers and modifications that may hereafter
be executed,
(b) documents received by you at the closing of your
purchase of the Notes (except the Notes themselves), and
(c) financial statements, certificates and other
information previously or hereafter furnished to you or any other
holder of Notes,
may be reproduced by any holder of Notes by any
photographic, photostatic, microfilm, micro-card, miniature
photographic, digital or other similar process and each
holder of Notes may destroy any original document so
reproduced. The Companies agree and stipulate that any such
reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether
or not the original is in existence and whether or not such
reproduction was made by such holder of Notes in the regular
course of business) and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be
admissible in evidence. Nothing in this Section 10.2 shall
prohibit the Companies or any holder of Notes from
contesting the validity or the accuracy of any such
reproduction.
3 Survival.
All warranties, representations, certifications and
covenants made by any of the Companies herein or in any
certificate or other instrument delivered by or on behalf of
any of the Companies hereunder shall be considered to have
been relied upon by you and shall survive the delivery to
you of the Notes regardless of any investigation made by you
or on your behalf. All statements in any such certificate
or other instrument shall constitute warranties and
representations by the Companies hereunder.
4 Successors and Assigns.
This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the
parties hereto. The provisions hereof are intended to be
for the benefit of all holders, from time to time, of Notes,
and shall be enforceable by any such holder, whether or not
an express assignment to such holder of rights hereunder
shall have been made by you or your successor or assign.
5 Amendment and Waiver.
(a) Requirements. This Agreement may be amended, and the
observance of any term hereof may be waived, with (and only with)
the written consent of the Companies and the Required Holders;
provided that no such amendment or waiver of any of the
provisions of Section 1 through Section 3 hereof, inclusive, or
any defined term used therein, shall be effective as to any
holder of Notes unless consented to by such holder in writing;
and provided further that no such amendment or waiver shall,
without the written consent of the holders of all Notes
(exclusive of Notes held by any of the Companies, any Subsidiary
or any Affiliate) at the time outstanding,
(i) subject to Section 8 hereof, change the amount or
time of any prepayment or payment of principal or Make-Whole
Amount or the rate or time of payment of interest,
(ii) amend Section 8 hereof,
(iii) amend the definition of "Required Holders," or
(iv) amend this Section 10.5.
(b) Solicitation of Noteholders.
(i) Solicitation. The Companies shall not solicit,
request or negotiate for or with respect to any proposed waiver
or amendment of any of the provisions hereof or the Notes unless
each holder of the Notes (irrespective of the amount of Notes
then owned by it) shall be provided by the Companies with
sufficient information to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any
waiver or consent effected pursuant to the provisions of this
Section 10.5 shall be delivered by the Companies to each holder
of outstanding Notes forthwith following the date on which the
same shall have been executed and delivered by all holders of
outstanding Notes required to consent or agree to such waiver or
consent.
(ii) Payment. The Companies shall not, directly or
indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, or
grant any security, to any holder of Notes as consideration for
or as an inducement to the entering into by any holder of Notes
of any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security
is concurrently granted, on the same terms, ratably to the
holders of all Notes then outstanding.
(iii) Scope of Consent. Any consent made pursuant to
this Section 10.5 by a holder of Notes that has transferred or
has agreed to transfer its Notes to any of the Companies, any
Subsidiary or any Affiliate and has provided or has agreed to
provide such written consent as a condition to such transfer
shall be void and of no force and effect except solely as to such
holder, and any amendments effected or waivers granted or to be
effected or granted that would not have been or would not be so
effected or granted but for such consent (and the consents of all
other holders of Notes that were acquired under the same or
similar conditions) shall be void and of no force and effect,
retroactive to the date such amendment or waiver initially took
or takes effect, except solely as to such holder.
(c) Binding Effect. Except as otherwise provided in
Section 10.5 hereof, any amendment or waiver consented to as
provided in this Section 10.5 shall apply equally to all holders
of Notes and shall be binding upon them and upon each future
holder of any Note and upon the Companies whether or not such
Note shall have been marked to indicate such amendment or waiver.
No such amendment or waiver shall extend to or affect any
obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent
thereon.
(d) Expenses. The Companies agree, to the extent permitted
by applicable law, to pay and indemnify you against any costs and
expenses, including reasonable attorneys' and accountants' fees,
incurred by you or any subsequent holder of Notes in evaluating
(in connection with any controversy or potential controversy) and
enforcing any rights or remedies under this Agreement or the
Notes or in responding to any subpoena or other legal process
issued in connection with this Agreement, the Notes or the
transactions contemplated hereby or by reason of your or any
subsequent holder's having acquired any Notes, including, without
limitation, costs and expenses incurred in any bankruptcy case.
Without limiting the foregoing, to the extent permitted by
applicable law, the Companies will also pay the reasonable fees,
expenses and disbursements of an investment bank or other firm or
firms acting as financial advisers to the holders of the Notes
following the occurrence and during the continuance of a Default
or an Event of Default or in connection with any amendment or
waiver proposed in connection with any Default or Event of
Default or any workout, restructuring or similar negotiation
relating to any other holder. The obligations of the Companies
under this Section 10.5(d) shall survive the transfer of any Note
or portion thereof or interest therein by you or any subsequent
holder, and the payment of any Note.
6 Payments on Notes.
(a) Manner of Payment. The Companies shall pay all amounts
payable with respect to each Note (without any presentment of
such Notes and without any notation of such payment being made
thereon) by crediting, by federal funds bank wire transfer, the
account of the holder thereof in any bank in the United States of
America as may be designated in writing by such holder, or in
such other manner as may be reasonably directed or to such other
address in the United States of America as may be reasonably
designated in writing by such holder. Annex 1 hereto shall be
deemed to constitute notice, direction or designation (as
appropriate) to the Companies with respect to payments as
aforesaid. In the absence of such written direction, all amounts
payable with respect to each Note shall be paid by check mailed
and addressed to the registered holder of such Note at the
address shown in the register maintained by the Companies
pursuant to Section 5.1 hereof.
(b) Payments Due on Holidays. If any payment due on, or
with respect to, any Note shall fall due on a day other than a
Business Day, then such payment shall be made on the first
Business Day following the day on which such payment shall have
so fallen due, provided that if all or any portion of such
payment shall consist of a payment of interest, for purposes of
calculating such interest, such payment shall be deemed to have
been originally due on such first following Business Day, such
interest shall accrue and be payable to (but not including) the
actual date of payment and the amount of the next succeeding
interest payment shall be adjusted accordingly.
(c) Payments, When Received. Any payment to be made to the
holders of Notes hereunder or under the Notes shall be deemed to
have been made on the Business Day such payment actually becomes
available to such holder at such holder's bank prior to 12:00
noon (local time of such bank).
7 Entire Agreement.
This Agreement constitutes the final written expression
of all of the terms hereof and is a complete and exclusive
statement of those terms.
8 Jurisdiction; Service of Process.
EACH OF THE COMPANIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER NOTE
PURCHASE AGREEMENTS OR THE NOTES, OR ANY ACTION OR
PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN
RESPECT OF ANY BREACH HEREUNDER, UNDER THE OTHER NOTE
PURCHASE AGREEMENTS OR UNDER THE NOTES, BROUGHT BY ANY
REGISTERED HOLDER OF A NOTE AGAINST ANY OF THE COMPANIES OR
ANY OF THEIR RESPECTIVE PROPERTY, MAY BE BROUGHT BY SUCH
HOLDER OF A NOTE IN THE COURTS OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY NEW YORK
STATE COURT SITTING IN NEW YORK CITY, AS SUCH REGISTERED
HOLDER OF A NOTE MAY IN ITS SOLE DISCRETION ELECT, AND BY
THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE
COMPANIES IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON-
EXCLUSIVE IN PERSONAM JURISDICTION OF EACH SUCH COURT, AND
AGREES THAT PROCESS SERVED EITHER PERSONALLY OR BY
REGISTERED MAIL, RETURN RECEIPT REQUESTED, SHALL CONSTITUTE,
TO THE EXTENT PERMITTED BY LAW, ADEQUATE SERVICE OF PROCESS
IN ANY SUCH SUIT, AND EACH OF THE COMPANIES IRREVOCABLY
WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT TO
THE IN PERSONAM JURISDICTION OF ANY SUCH COURT. RECEIPT OF
PROCESS SO SERVED SHALL BE CONCLUSIVELY PRESUMED AS
EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED
STATES POSTAL SERVICE OR ANY COMMERCIAL DELIVERY SERVICE.
WITHOUT LIMITING THE FOREGOING, EACH OF THE COMPANIES HEREBY
APPOINTS, IN THE CASE OF ANY SUCH ACTION OR PROCEEDING
BROUGHT IN THE COURTS OF OR IN THE STATE OF NEW YORK,
MAIDENFORM, INC., 90 PARK AVENUE, NEW YORK, NEW YORK 10016,
TO RECEIVE, FOR IT AND ON ITS BEHALF, SERVICE OF PROCESS IN
THE STATE OF NEW YORK WITH RESPECT THERETO AT ANY TIME WHEN
SUCH PERSON DOES NOT MAINTAIN AN OFFICE OR PAYING AGENT, AS
THE CASE MAY BE, IN THE UNITED STATES AS REQUIRED PURSUANT
TO SECTION 8.3 HEREOF OF WHICH IT HAS NOTIFIED THE HOLDERS
OF NOTES. IN ADDITION, EACH OF THE COMPANIES HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE IN ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER NOTE
PURCHASE AGREEMENTS AND/OR THE NOTES, BROUGHT IN SUCH
COURTS, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN
SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY
REGISTERED HOLDER OF A NOTE TO SERVE ANY SUCH WRITS, PROCESS
OR SUMMONSES, IN ANY MANNER PERMITTED BY APPLICABLE LAW OR
TO OBTAIN JURISDICTION OVER ANY OF THE COMPANIES IN SUCH
OTHER JURISDICTION, AND IN SUCH MANNER, AS MAY BE PERMITTED
BY APPLICABLE LAW.
9 Duplicate Originals, Execution in Counterpart.
Two (2) or more duplicate originals hereof may be
signed by the parties, each of which shall be an original
but all of which together shall constitute one and the same
instrument. This Agreement may be executed in one or more
counterparts and shall be effective when at least one
counterpart shall have been executed by each party hereto,
and each set of counterparts that, collectively, show
execution by each party hereto shall constitute one
duplicate original.
[Remainder of page intentionally blank; next page is signatu
re page.]
If this Agreement is satisfactory to you, please so
indicate by signing the acceptance at the foot of a
counterpart hereof and returning such counterpart to the
Companies, whereupon this Agreement shall become binding
between us in accordance with its terms.
MAIDENFORM, INC.
By_________________________________
Name:
Title:
By_________________________________
Name:
Title:
MAIDENFORM WORLDWIDE,INC.
MAIDENFORM WORLDWIDE,INC.
JAMAICA NEEDLECRAFT, LTD.
BETEX, S.A.
CREACIONES TEXTILES DE
MERIDA, S.A. DE C.V.
ELIZABETH NEEDLE CRAFT, INC.
MAIDENFORM INTERNATIONAL,
LTD.
NICHOLAS NEEDLECRAFT, INC.
NCC INDUSTRIES, INC.
CRESCENT INDUSTRIES, INC.
By/s/Ira Glazer
Name:Ira Glazer
Title:Vice President
By /s/ Steven Masket
Name: Steven Masket
Title:Secretary
Accepted:
[PURCHASER]
By /s/ Ira Glazer_
Name: Ira Glazer
Title: Vice President
By /s/ Steven Masket
Name: Steven Masket
Title: Secretary
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") made as of this
26 day of April, 1995 between MAIDENFORM WORLDWIDE, INC., a New
York corporation ("Worldwide-New York"), MAIDENFORM WORLDWIDE,
INC., a Delaware corporation ("Worldwide-Delaware"), MAIDENFORM,
INC., a New York corporation ("Maidenform"), BETEX, S.A., a Costa
Rican corporation ("Betex"), CREACIONES TEXTILES de MERIDA, S.A.
de C.V., a Mexican corporation ("Creaciones"), ELIZABETH NEEDLE
CRAFT, INC., a New York corporation ("Elizabeth"), JAMAICA
NEEDLECRAFT, LTD., a Jamaican corporation ("Jamaica"), MAIDENFORM
INTERNATIONAL, LTD., a New York corporation ("International"),
NICHOLAS NEEDLECRAFT, INC., a New York corporation ("Nicholas"),
NCC INDUSTRIES, INC., a Delaware corporation ("NCC"), CRESCENT
INDUSTRIES, INC., a Delaware corporation ("Crescent", Worldwide-
New York, Worldwide-Delaware, Maidenform, Betex, Creaciones,
Elizabeth, Jamaica, International, Nicholas, NCC and Crescent are
hereinafter referred to individually as a "Debtor" and
collectively as the "Debtors"); and CORESTATES BANK, N.A.
("CoreStates"), a national banking association, as collateral
agent under a certain Intercreditor Agreement (as hereinafter
defined), for itself in its capacity as Issuing Bank (as
hereinafter defined), in its capacity as the Agent (as
hereinafter defined), and in its individual capacity, The Chase
Manhattan Bank, N.A. ("Chase"), a national banking association,
National City Bank ("City"), a national banking association,
Nationsbank, N.A. ("Nationsbank"), a national banking
association, NBD Bank ("NBD"), a Michigan banking corporation,
Comerica Bank ("Comerica"), a Michigan banking corporation,
European American Bank ("EAB"), a New York banking corporation
and United Jersey Bank ("UJB"), a New Jersey banking corporation
(CoreStates, in its individual capacity, Chase, City,
Nationsbank, NBD, Comerica, EAB and UJB are collectively referred
to herein as the "Banks"), Massachusetts Mutual Life Insurance
Company ("Mass Mutual"), Principal Mutual Life Insurance Company
("Principal"), and TMG Life Insurance Company ("TMG"; Mass
Mutual, Principal and TMG, together with their respective
successors and assigns, are collectively referred to herein as
the "Noteholders"). CoreStates, in its capacity as collateral
agent for the Banks, the Issuing Bank, the Agent and the
Noteholders, and any successor collateral agent shall be
hereinafter referred to as the "Collateral Agent".
BACKGROUND
A. The Debtors, CoreStates as agent for the Banks
(CoreStates, in such capacity, and any successor agent shall be
referred to herein as the "Agent"), CoreStates as issuing bank
for the Letters of Credit (CoreStates, in such capacity, and any
successor issuing bank shall be referred to herein as the
"Issuing Bank"), and the Banks, have entered into a Loan
Agreement dated of even date herewith (such agreement, as
amended, extended or modified from time to time, shall be
referred to herein as the "Loan Agreement") pursuant to which the
Banks have agreed to lend the Debtors an amount not to exceed
$170,000,000.00 in the aggregate, consisting of a $120,000,000.00
revolving credit facility (the "Revolving Credit") and a
$50,000,000.00 term loan (the "Term Loan"). Terms used but not
otherwise defined herein shall have the meaning given to such
terms in the Loan Agreement.
B. The Noteholders and the Debtors have on the date hereof
entered into separate amended and restated note purchase
agreements, each dated as of April 1, 1995 (such agreements, as
amended, extended or modified from time to time, shall be
collectively referred to herein as the "Note Purchase Agreement")
pursuant to which the Debtors executed and delivered to the
Noteholders joint and several senior notes issued by the Debtors
in the aggregate principal amount of $30,000,000.00.
C. The Agent, the Issuing Bank, the Collateral Agent, the
Banks, the Noteholders and the Debtors have entered into an
Intercreditor Agreement dated of even date herewith (the
"Intercreditor Agreement"). The Loan Agreement and all documents
executed and delivered in connection therewith, the Note Purchase
Agreement and all documents executed and delivered in connection
therewith and the Intercreditor Agreement and all documents
executed and delivered in connection therewith shall be
collectively referred to herein as the "Loan Documents."
D. In order to induce the Banks to enter into the Loan
Agreement and to make available the Revolving Credit and the Term
Loan and to induce the Noteholders to enter into the Note
Purchase Agreement and to consent to and permit the Debtors to
grant the liens set forth herein, each Debtor has agreed to grant
to the Collateral Agent, as collateral agent for the Banks, the
Issuing Bank, the Agent and the Noteholders the liens and
security interests set forth herein.
NOW THEREFORE, in consideration of the premises and other
good and valuable consideration, each Debtor hereby agrees with
the Collateral Agent as follows:
2 . THE COLLATERAL
As security for the Obligations (as defined in Section 2
below), each Debtor hereby grants, pledges, assigns and conveys
to the Collateral Agent as agent for the Agent, the Banks, the
Issuing Bank and the Noteholders, a first priority continuing
security interest in and lien on all of the Debtors' right, title
and interest in and to all of the tangible and intangible
personal property of the Debtors, including, without limitation,
all of the following property described below (hereinafter
collectively called the "Collateral"):
.1 A. all Inventory, as that term is now defined in the
Uniform Commercial Code, as in effect in the Commonwealth of
Pennsylvania (the "UCC"), which is now owned or possessed or
hereafter acquired by the Debtors, including without limitation
all tangible personal property held by such Debtor for sale or
lease or to be furnished under contracts of service; tangible
personal property that any Debtor has so leased or furnished,
including tangible personal property held by others for sale on
consignment from such Debtor; tangible personal property sold by
any Debtor on a sale or return basis; tangible personal property
returned to any Debtor or repossessed by any Debtor following a
sale thereof by such Debtor; tangible personal property
constituting "work-in-process" and raw materials; and tangible
personal property represented by a Document of Title (as that
term is defined in the UCC) or by a certificate of title or
certificate of origin; and
A. all Accounts, Documents, Instruments, Chattel Paper and
General Intangibles (as those terms are defined in the UCC), now
owned or hereafter acquired by each Debtor, whether now existing
or hereafter arising, including without limitation all of such
Debtor's rights (but none of such Debtor's obligations) in, to
and under any and all contracts and agreements, contracts-in-
transit, and installment sale agreements, now existing or
hereafter entered into; all tax refunds, all patents,
unregistered patents, patent applications, copyrights, processes,
trade names, trademarks and trade name or trademark applications;
all guaranties, sureties and endorsements of, and letters of
credit, bonds or credit enhancements securing, such Debtor's
existing and future Accounts and General Intangibles; all
security or collateral held or taken by any Debtor to secure the
payment and/or satisfaction of any Account or General Intangible
including any returned or repossessed goods; and all goods
surrendered to any Debtor at the end of any lease or rental term;
and
B. all new and used Equipment and Fixtures (as those terms
are defined in the UCC whether or not perfection of a security
interest therein is governed by Article 9 of the UCC) which is
now owned or possessed or hereafter acquired by any Debtor (other
than Equipment (i) leased by any Debtor as lessee if the lease
agreement executed by such Debtor in connection therewith
prohibits such Debtor from granting a lien, encumbrance or
security interest in such Equipment or (ii) owned by such Debtor
if the Equipment is subject to a lien, encumbrance or security
interest that prohibits such Debtor from granting any other lien,
encumbrance or security interest in such Equipment), whether or
not now or hereafter constituting fixtures, and shall include,
without limitation, motor vehicles, aircraft and ships, boats and
other sailing vessels; and
.2 all accessions, accessories, parts and goods affixed or
appurtenant to the property described in Section 1.1; all choses
in action now or hereafter arising from or related to the
possession, use, sale, lease, other disposition or operation of
any of the property described in Section 1.1; all present and
future lease agreements, rental agreements and other agreements
arising out of or relating to any Debtor's lease, sale, rental,
consignment or other disposition of the property described in
Section 1.1 or any portion of said property, including such
Debtor's rights in connection with the residual value of said
property or portion thereof so leased, rented, consigned, sold or
otherwise disposed of, including but not limited to the proceeds
of any third party's option to purchase the said property or any
portion thereof; all insurance on any of the property described
in this Section 1, and all proceeds of such insurance and
returned or unearned insurance premiums; all tax refunds; and all
cash and non-cash proceeds of all property described in this
Section 1, including without limitation any lockbox accounts and
any funds therein; and
.3 all jigs, tools, dies, replacement parts, tool and die
designs, all replacements thereof and accessories, parts and
equipment appurtenant to the Collateral; all patents, processes,
trade names, trademarks and copyrights (to the extent of each
Debtor's interest therein), now or hereafter used in connection
with any of the Collateral; and
.4 all books and records of each Debtor evidencing or
relating to the foregoing, including, without limitation, billing
records of every kind and description, customer lists, tapes,
information, data, stored material, computer, media, passwords,
access codes, data storage and processing media, software and
related material, including printouts, punch cards and tab runs;
and
.5 all now existing or hereafter created deposit accounts,
savings accounts, other passbook accounts, investment accounts
and similar accounts maintained by any Debtor, whether maintained
with any Bank or any Bank's Subsidiaries or Affiliates, or at
banking institutions, savings institutions or other financial
institutions; certificates of deposits, investments in money
market or mutual funds whether or not maintained at or managed by
a banking institution, savings institution or other financial
institution, and all cash or other property now or hereafter
contained in any such account.
Notwithstanding anything contained herein or in any
other document, instrument, agreement or financing statement
executed by any of the Debtors pursuant hereto or in connection
herewith, the Collateral shall not include the securities and
other property listed on Schedule A hereto (the "Excluded
Collateral").
3 . OBLIGATIONS SECURED
The Collateral secures all of the following:
.1 payment and performance of the liabilities,
obligations, covenants and agreements of the Debtors to the
Agent, the Issuing Bank, and the Banks arising out of or incurred
in connection with the Loan Agreement or any document executed in
connection therewith and to the Noteholders arising out of or
incurred in connection with the Note Purchase Agreement or any
document executed in connection therewith, as such liabilities,
obligations, covenants, agreements and notes may be hereafter
amended, increased, decreased, supplemented or extended by any
and all renewals, extensions, replacements or modifications of
such Loan Agreement or Note Purchase Agreement hereafter entered
into; and
.2 payment and performance of all other existing and
future liabilities, obligations, covenants and agreements of the
Debtors to the Collateral Agent, the Banks, the Agent, the
Issuing Bank, or the Noteholders, whether absolute or contingent,
matured or unmatured, direct or indirect, similar or dissimilar,
due or to become due or heretofore or hereafter contracted or
acquired, arising under the Loan Agreement, the Note Purchase
Agreement, the Intercreditor Agreement, under any other Loan
Document or in connection with any of the transactions described
herein or therein or arising under any interest rate protection
agreement, foreign exchange contract or other contract or
agreement between a Debtor and a Bank permitted under the Loan
Agreement.
(All of the foregoing liabilities and obligations are secured
hereby and are hereinafter collectively referred to as the
"Obligations.")
The security interests granted herein shall continue in
full force and effect until all of the following have occurred:
(i) all of the Obligations are completely satisfied in full, (ii)
the Banks' Commitments are terminated, (iii) the Issuing Bank's
obligation to issue Letters of Credit is terminated, and (iv) no
Letters of Credit issued by the Issuing Bank on behalf of the
Debtors are outstanding.
4 . REPRESENTATIONS AND WARRANTIES
.1 Each Debtor represents and warrants to the Collateral
Agent as follows, all of which shall survive this Agreement:
(a) The Collateral, other than Collateral in transit, is
located at the addresses, including counties, listed on Schedule
B hereto, as amended from time to time.
(b) The address, including county, of each Debtor's chief
executive office and the place where each Debtor keeps its books
and records relating to the Collateral is listed on Schedule B
hereto, as amended from time to time.
(c) Each Debtor has absolute good and, with respect to real
property, marketable title to its respective Collateral, free and
clear of all liens, encumbrances and security interests except
the security interests granted to the Collateral Agent under any
of the Loan Documents and those security interests, liens and
encumbrances permitted under Section 5.5(A) of the Loan
Agreement. The Debtors will defend the Collateral against the
claims and demands of all persons except the Collateral Agent.
All General Intangibles and Accounts included in the Collateral
have arisen in the ordinary course of each Debtor's business and
are not subject to any defense, set-off or counterclaim (other
than with respect to warranty programs and sales programs
instituted by such Debtor in the ordinary course of business).
All Accounts and General Intangibles, and all contracts giving
rise to any of them, are valid and binding obligations of the
Account Debtors (which is herein defined as any and all persons
obligated as debtors, makers, endorsers, guarantors or sureties
on any Account or General Intangible) thereof, enforceable in
accordance with their respective terms subject to customary
chargebacks and claims incurred in the ordinary course of
business.
(d) The Collateral is and will be used for the sole purpose
of conducting such Debtor's business.
(e) Each Debtor has made or will promptly make all
fictitious or trade name filings as, when and where required by
law, all of which are identified on Schedule C attached hereto
and made a part hereof, as the same may be amended from time to
time.
(f) No Event of Default, as defined in Section 7 hereof,
has occurred and no event has occurred which, with the passage of
time, the giving of notice or both, could be an Event of Default
hereunder.
(g) No Collateral is affixed to real estate except as
described in Schedule D hereto, as the same may be amended from
time to time.
(h) The security interest created hereby is a first
priority perfected security interest in the Collateral for all
locations at which the Collateral is situated within the
continental United States, provided that such security interest
in the Collateral which is or may be subject to security
interests, liens or encumbrances permitted in accordance with
Section 5.5(A) of the Loan Agreement may not be a first priority
security interest.
.2 Each Debtor, jointly and severally, covenants and
agrees with the Collateral Agent as follows:
(a) The representations and warranties set forth in Section
3.1 above shall remain true and correct as long as this Agreement
remains in effect.
(b) Each Debtor will execute promptly upon the Collateral
Agent's request such UCC financing statements, lease assignments,
lessee notifications, Account Debtor notifications and other
documents as are necessary or desirable in the Collateral Agent's
sole discretion to perfect and continue perfected the liens and
security interests granted herein. Each Debtor hereby appoints
the Collateral Agent, as such Debtor's attorney-in-fact to do, at
the Collateral Agent's option and at such Debtor's expense, all
acts and things that the Collateral Agent may deem reasonably
necessary or desirable to perfect and continue perfected the
liens and security interests created herein and to protect the
Collateral. The Debtors will pay to the Collateral Agent upon
demand the costs and reasonable fees associated with filing the
same with appropriate governmental agencies. The Debtors further
agree that if the Collateral includes any motor vehicles or any
other type of property for which a certificate of title is
issuable, upon the occurrence and during the continuance of any
Event of Default at the Collateral Agent's request, the Debtors
will join with the Collateral Agent in doing whatever is
necessary to have a statement of the security interest created by
this Agreement noted on said certificate and will forthwith
deliver said certificate to the Collateral Agent.
(c) Each Debtor will keep complete and accurate books and
records and make all necessary entries therein to reflect the
quantities, costs, value and location of its Inventory and
Equipment and the transactions and facts giving rise to its
Accounts and General Intangibles and all payments, credits and
adjustments applicable thereto. Each Debtor agrees to mark its
books and records in such fashion as to indicate the security
interests granted herein. The Debtors shall permit the
Collateral Agent, its officers, employees and agents to have
access at all reasonable times upon reasonable notice to all of
the Debtors' books and records and any other records pertaining
to the Debtors' business that the Collateral Agent may reasonably
request. Each Debtor shall cause all persons, including computer
service bureaus, bookkeeping services, accountants and the like,
to make all such books and records in its possession available to
the Collateral Agent, its officers, employees and agents at all
reasonable times and, so long as no Event of Default has occurred
and is continuing, upon reasonable notice. If deemed necessary
by the Collateral Agent to protect the books and records from
falsification or destruction after the occurrence and during the
continuance of an Event of Default, permit the Collateral Agent,
its officers, employees and agents to remove them promptly upon
demand from such Debtor's place of business or any other place
where the same may be found for the purpose of examining,
auditing and copying the same and sharing the same with the
Collateral Agent. The Collateral Agent's right to take
possession of any Debtor's books and records after the occurrence
and during the continuance of an Event of Default shall be
enforceable at law, by action of replevin or by any other
appropriate remedy at law or in equity, and, to the extent
permitted by law, the Debtors consent to the entry of judicial
orders or injunctions enforcing such rights without any notice to
the Debtors or any opportunity to be heard.
(d) If any of the Debtors' Accounts or General Intangibles
arise out of a contract with the United States or any department,
agency or instrumentality thereof, the Debtors will immediately
notify the Collateral Agent thereof in writing and, if the
aggregate of such Accounts or General Intangibles exceeds
$2,000,000.00, the Debtors will execute any and all instruments
and take any and all steps required in order that the security
interests of the Collateral Agent hereunder in the Debtors'
rights under such contract and in all General Intangibles and
Accounts arising thereunder and in the proceeds thereof shall be
protected under the provisions of the Federal Assignment of
Claims Act or other applicable law, provided that the Debtors
will not be required to take such steps to protect the Collateral
Agent's security interest under the Federal Assignment of Claims
Act with respect to Accounts and General Intangibles aggregating
$2,000,000.00 or less, unless the Collateral Agent requests the
Debtors take such actions.
(e) Solely to perfect the Collateral Agent's interest
therein, if any of the Debtor's Accounts or General Intangibles
become evidenced by a promissory note, trade acceptance or any
other instrument for the payment of money or other instruments,
the Debtors will promptly deliver such instrument to the
Collateral Agent appropriately endorsed to the Collateral Agent's
order. So long as no Event of Default has occurred and is
continuing hereunder, unless otherwise required in accordance
with a Cash Management Agreement (as hereinafter defined), the
proceeds of the foregoing shall be promptly forwarded to the
Debtors. Regardless of the form of such endorsement, the Debtors
hereby waive presentment, demand, dishonor, notice of dishonor,
protest and notice of protest and all other notices with respect
thereto.
(f) Upon the occurrence and during the continuance of an Event
of Default, the Collateral Agent shall have the right, without
notice to the Debtors, to take possession of the Debtors'
Inventory and to require the Debtors to assign to the Collateral
Agent their right of stoppage in transit with respect to any
Inventory. All costs of transportation, packing, storage and
insurance of any Inventory that the Collateral Agent may take
into its possession shall be promptly repaid to the Collateral
Agent by the Debtors, together with interest thereon at the
highest rate of interest being charged to the Debtors on any of
the Obligations between the date of advancement of such costs by
the Collateral Agent and the date the Debtors repay such costs to
the Collateral Agent, inclusive.
(g) At such intervals that the Collateral Agent may reasonably
require, the Debtors shall submit to the Collateral Agent (1) a
schedule reflecting in form and detail satisfactory to the
Collateral Agent the quantities, costs, description and value of
their Inventory, properly certified by an officer of each Debtor,
(2) accounts receivable aging schedules, (3) reconcilements of
accounts receivable, and (4) insurance certificates.
(h) The Debtors shall immediately notify the Collateral Agent,
in detail, of any event, including but not limited to fire or
other casualty, causing deterioration, loss or depreciation in
value of any portion of the Debtors' Inventory and/or Equipment
having a value in excess of $2,000,000.00 and the amount of such
loss or depreciation. The Debtors shall permit the Collateral
Agent, its officers, employees and agents to have access to their
Inventory and Equipment from time to time, at all reasonable
times and, so long as no Event of Default has occurred and is
continuing, upon reasonable notice, for the purposes of
examination, inspection and appraisal thereof and verification of
the Debtors' records and schedules pertaining thereto.
(i) If any of the Collateral or any of the Debtors' records
concerning the Collateral are now or at any time to be located on
premises leased by any Debtor within the continental United
States prior to placement on such premises of any Collateral or
records concerning the Collateral (and, in the case of Collateral
or records currently located on such premises, prior to execution
of this Agreement), such Debtor shall obtain and deliver or cause
to be delivered to the Collateral Agent an agreement, in form and
substance satisfactory to the Collateral Agent, among other
things, waiving or subordinating the landlord's rights to enforce
any claim against such Debtor for monies due under the landlord's
lien, against the Collateral or Debtor's records and assuring the
Collateral Agent's ability to have access to the Collateral and
the Debtor's records in order to exercise the Collateral Agent's
rights to take possession thereof and to remove them from such
premises (a "Landlord's Waiver") provided that with respect to
Debtors' retail outlet stores, Debtors shall use their reasonable
efforts to obtain Landlord's Waivers and in doing so shall have
complied with its obligations hereunder.
(j) The Debtors will promptly notify the Collateral Agent in
writing if there is any adverse change (other than ordinary wear
and tear) in the status or physical condition of any material
item or portion of the Collateral or in the ability or
willingness of any Account Debtor to pay or preserve the
Collateral or if any defense, set-off or counterclaim (exceeding
$2,000,000.00 individually or $10,000,000.00 in the aggregate) is
asserted by one or more Account Debtors.
(k) The Debtors will, at their sole cost and expense, preserve
the Collateral and their rights against Account Debtors free and
clear of all liens and encumbrances except those created pursuant
hereto, and keep the material items or portion of the Collateral
in good condition and repair at all times, ordinary wear and tear
excepted. The Debtors will not grant to anyone other than the
Collateral Agent any lien upon or security interest in the
Collateral nor allow any person other than the Collateral Agent
to obtain a lien upon the Collateral except for the security
interests, liens or encumbrances permitted in accordance with
Section 5.5(A) of the Loan Agreement.
(l) The Debtors will: (1) keep themselves and the Collateral
insured against all hazards in such amounts as the Collateral
Agent may require and all such insurance shall be in form, and
issued by such insurers, as are customary within the industry;
provided that the Debtors may self-insure the furniture,
Fixtures, Inventory and Equipment in their retail outlet stores,
except that Inventory to be self-insured may not exceed
$1,000,000.00 in market value per retail outlet store; (2) cause
the Collateral Agent's security interests to be endorsed on all
policies of insurance thereon in such manner that all payments
for losses will be paid to the Collateral Agent as lender loss
payee; (3) furnish the Collateral Agent with evidence of such
insurance and endorsements; and (4) keep such insurance in full
force and effect at all times. The Debtors agree that all such
insurance policies shall contain a provision by which such
insurance policies shall be cancellable only after thirty days
prior written notice by the insurer to the Collateral Agent. In
the event that the Debtors fail to pay any such insurance
premiums when due, the Collateral Agent may, but is not required
to, pay such premiums and add the costs thereof to the
Obligations. The Debtors hereby agree to reimburse the
Collateral Agent on demand for any premiums paid by the
Collateral Agent with interest at the highest rate of interest
being charged to the Debtors on any of the Obligations between
the time of payment of such premiums by the Collateral Agent and
the date on which the Debtors repay such amount to the Collateral
Agent, inclusive.
(m) The Debtors will permit the Collateral Agent to audit the
Collateral at such intervals as the Collateral Agent may
reasonably require, which shall be at the expense of the Banks
and the Noteholders prior to the occurrence of an Unmatured Event
of Default or Event of Default and, at the Debtors' expense,
after the occurrence of an Unmatured Event of Default or Event of
Default or if the Debtors are required to pay such expenses in
accordance with the Loan Agreement.
(n) The Debtors will promptly advise the Collateral Agent in
writing of any change in any of the Debtors' place(s) of business
or the opening of any new or additional place(s) of business.
The Debtors will not move their chief executive office or any
Collateral to a location not identified or referred to in
Schedule B hereto unless and until the Debtors provide to the
Collateral Agent: (1) written notice thereof; and (2) evidence to
the satisfaction of the Collateral Agent that the Collateral
Agent, as agent for each Bank, the Agent, the Issuing Bank and
the Noteholders, has a first priority perfected security interest
in the Collateral located at such location.
(o) In addition to the reporting requirements set forth
herein, in the Loan Agreement and the Note Purchase Agreement,
each Debtor will at such intervals as the Collateral Agent may
reasonably require: (1) submit to the Collateral Agent a schedule
reflecting, in form and detail satisfactory to the Collateral
Agent, the names and addresses of all of such Debtor's lessees,
renters, and consignees, and of all Account Debtors, together
with the amounts due under all of its outstanding leases, rental
agreements, consignment agreements, Accounts and General
Intangibles; and (2) make available for review by the Collateral
Agent all invoices pertaining to any or all of such leases,
rental agreements, consignment agreements, Accounts and General
Intangibles with evidence of shipment of the goods or rendering
of services, the sale, consignment, rental or leasing of which
have given rise to such amount due. Upon the occurrence and
during the continuance of an Event of Default, each Debtor hereby
agrees to notify or join with Collateral Agent in notifying all
such lessees, renters, consignees and Account Debtors, at the
Collateral Agent's request, to pay to Collateral Agent solely and
directly all outstanding amounts due.
(p) No Collateral shall become affixed (1) to any real estate
or (2) to any other personal property except as set forth on
Schedule D.
(q) Except as expressly permitted hereby, in the Loan
Agreement and the Note Purchase Agreement, the Debtors will not
sell, exchange, lease, rent or otherwise dispose of any
Collateral or any of the Debtors' rights therein, without the
prior written approval of the Collateral Agent which approval
shall not be unreasonably withheld.
(r) At the Collateral Agent's request, the Debtors will affix
a label on any Equipment included in the Collateral identifying
such Equipment as subject to the Collateral Agent's security
interest.
(s) The Debtors will promptly pay when due all taxes and
assessments upon the Collateral or upon the use, sale or
operation of the Collateral, except those which are being
contested in good faith, through appropriate proceedings and
where adequate reserves have been set aside therefor.
5 . SALE OF INVENTORY OR LOSS OF INVENTORY OR EQUIPMENT
.1 The Debtors will hold the Inventory for the sole
purpose of manufacturing and selling the Inventory in the
ordinary course of business, and the Debtors will not sell or
otherwise dispose of any Inventory except in the ordinary course
of business for fair value or as permitted in the Loan Agreement
and the Note Purchase Agreement.
.2 Immediately upon the loss, damage or destruction of any
material portion of the Inventory or Equipment after the
occurrence and during the continuance of an Event of Default, the
Debtors will deliver to the Collateral Agent an amount equal to
the greater of (a) the actual cost, (b) the replacement cost or
(c) the sale proceeds of the Inventory and/or Equipment so lost,
damaged or destroyed, less the amount of any insurance proceeds
thereon collected and retained by the Collateral Agent.
6 . COLLECTION OF ACCOUNTS AND GENERAL INTANGIBLES
.1 The Collateral Agent shall have the right, but not the
obligation, at any time after the occurrence and during the
continuance of any Event of Default: (a) to collect all or any
part of the Accounts or General Intangibles in each Debtor's
name, or in the Collateral Agent's own name, as assignee
hereunder; (b) to sell, assign, compromise, discharge or extend
the time for payment of any Account or General Intangible; (c) to
institute legal action for the collection of any Account or
General Intangible; and (d) to do all acts and things necessary
or incidental to any of the foregoing. The Debtors hereby ratify
all that the Collateral Agent may do by virtue hereof. The
Collateral Agent may, at any time after the occurrence and during
the continuance of an Event of Default, without notice to the
Debtors, notify an Account Debtor that the Account or General
Intangible payable by such Account Debtor has been assigned to
the Collateral Agent and is to be paid directly and solely to the
Collateral Agent, and at the Collateral Agent's request the
Debtors shall promptly notify all Account Debtors and shall
indicate on all billings and statements to Account Debtors that
payments thereon are to be made solely to the Collateral Agent.
.2 The Collateral Agent may, at any time; (a) establish
and maintain a demand deposit account in the name of the
Collateral Agent, as agent for the Banks, the Issuing Bank, the
Agent and the Noteholders (the "A/R Collateral Account"), the
proceeds of which the Collateral Agent shall be entitled (but not
obligated) to apply to the Obligations in accordance with the
Intercreditor Agreement, and/or (b) after the occurrence and
during the continuance of any Event of Default, require the
Debtors to deliver to the Collateral Agent within 24 hours of the
receipt thereof by the Debtors, all remittances in the form of
cash, checks, drafts, notes, money orders, or other remittances
received in payment of or on account of any of the Accounts for
deposit into the A/R Collateral Account if one then exists or for
direct application by the Collateral Agent against the
Obligations in accordance with the Intercreditor Agreement, and
prior to such delivery such Debtor will not commingle any such
proceeds with any of such Debtor's funds or property, but will
hold such proceeds separate and apart upon an express trust for
the sole benefit of the Collateral Agent as agent for the Banks,
the Issuing Bank, the Agent and the Noteholders; and all proceeds
other than cash shall be deposited in precisely the form in which
received, except for the addition thereto of the endorsement of
such Debtor when necessary to permit collection of the
Instruments, which endorsement each Debtor agrees to make
promptly.
.3 At any time after the occurrence and during the
continuance of an Event of Default, the Collateral Agent may
require the Debtors to execute and deliver to the Collateral
Agent an irrevocable "Lockbox Agreement" in the Collateral
Agent's standard form under which the Debtors will agree to
indicate on all invoices and other correspondence with customers
and Account Debtors that all payments to the Debtors should be
made and sent in care of a post office box which will be under
the exclusive control of the Collateral Agent and further under
which the Debtors will appoint the Collateral Agent, as the
Debtors' true and lawful attorney-in-fact, to receive all
incoming mail, open all such mail, remove all collections and
remittances therefrom in payment of or on account of any the
Debtors' Accounts and use the Collateral Agent's reasonable
efforts to forward all other mail so received to the Debtors'
place of business. The Debtors agree to pay to the Collateral
Agent promptly when billed the Collateral Agent's standard fees
for opening and maintaining a lockbox account with the Collateral
Agent (which fees the Collateral Agent shall not be obligated to
share with the Banks or the Noteholders). The Debtors hereby
grant, bargain, convey and set over to the Collateral Agent as
agent for the Agent, the Issuing Bank, the Banks and the
Noteholders a security interest in and lien upon such lockbox
account and any other account established by the Debtors with any
Bank or any affiliate thereof, and all cash and any other assets
at any time hereafter contained therein. Each Bank acknowledges
the Collateral Agent's security interest in and lien upon all
such lockbox accounts and any other accounts established at any
Bank by the Debtors into which proceeds of Accounts are placed,
and each Bank agrees (a) to notify the Collateral Agent of the
receipt by such Bank of a notice of lien on any such accounts,
(b) to notify such lienholder of the Collateral Agent's lien
thereon and (c) to subordinate any right of setoff such Bank may
have against such accounts to the Collateral Agent's lien
thereon, other than with respect to returned or dishonored checks
and normal servicing fees and charges. All cash and other assets
in such accounts shall be delivered to the Collateral Agent and
applied pursuant to the provisions of the Intercreditor
Agreement.
.4 Other than in the ordinary course of business, the
Debtors shall not compromise, discharge, extend the time for
payment of or otherwise grant any indulgence or allowance with
respect to any Account without the express prior written consent
of the Collateral Agent.
.5 The Collateral Agent may, at any time and from time to
time, send such verification forms, make such calls or otherwise
contact Account Debtors as are necessary or desirable, in the
Collateral Agent's sole discretion, to verify accounts and the
balance due on Accounts.
7 . SIGNATORY AUTHORIZATION
Each Debtor hereby appoints the Collateral Agent, acting
through any employee, officer or agent of the Collateral Agent,
as such Debtor's true and lawful attorney-in-fact, with power:
.1 to sign and endorse the name of any Debtor upon any
security agreement, UCC financing statement and continuations
thereof, and any other instrument or document required by the
Collateral Agent to perfect and continue perfected the liens and
security interests granted to the Collateral Agent hereunder or
otherwise in connection with the Obligations and, after the
occurrence and during the continuance of an Event of Default,
except as provided in or required under any cash management
agreement between the Collateral Agent and the Debtors ("Cash
Management Agreement") all checks, drafts, money orders or other
instruments of payment or regarding disposition or sale of any
Collateral which comes into possession of the Collateral Agent,
the Agent, the Issuing Bank, any Bank or any Noteholder;
.2 after the occurrence and during the continuance of an
Event of Default, to sign and endorse the name of any Debtor upon
any invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against all Account Debtors,
assignments, verifications and notices in connection with
Accounts;
.3 after the occurrence and during the continuance of an
Event of Default, to give written notices in connection with
Accounts;
.4 after the occurrence and during the continuance of an
Event of Default, to give written notices to offices and
officials of the United States Postal Service to effect a change
or changes of address so that all mail addressed to the Debtors
may be delivered directly to the Collateral Agent;
.5 after the occurrence and during the continuance of an
Event of Default, except as provided in or required under a Cash
Management Agreement, to open all mail addressed to the Debtors
but delivered to the Collateral Agent (and the Collateral Agent
will use reasonable efforts to forward to the Debtors all mail
not related to the Obligations or the Collateral); and
.6 to do any and all things, in the sole judgment of the
Collateral Agent, necessary or appropriate to be done with
respect to the above as fully and effectively as the Debtors
might or could do.
Each Debtor hereby ratifies all that its said attorney shall do
or cause to be done by virtue hereof. Such power of attorney
shall be deemed to be coupled with an interest and irrevocable
while the security interests granted herein continue in full
force and effect.
8 . EVENTS OF DEFAULT
Each Debtor shall be in default hereunder upon the
occurrence of any one or more of the following "Events of
Default":
.1 if there occurs an Event of Default as defined in the
Loan Agreement, the Note Purchase Agreement or any of the other
Loan Documents; or
.2 if any warranty or representation made by any of the
Debtors herein shall prove to have been incorrect in any material
respect as of the date on which made; or
.3 if any Debtor shall fail to perform or observe any
term, covenant or agreement contained herein and such failure
continues uncured for a period of thirty (30) days from the date
a Debtor becomes aware of such failure, whether by written notice
from the Collateral Agent or otherwise; or
.4 if any material item or portion of the Collateral or
any rights therein shall be subject to any judicial process,
condemnation or forfeiture proceedings.
9 . RIGHTS UPON DEFAULT
Upon the occurrence and during the continuance of any Event
of Default, the Collateral Agent may, without notice to the
Debtors, do any or all of the following, all of which rights and
remedies shall be cumulative and any or all of which may be
exercised from time to time and as often as the Collateral Agent
shall deem necessary or desirable:
.1 exercise from time to time any or all rights,
privileges and remedies available to the Collateral Agent under
the UCC or otherwise available to the Collateral Agent by
agreement, in law or in equity, including those under any other
applicable agreement with respect to any of the Collateral then
held for the Obligations, and to apply such monies and the net
proceeds of the Collateral to any of the Obligations in
accordance with the Intercreditor Agreement;
.2 require the Debtors to assemble all or part of the
Collateral as the Collateral Agent may in its sole discretion
request or demand and make it available to the Collateral Agent
in a place to be designated by the Collateral Agent which is
reasonably convenient to the Collateral Agent and the Debtors;
.3 peaceably enter any premises where any Collateral is
located and take possession of such Collateral, with or without
notice or process of any kind and without limiting any other
rights of the Collateral Agent hereunder;
.4 complete any uncompleted Inventory in the process of
construction or completion;
.5 in addition to and not as a limitation of the
Collateral Agent's rights under Section 5 hereof, notify any
Debtor's lessees, consignees, renters and/or Account Debtors to
make all payments directly to the Collateral Agent and to
surrender, at the termination of any such lease, rental agreement
or consignment, the item or items leased, rented or consigned, or
pay the sale option price, if any, directly to the Collateral
Agent;
.6 upon ten (10) days prior written notice to the Debtors,
which notice each Debtor acknowledges is sufficient, proper and
commercially reasonable, sell, lease or otherwise dispose of the
Collateral, at any time and from time to time, in whole or in
part, at public or private sale, without advertisement or notice
of sale, all of which are hereby waived, and apply the proceeds
of any such sale in accordance with the provisions of the
Intercreditor Agreement;
.7 cure any default in any reasonable manner and add the
cost of any such cure to the Obligations;
.8 retain all books and records of the Debtors.
10 . WAIVERS AND INDEMNITY
Each Debtor waives and releases all relief from any and all
appraisement, stay or exemption laws of any state now in force or
hereafter enacted. The Debtors also release all procedural
errors in any proceedings instituted by Collateral Agent
hereunder. Neither the Collateral Agent nor the Agent, the
Issuing Bank, the Noteholders or the Banks shall be liable to any
third party in tort, contract or otherwise in connection with the
lawful exercise of remedies after the occurrence and during the
continuance of an Event of Default, and the exercise of such
remedies shall not constitute an assumption by the Collateral
Agent, the Agent, the Issuing Bank, the Noteholders or the Banks
of any of the obligations of the Debtors to any third party for
commissions, distribution fees, royalties, or otherwise, and the
Debtors hold the Collateral Agent, the Agent, the Issuing Bank,
the Noteholders and the Banks harmless and agree to indemnify and
defend the Collateral Agent, the Agent, the Issuing Bank, the
Noteholders and the Banks against any claims made by any party in
connection with such exercise by the Collateral Agent, the Agent,
the Issuing Bank, the Noteholders or the Banks, including without
limitation court costs and legal fees. The Debtors waive the
benefit of any marshalling statute or legal doctrine and agree
that the Collateral Agent may exercise its rights against the
Collateral in any order that the Collateral Agent, in its
discretion, deems appropriate.
11 . MISCELLANEOUS
.1 This Agreement shall be binding upon and inure to the
benefit of the parties, their successors, endorsers,
representatives, receivers, trustees and assigns, but nothing
contained herein shall be construed to permit the Debtors to
assign this Agreement or any of the Debtors' rights or
obligations hereunder without first obtaining the Collateral
Agent's express written approval. This Agreement and the
Schedules and Exhibits hereto may only be amended by a writing
signed by the Debtors and the Collateral Agent.
.2 All notices, requests, demands and other
communications under this Agreement shall be in writing and shall
be given to each party hereto at its address specified below or
at such other address as shall be designated by such party in a
notice to each other party complying with the terms of this
Section 10.2. All notices, requests, demands and other
communications provided for hereunder shall be effective (1) if
given by mail, three days after deposited in the mails, with
first class postage prepaid, addressed as aforesaid, (2) if given
by telecopy, when such telecopy is transmitted to the aforesaid
telecopy number and the appropriate confirmation of receipt is
received by the sender, and (3) if given by any other means, when
delivered to the carrier with postage prepaid to the following
addresses:
If to the Debtors: Maidenform Worldwide, Inc.
90 Park Avenue
New York, New York 10016
Attention: Steven Masket
Phone No.: (212) 856-8913
Fax No.: (212) 983-5834
With a copy to: Maidenform Worldwide, Inc.
154 Avenue E
Bayonne, NJ 07002
Attention: Ira Glazer
Phone No.: (201) 436-9200
Fax No. (201) 436-0991
If to the Collateral
Agent:
CoreStates Bank, N.A.
1345 Chestnut Street
Philadelphia, Pennsylvania 19101
Attention: Charles H. Dietrich, Jr.
Phone No.: (215) 973-2907
Fax No.: (215) 973-5831
.3 If any provision of this Agreement is prohibited or
unenforceable in any jurisdiction, it shall be ineffective in
such jurisdiction only to the extent of such prohibition or
unenforceability, and such prohibition or unenforceability shall
not invalidate the balance of such provision to the extent it is
not prohibited or unenforceable nor the remaining provisions
hereof, nor render unenforceable such provision in any other
jurisdiction.
.4 The rights, powers and remedies of the Collateral Agent
hereunder are cumulative and not alternative and shall not be
exhausted by a single assertion or exercise thereof and the
failure of the Collateral Agent to exercise any such right, power
or remedy will not be deemed a waiver thereof nor preclude any
further or additional exercise of such right, power or remedy.
The waiver of any default hereunder shall not be effective unless
in writing and, in any event, shall not be a waiver of any
subsequent default.
.5 This Agreement or copies of this Agreement may, in the
sole discretion of the Collateral Agent, be filed as a financing
statement.
.6 The Debtors agree to bear the risk of and hold the
Banks, the Noteholders, the Issuing Bank, the Agent and the
Collateral Agent harmless from claims for loss, damage or
destruction of the Collateral caused by any act or omission of
the Banks, the Noteholders, the Issuing Banks, the Agent, or the
Collateral Agent, unless caused by the willful misconduct or
gross negligence of the Banks, the Noteholders, the Issuing
Banks, the Agent, or the Collateral Agent.
.7 This Agreement shall be governed by and construed under
the laws of the Commonwealth of Pennsylvania. The parties
acknowledge the jurisdiction of the state, federal and local
courts located within the Commonwealth of Pennsylvania over
controversies arising from or relating to this Agreement.
.8 This Agreement may be executed in one or more
counterparts, each of which shall constitute one and the same
Agreement.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date
first above written.
MAIDENFORM WORLDWIDE, INC., a CORESTATES BANK, N.A., as
New York corporation the Collateral Agent
BETEX, S.A.
CREACIONES TEXTILES de
MERIDA, S.A. de C.V.
ELIZABETH NEEDLE CRAFT, INC. By:/s/ Charles H. Dietrich,
Jr.
JAMAICA NEEDLECRAFT, LTD. Charles H. Dietrich, Jr.
MAIDENFORM INTERNATIONAL, LTD. Senior Vice President
NICHOLAS NEEDLECRAFT, INC.
By: /s/ Ira Glazer
Name: Ira Glazer
Title:Vice-President
(as to all Debtors listed above)
Attest:/s/ Jodi Perlman
MAIDENFORM WORLDWIDE, INC., a
Delaware corporation
MAIDENFORM, INC.
NCC INDUSTRIES, INC.
CRESCENT INDUSTRIES, INC.
By:/s/ Ira Glazer
Name: Ira Glazer
Title: Vice-President
(as to all Debtors listed above)
Attest:/s/ Jodi Perlman
SCHEDULE C
FICTITIOUS OR TRADE NAME FILINGS
True Form Intimate Apparel:
Pennsylvania
New York
SCHEDULE D
COLLATERAL AFFIXED TO REAL ESTATE
Certain equipment located at the locations in the continental United
States identified below, including without limitation, compressors,
roof-top air conditioning units, transformers, conveyors, carousels,
racking and docklifts, are affixed to the real estate at which such
equipment is located:
6500 Youngerman Circle, Jacksonville, FL 32244
11801 Central Parkway, Jacksonville, FL 32246
800 Technology Drive, Fayetteville, NC 28306
2009 Elmwood Avenue, Sharon Hill, PA 19079
154 Avenue E, Bayonne, NJ 07002
90 Park Avenue, New York, NY 10016
74 Lexington Avenue, Bayonne, NJ 07002
200 Madison Avenue, New York, NY 10010
Luker Road, Cortlandville, NY 13045
165 Main Street, Cortland, NY 13045
PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement"), dated as of this
26 of April, 1995, made by MAIDENFORM WORLDWIDE, INC.,
a Delaware corporation ("Worldwide-Delaware"), MAIDENFORM, INC.,
a New York corporation ("Maidenform"), and NCC INDUSTRIES, INC.,
a Delaware corporation ("NCC") with an address at 90 Park Avenue,
New York, New York 10016 (Worldwide-Delaware, Maidenform and NCC
are individually and collectively referred to herein as
"Corporate Pledgor"), ELIZABETH J. COLEMAN, DAVID C. MASKET,
ROBERT A. BRAWER, ABRAHAM P. KANNER and JOHN MUIRHEAD
(individually and collectively referred to herein as "Individual
Pledgor"; the Corporate Pledgor and the Individual Pledgor shall
be referred to collectively herein as "Pledgor") to CORESTATES
BANK, N.A. ("CoreStates"), a national banking association with an
address at 1345 Chestnut Street, Philadelphia, Pennsylvania
19101, as Collateral Agent under a certain Intercreditor
Agreement (as hereinafter defined) for itself in its capacity
Issuing Bank (as hereinafter defined), in its capacity as the
Agent (as hereinafter defined), and in its individual capacity,
The Chase Manhattan Bank, N.A. ("Chase"), a national banking
association, National City Bank ("City"), a national banking
association, Nationsbank, N.A. ("Nationsbank"), a national
banking association, NBD Bank ("NBD"), a Michigan banking
corporation, Comerica Bank ("Comerica"), a Michigan banking
corporation, European American Bank ("EAB"), a New York banking
corporation and United Jersey Bank ("UJB"), a New Jersey banking
corporation (CoreStates, in its individual capacity, Chase, City,
Nationsbank, NBD, Comerica, EAB and UJB are collectively referred
to herein as the "Banks"), Massachusetts Mutual Life Insurance
Company ("Mass Mutual"), Principal Mutual Life Insurance Company
("Principal") and TMG Life Insurance Company ("TMG"; Mass Mutual,
Principal, and TMG, together with their respective successors and
assigns, are collectively referred to herein as the
"Noteholders"). CoreStates in its capacity as collateral agent
for the Banks, the Issuing Bank, the Agent and the Noteholders,
and any successor collateral agent shall hereinafter be referred
to as the "Collateral Agent."
BACKGROUND
A. Corporate Pledgor and Maidenform Worldwide, Inc., a New
York corporation, Betex, S.A., Creaciones Textiles de Merida,
S.A. de C.V., Elizabeth Needle Craft, Inc., Jamaica Needlecraft,
Ltd., Maidenform International, Ltd., Nicholas Needlecraft, Ltd.,
and Crescent Industries, Inc. (collectively, the "Borrowers"),
CoreStates as agent for the Banks (CoreStates, in such capacity,
and any successor agent shall be referred to herein as the
"Agent"), CoreStates as issuing bank for the Letters of Credit
(CoreStates, in such capacity, and any successor issuing bank
shall be referred to herein as the "Issuing Bank"), and the Banks
have entered into a Loan Agreement dated the date hereof (such
agreement, as amended, extended or modified from time to time,
shall be referred to herein as the "Loan Agreement") pursuant to
which the Agent and the Banks have agreed to lend to Borrowers an
amount not to exceed One Hundred and Seventy Million Dollars
($170,000,000.00) (the "Loans"). All terms capitalized but not
defined herein shall have the meanings given to such terms in the
Loan Agreement.
B. The Noteholders and the Borrowers have as of the date
hereof entered into separate amended and restated note purchase
agreements, each dated as of April 1, 1995 (such agreements, as
amended, extended or modified from time to time, shall be
collectively referred to herein as the "Note Purchase Agreement")
pursuant to which the Borrowers executed and delivered to the
Noteholders joint and several senior notes issued by the
Borrowers in the aggregate principal amount of $30,000,000.00.
C. The Collateral Agent, the Agent, the Issuing Bank, the
Banks, the Noteholders and the Borrowers have entered into an
Intercreditor Agreement dated as of even date herewith (such
agreement, as amended from time to time, shall be referred to
herein as the "Intercreditor Agreement"). The Loan Agreement and
all documents executed and delivered in connection therewith, the
Note Purchase Agreement and all documents executed and delivered
in connection therewith and the Intercreditor Agreement and all
documents executed and delivered in connection therewith shall be
collectively referred to herein as the "Loan Documents."
D. Each Individual Pledgor has executed this Agreement
solely to pledge its interest as nominal shareholder of certain
stock held for the benefit of a Corporate Pledgor and shall have
no other or further liability hereunder except for those duties
specifically set forth herein.
1. Pledge. In order to induce the Banks to enter into
the Loan Agreement and to make available to Borrowers the Loans
and to induce the Noteholders to enter into the Note Purchase
Agreement and to consent to and permit Pledgor to grant the liens
set forth herein, each Pledgor hereby grants, pledges and assigns
to the Collateral Agent, as Collateral Agent for the Banks, the
Issuing Bank, the Agent and the Noteholders a first priority
security interest in the following property (collectively, the
"Pledged Collateral"):
(A) the property described in Schedule 1 hereto owned by such
Pledgor and the certificates representing such property and all
dividends, interest, cash, instruments, and other property from
time to time received, receivable, or otherwise distributed or
distributable in respect of or in exchange for any or all of such
property;
(B) all additional securities issued by any of the issuers of
the property described in subsection (A) above to such Pledgor
from time to time, and the certificates or instruments
representing such additional securities, and all dividends,
interest, cash, instruments, and other property from time to time
received, receivable, or otherwise distributed or distributable
in respect of or in exchange for any or all of such additional
securities; and
(C) all proceeds of any of the foregoing.
2. Security for Liabilities. The security interest
granted by this Agreement secures the payment and performance of
Borrowers' obligations to the Collateral Agent, the Agent, the
Issuing Bank, the Noteholders or the Banks, whether absolute or
contingent, matured or unmatured, direct or indirect, similar or
dissimilar, due or to become due, arising hereunder, under the
Loan Agreement or any other documents executed in connection
therewith, under the Note Purchase Agreement or any other
document executed in connection therewith, in connection with any
of the transactions described in the Loan Agreement or in the
Note Purchase Agreement or arising under any interest rate
protection agreement, foreign exchange contract or other similar
contract or agreement between a Borrower and a Bank permitted
under the Loan Agreement (collectively, the "Liabilities").
3. Delivery of Pledged Collateral.
(A) All certificates or instruments representing or evidencing
the Pledged Collateral shall be delivered to and held by the
Collateral Agent pursuant hereto and shall be duly endorsed to
the Collateral Agent or shall be otherwise in suitable form for
transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. The Collateral
Agent shall have the right, without further notice to Pledgor, to
transfer to or to register in the name of the Collateral Agent or
its nominees, for the benefit of the Banks, the Issuing Bank, the
Agent and the Noteholders, any or all of the Pledged Collateral
at any time, (i) if required to perfect the security interests
granted herein, or (ii) after the occurrence and during the
continuance of an Event of Default (as such term is hereinafter
defined). In addition, upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent shall
have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
(B) This Agreement shall terminate and all certificates or
instruments representing or evidencing the Pledged Collateral
shall be delivered to Pledgor at such time as (1) Borrowers shall
have completely satisfied all of the Liabilities, (2) the Banks'
Commitments are terminated, (3) the Issuing Bank's obligation to
issue Letters of Credit is terminated, and (4) no Letters of
Credit issued by the Issuing Bank on behalf of the Borrowers are
outstanding.
4. Further Assurances. Each Pledgor agrees that at any
time and from time to time, at the expense of Corporate Pledgor,
Pledgor will promptly execute and deliver all further instruments
and documents, and take all further action that the Collateral
Agent may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to
enable the Collateral Agent to exercise and enforce the rights
and remedies hereunder with respect to any of the Pledged
Collateral.
5. Representations and Warranties. Each Pledgor hereby
represents and warrants that:
(A) such Pledgor has all right, title and interest in and to
the property now constituting the Pledged Collateral owned by it,
and will have all right, title and interest in and to any
property subsequently constituting the Pledged Collateral
pursuant to the terms hereof, in each case free and clear of any
liens, claims, security interests, and other encumbrances other
than those in favor of the Collateral Agent and free and clear of
any warrants, options, and other rights;
(B) all shares of stock now included in the Pledged Collateral
are, and any shares of stock subsequently included in the Pledged
Collateral pursuant to the terms hereof will be upon becoming
Pledged Collateral, duly authorized and issued, validly
outstanding, and fully paid and nonassessable; and
(C) on the date hereof, the Pledged Collateral constitutes:
(1) 100% of the issued and outstanding shares of
capital stock, owned by Worldwide-Delaware, no par value, of
Maidenform;
(2) 100% of the issued and outstanding shares of
capital stock, owned by Maidenform, no par value, of Stellar
Intimate Apparel;
(3) 100% of the issued and outstanding shares of
capital stock, owned by Maidenform, no par value, of Arriette
Fashions, Inc.;
(4) 100% of the issued and outstanding shares of
capital stock, owned by Maidenform, no par value, of Apparel
Testing Institute;
(5) 100% of the issued and outstanding shares of
capital stock, owned by Maidenform, 1,000 colones par value, of
Betex, S.A.;
(6) 100% of the issued and outstanding shares of
capital stock, owned by Maidenform, of Creaciones Textiles de
Merida, S.A. de C.V. of which 1% of the Series A Original Minimum
Fixed Capital Stock is owned for the benefit of Maidenform by
each of Elizabeth J. Coleman, Robert A. Brawer, David C. Masket
and Abraham P. Kanner;
(7) 100% of the issued and outstanding shares of
capital stock, owned by Maidenform, no par value, of Elizabeth
Needle Craft, Inc.;
(8) 100% of the issued and outstanding shares of
capital stock, owned by Maidenform, 100 Jamaican dollars par
value, of Jamaica Needlecraft, Ltd. of which .1% is held for the
benefit of Maidenform by John Muirhead;
(9) 100% of the issued and outstanding shares of
capital stock, owned by Maidenform, no par value, of Maidenform
International, Ltd.;
(10) 100% of the issued and outstanding shares of
capital stock, owned by Maidenform, no par value, of Nicholas
Needlecraft, Inc.;
(11) 92.389% of the issued and outstanding shares
of capital stock, owned by Maidenform and Worldwide, $1.00 par
value, of NCC; and
(12) 100% of the issued and outstanding shares of
capital stock, owned by NCC, no par value, of Crescent
Industries, Inc.
6. Voting Rights; Dividends; Etc.
(A) So long as no Event of Default shall have occurred and be
continuing:
(1) Pledgor shall be entitled to exercise any and all of
Pledgor's voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or, the Loan
Agreement and the Note Purchase Agreement; provided, however,
that Pledgor shall not exercise or refrain from exercising, any
such right which exercise or failure to exercise would have a
material adverse effect on the value of the Pledged Collateral
taken as a whole.
(2) Pledgor shall be entitled to receive and retain, free and
clear of the security interest of the Collateral Agent hereunder,
any and all of such dividends, interest and other distributions
as are permitted in accordance with the Loan Agreement and the
Note Purchase Agreement to be paid to Pledgor in respect of the
Pledged Collateral or any part thereof, except that (a) any and
all dividends, interest or other distributions paid or payable
other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect
of, or in exchange for, any Pledged Collateral shall also
constitute Pledged Collateral and shall be promptly delivered to
the Collateral Agent in conformity with Section 3 hereof, and (b)
any and all --
(i) dividends, interest, or other distributions paid or payable
in cash in respect of any Pledged Collateral in connection with a
partial or total liquidation or dissolution or in connection with
a reduction of capital, capital surplus or paid-in-surplus, and
(ii) cash paid, payable or otherwise distributed in redemption
of, or in exchange for, any Pledged Collateral --
received by Pledgor shall be so received in trust for the benefit
of the Collateral Agent, be segregated from the other property or
funds of Pledgor, and be forthwith delivered to the Collateral
Agent in the same form as so received (with any necessary endorse
ment) to be held as Pledged Collateral and applied as provided in
Section 11(B) hereof.
(3) The Collateral Agent shall promptly upon request therefor,
execute and deliver (or cause to be executed and delivered) to
Pledgor all such proxies and other instruments as Pledgor may
reasonably request for the purpose of enabling such Pledgor to
exercise the voting and other rights which it is entitled to
exercise pursuant to paragraph (1) above and to receive the
dividends, interest and other distributions which it is
authorized to receive and retain pursuant to paragraph (2) above.
(B) Upon the occurrence and during the continuance of an Event
of Default:
(1) all rights of Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to
exercise pursuant to Section 6(A)(1) hereof and to receive the
dividends, interest and other distributions which it would
otherwise be authorized to receive and retain pursuant to Section
6(A)(2) hereof shall cease and all such rights shall thereupon
become vested in the Collateral Agent which shall thereupon have
the sole right to exercise such voting and other consensual
rights and to receive such dividends, interest, and other
distributions for the benefit of the Banks, the Issuing Bank, the
Agent and the Noteholders; and
(2) all dividends, interest and other distributions which are
received by Pledgor contrary to the provisions of paragraph (1)
of this Section 6(B) shall be received in trust for the benefit
of the Collateral Agent, shall be segregated from other funds of
Pledgor, and shall be forthwith paid over to the Collateral Agent
in the same form as so received (with any necessary endorsement)
to be held as cash collateral and applied as provided in Section
11(B) hereof.
7. Transfers and Liens. Pledgor will not (A) sell or
otherwise dispose of, or grant any option with respect to, any of
the Pledged Collateral, or (B) create or permit to exist any
lien, security interest, or other charge or encumbrance upon or
with respect to any of the Pledged Collateral, provided, however,
that an Individual Pledgor may transfer its shares so long as the
transferee, prior to such transfer, executes this Pledge
Agreement and agrees to be bound by the terms hereof.
8. Collateral Agent Appointed Attorney-in-Fact. Pledgor
hereby appoints the Collateral Agent as Pledgor's attorney-in-
fact, with full authority in the place and stead of Pledgor and
in the name of Pledgor or otherwise, and from time to time in the
Collateral Agent's discretion to take any action and to execute
any instrument which the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement,
including, without limitation, upon the occurrence and during the
continuance of an Event of Default to receive, endorse, and
collect all instruments made payable to Pledgor representing any
dividend, interest, or other distribution in respect of the
Pledged Collateral or any part thereof and to give full discharge
for the same. In its capacity as such attorney-in-fact, the
Collateral Agent shall not be liable for any acts or omissions,
nor for any error of judgment or mistake of fact or law, but only
for bad faith, willful misconduct or gross negligence. This
power, being coupled with an interest, is irrevocable until all
Liabilities have been fully satisfied.
9. Collateral Agent May Perform. If Pledgor fails to
perform any agreement contained herein, the Collateral Agent may
itself perform, or cause performance of, such agreement, and the
reasonable expenses of the Collateral Agent incurred in
connection therewith shall be payable by Corporate Pledgor under
Section 13(B) hereof.
10. Collateral Agent's Duties. The powers conferred on
the Collateral Agent hereunder are solely to protect its
interests in the Pledged Collateral and shall not impose any duty
to exercise any such powers. Except for the safe custody of any
Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Agent
shall not have any duty as to any Pledged Collateral or as to the
taking of any necessary steps to preserve rights against any
parties or any other rights pertaining to any Pledged Collateral.
Without limiting the generality of the foregoing, the Collateral
Agent shall not have any responsibility for ascertaining or
taking action with respect to calls, conversions, exchanges,
maturities, tenders, or other matters relating to any Pledged
Collateral, whether or not the Collateral Agent has or is deemed
to have knowledge of such matters.
11. Events of Default; Remedies. (A) The term "Event of
Default," as used herein, shall mean: (1) any Event of Default
as defined in the Loan Agreement, the Note Purchase Agreement, or
any of the other Loan Documents; (2) any violation by any Pledgor
of any covenant contained in this Agreement which violation is
not cured within thirty (30) days from the date a Corporate
Pledgor becomes aware of such violation, whether by written
notice of such violation from the Collateral Agent or otherwise;
and (3) any warranty or representation contained in this
Agreement shall prove to have been false or incorrect in any
material respect on the date as of which made.
(A) Upon the occurrence and during the continuance of an
Event of Default then:
(1) The Collateral Agent may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the Uniform
Commercial Code as in effect in the Commonwealth of Pennsylvania
(the "Code") and other applicable laws and agreements and also
may, without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange, brokers' board or at any of the
Collateral Agent's offices or elsewhere, for cash, on credit, or
for future delivery, and upon such other terms as the Collateral
Agent may deem commercially reasonable. Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten
(10) days notice to Pledgor of the time and place of any public
sale or the time after which any private sale is to be made shall
be given and shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been
given. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(2) Any cash held by the Collateral Agent as Pledged
Collateral and all cash proceeds received by the Collateral Agent
in respect of any sale of, collection from, or other realization
upon all or any part of the Pledged Collateral in the discretion
of the Collateral Agent, may be held by the Collateral Agent as
collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Collateral Agent
pursuant to Section 13 hereof) in whole or in part by the
Collateral Agent against, all or any part of the Liabilities in
such order as the Collateral Agent shall elect in accordance with
the Intercreditor Agreement. Any surplus of such cash or cash
proceeds held by the Collateral Agent and remaining after payment
in full of all the Liabilities shall be paid over to Pledgor or
to whomsoever may be lawfully entitled to receive such surplus.
12. Private Sale. Each Pledgor acknowledges and
recognizes that the Collateral Agent may be unable to effect a
public sale of all or a part of the Pledged Collateral and may be
compelled to resort to one or more private sales to a restricted
group of purchasers who will be obligated to agree, among other
things, to acquire the Pledged Collateral for their own account,
for investment and not with a view to the distribution or resale
thereof. Each Pledgor acknowledges that any such private sales
may be at prices and on terms less favorable to the Collateral
Agent than those of public sales, and agrees that such private
sales will not necessarily be deemed not to have been made in a
commercially reasonable manner solely by virtue of being a
private sale for a price or on terms less favorable than a public
sale, and that the Collateral Agent has no obligation to delay
sale of any Pledged Collateral to permit the issuer thereof to
register it for public sale under the Securities Act of 1933, as
from time to time amended, even if the issuer is willing to do
so.
13. Indemnity and Expenses. (A) Each Corporate Pledgor
agrees to indemnify the Collateral Agent, the Agent, the Issuing
Bank, the Banks and the Noteholders from and against any and all
claims, losses and liabilities growing out of or resulting from
this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses, or liabilities resulting
from the Collateral Agent's, the Agent's, the Issuing Bank's, any
Bank's or any Noteholder's bad faith, willful misconduct or gross
negligence.
(A) Each Corporate Pledgor will upon demand pay to the
Collateral Agent the amount of any and all expenses, including
the reasonable fees and expenses of counsel and of any experts
and agents, which the Collateral Agent may incur in connection
with (1) the enforcement of this Agreement, (2) the custody or
preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (3) the exercise
or enforcement of any of the rights of the Collateral Agent
hereunder, or (4) the failure by any Pledgor to perform or
observe any of the provisions hereof.
14. Amendments, Indulgences, Etc. No amendment or waiver
of any provision of this Agreement nor consent to any departure
by Pledgor herefrom shall in any event be effective unless the
same shall be in writing and signed by the Collateral Agent, and
then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
No failure or delay on the part of the Collateral Agent in the
exercise of any right, power, or remedy under this Agreement
shall constitute a waiver thereof, or prevent the exercise
thereof in that or any other instance.
15. Addresses for Notices. (A) All notices, requests,
demands and other communications under this Agreement shall be in
writing and shall be given to each party hereto at its address
specified below or at such other address as shall be designated
by such party in a notice to each other party complying with the
terms of this Section 15. All notices, requests, demands and
other communications provided for hereunder shall be effective
(1) if given by mail, three days after deposited in the mails,
with first class postage prepaid, addressed as aforesaid, (2) if
given by telecopy, when such telecopy is transmitted to the
aforesaid telecopy number and the appropriate confirmation of
receipt is received by the sender, and (3) if given by any other
means, when delivered to the carrier with postage prepaid to the
following addresses:
If to Pledgor: Maidenform Worldwide, Inc.
90 Park Avenue
New York, NY 10016
Attention: Steven Masket
Phone No.: (212) 856-8913
Fax No.: (212) 983-5834
with a copy to: Maidenform Worldwide, Inc.
154 Avenue E
Bayonne, NJ 07002
Attention: Ira Glazer
Phone No.: (201) 436-9200
Fax No. (201) 436-0991
If to Collateral
Agent: CoreStates Bank, N.A.
1345 Chestnut Street
Philadelphia, Pennsylvania 19101
Attention: Charles H. Dietrich, Jr.
Phone No.: (215) 973-2907
Fax No.: (215) 973-5831
(A) If notice of sale, disposition or other intended action
by the Collateral Agent with respect to this Agreement is
required by the Uniform Commercial Code or other applicable law,
any notice thereof sent to Pledgor at least ten days prior to
such action will constitute reasonable notice to Pledgor.
16. Continuing Security Interest. This Agreement creates
a continuing security interest in the Pledged Collateral and
shall (A) be binding upon Pledgor, and its respective successors,
assigns, heirs, executors or administrators and (B) inure to the
benefit of the Collateral Agent, the Banks, the Agent, the
Issuing Bank, the Noteholders and their respective successors,
transferees and assigns. The execution and delivery of this
Agreement shall in no manner impair or affect any other security
(by endorsement or otherwise) for the payment or performance of
the Liabilities and no security taken hereafter as security for
payment or performance of the Liabilities shall impair in any
manner or affect this Agreement or the security interest granted
hereby, all such present and future additional security to be
considered as cumulative security. Any of the Pledged Collateral
may be released from this Agreement without altering, varying, or
diminishing in any way this Agreement or the security interest
granted hereby as to the Pledged Collateral not expressly
released, and this Agreement and such security interest shall
continue in full force and effect as to all of the Pledged
Collateral not expressly released.
17. Governing Law; Consent to Jurisdiction; etc. This
Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania applicable to
contracts made and wholly performed within Pennsylvania. Pledgor
consents to the jurisdiction of the courts of Pennsylvania and of
the court of the United States sitting in Pennsylvania in any
litigation concerning this Agreement, and each Pledgor waives any
objection based on venue or inconvenient forum. Unless otherwise
defined herein, terms defined in the Code as in effect on the
date hereof are used herein as therein defined as of such date.
This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart.
18. Severability. The provisions of this Agreement are
independent of and separable from each other, and no such
provision, shall be altered or rendered invalid or unenforceable
by virtue of the fact that for any reason any other such
provision may be invalid or unenforceable in whole or in part.
19. Counterparts. This Agreement and any amendments
thereto may be executed in any number of counterparts, all of
which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart.
20.
IN WITNESS WHEREOF, each Pledgor, intending to be legally
bound, has executed this Agreement, or caused this Agreement to
be executed by a duly authorized representative, as of the date
first above written.
MAIDENFORM WORLDWIDE, INC.
/s/ Elizabeth J. Coleman By: /s/ Ira Glazer
ELIZABETH J. COLEMAN Name:Ira Glazer
Address: Title:Vice-President
/s/ David C. Masket NCC INDUSTRIES, INC.
DAVID C. MASKET
Address:
By: /s/ Ira Glazer
Name: Ira Glazer
Title:Vice-President
/s/ Robert A. Brawer
ROBERT A. BRAWER
Address: MAIDENFORM INC.
By: /s/ Ira Glazer
/s/ Abraham P. Kanner Name: Ira Glazer
ABRAHAM P. KANNER Title:Vice-President
Address:
CORESTATES BANK, N.A.
as Collateral Agent
/s/ John Muirhead
JOHN MUIRHEAD By:/s/ Charles H. Dietrich,
Jr.
Address: Name:Charles H. Dietrich,
Jr.
Title:Senior Vice-President
Schedule 1
Description of Pledged Collateral
20. The right, title and interest of Maidenform Worldwide, Inc.,
a Delaware corporation, in 100% of the issued and outstanding
shares of capital stock, no par value, of Maidenform, Inc., a New
York corporation.
21. Maidenform, Inc.'s right, title and interest in 100% of the
issued and outstanding shares of capital stock, no par value, of
Stellar Intimates Apparel, a New York corporation.
22. Maidenform, Inc.'s right, title and interest in 100% of the
issued and outstanding shares of capital stock, no par value, of
Arriette Fashions, Inc., a New York corporation.
23. Maidenform, Inc.'s right, title and interest in 100% of the
issued and outstanding shares of capital stock, no par value, of
Apparel Testing Institute, a New Jersey corporation.
24. Maidenform, Inc.'s right, title and interest in 100% of the
issued and outstanding shares of capital stock, 1000 colones par
value, of Betex, S.A., a Costa Rican corporation.
25. Maidenform, Inc.'s right, title and interest in 100% of the
issued and outstanding shares of capital stock, of Creaciones
Textiles de Merida, S.A. de C.V., a Mexican corporation, of which
1% of the Series A Original Minimum Fixed Capital Stock is owned
for the benefit of Maidenform, Inc. by each of Elizabeth J.
Coleman, Robert A. Brawer, David C. Masket and Abraham P. Kanner.
26. Maidenform, Inc.'s right, title and interest in 100% of the
issued and outstanding shares of capital stock, no par value, of
Elizabeth Needle Craft, Inc., a New York corporation.
27. Maidenform, Inc.'s right, title and interest in 100% of the
issued and outstanding shares of capital stock, 100 Jamaican
Dollars par value, of Jamaica Needlecraft Limited, a Jamaican
corporation, of which .1% is held for the benefit of Maidenform,
Inc. by John Muirhead.
28. Maidenform, Inc.'s right, title and interest in 100% of the
issued and outstanding shares of capital stock, no par value, of
Maidenform International Ltd., a New York corporation.
29. Maidenform, Inc.'s right, title and interest in 100% of the
issued and outstanding shares of capital stock, no par value, of
Nicholas Needlecraft, Inc., a New York corporation.
30. The right, title and interest of Maidenform Inc. and/or
Maidenform Worldwide Inc., a Delaware corporation, in 92.389% of
the issued and outstanding shares of capital stock, $1.00 par
value, of NCC Industries, Inc.
31. NCC Industries, Inc.'s right title and interest in 100% of
the issued and outstanding shares of capital stock, owned by NCC,
no par value, of Crescent Industries, Inc., a Delaware
corporation.
AMENDMENT TO EMPLOYMENT CONTRACT
FIRST AMENDMENT, dated as of April 10, 1995, by and
between NCC INDUSTRIES, INC., a Delaware corporation having its
principal offices at 165 South Main Street, Cortland, New York
13045 ("NCC"), and PETER MUEHLBAUER, residing at 4572 Briar Hill
Road, Cortland, New York 13045 (the "Employee").
W I T N E S S E T H:
WHEREAS, the Employee is now employed as Vice President-
Finance, Treasurer and Secretary of NCC under the terms and
conditions of an Employment Contract, dated as of January 1, 1994
(the "Employment Contract"); and
WHEREAS, the parties desire amend the Employment
Contract as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements hereinafter set forth, the parties
hereto agree as follows:
1. All terms used herein, and not otherwise defined
herein, shall have the same meanings as such terms have in the
Employment Contract.
2. Paragraph 3(a) of the Employment Contract is hereby
amended in its entirety to read as follows:
(a) During the first year of the term of the Employee's
employment hereunder, NCC shall cause the Employee to receive a
total base salary of One Hundred Fifteen Thousand ($115,000)
Dollars (the "Base Salary"), payable in accordance with the
standard payroll practices of NCC. During the second year of the
term of the Employee's employment hereunder, NCC shall cause the
Employee to receive a total Base Salary of One Hundred Forty One
Thousand Nine Hundred One ($141,901) Dollars, payable in
accordance with the standard payroll practices of NCC. During
the third year of the term of the Employee's employment
hereunder, NCC shall cause the Employee to receive a total Base
Salary of One Hundred Thirty Eight Thousand Five Hundred Twenty
Three ($138,523) Dollars, payable in accordance with the standard
payroll practices of NCC.
3. The parties agree that in all respects, except as
expressly modified hereby, the Employment Contract shall remain
in full force and effect.
4. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York without
reference to conflicts of laws principles.
5. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same instrument, and the parties hereto may execute this
Amendment by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment as of the date first above written.
NCC INDUSTRIES, INC.
By: /s/ Frank Magrone
Frank Magrone, President
/s/ Peter Muehlbauer
PETER MUEHLBAUER
AMENDMENT TO SERIES A CREDIT AND REIMBURSEMENT AGREEMENT
AND
SERIES A GUARANTY
This is an Amendment to that certain (i) Series A Credit and
Reimbursement Agreement, dated as of September 1, 1988 (the
"Credit Agreement"), between NCC Industries, Inc. ("NCC") and
Norstar Bank of Upstate NY (now Fleet Bank) ("Fleet Bank"), and
(ii) Series A Guaranty, dated as of September 1, 1998 (the
"Guaranty"), between NCC and Fleet Bank.
R E C I T A L S
WHEREAS, pursuant to a certain Trust Indenture, dated as of
September 1, 1988 (the "Indenture"), the Cortland County
Industrial Development Agency issued $4,590,000 aggregate
principal amount of its Series 1988A Industrial Development
Revenue Bonds (the "Bonds") for the purpose of financing a
portion of the costs of constructing a 155,000 square foot
building operated by NCC, acquiring the land on which such
facility was built and installing and acquiring the equipment for
such facility;
WHEREAS, in connection with the issuance of the Bonds, the
Company entered into the Credit Agreement with Fleet Bank,
pursuant to which, among other things, Fleet Bank issued in favor
of the trustee under the Indenture an irrevocable transferable
letter of credit (the "Letter of Credit") as further security for
the Bonds, and NCC agreed to reimburse Fleet Bank for all amounts
drawn under the Letter of Credit and to pay to Fleet Bank certain
other fees, charges and expenses (collectively, the "Reimbursable
Amounts");
WHEREAS, as security for the full and prompt payment of the
Reimbursable Amounts as well as any additional sums arising under
the "Series A Financing Documents" (as defined in the Indenture)
(such additional sums, together with the Reimbursable Amounts are
collectively referred to as the "NCC Financial Obligations"), NCC
entered into the Guaranty;
WHEREAS, certain shareholders of NCC propose to sell (the
"NCC Sale") approximately 92% of the outstanding common stock of
NCC to Maidenform Worldwide, Inc. ("MWI") and Maidenform, Inc.
("MI");
WHEREAS, it is contemplated that subsequent to the NCC Sale,
MWI and MI will effect a merger pursuant to which NCC will be
merged with and into MI or one of its affiliates (the "Merger");
WHEREAS, MWI, MI and certain of their named subsidiaries
(the "Subsidiaries") and NCC are entering into a Loan Agreement
under which Corestates Bank, N.A. is acting as agent (the
"Maidenform Loan Agreement"); and
WHEREAS, NCC and MWI have requested that Fleet Bank amend
the Credit Agreement and the Guaranty in light of the NCC Sale
and the entering into of the Maidenform Loan Agreement, and Fleet
Bank is willing to so amend such agreements upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein
contained, the parties hereto agrees as follows:
1. Additional Obligors; Replacement Parties. (A) By
their execution hereof, MWI, MI and each of the Subsidiaries
hereby assumes all liabilities of NCC to Fleet Bank for any and
all present and future NCC Financial Obligations and agrees to be
jointly and severally liable therefor with NCC as primary
obligors.
(B) Fleet Bank acknowledges that from and after
the effective date of the Merger, the separate legal existence of
NCC shall cease and accordingly agrees that MWI, MI and the
Subsidiaries shall become substituted parties to the Credit
Agreement and Guaranty. MWI, MI and the Subsidiaries agree that
from and after the effective date of the Merger, they shall
become substituted parties to the Credit Agreement and the
Guaranty and agree to be bound, jointly and severally, by all of
the terms, agreements and obligations of NCC provided thereunder.
Any reference to the "Company" in either the Credit Agreement or
the Guaranty shall mean all of such substituted parties and,
until the effective date of the Merger, NCC.
2. Elimination of Financial Covenants. The parties
agree that all of the financial covenants contained in Section
6.01(H) of the Credit Agreement and in Section 1.9(B) of the
Guaranty are eliminated and shall no longer be deemed to be a
part of the Credit Agreement or the Guaranty, respectively.
3. Cross Default Provision to the Maidenform Loan
Agreement. The parties hereby agree that the term "Event of
Default" as provided in both the Credit Agreement and the
Guaranty shall, in addition to the events currently set forth,
respectively, in Section 8.01 of the Credit Agreement and Section
3.1 of the Guaranty, include a default by MWI, MI and the
Subsidiaries under any of the covenants set forth in Sections
5.18, 5.19, 5.20, 5.21 or 5.22 of the Maidenform Loan Agreement
as now or hereafter amended by the parties thereto (any such
amendment shall not require Fleet Bank's consent, although MWI
shall promptly advise Fleet Bank of any such amendments), to the
extent and only to the extent that such default has resulted in
an acceleration of indebtedness under the Maidenform Loan
Agreement which acceleration shall not have been subsequently
waived by the lenders thereunder.
4. Revised Letter of Credit Annual Commission. (A)
Section 2.02(B)(1) of the Credit Agreement is amended by adding
thereto the following sentences immediately after the last word
thereof:
"For the
period commencing on the
date of the closing of
the NCC Sale and ending
on March 31, 1996 the
annual commission (the
"Revised Annual
Commission") shall equal
two and one-quarter
percent (2.25%) of the
outstanding amount of the
Letter of Credit as
measured by reference to
the maximum amount which
could be drawn under the
Letter of Credit on the
September 15 next
proceeding such payment.
The Revised Annual
Commission is established
to be equivalent to the
initial "Applicable
Margin" for "Revolving
Credit LIBO Rate
Tranches" under the
Maidenform Loan
Agreement. From and
after March 31, 1996, the
Revised Annual Commission
shall from time to time
be adjusted to equal the
Applicable Margin for
Revolving Credit LIBO
Rate Tranches under the
Maidenform Loan Agreement
as the same shall from
time to time be in effect
thereunder, provided that
in no event shall the
Revised Annual Commission
be less than 1.25%. The
calculation of the
Applicable Margin under
the Maidenform Loan
Agreement is based upon
the consolidated balance
sheet and income
statement of the
borrowers thereunder for
each fiscal quarter
commencing with the
fiscal quarter ending
March 31, 1996. In the
event that the Applicable
Margin changes under the
Maidenform Loan Agreement
and therefore the Revised
Annual Commission
changes, such change
shall become effective as
of the first day of the
month immediately
following the month in
which such quarterly
financial statements are
delivered to Corestates
Bank, N.A. except that
the Applicable Margin and
therefore the Revised
Annual Commission, once
reset, shall remain in
effect for not less than
ninety (90) days.
Commencing April 1, 1996
the Revised Annual
Commission shall be,
billed in advance on a
quarterly basis and shall
be calculated based upon
the Revised Annual
Commission in effect as
of the first day of each
quarter; provided that to
the extent that the
Revised Annual Commission
shall be adjusted (either
up or down) as set forth
above during any quarter,
an appropriate adjustment
shall be made with
respect to the following
quarter's Revised Annual
Commission to reflect the
actual amount of the
Revised Annual Commission
that should have been
paid in the preceding
quarter giving effect to
the adjustment of the
Revised Annual
Commission.
Section 2.02(B)(2) of the Credit Agreement is revised
by deleting the phrase "one percent (1%)" and replacing such
phrase with the following: "the then - current annual commission
as provided in Section 2.02(B)(1)".
(B) NCC and the Bank acknowledge that, in accordance
with the terms of the Credit Agreement, NCC has pre-paid the
annual commission on the Letter of Credit due for the year ending
October 2, 1995. Accordingly, upon the closing of the NCC Sale
(and therefore the commencement of the Revised Annual Commission
rate), NCC shall be entitled to receive a credit for the prorated
portion of such prepaid annual commission attributable to the
period from the date of such closing through October 2, 1995 (the
"Credit"). The Credit shall be paid through an offset to the fee
described in paragraph 5 below.
5. Amendment Fee. NCC agrees to pay Fleet Bank, in
consideration of its entering into this Amendment, an amount
equal to $22,644.28, which amount is equivalent to three quarters
of one percent of the maximum amount currently available under
the Letter of Credit, less the amount of the Credit, by wire
transfer, contemporaneously with the consummation of the NCC
Sale. NCC also agrees to pay the reasonable fees and expenses of
counsel for Fleet Bank in connection with this Amendment.
6. Notices. Section 9.04 of the Credit Agreement and
Section 5.4 of the Guaranty are amended so that the addresses for
notices and communication set forth for the Company (including
where a copy is to be sent) are deleted in their entirety and the
following substituted therefor:
Maidenform Worldwide, Inc.
90 Park Avenue
New York, New York 10016
Attention: Steven Masket, Esq.
With a copy to:
Baer Marks & Upham
805 Third Avenue
New York, New York 10022
Attention: Stanley E. Bloch, Esq.
7. Other Terms of Credit Agreement and Guaranty
Unaffected. Except as otherwise provided in this Amendment, the
Credit Agreement and the Guaranty shall continue in full force
and effect and shall not otherwise be amended or changed as a
result of this Amendment. Notwithstanding the generality of the
foregoing sentence, the parties hereby agree that, to the extent
that other provisions of the Credit Agreement or the Guaranty are
now inconsistent with the terms of the such documents as amended
hereby, such inconsistent terms shall be read so as to be
consistent with such terms mutatis mutandis.
8. Effective Date. The terms and provisions of this
Amendment shall become effective immediately upon the
consummation of the NCC Sale and the payment of the fee described
in Paragraph 5 above and not before, regardless of the date this
Amendment is executed by any of the parties hereto. MWI and NCC
shall promptly notify Fleet Bank of the consummation date of the
NCC Sale.
9. Reaffirmation of Guaranty Agreement. NCC, in its
capacity as guarantor under the Guaranty, hereby consents to the
amendments to the Credit Agreement and Guaranty effected hereby
and reaffirms the Guaranty as amended hereby.
10. Satisfaction of Mortgage. Fleet Bank agrees to
deliver to NCC, no later than the closing date of the NCC Sale, a
Satisfaction of Mortgage, in recordable form, with respect to
that certain Mortgage, dated August 11, 1988, from NCC to Fleet
Bank, relating to a premises in the City and County of Cortland,
New York, and filed on August 17, 1988 in liber 378 of Mortgages
at page 24, as modified by Modification Agreement, dated
September 28, 1988 and filed October 6, 1988 in liber 383 of
Deeds at page 150.
IN WITNESS WHEREOF, the parties hereto have executed
this document as of the first above written.
NCC INDUSTRIES,INC.
By:/s/ Steven N. Masket
Authorized Officer
FLEET BANK
By:/s/ Christopher Papayanokos
Vice President
MAIDENFORM WORLDWIDE, INC.
BETEX, S.A.
CREACIONES TEXTILES de MERIDA,
S.A. de C.V.
ELIZABETH NEEDLE CRAFT, INC.
JAMAICA NEEDLECRAFT, INC.
MAIDENFORM INTERNATIONAL, INC.
NICHOLAS NEEDLECRAFT, INC.
CRESCENT INDUSTRIES, INC.
By:/s/ Steven N. Masket
Name: Steven N. Masket
Title:
(as to all above)
MAIDENFORM, INC.
By: /s/ Steven N. Masket
Name: Steven N. Masket
Title:
CONSENT TO SECOND LIEN
Reference is made to that certain Trust Indenture,
dated as of September 1, 1988 (the "Trust Indenture"), between
Cortland County Industrial Development Agency, as issuer, and Key
Trust Company, as trustee, relating to $4,590,000 aggregate
principal amount of Series 1988A Industrial Development Revenue
Bonds (NCC Industries, Inc. Project) (the "Series A Bonds").
Capitalized terms not otherwise defined herein shall have the
meaning described to them in the Trust Indenture.
R E C I T A L S
WHEREAS, pursuant to the Trust Indenture the Issuer issued
the Series A Bonds for the purpose of financing a portion of the
costs of undertaking the Project;
WHEREAS, in connection with the issuance of the Bonds and
the execution of the Trust Indenture, the Series A Financing
Documents were executed;
WHEREAS, the Series A Financing Documents contain various
provisions which restrict the ability of the Company to grant
Liens on or with respect to the Facility, the Land and the
Equipment;
WHEREAS, certain shareholders of the Company propose to sell
(the "Company Sale") approximately 92 percent of the common stock
of the Company to Maidenform Worldwide, Inc. ("MWI") and
Maidenform, Inc. ("MI");
WHEREAS, MWI, MI and certain of their named subsidiaries and
the Company, as a new subsidiary of MWI, propose to enter into a
Loan Agreement (the "Loan Agreement") under which Corestates
Bank, N.A. is acting as agent ("Corestates") for various lenders
(the "Lenders"); and
WHEREAS, as a condition to the Lenders' entering into the
Loan Agreement, the Lenders have required that they be granted a
second mortgage on the Land, Facility and Equipment and, in order
to provide the Lenders with such second mortgage, the Company has
requested the undersigned to consent to the granting by the
Company of such second mortgage.
NOW, THEREFORE, in consideration of the premises herein
contained, the undersigned, being the Trustee and the Bank under
the Trust Indenture, hereby consent to the following:
1. Consent to Grant of Second Lien. By their execution
hereof, the undersigned hereby consent to the grant to the
Lenders of a second mortgage or security interest in the Land,
Facility and Equipment notwithstanding anything contained in any
of the Series A Financing Documents.
2. Compliance with Section 905 of Trust Indenture.
Pursuant to Section 905 of the Trust Indenture, the Bank has
delivered to the Trustee its letter, substantially in the form
annexed hereto as Exhibit A, in connection with the Trustee's
consent hereby given.
3. Further Assurances. The undersigned each agree that
from time to time, as and when requested by the Company or by its
successors and assigns, it shall (i) execute and deliver
amendments to the Series A Financing Documents, and other
instruments, agreements and documents, and (ii) take or cause to
be taken by it such further and other action, in each case as
shall be appropriate or necessary in order to grant to the
Lenders a second mortgage or security interest on the Land,
Facility and Equipment and to perfect or confirm, of record or
otherwise, in the Lenders such mortgage interests, and to
otherwise permit the Company or its successors and assigns to
carry out the purposes of this Consent.
4. Other Terms of Series A Financing Documents Unaffected.
Except as otherwise provided in this Consent, the Trust Indenture
and the Series A Financing Documents shall continue in full force
in effect and shall not otherwise be amended or changed as a
result of this Consent. Notwithstanding the generality of
foregoing sentence, the undersigned hereby agree that, to the
extent that other provisions of the Trust Indenture or the Series
A Financing Documents are inconsistent as a result of this
Consent, such inconsistent terms shall be read so as to be
consistent with the terms hereof mutatis mutandis.
5. Effective Date. The terms and provisions of this
Consent shall become effective immediately upon the consummation
of the Company Sale and not before, regardless of the date this
Consent is executed by either of the undersigned. The Company
shall promptly notify the undersigned of the consummation date of
the Company Sale.
6. Multiple Counterparts. This Consent may be executed in
any number of counterparts, each of which shall be deemed an
original, but all of which constitute one in the same instrument.
7. Consent of Company. The Company, in its capacities as
guarantor under the Series A Guaranty and as operator of the
Project Facility, hereby consents to the grant to the Lenders of
the second mortgage or security interest referred to herein.
IN WITNESS WHEREOF, the undersigned have executed this
Consent as of the day of April, 1995.
FLEET BANK
By: /s/ Christopher Papayanokos
Vice President
KEY TRUST COMPANY, as Trustee
By: /s/ Stephen Gorzynski
Corporate Trust Officer
NCC INDUSTRIES, INC.
By: /s/ Steven N. Masket
Authorized Officer
EXHIBIT A
FLEET BANK
268 GENESEE STREET
UTICA, NEW YORK 13502
April 26, 1995
Key Trust Company
60 State Street
Albany, New York 12207
Attention: Corporate Trust Group
Re: Trust Indenture, dated as of September
1, 1988, between Cortland County Industrial
Development Agency and Key Trust Company, as
Trustee (the "Trust Indenture")
Ladies and Gentlemen:
Capitalized terms not otherwise defined herein shall have
the meaning ascribed to them in the Trust Indenture.
This letter is being provided to pursuant to Section 905 of
the Trust Indenture in connection with the request by the Company
of your consent to permit the Company to grant a second mortgage
and security interest in the Land, Facility and Equipment to the
lenders under a bank loan facility under which Corestates Bank,
N.A. is acting as agent.
Pursuant to said Section 905 of the Trust Indenture, we
hereby make formal written request for your consent to amend the
Series A Mortgage and any other Series A Financing Documents as
necessary to grant such second mortgage and security interest.
Furthermore, we hereby affirm to you that (i) the undersigned is
willing to also consent to the granting of such second mortgage
and (ii) the granting of such second mortgage and security
interest and any amendments necessary to permit same in the
Series A Mortgage or any other Series A Financing Documents will
not diminish or otherwise adversely affect the Letter of Credit.
Sincerely,
FLEET BANK
By:________________
Vice President
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<PERIOD-START> JAN-01-1995
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