SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
(MARK ONE) FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended September 28, 1996
_________ 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
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 September 28, 1996, 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 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits
SIGNATURES
-2-
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
NCC INDUSTRIES, INC. AND SUBSIDIARY
BALANCE SHEETS
(UNAUDITED)
<CAPTION>
September 28, December 31,
1996 1995
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 680,375 $ 725,198
Investments - 671,382
Accounts receivable, net 13,937,189 15,864,241
Income tax refundable 25,569 -
Inventories (Note 2) 39,049,849 45,020,477
Other current assets 5,269,112 2,347,071
Total Current Assets $ 58,962,094 $64,628,369
Property, plant and equipment at cost, net 8,431,665 10,155,629
Bond issuance cost 46,396 59,138
Other assets 266,862 525,606
$ 67,707,017 $ 75,368,742
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $21,143,550 $21,433,466
Due to affiliates 9,002,053 11,077,154
Current portion of long-term debt 445,000 445,000
Total Current Liabilities 30,590,603 32,955,620
Long term debt, less current portion 1,471,415 1,916,415
Other liabilities 2,262,967 1,664,956
Shareholders' Equity 33,382,032 38,831,751
$67,707,017 $75,368,742
</TABLE>
See notes to financial statements.
-3-
<TABLE>
NCC INDUSTRIES, INC. AND SUBSIDIARY
STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
STATEMENTS OF INCOME
Net Sales $ 27,338,660 $ 30,671,583 $ 78,139,022 $ 92,542,402
Cost and expenses
Cost of sales 26,442,218 22,414,449 65,689,750 69,606,508
Shipping, selling, general
and administrative expenses 6,469,865 6,852,130 18,681,672 18,314,430
Interest expense 548,748 552,121 l,405,762 1,405,427
33,460,831 29,818,700 85,777,184 89,326,365
Income (loss) before taxes (6,122,171) 852,883 (7,638,162) 3,216,037
Income taxes (benefit) (1,980,700) 87,297 (2,445,677) 735,479
Net Income (loss) ($4,141,471) $ 765,586 ($5,192,485) $2,480,558
Income (loss) per common share ($.95) $.18 ($1.19) $.57
Weighted average shares used in
computing per share amounts 4,375,492 4,375,492 4,375,492 4,375,492
</TABLE>
-4-
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
STATEMENTS OF RETAINED EARNINGS
<S> <C> <C> <C> <C>
Retained earnings, beginning $30,594,382 $30,609,704 $31,645,396 $28,894,732
Net income (loss) ( 4,141,471) 765,586 ( 5,192,485) 2,480,558
Retained earnings, ending $26,452,911 $31,375,290 $26,452,911 $31,375,290
</TABLE>
See notes to financial statements.
-5-
<TABLE>
<CAPTION>
NCC INDUSTRIES, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months Ended
September 28, September 30,
1996 1995
Cash flows from operating activities
<S> <C> <C>
Net income (loss) $(5,192,485) $2,480,558
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities
Depreciation 1,128,793 1,138,783
Amortization 12,742 15,148
Provision for losses on accounts receivable 90,000 81,000
Loss from retirement of equipment 225,134 17,449
Loss on impaired assets identified for disposal 477,591 -
Net change in operating assets and liabilities
(Increase) decrease in accounts receivables 1,811,483 294,904
(Increase) decrease in inventory 5,970,628 ( 8,715,038)
Increase (decrease) in accounts
payable and accrued expenses ( 547,150) 10,762,594
(Increase) decrease in other assets 258,744 294,713
Increase (decrease)in other liabilities 598,011 254,712
(Increase) decrease in other current assets (2,922,041) ( 810,491)
Increase (decrease) in due to affiliates (2,075,101) 2,113,214
Net cash provided by (used in )operating activities ( 163,651) 7,927,546
Cash flows from investing activities
Purchase of plant & equipment (107,554) ( 493,974)
Proceeds from sales of investments 671,382 -
Net cash used in investing activities 563,828 ( 493,974)
</TABLE>
See notes to financial statements.
-6-
<TABLE>
<CAPTION>
NCC INDUSTRIES, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<S> <C> <C>
Nine months Ended Nine months Ended
September 28, September 30,
1996 1995
Cash flows from financing activities
Long term debt repayments (445,000) ( 445,000)
Repayment of Majority Shareholder advances - ( 4,910,379)
Net cash used in financing activities (445,000) ( 5,355,379)
Net increase (decrease)in cash ( 44,823) 2,078,193
Cash, beginning of year 725,198 1,034,820
Cash, end of quarter $ 680,375 $ 3,113,013
Supplemental disclosure of cash flow information
Cash paid during the nine months for interest $ 483,764 $ 766,333
Cash paid during the nine months for income taxes $ 58,838 $ 169,445
</TABLE>
See notes to financial statements.
-7-
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 nine month period ended September 28, 1996 are not
necessarily indicative of the results that may be expected
for the year ending December 31, 1996. The balance sheet at
December 31, 1995 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, 1995. Certain amounts in the 1995
financial statements have been reclassified to conform with
the 1996 presentation.
2. Inventory:
a) Inventories at September 28, 1996 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:
September 28, December 31,
1996 1995
(unaudited)
Raw Materials $ 8,062,181 $7,566,204
Work in process 4,529,007 10,659,170
Finished goods 26,458,661 26,795,103
Total $39,049,849 $45,020,477
3. Net income per share:
Per share amounts are based on the weighted average number
of shares outstanding during the period.
4.Closure Costs
Registrant's management has announced the pending
closure of its Cortland, NY administrative offices by
the fourth quarter of 1996, and Registrant will utilize
certain administrative services from its majority
shareholder Maidenform, Inc. in Bayonne, NJ. In
connection with such closure, Registrant's non-employee
benefit related costs include the write-down of
impaired assets of $477,000 recorded in the third
quarter of 1996. Registrant has recorded a charge for
employee-related benefit costs of $455,000 in the third
quarter of
1996.
-8-
NCC INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
Management intends to seek to dispose of the building
facility for fair market value and relocate certain
employees to Registrant's other facility in Cortland,
New York and Maidenform's facility in Bayonne, New
Jersey. It is expected that the remaining employees
will be laid off with severance pay. The following
exit costs have been recorded in connection with the
pending Cortland, New York cutting operation closure:
severance payments of approximately $93,000; and
employee related benefits of approximately $292,000.
All such costs were recorded as general expense on
Registrant's income statements. At September 28, 1996,
no amounts had been paid and charged against the
liability and there were no adjustments to the
liability. It is anticipated that the closure of the
facility will be substantially completed by the end of
1996 or the first quarter of 1997.
In August, 1996 Registrant closed its Puerto Rican
manufacturing facility and has recorded a charge of
$1,348,000 for its closure in the first six months of
1996. Registrant adjusted this charge in the third
Quarter of 1996 by $276,000 primarily to increase
reserves for security of the facility. Management
moved the manufacturing activities to Maidenform's
facilities located in Puerto Rico and the Caribbean and
has laid off the employees in Registrant's facility
with severance pay. Registrant intends to negotiate
with the owner of the facility to terminate the lease
prior to expiration and to sell the machinery and
equipment to a bona fide purchaser. The following
approximate exit costs have been recorded in connection
with the Puerto Rico facility closure: lease
commitment of $478,000; estimates for security,
maintenance, and insurance; , $306,000, $94,000 and
$72,000, respectively; severance payments of $588,000;
and employee related benefits of $85,000. All such
costs were recorded as general expense on Registrant's
income statement.
-9-
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Net sales for the third quarter of 1996 were l0.9%
lower than the third quarter of 1995 due to reduced demand
for Registrant's products. Net sales for the first nine
months of 1996 were 15.6% lower than the first nine months
of 1995 because of continued softness in the brands and
private label business of Registrant's major customers. Net
sales for the third quarter of 1996 were 2.7% lower than the
second quarter of 1996. However, for the comparable period
of l995, the third quarter of 1995 results were 10% lower
than the second quarter of 1995. The cancellation of the
"Bill Blass" trademark merchandise continues to affect
comparable results with Walmart, a major customer. Sales
declined 60% for the first nine months of 1996 with Walmart.
Registrant's management no longer anticipates this business
to recover, but continues to aggressively pursue alternative
sales strategies with Walmart to meet their needs. Sales to
Mervyn's, another major customer, have declined 36.7% for
the first nine months of 1996, as compared to the first nine
months of 1995, due to reduced orders caused by continued
softness in the retail markets and a change in Mervyn's
pricing and promotion policies. Sales to Mast Industries
increased l73.7% in the first nine months of 1996 as
compared to the first nine months of 1995 due to increased
demand for Registrant's products in the third quarter.
Partially offsetting a 19% decline in unit volume is an
increase in the average revenue per unit of 5.2% in the
first nine months of 1996 as compared to the first nine
months of 1995. Unit volume declined 14.3% for the third
quarter of 1996, as compared to the third quarter of 1995.
Average unit revenue increased 6.4% in the third quarter of
1996 as compared to the third quarter of 1995.
Cost of sales increased as a percentage of sales due to
a decision by Registrant's management to increase reserves
for inventory markdowns by approximately $3,976,000. This
increase in reserves is due primarily to larger than
anticipated declines in sales volume with Walmart and K-
Mart, two major retailers, indicating consumer acceptance
did not meet Registrant's and customer's expectations,
resulting in excess inventories for these businesses. In
anticipation of discontinuance of this merchandise,
Registrant's management is aggressively pursuing alternative
strategies to help these customers fulfill their
merchandising needs in the future. Shipping, advertising
and selling costs increased as a percentage of sales for the
first nine months of 1996, as compared with the first nine
months of 1995 because of the reduced sales volume. General
and administrative expenses were higher as a percentage of
sales in the third quarter of 1996 as compared to the third
quarter of 1995, due to the recording of employee related
benefit costs of $455,000 related to the closure of
Registrant's administrative offices in Cortland, New York,
the recording of impaired assets valuation of $477,000 and
the recording of an officer severance arrangement of
$929,000. An adjustment was made during the third quarter
to increase previous accruals for closure of Registrant's
Puerto Rico facilities by $276,294.
-10-
Financial Condition
Net cash flows from operations decreased during the
first nine months of 1996 as compared with the first nine
months of 1995 due primarily to the net loss for the period.
The decrease in cash flows from changes in accounts payable
were largely offset by increases in cash flows from changes
in inventory. The increase in other current assets was
primarily due to increases in Deferred Tax Assets resulting
from plant closure and markdown effects on the effective tax
rates of Registrant. Inventories at September 29, 1996 were
$5,971,000 less than at December 31, 1995 due in part to the
increases in markdown reserves and lower production levels
needed to meet customer demand. Net cash flows from
investing activities were used to finance operating and
financing activities.
Working capital was $28,371,000 at September 28, 1996
as compared to $31,673,000 at December 31, 1995. While
Registrant and its parent have credit facilities of
$220,000,000, the available lines of credit were virtually
all utilized at the time of filing. At June 29, 1996, the
Maidenform Group was in default of certain financial and
other covenants under such credit facilities.
Notwithstanding such defaults, such lenders continued to
provide funding to the Maidenform Group under such credit
facilities. The Maidenform Group subsequently reached an
agreement with its lenders which provides financing through
the end of the year and includes a waiver of all defaults
and less restrictive covenants. However, in the event of a
default by Registrant or any other member of the Maidenform
Group, these lenders can demand repayment of all amounts
outstanding and assert their rights as secured creditors,
which security interest includes substantially all of the
assets of Registrant and the other members of the Maidenform
Group. During 1996, payments by the Maidenform Group to its
vendors and suppliers have been extended as a result of
discussions with its vendors. Registrant's management
believes that the Maidenform Group's line of credit and debt
capacity under the revolving credit facility, together with
vendor support, cash flow from operations, and additional
availability under its lines of credit, are adequate to meet
its anticipated operating needs through the second quarter
of 1997. The Registrant and the other members of the
Maidenform Group are currently in discussions with its
lenders about obtaining additional availability under its
line of credit and extension of duration into the second
quarter of 1997, which Registrant's Management expects to
conclude these negotiations during November 1996.. Although
there can be no assurance that such additional availability
will be granted, Registrant's management believes it can
obtain such additional availability. In the event of any
material adverse change in vendor support, Registrant's
anticipated sales for 1996, or the discussions with its
lenders, Registrant's liquidity would be adversely affected.
-11-
NCC INDUSTRIES, INC.
Part II - Other Information
Item 1. Legal Proceedings
Bernard Zimmerman ("Zimmerman"), the owner of
approximately 5,000 shares of Registrant's common stock, has
commenced a class action against Registrant, Maidenform,
Inc. ("Maidenform"), Maidenform Worldwide, Inc.
("Worldwide"), Triumph International Overseas, Ltd. (The
former majority shareholder of Registrant) ("Triumph"),
Guenther Spiesshofer (a former officer and shareholder of
Registrant) ("Spiesshofer"), and Frank Magrone (a former
officer and shareholder of Registrant) ("Magrone"). The
action was commenced in New York State Court, seeks
compensatory damages in an unspecified amount and alleges
that Triumph, Spiesshofer, and Magrone breached their
fiduciary duty to Zimmerman by selling their stock of
Registrant to Worldwide and failing to include Zimmerman and
the remaining shareholders in the sale. The
complaint also alleges that Maidenform and Worldwide aided
and abetted the selling defendants' breach by structuring
the stock purchase to exclude the public shareholders.
Zimmerman also claims that Maidenform and Worldwide, as the
controlling shareholders of Registrant since the sale,
breached their fiduciary duty to the public shareholders by
operating Registrant as a subsidiary in the absence of
purchasing 100% of the stock. Registrant and its affiliates
believes that the claims lack merit and intends to defend
the suit vigorously.
Item 5. Other Information
On July 17, 1996, Frank Magrone resigned as a director
and officer and employee of Registrant to pursue other
business opportunities.
Mr. Magrone has also assumed a consulting position with
Maidenform, Worldwide and its affiliated companies.
On September 27, 1996, Ira Glazer resigned as a director and
officer
of Registrant to pursue other business opportunities.
Registrant's management has recently announced the
closure of its Main Street administrative facility in
Cortland, New York, which closing will occur in the fourth
quarter of 1996. Registrant will utilize certain
administrative services from its majority shareholder
Maidenform, Inc. Registrant's management has determined the
total expected cost of closure to be $955,300, of which
$477,590 is the impaired long-term assets write down.
Registrant's management believes that such closure will
result in lower administrative costs and savings for
Registrant.
-12-
Item 6. Exhibits and Reports on Form 8-K
Exhibits No. Description
(a) 10.1 Second Amendment to Loan Agreement
dated September 11, 1996,
See Exhibit 10(a)(6) of Registrant's
Form 10-Q for the quarter ended
April 1, 1995.
10.2 Forbearance Agreement
dated September 11, 1996.
10.3 Second Amendment to Note Purchase Agreement
dated September 11, 1996,
See Exhibit 10(a)(4) of Registrant's
Form 10-Q for the quarter ended
April 1, 1995.
27 Financial Data Schedule
Bank Agreements
(b) Reports on Form 8-K
No Reports on Form 8-K have been filed during the quarter
ended September 28, 1996.
-l3-
EXHIBIT INDEX
Title of Document Page
Financial Data Schedule 120
-14-
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 November 12, 1996 By:/s/ Elizabeth Coleman
Chairman of the Board,
Chief Executive Officer
Date November 12, 1996 By:/s/ Steven Masket
Steven Masket
Executive Vice President -
General Counsel,
Secretary
-15-
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (this
"Amendment") is made as of the 11th day of September, 1996,
among 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, Maidenform, Betex,
Creaciones, Elizabeth, Jamaica, International, Nicholas, NCC
and Crescent are each hereinafter referred to individually as
"Borrower" and collectively as "Borrowers"), CORESTATES BANK,
N.A. ("CoreStates"), a national banking association,
NATIONSBANK, N.A. ("Nationsbank"), a national banking
association, THE CHASE MANHATTAN BANK ("Chase"), a New York
banking corporation, as successor by merger with The Chase
Manhattan Bank N.A., 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 SUMMIT BANK, formerly known as United
Jersey Bank ("Summit"), a New Jersey banking corporation
(CoreStates, Nationsbank, Chase, City, NBD, Comerica, EAB and
Summit 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 "Agent"), and CoreStates,
as issuing bank for the Letters of Credit (CoreStates, in such
capacity, and any successor issuing bank shall be hereinafter
referred to as "Issuing Bank").
BACKGROUND
A. Borrowers, Maidenform Worldwide, Inc. ("Worldwide-
NY"), a New York corporation, the Banks, the Agent and the
Issuing Bank executed a Loan Agreement dated as of April 26,
1995 (the "Original Loan Agreement") pursuant to which the
Banks made available to Borrowers and Worldwide-NY the
Revolving Credit in the maximum principal amount of
$120,000,000.00 and the Term Loan in the principal amount of
$50,000,000.00. On or about the Closing Date, Worldwide-NY
was merged into Worldwide-DE. Borrowers, the Banks, the Agent
and the Issuing Bank executed a First Amendment to Loan
Agreement dated as of March 29, 1996 (the "First Amendment"),
pursuant to which, among other things, certain of the Banks
made a new term loan in the amount of $20,000,000.00 (the
"Second Term Loan") to Borrowers and otherwise amended the
Loan Agreement as set forth therein. The Original Loan
Agreement as amended by the First Amendment is referred to
herein as the "Loan Agreement." Capitalized terms used herein
and not otherwise defined shall have the meanings given to
such terms in the Loan Agreement.
B. The Term Loan is evidenced by eight separate Term
Loan Notes executed by Borrowers and Worldwide-NY, each dated
as of April 26, 1995, and each payable to the order of a
different Bank in the principal amount of such Bank's interest
in the Term Loan. The Revolving Credit is evidenced by eight
separate Revolving Credit Notes executed by Borrowers and
Worldwide-NY, each dated as of April 26, 1995, and each
payable to a different Bank in the principal amount of such
Bank's maximum Commitment. The Second Term Loan is evidenced
by seven separate Second Term Loan Notes executed by
Borrowers, each dated as of March 29, 1996, and each payable
to the order of a different Bank (except NBD) in the principal
amount of such Bank's interest in the Second Term Loan.
C. The Banks, the Noteholders, the Collateral Agent,
Borrowers and Worldwide-NY executed an Intercreditor Agreement
dated as of April 26, 1995 (the "Original Intercreditor
Agreement") setting forth their agreement with respect to
certain rights and obligations among the creditors of
Borrowers and Worldwide-NY that were parties to the Original
Intercreditor Agreement. The Banks, the Noteholders, the
Collateral Agent and Borrowers executed an Amendment to
Intercreditor Agreement dated as of March 29, 1996 (the
"Amended Intercreditor Agreement"), amending certain rights
and obligations of the parties thereto. The Original
Intercreditor Agreement as amended by the Amended
Intercreditor Agreement shall be referred to hereinafter as
the "Intercreditor Agreement".
D. Borrowers' obligations under the Loan Agreement, the
Term Loan Notes, the Revolving Credit Notes and the Second
Term Loan Notes were and are secured by, among other things,
the Security Documents. Pursuant to a Reaffirmation Agreement
dated as of March 29, 1996, each Borrower reaffirmed the
Security Documents and each Pledgor reaffirmed the Pledge
Agreement.
E. The Collateral Agent presently holds a lien on and
security interest in the Collateral and is legally entitled to
enforce collection of the indebtedness evidenced by the Loan
Agreement, the Term Loan Notes, the Revolving Credit Notes and
the Second Term Notes and secured by the Security Documents in
accordance with the terms of the Notes, the Security Documents
and the Intercreditor Agreement.
F. Events of Default have occurred and are continuing
under the Loan Agreement pursuant to the Borrowers' failure to
comply with certain covenants and agreements contained in
Sections 2.2.1, 2.3(A), 5.2(B), 5.19, 5.20, 5.21 and 5.22 of
the Loan Agreement (the "Existing Events of Default"), and the
Borrowers acknowledge that, absent a restructuring, further
Events of Default will occur in the future.
G. Borrowers, the Banks, the Agent, the Issuing Bank
and the Noteholders have entered into a Forbearance Agreement
of even date herewith (the "Forbearance Agreement") pursuant
to which the Banks have agreed to forbear from exercising
their rights and remedies arising from the Existing Events of
Default, and the Noteholders have agreed to forbear from
exercising their rights and remedies arising from certain
events of default under the Note Purchase Agreement (as such
term is defined in the Forbearance Agreement), all on the
terms and conditions set forth in the Forbearance Agreement.
H. Borrowers have asked that the Banks amend certain of
the covenants and other terms in the Loan Agreement. Subject
to the terms and conditions set forth herein and in the
Forbearance Agreement, the Banks have agreed to amend the Loan
Agreement as set forth herein.
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged
and intending to be legally bound, the parties hereto agree as
follows:
1. Acknowledgement of Existing Events of Default. The
Existing Events of Default have occurred and exist under the
Loan Documents. Neither this Amendment nor any actions taken
by any of the parties pursuant to this Amendment or the Loan
Documents or otherwise shall be deemed to cure the Existing
Events of Default or any other existing defaults or Events of
Default under the Loan Documents or shall be deemed to be a
waiver by the Banks of the Existing Events of Default, or any
other existing defaults or Events of Default under the Loan
Documents or of any rights or remedies in connection therewith
or with respect thereto, it being the intention of the parties
hereto that the obligations of the Borrowers are and shall
remain in default notwithstanding this Agreement or any term
or provisions of the Loan Documents; and that the Banks
reserve all rights and remedies under the Loan Documents, at
law and in equity, in connection with such defaults and any
future defaults, except as limited by the Banks' agreement to
forbear as set forth in the Forbearance Agreement.
2. Amendments to Loan Agreement. Borrowers and the
Banks agree to modify the terms and conditions of Borrowers'
obligations to the Banks and the Banks' obligations to
Borrowers under the Loan Agreement in accordance with the
terms and conditions set forth herein. The parties hereto
agree that all the terms and conditions of the Loan Agreement
shall continue unchanged and remain in full force and effect
except as amended herein as follows:
a. The following definitions in Section 1.1 of the Loan
Agreement are hereby amended to read as follows:
"Applicable Margin" means (A) for the Second Term Loan,
for the period from the First Amendment Closing Date
through and including August 15, 1996, 2.50% per annum,
for the period from August 16, 1996 through and including
the Second Amendment Closing Date, 3.00% per annum, and
thereafter 3.50% per annum, (B) for Revolving Credit Base
Rate Tranches, Revolving Credit LIBO Rate Tranches, Term
Loan Base Rate Tranches and Term Loan LIBO Rate Tranches,
for the period prior to the date of the Second Amendment
Closing Date, as calculated in accordance with the
definition of "Applicable Margin" then in effect, and (C)
for the period from the Second Amendment Closing Date,
for Revolving Credit Base Rate Tranches, 1.00% per annum,
for Revolving Credit LIBO Rate Tranches, 2.75% per annum,
for Term Loan Base Rate Tranches, 2.00% per annum, and
for Term Loan LIBO Rate Tranches, 3.75% per annum.
"Borrowing Base" means the sum of (A) 80% of Eligible
Accounts plus (B) 50% of Eligible Inventory plus (C)
Restricted Cash.
"Credit Limit" at any time, means the lower of: (A) (i)
from the Closing Date through and including November 15,
1996, the Borrowing Base plus the Overadvance, and (ii)
from November 16, 1996 and thereafter, the Borrowing
Base, or (B) (i) from the Closing Date to but not
including the First Amendment Closing Date,
$120,000,000.00; (ii) from the First Amendment Closing
Date to but not including the Second Amendment Closing
Date, $140,000,000.00; (iii) from the Second Amendment
Closing Date through and including September 14, 1996,
$132,000,000.00, (iv) from September 15, 1996 through and
including October 14, 1996, $128,000,000.00, (v) from
October 15, 1996 through and including November 14, 1996,
$125,000,000.00, (vi) from November 15, 1996 through and
including December 14, 1996, $120,000,000.00, (vii) from
December 15, 1996 through and including January 14, 1997,
$110,000,000.00, and (viii) from January 15, 1997 and
thereafter, $105,000,000.00.
"Eligible Inventory" means Inventory of any Domestic
Borrower, valued within twenty (20) days after the close
of each month at the lower of cost or market on a first-
in, first-out basis, which: (A) 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, provided however, that in no
event shall the aggregate amount of Eligible Inventory
included in the calculation of the Borrowing Base exceed
(i) $172,000,000.00 from the Second Amendment Closing
Date through and including September 15, 1996, (ii)
$166,000,000.00 from September 16, 1996 through and
including October 15, 1996, (iii) $160,000,000.00 from
October 16, 1996 through and including November 15, 1996,
(iv) $156,000,000.00 from November 16, 1996 through and
including December 15, 1996, and (v) $152,000,000.00
commencing on December 16, 1996 and thereafter.
"Fees" means all payments except for interest and
principal which 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, the
Second Term Loan Facility Fee, the Forbearance 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.
"LIBO Interest Period" means (i) for each LIBO Loan
borrowed on or after the Closing Date and prior to July
17, 1996, a period of time, beginning on an Effective
Date, of one, two, three or six months in length (as such
periods are commonly used), (ii) for each LIBO Loan
borrowed on and after July 17, 1996 and prior to the
Second Amendment Closing Date, a period of time,
beginning on an Effective Date, of one, two or three
months in length (as such periods are commonly used) and
(iii) for each LIBO Loan borrowed on and after the Second
Amendment Closing Date, a period of time, beginning on an
Effective Date, of one month in length (as such period is
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; provided
however, that no LIBO Interest Period shall be available
for any period ending after January 17, 1997. 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.
"Loan Documents" means the documents associated with this
transaction, including but not limited to this Agreement,
the First Amendment to Loan Agreement, the Second
Amendment to Loan Agreement, the Notes, the Intercreditor
Agreement, the Environmental Indemnity, the Protection
Agreements, the Security Documents and the Forbearance
Agreement, as each may be amended or supplemented from
time to time.
"Operating Cash Flow" means net income from operations
(without giving effect to (a) either extraordinary income
or extraordinary losses, (b) the one-time charge not to
exceed $4,000,000.00, accrued in the second quarter of
1995 in connection with the retirement of Robert Brawer,
(c) a one-time charge, not to exceed $1,500,000.00, which
the Borrowers may accrue in connection with the possible
closing of its plant in Shannon, County Clare, Ireland,
(d) reorganization charges, plant or location closing
charges, employee termination benefits, and any other
restructuring fees or charges, in an amount not to exceed
$12,000,000.00 in the aggregate, and (e) the effects of
the pension reversions (FASB 88) in an amount not to
exceed $6,000,000.00, and FASB 87 to the extent that any
remaining pension assets are treated as intangible) 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, provided that when Operating Cash Flow
is calculated to determine the Borrowers' compliance with
Section 5.34 hereof with respect to the minimum
Cumulative EBIT of the Borrowers for the first three
fiscal quarters of 1996, Operating Cash Flow shall be
calculated for the nine (9) month period ending September
30, 1996.
"Overadvance" means an amount, not to exceed (i)
$1,000,000.00 from the Closing Date to the Second
Amendment Closing Date, or (ii) $6,000,000.00 from the
Second Amendment Closing Date through and including
September 15, 1996, or (iii) $4,000,000.00 from September
16, 1996 through and including October 15, 1996, or (iv)
$1,000,000.00 from October 16, 1996 through and including
November 15, 1996, by which the aggregate amount of
outstanding Advances plus the Letter of Credit Liability
plus the outstanding principal under the Second Term Loan
exceeds the Borrowing Base. Commencing on November 16,
1996 and thereafter, the Overadvance shall be zero.
"Security Documents" means the Collateral Assignments,
the Security Agreement, the Mortgages and any amendments
thereto, the North Carolina Second Mortgage, the Pledge
Agreement, the Trademark Agreement, the Second Trademark
Agreement, any financing statements executed in
connection herewith and all other documents delivered to
the Collateral Agent in accordance with the Security
Agreement.
b. The following definitions are hereby incorporated
into Section 1.1 of the Loan Agreement and shall read as
follows:
"Cumulative EBIT" means, for the previous fiscal period
or periods, Operating Cash Flow minus depreciation and
amortization for such period or periods.
"E&Y Audit" has the meaning given to such term in section
5.37 hereof.
"E&Y Tangible Net Worth" has the meaning given to such
term in section 5.37 hereof.
"Forbearance Agreement" has the meaning given to such
term in the Background of the Second Amendment to Loan
Agreement.
(a) $400,000.00 payable by Borrowers upon execution of the
Second Amendment to Loan Agreement to the Banks and the
Noteholders in accordance with Section 4.1(b) of the
Forbearance Agreement, plus (b) $1,000,000.00 payable by
Borrowers on December 17, 1996 unless the Loans are paid in
full prior to December 17, 1996, in which event such fee shall
be reduced to $500,000.00, payable in either event to the
Banks and the Noteholders in accordance with Section 4.3 of
the Forbearance Agreement, plus (c) $200,000.00, payable upon
execution of the Second Amendment to Loan Agreement for the
account of each Bank, to be shared ratably by each such Bank
based upon such Bank's Ratable Portion. The Forbearance Fee
shall be due and payable in accordance with the foregoing and
shall be deemed fully earned upon execution of the Second
Amendment to Loan Agreement and non-refundable when paid.
"Forbearance Period" has the meaning given to such term
in the Forbearance Agreement.
"Ratable Portion" for each Bank means such Bank's
percentage as set forth on Exhibit 2.1(A) attached
hereto.
"Reserved Amount" has the meaning given to such term in
Section 2.3(A) hereof.
"Restricted Cash" means any funds that are collected and
held in the Master Collection Account and are free and
unencumbered (other than the liens granted under the
Security Documents) and eligible for application toward
payment of amounts payable under the Loan Documents but
are not applied toward payment of any amounts owing by
the Borrowers under the Loan Documents or otherwise in
accordance with the Intercreditor Agreement.
"Retail Bank" has the meaning given to such term in
Section 5.38 hereof.
"Second Amendment Closing Date" means the date of the
Second Amendment to Loan Agreement.
"Second Amendment to Loan Agreement" means the Second
Amendment to Loan Agreement by and among Borrowers, the
Agent and the Banks dated as of September 11, 1996.
"Second North Carolina Mortgage" means the mortgage
granted by Maidenform on the Second Amendment Closing
Date to the Banks on certain real property and
improvements located in Fayetteville, North Carolina to
secure the Second Term Loan.
"Second Trademark Agreement" means the Second Trademark
Security Agreement by and among Borrowers, the Banks, the
Agent, the Collateral Agent, the Issuing Bank and the
Noteholders dated as of September 11, 1996.
c. Section 2.1 of the Loan Agreement is hereby amended
to read as follows:
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 shall not exceed (i)
at any time the amount set forth opposite such Bank's
name under the heading "Revolving Credit" on Exhibit 2.1
hereto, (ii) from September 15, 1996 through and
including October 14, 1996, the amount set forth opposite
such Bank's name under the heading "Revolving Credit" on
Exhibit 2.1 hereto less such Bank's Ratable Portion of
$4,000,000.00, (iii) from October 15, 1996 through and
including December 14, 1996, the amount set forth
opposite such Bank's name under the heading "Revolving
Credit" on Exhibit 2.1 hereto less such Bank's Ratable
Portion of $7,000,000.00, (iv) from December 15, 1996
through and including January 14, 1997, the amount set
forth opposite such Bank's name under the heading
"Revolving Credit" on Exhibit 2.1 hereto less such Bank's
Ratable Portion of $10,000,000.00, and (v) from January
15, 1997 and thereafter, the amount set forth opposite
such Bank's name under the heading "Revolving Credit" on
Exhibit 2.1 hereto less such Bank's Ratable Portion of
$15,000,000.00, as such amounts, with respect to (i)
through (vi) above, may be reduced pursuant to Section
2.3 hereof (such respective amounts relating to the
Revolving Credit being the "Commitment" of each Bank).
As a result of the reductions set forth in (ii) through
(vi) above, the aggregate Commitments of the Banks under
the Revolving Credit are (i) $116,000,000.00 from
September 15, 1996 through and including October 14,
1996, (ii) $113,000,000.00 from October 15, 1996 through
and including December 14, 1996, (iii) $110,000,000.00
from December 15, 1996 through and including January 14,
1997, and (iv) $105,000,000 from January 15, 1997 and
thereafter. Each Advance of the Revolving Credit shall
be from all of the Banks ratably according to their
respective Commitments. In addition, subject to the
terms and conditions hereinafter provided, each Bank
identified on Exhibit 2.2.1 hereto, for itself only,
agrees to make on the First Amendment Closing Date its
portion of the Second Term Loan in the principal amount
set forth opposite its name on Exhibit 2.2.1 hereto.
d. Section 2.2(B) of the Loan Agreement is hereby
amended to read as follows:
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, with respect to the notes
delivered prior to the Second Amendment Closing Date, in
a principal amount equal to the amount set forth opposite
such Bank's name with respect to the Term Loan after the
caption "Prior to Second Amendment Closing Date" on
Exhibit 2.1 hereto, and with respect to the notes
delivered on the Second Amendment Closing Date to
CoreStates and NBD in substitution for the notes
delivered to such Banks on the Closing Date, in a
principal amount equal to the amount set forth opposite
such Bank's name with respect to the Term Loan after the
caption "On and After Second Amendment Closing Date" on
Exhibit 2.1 hereto, and with respect to all such notes,
otherwise substantially in the form of Exhibit 2.2
attached hereto (the "Term Loan Notes").
e. Section 2.2.1(B) of the Loan Agreement is hereby
amended to read as follows:
The Borrowers shall pay interest on the principal amount
of the Second Term Loan outstanding from time to time at
the Adjusted Base Rate applicable to the Second Term
Loan. The Adjusted Base Rate shall change (a)
simultaneously with each change in the Base Rate and (b)
with any change in the Applicable Margin in accordance
with the definition thereof. With respect to the Second
Term Loan, the Borrowers shall pay to the Agent for the
account of each Bank making a portion of the Second Term
Loan interest monthly in arrears from the First Amendment
Closing Date until the principal amount of the Second
Term Loan has been repaid in full, on the last day of
each month commencing with the last day of the month in
which the First Amendment Closing Date occurs. The
Borrowers shall repay the principal balance of the Second
Term Loan in the amounts and on the dates set forth
below:
Date Each Principal Repayment
October 30, 1996 $ 5,000,000.00
November 18, 1996 $ 15,000,000.00
Notwithstanding clause "fifth" of Section 2.9(C) hereof,
if the Borrowers fail to make either payment of the
principal balance of the Second Term Loan when due as set
forth above, any principal payments on account of any of
the Loans, or any proceeds of the Collateral received by
the Agent after such payment is due shall be applied
first to the repayment of the principal of the Second
Term Loan prior to the payment of the principal of the
Term Loan or the Revolving Credit until such overdue
payment of the principal of the Second Term Loan has been
paid in full.
f. Section 2.2.1(C) of the Loan Agreement is hereby
amended to read as follows:
(C) The joint and several obligation of the
Borrowers to repay the Second Term Loan and interest
thereon shall be evidenced by promissory notes of the
Borrowers dated the date hereof, each payable to the
order of a Bank, with respect to the notes delivered
prior to the Second Amendment Closing Date, in a
principal amount equal to the amount set forth opposite
such Bank's name with respect to the Second Term Loan
after the caption "Prior to Second Amendment Closing
Date" on Exhibit 2.2.1 hereto, and with respect to the
notes delivered on the Second Amendment Closing Date to
CoreStates and NBD in substitution for the note delivered
to CoreStates on the First Amendment Closing Date, in a
principal amount equal to the amount set forth opposite
such Bank's name with respect to the Second Term Loan
after the caption "On and After Second Amendment Closing
Date" on Exhibit 2.2.1 hereto, and with respect to all
such notes, otherwise substantially in the form of
Exhibit 2.2.2 attached hereto (the "Second Term Loan
Notes"). All principal payments of the Second Term Loan
that otherwise would be paid to NBD shall be paid to
CoreStates until such time as CoreStates' and NBD's
respective percentages in the Second Term Loan equal the
amounts under the Caption "Targeted Percentages" on
Exhibit 2.2.1 hereto.
g. The first two sentences of Section 2.3(A) of the
Loan Agreement are hereby amended to read as follows:
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 of such
Bank's Commitment as in effect at such time, (2) at any
one time, the total outstanding principal under the
Revolving Credit plus the total outstanding principal
under the Second Term Loan plus the Letter of Credit
Liability shall not exceed the Credit Limit, (3) the
Letter of Credit Liability shall at no time exceed the
Letter of Credit Sublimit, and (4) upon payment of
$3,000,000.00 of the principal of the Revolving Credit on
account of the first $3,000,000.00 paid pursuant to
clause (B) of Section 2.6 hereof, each Bank's Commitment
in an amount equal to its Ratable Portion of
$3,000,000.00 (the "Reserved Amount") shall be reserved
solely for an Advance or Advances requested by the
Borrowers to pay the True-Up Amount (as such term is
defined in the Intercreditor Agreement) due, if any, to
the Noteholders on a Step-Down True-Up Date (as such term
is defined in the Intercreditor Agreement), and each such
Advance shall reduce the Reserved Amount of each Bank in
an amount equal to the amount advanced by such Bank. If
the total outstanding principal under the Revolving
Credit, plus the total outstanding principal under the
Second Term Loan plus the Letter of Credit Liability at
any time exceeds the Credit Limit, the Borrowers shall
immediately repay the amount of such excess together with
accrued interest thereon and any amount which may be due
pursuant to Section 2.17(B) on account of such payment.
h. Section 2.3(F) of the Loan Agreement is hereby
amended to read as follows:
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, with respect to such
notes delivered prior to the Second Amendment Closing
Date, in a principal amount equal to the amount set forth
opposite such Bank's name with respect to the Revolving
Credit after the caption "Prior to Second Amendment
Closing Date" and under the caption "Original Revolving
Credit" on Exhibit 2.1 hereto, and with respect to such
notes delivered on the Second Amendment Closing Date to
CoreStates and NBD in substitution or the notes delivered
to such Banks on the Closing Date, in a principal amount
equal to the amount set forth opposite such Bank's name
after the caption "On and After Second Amendment Closing
Date" and under the caption "Original Revolving Credit"
on Exhibit 2.1 hereto, and with respect to all such
notes, otherwise substantially in the form of Exhibit 2.3
attached hereto (the "Revolving Credit Notes").
i. Section 2.5(B) of the Loan Agreement is hereby
amended to read as follows:
(B) Agent's Fee. Borrowers shall pay to the Agent for
the Agent's account, and not for the account of any Bank (i)
an annual fee (the "Agent's Fee") pursuant to the agreement
entered into by Borrowers and the Agent on or before the
execution of this Agreement, plus (ii) $150,000.00, payable on
the Second Amendment Closing Date.
j. Section 2.5 of the Loan Agreement is amended by
adding subsection E thereto as follows:
(E) Forbearance Fee. The Borrowers will pay to the
Agent, for the benefit of the Banks, the portion of the
Forbearance Fee allocable to the Banks.
k. The first two sentences of Section 2.6 of the Loan
Agreement are hereby amended to read as follows:
The Borrowers shall pay to the Agent, for the benefit of
each Bank based on such Bank's Pro Rata Share, promptly
upon consummation of each of the transactions set forth
below: (A) the gross proceeds from the sale of any
Significant Asset of the Borrowers, less (i) any
reasonable costs and expenses thereof incurred to Persons
other than any Borrower or any Borrower's Subsidiaries or
Affiliates and (ii) the amount expended or committed to
be expended by the Borrowers (in an amount not to exceed
$10,000,000.00 with respect to any one sale of
Significant Assets) within one hundred twenty (120) days
before and/or after such sale for the acquisition of any
other asset, the use of which the Borrowers reasonably
intend will replace the use of the Significant Asset
sold, (B) the gross proceeds when received by the
Borrowers as a result of the termination of any over-
funded Plan, net of any (i) reasonable out-of-pocket
costs and expenses incurred by the Borrowers to Persons
other than any Borrower or any of Borrower's Subsidiaries
or Affiliates related to the termination which would not
have been incurred but for such termination; (ii) amount
set aside for a successor Plan; (iii) surplus assets of
the terminated Plan attributable to employee
contributions; and (iv) federal, state or city excise and
income taxes, including alternative minimum taxes, that
would not have been incurred but for receipt of such
proceeds, net of any Borrower's net loss carry forwards
or other credits available to be applied against such
taxes, (C) the gross proceeds of any private placement of
equity by the Borrowers, net of any reasonable costs and
expenses thereof incurred to Persons other than any
Borrower or any of Borrower's Subsidiaries or Affiliates;
(D) the gross proceeds of any public sale of equity by
the Borrowers, net of any reasonable costs and expenses
thereof incurred to Persons other than any Borrower or
any Borrower's Subsidiaries or Affiliates and (E) the
gross amount of any debt for borrowed money (whether by
private placement or public sale) described in Section
5.24(A)(5) incurred by Borrowers or any of them, provided
that if the Intercreditor Agreement, 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 the
occurrences described in clauses (A), (C), (D) and/or (E)
of this sentence, then the amount Borrowers shall be
obligated to prepay hereunder as a result of the
occurrences described in clauses (A), (C), (D) and/or (E)
of this sentence, and as a result of the occurrences
described in clause (B) of this sentence if such
occurrences occur after the Forbearance Period, 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 amounts of the
Term Loan and the Second 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 amounts of the Term Loan and the Second 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
Intercreditor Agreement, 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); provided further that if the
Intercreditor Agreement, 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 the occurrences
described in clause (B) of this sentence if such
occurrences occur during the Forbearance Period, then the
amount Borrowers shall be obligated to prepay hereunder
as a result of the occurrences described in clause (B) of
this sentence shall be equal to 100% of the first
$3,000,000 received by the Borrowers on account thereof
and 84.85% of all amounts in excess of $3,000,000.00
received by the Borrowers on account thereof; provided
further that neither the foregoing provision nor any
payment made by Borrowers and accepted by the Agent shall
constitute a waiver by the Agent or the Banks of any
breach of any covenant by Borrowers which may have
occurred hereunder as a result of any of the events
described in clauses (A), (B), (C), (D) and/or (E)
hereof. Amounts prepaid in accordance with clauses (A),
(C), (D) and/or (E) of this Section, and amounts prepaid
in accordance with clause (B) of this Section after the
Forbearance Period, shall be applied when received first
against the Term Loan Base Rate Tranches in inverse order
of maturity and thereafter against the Term Loan LIBO
Rate Tranches in inverse order of maturity, if any, and
amounts prepaid in accordance with clause (B) of this
Section during the Forbearance Period shall be applied
(i) with respect to the first $3,000,000.00 prepaid,
against the Revolving Credit Base Rate Tranches in
inverse order of maturity and thereafter against the
Revolving Credit LIBO Rate Tranches in inverse order of
maturity, if any, and (ii) with respect to any amounts
prepaid in excess of $3,000,000.00, against the Term Loan
Base Rate Tranches in inverse order of maturity and
thereafter against the Term Loan LIBO Rate Tranches in
inverse order of maturity.
l. Section 2.7(B) of the Loan Agreement is hereby
amended to read as follows:
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, provided however that
the Borrowers may not convert a Base Rate Loan into a
LIBO Loan if the LIBO Loan would have an Interest Period
ending after January 17, 1997. 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,
provided however that the Borrowers may not elect to
continue a LIBO Loan as a LIBO Loan for any LIBO Loan if
the new LIBO Interest Period selected by the Borrowers
would end after January 17, 1997.
m. The sixth sentence of Section 2.9(D) of the Loan
Agreement is hereby amended to read as follows:
Subject to the provisions of the Intercreditor Agreement,
provided that there has not occurred an Event of Default
and acceleration of the Loans as set forth in Section 6.2
hereof, and Borrowers have paid all amounts then due, at
the beginning of each Business Day, Collateral Agent
shall withdraw and, in its capacity as Agent, shall apply
any collected funds held in the Master Collection Account
against the outstanding principal amount of the Revolving
Credit; provided however, that the Agent may elect at its
discretion not to apply any collected funds held in the
Master Collection Account if applying such funds would
cause the Borrowers to incur expenses payable pursuant to
Section 2.17(B) hereof, but to hold such collected funds
as Restricted Cash until applied by the Agent and
provided further that the Agent shall not hold any
collected funds in the Master Collection Account if such
funds could be applied to a Base Rate Loan.
n. Section 2.15(C) of the Loan Agreement is hereby
amended to read as follows:
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 earlier of January 17,
1997 and 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 earlier
of January 17, 1997 and 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 earlier of January 17,
1997 and 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 earlier of
January 17, 1997 and 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.
o. Section 3.2(B) of the Loan Agreement is hereby
amended to read as follows:
(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, except for, solely during the Forbearance
Period and not at any time thereafter, those Events of
Default and Unmatured Events of Default subject to the
Forbearance Agreement; and
p. Section 5.2(C) of the Loan Agreement is hereby
amended to read as follows:
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 executed by the
chief executive officer and chief financial officer of
the Borrowers. Commencing on the First Amendment Closing
Date and continuing through September 14, 1996, at any
time while Borrowers' Leverage Ratio is 0.60 or greater
the Borrowers will also furnish to each Bank, by Friday
of each week (as of the end of the seven-day week ended
on the previous Tuesday) prior to the Termination Date or
at such more frequent intervals as Agent may request, a
completed Borrowing Base Certificate executed by the
chief financial officer of the Borrowers. Commencing on
September 15, 1996 and thereafter, the Borrowers will
also furnish to each Bank (i) by Friday of each week (as
of the end of the seven-day week ended on the previous
Tuesday) prior to the Termination Date or at such more
frequent intervals as Agent may request, a completed
Borrowing Base Certificate as to Eligible Inventory
executed by the chief financial officer of the Borrowers
and (ii) a daily Borrowing Base Certificate with respect
to Eligible Accounts as of the previous Business Day
executed by the chief financial officer of the Borrowers.
Each Borrowing Base Certificate provided pursuant to this
section 5.2(C) shall be substantially in the form of
Exhibit 1.1A hereto.
q. Section 5.2 of the Loan Agreement is hereby amended
by adding a new subsection (G) thereto as follows:
(G) In calculating the ratios and other financial
information determined in accordance with the covenants
in Sections 5.19, 5.20, 5.21, 5.22, 5.34 and 5.35, the
Borrowers shall exclude (i) the effects of the pension
reversions (FASB 88) in an amount not to exceed
$6,000,000.00 and FASB 87 to the extent that any
remaining pension assets are treated as intangible, and
(ii) reorganization charges, plant or location closing
charges, employee termination benefits, and any other
restructuring fees or charges, in an amount not to exceed
$12,000,000.00 in the aggregate.
r. Section 5.19 of the Loan Agreement is hereby amended
in its entirety to read as follows:
SECTION 5.19 Leverage Ratio. Borrowers will
maintain their 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 the quarter
ending December 31, 1995 0.70:1
as of the fiscal quarters
ending March 31, 1996 and
June 30, 1996 0.80:1
as of the end of the fiscal quarter
ending September 30, 1996 0.86:1
as of the fiscal quarter
ending December 31, 1996 0.825:1
as of the end of each fiscal
quarter from January 1, 1997
through the quarter ending
September 30, 1997 0.60:1
as of the end of each fiscal
quarter from and after
October 1, 1997 0.55:1
s. Section 5.20 of the Loan Agreement is hereby amended
in its entirety to read as follows:
SECTION 5.20 Tangible Net Worth. Until Borrowers
provide the Banks with the Combined Pro Forma for the
period from January 1, 1995 through the Closing Date
required by Subsection 5.2(B)(i) hereof, Borrowers will
not permit Tangible Net Worth at any time to be less than
$72,000,000.00. From the Closing Date through December
31, 1995, Borrowers will not permit Tangible Net Worth to
be less than (A) 90% of the Tangible Net Worth as of the
Closing Date, minus (B) $5000.00, being the amount
expended between the Closing Date and December 31, 1995
to acquire 300 shares of the outstanding NCC stock not
purchased on the Closing Date, plus (C) 70% of the
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. From January 1, 1996
through December 31, 1996, Borrowers will not permit
Tangible Net Worth to be less than the amounts set forth
below:
Period Tangible Net Worth
through March 31, 1996
$68,000,000.00
through June 30, 1996
$76,000,000.00
through September 30,
1996 95% of the
E&Y Tangible Net Worth
through December 31,
1996 95% of the
E&Y Tangible Net Worth
Thereafter, Borrowers will not permit Tangible Net Worth
to be less than the greater of (A) $76,000,000.00, or (B)
the sum of (i) the Tangible Net Worth covenant level
which Borrowers are obligated to meet on December 31,
1995 plus (ii) 70% of the aggregate Consolidated net
profit after taxes since January 1, 1996, provided that
Consolidated losses incurred for any reporting period
shall not be used to reduce aggregate Consolidated net
profits after taxes for purposes of this Section 5.20.
t. Section 5.22 of the Loan Agreement is hereby amended
in its entirety to read as follows:
SECTION 5.22 Funded Debt to Operating Cash Flow.
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 the fiscal quarter
ending September 30, 1995 5.25:1
for the fiscal quarter ended
December 31, 1995 7.00:1
for the fiscal quarter
ending March 31, 1996 9.00:1
for the fiscal quarter
ending June 30, 1996 7.00:1
for the fiscal quarter ending
September 30, 1996 4.75:1
for the fiscal quarter ending
December 31, 1996 9.26:1
after December 31, 1996 through
the fiscal quarter ending
September 30, 1997 4.25:1
from October 1, 1997 and each fiscal
quarter ending thereafter 4.00:1
u. Section 5.23 of the Loan Agreement is hereby amended
in its entirety to read as follows:
SECTION 5.23 Dividends and Distributions. 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 any 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 except the Existing Events of Default, and (B)
between the Closing Date and December 31, 1995, Borrowers
shall be entitled to purchase 300 shares of NCC stock not
otherwise purchased on or about the Closing Date at a
price not to exceed $5000.00, provided that such shares
are delivered to the Collateral Agent to be held subject
to the Pledge Agreement.
v. Section 5.31 of the Loan Agreement is hereby amended
in its entirety to read as follows:
SECTION 5.31 Inventory. The Borrowers will not
permit (A) the aggregate value of all Inventory of the
Borrowers, as reflected on the year-end audited Financial
Statements provided to the Banks for the fiscal period
ending December 31, 1996, to exceed $170,000,000.00 or
(B) the aggregate value of all Inventory of the Borrowers
located in Mexico to exceed $3,500,000.00 at any time
after the Second Amendment Closing Date if the Banks do
not perfect their security interests in the Inventory of
Borrowers located in Mexico due to the requirement that
weekly filings are required in order to do so.
w. Section 5.32 of the Loan Agreement is hereby amended
in its entirety to read as follows:
SECTION 5.32 Management Consultant. Borrowers are
presently engaging Zolfo Cooper, LLC, to determine the
cause of the rapid build-up of Borrowers' inventory, to
review and report upon the effectiveness of Borrowers'
inventory reduction plan, and inventory accounting and
production planning systems, and to review and report on
such other matters as reasonably determined by the Agent.
Unless the Agent informs Borrower that the services of
Zolfo Cooper or a replacement management consultant
satisfactory to the Majority Banks are no longer desired
by the Agent, at the direction of the Majority Banks,
Borrowers shall continue to engage such management
consultant until Borrowers' Leverage Ratio, Tangible Net
Worth, Fixed Charge Coverage Ratio and ratio of Funded
Debt to Operating Cash Flow each have reached such levels
at such times as would be in compliance with Sections
5.19, 5.20, 5.21 and 5.22 as in effect prior to the First
Amendment to Loan Agreement. Borrowers shall cooperate
fully with such management consultant, shall permit the
Agent to contact and discuss with such management
consultant its progress and findings from time to time,
and cause such management consultant to prepare and
deliver to the Banks and Borrowers written reports, in
form and detail reasonably satisfactory to the Agent. In
addition, Borrowers shall continue their search for a new
chief financial officer.
x. The Loan Agreement is hereby amended to add a new
Section 5.34 to read as follows:
SECTION 5.34 Minimum Cumulative EBIT. Borrowers
will not permit Cumulative EBIT for all of the preceding
fiscal quarters during the calendar year 1996 (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:
Date Minimum EBIT
through the fiscal quarter ending
September 30, 1996 $6,500,000.00
through the fiscal quarter
ending December 31, 1996
$12,000,000.00
y. The Loan Agreement is hereby amended to add a new
Section 5.35 to read as follows:
SECTION 5.35 Cumulative EBIT to Interest Expense.
Borrowers will not permit the ratio of (a) Cumulative
EBIT for the four fiscal quarters ending on December 31,
1996 (including the fiscal quarter ending on such date)
to (b) interest expense for such period payable on
account of Borrowers' Total Liabilities to be less than
0.65:1.00.
z. The Loan Agreement is hereby amended to add a new
Section 5.36 to read as follows:
SECTION 5.36 Business Plan. On or about September
30, 1996 but in no event later than October 11, 1996,
Borrowers shall submit to the Agent for the benefit of
the Banks their 1997 business plan in form and detail
satisfactory to the Majority Banks consistent with
representations set forth therein and in the Second
Amendment to Loan Agreement.
aa. The Loan Agreement is hereby amended to add a new
Section 5.37 to read as follows:
SECTION 5.37 Ernst & Young Audit; Business
Consultant. (b) Borrowers shall cause Ernst & Young to
undertake a complete audit of Borrowers' books and
records as of July 31, 1996 (the "E&Y Audit"), and
provide among other things, a determination of the
Borrower's Tangible Net Worth as of July 31, 1996 (the
"E&Y Tangible Net Worth"). Borrowers shall cooperate
fully with Ernst & Young, shall cause Ernst & Young to
grant the Agent open access to Ernst & Young in order to
discuss and review its progress and findings from time to
time, and shall cause Ernst & Young to prepare and
deliver to the Banks and Borrowers a draft of the E&Y
Audit in accordance with GAAP, subject only to debt
classification issues, on or about October 30, 1996 but
in no event later than November 12, 1996, and to deliver
to the Banks and Borrowers the final E&Y Audit on or
about November 15, 1996 but in no event later than
November 27, 1996. The E&Y Tangible Net Worth shall be
the amount as set forth in the final E&Y Audit; provided
however that for purposes of testing Borrowers'
compliance with the covenant set forth in Section 5.20
hereof, if the E&Y Audit is not yet in final form at the
time such covenant is to be tested in accordance with the
provisions hereof, the E&Y Tangible Net Worth shall be
the amount as set forth in the draft E&Y Audit.
(b) Borrowers shall pay all fees and expenses of the
business consultant, if any, retained by the Banks and the
Noteholders pursuant to Section 4.5 of the Forbearance
Agreement.
bb. The Loan Agreement is hereby amended to add a new
Section 5.38 to read as follows:
SECTION 5.38 Fixed Asset Appraisals. The
Borrowers will obtain appraisals satisfactory in form and
substance to the Banks of all real estate, machinery and
equipment owned by the Borrowers and located in the
United States by September 30, 1996, prepared by an
independent appraiser(s) acceptable to the Banks. Copies
of such appraisals will be delivered by the Borrowers
promptly upon receipt to each Bank and in no event later
than October 11, 1996.
cc. The Loan Agreement is hereby amended to add a new
Section 5.39 to read as follows:
SECTION 5.39 Borrowers' Deposit Accounts. Borrowers
shall take all steps necessary to perfect the Banks'
security interests in each of the deposit accounts
maintained at a Bank (each a "Retail Bank") used by the
Borrowers' retail locations, which security interests
shall be perfected by letter agreements, as to each
deposit account maintained by Maidenform or any other
Borrower at a Retail Bank, among such Retail Bank, the
Collateral Agent and Maidenform or such other Borrower.
Borrowers covenant that they shall use their best efforts
to cause all of the Retail Banks to execute such letter
agreements and in any event within sixty (60) days after
the Second Amendment Closing Date shall cause no less
than seventy-five percent (75%) of the Retail Banks to
execute such letter agreements. Borrowers agree that
such best efforts shall include, where a Retail Bank
refuses to sign such a letter agreement and an alternate
commercial bank is available, moving the account of a
retail location to a new Retail Bank that has executed
such a letter agreement.
dd. The Loan Agreement is hereby amended to add a new
Section 5.40 to read as follows:
SECTION 5.40 Amendments to Mortgages. Borrowers shall,
as soon as possible and in no event later than fifteen
(15) days after the Second Amendment Closing Date,
execute amendments to the New York Mortgage and the
Florida Mortgage to confirm that the obligations under
the Second Term Loan are secured thereby and execute the
Second North Carolina Mortgage to secure the Second Term
Loan, which amendments and Second North Carolina Mortgage
shall be duly executed and acknowledged in form suitable
for recording. Borrowers shall obtain title insurance
endorsements for such amendments insuring the New York
Mortgage and Florida Mortgage, as amended, as valid first
priority mortgage liens, bringing down title to the date
of recordation. Borrowers shall pay all recording costs,
documents preparation costs and title insurance premiums.
ee. The Loan Agreement is hereby amended to add a new
Section 5.41 to read as follows:
SECTION 5.41 Ernst & Young Audit. Borrowers agree that
at the time the E&Y Audit is delivered to the Borrowers,
the Banks shall be satisfied that E&Y has agreed to
deliver the E&Y Audit to the Banks and the Noteholders as
well as the Borrowers, and that E&Y is aware of, and has
consented to, the reliance by the Banks and the
Noteholders on the E&Y Audit.
ff. The second sentence of Section 8.4 of the Loan
Agreement is hereby amended to read as follows:
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, (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
except to the extent otherwise consistent with the terms
of this Agreement and the Security Documents, (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, (11) a
change in the definition of Borrowing Base or any
component thereof, (12) a change in the conditions for
funding Advances as set forth in Section 3.2 hereof, (13)
a change in the definition of Credit Limit, or (14) a
change in the definition of Overadvance, 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.
gg. Section 8.14 of the Loan Agreement is hereby amended
to read as follows:
Any Bank may sell participations in its Pro Rata Share of
the Loans to another Person (each such Person, a
"Participant Bank") or, with the prior approval of the
Borrowers and the Agent, which approval shall not be
unreasonably withheld, assign up to 100% of its Pro Rata
Share of all, but not less than all, of the Loans in
equal Pro Rata Shares as to each Loan (but in the case of
assignments, in an amount not less than $5,000,000.00 in
the aggregate of all of the Loans assigned) to another
Person; 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 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, (i)
notwithstanding any provisions in this Section 8.14, the
Sale and Assignment Agreement of even date herewith
between CoreStates and NBD is permitted hereunder, and
(ii) any Bank may assign and pledge, up to 100% of its
Pro Rata Share of all, but not less than all, of its
Loans and Notes to (1) with the prior approval of the
Agent, which approval shall not be unreasonably withheld,
any other Bank, (2) any affiliate of such Bank or (3) 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;
provided, however that if the Borrowers and the Agent
consent to an assignment by a Bank of all or a part of
its Pro Rata Share of the Loans as set forth above, then
the assigning Bank shall be released from its obligations
hereunder with respect to the part of the Loans sold by
such assigning Bank. In the event that any Bank assigns
all or a portion of its Pro Rata Share of its Commitment,
its Term Note and its Second Term Note as permitted under
this Section 8.14, the Borrowers will execute and deliver
replacement Notes in the form of Exhibit 2.3 hereto upon
the request of the Agent and against return of the Notes
being replaced.
hh. The Loan Agreement is hereby amended to add a new
Section 8.17 to read as follows:
SECTION 8.17 Counsel for Banks. The Banks shall, at
Borrowers' expense, engage legal counsel selected by all
the Banks, which counsel shall represent the Banks and
shall be independent from counsel representing the Agent.
The counsel selected by the Banks shall not duplicate the
work of counsel representing the Agent except when
reasonably necessary.
ii. The Loan Agreement is hereby amended to add Exhibit
2.1A attached hereto as Exhibit 2.1A to the Loan Agreement and
to substitute Exhibits 2.1 and 2.2.1 hereto for, respectively,
Exhibits 2.1 and 2.2.1 to the Loan Agreement.
3. Security Interests. The Borrowers acknowledge and
agree that the Borrowers' obligations under the Loan
Agreement, the Term Loan Notes, the Revolving Credit Notes and
the Second Term Loan Notes were and are secured by, among
other things, the Security Documents.
4. Perfection of Security Interests. Each Borrower
covenants to the Agent, the Banks and the Issuing Bank that,
on the direction of the Majority Banks and in no event later
than sixty (60) days after the Second Amendment Closing Date,
it will fully cooperate with the Agent, take any action, pay
all fees, and execute all documents requested by the Agent in
connection with the perfection of any security interests and
liens granted under the Security Documents, including without
limitation the security interests and liens against all
domestic trademarks, tradenames, logos and other intellectual
property of the Borrowers, assets of Borrowers located outside
the United States (except inventory located in Mexico, if
weekly filings are required to perfect the security interests
therein) and the security interests in each deposit account
maintained by Maidenform or any other Borrower at a Retail
Bank, which security interests were granted under Section 1.5
of the Security Agreement.
5. Outstanding Indebtedness. This Amendment is an
acknowledgement of the outstanding indebtedness presently owed
by each Borrower, jointly and severally, to the Banks and the
outstanding indebtedness owed by the Borrowers to the Banks as
set forth on Exhibit 5 hereto, and reaffirmation by Borrowers
to pay the indebtedness to the Agent on account of the Banks
in full according to the terms of the Loan Agreement.
6. Representations and Warranties. Each Borrower
represents and warrants to the Agent, the Banks and the
Issuing Bank that (a) the representations and warranties of
Borrowers contained in the Loan Agreement are true and correct
as of the date hereof except for (i) representations and
warranties which, by their express terms, relate to a
particular period or date which has since passed, and (ii)
representations and warranties of Borrowers contained in the
Loan Agreement with respect to the subject matter contained on
Exhibits 4.5, 4.16 and 5.14, which the Borrowers represent and
warrant are true and correct as of the date hereof as amended
by the Supplement to Exhibit 4.5, Supplement to Exhibit 4.16
and Supplement to Exhibit 5.14 respectively, which are
attached hereto and made a part hereof, (b) the Borrowers own
no real property other than the Properties, and the Borrowers
continue to own good and valid title to the Properties, (c)
the Borrowers' Equipment and Inventory are located at the
locations set forth on Exhibit 4.12 to the Loan Agreement and
at no other location, (d) the Borrowers' chief executive
officers and books and records are located at the locations
set forth on Exhibit 4.12 to the Loan Agreement and at no
other location, (e) the Borrowers own no other domestic
registered Marks (as that term is defined in the Trademark
Agreement) other than those set forth on Schedule A to the
Trademark Agreement and on Schedule A to the Second Trademark
Agreement (as such term is defined hereinafter), (f) except
those covenants that Borrowers have failed to comply with as
set forth in Section 2.2(a) of the Forbearance Agreement,
Borrowers are in compliance with the covenants contained in
the Loan Documents as amended hereby, (g) after giving effect
to this Amendment, there exists no Event of Default or
Unmatured Event of Default under the Loan Agreement except the
Existing Events of Default, (h) there exists no event of
default or event which with the passage of time or giving of
notice or both would constitute an event of default under any
other agreement for borrowed money to which Borrowers (or any
of them) are a party not otherwise waived in writing by the
creditor thereof, (i) the conditions precedent set forth in
Paragraph 8 hereof have been fully satisfied, and (j) the
projections provided to the Banks as a condition precedent
hereof (the "Projections") are accurate based on the
information available to the Borrowers and are based on
assumptions that are reasonable in light of the information
available to the Borrowers, and the Borrowers believe they are
able to meet their financial covenants and other obligations
under the Loan Agreement and the Note Purchase Agreement
through the Forbearance Period.
7. Defenses. Borrowers acknowledge that the Loan
Documents continue in full force and effect and that Borrowers
have no charge, lien, claim or offset against the Banks, or
defenses to enforcement of the Loan Documents by the Agent or
the Collateral Agent on behalf of the Banks.
8. Conditions Precedent. The obligation of the Banks
hereunder is conditioned upon satisfaction of the following
conditions precedent:
a. Borrowers shall deliver to the Agent this Amendment
duly executed by Borrowers;
b. Borrowers shall deliver or cause to be delivered to
the Agent:
(1) an amendment to the Intercreditor Agreement in form
and substance acceptable to all the Banks duly executed by
Borrowers, the Banks, the Noteholders, the Agent, the Issuing
Bank and the Collateral Agent, together with amendments to the
Private Placement Notes and related documents, duly executed
by the Borrowers and the Noteholders containing amendments to
the terms thereof consistent with the terms of this Amendment
and otherwise acceptable to all the Banks;
(2) the Forbearance Agreement, duly executed by the
Borrowers and the Noteholders;
(3) the Second Trademark Agreement, assigning to the
Collateral Agent a security interest in all registered and
unregistered trademarks, servicemarks and trade names and all
trademark, servicemark or trade name applications owned by or
(to the extent permitted by the licensor) licensed to the
Borrowers, and listing on Schedule A thereon all domestic
registered Marks (as that term is defined in the Second
Trademark Agreement) of the Borrowers, other than those listed
on Schedule A to the Trademark Agreement, duly executed and
acknowledged and in form suitable for recording;
(4) all other amendment and modification documents
requested by the Agent in connection herewith;
(5) certified copies of (i) resolutions of each of
Borrowers authorizing the execution of this Amendment, all
modification documents to which such Borrower is a party and
all transactions contemplated herein and (ii) each document
evidencing any other necessary corporate action and any
required approvals from governmental authorities for each of
such Borrowers with respect to this Amendment and the other
documents contemplated hereby;
(6) a certificate dated as the date of this Amendment by
the Secretary or an Assistant Secretary of each of Borrowers
stating that the Articles and by-laws of such Borrower have
not been amended since March 29, 1996, except as stated in
said certificate, with copies of all amendments attached;
(7) a favorable opinion of outside counsel for Borrowers
dated the date of this Amendment on such matters as the Agent
shall require and in form and substance reasonably
satisfactory to the Agent;
(8) a certificate dated the date of this Amendment 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 Amendment and the Loan Documents and
the other documents or certificates of such Borrower to be
executed and delivered pursuant hereto;
(9) the Projections, in form and substance satisfactory
to the Majority Banks, and certified to by an executive
officer of the Borrowers; and
(10) such other documents as may be reasonably requested
by the Banks.
c. There shall have been no material adverse change in
the financial condition, assets, nature of the assets,
operations or prospects of Borrowers which has not been
previously disclosed in writing to the Agent and the Banks.
d. Borrowers shall pay to the Agent the portion of the
Restructuring Fee and the Agent's Fee due on the date of this
Amendment, which fees shall be due and payable upon execution
of this Amendment and shall be deemed fully earned upon
execution and non-refundable when paid.
e. Borrowers shall pay all costs and out-of-pocket
expenses of the Banks and the Agent (including, without
limitation, travel expenses and reasonable fees and costs of
the Agent's and the Banks' primary attorneys, including in-
house counsel, and local counsel provided that Borrowers'
obligations with respect to attorney's fees of the Banks,
other than the Agent and local counsel, shall be limited to
$5,000.00 per Bank with respect to attorneys' fees incurred by
each Bank in connection with this Amendment) in connection
with the amendment of the Loan Agreement and modification of
the Loan Documents which includes, among other things, the
negotiation and preparation of this Amendment and related
modification documents, all related filings and recordation
fees and taxes, and the enforcement of the Loan Agreement and
all costs and expenses incurred in connection with the above
and recordation fees and taxes.
f. The representations and warranties set forth in
Paragraph 6 are true, correct and not misleading in any
material respect.
9. Release. As a material inducement to the Banks, the
Agent and the Issuing Bank to enter into this Amendment which
is to the direct advantage and benefit of the Borrowers, on
behalf of them and all of their respective successors and
assigns, the Borrowers (A) do hereby remise, release, acquit,
satisfy and forever discharge the Banks, the Agent and the
Issuing Bank and all of their respective past, present and
future affiliates, officers, directors, employees, agents,
attorneys, participants, heirs, successors and assigns from
any and all manner of debts, accountings, bonds, warranties,
representations, covenants, promises, contracts,
controversies, agreements, liabilities, obligations, expenses,
damages, judgments, executions, actions, claims, demands and
causes of action of any nature whatsoever, whether at law or
in equity, either now accrued or hereafter maturing, whether
known or unknown, which the Borrowers now have or hereafter
can, shall or may have by reason of any matter, cause or
thing, from the beginning of the world to and including the
date of this Amendment with respect to any matters,
transactions, occurrences, agreements, actions, events arising
out of, in connection with or relating to the Borrowers'
obligations with respect to the Loan Documents, including, but
not limited to, the administration or funding by the Banks of
any loan or transaction giving rise to any of such obligations
and the transactions described therein or the indebtedness or
obligations evidenced and secured thereby, and the collateral;
and (B) do hereby covenant and agree never to institute or
cause to be instituted or continue prosecution of any suit or
other form of action or proceeding of any kind or nature
whatsoever against the Banks, the Agent or the Issuing Bank,
or any of their respective past, present or future affiliates,
officers, directors, employees, agents, attorneys,
representatives, participants, heirs, successors or assigns,
by reason of or in connection with any of the foregoing
matters, claims or causes of action; provided, however, that
the foregoing release and covenant not to sue shall not apply
to any claims arising after the date of the Amendment with
respect to acts, occurrences or events after the date of this
Amendment.
10. Miscellaneous. The indebtedness evidenced by the
Loan Agreement and the Notes shall continue to be secured as
set forth in the Loan Agreement as amended by this Amendment
and all of the Security Documents, including those Security
Documents modified in connection herewith. This Amendment
contains all of the modifications to the Loan Agreement. No
further modifications shall be deemed effective, unless in
writing executed by all parties, or in the case of amendments
that may be approved by the Majority Banks, by the Majority
Banks and the Borrowers. This Amendment shall be binding upon
the parties hereto, their successors and assigns. Except as
expressly modified and amended herein, the Loan Agreement and
all documents executed in connection with the Loan Agreement,
will remain in full force and effect in accordance with their
respective terms. This Amendment shall be construed and
enforced in accordance with the laws of the Commonwealth of
Pennsylvania. This Amendment 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 Amendment by signing any such counterpart. This
Amendment shall become effective when it shall have been
executed by Borrowers, the Agent, the Issuing Bank and the
Banks, and it shall thereafter be binding upon and inure to
the benefit of Borrowers, the Agent, the Issuing Bank and the
Banks and their respective successors and assigns, except that
no Borrower shall have the right to assign any right or
obligation hereunder or any interest herein. The Loan
Agreement, as amended hereby, shall remain in full force and
effect. Execution of this Amendment shall not constitute a
novation between Borrowers and the Banks. Each of the parties
acknowledges and agrees that the signature pages to this
Agreement and each of the other agreements, instruments,
certificates and documents being executed and delivered in
connection herewith or therewith are being delivered via
facsimile transmission and that, upon satisfaction of the
conditions precedent, all such documents shall be in full
force and effect. Each of the parties further acknowledges
and agrees that any amendments, modifications, consents and
waivers in respect hereof and thereof shall also be in full
force and effect upon the delivery of signature pages thereto
via facsimile transmission and the satisfaction of all other
conditions to their effectiveness, and that all of the faxed
signature pages referred to in this Section shall be accepted
by such parties as, and shall be deemed for all purposes to
constitute, legally admissible evidence in a court of law as
to the execution of all such documents without the need to
produce original signature pages thereto.
11.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have caused this Amendment to be executed by
their respective officers thereunto duly authorized, as of the
date first above written.
MAIDENFORM WORLDWIDE, INC.
BETEX, S.A. MAIDENFORM, INC.
CREACIONES TEXTILES de NCC INDUSTRIES, INC.
MERIDA, S.A. de C.V. CRESCENT INDUSTRIES, INC.
ELIZABETH NEEDLE CRAFT, INC.
JAMAICA NEEDLECRAFT, LTD.
MAIDENFORM INTERNATIONAL, LTD. By
NICHOLAS NEEDLECRAFT, INC. Name:
Title:
By_________________________
Name:
(as to all Borrowers listed
above)
Title:
(as to all Borrowers listed above)
Attest: Attest:
CORESTATES BANK, N.A. COMERICA BANK
By_______________________ By_______________________
Name: Name:
Title: Title:
THE CHASE MANHATTAN BANK NATIONSBANK, N.A.
By_______________________ By_______________________
Name: Name:
Title: Title:
CORESTATES BANK, N.A., as Agent NATIONAL CITY BANK
By_______________________
By_______________________ Name:
Name: Title:
Title:
NBD BANK
By_______________________
Name:
Title:
EUROPEAN AMERICAN BANK SUMMIT BANK
By_______________________ By______________________
Name: Name:
Title: Title:
Exhibit 2.1A
CoreStates 18.8987%
Nationsbank 16.4706%
Chase 14.1176%
City 12.6471%
Comerica 12.6471%
NBD 10.5131%
Summit 7.3529%
EAB 7.3529%
Total 100.0000%
EXHIBIT 2.1
PRIOR TO SECOND AMENDMENT CLOSING DATE:
ORIGINAL
BANK TERM LOAN REVOLVING CREDIT PRO
RATA SHARE
CoreStates $ 8,823,529.41 $ 21,176,470.59
17.6471%
Nationsbank 8,235,294.12 19,764,705.88
16.4706%
Chase 7,058,823.53 16,941,176.47
14.1176%
City 6,323,529.41 15,176,470.59
12.6471%
Comerica 6,323,529.41 15,176,470.59
12.6471%
NBD 5,882,352.94 14,117,647.06
11.7647%
Summit 3,676,470.59 8,823,529.41
7.3529%
EAB 3,676,470.59 8,823,529.41
7.3529%
Total: $50,000,000.00 120,000,000.00
100.0000%
ON AND AFTER SECOND AMENDMENT CLOSING DATE:
ORIGINAL
BANK TERM LOAN REVOLVING CREDIT PRO
RATA SHARE
CoreStates $ 9,424,281.00 $ 22,678,347.94
18.8987%
Nationsbank 8,235,294.12 19,764,705.88
16.4706%
Chase 7,058,823.53 16,941,176.47
14.1176%
City 6,323,529.41 15,176,470.59
12.6471%
Comerica 6,323,529.41 15,176,470.59
12.6471%
NBD 5,281,601.35 12,615,769.71
10.5131%
Summit 3,676,470.59 8,823,529.41
7.3529%
EAB 3,676,470.59 8,823,529.41
7.3529%
Total: $50,000,000.00 120,000,000.00
100.0000%
EXHIBIT 2.2.1
PRIOR TO SECOND AMENDMENT CLOSING DATE:
BANK SECOND TERM LOAN PRO RATA SHARE
CoreStates $ 5,882,360.00 29.4118%
Nationsbank 3,294,120.00 16.4706%
Chase 2,823,520.00 14.1176%
City 2,529,420.00 12.6471%
Comerica 2,529,420.00 12.6471%
Summit 1,470,580.00 7.3529%
EAB 1,470,580.00 7.3529%
Total: $20,000,000.00 100.0000%
ON AND AFTER SECOND AMENDMENT CLOSING DATE:
SECOND TERM TARGET SECOND AMENDMENT
BANK LOAN NOTE AMOUNT PERCENTAGE CLOSING DATE
PERCENTAGE
CoreStates$ 3,969,095.21 18.8987% 19.8455%
Nationsbank 3,294,120.00 16.4706% 16.4706%
Chase 2,823,520.00 14.1176% 14.1176%
City 2,529,420.00 12.6471% 12.6471%
Comerica 2,529,420.00 12.6471% 12.6471%
NBD 1,913,264.79 10.5131% 9.5663%
Summit 1,470,580.00 7.3529% 7.3529%
EAB 1,470,580.00 7.3529% 7.3529%
Total: $20,000,000.00 100.0000% 100.0000%
Exhibit 5
Outstanding Indebtedness
AGGREGATE AMOUNT OF EACH LOAN HELD BY ALL BANKS:
Revolving Credit $104,869,856.77
Term Loan 48,000,000.00
Second Term Loan 20,000,000.00
AMOUNT OF TERM LOAN HELD BY EACH BANK
AS OF SECOND AMENDMENT CLOSING DATE:
BANK TERM LOAN
CoreStates $ 9,071,339.16
Nationsbank 7,905,882.36
Chase 6,776,470.59
City 6,070,588.24
Comerica 6,070,588.24
NBD 5,046,307.89
Summit 3,529,411.76
EAB 3,529,411.76
Total: $48,000,000.00
FORBEARANCE AGREEMENT
FORBEARANCE AGREEMENT (this "Agreement"), dated as of
September 11, 1996, by and among CORESTATES BANK, N.A.
("CoreStates"), THE CHASE MANHATTAN BANK (successor by merger
to The Chase Manhattan Bank, N.A.) ("Chase"), NATIONAL CITY
BANK ("NCB"), NATIONSBANK, N.A. ("Nationsbank"), NBD BANK
("NBD"), COMERICA BANK ("Comerica"), EUROPEAN AMERICAN BANK
("EAB") and SUMMIT BANK (formerly known as United Jersey Bank)
("Summit"; CoreStates, Chase, NCB, Nationsbank, NBD, Comerica,
EAB and Summit are hereinafter referred to as the "Banks"),
CoreStates, as agent for the Banks (CoreStates, in such
capacity, and any successor agent is hereinafter referred to
as the "Agent"), CoreStates, as issuing bank for letters of
credit pursuant to the terms of the Loan Agreement, as that
term is hereinafter defined, (CoreStates, in such capacity,
and any successor issuing bank is hereinafter referred to as
the "Issuing Bank"; the Banks, the Issuing Bank and the Agent
are hereinafter referred to collectively as the "Bank Group");
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY ("Mass Mutual"),
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY ("Principal") and TMG
LIFE INSURANCE COMPANY ("Mutual"; Mass Mutual, Principal and
Mutual are hereinafter referred to collectively as the
"Noteholders", and the Bank Group and the Noteholders are
hereinafter referred to collectively as the "Lenders" and each
member of the Bank Group and each Noteholder is hereinafter
referred to as a "Lender"); MAIDENFORM WORLDWIDE, INC.
("Worldwide"), MAIDENFORM, INC. ("Maidenform"), BETEX, S.A.
("Betex"), CREACIONES TEXTILES DE MERIDA, S.A. DE C.V.
("Creaciones"), ELIZABETH NEEDLE CRAFT, INC. ("Elizabeth"),
JAMAICA NEEDLECRAFT, LTD. ("Jamaica"), MAIDENFORM
INTERNATIONAL, LTD. ("International"), NICHOLAS NEEDLECRAFT,
INC. ("Nicholas"), NCC INDUSTRIES, INC. ("NCC") and CRESCENT
INDUSTRIES, INC. ("Crescent"; and together with Worldwide,
Maidenform, Betex, Creaciones, Elizabeth, Jamaica,
International, Nicholas, and NCC, collectively, the
"Borrowers"); and CoreStates, as collateral agent for the
Lenders (CoreStates, in such capacity, and any successor
collateral agent is hereinafter referred to as the "Collateral
Agent").
RECITALS
I. The Bank Group, the Borrowers and Maidenform
Worldwide, Inc., a New York corporation ("Worldwide-NY")
executed a Loan Agreement dated as of April 26, 1995 (as
amended by the First Amendment to Loan Agreement dated as of
March 29, 1996, the "Original Loan Agreement," and as further
amended as of the date hereof, the "Loan Agreement") pursuant
to which (i) the Bank Group made available to the Borrowers
and Worldwide-NY a first term loan in the maximum principal
amount of $50,000,000.00 (the "First Term Loan") and a
revolving credit facility in the maximum principal amount of
$120,000,000.00 (the "Revolving Credit"), and (ii) certain of
the Banks made available to the Borrowers a second term loan
in the maximum principal amount of $20,000,000.00 (the "Second
Term Loan"). The Noteholders, the Borrowers and Worldwide-NY
entered into separate Amended and Restated Note Purchase
Agreements dated as of April 1, 1995 (as amended by the
Amendment Agreement dated as of March 29, 1996, the "Original
Note Purchase Agreement," and as further amended as of the
date hereof, the "Note Purchase Agreement") pursuant to which
the Borrowers executed and delivered to the Noteholders their
joint and several senior notes in the aggregate principal
amount of $30,000,000.00 (the "Private Placement Notes"). The
notes issued under the Loan Agreement and the Private
Placement Notes are hereinafter referred to collectively as
the "Notes." The Loan Agreement and the Note Purchase
Agreement are hereinafter referred to collectively as the
"Agreements".
J. The Borrowers and the Lenders are parties to an
Intercreditor Agreement dated as of April 26, 1995 (as amended
by the Amendment to Intercreditor Agreement dated as of March
29, 1996, the "Original Intercreditor Agreement," and as
further amended and restated as of the date hereof, the
"Intercreditor Agreement") pursuant to which the parties
thereto have agreed to certain matters with respect to, among
other things, the Collateral.
K. One or more events of default presently exist under
the Loan Agreement (the "Existing Bank Events of Default") and
one or more events of default presently exist under the Note
Purchase Agreement (the "Existing NPA Events of Default"; the
Existing Bank Events of Default and Existing NPA Events of
Default are hereinafter collectively referred to as the
"Existing Events of Default") entitling the Lenders to pursue
their rights and remedies in respect thereof, and the
Borrowers have acknowledged that, absent a restructuring,
further events of default will occur in the near future.
Attached hereto as Exhibit A is a schedule listing the
Existing Events of Default.
L. The Borrowers have requested that, during the
Forbearance Period (as defined below), the Lenders (i) amend
certain terms of the Agreements, and (ii) forbear from
exercising certain of their rights and remedies, all as more
particularly set forth in this Agreement.
M. Subject to the terms and conditions hereinafter set
forth, the Lenders are willing to agree to the requested
amendments and forbearance terms, all as more particularly set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
AGREEMENT:
. DEFINED TERMS.
II.A. Definitions. The following terms, as used in
this Agreement, shall have the meanings set forth below or in
the section of this Agreement referenced below (and to the
extent any of the following terms are also defined in the Loan
Agreement, the Note Purchase Agreement or the Intercreditor
Agreement, the following definitions shall, for the purposes
of this Agreement, expressly override such definitions in the
Loan Agreement, the Note Purchase Agreement or the
Intercreditor Agreement). All terms capitalized but not
otherwise defined herein shall have the meaning given to such
terms in the Loan Agreement as in effect on the date hereof:
"Agreements" -- Recital A.
"Bank Documents" means, collectively, this Agreement, the
Loan Documents and the Loan Agreement Amendment.
"Effective Date" means the date on which each of the
conditions precedent specified in Section VII hereof shall
have occurred or been waived in writing by the parties hereto.
"Existing Bank Events of Default" -- Recital C.
"Existing Events of Default" -- Recital C.
"Existing NPA Events of Default" -- Recital C.
"Fee Pro Rata Basis" means, on any date that a fee shall
be payable to the Lenders in accordance with Section 2 or
Section C hereof, shared between the Banks and the Noteholders
with (i) the Banks' share of such fee to be calculated using a
fraction the numerator of which shall be the sum of (A) the
principal amount outstanding on such date under the First Term
Loan plus (B) the Commitment on such date under the Revolving
Credit including, without limitation, the Commitment with
respect to undrawn Letters of Credit issued and outstanding
under the Loan Agreement on such date minus any amounts held
in the Letter of Credit Cash Collateral Account, and the
denominator of which shall be the sum of (C) the aggregate
principal amount outstanding on such date under the First Term
Loan and the Private Placement Notes, plus (D) the Commitment
on such date under the Revolving Credit including, without
limitation, the Commitment with respect to undrawn Letters of
Credit issued and outstanding under the Loan Agreement on such
date minus any amounts held in the Letter of Credit Cash
Collateral Account, and (ii) the Noteholders' share of such
fee to be calculated using a fraction the numerator of which
shall be the principal amount outstanding under the Private
Placement Notes on such date and the denominator of which
shall be the sum of (E) the aggregate principal amount
outstanding on such date under the First Term Loan and the
Private Placement Notes, plus (F) the Commitment on such date
under the Revolving Credit including, without limitation, the
Commitment with respect to undrawn Letters of Credit issued
and outstanding under the Loan Agreement on such date minus
any amounts held in the Letter of Credit Cash Collateral
Account.
"First Term Loan" -- Recital A.
"Forbearance Period" means the period between the
Effective Date and the Termination Date, inclusive.
"Loan Agreement Amendment" means the Second Amendment to
Loan Agreement being entered into contemporaneously herewith
by the Borrowers and the members of the Bank Group in the form
of Exhibit B attached hereto.
"Net Pension Reversion Proceeds" -- Section C hereof.
"Noteholder Documents" means, collectively, this
Agreement, the Note Purchase Agreement, the Private Placement
Notes, the Intercreditor Agreement, the Security Documents,
the NPA Amendment, and the other documents executed in
connection therewith or herewith by the Noteholders or for
their benefit.
"NPA Amendment" means the Second Amendment to Note
Purchase Agreement being entered into contemporaneously
herewith by the Borrowers and the Noteholders in the form of
Exhibit C attached hereto.
"Notes" -- Recital A.
"Private Placement Notes" -- Recital A.
"Relevant Noteholders" means the holder or holders of at
least thirty-four percent (34%) in principal amount of the
Private Placement Notes then outstanding (exclusive of Private
Placement Notes then owned by any one or more of the Borrowers
or its or their subsidiaries or affiliates).
"Required Lenders" means the holders of not less than
66_% of the "Base Denominator" (as such term is defined in the
Intercreditor Agreement).
"Required Noteholders" means the "Required Holders" as
such term is defined in the Note Purchase Agreement as in
effect on the date hereof.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of
capital stock of any of the Borrowers or any Subsidiary (other
than on account of capital stock of a Subsidiary owned legally
and beneficially by any of the Borrowers) now or hereafter
outstanding, whether in cash or other property, and (ii) any
redemption, retirement, purchase or other acquisition, direct
or indirect, of any shares of capital stock of any of the
Borrowers or any Subsidiary (other than on account of capital
stock of a Subsidiary owned legally and beneficially by any of
the Borrowers) now or hereafter outstanding, or of any
warrants, rights or options to acquire any shares of such
stock.
"Revolving Credit" -- Recital A.
"Second Term Loan" -- Recital A.
"Termination Date" means the earlier to occur of (1)
January 17, 1997 and (2) the termination of the Forbearance
Period pursuant to Section B hereof.
"Transaction Documents" means, collectively, the Bank
Documents and the Noteholder Documents.
II.B. Other Definitional and Operational Provisions.
All definitions contained in this Agreement are equally
applicable to the singular and plural forms of the terms
defined. The words "hereof," "herein," and "hereunder" and
words of similar import referring to this Agreement refer to
this Agreement as a whole and not to any particular provision
of this Agreement. Unless otherwise specified, all Section
references pertain to this Agreement. All accounting terms
not specifically defined herein shall be construed in
accordance with generally accepted accounting principles in
the United States. All references herein to sections or
clauses of any other agreement or document shall, unless the
context otherwise requires, be deemed to refer to such
sections as they may be renumbered from time to time in
connection with any amendment thereof. All references herein
to a natural or legal person shall be deemed to refer to such
person and its lawful successors and assigns.
III. . AGREEMENTS BY THE MEMBERS OF THE BANK GROUP.
III.A. Forbearance Provisions.
1. During the Forbearance Period (but not thereafter),
each member of the Bank Group shall forbear from exercising
any rights or remedies it may have under the Bank Documents or
otherwise in respect of (i) any Existing Bank Event of Default
and (ii) any event of default under the Bank Documents
occurring during the Forbearance Period to the extent (and
only to the extent) that such event of default constitutes a
continuation of an Existing Bank Event of Default. For
purposes hereof, the failure of the Borrowers to comply with
the financial tests set forth in the Loan Agreement for fiscal
periods occurring (in part or in whole) during the Forbearance
Period shall (unless overridden pursuant to Section B hereof)
constitute new events of default under the Loan Agreement and
shall not be deemed to constitute continuations of Existing
Bank Events of Default.
2. Each of the Borrowers, each member of the Bank Group
and each of the Noteholders agrees that the Existing Bank
Events of Default shall be deemed to have occurred on the
Termination Date and, on and after the Termination Date (but
not before), the Banks (including the Agent acting on their
behalf) may (at their option), unless all of the Existing Bank
Events of Default have been cured (if curable), demand the
immediate repayment of all indebtedness owing under the Bank
Documents, whereupon all such indebtedness shall be
immediately due and payable and shall accrue interest on and
after such date (but not retroactively) at the default rate
specified in the Loan Agreement, and may, subject to the
Intercreditor Agreement, thereupon exercise any rights and
remedies they may have under any of the Bank Documents or
otherwise, all of such rights and remedies being hereby
expressly reserved by the Bank Group.
III.B. Override Provisions. Notwithstanding any
provision herein or in the Loan Agreement to the contrary,
during the Forbearance Period each member of the Bank Group
acknowledges and agrees that operation of the following
provisions of the Loan Agreement shall be suspended and the
provisions hereof shall override such suspended provisions and
be deemed to be controlling in all respects. The Bank Group,
the Borrowers and the Noteholders acknowledge and agree that,
upon the termination of the Forbearance Period, all such
suspended provisions shall be immediately and automatically
reinstated in full and, unless the time period (if any) to
which such provisions relate has expired, shall apply as
relevant to all subsequent periods:
1. (i) the Leverage Ratio required to be maintained by
the Borrowers pursuant to Section 5.19 of the Loan Agreement
as of the fiscal quarters ending December 31, 1995, March 31,
1996 and June 30, 1996; (ii) the minimum Tangible Net Worth
required to be maintained by the Borrowers pursuant to Section
5.20 of the Loan Agreement through and including June 30,
1996; (iii) the Fixed Charge Coverage Ratio required to be
maintained by the Borrowers pursuant to Section 5.21 of the
Loan Agreement as of the fiscal quarter ending December 31,
1995 and each fiscal quarter in fiscal year 1996; (iv) the
Ratio of Funded Debt to Operating Cash Flow required to be
maintained by the Borrowers pursuant to Section 5.22 of the
Loan Agreement as of the fiscal quarters ending December 31,
1995, March 31, 1996, June 30, 1996 and September 30, 1996;
(v) the Borrowers' obligation pursuant to Section 5.2(B) of
the Loan Agreement to provide Interim Financial Statements for
the fiscal quarter ending June 30, 1996; (vi) during the
period prior to the Effective Date, the Borrowers' covenant to
repay immediately any amount by which Advances outstanding
under the Revolving Credit plus the Letter of Credit Liability
exceed the Credit Limit as contained in Section 2.3(A) of the
Original Loan Agreement; and (vii) the Borrowers' obligation
to pay the principal installment on the Second Term Loan due
on August 15, 1996 (including the right to charge interest at
the interest rate specified in Section 2.14 of the Loan
Agreement as a result of the Borrowers' breach of the
provisions described in the foregoing clauses (i) through
(vii));
2. the "Events of Default" set forth in Section 6.1 of
the Loan Agreement to the extent (and only to the extent) they
relate to the covenants referred to in Section 1 hereof or to
cross-defaults to the Existing NPA Events of Default;
3. the termination, acceleration and enforcement rights
set forth in Sections 6.2 and 6.3 of the Loan Agreement to the
extent (and only to the extent) such rights are inconsistent
with Section B hereof; and
4. any other provisions of the Loan Agreement to the
extent (and only to the extent) such provisions cannot in any
manner be construed consistently with provisions of this
Agreement.
III.C. Pension Reserve Availability. The second
sentence of Section 4.1(b) of the Intercreditor Agreement
provides that the Borrowers shall apply the first
$3,000,000.00 of certain proceeds (the "Net Pension Reversion
Proceeds") to reduce the principal amount outstanding under
the Revolving Credit. Immediately after such reduction
occurs, the Reserved Amount shall be created in accordance
with, and for the exclusive purpose described in, Section
2.3(A) of the Loan Agreement as in effect on the Effective
Date.
III.D. Continuation of Loan Agreement. Except as
expressly overridden herein or in the Intercreditor Agreement,
all of the terms and provisions of the Loan Agreement and the
promissory notes and other evidences of indebtedness issued in
connection therewith shall remain in full force and effect,
and nothing in this Agreement shall waive, prejudice, impair
or otherwise adversely affect any right, power or remedy of
the Bank Group under the Loan Agreement, such notes and other
evidences of indebtedness, or applicable law.
III.E. Consent to Certain Transactions. The members
of the Bank Group hereby consent to the amendments to the
Original Note Purchase Agreement set forth in the NPA
Amendment, and hereby waive compliance with any provisions of
the Loan Agreement that would otherwise prohibit or condition
such amendments, such waiver to be effective only to the
minimum extent necessary to permit such amendments.
IV. . AGREEMENTS BY THE NOTEHOLDERS.
IV.A. Forbearance Provisions.
1. During the Forbearance Period (but not thereafter),
each Noteholder shall forbear from exercising any rights or
remedies it may have under the Noteholder Documents or
otherwise in respect of (i) any Existing NPA Event of Default
and (ii) any event of default under the Noteholder Documents
occurring during the Forbearance Period to the extent (and
only to the extent) that such event of default constitutes a
continuation of an Existing NPA Event of Default.
2. Each of the Borrowers, each of the Noteholders and
each member of the Bank Group agrees that the Existing NPA
Events of Default shall be deemed to have occurred on the
Termination Date and, on and after the Termination Date (but
not before), the Relevant Noteholders may (at their option),
unless all of the Existing NPA Events of Default have been
cured (if curable), demand the immediate repayment of all
indebtedness to them under the Noteholder Documents, whereupon
all such indebtedness shall be immediately due and payable and
shall accrue interest on and after such date (but not
retroactively) at the default rate specified in the Note
Purchase Agreement, and may, subject to the Intercreditor
Agreement, thereupon exercise any rights and remedies they may
have under any of the Noteholder Documents or otherwise, all
of such rights and remedies being hereby expressly reserved by
each Noteholder.
IV.B. Override Provisions. Notwithstanding any
provision herein or in the Note Purchase Agreement to the
contrary, during the Forbearance Period each Noteholder
acknowledges and agrees that operation of the following
provisions of the Note Purchase Agreement shall be suspended
and the provisions hereof shall override such suspended
provisions and be deemed to be controlling in all respects.
The Noteholders, the Borrowers and the Bank Group acknowledge
and agree that, upon the termination of the Forbearance
Period, all such suspended provisions shall be immediately and
automatically reinstated in full and shall apply to all
subsequent periods:
1. the covenants set forth in Sections 6.6 through 6.10
of the Note Purchase Agreement;
2. the "Events of Default" set forth in Section 8.1 of
the Note Purchase Agreement to the extent (and only to the
extent) they relate to the covenants referred to in Section 1
hereof or to cross-defaults to the Existing Bank Events of
Default;
3. the voting provisions, acceleration rights and
enforcement rights set forth in Sections 8.2(a)(ii) and 8.2(b)
of the Note Purchase Agreement to the extent (and only to the
extent) such voting provisions are inconsistent with Section B
hereof; and
4. any other provisions of the Note Purchase Agreement
to the extent (and only to the extent) such provisions cannot
in any manner be construed consistently with provisions of
this Agreement.
IV.C. Deemed Election To Receive Prepayments. During
the Forbearance Period, each Noteholder shall be deemed to
have made the election described in Section 4.4 of the Note
Purchase Agreement to receive the relevant mandatory principal
prepayments referred to in said Section 4.4, with such
prepayments to be made by the Borrowers to the Noteholders on
the same date that the corresponding prepayments on the First
Term Loan are made by the Borrowers to the Agent for the
benefit of the Banks, unless prior to such date a Noteholder
notifies the Borrowers in writing of its election not to
receive the relevant mandatory prepayment.
IV.D. Continuation of Note Purchase Agreement and
Notes. Except as expressly overridden herein or in the
Intercreditor Agreement, all of the terms and provisions of
the Note Purchase Agreement and the Private Placement Notes
shall remain in full force and effect, and nothing in this
Agreement shall waive, prejudice, impair or otherwise
adversely affect any right, power or remedy of the Noteholders
under the Note Purchase Agreement, the Private Placement Notes
or applicable law.
IV.E. Consent to Certain Transactions. The
Noteholders hereby consent to the amendments to the Original
Loan Agreement set forth in the Loan Agreement Amendment, and
hereby waive compliance with any provisions of the Note
Purchase Agreement that would otherwise prohibit or condition
such amendments, such waiver to be effective only to the
minimum extent necessary to permit such amendments.
V. . AGREEMENTS BY THE BORROWERS.
V.A. Certain Closing Payments. On or before the
Effective Date the Borrowers shall pay the following amounts
to the following Lenders:
1. interest (at the rate then in effect) accrued
through and including the Effective Date on the Notes to be
paid to each Lender in accordance with the principal amount of
the Note(s) held by such Lender;
2. a restructuring fee of $400,000.00 to be paid to the
Noteholders and the Banks on a Fee Pro Rata Basis;
3. a restructuring fee of $200,000.00 to be paid to the
Banks participating in the Second Term Loan;
4. an agent's fee of $150,000.00 to be paid to the
Agent; and
5. additional interest on the Private Placement Notes
to be paid to the Noteholders in an amount equal to the
difference between (i) the amount of interest that would have
been paid to the Noteholders in respect of the period
commencing on the first date on which the Interest Rate then
in effect on the Loans was increased pursuant to Section 2.14
of the Loan Agreement through and including the Effective Date
assuming the interest rate set forth in Section 1.2(e)(ii) of
the Note Purchase Agreement had been in effect throughout such
period, and (ii) the amount of interest that was actually paid
to the Noteholders or accrued on the Private Placement Notes
in respect of such period.
V.B. Costs and Expenses.
1. On the Effective Date the Borrowers shall pay to the
relevant professionals the amounts required to be paid to them
in accordance with Section 8.e of the Loan Agreement Amendment
and Section 7.6 of the NPA Amendment.
2. On the Effective Date the Borrowers shall pay to
each Lender upon demand (i) the costs of individual counsel
(including, without limitation, in-house counsel) for such
Lender incurred in document review, not to exceed $5,000.00
per Lender, and (ii) travel expenses associated with the
negotiations resulting from the occurrence of the Existing
Events of Default, the administration of the Lenders' credit
facilities during such period, and the negotiation,
documentation and closing of the transactions contemplated
hereby.
3. After the Effective Date the Borrowers shall pay to
each Lender upon demand the travel expenses associated with
the administration of the credit facilities described in the
Transaction Documents (without limiting any other payment or
reimbursement obligations the Borrowers may have under the
various Transaction Documents).
V.C. Additional Restructuring Fee. On the earliest to
occur of (i) the Termination Date, (ii) December 17, 1996, and
(iii) the date (the "Full Prepayment Date") on which all of
the obligations outstanding under the Revolving Credit, the
First Term Loan, the Second Term Loan and the Private
Placement Notes shall be paid in full, the Borrowers shall pay
a restructuring fee of $1,000,000.00 to be shared by the
Noteholders and the Banks on a Fee Pro Rata Basis, provided
that if the Full Prepayment Date occurs prior to December 17,
1996, the amount of such restructuring fee shall automatically
be deemed to have been reduced to $500,000.00.
V.D. Additional Liens. The Borrowers shall grant and
cooperate in the perfection of liens against the Borrowers'
inventory (except in Mexico if weekly filings are required in
order to perfect such lien on inventory in Mexico), accounts
and such other assets (wherever located) for the benefit of
the Lenders as may be required from time to time by the
Collateral Agent. The Borrowers shall, at the Agent's option
with respect to each parcel of real estate in question, either
grant to the Collateral Agent, for the benefit of the Banks
participating in the Second Term Loan, second priority liens
on the Borrowers' domestic real estate to secure the Second
Term Loan, or enter into amendments to the existing Mortgages
to confirm that the Second Term Loan is secured thereby.
V.E. Business Consultant. The Borrowers agree to
cooperate with, provide access to and pay for a business
consultant if such consultant is jointly retained by the
Lenders. The Borrowers' obligations with respect to such
business consultant will be memorialized in an engagement
letter to be entered into among the Borrowers, the Lenders and
such business consultant. Notwithstanding the fact that the
Borrowers shall pay for a business consultant (if one is
retained by the Lenders), such financial consultant will work
on this matter solely for the Lenders, and not for the
Borrowers, any of their principals, any holder of debt (other
than the Lenders) or equity of the Borrowers or any other
party. All work done in respect of any such engagement of a
business consultant by the Lenders shall be confidential to
the Lenders.
V.F. 1997 Business Plan. The Borrowers shall submit
their 1997 business plan to the Lenders on or about September
30, 1996, but in no event later than October 11, 1996.
V.G. Ernst & Young Audit. On or about October 30, 1996,
but in no event later than November 12, 1996, the Borrowers
shall deliver to the Lenders a copy of a complete audit report
prepared by Ernst & Young of the Borrowers' books and records
as at July 31, 1996, in draft form and subject to debt
classification issues. The Borrowers shall deliver to the
Lenders the final form of such audit on or about November 15,
1996, but in no event later than November 27, 1996.
V.H. Fixed Asset Appraisals. On or about September 30,
1996, but in no event later than October 11, 1996, the
Borrowers shall deliver to the Lenders copies of appraisals,
in form and substance reasonably satisfactory to the Lenders,
of the Borrowers' domestic real estate, machinery and
equipment.
V.I. Restricted Payments and Investments. The Borrowers
shall not declare or make any Restricted Payments. The
Borrowers shall not make any "Investments" (as such term is
defined in the Note Purchase Agreement) of the type described
in clauses (f), (g) or (h) of Section 6.11 of the Note
Purchase Agreement.
V.J. Acknowledgment. THE BORROWERS EXPRESSLY ACKNOWLEDGE
AND AGREE THAT THE FORBEARANCE AND OVERRIDE PROVISIONS SET
FORTH IN SECTIONS A, B, A AND B HEREOF ARE EFFECTIVE ONLY
DURING THE FORBEARANCE PERIOD AND THAT, ON AND AFTER THE
TERMINATION DATE, UNLESS ALL EXISTING BANK EVENTS OF DEFAULT
AND EXISTING NPA EVENTS OF DEFAULT HAVE BEEN CURED (IF
CURABLE), THE LOAN AGREEMENT AND THE NOTE PURCHASE AGREEMENT
SHALL BE IN MATERIAL DEFAULT AND THE MEMBERS OF THE BANK GROUP
AND THE NOTEHOLDERS SHALL BE FULLY ENTITLED TO EXERCISE THEIR
RESPECTIVE RIGHTS AND REMEDIES THEREUNDER AND UNDER APPLICABLE
LAW WITHOUT REGARD TO ANY MATTERS TRANSPIRING DURING THE
FORBEARANCE PERIOD OR THE FINANCIAL CONDITION OR PROSPECTS OF
THE BORROWERS AS OF THE TERMINATION DATE. THE BORROWERS
UNDERSTAND THAT THE LENDERS ARE EXPRESSLY RELYING ON THE TERMS
OF THIS SECTION J AND WOULD NOT HAVE ENTERED INTO THIS
AGREEMENT OR OTHERWISE AGREED TO FORBEAR FROM EXERCISING THEIR
RIGHTS AND REMEDIES BUT FOR THE BORROWERS' ACKNOWLEDGMENT AND
AGREEMENT SET FORTH IN THIS SECTION J.
VI. . FORBEARANCE EVENTS OF DEFAULT; REMEDIES.
VI.A. Forbearance Events of Default Defined. If any
of the following Forbearance Events of Default shall have
occurred and be continuing during the Forbearance Period
(whatever the reason for such Forbearance Event of Default and
whether it shall be voluntary or involuntary or by operation
of law or otherwise), the Lenders shall have the rights and
remedies available to them described in Sections B and C
hereof:
1. subject to the forbearance and override provisions
of Sections A and B hereof, the occurrence of an event of
default under the Loan Agreement;
2. (i) any of the Borrowers shall fail to perform or
observe any covenant contained in (A) Sections 6.4, 6.5, 6.12,
6.13, 6.14, 6.15, 6.18, 6.21, 6.24, or 6.26(a) of the Note
Purchase Agreement, or (B) in Sections 4 or 6.3 of the Note
Purchase Agreement to the extent they relate to the payment of
principal, interest or Net Pension Reversion Proceeds, and
such failure continues beyond the applicable grace period (if
any) set forth in the Note Purchase Agreement with respect
thereto, or (ii) the Borrowers shall fail to pay when due the
"True-Up Amount" required to be paid to the Noteholders in
accordance with Section 5.1(b) of the Intercreditor Agreement
and the Banks shall fail to elect to pay such amount pursuant
to, and within the time period set forth in, Section 5.5(a) of
the Intercreditor Agreement;
3. any event of default of the type described in
Section 6.1(E) of the Loan Agreement or Sections 8.1(g),
8.1(h) or 8.1(i) of the Note Purchase Agreement shall occur,
or an "Enforcement Period" (as such term is defined in the
Intercreditor Agreement) shall have commenced;
4. any of the Borrowers shall fail to comply with any
provision of Section V hereof or any other provision of any of
the Transaction Documents (except to the extent such provision
is expressly overridden hereby) other than the provisions
specified in the foregoing clauses (a), (b) and (c) of this
Sections A, and such failure continues beyond the applicable
grace period (if any) set forth in the relevant Transaction
Document with respect thereto; or
5. any warranty, representation or other statement by
or on behalf of any of the Borrowers contained herein or in
any of the Transaction Documents other than the Loan 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,
except to the extent that such matter constitutes an Existing
Bank Event of Default or Existing NPA Event of Default.
VI.B. Termination of the Forbearance Period. Upon
the occurrence of any Forbearance Event of Default and at any
time thereafter during which a Forbearance Event of Default
shall be continuing:
1. if the Forbearance Event of Default shall be of the
type described in Section 3 hereof, the Forbearance Period
shall automatically terminate without demand or notice of any
kind;
2. if the Forbearance Event of Default shall be of the
type described in Sections 1 hereof, the Majority Banks (or
the Agent acting on their instructions) shall be entitled by
written notice to the Borrowers, with a copy to the
Noteholders, to terminate the Forbearance Period with
immediate effect;
3. if the Forbearance Event of Default shall be of the
type described in Sections 2 hereof, the Required Noteholders
shall be entitled by written notice to the Borrowers, with a
copy to the Agent, to terminate the Forbearance Period with
immediate effect; or
4. if the Forbearance Event of Default shall be of the
type described in Sections 4 or 5 hereof, the Required Lenders
(or the Agent acting on their instructions) shall be entitled
by written notice to the Borrowers, to terminate the
Forbearance Period with immediate effect.
VI.C. Consequences of Termination. If the
Forbearance Period shall have been terminated pursuant to
Section B hereof (it being acknowledged and agreed that such
termination of the Forbearance Period shall not terminate any
other provisions of this Agreement that are not by their terms
limited in application to the Forbearance Period), then each
Lender shall be entitled to pursue all of the rights and
remedies available to it pursuant to the Transaction Documents
to which it is a party and any of its other legal or equitable
rights and remedies, subject (as among the Lenders without
creating any rights in the Borrowers) to the terms and
provisions of the Intercreditor Agreement.
VII. . CONDITIONS PRECEDENT. This Agreement shall not
become effective unless all of the following conditions
precedent shall have been satisfied or waived by the parties
hereto on or before September 13, 1996:
VII.A. Execution of this Agreement. Execution and
delivery of faxed signature pages by each of the parties
hereto, to be followed (but not as a condition to closing) by
delivery of original signature pages to (a) Drinker, Biddle &
Reath (9 sets), (b) Hebb & Gitlin (4 sets) and (c) Jones, Day,
Reavis & Pogue (2 sets).
VII.B. Execution of the Loan Agreement Amendment.
Execution and delivery of faxed signature pages to the Loan
Agreement Amendment by each of the parties thereto in form and
substance identical to Exhibit B hereto and the occurrence of
the "Effective Date" under the Loan Agreement Amendment (save
for the condition precedent under the Loan Agreement Amendment
requiring the execution and delivery of this Agreement).
VII.C. Execution of the NPA Amendment. Execution and
delivery of faxed signature pages to the NPA Amendment by each
of the parties thereto in form and substance identical to
Exhibit C hereto and the occurrence of the "Amendment
Effective Date" under the NPA Amendment (save for the
condition precedent under the NPA Amendment requiring the
execution and delivery of this Agreement).
VII.D. Execution of the Intercreditor Agreement.
Execution and delivery of faxed signature pages to the
Intercreditor Agreement by each of the parties thereto in form
and substance identical to Exhibit D hereto, to be followed
(but not as a condition to closing) by delivery of an
appropriate number of original signature pages to respective
counsel for the parties thereto.
VII.E. Payments at Closing. The Borrowers shall have
paid to the relevant Lenders and professionals the amount
required to be paid to them on or before the Effective Date
pursuant to Sections A and B hereof.
VII.F. Delivery of Pro Forma Make-Whole Amount
Calculations. The Noteholders shall have delivered to the
Agent a calculation of the "Make-Whole Amount" (as such term
is defined in the Note Purchase Agreement) estimated to arise
in connection with the prepayments on the Private Placement
Notes on each "Step-Down True-Up Date" (as such term is
defined in the Intercreditor Agreement), assuming the Step-
Down True-Up Dates occur on September 15, 1996, October 15,
1996, November 15, 1996, December 15, 1996, and January 15,
1997, and on the "Enforcement True-Up Date" (as such term is
defined in the Intercreditor Agreement), assuming the
Enforcement True-Up Date occurs on January 17, 1997, and on
such date the principal amounts outstanding under the
Revolving Credit (including Letter of Credit exposure), the
First Term Loan and the Second Term Loan are, respectively,
$105,000,000.00, $44,000,000.00 and $0.
VII.G. Authorization of Transactions. Each Borrower
shall have authorized, by all necessary corporate action, (i)
the execution and delivery of this Agreement and each of the
documents executed and delivered by it in connection herewith,
(ii) the satisfaction by each of them of all of the conditions
precedent set forth in this Section VII which they are
required to satisfy, (iii) the consummation of all
transactions contemplated by this Agreement, and (iv) their
performance of all of their obligations contemplated by this
Agreement. The Lenders shall have received a certificate, in
form and substance satisfactory to the Lenders and to Drinker,
Biddle & Reath and Hebb & Gitlin, certifying the adoption of
resolutions of the Board of Directors of each of the Borrowers
authorizing such execution, delivery, performance,
satisfaction and consummation by such entity, which
resolutions shall be attached to such certificate and shall be
in full force and effect. The certificate shall indicate that
there has been no resolution passed by the Board of Directors
(or a duly constituted committee thereof) of any of the
Borrowers which conflicts with, amends or rescinds any such
resolution.
VII.H. Proceedings Satisfactory. All proceedings
taken in connection with this Agreement and all documents and
papers relating thereto shall be satisfactory to the Lenders
and to Drinker, Biddle & Reath and Hebb & Gitlin. The
Lenders, Drinker, Biddle & Reath and Hebb & Gitlin shall have
received copies of such documents and papers as they may
reasonably request in connection therewith, in form and
substance satisfactory to them. If each of the other
provisions of this Section VII has been complied with, the
Borrowers shall be entitled to presume that this Section H has
also been complied with unless the Borrowers have received
written notice to the contrary from the Lenders at or before
the time of the delivery (and release from escrow, if any) of
the Lenders' signature pages referred to in Section A hereof.
VIII. . MISCELLANEOUS.
VIII.A. Governing Law. This Agreement shall be
construed according to the laws of the Commonwealth of
Pennsylvania, without regard to principles of conflict of
laws.
VIII.B. Waivers and Amendment of this Agreement.
Neither this Agreement nor any term hereof may be amended,
modified or waived orally, or by any action or inaction,
except by an instrument in writing signed by the Majority
Banks, the Required Noteholders and the Borrowers.
VIII.C. Severability. If a provision of this Agreement
or any other Transaction Document is or becomes illegal,
invalid or unenforceable in any jurisdiction, that shall not
effect (i) the validity or enforceability in that jurisdiction
of any other provision of the Financing Documents, or (ii) the
validity or enforceability in other jurisdictions of that or
any other provision of the Transaction Documents.
VIII.D. Section Headings. The titles of the sections
hereof appear as a matter of convenience only, do not
constitute a part of this Agreement and shall not affect the
construction hereof.
VIII.E. Counterparts; Faxed Signature Pages. This
Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which
together shall constitute one and the same agreement. Each of
the parties acknowledges and agrees that the signature pages
to this Agreement, the Intercreditor Agreement, the Loan
Agreement Amendment, the NPA Amendment and each of the other
instruments, certificates and documents being executed and
delivered in connection therewith or herewith are being
delivered via facsimile transmission and that, upon the
occurrence of the Effective Date, all such documents shall be
in full force and effect. Each of the parties further
acknowledges and agrees that any amendments, modifications,
consents and waivers in respect hereof and thereof shall also
be in full force and effect upon the delivery of signature
pages thereto via facsimile transmission and the satisfaction
of all other conditions to their effectiveness, and that all
of the faxed signature pages referred to in this Section E
shall be accepted by such parties as, and shall be deemed for
all purposes to constitute, legally admissible evidence in a
court of law as to the execution of all such documents without
the need to produce original signature pages thereto.
[REMAINDER OF PAGE IS INTENTIONALLY BLANK. NEXT PAGE IS SIGNATU
RE PAGE.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on their behalf by a duly authorized
officer or agent thereof, as the case may be, as of the date
first above written.
BETEX, S.A.
CREACIONES TEXTILES de MERIDA, S.A. de C.V.
ELIZABETH NEEDLE CRAFT, INC.
JAMAICA NEEDLECRAFT, INC.
MAIDENFORM INTERNATIONAL, LTD.
NICHOLAS NEEDLECRAFT, INC.
By:
Name:
Title:
(as to all Borrowers listed above)
Attest:
(Corporate Seal)
MAIDENFORM WORLDWIDE, INC.
MAIDENFORM, INC.
NCC INDUSTRIES, INC.
CRESCENT INDUSTRIES, INC.
By:
Name:
Title:
(as to all Borrowers listed above)
Attest:
(Corporate Seal)
CORESTATES BANK, N.A., in its own capacity, as Agent,
as Issuing Bank and as Collateral Agent
By:
Name:
Title:
THE CHASE MANHATTAN BANK,
in its own capacity and as co-agent
By:
Name:
Title:
NATIONSBANK, N.A.
By:
Name:
Title:
NATIONAL CITY BANK
By:
Name:
Title:
NBD BANK
By:
Name:
Title:
COMERICA BANK
By:
Name:
Title:
EUROPEAN AMERICAN BANK
By:
Name:
Title:
SUMMIT BANK
By:
Name:
Title:
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By:
Name:
Title:
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By:
Name:
Title:
By:
Name:
Title:
TMG LIFE INSURANCE COMPANY
By: The Mutual Group (U.S.), Inc.
Its: Agent
By:
Name:
Title:
By:
Name:
Title:
EXHIBIT A
EXISTING EVENTS OF DEFAULT
I. Existing Bank Events of Default
Events of Default have occurred and are continuing under
the Original Loan Agreement pursuant to the Borrowers' failure
to comply with certain covenants and agreements contained in
Sections 2.2.1, 2.3(A), 5.2(B), 5.19, 5.20, 5.21 and 5.22 of
the Loan Agreement. "Existing Bank Events of Default" shall
not include Events of Default resulting from the Borrowers'
failure hereafter to comply with such covenants as amended by
the Second Amendment to Loan Agreement of even date herewith.
II. Existing NPA Events of Default
Events of Default have occurred and are continuing under
Sections 8.1(c) and 8.1(d) of the Note Purchase Agreement
pursuant to the Borrowers' failure to comply with certain
covenants and agreements contained in Sections 6.6, 6.7, 6.9,
6.10 and 7.1(a) of the Note Purchase Agreement. An Event of
Default under Section 8.1(f) of the Note Purchase Agreement
has also occurred and is continuing pursuant to the occurrence
of the events of default under the Loan Agreement listed in
Part I of this Exhibit A.
EXHIBIT B
[Second Amendment to Loan Agreement]
EXHIBIT C
[Second Amendment to Note Purchase Agreement]
EXHIBIT D
[Amended and Restated Intercreditor Agreement]
SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT
SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT (this
"Agreement"), dated as of September 11, 1996, among MAIDENFORM
WORLDWIDE, INC. ("Worldwide"), a Delaware 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"), MASSACHUSETTS
MUTUAL LIFE INSURANCE COMPANY ("MassMutual"), PRINCIPAL MUTUAL
LIFE INSURANCE COMPANY ("Principal") and TMG LIFE INSURANCE
COMPANY ("TMG," MassMutual, Principal and TMG are herein
collectively referred to as the "Noteholders").
RECITALS:
A. Pursuant to separate Amended and Restated Note
Purchase Agreements, each dated as of April 1, 1995
(collectively, as amended by the Amendment Agreement dated as
of March 29, 1996, the "Original Note Agreement," and, as
amended by this Agreement, the "Note Agreement"), the
Companies issued Thirty Million Dollars ($30,000,000) in
aggregate principal amount of their joint and several ten and
seventy-five one hundredths percent (10.75%) Senior Notes due
September 30, 2003 (the "Notes"). The Notes are substantially
in the form of Exhibit A attached to the Original Note
Agreement.
B. The Companies' obligations under the Note Agreement
and the Notes were and are secured by, among other things,
certain security agreements, mortgages, deeds of trust and
other similar documents (collectively, the "Security
Documents"), executed by one or more of the Companies in favor
of CoreStates Bank, N.A., as collateral agent (the "Collateral
Agent").
C. The Companies have requested that the Noteholders
amend certain terms of the Original Note Agreement and the
Notes, as more particularly set forth in this Agreement.
D. Subject to the terms and conditions hereinafter set
forth, the Noteholders are willing to amend certain terms of
the Original Note Agreement and the Notes, all as more
particularly set forth in this Agreement.
E. Each of the Companies and the Noteholders are
desirous of entering into this Agreement on the terms and
conditions hereinafter set forth.
AGREEMENT:
NOW THEREFORE, for valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
IX. . DEFINED TERMS.
The terms used herein and not defined herein shall have
the meanings assigned to such terms in the Original Note
Agreement. The Original Note Agreement, the Notes and the
Security Documents are referred to herein as the "Original
Financing Documents", and, as amended and supplemented by this
Agreement and the other agreements and instruments to be
executed in connection herewith and therewith, as each may be
amended from time to time, and together with the Forbearance
Agreement (as defined below), are referred to herein as the
"Financing Documents".
X. . AMENDMENTS TO ORIGINAL NOTE AGREEMENT.
Each of the Companies and, subject to the satisfaction of
the conditions set forth in Section 5 hereof, the Noteholders
hereby consents and agrees to the amendments to the Original
Note Agreement, as set forth in Exhibit A to this Agreement.
Each such amendment shall become effective on the Amendment
Effective Date and is incorporated herein by reference as if
set forth verbatim in this Agreement.
XI. . AMENDMENT TO NOTES.
Each of the Companies and, subject to the satisfaction of
the conditions set forth in Section 6 hereof, the Noteholders
hereby consents and agrees to the amendment to the Notes, as
set forth in Exhibit B to this Agreement. Such amendment
shall become effective on the Amendment Effective Date and is
incorporated herein and in the Notes by reference as if set
forth verbatim in this Agreement and in the Notes. The
Companies acknowledge and agree that, upon due presentation by
any Noteholder of its original Note or Notes, the Companies
will issue to such Noteholder a replacement Note or Notes
reflecting the amendment set forth herein, provided that the
failure of any Noteholder to exchange any of its Notes shall
not in any manner affect the legality, validity or
enforceability of any of the Notes.
XII. . WARRANTIES AND REPRESENTATIONS.
To induce the Noteholders to enter into this Agreement,
the Companies jointly and severally warrant and represent to
the Noteholders that as of the Amendment Effective Date:
XII.A. Organization, Existence and Authority. Each of
the Companies 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. Each of the Companies has all requisite power
and authority to execute and deliver this Agreement and to
perform its obligations under the Amended Financing Documents.
XII.B. Authorization, Execution and Enforceability.
The execution and delivery by each of the Companies of this
Agreement and the performance by the Companies of their
respective obligations under the Financing Documents have been
duly authorized by all necessary action on the part of each of
the Companies. This Agreement has been duly executed and
delivered by each of the Companies. Each of the Financing
Documents constitutes a valid and binding obligation of each
of the Companies, enforceable in accordance with its
respective terms, except that the enforceability thereof may
be:
1. limited by bankruptcy, insolvency or other similar
laws affecting the enforceability of creditors' rights
generally; and
2. subject to the availability of equitable remedies.
XII.C. No Conflicts or Defaults. Neither the
execution and delivery by any of the Companies of this
Agreement, nor the performance by any of the Companies of its
obligations under each of the Financing Documents, conflicts
with, results in any breach in any of the provisions of,
constitutes a default under, violates or results in the
creation of any Lien (other than pursuant to the Financing
Documents) upon any Property of any of the Companies under the
provisions of:
1. any charter document, partnership agreement or
bylaws of any of the Companies;
(b) assuming the contemporaneous execution and
delivery of an amendment to the Bank Loan Agreement, any
agreement, instrument or conveyance to which the any of
the Companies or any Properties of any of the Companies
may be bound or affected; or
(c) any statute, rule or regulation or any order,
judgment or award of any court, tribunal or arbitrator by
which any of the Companies or any Properties of any of
the Companies may be bound or affected.
XII.D. Governmental Consent. Neither the execution
and delivery by each of the Companies of this Agreement nor
the performance by each of the Companies of its respective
obligations under each of the Financing Documents, 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 thereto
under the circumstances and conditions contemplated by this
Agreement and each of the Financing Documents.
XII.E. No Defaults or Events of Default. After
giving effect to the transactions contemplated by this
Agreement and the contemporaneous execution and delivery of
the Forbearance Agreement and amendments to the Bank Loan
Agreement and Intercreditor Agreement, no unwaived Default or
Event of Default will exist under any of the Financing
Documents.
XII.F. Disclosure. The financial statements and
certificates delivered to the Noteholders by the Companies or
the Companies' accountants, as the case may be, pursuant to
Section 7.1, Section 7.2 and Section 7.3 of the Original Note
Agreement do not, nor does this Agreement or any written
statement furnished by any of the Companies in connection
herewith, 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
which the Companies have not disclosed to the Noteholders in
writing which has had or, so far as any of the Companies can
now foresee, could reasonably be expected to have, a Material
Adverse Effect.
XII.G. Revised 1996 Projections. The projections set
forth in the revised 1996 projections delivered to the
Noteholders pursuant to Section H hereof are accurate based on
the information available to the Companies as of the Amendment
Effective Date and are based on assumptions that are
reasonable in light of the information then available to the
Companies. As indicated in such projections, the Borrowers
reasonably project and believe as of the Amendment Effective
Date that they will remain in compliance with their financial
covenants for the remainder of fiscal year 1996 and will be
able to meet all of their financial and other obligations that
come due during fiscal year 1996, as such financial covenants,
financial obligations and other obligations are set forth in
the Financing Documents, the Bank Loan Agreement, the
Forbearance Agreement and the Intercreditor Agreement.
XII.H. True and Correct Copies. The Companies have
delivered to each of the Noteholders true and correct copies
of the Bank Loan Agreement as in effect on the Amendment
Effective Date.
XII.I. Certain Representations and Warranties. As
supplemented by the information set forth on Annex 1 hereto,
all of the representations and warranties contained in Section
2 of the Original Note Agreement are true and correct in all
material respects as of the Amendment Effective Date as if
such representations and warranties were made on the Amendment
Effective Date. All of the representations and warranties
contained in the most recent amendments to the Bank Loan
Agreement and the Intercreditor Agreement, each as in effect
on the Amendment Effective Date, are true and correct in all
respects.
XIII. . CONDITIONS PRECEDENT.
The amendments set forth in Sections 2 and 3 hereof shall
not become effective unless all of the following conditions
precedent shall have been satisfied on or before September 13,
1996 (the date of such satisfaction being herein referred to
as the "Amendment Effective Date"):
XIII.A. Execution and Delivery of this Agreement. Each
of the Companies shall have executed and delivered to each of
the Noteholders a counterpart of this Agreement.
XIII.B. Execution and Delivery of Other Amendments.
The following documents, each in form and substance
satisfactory to the Noteholders and their special counsel,
shall have been duly executed and delivered by the parties
thereto, and shall be in full force and effect:
1. Second Amendment to Loan Agreement, among the
Companies, CoreStates Bank N.A., as Agent, CoreStates Bank
N.A., Nationsbank, N.A., The Chase Manhattan Bank, National
City Bank, NBD Bank, Comerica Bank, European American Bank,
and Summit Bank;
2. Amended and Restated Intercreditor Agreement, among all
of the parties to the Intercreditor Agreement; and
3. Forbearance Agreement among all of the parties to the
Intercreditor Agreement (the "Forbearance Agreement").
5.12 Collateral. The Financing Documents shall be in
full force and effect and there shall be no Default or Event
of Default thereunder and as defined therein which would not
be waived by the Forbearance Agreement. Except with respect
to the additional liens referred to in Section 4.4 of the
Forbearance Agreement, the Lien of the Collateral Agent as
provided by the Financing Documents shall be valid,
enforceable and perfected and the Property of the Companies
shall be subject to no other Lien not otherwise permitted
under Section 6.5 of the Note Agreement.
XIII.D. No Default; Representations And Warranties
True. The warranties and representations set forth in
Section 4 hereof shall be true and correct on the Amendment
Effective Date and no Default or Event of Default shall exist
which would not be waived by the Forbearance Agreement.
XIII.E. Authorization of Transactions. Each of the
Companies shall have authorized, by all necessary action, the
execution and delivery of this Agreement and each of the
documents executed and delivered in connection herewith and
the performance of all obligations of, and the satisfaction of
all closing conditions pursuant to this Section 5 by, and the
consummation of all transactions contemplated by this
Agreement by, the Companies.
XIII.F. Opinions of Counsel. The Noteholders shall
have received from Jones, Day, Reavis & Pogue and Baer Marks &
Upham LLP, counsel to the Companies, legal opinions which,
taken together, are substantially the same as the combined
form of opinion set forth in Exhibit C to this Agreement.
XIII.G. Payment of Certain Expenses. The Companies
shall have paid all reasonable costs and expenses of the
Noteholders relating to this Agreement and the other Financing
Documents, including without limitation the fees and expenses
of Hebb & Gitlin, the Noteholder's special counsel.
XIII.H. Revised 1996 Projections. The Companies shall
have delivered to the Noteholders revised 1996 projections
certified to by an executive officer of the Borrowers and in
form and level of detail satisfactory to the Required
Noteholders.
XIII.I. Proceedings Satisfactory. All documents
executed and delivered, and actions and proceedings taken, in
connection with this Agreement shall be satisfactory to the
Noteholders and their special counsel. The Noteholders and
their special counsel shall have received copies of such
documents and papers as they may reasonably request in
connection therewith, in form and substance satisfactory to
them.
XIV. . NO PREJUDICE OR WAIVER; REAFFIRMATION;
ACKNOWLEDGMENT.
XIV.A. No Prejudice or Waiver. Except as provided
herein, the terms of this Agreement shall not operate as a
waiver by the Noteholders of, or otherwise prejudice the
Noteholders' rights, remedies or powers under, the Financing
Documents or under applicable law. Except as expressly
provided herein:
(a) no terms and provisions of any agreement are
modified or changed by this Agreement; and
(b) the terms and provisions of the Financing
Documents shall continue in full force and effect.
XIV.B. Reaffirmation. Each of the Companies hereby
acknowledges and reaffirms all of its obligations and duties
under the Financing Documents.
XIV.C. Acknowledgment. EACH OF THE COMPANIES
ACKNOWLEDGES AND AGREES THAT THE NOTE AGREEMENT, THE NOTES,
THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS TO WHICH IT
IS A PARTY ARE VALID AND BINDING OBLIGATIONS OF IT,
ENFORCEABLE IN ACCORDANCE WITH THEIR RESPECTIVE TERMS, WITHOUT
DEFENSES, OFFSETS, RIGHTS OF RECOUPMENT, COUNTERCLAIMS OR
CLAIMS OF ANY NATURE WHATSOEVER, AND TO THE EXTENT THAT ANY
SUCH DEFENSES, OFFSETS, RIGHTS OF RECOUPMENT, COUNTERCLAIMS OR
CLAIMS MAY EXIST AS OF THE DATE HEREOF, EACH BORROWER HEREBY
EXPRESSLY WAIVES, RELEASES AND DISCHARGES THE SAME.
XV. . MISCELLANEOUS.
XV.A. Information. Without limiting the Companies'
obligations to provide information to the Noteholders in
accordance with Section 7 of the Note Agreement, the Companies
shall also timely deliver to the Noteholders copies of all
reports delivered to the Banks pursuant to Sections 5.8 and
5.32 of the Bank Loan Agreement and all monthly, weekly and
daily borrowing base certificates delivered by the Companies
to the Banks pursuant to Section 5.2(C) the Bank Loan
Agreement.
XV.B. Governing Law. This Agreement shall be
construed, interpreted and enforced in accordance with, and
governed by, internal New York law.
XV.C. Duplicate Originals. Two or more duplicate
originals of this Agreement 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 which,
collectively, show execution by each party hereto shall
constitute one duplicate original.
XV.D. Waivers and Amendments. Neither this Agreement
nor any term hereof may be changed, waived, discharged or
terminated orally, or by any action or inaction, but only by
an instrument in writing signed in accordance with the
amendment provisions set forth in the Note Agreement.
XV.E. Section Headings. The titles of the sections
hereof appear as a matter of convenience only, do not
constitute a part of this Agreement and shall not affect the
construction hereof.
XV.F. Costs and Expenses. On the Amendment Effective
Date, the Companies shall pay all costs and expenses of the
Noteholders relating to this Agreement and the other Financing
Documents, including, but not limited to, the statement for
reasonable fees and disbursements of the Noteholders' special
counsel presented to the Companies on the Amendment Effective
Date. The Companies will also pay upon receipt of any
statement thereof, each additional statement for reasonable
fees and disbursements of the Noteholders' special counsel
rendered after the Amendment Effective Date in connection with
the Financing Documents.
XV.G. Ernst & Young Consent. If Ernst & Young
provides to the Banks the consent described in Section 5.41 of
the Bank Loan Agreement, such consent shall also be provided
to the Noteholders on the same terms.
XV.H. Survival. All warranties, representations,
certifications and covenants made by or on behalf of the
Companies in the Financing Documents or in any certificate or
other instrument delivered pursuant to the Financing Documents
shall be considered to have been relied upon by the
Noteholders and shall survive the execution of the Financing
Documents, regardless of any investigation made by or on
behalf of the Noteholders. All statements in any such
certificate or other instrument shall constitute warranties
and representations of the Companies hereunder.
[REMAINDER OF PAGE IS INTENTIONALLY BLANK. NEXT PAGE IS SIGNATU
RE PAGE.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on their behalf by a duly authorized
officer or agent thereof, as the case may be, as of the date
first above written.
MAIDENFORM WORLDWIDE, INC.
MAIDENFORM, 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_________________________________
Name:
Title:
By_________________________________
Name:
Title:
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By_________________________________
Name:
Title:
PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY
By_________________________________
Name:
Title:
By_________________________________
Name:
Title:
TMG LIFE INSURANCE COMPANY
By: The Mutual Group
(U.S.), Inc.
Its: Agent
By_________________________________
Name:
Title:
By_________________________________
Name:
Title:
ANNEX 1
INFORMATION AS TO COMPANIES
SUPPLEMENT TO EXHIBIT 4.16 TO LOAN AGREEMENT
DATED AS OF APRIL 26, 1995 AND
SUPPLEMENT TO PART 2.2(d) TO ANNEX 2 TO AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT DATED APRIL 1, 1995
Pursuant to the First Amendment to Loan Agreement, the
Banks have agreed to make an additional term loan to the
Companies in the aggregate principal amount of $20,000,000.00
The subordinated promissory note in the principal amount
of $2,538,896.00 remains outstanding.
Guaranties, Letters of Credit or Performance Credits:
(a) Guarantee by Maidenform of the obligations of
Maidenform International under a lease for space in
the Shannon Industrial Estate.
(b) Maidenform has agreed to provide a Bank
Guarantee in the amount of $22,425.00, representing
three months' rental for lots 51-54 leased from the
Kingston Free Zone Company in Jamaica. This
guarantee satisfies the security deposit requirement
for these lots.
(c) Letter of Credit in the amount of $100,000.00
for the benefit of the Bank of Ireland, in
connection with Customs and Excise Duty.
(d) Letter of Credit in the amount of $868,180.00
for the benefit of Atlantic Mutual, in connection
with Maidenform's workers' compensation insurance
program.
(e) Letter of Credit in the amount of $487,749.00
for the benefit of The Hartford, in connection with
Maidenform's workers' compensation insurance
program.
(f) Letter of Credit in the amount of $80,000.00
for the benefit of Corporate Health Administrators,
in connection with Network Access under Maidenform's
Self Insured Medical program.
(g) Surety Bond in the amount of $50,000.00 in
connection with Puerto Rican Excise Taxes.
(h) Surety Bonds in the amount of $50,000.00
(Maidenform) and CDN12,000.00 (NCC) in connection
with Canadian Excise Taxes.
(i) Surety Bond in the amount of $58,810.00 for the
benefit of the Jacksonville Electric Authority.
(j) Surety Bond in the amount of $10,200.00 as
required by the State of New York in connection with
Game of Chance Performance Sweepstakes.
(k) Surety Bond in the amount of $10,200.00 as
required by the State of Florida in connection with
Game of Chance Performance Sweepstakes.
(l) Letter of Credit in the amount of $2,720,000.00
in connection with certain obligations of Bratex to
Chase Manhattan Bank, N.A. in connection with the
construction of a plant facility in the Dominican
Republic. Maidenform engages Bratex as a contractor
to manufacture products on behalf of Maidenform.
(m) Letter of Credit in the amount of $453,948.00
issued by Marine Midland Bank in 1994 in connection
with certain obligations of Bratex with respect to
the construction of a plant facility in the
Dominican Republic. Maidenform engages Bratex as a
contractor to manufacture products on behalf of
Maidenform.
SUPPLEMENT TO EXHIBIT 4.5 TO LOAN AGREEMENT
DATED AS OF APRIL 26, 1995 AND
SUPPLEMENT TO PART 2.6(a) TO ANNEX 2 TO AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT DATED APRIL 1, 1995
Since April 26, 1995, the following pending litigation has
been commenced or threatened against Borrowers:
XVI. Herzog, Heine, Geduld: On March 14, 1996, the Board of
Directors of NCC received a letter from counsel to Herzog,
Heine, Geduld, Inc. ("HHG"), the holder of 30,214 shares of
common stock of NCC, pursuant to which HHG alleged that (1)
Maidenform is operating NCC as a "de facto" subsidiary, and
(2) the NCC Board of Directors and Maidenform have been
violating their fiduciary duties to NCC minority stockholders.
HHG sought disclosure of various financial information and a
buyout of these shares by Maidenform.
On May 30, 1996, HHG filed a summons and complaint
against NCC, Triumph International Overseas, Ltd.,
Guenther Spiesshofer, Frank Magrone, Maidenform
Worldwide, Inc. and Maidenform, Inc., alleging breach of
fiduciary duties to the public stockholders of NCC,
seeking compensatory damages in an amount to be
determined at trial and requesting that such action be
declared a class action on behalf of all public
stockholders of NCC. Baer, Marks & Upham, counsel for
the defendants, is in the process of preparing an answer
to the complaint. The answer is due September 17, 1996.
2. Christine Alderman: On March 1, 1996, Maidenform
received a letter from counsel for Christine Alderman
(the "Alderman Letter"), a former Maidenform sales
representative whose employment was terminated on
December 31, 1995 as a result of a territory
consolidation. The termination occurred approximately
three months after Ms. Alderman gave birth to a child.
The Alderman Letter alleges causes of action for
promotional discrimination, pay disparity, sexual
discrimination in the form of pregnancy discrimination,
and denial of family leave. The Alderman Letter further
alleges sexual harassment of other employees against a
certain senior officer of Maidenform. Maidenform is in
the process of investigating these claims, although it
has thus far not been able to verify these allegations.
The letter further demands settlement in the amount of
$1,000,000.00. Maidenform believes that these
allegations are entirely without merit, is continuing its
investigation, and has attended a mediation of this
matter which was unsuccessful in attempting to resolve
Ms. Alderman's claims. Maidenform anticipates that Ms.
Alderman will commence a lawsuit and is prepared to
defend this claim vigorously through Paul Hastings
Janofsky & Walker, Maidenform's California counsel.
3. Bill Janney: On October 24, 1995, NCC received a letter
from counsel for Nathan W. ("Bill") Janney (the "Janney
Letter"), a current NCC sales representative who has been
employed by NCC for approximately 28 years. The Janney
Letter alleges that, in 1994 and 1995, NCC wrongfully
unilaterally reduced Mr. Janney's "guarantied" salary in
violation of an agreement entered into between NCC and
Mr. Janney in 1986 and that said agreement is therefore
subject to rescission under California law. The Janney
Letter further alleges that NCC reduced Mr. Janney's
salary with the intent to force Mr. Janney (who is
nearing retirement age) to leave NCC so that a younger
person can be given Mr. Janney's territory. NCC
responded to this letter by informing counsel that
neither a written nor a verbal agreement exists relating
to Mr. Janney's employment or his salary; that NCC never
agreed to a "guarantied" salary; that Mr. Janney's salary
was far in excess of those of his colleagues and was not
supported by his sales volume; that NCC had treated Mr.
Janney far more favorably than his colleagues for several
years; and that, as a result, NCC reduced Mr. Janney's
salary because it could no longer justify the costs of
such a disproportionate salary given the level of sales
volume in his territory. Counsel for Mr. Janney offered
to settle this matter without resorting to litigation if
NCC would agree to one of two proposals: (1) give Mr.
Janney a four-year employment agreement at an annual base
salary of $90,000.00 per annum, plus approximately
$78,000 in back pay, or (2) Mr. Janney's employment would
terminate and NCC would pay Mr. Janney severance equal to
four year's pay at an annual rate of $90,000, plus
approximately $78,000 in back pay. NCC informed counsel
that these proposals were ridiculous, that their
allegations were entirely without merit, and offered to
settle this matter by giving Mr. Janney the ability to
benefit from additional sales volume generated from the
recent merger of The Broadway Stores into Federated
Department Stores. Specifically, as a result of the
merger, Mr. Janney's territory would more than double in
projected sales volume. This, in turn, would afford Mr.
Janney the opportunity to receive at least his pre-
reduction salary while paying him in accordance with the
same pay plan as his colleagues.
On April 12, 1996, counsel for Mr. Janney commenced an
action in Sonoma County,California for breach of
contract and other related claims. NCC has retained Paul
Hastings Janofsky & Walker in California to defend this
claim and filed an answer on May 31, 1996.
4. David Blum: On August 2, 1995, Maidenform received a
letter from counsel for David Blum (the "Blum Letter"), a
former True Form sales representative whose employment
was terminated on May 30, 1995 as a result of poor work
performance. The Blum Letter alleges that Maidenform's
termination of Mr. Blum violated the Civil Rights Act of
1964, as amended, by discriminating against Mr. Blum on
account of his sex, male. The Blum Letter further
alleges that the basis for this allegation is the fact
that Mr. Blum, like most of True Form's sales force, was
replaced by a woman at a lower salary. The Blum Letter
demands the sum of $216,000.00, plus approximately
$48,000.00 in past due commissions and expenses, as an
appropriate settlement payment. Maidenform has responded
to this letter by refuting the fact that True Form is
engaged in a pattern of firing men to replace them with
women at lower-paying salaries and has offered Mr. Blum a
severance package, solely for the purpose of avoiding
litigation and without admitting any wrongdoing, equal to
$26,653.85, representing one-and-one-half weeks pay for
each year of employment with True Form. Maidenform has
also agreed to pay Mr. Blum approximately $6,000.00 for
past due commissions which had been erroneously
calculated for the calendar year 1994. On March 22,
1996, Mr. Blum received a Notice of Right to Sue from the
Equal Employment Opportunity Commission of Miami,
Florida.
On July 15, 1996, Maidenform was served a copy of a
summons and complaint filed by counsel for Mr. Blum in
Broward County, Florida. The complaint seeks
compensatory and punitive damages for alleged violations
of Title VII of the Civil Rights Act of 1964, as amended,
and the Florida Civil Rights Act of 1992, on the basis of
sexual discrimination alleging that the plaintiff was
dismissed from his employment because he is a male.
Specifically, plaintiff has demanded the following
relief: (a) lost wages and retroactive benefits and pay;
(b) front pay; (c) damages, both compensatory and
punitive, including, but not limited to, damages for
mental pain and suffering, anguish, injury to reputation,
medical expenses and loss of capacity for the enjoyment
of life; (d) injunctive relief ordering Maidenform to
rehire plaintiff; and (e) awarding plaintiff his costs in
this is action, including the reasonable attorney's
fees. The complaint further alleges breach of contract
seeking the sum of $6,263.69 in outstanding commissions.
Maidenform has retained the Boca Raton, Florida office of
Proskauer Rose Goetz & Mendelsohn to defend this claim,
although it has agreed to pay the past due commissions
which had been incorrectly calculated during the period
from 1993 - 1995. An answer has been submitted on behalf
of Maidenform.
5. Neal Conahan vs. Maidenform: On June 12, 1996,
Maidenform received a letter from counsel for Neal
Conahan (the "Conahan Letter"), a former Maidenform
employee whose employment terminated on May 20, 1996.
The Conahan Letter alleges that Mr. Conahan was
"unlawfully terminated" by Maidenform and that his age
(currently 66) was the cause for his termination. It is
Maidenform's position that Mr. Conahan's failure to
accept work assigned to him unless he received additional
compensation or a guaranteed severance upon termination
is deemed to constitute Mr. Conahan's resignation from
the company. Maidenform is in the process of preparing a
response to the Conahan Letter.
On July 11, 1996, a telephone hearing was held by the
Department of Labor ("DOL") with respect to the receipt
of unemployment benefits by Mr. Conahan. As a result of
such hearing, the DOL appeals examiner concluded that Mr.
Conahan "is disqualified for benefits under N.J.S.A.
43:21-5(b), as of 5/19/96 through 6/29/96 as he was
discharged for misconduct connected with the work." Mr.
Conahan is presently appealing the DOL's decision.
6. JT Distribution SARL v. Maidenform Inc.: On August 1,
1996, JT Distribution SARL ("JT"), a former sales
representative of Maidenform in France commenced an
action before the Commercial Court (Tribunal de Commerce)
of Chambery, France. JT had represented Maidenform's
products in France on a commission basis for
approximately one year. In January 1996, Maidenform
terminated its relationship with JT. JT is now claiming
that it acted in a capacity of a commercial agent for
Maidenform and, accordingly, is entitled to compensation
equal to two years commissions as a result of the
termination, as well as certain commissions owed for
orders placed in 1995 and 1996, aggregating 888,579.14
French Francs (Approximately (US $180,000). Maidenform
has been advised by French counsel that JT acted as
"courtier" rather than a commercial agent and that two
years commissions is not payable to a courtier in
connection with a termination. Maidenform intends to
vigorously defend this claim.
7. Miriam Rodriguez Nazario v. Maidenform: On November 14,
1995, Miriam Rodriguez Nazario, a former Maidenform
employee whose employment was terminated on November 11,
1994 as a result of technological advances, filed a
complaint in Court in Mayaguez, Puerto Rico alleging
discriminatory dismissal on the basis of age under Law
100 of June 30, 1959 and demanding front and back payment
of salaries, plus damages and attorneys fees, totaling
$104,412.00. Ms. Rodriguez was an office worker in
Maidenform's plant in Ricon, Puerto Rico and was
dismissed for the same reason Ms. Caraballo was
dismissed, as described in paragraph 8 below.
Specifically, she was notified in June 1994 that the
office computer system would be updated and that all of
the office workers would receive training and an
objective test to determine who would remain with the
company. Her test results were the lowest of the
employees tested in the Rincon facility and, as a
result, her employment was terminated. Maidenform
continues to vigorously defend this claim through Goldman
Antonetti & Cordova, Maidenform's Puerto Rican counsel.
8. Juanita Caraballo Carrau v. Maidenform: On June 21,
1995, Juanita Caraballo, a former Maidenform employee
whose employment was terminated on October 7, 1994 as a
result of technological advances, filed a complaint in
Court in Mayaguez, Puerto Rico alleging that the real
reason she was terminated was because she had reported an
injury to the State Insurance Fund. Her complaint claims
damages in the amount of $30,000.00 plus back pay since
the date she was terminated. Ms. Caraballo was an office
worker in Maidenform's plant in Anasco, Puerto Rico. In
June 1994, Maidenform distributed a memo to office
workers in its plants in Anasco, and Rincon, Puerto Rico
informing them that it is in the process of implementing
a computer system at those two facilities, the result of
which would be the need to reduce the office staff. The
memo explained that rather than determining on the basis
of seniority who would remain with the company to work on
the new computer system, all office workers would be
trained on the computers, their skills would be tested on
an objective basis, and the employees who scored the
highest would remain at Maidenform. Shortly before this
decision was made, Ms. Caraballo had been out of work due
to a disability, which she reported to the State
Insurance Fund. Upon her return, she was trained on the
computer and tested. Ms. Caraballo's test results were
the lowest in her office and, as a result, her employment
was terminated. On October 12, 1995, Ms. Caraballo filed
an amendment to the complaint pursuant to which she added
an additional claim of discrimination on the basis of age
under Law 100 of June 30, 1959. Said law provides a
remedy of double award as compensation for damages if
plaintiff's allegations are proven against the employer.
Maidenform continues to vigorously defend this claim
through Goldman Antonetti & Cordova, Maidenform's Puerto
Rican counsel.
9. Myriam Rodriguez v. Maidenform: On May 22, 1995,
Maidenform received a letter from counsel to Myriam
Rodriguez (the "Rodriguez I Letter"), a former Maidenform
employee whose employment was terminated on June 17, 1994
as a result of the elimination of her job position. Ms.
Rodriguez was responsible for training supervisory
personnel at Maidenform's plants in the Caribbean. Ms.
Rodriguez was pregnant at the time of her dismissal,
although this fact was not known by Company management at
the time it made its decision to eliminate her job
position. The Rodriguez I Letter demands settlement in
the amount of $208,000.00. Maidenform responded to the
Rodriguez I Letter by informing counsel that her
termination was not related to her pregnancy and that her
employment position was truly eliminated as the company
no longer employs someone to perform her prior job
functions. On August 28, 1995, Ms. Rodriguez filed a
claim alleging pregnancy discrimination before the
Department of Labor and Human Resources in Puerto Rico
("PRDOL"), pursuant to which Ms. Rodriguez requests
reinstatement, back pay, and other damages in the total
amount of $600,000.00. Through hearings before the
PRDOL, Ms. Rodriguez offered to settle this claim for
$100,000.00. Maidenform is in the process of counter-
offering to settle this mater for a nominal sum, such as
$5,000.00. In the event that this matter cannot be
settled for a nominal sum, Maidenform will continue to
defend this claim through Goldman Antonetti & Cordova,
Maidenform's Puerto Rican Counsel.
10. Coolbaugh v. Maidenform, et al: On December 30, 1992,
Nancy Coolbaugh, an individual, filed a summons and
complaint against Maidenform and certain unrelated
parties, for injuries suffered while wearing a Maidenform
bra. Plaintiff alleges that Maidenform recklessly,
carelessly and/or negligently designed, manufactured,
assembled, inspected, tested, distributed, sold and/or
delivered the subject brassiere; that Maidenform is
strictly liable in tort to the plaintiff because the
brassiere was defective and not fit, safe or suitable for
its intended purpose; that Maidenform is strictly liable
in tort to plaintiff because it breached express and/or
implied warranties in that the brassiere was not of
merchantable quality and not fit safe or suitable for the
purpose for which it was designed. During a court
ordered settlement conference, plaintiff's attorney made
a settlement demand of $325,000.00. Maidenform does not
believe that its product caused plaintiff's injuries and
continues to vigorously defend this claim. The parties
are in the process of discovery. Maidenform has been
informed by its insurance company that no coverage exists
for allegations involving breach of expressed and implied
warranties. Maidenform has obtained the advice of
separate counsel to assure effective representation with
regard to these issues.
11. Sterling Winthrop, Inc. v. Maidenform, Superior
Restaurant Equipment Corporation, Champion Industries,
Inc. and John Doe Nos. 1 and 2, individuals and/or
corporations as yet unidentified: Sterling Winthrop has
commenced an action against Maidenform and certain other
defendants in connection with certain water damage
resulting from a leak of Maidenform's dishwasher on
September 8, 1990. The dishwasher was located at
Maidenform's corporate offices at 90 Park Avenue, New
York, New York. This claim is covered by insurance. The
parties are still in the process of discovery.
12. Woodquay Finance & Leasing Company Limited ("Woodquay")
has commenced an action in Galway Circuit Court, in
Galway, Ireland, against International claiming that
International owes to Woodquay payment of approximately
11,000 English Pounds as a result of damages allegedly
caused by International to Woodquay's trade fixtures and
fittings when International took possession of certain
leased property in Galway, Ireland in which International
currently operates a retail store.
13. Miller & Miller Consulting Actuaries, Inc.: NCC, The NCC
Industries, Inc. Defined Benefit Pension Plan and the
trustees of such plan have been named as parties to a
suit brought by Miller & Miller Consulting Actuaries,
Inc., a firm engaged to perform actuarial services for
NCC for the NCC Defined Benefit Pension Plan, in Supreme
Court, County of Westchester. The total amount of this
claims is $94,315.20, plus legal costs, disbursements and
interest from January 1, 1987.
14. Lehrer v. Goldman, et al: NCC has been named as a third
party defendant to a lawsuit brought by Flora Lehrer, an
NCC employee, for personal injuries suffered while on the
premises located at 475 Park Avenue South, New York, New
York. This claim is covered by NCC's insurance.
15. EEOC Claims: Maidenform is a party to various EEO
claims, all of which it is defending vigorously.
16. Threatened or Potential Claims: Maidenform has knowledge
of the following threatened or potential claims:
(a) In late 1994, a Vice President of Maidenform,
while driving a company-leased car, was involved in
a car accident with another vehicle. The driver of
the other vehicle has made verbal claims that he was
injured in such accident, but no formal threat or
claim for damages has yet been made. Buyer cannot
predict the extent of injuries or the amount of a
claim, if any.
(b) Gayla Phillips, a former Maidenform employee
who worked at the Jacksonville Distribution Center
died on December 12, 1994 as a result of an overdose
from morphine patch prescribed by her workers'
compensation physician. No claim or action has been
threatened.
(c) Miscellaneous non-material potential product
liability claims which are being handled through
Maidenform's insurance carrier.
(d) Rudi Scheidt: Since May 1995 through March
1996, NCC and Maidenform had received telephone
calls and threatening correspondence from Rudi
Scheidt and his counsel claiming breach of fiduciary
duties and threatening a class action lawsuit in
connection with Maidenform's purchase of NCC. Mr.
Scheidt is the holder of approximately 60,000 shares
of common stock of NCC. On or about March 15, 1996,
before any covenant restrictions existed or were
proposed, in order to avoid the commencement of a
lawsuit by Mr. Scheidt, Maidenform entered into an
agreement with Mr. Scheidt pursuant to which
Maidenform agreed to purchase Mr. Scheidt's shares
in installments. Installment purchases in the
aggregate of $810,000 will be due to be made in
equal amounts on the 15th of October, November and
December of 1996. No claim or action has been
threatened.
SUPPLEMENT TO PART 2.17(b)* TO ANNEX 2 TO AMENDED AND
RESTATED NOTE PURCHASE AGREEMENT DATED APRIL 1, 1995
CERTAIN TRANSACTIONS SINCE DECEMBER 31, 1994
See Part 2.2(d) to Annex 2, as amended
* Note that text reference states "2.16(b)"
SUPPLEMENT TO SCHEDULE A TO EXHIBIT 5.14 TO LOAN AGREEMENT
DATED AS OF APRIL 26, 1995 AND
SUPPLEMENT TO PART 6.11 TO ANNEX 2 TO AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT DATED APRIL 1, 1995
1. Each of Maidenform and NCC are the holders of those
shares of stock set forth below, which represent
interests in Account Debtors received in connection with
the bankruptcy reorganizations effectuated by certain of
their respective customers.
Issuer Number of Stockholder
Shares
City Stores Company 183 Maidenform
Richard Gordman 2,764 Maidenform
1/2 Price Stores, 5,749 Maidenform
Inc.
Unishops 15 Maidenform
WCI Holdings 1 Maidenform
Corporation
Federated Department 533 Maidenform
Stores
Marietta Packing 1711 NCC Industries
EXHIBIT A
AMENDMENTS TO ORIGINAL NOTE AGREEMENT
XVII. Amendment to Section 1.2. Section 1.2 of the
Original Note Agreement is hereby amended by adding at the end
thereof a new paragraph which shall read in its entirety as
follows:
"Notwithstanding the foregoing provisions of this
Section 1.2, on and after September 11, 1996:
(a) the Notes shall be amended in the manner
provided in Section XI of the Second Amendment, and all
references herein to a "Note" or the "Notes" shall be
deemed to refer to such Note or Notes as so amended;
(b) on and after September 11, 1996, each Note
(i) shall bear interest (computed on the basis of a 360-
day year of twelve 30-day months) on the unpaid principal
balance thereof until the principal amount thereof shall
become due and payable, at the rate of eleven and twenty-
five one-hundredths percent (11.25%) per annum, monthly
on the last day of each month in each year commencing on
September 30, 1996; and (ii) shall 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 (a) the highest rate allowed by applicable
law and (b) thirteen and twenty-five one-hundredths
percent (13.25%) per annum."
XVIII. Amendment to Section 6.15. Section 6.15 of the
Existing Note Agreement is hereby amended in its entirety to
read as follows:
"6.15 Debt Incurrence.
The Companies will not, at any time, incur any Debt
other than the Notes, the Coleman Note, the Bank Term
Loan, the Second Bank Term Loan, Debt not to exceed One
Hundred Twenty Million Dollars ($120,000,000) 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.
Nothing in this Section 6.15 shall be deemed to excuse
compliance with any other covenant or provision of this
Agreement."
XIX. Amendment to Section 6.24. Section 6.24 of the
Original Note Agreement is hereby amended in its entirety to
read as follows:
"6.24 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 (i) increase the
interest or other amounts (other than increased
amounts specifically allowed by Section 6.24(a))
payable thereunder, (ii) increase the principal
amount of the Bank Term Loan, (iii) increase the
"Commitment" as defined in the Bank Loan Agreement
from the level of the Commitment in effect
immediately prior to such proposed amendment, (iv)
decrease the Commitment (other than decreases
specifically contemplated by Section 2.1 of the Bank
Loan Agreement as in effect as of September 11,
1996), (v) accelerate the payment schedule for
principal or interest due under the Bank Loan
Agreement, (vi) accelerate the maturity date thereof
or create a security interest in connection
therewith (other than in favor of the Collateral
Agent), in each case unless agreed to in writing by
the Required Holders.
(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. No Company
shall make any payment on the Coleman Note
(i) until the Second Term Loan
has been repaid in full and Consolidated
Tangible Net Worth, Fixed Charge Coverage
Ratio, the ratio of Consolidated Funded Debt to
Consolidated Capitalization, and the ratio of
Consolidated Funded Debt to Consolidated
Operating Cash Flow each have reached such
levels at such times as would be in compliance
with Section 6.6, Section 6.7, Section 6.9 and
Section 6.10 hereof, in each case as in effect
prior to the Amendment Effective Date,
(ii) while there exists a
Default or an Event of Default, or
(iii) prior to January 17,
1997."
XX. Amendment to Section 9.1. Section 9.1 of the
Original Note Agreement is hereby amended to add, in its
proper alphabetical order, the following definition:
"Second Amendment" -- means the Second Amendment to
Note Purchase Agreement, dated as of September 11, 1996,
among each of the Companies and the Purchasers."
EXHIBIT B
AMENDMENT TO NOTES
The first paragraph of each of the Notes is hereby
amended in its entirety to read as follows:
"MAIDENFORM WORLDWIDE, INC. ("Worldwide"), a
Delaware corporation, MAIDENFORM, INC., 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 (collectively, together with Worldwide, the
"Companies"), for value received, hereby jointly and
severally promise to pay to
or registered assigns the principal sum of
DOLLARS ($ ) on September 3, 2003 and to pay
interest (computed on the basis of a 360-day year of
twelve 30-day months) on the unpaid principal balance
thereof (i) from the date of this Note through September
10, 1996, at the rate of ten and seventy-five one-
hundredths percent (10.75%) per annum, quarterly on the
last day of each December, March, June and September in
each year, commencing on the later of June 30, 1995 and
the payment date next succeeding the date hereof, and
(ii) on and after September 11, 1996 until the principal
amount hereof shall become due and payable, at the rate
of eleven and twenty-five one-hundredths percent (11.25%)
per annum, monthly on the last day of each month in each
year commencing on September 30, 1996; and to pay
interest 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 (i) from the date of this
Note through September 10, 1996, at a rate equal to the
lesser of (a) the highest rate allowed by applicable law
and (b) twelve and seventy-five one-hundredths percent
(12.75%) per annum, and (ii) on and after September 11,
1996, at a rate equal to the lesser of (x) the highest
rate allowed by applicable law and (y) thirteen and
twenty-five one-hundredths percent (13.25%) per annum."
EXHIBIT C
COMBINED FORM OF OPINIONS OF COMPANY COUNSEL
September 11, 1996
To each of the Persons
listed on Annex I hereto
Re: Maidenform Worldwide, Inc., a Delaware
corporation ("Worldwide-DE"), 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
("ENC"), Jamaica Needlecraft, Ltd. a Jamaican
corporation, Maidenform International, Ltd., a New
York corporation ("International"), Nicholas
Needlecraft, Inc., a New York corporation, ("NNC"),
NCC Industries, Inc., a Delaware corporation
("NCC"), Crescent Industries, Inc., a Delaware
corporation ("Crescent", and together with each of
Worldwide-DE, Maidenform, ENC, International, NNC
and NCC, collectively referred to as the "Domestic
Companies" and individually as a "Domestic Company".
Ladies and Gentlemen:
Reference is made to (i) the separate Amended and
Restated Note Purchase Agreements, each dated as of April 1,
1995 (collectively, as amended by the Amendment Agreement
dated as of March 29, 1996, the "Restated Note Agreement"),
between the Companies and each of the purchasers listed on
Annex I thereto (the "Purchasers"), which provide, among other
things, for the issuance by the Companies of their joint and
several 10.75% Senior Notes due September 30, 2003, in the
aggregate principal amount of Thirty Million Dollars
($30,000,000), and (ii) that certain Second Amendment to Note
Purchase Agreement, dated of even date herewith, amending the
Restated Note Agreement (the "Amendment Agreement"). The
capitalized terms used herein and not defined herein have the
meanings specified by the Restated Note Agreement as amended
by the Amendment Agreement.
We have acted as special counsel to the Domestic
Companies in connection with the transactions contemplated by
the Amendment Agreement. This opinion is being delivered
pursuant to Section F of the Amendment Agreement.
In acting as such counsel, we have examined:
1. the Restated Note Agreement;
2. the Amendment Agreement;
3. the bylaws of each of the Domestic Companies, the
records of proceedings of the board of directors of each of
the Domestic Companies that we have deemed relevant for the
purposes of rendering the opinions expressed herein and a
certified copy of the articles of incorporation of each of the
Domestic Companies, as in effect on the date hereof;
4. the Amended and Restated Intercreditor Agreement of
even date herewith among the Purchasers and the parties to the
Bank Loan Agreement (including the Companies) (the "Restated
Intercreditor Agreement");
5. the Forbearance Agreement of even date herewith
among the parties to the Restated Intercreditor Agreement (the
"Forbearance Agreement"); and
6. originals, or copies certified or otherwise
identified to our satisfaction, of such other documents,
records, instruments and certificates of public officials as
we have deemed necessary or appropriate to enable us to render
this opinion.
We have assumed the genuineness of all signatures (other
than signatures of officers of each of the Companies) and
documents submitted to us as originals, that all copies
submitted to us conform to the originals (and the authenticity
of such originals), the legal capacity of all natural Persons,
and, as to documents executed by Persons other than the
Domestic Companies, that each such Person executing documents
had the power to enter into and perform its obligations under
such documents, and, as to documents executed by Persons other
than the Domestic Companies, that such documents have been
duly authorized, executed and delivered by, and are binding
upon and enforceable against, such Persons.
As to various questions of fact material to our opinion,
we have relied, to the extent we deem necessary and proper, on
the warranties and representations contained in the Amendment
Agreement, and we have no knowledge of any material
inaccuracies in any of such warranties or representations.
This opinion addresses matters only as of the date hereof and
we specifically disclaim any responsibility for advising you
of changes in matters addressed herein occurring after this
date.
Based upon and subject to the foregoing, and subject to
the limitations, qualifications and exceptions set forth
below, we are of the following opinions:
XXI. Each of the Domestic Companies is a corporation duly
incorporated and validly existing under the laws of its state
of incorporation, and, based solely on certificates of good
standing of recent date issued by the Secretary of State of
its state of incorporation, is in good standing in its state
of incorporation. Each of the Domestic Companies has all
requisite corporate power and authority to carry on its
business and own its Property.
XXII. Each of the Domestic Companies has the
requisite corporate power and authority to execute and deliver
the Amendment Agreement, the Restated Intercreditor Agreement
and the Forbearance Agreement and to perform its obligations
set forth in the Amendment Agreement, the Restated
Intercreditor Agreement and the Forbearance Agreement.
XXIII. The execution of the Amendment Agreement, the
Restated Intercreditor Agreement and the Forbearance Agreement
has been duly authorized by all necessary corporate action on
the part of each of the Domestic Companies, and the Amendment
Agreement, the Restated Intercreditor Agreement and the
Forbearance Agreement have been executed and delivered by duly
authorized officers of each of the Domestic Companies.
XXIV. Each of the Amendment Agreement, the Restated
Intercreditor Agreement and the Forbearance Agreement
constitutes a legal, valid and binding obligation of the
Domestic Companies, enforceable against each of the Domestic
Companies in accordance with its terms except that the
validity and enforceability of the rights and remedies set
forth therein are subject to
(a) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar laws
affecting the enforcement of creditors' rights and
remedies generally; and
(b) the application of principles of equity whether
in an action at law or a proceeding in equity. The
foregoing does not constitute an opinion as to the
priority of any security interests in favor of the
Collateral Agent or the Noteholders referred to in the
Amendment Agreement, the Restated Intercreditor Agreement
or the Forbearance Agreement.
Our opinions herein are further subject to the following
limitations:
(i) We express no opinion as to the enforceability
of any waiver of any constitutional right or other right
to notice or a hearing contained in the Amendment
Agreement, the Restated Intercreditor Agreement or the
Forbearance Agreement.
(ii) We express no opinion as to the solvency of any
of the Companies and have assumed for the purposes of
rendering this opinion that the execution, delivery and
performance by the Borrowers of their respective
obligations under the Amendment Agreement, the Restated
Intercreditor Agreement and the Forbearance Agreement
will not render any of the Companies insolvent.
(iii) Enforceability of the Amendment Agreement,
the Restated Intercreditor Agreement and the Forbearance
Agreement may be limited to the extent that the
Noteholders and the Collateral Agent are determined not
to have acted in good faith and in a commercially
reasonable manner or to the extent that enforcement would
be unreasonable under the then-existing circumstances and
public policy considerations may limit the rights of the
Noteholders and the Collateral Agent to obtain certain
rights and remedies and to indemnification.
This opinion is furnished at the request of the Companies
for the sole benefit of the named addressees and their
successors and assigns and counsel and may not be relied upon
by any other person or entity. Further, this opinion cannot
be published, quoted or otherwise used for any other purpose
without our prior written consent except that any holder of
Notes may furnish this opinion to any person exercising
regulatory authority over it and to the National Association
of Insurance Commissioners. This opinion is based on the law
(and interpretations thereof) and facts existing as of the
date hereof, and we disclaim any obligation to advise you of
any changes therein that may be brought to our attention after
the date hereof.
Very truly yours,
ANNEX I
ADDRESSEES
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111-0001
Principal Mutual Life Insurance Company
711 High Street
Des Moines, IA 50392-0800
TMG Life Insurance Company
401 North Executive Drive
Brookfield, WI 53008
