<PAGE>
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 June 28, 1997
----- 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 June 28, 1997, there were outstanding 4,375,492 shares of Registrant's Common
Stock, par value $1.00 per share.
<PAGE>
NCC INDUSTRIES, INC. AND SUBSIDIARY
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets......................................................... 3
Consolidated Statements of Operations and Retained Earnings......................... 4
Consolidated Statements of Cash Flows............................................... 5-6
Notes to Financial Statements....................................................... 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................ 9-11
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings........................................................... 12
Item 6. Exhibits and Reports on Form 8-K............................................ 13
SIGNATURES 14
</TABLE>
2
<PAGE>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
NCC INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
(a)
June 28, December 31,
1997 1996
------------- -------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents..................................................... $ 35,913 $ 73,359
Accounts receivable, net...................................................... 4,978,035 10,007,836
Income tax refundable......................................................... -- 117,845
Inventories (Note 2).......................................................... 15,384,916 26,992,458
Other current assets.......................................................... 729,924 2,294,237
------------- -------------
Total current assets.......................................................... 21,128,788 39,485,735
Property, plant and equipment at cost, net...................................... 5,566,345 7,749,955
Other assets.................................................................... 83,452 97,897
------------- -------------
Total Assets.................................................................... $ 26,778,585 $ 47,333,587
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses......................................... $ 8,313,557 $ 8,907,721
Due to affiliates............................................................. 1,975,038 8,757,613
Current portion of long-term debt............................................. 1,916,415 1,916,415
------------- -------------
Total current liabilities..................................................... 12,205,010 19,581,749
Other liabilities............................................................. 1,473,912 1,852,225
Shareholder's equity.......................................................... 13,099,663 25,899,613
------------- -------------
Total Liabilities and Shareholders Equity....................................... $ 26,778,585 $ 47,333,587
------------- -------------
------------- -------------
</TABLE>
- ------------------------
(a) Derived from December 31, 1996 audited financial statements.
See notes to financial statements.
3
<PAGE>
NCC INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- -----------------------------
<S> <C> <C> <C> <C>
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
-------------- ------------- -------------- -------------
STATEMENTS OF OPERATIONS
Net sales........................................ $ 11,482,526 $ 28,106,000 $ 23,777,502 $ 50,800,362
Cost and expenses
Cost of sales, shipping, selling, general and
administrative expenses........................ 24,414,512 28,302,278 37,728,519 51,459,339
Interest expense............................... 321,136 526,749 608,024 857,014
-------------- ------------- -------------- -------------
24,735,648 28,829,027 38,336,543 52,316,353
Loss before income taxes......................... (13,253,122) (723,027) (14,559,041) (1,515,991)
Income tax benefit............................... (1,771,883) (202,447) (1,759,091) (464,977)
-------------- ------------- -------------- -------------
Net loss......................................... ($ 11,481,239) ($ 520,580) ($ 12,799,950) ($ 1,051,014)
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
Loss per common share............................ ($ 2.62) ($ .12) ($ 2.93) ($ .24)
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
Weighted average shares used in computing per
share amounts.................................. 4,375,492 4,375,492 4,375,492 4,375,492
STATEMENTS OF RETAINED EARNINGS
Retained earnings, beginning....................... $ 17,319,178 $ 31,114,962 $ 18,637,889 $ 31,645,396
Net loss........................................... (11,481,239) (520,580) (12,799,950) (1,051,014)
-------------- ------------- -------------- -------------
Retained earnings, ending.......................... $ 5,837,939 $ 30,594,382 $ 5,837,939 $ 30,594,382
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
</TABLE>
See notes to financial statements.
4
<PAGE>
NCC INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
<S> <C> <C>
June 28, June 29,
1997 1996
-------------- -------------
Cash flows from operating activities
Net loss......................................................................... ($ 12,799,950) ($ 1,051,014)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation................................................................... 683,927 774,273
Provision to reduce assets held for sale....................................... 1,267,726 --
Amortization................................................................... 6,968 8,585
Provision for losses on accounts receivable.................................... 60,000 60,000
Loss from sale of equipment.................................................... 252,934 131,734
Net change in operating assets and liabilities
Decrease (increase) in accounts receivable..................................... 4,969,801 (328,754)
Decrease (increase) in inventory............................................... 11,607,542 (3,794,518)
(Decrease) increase in accounts payable and accrued expenses................... (594,164) 3,968,943
Decrease in income taxes refundable............................................ 117,845 --
Decrease (increase) in other current assets.................................... 1,564,313 (476,141)
Decrease in other assets....................................................... 7,477 97,189
Decrease in amounts due to affiliates.......................................... (6,782,575) --
(Decrease) increase in other liabilities....................................... (378,313) 504,098
-------------- -------------
Net cash used in operating activities............................................ (16,469) (105,605)
Cash flows from investing activities
Purchase of plant & equipment.................................................. (20,977) (85,200)
Proceeds from sales of investments............................................. -- 555,415
-------------- -------------
Net cash (used in) provided by investing activities.............................. (20,977) 470,215
</TABLE>
See notes to financial statements.
5
<PAGE>
NCC INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 28, June 29,
1997 1996
----------------- -----------------
<S> <C> <C>
Net (decrease) increase in cash........................................... ($ 37,446) $ 364,610
Cash, beginning of year................................................... 73,359 725,198
-------- -----------------
Cash, end of quarter...................................................... $ 35,913 $ 1,089,808
-------- -----------------
-------- -----------------
Supplemental disclosure of cash flow information
Cash paid during the six months for interest.............................. $ 322,855 $ 164,273
-------- -----------------
-------- -----------------
Cash paid during the six months for income taxes.......................... $ 106,289 $ 18,360
-------- -----------------
-------- -----------------
</TABLE>
See notes to financial statements.
6
<PAGE>
NCC INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation:
The accompanying unaudited 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 of the financial position and
results of operations for the interim period have been included. Operating
results for the six month period ended June 28, 1997 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1997. The balance sheet at December 31, 1996 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, 1996.
The Registrant's operations historically have been engaged in the
foundation garment business, which consists of the design, manufacture and
sale of brassieres, panties and girdles.
In April 1995, Maidenform Worldwide, Inc. ("Worldwide") acquired
approximately 92.4% of the common stock of Registrant from Triumph
International Overseas, Limited, a Liechtenstein corporation ("Triumph"),
Guenther Spiesshofer, a former officer and director of Registrant
("Spiesshofer"), and Frank Magrone, a former officer of Registrant
("Magrone") (the "Acquisition"). Following the closing of this Acquisition,
Worldwide contributed all of the purchased shares of Registrant's common
stock to Maidenform, Inc. ("Maidenform"), a wholly owned subsidiary of
Worldwide. Simultaneously Triumph purchased, along with Mr. Magrone,
approximately 28% of the outstanding shares of Class A common stock of
Worldwide and, therefore, Triumph remains a related party to Registant.
Registrant's consolidated financial statements for the year ended December
31,1996 were prepared on a going concern basis which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business. Registrant has experienced a decline in the trend of
earnings with a net (loss) gain of ($12,697,794), $2,750,664, and $5,901,012 for
the years ended December 31, 1996, 1995 and 1994, respectively. In addition,
Worldwide also had losses for the years ended December 31, 1996 and 1995.
2. Inventory:
a) Inventories at June 28, 1997 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.
b) Inventories for all periods indicated consist of the following:
June 28,
1997 December 31,
(unaudited) 1996
------------- -------------
Raw Materials.................................. $ 9,477,117 $ 5,675,483
Work in process................................ 2,171,307 3,337,370
Finished goods................................. 3,736,492 17,979,605
------------- -------------
Total...................................... $ 15,384,916 $ 26,992,458
------------- -------------
------------- -------------
3. Net loss per share:
Per share amounts are based on the weighted average number of shares outstanding
during the period.
7
<PAGE>
4. Debt
Registrant participates in the consolidated cash management system of its
ultimate parent, Worldwide. As such, Registrant is a party to, and its liquidity
is dependent upon, Worldwide's financing arrangements.
5. Restructuring Costs
During the second quarter ended June 28, 1997, restructuring costs for
increased inventory reserves, facilities exit costs, and related severance
amounts to approximately $ 6,000,000.
6. Subsequent Event
On July 22, 1997, the Registrant announced that it, along with Maidenform
Worldwide, Inc. and Maidenform, Inc. (collectively, the ("Maidenform Group"),
filed a voluntary petition for bankruptcy under Chapter 11 of the Federal
Bankruptcy Code in the United States District Court for the Southern District of
New York. The filing is expected to allow the Maidenform Group to restructure
its financial obligations through a plan of reorganization. The Maidenform Group
signed a $ 50 million Debtor-In-Possession Credit Agreement in
connection with the filing, which was approved by the bankruptcy court.
8
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
General Results of Operations.
Historically, the Registrant manufactured garments in its manufacturing
facilities in Cortland, New York and Puerto Rico. In August 1996, Registrant
closed two leased Puerto Rican manufacturing facilities. Registrant
transferred all equipment from these facilities to Maidenform at net book
value for use at other locations. In November 1996, Registrant ceased
manufacturing garments and closed its manufacturing facility in Cortland, New
York. Registrant now purchases garments and labor from Maidenform and certain
of its affiliates, Triumph and certain of its affiliates, and independent
contractors.
Registrant's closed its leased manufacturing facilities in order to
obtain more favorable product pricing as a result of manufacturing
efficiencies resulting from the integration of operations of Registrant with
Maidenform. Registrant and Maidenform are in the process of formalizing a
definitive agreement which reflects these arrangements, which Registrant
believes will be on terms no less favorable to it than terms available from
non-affiliated, third parties. Both parties believe that the utilization of
Maidenform's facilities, outside contractors and plant production provides
Registrant with a more competive product cost.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. This Quarterly Report contains
certain forward-looking statements and information based upon the beliefs of
management as well as assumptions made by and information currently available
to management. The statements contained in this Quarterly Report relating to
matters that are not historical facts are forward-looking statements that
involve risks and uncertainties, including, but not limited to, future demand
for the Registrant's products, Registrant's future working capital
requirements, general economic conditions, government regulation,
competition, and other risks and uncertainties. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated or expected.
Results of Operations
Net sales for the second quarter declined by 59% to $ 11,482,526 at June
28, 1997 from $ 28,106,000 at June 29, 1996. Net sales for the six months of
1997 decreased 53% to $ 23,777,502 at June 28, 1997 from $ 50,800,362 at June
29, 1996. The decline in net sales for the three and six months ended June
28, 1997 is the result of decreases in both units sold and unit price. Unit
volume declined 38% for the second quarter of 1997 as compared to the second
quarter of 1996, and also declined 43% for the first six months of 1997 as
compared to the first six months of 1996. This decline was primarily due to
the Registrant's inability to ship stock on a timely basis due to liquidity
constraints. The average selling price per unit declined due to closeout
sales of discontinued styles and change in the mix of products sold.
Cost of sales, shipping, selling and general administrative expenses for
the three and six months ended June 28,1997 increased to $24,414,512 and
$37,728,519, respectively, from $28,302,278 and $57,459,339, respectively,
for the same periods in 1996. Cost of sales increased as a result of the
aforementioned closeout sales, accrued restructuring costs and change in
product mix. Restructuring costs for increased inventory reserves, facilities
exit costs, and related severance amounted to approximately $ 6,000,000 in
the second quarter of 1997. Shipping, selling and general and administrative
expenses for the second quarter and the first six months of 1997 as a
percentage of net sales increased as compared to 1996 primarily due to the
substantial decline in net sales partially offset by reduced spending.
Interest expense for the second quarter of 1997 as compared with the
second quarter 1996 and the first six months of 1997 as compared with the
first six months of 1996 decreased principally due to lower debt levels
partially offset by increased interest charges from vendors.
As a result of the aforementioned items, the net loss in the second
quarter and the first six months of 1997 was ($ 11,481,239) and ($ 12,799,950),
respectively, as compared with the net loss in the second quarter and the first
six months of 1996 which was ($ 520,580) and ($ 1,051,014), respectively.
9
<PAGE>
Financial Condition
Net cash flows used in operating activities was ($ 16,469) during the first
six months of 1997 as compared to($ 105,605) during the first six months of
1996. The increased net loss for the first six months and decrease in amounts
due affiliates were offset by decreases in accounts receivable and inventory.
Net cash flows used in investing activities decreased due to sales of
investments in 1996. Working capital was $ 8,923,778 at June 28, 1997,
as compared to $19,903,986 at December 31, 1996.
Registrant participates in the consolidated cash management system of its
ultimate parent, Worldwide, and its subsidiaries, including Maidenform and
the Registrant. As such, Registrant is a party to, and its liquidity is
dependent upon, the Maidenform Group's financing arrangements. In April 1995,
the Maidenform Group entered into a bank loan agreement for a revolving
credit facility in the amount of $120,000,000 and a term loan of $50,000,000
(the "Bank Loan Agreement"), and amended and restated its senior note
agreement with respect to $30,000,000 principal amount in senior notes (the
"Senior Note Agreement" and, collectively, with the Bank Loan Agreement, the
"Maidenform Loan Agreements"). The revolving credit facility, which had an
expiration date of April 25, 1998, limited borrowings to certain percentages
of the Maidenform Group's trade accounts receivable and inventories. The term
loan was repayable in increasing quarterly principal installments ranging
from $2,000,000 to $3,000,000 commencing on June 30, 1996 through maturity on
March 31, 2001. The senior notes are due on September 30, 2003, payable in
annual principal installments of $4,285,714 on each September 30, commencing
1997 through 2000. In connection with such financings, Registrant's assets
and 92.4% of its stock were pledged as collateral. In the event of a default
by Registrant or any other member of the Maidenform Group with respect to the
Maidenform Loan Agreements, the lenders could demand repayment of all amounts
outstanding and assert their rights as secured creditors against any member
of the Maidenform Group, including the Registrant.
In 1996, events of default occurred under the Maidenform Loan Agreements
from time to time due to the Maidenform Group's failure to comply with
certain financial covenants and other provisions of such agreements. In
September 1996, the Maidenform Loan Agreements were amended whereby the
lenders agreed to forbear from exercising their rights and remedies arising
from such events of default through January 17, 1997 and to permit
overadvances which allowed borrowings beyond the borrowing base tied to
inventory and accounts receivable up to a maximum credit limit. In December
1996, the Bank Loan Agreement was amended and restated with a new loan
facility (the "New Bank Loan Agreement" and, collectively with the Senior
Note Agreement, as amended, the "New Maidenform Loan Agreements"), which
increased the revolving credit facility up to a maximum of $145,000,000,
provided for a term loan in the original principal amount of $50,000,000, and
extended the forbearance until May 31, 1997. In addition, the Senior Note
Agreement was amended in order to conform certain provisions therein with the
provisions in the New Bank Loan Agreement. In March 1997, the New Bank Loan
Agreement was amended to modify the overadvance formula to allow the
Maidenform Group to obtain borrowings up to the maximum credit limit. In
April 1997, the New Bank Loan Agreement was further amended to increase the
available overadvances to allow access to the maximum credit limit, increase
the maximum revolving credit limit up to $150,000,000, and amend the
forbearance agreement so that certain covenants relating to the first quarter
of 1997 were suspended. In May 1997, the New Bank Loan Agreement was again
amended to increase the available overadvances to allow access to the maximum
credit limit, maintain the small increase in the revolving credit facility
amount obtained in the April amendment, and extend the forbearance period
through September 30, 1997.
Under the New Maidenform Loan Agreements, Registrant's assets and 92.4%
of its stock were pledged as collateral. In the event of a default by
Registrant or any other member of the Maidenform Group under the New
Maidenform Loan Agreements, the lenders can demand repayment of all amounts
outstanding and assert their rights as secured creditors against any member
of the Maidenform Group, including Registrant.
The New Maidenform Loan Agreements contain covenants that, among other
matters, restrict additional borrowings, dividends and other payments with
respect to the Maidenform Group's capital stock and provide for the
maintenance of minimum consolidated tangible net worth and certain financial
ratios, including current assets (excluding inventory) to current
liabilities, debt to equity, fixed charge coverage and debt to operating cash
flow ratios (all as defined). However, as stated above, these financial
covenants have been suspended through September 30, 1997.
As of June 28, 1997, outstanding borrowings and letters of credit under
the then existing revolving credit facility amounted to approximately
$141,700,000, outstanding borrowings under the term loan were approximately
$29,692,400 and outstanding borrowings under the Senior Note Agreement were
approximately $26,344,980.
On July 22, 1997, the registrant along with Maidenform Worldwide, Inc.
and Maidenform, Inc., filed a voluntary petition for bankruptcy under Chapter
11 of the Federal Bankruptcy Code in the United States District Court for the
Southern District of New York. The filing is expected to allow the Maidenform
Group to restructure its financial obligations through a plan of
reorganization. The effect of the Bankruptcy filing was to stay collection
efforts of the outstanding debt discussed above pending further order of the
Bankruptcy Court.
The Maidenform Group signed a $ 50 million Debtor-In-Possession Credit
Agreement in connection with the filing (the "DIP Agreement"), which was
approved by the bankruptcy court. The DIP Agreement terminates upon any of
the following conditions: (i) any material non-compliance by the Borrowers
with any of the terms or provisions of either of the orders of the bankruptcy
court, (ii) any event of default shall have occurred and any notice required
to cause the debtor-in-possession loans to become due and payable shall have
been given, (iii) the consummation date of any reorganization plan and (iv)
December 31, 1998.
The debtor-in-possession loan commitment amount is limited to the lesser of:
(i) the excess, if any, of (A) the sum of (I) the borrowing base plus (II) the
overadvance on any such date over (B) the sum of the aggregate outstanding
principal amount of the (I) advances plus (II) second revolving credit advances
plus (III) letter of credit liability plus (IV) cash collateral loans, on any
such date, or (ii) on any such date occurring (A) from July 23, 1997 through and
including July 29, 1997, $ 10,000,000; (B) from July 30, 1997 through and
including August 26, 1997, $ 14,400,000; (C) from August 27, 1997 through and
including September 30, 1997, $ 20,900,000; (D) from October 1, 1997 through and
including October 28, 1997, $ 23,900,000; (E) from October 29, 1997 through and
including November 25, 1997, $ 27,100,000; (F) from November 26, 1997 through
and including December 31, 1997, $ 30,000,000; (G) from January 1, 1998 and
thereafter, $ 50,000,000.
10
<PAGE>
The DIP Agreement contains affirmative and negative covenants that, among
other matters, restricts indebtedness, liens, contingent obligations,
fundamental changes, sales of assets, investments, dividends, transactions
with affiliates, foreign exchange contracts, creations of and investments in
subsidiaries, minimum monthly amounts of cumulative earnings before interest,
taxes, depreciation, amortization and restructuring ("EBITDAR as defined),
capital expenditures, and professional fees.
As of August 18, 1997, there has not been any need for advances under the
DIP Agreement and there is availability of approximately $ 12,700,000 under
this facility.
The Maidenform Group is currently in the process of trying to restructure
itself under Chapter 11. However, no assurance can be given that the Maidenform
Group will be successful in its restructuring which would allow it to continue
in business and allow it to realize its assets and liquidate its liabilities as
they become due.
11
<PAGE>
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
During 1996, Herzog, Heine Geduld, Inc. ("HHG"), the owner of approximately
30,214 shares of Registrant's common stock and the principal market maker for
Registrant's common stock, commenced a purported class action (the "Action")
against Registrant, Maidenform, Worldwide, Triumph, Guenther Spiesshofer, a
former director and shareholder of Registrant ("Spiesshofer"), and Frank
Magrone, a former officer, director and shareholder of Registrant ("Magrone").
The Action, which HHG sought to maintain on behalf of itself and a putative
class of all public shareholders of Registrant as of April 26, 1995, was
commenced in New York State Court (the "Court"), seeks compensatory damages in
an unspecified amount and alleges that Triumph, Spiesshofer and Magrone breached
their fiduciary duty to HHG and the remaining shareholders by selling their
controlling stock of Registrant to Worldwide at a premium and failing to include
HHG and the remaining shareholders in the sale, and in failing to share the
control premium with such shareholders. The complaint also alleges that
Maidenform and Worldwide aided and abetted the selling defendants' alleged
breach by allegedly structuring the stock purchase to exclude public
shareholders. HHG also claims that Maidenform and Worldwide, as the controlling
shareholders of Registrant since the sale, breached their fiduciary duty to the
public shareholders by allegedly operating Registrant as a wholly-owned
subsidiary in absence of purchasing 100% of the stock. While the complaint names
Registrant as a defendant, it does not articulate any claim for relief against
Registrant.
Additionally, in October 1996, Bernard Zimmerman, the owner of 5,000 shares
of common stock of Registrant, commenced a related purported class action
lawsuit against the same defendants as the HHG lawsuit and asserting identical
claims for relief. By stipulation and order dated December 19, 1996, the
Zimmerman action was consolidated with the HHG action.
On April 18, 1997, the Court granted defendants' motion to dismiss the
complaints for failure to state a cause of action and dismissed the
complaints. In May 1997, plaintiffs filed a motion for reconsideration of the
Court's decision as to matters unrelated to the Registrant and a notice of
appeal. As a result of the bankruptcy filing of the Maidenform Group, these
proceedings are automatically stayed as against the Maidenform Group.
On July 22, 1997, NCC Industries, Inc., along with Maidenform Worldwide,
Inc. and Maidenform, Inc. (collectively, the "Maidenform Group"), filed a
voluntary petition for bankruptcy under Chapter 11 of the Federal Bankruptcy
Code in the United States District Court for the Southern District of New
York.
12
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
Exhibits No. Description
---------------------- -----------------------
<S> <C> <C>
(a)
27 Financial Data Schedule
99.1 Debtor-In Possession
Agreement
(b) Reports on Form 8-K
</TABLE>
A Report on Form 8-K dated July 22, 1997 filed on July 31, 1997.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NCC INDUSTRIES, INC.
DATE August 18, 1997 By: /s/ FRANK STULL
----------------- --------------------------
Frank Stull
Executive Vice President
Chief Financial Officer
(Duly authorized officer to execute
on behalf of Registrant)
14
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Title of Document Page
----------------------- -----
<S> <C>
Financial Data Schedule 26
Debtor in Possession Credit Agreement
</TABLE>
15
<PAGE>
EXECUTION COPY
--------------
Ex. 99.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
MAIDENFORM WORLDWIDE, INC.
MAIDENFORM, INC.
NCC INDUSTRIES, INC.
---------------------------------------
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
dated as of July 22, 1997
---------------------------------------
$50,000,000
Credit Facility
---------------------------------------
CORESTATES BANK, N.A.,
as Agent
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
16
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS........................................ 1
1.1 Defined Terms...................................... 1
1.2 Other Definitional Provisions...................... 16
SECTION 2. COMMITMENTS........................................ 16
2.1 Commitments........................................ 16
2.2 Commitment Amounts................................. 17
2.3 Fees............................................... 18
2.4 Proceeds of DIP Loans.............................. 19
SECTION 3. LETTERS OF CREDIT.................................. 19
3.1 Issuances and Extensions........................... 19
3.2 Participating Interests............................ 20
3.3 Procedure for Opening Letters of Credit............ 20
3.4 Payments in Respect of Letters of Credit........... 20
3.5 Letter of Credit Reserves.......................... 21
3.6 Further Assurances................................. 22
3.7 Obligations Absolute............................... 22
3.8 Assignments........................................ 23
3.9 Participations..................................... 23
SECTION 4. GENERAL PROVISIONS APPLICABLE TO DIP LOANS......... 23
4.1 Procedure for DIP Loan Borrowings.................. 23
4.2 Repayments and Prepayments......................... 24
4.3 Interest Rates and Payment Dates................... 24
4.4 Computation of Interest and Fees................... 25
4.5 Pro Rata Treatment and Payments.................... 25
4.6 Requirements of Law................................ 27
SECTION 5. REPRESENTATIONS AND WARRANTIES..................... 28
5.1 Financial Condition................................ 28
5.2 No Change.......................................... 29
5.3 Corporate Existence; Compliance with Law........... 29
5.4 Corporate Power; Authorization..................... 30
5.5 Enforceable Obligations............................ 30
5.6 No Legal Bar....................................... 31
5.7 No Material Litigation............................. 31
5.8 Investment Company Act............................. 31
5.9 Federal Regulation................................. 31
5.10 Taxes.............................................. 32
5.11 Subsidiaries....................................... 32
5.12 Ownership of Property; Liens....................... 32
5.13 ERISA.............................................. 33
5.14 Patents, Copyrights, Permits, Trademarks
and Licenses....................................... 34
</TABLE>
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5.15 Environmental Matters.............................. 34
5.16 Accuracy and Completeness of Information........... 35
SECTION 6. CONDITIONS PRECEDENT............................... 36
6.1 Conditions to Initial DIP Loans and Letters
of Credit.......................................... 36
6.2 Conditions to All DIP Loans and Letters
of Credit.......................................... 37
SECTION 7. AFFIRMATIVE COVENANTS.............................. 38
7.1 Financial Statements............................... 38
7.2 Certificates; Other Information.................... 40
7.3 Payment of Obligations............................. 41
7.4 Conduct of Business and Maintenance of
Existence.......................................... 41
7.5 Maintenance of Property; Insurance................. 42
7.6 Inspection of Property; Books and Records;
Discussions........................................ 42
7.7 Notices............................................ 42
7.8 Environmental Laws................................. 44
7.9 Cash Concentration Account......................... 44
7.10 FY1988 Projections................................. 44
7.11 Professional Fee Budget............................ 44
SECTION 8. NEGATIVE COVENANTS................................. 45
8.1 Indebtedness....................................... 45
8.2 Limitation on Liens................................ 45
8.3 Limitation on Contingent Obligations............... 47
8.4 Prohibition of Fundamental Changes................. 47
8.5 Prohibition on Sale of Assets...................... 47
8.6 Limitation on Investments, Loans and
Advances........................................... 47
8.7 Limitation on Dividends............................ 48
8.8 Transactions with Affiliates....................... 48
8.9 Foreign Exchange Contracts......................... 49
8.1 Limitation on Creation of and Investments
in Subsidiaries.................................... 49
8.11 DIP Financing...................................... 49
8.12 Alteration of Rights of Banks...................... 49
8.13 Chapter 11 Claims.................................. 49
8.14 Reclamation Claims; Bankruptcy Code
Section 546(g) Agreements......................... 49
8.15 EBITDAR............................................ 50
8.16 Capital Expenditures............................... 50
8.17 Professional Fees.................................. 50
SECTION 9. EVENTS OF DEFAULT.................................. 50
SECTION 10. THE AGENT; CORESTATES AS ISSUER.................... 55
10.1 Appointment........................................ 55
</TABLE>
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10.2 Delegation of Duties.............................. 55
10.3 Exculpatory Provisions............................ 55
10.4 Reliance by Agent................................. 55
10.5 Notice of Default................................. 56
10.6 Non-Reliance on Agent and Other Banks............. 56
10.7 Indemnification................................... 57
10.8 The Agent in its Individual Capacity.............. 57
10.9 Successor Agent................................... 58
10.10 CoreStates as Issuer of Letters of Credit......... 58
SECTION 11. MISCELLANEOUS..................................... 58
11.1 Amendments and Waivers............................ 58
11.2 Notices........................................... 59
11.3 No Waiver; Cumulative Remedies.................... 60
11.4 Survival of Representations and Warranties........ 61
11.5 Payment of Expenses and Taxes..................... 61
11.6 Successors and Assigns; Participations;
Purchasing Banks................................. 62
11.7 Adjustments; Set-Off............................. 66
11.8 Counterparts..................................... 66
11.9 Governing Law; No Third-Party Rights............. 66
11.10 Additional Grant of Lien......................... 67
</TABLE>
Schedules
Schedule I DIP Loan Percentages
Schedule 5.7 Material Litigation
Schedule 5.10 Taxes
Schedule 5.11 Subsidiaries
Schedule 5.13 ERISA
Schedule 5.14 Patents
Schedule 5.15 Environmental Matters
Schedule 7.5 Maintenance of Property
Exhibits
Exhibit A Borrowing Base Certificate
Exhibit B Commitment Transfer Supplement
Exhibit C Interim Order
Exhibit D L/C Participation Certificate
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<PAGE>
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
-------------------------------------
DEBTOR-IN-POSSESSION CREDIT AGREEMENT, dated as of July 22, 1997 (this
"Agreement"), among MAIDENFORM WORLDWIDE, INC., a Delaware corporation (the
"Company"), MAIDENFORM, INC., a New York corporation ("Maidenform"), NCC
INDUSTRIES, INC., a Delaware corporation ("NCC", and collectively with the
Company, and Maidenform, the "Borrowers"), the several lenders from time to time
parties hereto (the "Banks") and CORESTATES BANK, N.A., a national banking
association, as agent (in such capacity, and any successor agent, the "Agent").
W I T N E S S E T H:
WHEREAS, on July 22, 1997 (the "Filing Date"), the Borrowers filed,
with the United States Bankruptcy Court for the Southern District of New York,
voluntary petitions for relief under Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code");
WHEREAS, the Borrowers have requested that the Banks from time to time
after the Effective Date and prior to the Termination Date make DIP Loans to the
Borrowers and issue Letters of Credit in the maximum face or stated amounts
herein on behalf of the Borrowers; and
WHEREAS, the Banks are willing, on the terms and conditions
hereinafter set forth, to make such DIP Loans and issue such Letters of Credit;
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:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms defined in
the caption hereto shall have the meanings set forth therein, and the following
terms have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof: "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Agent as its prime rate in
effect at its principal office in Philadel-
<PAGE>
phia, Pennsylvania (the Prime Rate not being intended to be the lowest rate of
interest charged by CoreStates in connection with extensions of credit to
debtors) and "Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Agent from three federal funds brokers of recognized standing selected by it.
Any change in the ABR due to a change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change in the Prime Rate,
the Three-Month Secondary CD Rate or the Federal Funds Effective Rate,
respectively.
"Accounts" has the meaning given to such term in the Pennsylvania
Uniform Commercial Code as in effect on the date hereof.
"Advances": as defined in the Pre-Petition Loan Agreement.
"Affiliate": of any Person (a) any Person (other than a Subsidiary)
which, directly or indirectly, is in control of, is controlled by, or is under
common control with such Person, or (b) any Person who is a director or officer
(i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above. For purposes of this definition, control of a
Person shall mean the power, direct or indirect, (i) to vote 25% or more of the
securities having ordinary voting power for the election of directors of such
Person, whether by ownership of securities, contract, proxy or otherwise, or
(ii) to direct or cause the direction of the management and policies of such
Person, whether by ownership of securities, contract, proxy or otherwise.
"Agent": as defined in the preamble.
"Agreement": this Debtor-in-Possession Credit Agreement, as amended,
supplemented or modified from time to time.
"Bankruptcy Code": as defined in the first recital.
"Bankruptcy Court: the United States Bankruptcy Court for the
Southern District of New York or such other court as shall have jurisdiction
over the Chapter 11 Cases.
"Banks": as defined in the preamble.
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<PAGE>
"Borrowers": as defined in the preamble.
"Borrowing": the making of DIP Loans or issuance of Letters of Credit
on any Business Day in accordance with Sections 2, 3 and 4.
"Borrowing Base": the sum of (A) 80% of Eligible Accounts plus (B)
50% of Eligible Inventory plus (C) 80% of Restricted Cash.
"Borrowing Base Certificate": a certificate of the Borrowers in
substantially the form attached hereto as Exhibit A and made a part hereof.
"Borrowing Date": any Business Day, specified in a notice pursuant to
(a) Section 4.1 as a date on which the Company requests the Banks to make DIP
Loans hereunder or (b) Section 3.1 as a date on which the Company requests
CoreStates to issue a Letter of Credit hereunder.
"Budget": the Consolidated monthly projections dated July 21, 1997
covering the period from July 1, 1997 through December 31, 1997 which has been
previously delivered to the Agent, as updated by the Company from time to time.
"Budget Compliance Certificate": a written certificate signed by an
authorized financial officer of the Company delivered weekly to the Agent and
each of the Banks stating that (a) the proceeds of the DIP Loans, Letters of
Credit and Cash Collateral Loans to be used during the upcoming week are for one
of the types of expenditures set forth in Section 2.4 and in compliance with the
maximum amounts permitted to be expended thereunder for the relevant time
period, and (b) no Termination Event has occurred, or, if a Termination Event
has occurred, that a Termination Event has occurred together with a description
of such Termination Event.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Capital Expenditures": any expenditures made or cost incurred by any
Borrower whether paid or due and owing, for the acquisition, purchase,
alteration or improvement of any capital asset that is required to be
capitalized under GAAP, however reflected on Borrowers' financial statements.
"Cash Collateral Loans": as defined in the Interim Order.
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<PAGE>
"Cash Equivalents": (a) securities issued or directly and fully
guaranteed or insured by the United States Government, the Commonwealth of
Puerto Rico or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (b) certificates of deposit
and Eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any Bank or with any commercial
bank organized under the laws of the United States of America or any state
thereof, the District of Columbia or the Commonwealth of Puerto Rico, each
having capital and surplus in excess of $300,000,000, (c) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (a) and (b) entered into with any financial institution
meeting the qualifications specified in clause (b) above, and (d) commercial
paper rated A/1 or the equivalent thereof by Standard & Poor's Ratings Group or
P-1 or the equivalent thereof by Moody's Investors Service, Inc. and in each
case maturing within six months after the date of acquisition.
"Change in Law": with respect to any Bank, the adoption of any law,
rule, regulation, policy, guideline or directive (whether or not having the
force of law) or any change therein or in the interpretation or application
thereof by any Governmental Authority having jurisdiction over such Bank, in
each case after the Effective Date.
"Chapter 11 Cases": the chapter 11 cases of the Borrowers under Case
nos. 97-B-44869 through 97-B-44871 (CB) in the Bankruptcy Court.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Commercial L/C": a commercial documentary Letter of Credit issued
pursuant to this Agreement under which CoreStates agrees to make payments in
Dollars for the account of any Borrower in connection with the purchase of goods
or services in the ordinary course of business.
"Commitment Transfer Supplement": the supplement substantially in the
form of Exhibit B attached hereto.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Company within the meaning of Section
414(b) or (c) of the Code.
"Company": as defined in the preamble.
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<PAGE>
"Consolidated": refers to the consolidation of the accounts of the
Borrowers and their Subsidiaries in accordance with GAAP, including principles
of consolidation.
"Consummation Date": with respect to a Reorganization Plan, the
earlier of the date by which (i) the effective date of such Reorganization Plan
occurs or (ii) "substantial consummation" (as defined in Section 1101(2) of the
Bankruptcy Code) of such Reorganization Plan shall have occurred.
"Contingent Obligation": as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, Financing
Leases, dividends or other obligations ("primary obligations") of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (d) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount (based on the maximum
reasonably anticipated net liability in respect thereof as determined by the
Company in good faith) of the primary obligation or portion thereof in respect
of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated net liability in respect thereof (assuming
such Person is required to perform thereunder) as determined by the Company in
good faith.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of the property owned by it
is bound.
"Controlled Group": all members of a controlled group of corporations
or all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrowers, are
treated as a single
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<PAGE>
employer under Section 414(b) or 414(c), respectively, of the Code or Section
4001 of ERISA.
"CoreStates": CoreStates Bank, N.A., a national banking association,
and its successors.
"CoreStates Commercial Issuance Fee": a fee equal to 0.125% per annum
on the Stated Amount under all Letters of Credit constituting Commercial L/Cs.
"CoreStates Issuance Fee": collectively, the Core-
States Commercial Issuance Fee and the CoreStates Standby Issuance Fee.
"CoreStates Standby Issuance Fee": a fee equal to 0.125% per annum on
the Stated Amount under all Letters of Credit constituting Standby L/Cs.
"Default": any of the events specified in Section 9, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Delinquent Purchaser": a Purchaser more than 50% of whose aggregate
Account indebtedness to the Borrowers fails to comply with the specification for
Eligible Accounts set out in clause (J) of the definition of Eligible Accounts.
"DIP Financing Documents": the collective reference to this
Agreement, all Letters of Credit, each Order and each other instrument, document
or agreement required to be delivered pursuant hereto or thereto.
"DIP Loan": as defined in Section 2.1(a).
"DIP Loan Borrowing: that portion of any Borrowing consisting solely
of DIP Loans, if any.
"DIP Loan Commitment": with respect to each Bank, such Bank's
obligation pursuant to Section 2.1 to make DIP Loans and issue (or participate
in the issuance of) Letters of Credit.
"DIP Loan Commitment Amount": as defined in Section 2.2(a).
"DIP Loan Percentage": relative to any Bank, the percentage set forth
opposite its name in the column labeled "DIP Loan Percentage" on Schedule I
attached hereto.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
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<PAGE>
"EBITDAR": of any Person, on a Consolidated basis, for any period,
the sum of the following for such period: (i) net income or net loss (without
giving effect to (A) extraordinary income or extraordinary losses or (B) any
income arising from the reversal of restructuring reserves) plus (ii) income
taxes, de-preciation, amortization, interest expense, reorganization expenses
and restructuring fees and charges.
"Effective Date": the first date on which all of the conditions
precedent contained in Section 6 hereof are satisfied or waived.
"Eligible Account": any Account of a Borrower created in an arm's
length transaction which meets all the following specifications at the time of
determination of Eligible Accounts and continues to meet the same until it is
collected in full: (A) the Account is lawfully owned by a Borrower free and
clear of all liens, security interests or prior assignments except (i) for the
Liens securing any obligations under this Agreement or the Pre-Petition
Agreements (as defined in the Interim Order) or contemplated by either of the
Orders and (ii) as set forth in subsection (B) hereof, and such Borrower has the
right of assignment thereof and the power to grant a security interest therein;
(B) the Account is subject to a first priority perfected security interest in
favor of the Agent; (C) the Account is valid and enforceable, representing the
undisputed indebtedness of a Purchaser to a Borrower, provided that if the
Account is subject to any defense, set-off, counter-claim, credit, allowance or
adjustment, only that portion of the Account, if any, not so subject and
otherwise eligible shall be included as an Eligible Account; (D) the Purchaser
has accepted the goods, the sale of which to such Purchaser has given rise to
the Account, provided that if any part of the goods the sale of which has given
rise to an Account have been returned, rejected, lost or damaged, only that part
of the Account, if any, representing the sale of goods not so returned,
rejected, lost or damaged, and otherwise eligible, shall be included as an
Eligible Account; (E) if the Account arises from the sale of goods, such sale
was an absolute sale and not on consignment or on approval or on a
sale-or-return basis nor subject to any other repurchase or return agreements,
and such goods have been shipped to the Purchaser; (F) if the Account arises
from the performance of services, such services have actually been performed;
(G) the Account arose in the ordinary course of a Borrower's business; (H) no
notice of the bankruptcy, receivership, reorganization, or insolvency of the
Purchaser owing such Account has been received by the Agent, any Bank or any
Borrower unless the Agent determines in its sole discretion that the Purchaser's
ability to pay such Account is not compromised by such bankruptcy, receivership,
reorganization or insol-
-7-
<PAGE>
vency because of post petition financing, collateral or other adequate support
for such payment; (I) an invoice has been sent to the Purchaser for such
Account; (J) the Account has remained unpaid for less than 60 days from the due
date and less than 120 days from the date of the initial invoice for such
Account; (K) the Purchaser is not the United States Federal government or any
United States Federal governmental agency except to the extent (1) such agency
and the Account are subject to the Federal Assignment of Claims Act, and (2)
such Account has been assigned to the Agent and notice has been given thereof
under the Federal Assignment of Claims Act; provided, however, that up to Two
Million Dollars ($2,000,000.00) of otherwise Eligible Accounts owing from the
United States Federal government or governmental agency thereof shall be deemed
Eligible Accounts notwithstanding their failure to satisfy conditions (1) and/or
(2) in this clause (K); (L) the Account is not owed by a Purchaser who is, and
does not arise out of transactions between a Borrower and (1) a non-United
States government, governmental agency or government-controlled business, (2) a
Person who is not subject to the jurisdiction of the court system of the United
States, any state of the United States or Canada, or (3) a Person who does not
maintain in the United States or Canada an office to which such Account is
invoiced, unless the payment of such Account is secured by a letter of credit
opened or confirmed by a national bank or other bank incorporated under the laws
of a state of the United States or similar credit support in form and amount,
and with terms acceptable to the Agent in its sole discretion, which has been
assigned to the Agent pursuant to the DIP Financing Documents and the Agent
determines, and so notifies the Borrowers in writing, that the Purchaser is
sufficiently credit-worthy taking into account the aggregate amount of the
Accounts owed by such Purchaser and such other factors as the Agent may
determine; (M) the Purchaser for such Account has not submitted a medium of
payment therefor which has been returned uncollected for any reason; (N) the
Purchaser owing such Account is not an Affiliate of any Borrower; (O) such
Account is not a contra Account; (P) such Account is not owed by a Delinquent
Purchaser; and (Q) such Account is otherwise acceptable to the Agent in its
reasonable discretion.
"Eligible Inventory": Inventory of any Borrower, valued within thirty
(30) 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 Borrower; (B)
conforms in all respects to the representations and warranties relating thereto
contained in the DIP Financing Documents; (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
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<PAGE>
date hereof; (E) is not being held on consignment; (F) is not subject to a Lien
other than a Lien in favor of the Agent or a Lien securing any obligations under
this Agreement or the Pre-Petition Agreements (as defined in the Interim Order)
or contemplated by either of the Orders); and (G) is otherwise acceptable to the
Agent in its reasonable judgment.
"Environmental Laws": any and all Federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees or
requirements of any Governmental Authority regulating, or imposing liability or
standards of conduct concerning environmental protection matters, including
without limitation, Hazardous Materials, as now or may at any time hereafter be
in effect, including, without limitation, the Clean Water Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Superfund Amendment
and Reauthorization Act of 1986, the Emergency Planning and Community Right to
Know Act, the Resource Conservation and Recovery Act, the Safe Drinking Water
Act, the Toxic Substances Control Act, together, in each case, with each
amendment, supplement or other modification thereto, and the regulations adopted
and publications promulgated thereunder and all substitutions therefor.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Fee Properties": as defined in Section 5.12.
"Filing Date": as defined in the first recital.
"Final Order": an order of the Bankruptcy Court which contains
substantially the same provisions as the Interim Order.
"Financing Lease": (a) any lease of property, real or personal, the
obligations under which are capitalized on a Consolidated balance sheet of the
Company and its Consolidated Sub-sidiaries, and (b) any other such lease to the
extent that the then present value of any rental commitment thereunder should,
in accordance with GAAP, be capitalized on a balance sheet of the lessee.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof or any entity
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<PAGE>
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Materials": any hazardous materials, hazardous wastes,
hazardous or toxic substances, defined or regulated as such in or under any
Environmental Law, including, without limitation, asbestos, gasoline and any
other petroleum products (including crude oil or any fraction thereof).
"Indebtedness": of a Person, at a particular date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (b) the undrawn face amount of all letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder and unpaid reimbursement obligations with respect
thereto, (c) all liabilities (other than Lease Obligations) secured by any Lien
on any property owned by such Person, even though such Person has not assumed or
become liable for the payment thereof, (d) Financing Leases and (e) all
indebtedness of such Person arising under acceptance facilities; but excluding
trade and other accounts payable and accrued expenses payable arising from and
after the Filing Date in the ordinary course of business which are not overdue
for a period of more than 120 days or, if overdue for more than 120 days, as to
which a dispute exists and adequate reserves in conformity with GAAP have been
established on the books of such Person.
"Insolvency": with respect to a Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of such term as used in Section
4245 of ERISA.
"Interim Order": an order of the Bankruptcy Court substantially in
the form of Exhibit C attached hereto.
"Inventory" has the meaning given to such term in the Pennsylvania
Uniform Commercial Code as in effect on the date hereof.
"L/C Application": with respect to any Letters of Credit, a letter of
credit application in CoreStates' then customary form completed to the
reasonable satisfaction of Core-
States, together with the proposed form of such Letter of Credit (which shall
comply with the provisions of Section 3.1 hereof) and such other certificates,
documents and other papers.
"L/C Liability": the "Letter of Credit Liability" as defined in the
Pre-Petition Loan Agreement.
"L/C Obligations": at any time, the aggregate amount of obligations
of the Borrowers to reimburse CoreStates for any
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<PAGE>
payments made by CoreStates under any Letters of Credit that have not at that
time been reimbursed by the Borrowers pursuant to Section 3.4.
"L/C Participating Interest": an undivided participating interest in
the face amount of each issued and outstanding Letter of Credit and the L/C
Application relating thereto.
"L/C Participation Certificate": the certificate in substantially the
form of Exhibit D attached hereto.
"Lease Obligations": of the Company and its Subsidiaries, as of the
date of any determination thereof, the rental commitments of the Company and its
Subsidiaries determined on a Consolidated basis, if any, under leases for real
and/or personal property (net of rental commitments from sub-leases thereof),
excluding however, obligations under Financing Leases.
"Leased Properties": as defined in Section 5.12.
"Letter of Credit Liability": on any date, an amount equal to the sum
of (i) the aggregate Stated Amount of all issued and undrawn Letters of Credit
plus (ii) the aggregate amount of all L/C Obligations.
"Letters of Credit": the collective reference to Commercial L/Cs and
Standby L/Cs; individually, a "Letter of Credit."
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing except for the filing of financing statements in connection
with Lease Obligations incurred by the Company or its Subsidiaries to the extent
that such financing statements relate to the property subject to such Lease
Obligations).
"Maidenform": as defined in the preamble.
"Material Adverse Effect": (a) a material adverse change in, or a
material adverse effect upon, the business, prospects, operations, results of
operations, assets, liabilities or condition (financial or otherwise) of the
Company or the Borrowers and their Subsidiaries taken as a whole or (b) a mate-
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rial adverse effect upon the legality, validity, binding effect or
enforceability against the Company or any other Borrower of any DIP Financing
Document.
"Maturity Date": the earlier of (i) December 31, 1998 and (ii) the
Consummation Date of a Reorganization Plan.
"Monthly Payment Date": the last Tuesday of each fiscal month
(beginning with July 29, 1997) or, if any such day is not a Business Day, the
next succeeding Business Day.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NCC": as defined in the preamble.
"New Directors": as defined in Section 9(s).
"Non-Funding Bank": as defined in Section 4.5(b).
"Notice of Borrowing": as defined in Section 4.1.
"Obligations": all obligations owing to, and rights of, the Agent
and/or any Bank pursuant to the DIP Financing Documents, including without
limitation, DIP Loans and L/C Obligations.
"Orders": collectively, the Interim Order and the Final Order.
"Overadvance": on any date, an amount by which the sum of the
aggregate outstanding principal amount of the (a) DIP Loans plus (b) the Letter
of Credit Liability plus (c) Advances plus (d) Second Revolving Credit Advances
plus (e) L/C Liability plus (f) Cash Collateral Loans, on any such date, exceeds
the Borrowing Base, which amount shall not exceed (i) $89,500,000 from the
Effective Date through and including July 29, 1997, or (ii) $94,800,000 from
July 30, 1997 through and including August 26, 1997, or (iii) $101,200,000 from
August 27, 1997 through and including September 30, 1997, or (iv) $105,700,000
from October 1, 1997 through and including October 28, 1997, or (v) $109,300,000
from October 29, 1997 through and including November 25, 1997, or (vi)
$112,800,000 from November 26, 1997 through and including December 31, 1997, or
(vii) $74,000,000 from January 1, 1998 and thereafter.
"Participating Bank": any Bank (other than CoreStates) with respect
to its L/C Participating Interest in each Letter of Credit.
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"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permitted Liens": Liens permitted to exist under Section 8.2.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": any pension plan which is covered by Title IV of ERISA and in
respect of which the Company or a Commonly Controlled Entity is an "employer" as
defined in Section 3(5) of ERISA.
"Pre-Petition Agreements": as defined in the Interim Order.
"Pre-Petition Indebtedness": as defined in the Interim Order.
"Pre-Petition Loan Agreement": as defined in the Interim Order.
"Professional Fee Budget": as defined in Section 7.11.
"Properties": the real property of the Borrowers subject to the Liens
in favor of the Banks pursuant to the DIP Financing Documents.
"Purchaser": a buyer of goods from a Borrower, or a customer for whom
services have been rendered or materials furnished by a Borrower.
"Regulation U": of the Board of Governors of the Federal Reserve
System, as from time to time in effect.
"Reorganization": with respect to a Multiemployer Plan, the condition
that such Plan is in reorganization as such term is used in Section 4241 of
ERISA.
"Reorganization Plan": a plan of reorganization for one or more of
the Borrowers proposed pursuant to Section 1121 et seq. of the Bankruptcy Code.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
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"Required Banks": at a particular time, (a) Banks having at least 51%
of the DIP Loan Commitments or (b) if the DIP Loan Commitments shall have
terminated at or before such time, Banks having at least 51% of the aggregate
DIP Loans, L/C Participating Interests and L/C Obligations. The DIP Loans and
the DIP Loan Commitments of any Non-Funding Bank shall be disregarded in
determining Required Banks at any time.
"Required Supermajority Banks": at a particular time, (a) Banks
having at least 75% of the DIP Loan Commitments or (b) if the DIP Loan
Commitments shall have terminated at or before such time, Banks having at
least 75% of the aggregate DIP Loans, L/C Participating Interests and L/C
Obligations. The DIP Loans and the DIP Loan Commitments of any Non-Funding
Bank shall be disregarded in determining Required Supermajority Banks at any
time.
"Requirement of Law": as to any Person, the Articles or Certificate
of Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property, or to which such Person
or any of its property is subject.
"Restricted Cash": any funds that are deposited into an account
subject to the rights of the Agent or CoreStates and are free and clear of any
Liens other than Liens securing any obligations under this Agreement or the
Pre-Petition Agreements (as defined in the Interim Order) or contemplated by
either of the Orders) and eligible for application toward payment of amounts
payable under the DIP Financing Documents or the Pre-Petition Agreements, which
funds shall not have been yet so applied; provided, however, that "Restricted
Cash" shall not include cash collateral held by the Agent or CoreStates to
secure the Letter of Credit Liability.
"Second Revolving Credit Advances": as defined in the Pre-Petition
Loan Agreement.
"Side Letter Agreement: that certain letter agreement dated July 22,
1997 among Elizabeth J. Coleman, the Company and Maidenform.
"Single Employer Plan": any Plan which is not a Multiemployer Plan.
"Standby L/C": an irrevocable letter of credit issued pursuant to
this Agreement under which CoreStates agrees to make payments in Dollars for the
account of any Borrower, in respect
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of obligations incurred pursuant to contracts made or performances undertaken or
to be undertaken or like matters relating to contracts to which a Borrower or
any of its Subsidiaries is or proposes to become a party in the ordinary course
of business, including, without limiting the foregoing, for insurance purposes
or in respect of advance payments or as bid or performance bonds or in
connection with industrial revenue bonds or for any other purpose for which a
standby letter of credit might customarily be issued.
"Stated Amount": of each Letter of Credit, the maximum amount
available to be drawn thereunder (in each case determined without regard to
whether any conditions to drawing could then be met).
"Stated Expiry Date": as defined in Section 3.1.
"Subsidiary": as to any Person, any corporation of which shares of
stock of each class having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation are at the time
owned by such Person or by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries of such Person. (A Subsidiary shall be
deemed wholly-owned by a Person who owns all of the shares of stock entitled to
vote for the election of directors or other managers of such Subsidiary except
for directors' qualifying shares.)
"Superpriority Claims": Indebtedness or other claims arising out of
credit obtained or debt incurred by one or more Borrowers having priority in
accordance with the provisions of Section 364(c)(1) of the Bankruptcy Code over
any or all administrative expenses of the kind specified in Section 503(b) or
507(b) of the Bankruptcy Code.
"Termination Date": the date of occurrence of a Termination Event.
"Termination Event": (i) any material non-compliance by the Borrowers
with any of the terms or provisions of either of the Orders, (ii) any Event of
Default shall have occurred and any notice required to cause the DIP Loans to
become due and payable shall have been given, (iii) the Consummation Date of any
Reorganization Plan and (iv) December 31, 1998.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
and any amendments thereof.
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1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any other DIP Financing Document or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein, any other DIP Financing Document and any
certificate or other document made or delivered pursuant hereto, accounting
terms relating to the Company and its Subsidiaries not defined herein and
accounting terms partly defined herein to the extent not defined, shall have the
respective meanings given to them under GAAP. All computations determining
compliance with financial covenants or terms, including definitions used
therein, shall be prepared in accordance with generally accepted accounting
principles in effect at the time of the preparation of, and in conformity with
those used to prepare, the historical financial statements delivered to the
Agent pursuant to Section 7.1(a). If at any time the computations for
determining compliance with financial covenants or provisions relating thereto
utilize generally accepted accounting principles different than those then being
utilized in the financial statements then being delivered to the Agent, such
financial statements shall be accompanied by a reconciliation statement with
respect to such computations.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to the singular and plural forms of such terms.
SECTION 2. COMMITMENTS
2.1 Commitments. Subject to the terms and conditions of this
Agreement (including, without limitation, those contained in Section 6), each
Bank severally and for itself alone agrees that it will, in accordance with
Sections 3 and 4:
(a) from time to time on any Business Day occurring during the period
commencing on the Effective Date until (but not including) the Termination
Date, make loans to the Company or any of its Subsidiaries that are
Borrowers equal to such Bank's DIP Loan Percentage of the aggregate
principal amount of the DIP Loan Borrowing requested by the Company or such
other Borrowers (each such loan made pursuant
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to this Section 2.1(a) being referred to as a "DIP Loan", and collectively
as the "DIP Loans");
(b) from time to time on any Business Day occurring during the period
commencing on or after the Effective Date until (but not including) the
Termination Date, issue (in the case of CoreStates), or participate in (in
the case of all other Banks) in accordance with such Bank's DIP Loan
Percentage, Letters of Credit (which may be either Commercial L/Cs or
Standby L/Cs) requested by the Company or any of its Subsidiaries that are
Borrowers;
provided, however, that no Bank (or CoreStates, in the case of Letters of
Credit) shall be permitted or required to
(c) make any DIP Loan if, after giving effect thereto, the sum of (i)
the aggregate outstanding principal amount of all DIP Loans from all Banks,
plus (ii) the Letter of Credit Liability would exceed the DIP Loan
Commitment Amount; or
(d) issue, extend or participate in any Letter of Credit if, after
giving effect to such issuance or extension, the Letter of Credit Liability
would exceed the lesser of (i) $5,000,000 and (ii) the excess, if any, of
(A) the DIP Loan Commitment Amount over (B) the aggregate principal amount
of all outstanding DIP Loans.
Subject to the terms hereof and the Orders, the Borrowers may from time to time
borrow, prepay and reborrow DIP Loans, and request, and repay any obligations
under, Letters of Credit, pursuant to the DIP Loan Commitments.
2.2 Commitment Amounts. The aggregate amount of each DIP Loan
Commitment shall be as set forth in this Section.
(a) The maximum aggregate principal amount (the "DIP Loan Commitment
Amount") of all DIP Loan Commitments for all Banks on any date prior to the
Termination Date shall be the lesser of:
(i) the excess, if any, of (A) the sum of (I) the Borrowing Base plus (II)
the Overadvance on any such date over (B) the sum of the aggregate
outstanding principal amount of the (I) Advances plus (II) Second Revolving
Credit Advances plus (III) L/C Liability plus (IV) Cash Collateral Loans,
on any such date, or
(ii) on any such date occurring (A) from the Effective Date through and
including July 29, 1997, $10,000,000; (B) from July 30, 1997 through and
including August 26, 1997,
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$14,400,000;(C) from August 27, 1997 through and including September 30,
1997, $20,900,000; (D) from October 1, 1997 through and including
October 28, 1997, $23,900,000; (E) from October 29, 1997 through and
including November 25, 1997, $27,100,000; (F) from November 26, 1997
through and including December 31, 1997, $30,000,000; (G) from January 1,
1998 and thereafter, $50,000,000.
(b) At their option, the Borrowers may reduce the DIP Loan Commitment
Amount upon five Business Days' prior written notice to the Agent.
2.3 Fees. The Borrowers agree to pay the fees set forth in this
Section 2.3.
(a) Unused Capacity. For the period of time commencing on the
Effective Date and continuing through the Termination Date, the Borrowers agree
to pay in the aggregate to the Agent for the pro rata account of each Bank in
accordance with its DIP Loan Percentage a non-refundable commitment fee at the
rate of 0.5% per annum on the daily average unused portion of the DIP Loan
Commitment Amount. Such commitment fee will be payable in arrears by the
Borrowers, on each Monthly Payment Date and on the Termination Date.
(b) Letter of Credit. The Borrowers agree to pay letter of credit
fees as follows:
(i) to the Agent for the pro rata account of each Bank in
accordance with its DIP Loan Percentage (including CoreStates), a
non-refundable letter of credit fee at the rate of (x) 2.5% per annum
(minus the CoreStates Standby Issuance Fee) on the aggregate undrawn and
available amount under all Letters of Credit constituting Standby L/Cs and
(y) 2.5% per annum (minus the CoreStates Commercial Issuance Fee) on all
Letters of Credit constituting Commercial L/Cs; and
(ii) to CoreStates, all reasonable "fronting" or
correspondent-bank fees incurred by CoreStates in connection with any
Letter of Credit issued by CoreStates, together with all CoreStates
Issuance Fees and all other customary and administrative fees and all
reasonable amendment and extension fees which may be charged, from time to
time, by CoreStates in respect of any Letters of Credit.
Such letter of credit fees shall be payable:
(iii) with respect to those fees described in clause (i) in
advance:
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(A) on the date of issuance of any Letter of Credit for the
period from such date up to (but not including) the next succeeding
Monthly Payment Date, and
(B) thereafter for Letters of Credit, on each Monthly Payment
Date for the period from the preceding Monthly Payment Date up to (but
not including) the next succeeding Monthly Payment Date;
(iv) with respect to those fees described in clause (ii), on the
date of issuance (or amendment or extension) of the Letter of Credit with
respect to which such fees are incurred.
(c) Facility. On the Effective Date, the Borrowers shall pay in the
aggregate to the Agent for distribution to the Banks a facility fee, equal
to 2% of the DIP Loan Commitment Amount, which shall be non-refundable once
paid, for the pro rata account of each Bank in accordance with its DIP Loan
Percentage.
(d) Agent. The Borrowers shall pay in the aggregate to the Agent for
its own account an agency fee equal to $312,500 per annum, payable in advance in
equal monthly installments on the Effective Date and on each Monthly Payment
Date.
2.4 Proceeds of DIP Loans. The Borrowers shall apply the proceeds of
each DIP Loan and Letter of Credit for general corporate purposes subject to the
Bankruptcy Code, orders of the Bankruptcy Court and the terms and conditions of
this Agreement.
SECTION 3. LETTERS OF CREDIT
3.1 Issuances and Extensions. Subject to the terms and conditions of
this Agreement, CoreStates shall issue Letters of Credit, and extend the Stated
Expiry Dates of outstanding Letters of Credit, in accordance with the provisions
of this Section 3 and the L/C Applications submitted therefor, respectively.
CoreStates will make available the original of each Letter of Credit to the
beneficiary thereunder (with a copy to the relevant Borrower) which it issues
hereunder, as the case may be, and will notify the beneficiary under any Letter
of Credit of any extension of the Stated Expiry Date thereof. Notwithstanding
anything to the contrary herein, each Letter of Credit shall be (i) stated to
expire on a date (its "Stated Expiry Date") no later than the Termination Date,
(ii) subject to the Uniform Customs and, to the extent not inconsistent
therewith, the laws
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of the State of New York and (iii) in such form as shall be reasonably
acceptable to CoreStates.
3.2 Participating Interests. Effective in the case of each Letter of
Credit as of the date of the opening thereof, CoreStates agrees to allot and
does allot, to itself and each other Bank, and each Bank severally and
irrevocably agrees to take and does take in such Letter of Credit and the
related L/C Application, an L/C Participating Interest in a percentage equal to
such Bank's DIP Loan Percentage.
3.3 Procedure for Opening Letters of Credit. CoreStates will notify
each Bank after the end of each calendar month of any L/C Applications received
by CoreStates from the Company during such month. Upon receipt of any L/C
Application from the Company or any Subsidiary thereof that is a Borrower,
CoreStates will process such L/C Application, and the other certificates,
documents and other papers delivered to CoreStates in connection therewith, in
accordance with its customary procedures and, subject to the terms and
conditions hereof, shall promptly open such Letter of Credit by issuing the
original of such Letter of Credit to the beneficiary thereof and by furnishing a
copy thereof to the relevant Borrower and, after the end of the calendar month
in which such Letter of Credit was opened, to the other Banks, provided that no
such Letter of Credit shall be issued if Section 2.1 would be violated thereby.
3.4 Payments in Respect of Letters of Credit. (a) The Borrowers
agree promptly upon demand by CoreStates and otherwise in accordance with the
terms of the L/C Application relating thereto, (i) to reimburse CoreStates for
any payment made by CoreStates under any Letter of Credit and (ii) to pay
interest on any unreimbursed portion of any such payment from the date of such
payment until reimbursement in full thereof at a rate per annum equal to the ABR
plus 3.5%.
(b) In the event that CoreStates makes a payment under any Letter of
Credit and is not reimbursed in full therefor promptly upon demand of
CoreStates, and otherwise in accordance with the terms of the L/C Application
relating to such Letter of Credit, CoreStates will promptly notify each other
Bank. Forthwith upon its receipt of any such notice, each other Bank will
transfer to CoreStates, in immediately available funds, an amount equal to such
other Bank's DIP Loan Percentage of the L/C Obligation arising from such
unreimbursed payment. Upon its receipt from such other Bank of such amount,
CoreStates will complete, execute and deliver to such other Bank an L/C
Participation Certificate dated the date of such receipt and in such amount.
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(c) Whenever, at any time after CoreStates has made a payment under
any Letter of Credit and has received from any other Bank such other Bank's DIP
Loan Percentage of the L/C Obligation arising therefrom, CoreStates receives any
reimbursement on account of such L/C Obligation or any payment of interest on
account thereof, CoreStates will distribute to such other Bank its DIP Loan
Percentage thereof in like funds as received; provided, however, that in the
event that the receipt by CoreStates of such reimbursement or such payment of
interest (as the case may be) is required to be returned, such other Bank will
return to CoreStates any portion thereof previously distributed by CoreStates to
it in like funds as such reimbursement or payment is required to be returned by
CoreStates.
3.5 Letter of Credit Reserves. (a) If any Change in Law shall
either (i) impose, modify, deem or make applicable any reserve, special deposit,
assessment or similar requirement against letters of credit issued by CoreStates
or (ii) impose on CoreStates any other condition regarding this Agreement (with
respect to Letters of Credit) or any Letter of Credit, and the result of any
event referred to in clause (i) or (ii) above shall be to increase the cost to
CoreStates of issuing or maintaining any Letter of Credit (which increase in
cost shall be the result of CoreStates' reasonable allocation of the aggregate
of such cost increases resulting from such events), then, upon demand by
CoreStates, the Company shall immediately pay to CoreStates, from time to time
as specified by CoreStates, additional amounts which shall be sufficient to
compensate CoreStates for such increased cost, together with interest on each
such amount from the date demanded until payment in full thereof at a rate per
annum equal to the rate applicable to DIP Loans pursuant to Section 4.3(b). A
certificate, setting forth in reasonable detail the calculation of the amounts
involved, submitted by CoreStates to the Company concurrently with any such
demand by CoreStates, shall be conclusive, absent manifest error, as to the
amount thereof.
(b) In the event that any Change in Law with respect to CoreStates
shall, in the opinion of CoreStates, require that any obligation under any
Letter of Credit be treated as an asset or otherwise be included for purposes of
calculating the appropriate amount of capital to be maintained by CoreStates or
any corporation controlling CoreStates, and such Change in Law shall have the
effect of reducing the rate of return on CoreStates' or such corporation's
capital, as the case may be, as a consequence of CoreStates' obligations under
such Letter of Credit to a level below that which CoreStates or such
corporation, as the case may be, could have achieved but for such Change in Law
(taking into account CoreStates' or such corporation's policies, as the case may
be, with respect to capital adequacy) by an amount deemed by CoreStates to be
material, then from time to time following
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notice by CoreStates to the Borrowers of such Change in Law, within 15 days
after demand by CoreStates, the Borrowers shall pay to CoreStates such
additional amount or amounts as will compensate CoreStates or such corporation,
as the case may be, for such reduction. If CoreStates becomes entitled to claim
any additional amounts pursuant to this subsection 3.5(b), it shall promptly
notify the Borrowers of the event by reason of which it has become so entitled.
A certificate, in reasonable detail setting forth the calculation of the amounts
involved, submitted by CoreStates to the Borrowers concurrently with any such
demand by CoreStates, shall be conclusive, absent manifest error, as to the
amount thereof.
(c) CoreStates agrees that, upon the occurrence of any event giving
rise to the operation of paragraph (a) or (b) of this Section 3.5 with respect
to CoreStates, it will, if requested by the Borrowers and to the extent
permitted by law or by the relevant Governmental Authority, endeavor in good
faith to avoid or minimize the increase in costs or reduction in payments
resulting from such event; provided, however, that such avoidance or
minimization can be made in such a manner that CoreStates, in its sole
determination, suffers no economic, legal or regulatory disadvantage.
(d) The Borrowers and each Participating Bank agree that the
provisions of the foregoing paragraphs (a) and (b) shall apply equally to each
Participating Bank in respect of its L/C Participating Interest in such Letter
of Credit, as if the references in such paragraphs and provisions referred to,
where applicable, such Participating Bank or, in the case of paragraph (b), any
corporation controlling such Participating Bank.
3.6 Further Assurances. The Borrowers hereby agree, from time to
time, to do and perform any and all acts and to execute any and all further
instruments reasonably requested by CoreStates more fully to effect the purposes
of this Agreement and the issuance of Letters of Credit hereunder.
3.7 Obligations Absolute. The payment obligations of the Borrowers
under this Agreement with respect to the Letters of Credit shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:
(i) the existence of any claim, set-off, defense or other right which
any Borrower may have at any time against any beneficiary, or any
transferee, of any Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), CoreStates, the Agent or
any
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Bank, or any other Person, whether in connection with this Agreement, any
DIP Financing Document, the transactions contemplated herein, or any
unrelated transaction;
(ii) any statement or any other document presented under any Letter of
Credit proving to be forged, fraudulent or invalid or any statement therein
being untrue or inaccurate in any respect;
(iii) payment by CoreStates under any Letter of Credit against
presentation of a draft or certificate or other document which does not
comply with the terms of such Letter of Credit or is insufficient in any
respect, except where such payment constitutes gross negligence or willful
misconduct on the part of CoreStates; or
(iv) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing, except for any such circumstances or
happening constituting gross negligence or willful misconduct on the part
of CoreStates.
3.8 Assignments. No Participating Bank's participation in any Letter
of Credit or any of its rights or duties hereunder shall be subdivided, assigned
or transferred (other than in connection with a transfer of a corresponding
portion or all of such Participating Bank's DIP Loan Commitment in accordance
with Section 11.6).
3.9 Participations. Each Bank's obligation to purchase participating
interests pursuant to Section 3.4(b) shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (i)
any set-off, counterclaim, recoupment, defense or other right which such Bank
may have against CoreStates, the Company or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of an Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of the Company; (iv)
any breach of this Agreement by the Company or any other Bank; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO DIP LOANS
4.1 Procedure for DIP Loan Borrowings. The Borrowers may borrow
under the DIP Loan Commitments on any Business Day provided that, with respect
to any borrowings, the Borrowers shall give the Agent irrevocable notice (which
notice must be received by the Agent prior to 11:00 a.m., New York City time
specifying the amount of the borrowing) (a "Notice of Borrow-
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ing"). Upon receipt of such Notice of Borrowing the Agent shall promptly notify
each Bank. Not later than 2:00 p.m., New York City time, on the Borrowing Date
specified in such notice, each Bank shall make available to the Agent at the
office of the Agent specified in Section 11.2 (or at such other location as the
Agent may direct) an amount in immediately available funds equal to the amount
of the DIP Loan to be made by such Bank. DIP Loan proceeds received by the
Agent hereunder shall promptly be made available to the Company by the Agent's
crediting the account of the Company, at the office of the Agent specified in
Section 11.2, with the aggregate amount actually received by the Agent from the
Banks and in like funds as received by the Agent. Each Borrowing shall be in an
aggregate minimum amount of $250,000 and integral multiples of $50,000.
4.2 Repayments and Prepayments. The Borrowers promise to make
payment in full of all unpaid principal of each DIP Loan at the Maturity Date.
This Agreement evidences the Borrowers' joint and several obligations and no
note is required to evidence such obligations. Prior to the Maturity Date, the
Borrowers
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of all
DIP Loans; provided, however, that all voluntary partial prepayments of DIP
Loans shall be in an aggregate minimum amount of $250,000 and an integral
multiple of $50,000;
(b) shall make prepayments in accordance with the terms of the
Orders; and
(c) shall, make a mandatory prepayment of all DIP Loans in an
aggregate amount equal to the excess, if any, on any date of
(i) (x) the aggregate outstanding principal amount of all DIP
Loans, plus (y) the Letter of Credit Liability, over
(ii) the DIP Loan Commitment Amount (as determined from time to
time in accordance with Section 2.2.(a)).
Each prepayment of DIP Loans made pursuant to this Section shall be without
premium or penalty. Except as may be specified in the Orders, no payment of
principal of any DIP Loans shall cause a reduction in the DIP Loan Commitment
Amount.
4.3 Interest Rates and Payment Dates. (a) All DIP Loans shall bear
interest for the period from and including the date such DIP Loans are made to,
but excluding, the maturity date
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thereof on the unpaid principal amount thereof at a rate per annum equal to the
ABR plus 3.5%.
(b) If all or a portion of (i) the principal amount of any of the DIP
Loans or (ii) any interest payable thereon shall not be paid when due (whether
at the stated maturity, by acceleration or otherwise) such overdue amount shall,
without limiting the rights of the Banks under Section 9, bear interest at a
rate per annum which is 5.5% above the ABR from the date of such non-payment
until paid in full (as well after as before judgment).
(c) Interest shall be payable in arrears on each Monthly Payment
Date.
4.4 Computation of Interest and Fees. (a) Interest in respect of
DIP Loans and all fees hereunder shall be calculated on the basis of a 365 (or
366 as the case may be) day year for the actual days elapsed. Any change in the
interest rate on a DIP Loan resulting from a change in the ABR shall become
effective as of the opening of business on the day on which such change in the
ABR is announced. The Agent shall as soon as practicable notify the Company and
the Banks of the effective date and the amount of each such change.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrowers
and the Banks in the absence of manifest error.
4.5 Pro Rata Treatment and Payments. (a) Each borrowing of DIP
Loans by the Borrowers from the Banks and any reduction of the DIP Loan
Commitments of the Banks hereunder and any payments in respect of principal,
interest or fees hereunder shall be made pro rata according to the relevant DIP
Loan Commitment Percentages of the Banks with respect to the DIP Loans borrowed
or the DIP Loan Commitments to be reduced.
(b) If any Bank (a "Non-Funding Bank") has (x) failed to make a DIP
Loan required to be made by it hereunder, and the Agent has determined that such
Bank is not likely to make such a DIP Loan or (y) given notice to the Company or
the Agent that it will not make, or that it has disaffirmed or repudiated any
obligation to make, any DIP Loan, in each case by reason of the provisions of
the Financial Institutions Reform, Recovery and Enforcement Act of 1989, or
otherwise, (i) any payment made on account of the principal of the DIP Loans
outstanding shall be made as follows:
(A) in the case of any such payment made on any date when and to the
extent that, in the reasonable determination
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of the Agent, the Borrowers would be able, under the terms and conditions
hereof, to reborrow the amount of such payment under the DIP Loan
Commitments and to satisfy any applicable conditions precedent set forth in
Section 6 to such reborrowing, such payment shall be made on account of the
outstanding DIP Loans held by the Banks other than the Non-Funding Bank pro
rata according to the respective outstanding principal amounts of the DIP
Loans of such Banks; and
(B) otherwise, such payment shall be made on account of the
outstanding DIP Loans held by the Banks pro rata according to the
respective outstanding principal amounts of such DIP Loans; and
(ii) any payment made on account of interest on the DIP Loans shall be made pro
rata according to the respective amounts of accrued and unpaid interest due and
payable on the DIP Loans with respect to which such payment is being made. The
Company agrees to give the Agent such assistance in making any determination
pursuant to subparagraph (A) of this paragraph as the Agent may reasonably
request. Any such determination by the Agent shall be conclusive and binding on
the Banks.
(c) All payments (including prepayments) to be made by the
Borrowers on account of principal, interest and fees shall be made without
set-off or counterclaim and shall be made to the Agent, for the account of
the Banks at the Agent's office located at 1339 Chestnut Street,
Philadelphia, PA 19107, in lawful money of the United States of America and
in immediately available funds. The Agent shall promptly distribute such
payments in accordance with the provisions of this Section 4.5 promptly upon
receipt in like funds as received. If any payment hereunder would become due
and payable on a day other than a Business Day, such payment would become due
and payable on the next succeeding Business Day and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension.
(d) Unless the Agent shall have been notified in writing by any Bank
prior to a Borrowing Date that such Bank will not make the amount which would
constitute its DIP Loan Percentage of the borrowing on such date available to
the Agent, the Agent may assume that such Bank has made such amount available to
the Agent on such Borrowing Date in accordance with Section 4.1 and the Agent
may, in reliance upon such assumption, make available to the Borrowers a
corresponding amount. If such amount is made available to the Agent by such
Bank on a date after such Borrowing Date, such Bank shall pay to the Agent on
demand an amount equal to the product of (i) the daily average Federal funds
rate during such period as quoted by the Agent, times (ii)
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the amount of such Bank's DIP Loan Percentage of such borrowing, times (iii) a
fraction the numerator of which is the number of days that elapse from and
including such Borrowing Date to the date on which such Bank's DIP Loan
Percentage of such borrowing shall have become immediately available to the
Agent and the denominator of which is 360. A certificate of the Agent submitted
to any Bank with respect to any amounts owing under this subsection 4.5(d) shall
be conclusive, absent manifest error. If such Bank's DIP Loan Percentage of
such borrowing is not in fact made available to the Agent by such Bank within
three Business Days of such Borrowing Date, the Agent shall be entitled to
recover such amount with interest thereon at the rate per annum applicable to
DIP Loans hereunder, on demand, from the Borrowers, without prejudice to any
rights which the Borrowers or the Agent may have against such Bank hereunder.
Nothing contained in this subsection 4.5(d) shall relieve any Bank which has
failed to make available its ratable portion of any borrowing hereunder from its
obligation to do so in accordance with the terms hereof.
(e) The failure of any Bank to make any DIP Loan to be made by it on
any Borrowing Date shall not relieve any other Bank of its obligation, if any,
hereunder to make its DIP Loan on such Borrowing Date, but no Bank shall be
responsible for the failure of any other Bank to make any DIP Loan to be made by
such other Bank on such Borrowing Date.
4.6 Requirements of Law. (a) In the event that any Change in Law
occurring after the date that any lender becomes a Bank party to this Agreement
with respect to any such Bank shall, in the opinion of such Bank, require that
any DIP Loan of such Bank be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
such Bank or any corporation controlling such Bank, and such Change in Law shall
have the effect of reducing the rate of return on such Bank's or such
corporation's capital, as the case may be, as a consequence of such Bank's
obligations hereunder to a level below that which such Bank or such corporation,
as the case may be, could have achieved but for such Change in Law (taking into
account such Bank's or such corporation's policies, as the case may be, with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time following notice by such Bank to the Company of such
Change in Law, within 15 days after demand by such Bank, the Borrowers shall pay
to such Bank such additional amount or amounts as will compensate such Bank or
such corporation, as the case may be, for such reduction.
(b) If any Bank becomes entitled to claim any additional amounts
pursuant to this Section 4.6, it shall promptly notify the Company, through the
Agent, of the event by reason of
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which it has become so entitled. A certificate in reasonable detail as to any
amounts submitted by such Bank, through the Agent, to the Company, shall be
conclusive in the absence of manifest error. The covenants contained in this
Section 4.6 shall survive the termination of this Agreement and payment of the
outstanding DIP Loans and L/C Obligations.
(c) Each Bank (i) represents to the Borrowers (for the benefit of the
Borrowers and the Agent) that under applicable law and treaties no taxes are
required to be withheld by the Borrowers or the Agent with respect to any
payments to be made to such Bank in respect of the DIP Loans or the L/C
Participating Interests, (ii) agrees to furnish to the Borrowers, with a copy to
the Agent, either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein such Bank claims entitlement to complete
exemption from U.S. Federal withholding tax on all interest payments hereunder)
and (iii) agrees (for the benefit of the Borrowers and the Agent) to provide the
Borrowers, with a copy to the Agent, a new Form 4224 or Form 1001 upon the
expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Bank, and to comply from time to
time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption. Notwithstanding any provision of this Section 4.6 to
the contrary, the Borrowers shall have no obligation to pay any amount to or for
the account of any Bank on account of any taxes pursuant to this Section 4.6(c)
to the extent that such amount results from (i) the failure of any Bank to
comply with its obligations pursuant to this Section 4.6(c) or (ii) any
representation or warranty made or deemed to be made by any Bank pursuant to
this Section 4.6(c) proving to have been incorrect, false or misleading in any
material respect when so made or deemed to be made.
SECTION 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Banks to enter into this
Agreement and to make the DIP Loans and to induce CoreStates to issue, and the
Participating Banks to participate in, the Letters of Credit, the Borrowers
hereby represent and warrant to each Bank and the Agent that:
5.1 Financial Condition. The Consolidated balance sheets of the
Company and its Consolidated Subsidiaries as at December 31, 1996 and the
related Consolidated statements of income and of cash flows for the fiscal year
ended on such date, reported on by the Company's independent certified public
accountants, copies of which have heretofore been furnished to each Bank,
present fairly the Consolidated financial condition of the
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Company and its Consolidated Subsidiaries as at such dates, and the Consolidated
results of their operations and their Consolidated cash flows for the fiscal
year then ended. The unaudited Consolidated balance sheet of the Company and
its Consolidated Subsidiaries as at May 27, 1997 and the related unaudited
Consolidated statements of income and of cash flows for the periods ended on
such date, certified by the chief financial officer or controller of the
Company, copies of which have heretofore been furnished to each Bank, present
fairly the Consolidated financial condition of the Company and its Consolidated
Subsidiaries as at such date, and the Consolidated results of their operations
and their Consolidated cash flows for the periods then ended (subject to normal
year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by such
accountants or such officer, as the case may be, and as disclosed therein).
Except as otherwise disclosed to the Banks, during the period from May 27, 1997
to and including the Effective Date there has been no sale, transfer or other
disposition by the Company or any of its Consolidated Subsidiaries of any
material part of its business or property and no purchase or other acquisition
of any business or property (including any capital stock of any other Person)
material in relation to the Consolidated financial condition of the Company and
its Consolidated Subsidiaries at May 27, 1997.
5.2 No Change. Since May 27, 1997 (a) other than the commencement of
the Chapter 11 Cases and all events and circumstances leading thereto and
associated therewith or as otherwise disclosed in the financial statements
previously provided to the Banks or in the Budget, there has been no change, and
no development or event involving a prospective change, which has had or could
reasonably be expected to have a Material Adverse Effect and (b) no dividends or
other distributions have been declared, paid or made upon the capital stock of
the Company nor has any of the capital stock of the Company been redeemed,
retired, purchased or otherwise acquired for value by any of the Borrowers.
5.3 Corporate Existence; Compliance with Law. The Company and each
of the Subsidiaries of the Company, except in each case as such may be affected
by the commencement of the Chapter 11 cases and all events and circumstances
associated therewith, (a) is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation, (b) has full corporate
power and authority and possesses all governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to use its
corporate name and to own, lease or otherwise hold its properties and assets and
to carry on its business as presently conducted other than such franchises,
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licenses, permits, authorizations and approvals the lack of which, individually
or in the aggregate, would not have a Material Adverse Effect, (c) is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership, leasing or holding of its properties
makes such qualification necessary, except such jurisdictions where the failure
so to qualify would not have a Material Adverse Effect, and (d) is in compliance
with all applicable statutes, laws, ordinances, rules, orders and regulations of
any Governmental Authority or instrumentality, domestic or foreign (including,
without limitation, those related to asbestos, petroleum and hazardous wastes
and substances), except where noncompliance would not have a Material Adverse
Effect. The Company has not received any written communication from a
governmental authority that alleges that the Company or any of the Company's
Subsidiaries is not in compliance, in all material respects, with all material
Federal, state, local or foreign laws, ordinances, rules and regulations.
5.4. Corporate Power; Authorization. Subject to the approval of the
Bankruptcy Court pursuant to the Orders, the Borrowers have corporate power and
authority to make, deliver and perform each of the DIP Financing Documents to
which it is a party, and, subject to the approval of the Bankruptcy Court
pursuant to the Orders, each of the Borrowers has the corporate power and
authority and legal right to borrow hereunder and to have Letters of Credit
issued for their respective accounts hereunder. Each of the Borrowers has taken
all necessary corporate action to authorize the execution, delivery and
performance of each of the DIP Financing Documents to which it is a party and
the Company has taken all necessary corporate action to authorize the borrowings
hereunder and the issuance of Letters of Credit for its account hereunder.
Except for the approval of the Bankruptcy Court pursuant to the Orders, no
consent or authorization of, or filing with, any Person (including, without
limitation, any Governmental Authority) is required in connection with the
execution, delivery or performance by any of the Borrowers, or for the validity
or enforceability against the Borrowers, of any DIP Financing Document except
for consents, authorizations and filings which have been obtained or made and
are in full force and effect and except such consents, authorizations and
filings, the failure to obtain or perform which would not have a Material
Adverse Effect.
5.5 Enforceable Obligations. Each DIP Financing Document delivered
on or prior to the date hereof (i) has been duly executed and delivered on
behalf of each of the Borrowers that is party thereto and (ii) subject to the
approval of the Bankruptcy Court pursuant to the Orders, constitutes the legal,
valid and binding obligation of such Borrower, as the case may
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be, and is enforceable against such Borrower in accordance with its terms.
5.6 No Legal Bar. Subject to the approval of the Bankruptcy Court
pursuant to the Orders, the execution, delivery and performance of each DIP
Financing Document, the use of the proceeds of the DIP Loans and of drawings
under the Letters of Credit and the transactions contemplated by or in respect
of such use of proceeds will not violate any Requirement of Law or any
Contractual Obligation applicable to or binding upon any Borrower or any of its
respective properties or assets, in any manner which, individually or in the
aggregate, (i) would have a material adverse effect on the ability of such
Borrower to perform its obligations under the DIP Financing Documents to which
it is a party, (ii) would give rise to any liability on the part of the Agent or
any Bank, or (iii) would have a Material Adverse Effect, and will not result in
the creation or imposition of any Lien on any of its properties or assets
pursuant to any Requirement of Law applicable to it, as the case may be, or any
of its Contractual Obligations, except for the Liens arising hereunder and under
the Orders.
5.7 No Material Litigation. Except as set forth on Schedule 5.7 and
for the motion(s) brought by the Company seeking entry of the Orders by the
Bankruptcy Court, no litigation by, investigation known to the Company by, or
proceeding of, any Governmental Authority is pending against any of the
Borrowers with respect to the validity, binding effect or enforceability of any
DIP Financing Document, the DIP Loans made hereunder, the use of proceeds
thereof, or of any drawings under a Letter of Credit and the other transactions
contemplated hereby or in respect of such use of proceeds. Except for the
commencement of the Chapter 11 Cases and the filing and prosecution of claims
therein, no lawsuits, claims, proceedings or investigations are pending or, to
the knowledge of the Company, threatened as of the Effective Date against or
affecting the Company or a Subsidiary of the Company or any of their respective
properties, assets, operations or businesses, in which there is a probability of
an adverse determination, which is reasonably likely, if adversely decided, to
have a Material Adverse Effect.
5.8 Investment Company Act. Neither the Company nor any Subsidiary
of the Company is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended).
5.9 Federal Regulation. No part of the proceeds of any of the DIP
Loans or any drawing under a Letter of Credit will be used for any purpose which
violates the provisions of Regula-
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tion G, T, U or X of the Board of Governors of the Federal Reserve System.
Neither the Company nor any of its Subsidiaries is engaged or will engage,
principally or are one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under said Regulation U.
5.10 Taxes. Except as set forth on Schedule 5.10, each Borrower has
filed or caused to be filed all material tax returns which, to the knowledge of
the Company, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than (i) for which an extension
for filing is available and such Borrower has taken necessary steps to qualify
for such extension, (ii) where the failure to file would not have a Material
Adverse Effect, and (iii) any the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of the
Company or its Subsidiaries, as the case may be); except Permitted Liens, no tax
Lien has been filed, and, to the knowledge of the Company, no written claim is
being asserted, with respect to any such tax, fee or other charge.
5.11 Subsidiaries. The Subsidiaries of the Company listed on
Schedule 5.11 constitute all of the Subsidiaries of the Company as of the
Effective Date.
5.12 Ownership of Property; Liens. Each Borrower has good and valid
title to all its material assets (other than real property or interests in real
property, or goods sold on a consignment basis), except where the failure to
have such title would not have a Material Adverse Effect, in each case free and
clear of all Liens of any nature whatsoever except Permitted Liens. With
respect to real property or interests in real property, each of the Company and
its Subsidiaries has (i) good and insurable fee title to all of its real
property, except where the failure to have such title would not have a Material
Adverse Effect (each, a "Fee Property"), and (ii) good and valid title to the
leasehold estates in all of the real property leased by it, except where the
failure to have such title would not have a Material Adverse Effect (each, a
"Leased Property", each such Fee Property that is owned and each such Leased
Property being referred to individually as a "Company Property" in this Section
5.12), in each case free and clear of all Liens, easements, covenants,
rights-of-way and other similar restrictions of any nature whatsoever, except
(A) Permitted Liens, (B) easements,
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covenants, rights-of-way and other similar restrictions of record, (C) any
conditions that may be shown by a current, accurate survey or physical
inspection of any Company Property made prior to the Effective Date, (D) any
immaterial condemnation or eminent domain proceeding affecting any real property
that does not prevent such real property from being utilized by the Company or
any of its Subsidiaries substantially for the purposes for which it was being
utilized prior to such proceeding, and (E) (I) zoning, building and other
similar restrictions, (II) Liens that have been placed by any developer,
landlord or other third party on property over which the Company or any
Subsidiary of the Company has easement rights or on any Leased Property and
subordination or similar agreements relating thereto, and (III) unrecorded
easements, covenants, rights-of-way or other similar restrictions, none of which
items set forth in clauses (I), (II) and (III), individually or in the
aggregate, materially impair the continued use and operation of the property to
which they relate in the business of the Company and its Subsidiaries, taken as
a whole, as presently conducted.
5.13 ERISA. Except as set forth on Schedule 5.13, none of the
Company, any Subsidiary or any Commonly Controlled Entity would be liable for
any amount pursuant to Sections 4062, 4063 or 4064 of ERISA, if any Plan were to
terminate. Neither the Company nor any Commonly Controlled Entity has been
involved in any transaction that would cause the Company to be subject to
liability with respect to a Plan to which the Company or any Commonly Controlled
Entity contributed or was obligated to contribute during the six-year period
ending on the Effective Date under Sections 4062, 4069 or 4212(c) of ERISA.
Neither the Company nor any Commonly Controlled Entity has incurred any material
liability under Title IV of ERISA which will remain a liability of the Company
after the Effective Date. To the knowledge of any Borrower, none of the
Company, any Subsidiary, or any director, officer or employee of either, or any
of the Plans, or any trust created thereunder, or any fiduciary thereof, has
engaged in a transaction in connection with which the Company, any Subsidiary,
or any director, officer or employee of either, or any fiduciary of the Plans or
any such trust could be subject to either a material liability or civil penalty
assessed pursuant to Sections 409, 502(i) or 502(l) of ERISA or a material tax
imposed pursuant to Sections 4975 or 4976 of the Code with respect to any Plan.
To the knowledge of any Borrower, each of the Plans has been operated and
administered in all material respects in accordance with applicable laws,
including but not limited to ERISA and the Code. There are no material pending
or, to the best knowledge of the Company, threatened claims by or on behalf of
any of the Plans or any fiduciary thereof with respect to a Plan, by any
employee or beneficiary covered under any such Plan or fiduciary of any such
Plan, or otherwise involving any such
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Plan or any such fiduciary (other than routine claims for benefits). No
condition exists and no event has occurred with respect to any Multiemployer
Plan which presents a material risk of a complete or partial withdrawal under
Subtitle E of Title IV of ERISA, nor has the Company or any Commonly Controlled
Entity been notified that any such Plan is insolvent or in reorganization within
the meaning of Section 4241 of ERISA. Except as set forth on Schedule 5.13,
neither the Company nor any Commonly Controlled Entity has been a party to any
transaction or agreement to which the provisions of Section 4204 of ERISA were
applicable. Except as set forth on Schedule 5.13, neither the Company nor any
Subsidiary is obligated to contribute, on behalf of any current or former
employee of the Company, to a Multiemployer Plan. None of the Plans or any
trust established thereunder which is sponsored by the Company or any of its
Subsidiaries has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each of the Plans. No
contribution failure has occurred with respect to any Plan sufficient to give
rise to a lien under Section 302(f) of ERISA.
5.14. Patents, Copyrights, Permits, Trademarks and Licenses.
Schedule 5.14 sets forth a true and complete list of all material patents,
trademarks (registered or unregistered), trade names, service marks and
copyrights and applications therefor owned, used or filed by or licensed to the
Company and its Subsidiaries and, with respect to such material registered
trademarks, contains a list of all jurisdictions in which such trademarks are
registered or applied for and all registration and application numbers. Except
as disclosed on Schedule 5.14, the Company or a Subsidiary of the Company owns
or has the right to use, without payment to any other party, the patents,
trademarks (registered or unregistered), trade names, service marks, copyrights
and applications therefor referred to in such Schedule. To the knowledge of the
Company, no claims are pending by any person with respect to the ownership,
validity, enforceability or use of any such patents, trademarks (registered or
unregistered), trade names, service marks, copyrights, or applications therefor,
challenging or questioning the validity or effectiveness of any of the
foregoing, in any jurisdiction, domestic or foreign.
5.15 Environmental Matters. (a) Except as disclosed in Schedule
5.15, and subject to clause (f) below, to the knowledge of the Company, the
Proper-
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ties do not contain, in, on or under including, without limitation, the soil and
groundwater thereunder, any Hazardous Materials which result in a currently
existing violation of Environmental Laws.
(b) Except as disclosed in Schedule 5.15 and subject to clause (f)
below, to the knowledge of the Company, the Properties and all operations and
facilities at the Properties are in material compliance with all Environmental
Laws, and there is no contamination or violation of any Environmental Law which
could materially interfere with the continued operation of any of the Properties
or materially impair the fair saleable value of any thereof.
(c) Except as disclosed in Schedule 5.15, and subject to clause (f)
below, neither the Company nor any of its Subsidiaries has received any
complaint, notice of violation, alleged violation, notice of investigation or of
potential liability under Environmental Laws with regard to any of the
Properties which has not been cured, nor does the Company or any of its
Subsidiaries have knowledge that any Governmental Authority is contemplating
delivering to the Company or any of its Subsidiaries any such notice.
(d) Except as disclosed in Schedule 5.15, and subject to clause (f)
below, and for violations which have been cured, to the knowledge of the Company
or any of its Subsidiaries, Hazardous Materials have not been generated,
treated, stored, disposed of, at, on or under any of the Properties in violation
of any Environmental Laws nor have any Hazardous Materials been transported from
any of the Properties to any other location in violation of any Environmental
Laws.
(e) Except as disclosed in Schedule 5.15, and subject to clause (f)
below, there are no governmental administrative actions or judicial proceedings
pending under any Environmental Law to which the Company or any of its
Subsidiaries is a party with respect to any of the Properties, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to any of the Properties.
(f) Each of the representations and warranties set forth in
paragraphs (a) through (e) of this Section 5.15 is true and correct with respect
to each parcel of Property, except to the extent that the facts and
circumstances giving rise to any such failure to be so true and correct would
not have any reasonable likelihood of having a Material Adverse Effect.
5.16 Accuracy and Completeness of Information. The factual
statements contained in the financial statements referred to in Section 7.1, the
DIP Financing Documents and any other certificates or documents furnished or to
be furnished to the Agent or the Banks from time to time in connection with this
Agreement, taken as a whole, do not and will not, to the knowledge of the
Company, as of the date when made, contain any untrue
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statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not misleading in light of the
circumstances in which the same were made, all except as otherwise qualified
herein or therein, such knowledge qualification being given only with respect to
factual statements made by Persons other than the Company.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial DIP Loans and Letters of Credit. The
obligation of each Bank to make its initial DIP Loan, or the obligation of
CoreStates to issue its initial Letter of Credit, whichever occurs first, is
subject to the satisfaction or waiver pursuant to Section 11.1 immediately prior
to or concurrently with the making of such DIP Loan or the issuance of such
Letter of Credit, as the case may be, of the following conditions:
(a) Agreement. The Agent shall have received a counterpart of this
Agreement for each Bank duly executed and delivered by a duly authorized
officer of each of the Borrowers.
(b) No Violation. The consummation of the transactions contemplated
hereby or entered into in contemplation hereof, shall not contravene,
violate or conflict with, nor involve any Bank in a violation of, any
Requirement of Law.
(c) Consents, Authorizations and Filings, etc. All consents,
authorizations and filings, if any, required in connection with the
execution, delivery and performance by the Borrowers, and the validity and
enforceability against the Borrowers, of the DIP Financing Documents to
which it is a party, shall have been obtained or made, and such consents,
authorizations and filings shall be in full force and effect, except such
consents, authorizations and filings, the failure to obtain which would not
have a Material Adverse Effect.
(d) Other Agreements. The Agent shall have received each additional
document or instrument reasonably requested by the Required Banks.
(e) Insurance. The Agent shall have received a schedule describing
all insurance maintained by the Borrowers pursuant to Section 7.5.
(f) Fees. The Company shall have paid all fees then due and payable
under this Agreement.
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(g) Interim Order. The Agent shall have received, with a copy for
each Bank, a copy of the Interim Order, entered by the Bankruptcy Court and
the Interim Order shall be in full force and effect and shall not have been
vacated, stayed, reversed, modified or amended.
(h) Side Letter Agreement. The Agent and the Banks shall have
received the Side Letter Agreement, duly executed and in form and substance
satisfactory to the Agent and the Banks.
(i) Other Fees. All reasonable fees and expenses of Wachtell,
Lipton, Rosen & Katz and Policano & Manzo and, in an aggregate amount not
to exceed $25,000 any counsel to individual Banks, shall have been paid
upon presentation to the Company and the Agent of appropriate invoices
therefor.
6.2 Conditions to All DIP Loans and Letters of Credit. The
obligation of each Bank to make any DIP Loan and the obligation of CoreStates to
issue any Letter of Credit is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date:
(a) Representation and Warranties. Each of the representations and
warranties made in or pursuant to Section 5 or which are contained in any
other DIP Financing Document shall be true and correct in all material
respects on and as of such Borrowing Date as if made on and as of such date
(unless stated to relate to a specific earlier date, in which case, such
representations and warranties shall be true and correct in all material
respects as of such earlier date).
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such Borrowing Date or after
giving effect to such DIP Loan to be made or such Letter of Credit to be
issued on such Borrowing Date.
(c) Certificate. The Agent shall have received, with a counterpart
for each Bank, a certificate of an authorized financial officer of the
Company to the effect that, to the best of his knowledge, the applicable
statements contained in paragraphs (a) and (b) above are true and correct
as at the Borrowing Date.
(d) Budget Compliance Certificate. The Agent shall have received,
with a copy to each Bank, a Budget Compliance Certificate.
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(e) Orders. If the amount of the DIP Loan or Letter of Credit
requested in a Notice of Borrowing or L/C Application, as applicable,
together with the DIP Loans or outstanding Letters of Credit would exceed
the amount approved under the Interim Order after the entry thereof but
prior to entry of the Final Order then (x) the Agent shall have received,
with a copy for each Bank, a certified copy of the Interim Order or Final
Order, as the case may be, entered by the Bankruptcy Court, in form and
substance satisfactory to the Banks with such changes thereto as may be
approved by the Agent and its counsel and (y) the Interim Order or Final
Order, as applicable, shall be in full force and effect and shall not have
been vacated, stayed, reversed, modified or amended.
; provided, however, that if more than one Borrowing is requested during any
seven-day period, the requirements set forth in clauses (c) and (d) above need
only be satisfied in connection with the first Borrowing during such period.
Each Borrowing hereunder shall constitute a representation and warranty by the
Borrowers as of the date of such Borrowing that the conditions in clauses (a)
and (b) and of this Section 6.2 have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
Each Borrower hereby agrees that, so long as the Banks' Commitments
remain in effect, any DIP Loan, L/C Obligation or Letter of Credit remains
outstanding and unpaid, any amount (unless cash in an amount equal to such
amount has been deposited to a cash collateral account established by the Agent)
remains available to be drawn under any Letter of Credit or any other amount is
owing to any Bank, or the Agent hereunder, it shall, and shall cause each of its
Subsidiaries to:
7.1 Financial Statements. Furnish to the Agent (with sufficient
copies for each Bank):
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Company, a copy of the audited Consolidated
balance sheet of the Company and its Consolidated Subsidiaries as at the
end of such fiscal year and the related audited Consolidated statements of
stockholders' equity and audited cash flows and the Consolidated statements
of income of the Company and its Subsidiaries for such fiscal year, setting
forth in each case in comparative form the figures for the previous year;
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(b) within 60 days after the end of the fiscal quarter ending July 1,
1997 and thereafter as soon as available, but in any event not later than
45 days after the end of each of the first three quarterly periods of each
fiscal year of the Company, the unaudited Consolidated balance sheet of the
Company and its Subsidiaries as at the end of each such quarter and the
related unaudited Consolidated statements of income and cash flows of the
Company and its Subsidiaries for such quarterly period and the portion of
the fiscal year of the Company through such date subject only to usual
year-end adjustments and the absence of footnotes, setting forth in each
case in comparative form the figures for the corresponding quarter in, and
year to date portion of, the previous year, and the figures for such
periods in the budget prepared by the Company and furnished to the Agent,
certified by the chief financial officer, controller or treasurer of the
Company as being fairly stated in all material respects;
(c) as soon as practicable, and in any event within 30 days after the
end of each fiscal month of each year, commencing as of the fiscal month
ending with July 1, 1997 (it being understood and agreed that the balance
sheet for the fiscal month ended July 1, 1997 shall reflect an additional
inventory reserve of at least $10,000,000), the unaudited Consolidated
balance sheet of the Company and its Subsidiaries as at the end of such
month and the related unaudited Consolidated statement of income of the
Company and its Subsidiaries for such month and for the portion of the
fiscal year of the Company through such date in the form and detail similar
to those customarily prepared by management of the Company for internal
use, setting forth in each case in comparative form the Consolidated
figures for the corresponding month of, and year to date portion of, the
previous year and the figures for such periods in the budget prepared by
the Company and furnished to the Agent, certified by the chief financial
officer, controller or treasurer of the Company as being fairly stated in
all material respects;
(d) as soon as available, but in any event not later than 30 days
after the end of each month commencing with July 1997, an analysis of the
Company's actual performance as compared with the Budget;
(e) On Friday of each week of every calendar month of each year,
commencing with August 1, 1997, a forecast, in a format reasonably
satisfactory to the Agent, of the Company's forecast of receipts and
disbursements of the Company for the next four weeks, together with a
reconciliation in
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respect of actual receipts and disbursements for the immediately preceding
week;
(f) No later than 30 days after the end of each calendar month of
each year (other than quarterly month-ends, in which case no later than 45
days after the end of such quarterly month-end), commencing with July 30,
1997, a monthly reporting package, in a format reasonably satisfactory to
the Agent, showing: (i) a statement of outstanding "administrative
expenses" (as defined in the Bankruptcy Code) as of the end of such month,
(ii) a balance sheet, income statement and statement of cash flows for the
Company and its Subsidiaries as at the end of such month and (iii) a
certificate signed by an authorized officer of the Borrowers demonstrating
the Borrowers' compliance with Section 8.15; and
(g) any other information that any Bank may reasonably request;
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and (except in the case of
the statements referred to in paragraphs (c) through (l) of this Section 7.1) in
accordance with GAAP.
7.2 Certificates; Other Information. Furnish to the Agent (with
sufficient copies for each Bank):
(a) concurrently with the delivery of the Consolidated financial
statements referred to in Section 7.1(a), a letter from the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary to express their opinion on such
financial statements no knowledge was obtained of any Default or Event of
Default, except as specified in such letter;
(b) concurrently with the delivery of the financial statements
referred to in Sections 7.1(a), a certificate of an authorized financial
officer of the Company stating that, to the best of such officer's
knowledge, each of the Company and its respective Subsidiaries has observed
or performed all of its covenants and other agreements, and satisfied every
material condition, contained in this Agreement and the other DIP Financing
Documents to be observed, performed or satisfied by it, and that such
officer has obtained no knowledge of any Default or Event of Default except
as specified in such certificate;
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(c) promptly upon receipt thereof, copies of all final reports
submitted to the Company or to any of its Subsidiaries by independent
certified public accountants in connection with each annual, interim or
special audit of the books of the Company or any of its Subsidiaries made
by such accountants, including, without limitation, any final comment
letter submitted by such accountants to management in connection with their
annual audit;
(d) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available to
the public generally by the Company or any of its Subsidiaries and all
regular and periodic reports and all final registration statements and
final prospectuses, if any, filed by the Company or any of its Subsidiaries
with any securities exchange or with the Securities and Exchange Commission
or any Governmental Authority succeeding to any of its functions;
(e) all materials, statements and reports required of the Borrowers
pursuant to the Orders; and
(f) promptly, such additional financial and other information as any
Bank may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
post-Filing Date obligations and liabilities of whatever nature, except (a) when
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the relevant Borrower or any of its
Subsidiaries, as the case may be, (b) for delinquent obligations which do not
have a Material Adverse Effect and (c) for trade and other accounts payable in
the ordinary course of business which are not overdue for a period of more than
90 days or, if overdue for more than 120 days, as to which a dispute exists and
adequate reserves in conformity with GAAP have been established on the books of
the relevant Borrower or any of its Subsidiaries, as the case may be.
7.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it, and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges, franchises,
copyrights, trademarks and trade names necessary or desirable in the normal
conduct of its business except for rights, privileges, franchises, copyrights,
trademarks and trade names the loss of which would
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not in the aggregate have a Material Adverse Effect, and except as otherwise
permitted hereunder; and comply with all applicable Requirements of Law except
to the extent that the failure to comply therewith would not, in the aggregate,
have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. (a) Except for the
conditions disclosed on Schedule 7.5, keep all property useful and necessary in
its business in good working order and condition (ordinary wear and tear
excepted); and
(b) Maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and with only such
deductibles as are usually maintained by, and against at least such risks (but
including, in any event, public liability and product liability insurance) as
are usually insured against in the same general area, by companies engaged in
the same or a similar business; and furnish to the Agent, with a copy for each
Bank, (i) annually, a schedule disclosing (in a manner substantially similar to
that used in the schedule provided pursuant to Section 6.1(f)) all insurance
against products liability risk maintained by the Company and its Subsidiaries
pursuant to this Section 7.5 or otherwise and (ii) upon written request of any
Bank, full information as to the insurance carried; provided that the Borrowers
may implement programs of self insurance in the ordinary course of business and
in accordance with industry standards for a company of similar size so long as
reserves are maintained in accordance with GAAP for the liabilities associated
therewith.
7.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and activities
which permit financial statements to be prepared in conformity with GAAP and all
Requirements of Law; and permit representatives of any Bank upon reasonable
notice to visit and make a reasonable inspection of any of its properties and
reasonably examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be requested upon reasonable
notice, and to discuss the business, operations, assets and financial and other
condition of the Company and its Subsidiaries with officers and employees
thereof and with their independent certified public accountants.
7.7 Notices. Promptly give notice to the Agent and each Bank:
(a) of the occurrence of any Default or Event of Default then known
to such Borrower;
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(b) of any (i) default or event of default under any instrument or
other agreement, guarantee or collateral document of the Company or any of
its Subsidiaries which default or event of default has arisen after the
Filing Date and has not been waived and would have a Material Adverse
Effect, or (ii) litigation, investigation or proceeding which may exist at
any time between the Company or any of its Subsidiaries and any
Governmental Authority, or receipt of any notice of any environmental claim
or assessment against the Company or any of its Subsidiaries by any
Governmental Authority, which in any such case would have a Material
Adverse Effect;
(c) of the commencement of any litigation or proceeding against the
Company or any of its Subsidiaries (i) in which more than $500,000 of the
amount claimed is not covered by insurance or (ii) in which injunctive or
similar relief is sought which if obtained would have a Material Adverse
Effect;
(d) of the following events, as soon as practicable after, and in any
event within 30 days after, the Company knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to any
Single Employer Plan which Reportable Event could reasonably result in
material liability to the Company and its Subsidiaries taken as a whole, or
(ii) the institution of proceedings or the taking of any other action by
PBGC, the Company or any Commonly Controlled Entity to terminate, withdraw
or partially withdraw from any Plan and, with respect to a Multiemployer
Plan, the Reorganization or insolvency of the Plan, in each of the
foregoing cases which could reasonably result in material liability to the
Company and its Subsidiaries taken as a whole, and in addition to such
notice, deliver to the Agent and each Bank whichever of the following may
be applicable: (A) a certificate of an authorized officer of the Company
setting forth details as to such Reportable Event and the action that the
Company or such Commonly Controlled Entity proposes to take with respect
thereto, together with a copy of any notice of such Reportable Event that
may be required to be filed with PBGC, or (B) any notice delivered by PBGC
evidencing its intent to institute such proceedings or any notice to PBGC
that such Plan is to be terminated, as the case may be; and
(e) of a Material Adverse Effect arising after the Filing Date known
to such Borrower.
Each notice pursuant to this Section 7.7 shall be accompanied by a statement of
an authorized officer setting forth details of the
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occurrence referred to therein and (in the cases of clauses (a) through (d))
stating what action the Company proposes to take with respect thereto.
7.8 Environmental Laws. (a) Comply with, and use its reasonable
efforts to insure compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply with and maintain, and use
its reasonable efforts to insure that all tenants and subtenants obtain and
comply with and maintain, any and all licenses, approvals, registrations or
permits required by Environmental Laws, except to the extent that failure to do
so would not have any reasonable likelihood of having a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities respecting Environmental Laws, except to the extent
that the same are being contested in good faith by appropriate proceedings; and
(c) Defend, indemnify and hold harmless the Agent and the Banks, and
their respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of or noncompliance with
any Environmental Laws applicable to the real property owned or operated by the
Company or any of its Subsidiaries, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory fees,
court costs and litigation expenses, except to the extent that any of the
foregoing arise out of the gross negligence or willful misconduct of the party
seeking indemnification therefor.
7.9 Cash Concentration Account. At all time maintain its cash
concentration account with the Agent.
7.10 FY1998 Projections. Deliver to the Agent and the Banks within
90 days of the Effective Date, the Borrowers' projections (including, without
limitation, profit/loss statements, statements of cash flows, balance sheets,
income statements and other customary financial statements, on a Consolidated
basis) for the 1998 fiscal year.
7.11 Professional Fee Budget. Submit to the Agent and the Banks
within 45 days of the Effective Date a budget for professional fees and expenses
for the Borrowers and any statu-
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tory committee(s) appointed in the Chapter 11 Cases (the "Professional Fee
Budget"), such Professional Fee Budget to be reasonably acceptable to the
Required Banks.
SECTION 8. NEGATIVE COVENANTS
Each Borrower hereby agrees that it shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly so long as the DIP Loan
Commitments remain in effect or any DIP Loan or L/C Obligation remains
outstanding and unpaid, any amount (unless cash in an amount equal to such
amount has been deposited indefeasibly in a cash collateral account established
by the Agent) remains available to be drawn under any Letter of Credit or any
other amount is owing to any Bank or the Agent hereunder (it being understood
that each of the permitted exceptions to each of the covenants in this Section 8
is in addition to, and not overlapping with, any other of such permitted
exceptions except to the extent expressly provided):
8.1 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except in the case of the Company and the Company's Subsidiaries:
(a) Indebtedness outstanding on the Effective Date;
(b) Indebtedness in connection with the DIP Loans, the Orders, the
Letters of Credit and this Agreement;
(c) Indebtedness contemplated by Section 8.6(e); and
(d) Indebtedness owed to a Borrower.
8.2 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets, income or profits, whether now owned
or hereafter acquired, except:
(a) Liens for taxes, assessments or other governmental charges not
yet due or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or such Subsidiary, as the case may be, in accordance
with GAAP;
(b) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
in respect of obligations which are not yet due or which are being
contested in good faith and by appropriate proceedings if adequate reserves
with respect thereto are maintained on the books of the Com-
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pany or such Subsidiary, as the case may be, in accordance with GAAP;
(c) Liens in connection with workmen's compensation, unemployment
insurance and other similar programs and legislation;
(d) Liens to secure the performance of bids, tenders, trade or
government contracts (other than for borrowed money), leases, licenses,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(e) easements (including, without limitation, reciprocal easement
agreements), right-of-way, building, zoning and similar restrictions,
utility agreements, covenants, reservations, encroachments, changes, and
other similar Liens, encumbrances or title defects incurred, or leases or
subleases granted to others, in the ordinary course of business, which do
not interfere with or adversely affect in any material respect the ordinary
conduct of the business of the Company and its Subsidiaries on the property
in question;
(f) Liens in favor of the Banks pursuant to the DIP Financing
Documents and bankers' liens arising by operation of law;
(g) Liens existing on the Effective Date;
(h) Liens on documents of title and the property covered thereby
securing Indebtedness in respect of the Commercial L/Cs;
(i) (i) Liens that have been placed by any developer, landlord or
other third party on property over which the Company or any Subsidiary of
the Company has easement rights or on any Leased Property and subordination
or similar agreements relating thereto and (ii) any immaterial condemnation
or eminent domain proceeding affecting any real property that does not
prevent such real property from being utilized by the Company or any of its
Subsidiaries substantially for the purposes for which it was being utilized
prior to such proceeding; and
(j) Liens on goods of the Company or any of its Subsidiaries sold on
a consignment basis in the ordinary course of business.
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8.3 Limitation on Contingent Obligations. Create, incur, assume or
suffer to exist any Contingent Obligation except:
(a) Contingent Obligations existing on the Effective Date;
(b) Contingent Obligations in favor of CoreStates or any Bank in
respect of Letters of Credit.
8.4 Prohibition of Fundamental Changes. Enter into any merger or
consolidation or amalgamation (other than in connection with a Reorganization
Plan), or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or engage in any type of business other than of the same general
type now conducted by it.
8.5 Prohibition on Sale of Assets. Convey, sell, lease (other than a
sublease of real property), assign, transfer or otherwise dispose of (including
through a transaction of merger or consolidation of any Subsidiary of the
Company) any of its property, business or assets (including, without limitation,
tax benefits, receivables and leasehold interests), whether now owned or
hereafter acquired, except:
(a) for (i) sales of inventory made in the ordinary course of
business and (ii) sales of assets with a net book value of less than
$25,000 in respect of any single sale or related series of sales, but in
any event not in excess of $250,000 in the aggregate in respect of all such
sales during any fiscal quarter; and
(b) any immaterial condemnation or eminent domain proceeding
affecting any real property that does not prevent such real property from
being utilized by the Company or any of its Subsidiaries substantially for
the purposes for which it was being utilized prior to such proceeding.
8.6 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of, or make any other investment in
(including, without limitation, any acquisition of all or any substantial
portion of the assets, and any acquisition of a business or a product line, of
other companies, other than the acquisition of inventory in the ordinary course
of business), any Person, except:
(a) the Company and its Subsidiaries may invest in, acquire and hold
Cash Equivalents;
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(b) the Company or any of its Subsidiaries may make travel and
entertainment advances and relocation and other loans to their respective
officers and employees (or guarantee such obligations) in the ordinary
course as currently conducted;
(c) the Company or any of its Subsidiaries may make payroll advances
in the ordinary course of business;
(d) the Company or any of its Subsidiaries may acquire and hold
receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms; and
(e) any Borrower may make loans to any Subsidiary and any such
Subsidiary may make loans to any such Borrower, all in the ordinary course
of the Borrower's and such Subsidiaries' respective businesses as conducted
as of July 21, 1997.
8.7 Limitation on Dividends. Declare any dividends on any shares of
any class of stock, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, retirement or
other acquisition of any shares of any class of stock, or any warrants or
options to purchase such stock, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Company or any of its
Subsidiaries; except that Subsidiaries may pay dividends to the Borrowers or to
Subsidiaries which are directly or indirectly wholly owned by such Borrower.
8.8 Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate except for transactions
which are not prohibited under this Agreement and which are in the ordinary
course of the Company's or a Subsidiary's business and which are upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than it
would obtain in a hypothetical comparable arm's length transaction with a Person
not an Affiliate, provided, however, that nothing in this Section 8.8 shall
prohibit the Company and its Subsidiaries from engaging in the following
transactions: (x) the performance of the Company's or Subsidiary's obligations
under any employment contract, collective bargaining agreement, employee benefit
plan, related trust agreement or any other similar arrangement heretofore or
hereafter entered into in the ordinary course, (y) payment of compensation to
employees, officers, directors or consultants in the ordinary course of
business, and (z) maintenance of benefit programs or arrangements for employees,
officers or directors, including,
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without limitation, vacation plans, health and life insurance plans, deferred
compensation plans, incentive plans, and retirement or savings plans and similar
plans.
8.9 Foreign Exchange Contracts. Enter into any foreign currency
exchange contracts.
8.10 Limitation on Creation of and Investments in Subsidiaries.
Except as permitted in Section 8.6(e), make any advance, loan, extension of
credit or capital contribution to, purchase any stock, bonds, notes, debentures
or other securities of, or make any other investment in, any Subsidiary, or
create, merge or consolidate with, or sell or otherwise transfer all or any
assets of the Company or any of its Subsidiaries to, any Subsidiary.
8.11 DIP Financing. Incur or apply to the Bankruptcy Court for
authority to incur, or suffer to exist, any (i) indebtedness having the priority
afforded by section 364(c) or (d) of the Bankruptcy Code (including any
Superpriority Claims) other than the financing provided for under this Agreement
and the other DIP Financing Documents or as authorized pursuant to the Orders or
(ii) obligation to make adequate protection payments, or otherwise provide
adequate protection, other than (A) as contemplated by the Orders or (B) in an
amount not to exceed $150,000 in the aggregate.
8.12 Alteration of Rights of Banks. Limit, affect or modify, or
apply to the Bankruptcy Court to limit, affect or modify any of the Agent's or
the Banks' rights with respect to the Obligations, including rights with respect
to Pre-Petition Collateral and Post-Petition Collateral (each as defined in the
Orders) and the priority thereof and payment of various amounts, pursuant to any
Reorganization Plan or otherwise.
8.13 Chapter 11 Claims. Except for the Carveout (as defined in the
Interim Order) and in connection with, and only to the extent incurred on or
after the Consummation Date in respect of, a Reorganization Plan, apply to the
Bankruptcy Court for the authority to incur, create, assume, suffer or permit
any claim, Lien or encumbrance (other than Permitted Liens) against any
Borrower, any Subsidiary of any Borrower, or any of their assets in the Chapter
11 Cases to be pari passu with, or senior to, the Liens and claims of the Banks
granted and arising hereunder and under the Orders.
8.14 Reclamation Claims; Bankruptcy Code Section 546(g) Agreements.
(a) Make any payments or transfer any property on account of claims asserted by
any of the Company's vendors for reclamation in accordance with UCC Section
2-702 and Bankruptcy
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Code Section 546(c) in excess of an amount to be agreed upon, in each case, by
the Company and the Agent.
(b) Enter into any agreements or file any motion seeking a Bankruptcy
Court order for the return of Inventory to any vendor pursuant to Bankruptcy
Code Section 546(g) without the written consent of the Agent.
8.15 EBITDAR. Permit cumulative EBITDAR for the periods commencing
on July 1, 1997 and ending at the end of the months in Column A below to be less
than the corresponding amounts in Column B below:
A B
July 1997 ($5,000,000)
August 1997 ($7,900,000)
September 1997 ($11,200,000)
October 1997 ($13,300,000)
November 1997 ($15,300,000)
December 1997 ($17,800,000)
8.16 Capital Expenditures. (a) Make, incur or otherwise suffer to
exist Capital Expenditures during the period from July 1, 1997 through December
31, 1997 in the aggregate in excess of $600,000 for the Company and its
Subsidiaries (including each of the Borrowers).
(b) Make, incur or otherwise suffer to exist any Capital Expenditures
after December 31, 1997.
8.17 Professional Fees. Make payments to professionals for the
Borrowers and any statutory committee(s) appointed in the Chapter 11 Cases in
excess of the amounts provided therefor in the Professional Fee Budget.
SECTION 9. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
events:
(a) Borrowers shall fail to (i) pay any principal of any DIP Loan
when due in accordance with the terms hereof or to reimburse CoreStates for
any draw under any Letter of Credit in accordance with Section 3.4 or (ii)
pay any inter-
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est on any DIP Loan or any other amount payable hereunder within three days
after any such interest or other amount becomes due in accordance with the
terms hereof; or
(b) Any representation or warranty made or deemed made by any
Borrower in any DIP Financing Document shall prove to have been incorrect
in any material respect on or as of the date made or deemed made; or
(c) Any Borrower shall default in any material respect in the
observance or performance of any other agreement, obligation or restriction
contained in any DIP Financing Document and such default shall continue for
more than 10 days; or
(d) The Bankruptcy Court shall enter an order with respect to any
Borrower dismissing its Chapter 11 Case or converting it to a case under
Chapter 7 of the Bankruptcy Code, or appointing a trustee in its Chapter 11
Case or appointing a responsible officer or an examiner with enlarged
powers relating to the operation of the Borrowers' business (beyond those
set forth in Sections 1106(a)(3) or (4)) under Bankruptcy Code Section
1106(b); or
(e) The Bankruptcy Court shall enter an order granting relief from
the automatic stay applicable under Section 362 of the Bankruptcy Code to
the holder of any Lien other than Liens in favor of the Agent in any assets
of any of the Borrowers having an aggregate value in excess of $500,000; or
(f) An order of the Bankruptcy Court shall be entered in any of the
Chapter 11 Cases amending, supplementing, staying for a period in excess of
10 days, vacating or otherwise modifying any of the Orders, or any Borrower
shall apply for authority to do so; provided, that no Event of Default
shall occur under this clause (f) to the extent that any such amendment,
supplement or other modification is made in compliance with this Agreement
and is not adverse, in the reasonable judgment of the Agent, to the rights
and interests of the Banks under this Agreement and the DIP Financing
Documents; or
(g) Any Borrower shall support (in any such case by way of any motion
or other pleading filed with the Bankruptcy Court or any other writing to
another party-in-interest executed by or on behalf of a Borrower) any other
Person's opposition of, any motion made in the Bankruptcy Court by any Bank
seeking confirmation of the amount of such Bank's claim or the validity and
enforceability of the Liens in favor of such Bank (including, without
limitation, the
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Liens securing Pre-Petition Indebtedness owed to such Bank); or
(h) Any Borrower shall seek to, or shall support (in any such case by
way of any motion or other pleading filed with the Bankruptcy Court or any
other writing to another party-in-interest executed by or on behalf of a
Borrower) any other Person's motion to, disallow in whole or in part any
Bank's claim in respect of the Pre-Petition Indebtedness or the Obligations
or to challenge the validity and enforceability of the Liens in favor of
the Agent or any Bank (including, without limitation, the Liens securing
Pre-Petition Indebtedness owed to such Bank); or
(i) From and after the date of entry thereof, the Interim Order shall
cease to be in full force and effect (or shall have been vacated, stayed,
reversed, modified or amended), in each case without the consent of the
Required Supermajority Banks, and the Final Order shall not have been
entered prior to such cessation (or vacatur, stay, reversal, modification
or amendment); or
(j) The Final Order shall not have been entered by the Bankruptcy
Court on or before August 22, 1997; or
(k) From and after the date of entry thereof, the Final Order shall
cease to be in full force and effect (or shall have been vacated, stayed,
reversed, modified or amended), in each case without the consent of the
Required Supermajority Banks; or
(l) Any Borrower or Subsidiary thereof shall make any payments on any
Indebtedness of such Borrower or Subsidiary (other than as permitted under
the Orders or permitted hereunder) arising before the Filing Date; or
(m) the Borrowers shall fail to comply with the terms of the Orders
in all material respects; or
(n) One or more judgments or decrees shall be entered against (i) any
of the Borrowers involving in the aggregate a post-Filing Date liability
(not paid or fully covered by insurance) of $500,000 or more or (ii) any
Subsidiary of any Borrower which would have a Material Adverse Effect, and
all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within the time required by the terms of
such judgment; or
(o) Any DIP Financing Document shall cease, for any reason, to be in
full force and effect or any Borrower or
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any of its Subsidiaries shall so assert in writing, or any DIP Financing
Document shall cease to be effective to grant a perfected Lien on any
material item of collateral described therein with the priority purported
to be created thereby; or
(p) Any of the following events shall occur with respect to any Plan:
(i) the institution of any steps by any of the Borrowers, any
member of its Controlled Group or any other Person to terminate a Plan
if, as a result of such termination, any of the Borrowers or any such
member could be required to make a contribution to such Plan, or could
reasonably expect to incur a liability or obligation to such Plan, in
excess of $500,000; or
(ii) a contribution failure occurs with respect to any Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA; or
(q) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Banks, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) other
than as previously disclosed to the Banks, the Company or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required Banks
is likely to, incur any liability in connection with a withdrawal from, or
the Insolvency or Reorganization of, a Multiemployer Plan; and in each case
in clauses (i) through (v) above, such event or condition, together with
all other such similar events or conditions relating to a Plan, if any,
would be reasonably likely to subject the Company or any of its
Subsidiaries to any tax, penalty or other liabilities in the aggregate
material in relation to the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries
taken as a whole; or
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(r) A material breach of, or material non-compliance in respect of,
the terms and conditions of the Side Letter Agreement; or
(s) within ten (10) Business Days after presentation by the Banks of
a slate of independent persons with substantial business or financial
experience, such slate of directors shall not have been elected as
directors of the Company (the "New Directors") in replacement of the
current directors of the Company; or
(t) the chief executive officer or any of the New Directors shall
have been removed from their respective positions without the consent of
the Required Banks;
then, and in any such event, so long as any such Event of Default shall be
continuing, either or both of the following actions may be taken: (i) with the
consent of the Required Banks, the Agent may, or upon the request of the
Required Banks, the Agent shall, by notice to the Company, declare the DIP Loan
Commitments and CoreStates' obligations to issue the Letters of Credit to be
terminated forthwith, whereupon the Banks' Commitments and such obligations
shall immediately terminate; and (ii) with the consent of the Required Banks,
the Agent may, or upon the request of the Required Banks, the Agent shall, by
notice of default to the Company, (A) declare all or a portion of the DIP Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement to be due and payable forthwith, whereupon the same shall immediately
become due and payable, and (B) declare all or a portion of the obligations of
the Borrowers in respect of the Letters of Credit, although contingent and
unmatured, to be due and payable forthwith, whereupon the same shall immediately
become due and payable and/or demand that the Borrowers discharge any or all of
the obligations supported by the Letters of Credit by paying or prepaying any
amount due or to become due in respect of such obligations. All payments under
this Section 9 on account of undrawn Letters of Credit shall be made by the
Company directly to a cash collateral account established by the Agent for such
purpose for application to the Borrowers' reimbursement obligations under this
Section 9 as drafts are presented under the Letters of Credit with the balance,
if any, to be applied to the Borrowers' obligations under this Agreement as the
Agent shall determine with the approval of the Required Banks. Except as
expressly provided above in this Section 9, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
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SECTION 10. THE AGENT; CORESTATES AS ISSUER
10.1 Appointment. Each Bank hereby irrevocably designates and
appoints CoreStates as the Agent under this Agreement and irrevocably authorizes
CoreStates as Agent for such Bank, to take such action on its behalf under the
provisions of the DIP Financing Documents and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms of the
DIP Financing Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the DIP Financing Documents or otherwise exist
against the Agent.
10.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and each of the other DIP Financing Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
10.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with the DIP Financing Documents (except for its
or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by any Borrower or any officer thereof
contained in the DIP Financing Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, the DIP Financing Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of the DIP
Financing Documents or for any failure of any Borrower to perform its
obligations thereunder. The Agent shall not be under any obligation to any Bank
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, any DIP Financing Document, or to
inspect the properties, books or records of any Borrower.
10.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to
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be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitations, counsel to the Borrowers), independent accountants and
other experts selected by the Agent. The Agent may deem and treat the payee of
any DIP Loan as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under any DIP Financing Document unless it shall first receive such
advice or concurrence of the Required Banks (or, where unanimous consent of the
Banks is expressly required hereunder, such Banks) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under any DIP Financing
Document in accordance with a request of the Required Banks, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Banks and all future holders of the DIP Loans.
10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received written notice from a Bank or a Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Banks. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Banks; provided that
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Banks.
10.6 Non-Reliance on Agent and Other Banks. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrowers, shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthi-
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ness of the Company and its Subsidiaries and made its own decision to make its
DIP Loans hereunder and enter into this Agreement. Each Bank also represents
that it will, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under the DIP Financing Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of the Borrowers which may
come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
10.7 Indemnification. The Banks agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrowers and without
limiting the obligation of the Borrowers to do so), ratably according to the
respective amounts of their original DIP Loan Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including without limitation at any time following the payment
of the DIP Loans) be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the DIP Financing Documents or any
documents contemplated by or referred to herein or the transactions contemplated
hereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided that no Bank shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's gross negligence or willful misconduct. The agreements in this
Section 10.7 shall survive the payment of the DIP Loans and all other amounts
payable hereunder.
10.8 The Agent in its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Company and its Subsidiaries as though the Agent were
not the Agent hereunder. With respect to its DIP Loans made or renewed by it
and any note issued to it, the Agent shall have the same rights and powers,
duties and liabilities under the DIP Financing Documents as any Bank and may
exercise the same as though it were not the Agent
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and the terms "Bank" and "Banks" shall include the Agent in its individual
capacity.
10.9 Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Banks. If the Agent shall resign as Agent under the DIP Financing
Documents, then the Required Banks shall appoint from among the Banks a
successor agent for the Banks which successor agent shall be approved by the
Borrowers, which shall not unreasonably withhold its approval, whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent and
the term "Agent" shall mean such successor agent effective upon its appointment,
and the former Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement or any holders of the Notes. After any
retiring Agent's resignation hereunder as Agent the provisions of this Section
10 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under the DIP Financing Documents.
10.10 CoreStates as Issuer of Letters of Credit. Each Bank hereby
acknowledges that the provisions of this Section 10 shall apply to CoreStates,
in its capacity as issuer of the Letters of Credit, in the same manner as such
provisions are expressly stated to apply to the Agent.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. No DIP Financing Document nor any terms
thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 11.1. With the written consent of the Required
Banks, the Agent and the respective Borrowers or their Subsidiaries may, from
time to time, enter into written amendments, supplements or modifications hereto
for the purpose of adding any provisions to any DIP Financing Document in which
they are parties or changing in any manner the rights of the Banks or of any
such Borrower or its Subsidiaries thereunder or waiving, on such terms and
conditions as the Agent may specify in such instrument, any of the requirements
of any such DIP Financing Document or any Default or Event of Default and its
consequences; provided, however, that:
(a) no such waiver and no such amendment, supplement or modification
shall extend the maturity of any DIP Loan, or reduce the rate or extend the
time of payment of interest thereon, or change the method of calculating
interest thereon, or reduce any fee payable to the Banks hereunder, or
reduce the principal amount of any DIP Loan, or change the amount of any
Bank's DIP Loan Commitment, or amend, modify or waive any provision of this
Section 11.1 or reduce
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the percentage specified in the definition of Required Banks or Required
Supermajority Banks or consent to the assignment or transfer by any
Borrower of any of its rights and obligations under any DIP Financing
Document or effect the release of substantially all of the Pre-Petition
Collateral and the Post-Petition Collateral (each as defined in the Interim
Order), in each case, without the written consent of each Bank affected
thereby;
(b) no such waiver and no such amendment, supplement or modification
shall amend, modify or waive any provision of Section 10 without the
written consent of the then Agent; and
(c) no such waiver and no such amendment, supplement or modification
shall, without the written consent of the Required Supermajority Banks, (i)
amend, modify or waive any material provision of any Order or (ii) increase
the DIP Loan Commitment Amount (without prejudice to any Bank's right to
object to approval by the Bankruptcy Court of any such increase).
Any such waiver and any such amendment, supplement or modification described in
this Section 11.1 shall apply equally to each of the Banks and shall be binding
upon each Borrower and its Subsidiaries, the Banks, the Agent and all future
holders of DIP Loans. Any extension of a Letter of Credit by CoreStates shall
be treated hereunder as a new Letter of Credit. In the case of any waiver, the
Company, the Banks and the Agent shall be restored to their former position and
rights hereunder and under the outstanding DIP Loans, and any Default or Event
of Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
11.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three Business Days
after being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when sent, confirmation of receipt received, addressed as follows in the
case of each Borrower and the Agent, and as set forth on the signature pages
hereto in the case of any Bank, or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the DIP
Loans:
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The Borrowers: c/o Maidenform Worldwide, Inc.
154 Avenue E
Bayonne, New Jersey 07002
Attention: President
Facsimile: (201) 436-9506
With a copy to: c/o Maidenform Worldwide, Inc.
90 Park Avenue
New York, New York 10016
Attention: General Counsel
Facsimile: (212) 661-4522
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Alan B. Miller, Esq.
and
Stephen Karotkin, Esq.
Facsimile: (212) 735-4965
The Agent: CoreStates Bank, N.A.
1339 Chestnut Street
13th Floor
Philadelphia, PA 19107
Attention:
Facsimile: (215) 786-7657
With a copy to: Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Chaim J. Fortgang, Esq.
and
Richard G. Mason, Esq.
Facsimile: (212) 403-2000
provided that any notice, request or demand to or upon the Agent or the Banks
pursuant to Sections 2.2, 3.3 or 4.1 shall not be effective until received.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and
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not exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the issuance of Letters of Credit.
11.5 Payment of Expenses and Taxes. The Borrowers agree (a) to pay
or reimburse the Agent and the Banks for all their respective reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
the DIP Financing Documents and any other documents prepared in connection
herewith, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Agent and the Bank group (and, in an amount not to exceed
$25,000, the individual Banks), and accountants and financial advisors to the
Agent and/or the Bank group, (b) to pay or reimburse each Bank and the Agent for
all their reasonable costs and expenses incurred in connection with, and to pay,
indemnify, and hold the Agent and each Bank harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever arising out of or in connection with, the enforcement or preservation
of any rights under any DIP Financing Document and any such other documents,
including, without limitation, reasonable fees and disbursements of counsel to
the Agent and each Bank incurred in connection with the foregoing and in
connection with advising the Agent with respect to its rights and
responsibilities under this Agreement and the documentation relating thereto,
(c) to pay, indemnify, and to hold the Agent and each Bank harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other similar taxes
(other than withholding taxes), if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, any DIP
Financing Document and any such other documents, and (d) to pay, indemnify, and
hold the Agent and each Bank and their respective officers and directors
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, reasonable fees
and disbursements of counsel) which may be incurred by or asserted against the
Agent or the Banks (x) arising out of or in
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connection with any investigation, litigation or proceeding related to this
Agreement, the other DIP Financing Documents, the proceeds of the DIP Loans and
the transactions contemplated by or in respect of such use of proceeds, or any
of the other transactions contemplated hereby, whether or not the Agent or any
of the Banks is a party thereto, or (y) without limiting the generality of the
foregoing by reason of or in connection with the execution and delivery or
transfer of, or payment or failure to make payments under, Letters of Credit (it
being agreed that nothing in this Section 11.5 is intended to limit the
Borrowers' obligations pursuant to Section 3.4) (all the foregoing,
collectively, the "indemnified liabilities"), provided that the Company shall
have no obligation hereunder with respect to indemnified liabilities of the
Agent or any Bank or any of their respective officers and directors arising from
(i) the gross negligence or willful misconduct of such Agent or Bank or their
respective directors or officers or (ii) legal proceedings commenced against the
Agent or a Bank by any security holder or creditor thereof arising out of and
based upon rights afforded any such security holder or creditor solely in its
capacity as such or (iii) legal proceedings commenced against the Agent or any
such Bank by any Transferee (as defined in Section 11.6). The agreements in
this Section 11.5 shall survive repayment of the DIP Loans and all other amounts
payable hereunder. No approval of the Bankruptcy Court shall be required with
respect to the payments contemplated by this Section 11.5.
11.6 Successors and Assigns; Participations; Purchasing Banks. (a)
This Agreement shall be binding upon and inure to the benefit of the Borrowers,
the Banks and the Agent, and their respective successors and assigns, except
that the Borrowers may not assign or transfer any of their rights or obligations
under this Agreement without the prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any DIP Loan owing to such
Bank, any participating interest in the Letters of Credit of such Bank, any DIP
Loan made by such Bank, any DIP Loan Commitment of such Bank or any other
interest of such Bank hereunder. In the event of any such sale by a Bank of
participating interests to a Participant, such Bank's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Bank shall remain solely responsible for the performance thereof, such Bank
shall remain the holder of any such DIP Loan and any note representing such DIP
Loan for all purposes under this Agreement and the Company and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obliga-
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tions under this Agreement. The Borrowers agree that if amounts outstanding
under this Agreement and the DIP Loans are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff in respect
of its participating interest in amounts owing under this Agreement and any DIP
Loan to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under this Agreement or any DIP Loan; provided,
that such right of setoff shall be subject to the obligation of such Participant
to share with the Banks, and the Banks agree to share with such Participant, as
provided in Section 11.7. The Borrowers also agree that each Participant shall
be entitled to the benefits of Sections 3.5 and 4.6 with respect to its
participation in the Letters of Credit and in the DIP Loan Commitments and the
DIP Loans outstanding from time to time; provided, that no Participant shall be
entitled to receive any greater amount pursuant to such subsections than the
transferor Bank would have been entitled to receive in respect of the amount of
the participation transferred by such transferor Bank to such Participant had no
such transfer occurred. Each Bank agrees that the participation agreement
pursuant to which any Participant acquires its participating interest (or any
other document) may afford voting rights to such Participant only with respect
to matters requiring the consent of all of the Banks hereunder.
(c) Any Bank may, in the ordinary course of its business and in
accordance with applicable law, (i) at any time sell all or any part of its
rights and obligations under this Agreement and the DIP Loans to any Bank or any
Affiliate thereof, provided that, in the event of a sale of less than all of
such rights and obligations, (x) such assigning Bank after any such sale to any
other Bank or any Affiliate of such Bank shall retain DIP Loan Commitments, DIP
Loans and L/C Participating Interests aggregating at least 2% of the aggregate
DIP Loan Commitments (or such lesser amount as the Agent may determine) and (y)
such sale shall be of corresponding proportions of the DIP Loan Commitments, DIP
Loans and L/C Participating Interests held by such assigning Banks immediately
prior to such sale, and, (ii) with the consent of the Agent (which shall not be
unreasonably withheld) sell to one or more additional banks or financial
institutions ("Purchasing Banks"), all or any part of its rights and obligations
under this Agreement and the DIP Loans, pursuant to a Commitment Transfer
Supplement, executed by such Purchasing Bank, such transferor Bank (and, in the
case of a Purchasing Bank that is not then a Bank or an Affiliate thereof, by
the Agent), and delivered to the Agent for its acceptance and recording in the
Register (as defined below) together with a recordation fee to the Agent of
$2,500 in cash; provided that (A) each such sale pursuant to clause (ii) of this
Section 11.6(c) shall be in an
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amount of 2% of the aggregate DIP Loan Commitments or more and (B) in the event
of a sale of less than all of such rights and obligations, (x) such Bank after
any such sale shall retain DIP Loan Commitments, DIP Loans and L/C Participating
Interests aggregating at least 2% of the aggregate DIP Loan Commitments and (y)
such sale shall be of corresponding proportions of the DIP Loan Commitments, DIP
Loans and L/C Participating Interests held by such assigning Banks immediately
prior to such sale. Upon such execution, delivery, acceptance and recording,
from and after the Transfer Effective Date as defined in the Commitment Transfer
Supplement, (x) the Purchasing Bank thereunder shall be a party hereto and, to
the extent provided in such Commitment Transfer Supplement, have the rights and
obligations of a Bank hereunder with a DIP Loan Commitment as set forth therein,
and (y) the transferor Bank thereunder shall, to the extent of the interest
transferred, as reflected in such Commitment Transfer Supplement, be released
from its obligations under this Agreement (and, in the case of a Commitment
Transfer Supplement covering all or the remaining portion of a transferor Bank's
rights and obligations under this Agreement, such transferor Bank shall cease to
be a party hereto). Such Commitment Transfer Supplement shall be deemed to
amend this Agreement to the extent, and only to the extent, necessary to reflect
the addition of such Purchasing Bank and the resulting adjustment of Commitment
Percentages arising from the purchase by such Purchasing Bank of all or a
portion of the rights and obligations of such transferor Bank under this
Agreement and the DIP Loans.
(d) The Agent shall maintain at its address referred to in Section
11.2 a copy of each Commitment Transfer Supplement delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Banks and the Banks' Commitment of, the principal amount of DIP Loans owing to,
and the L/C Participating Interests of, each Bank from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Company, the Agent and the Banks may treat each Person whose name is
recorded in the Register as the owner of the DIP Loan or L/C Participating
Interest recorded therein for all purposes of this Agreement. The Register
shall be available for inspection by the Company or any Bank at any reasonable
time and from time to time upon reasonable prior notice and upon request by any
Borrower, Agent will provide a copy of the Register promptly to such Borrower or
its counsel.
(e) Upon its receipt of a Commitment Transfer Supplement executed by
a transferor Bank and a Purchasing Bank (and, in the case of a Purchasing Bank
that is not then a Bank or an Affiliate thereof, by the Company and the Agent),
together with payment to the Agent of a registration and processing fee of
$4,000 if the Purchasing Bank is not a Bank prior to the execu-
-64-
<PAGE>
tion of such supplement and $1,000 otherwise, the Agent shall (i) promptly
accept such Commitment Transfer Supplement and (ii) on the Transfer Effective
Date determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Banks and the
Company.
(f) The Banks agree that they will use reasonable efforts to protect
the confidentiality of any confidential information concerning the Company and
its Affiliates. Notwithstanding the foregoing, the Company authorizes each Bank
to disclose to any Participant or Purchasing Bank (each, a "Transferee") and any
prospective Transferee any and all financial information in such Bank's
possession concerning the Company and its Affiliates which has been delivered to
such Bank by or on behalf of the Company pursuant to this Agreement or which has
been delivered to such Bank by or on behalf of the Company in connection with
such Bank's credit evaluation of the Company and its Affiliates prior to
becoming a party to this Agreement, subject to any such prospective Transferee
agreeing to use reasonable efforts to protect the confidentiality of any
confidential information concerning the Company and its Affiliates.
(g) If, pursuant to this Section 11.6, any interest in this Agreement
or any DIP Loan is transferred to any Transferee which is organized under the
laws of any jurisdiction other than the United States or any State thereof, the
transferor Bank shall cause such Transferee, concurrently with the effectiveness
of such transfer, (i) to represent to the transferor Bank (for the benefit of
the transferor Bank, the Agent and the Company) that under applicable law and
treaties no taxes will be required to be withheld by the Agent, any Borrower or
the transferor Bank with respect to any payments to be made to such Transferee
in respect of the DIP Loans or L/C Participating Interests, (ii) to furnish to
the transferor Bank (and, in the case of any Purchasing Bank registered in the
Register, the Agent and the Borrowers) either U.S. Internal Revenue Service Form
4224 or U.S. Internal Revenue Service Form 1001 (wherein such Transferee claims
entitlement to complete exemption from U.S. Federal withholding tax on all
interest payments hereunder), and (iii) to agree (for the benefit of the
transferor Bank, the Agent and the Borrowers) to provide the transferor Bank
(and, in the case of any Purchasing Bank registered in the Register, the Agent
and the Company) a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.
-65-
<PAGE>
11.7 Adjustments; Set-Off. If any Bank (a "benefitted Bank") shall
at any time receive any payment of all or part of any of its DIP Loans or L/C
Participating Interests, as the case may be, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by setoff,
or otherwise) in a greater proportion than any such payment to and collateral
received by any other Bank, if any, in respect of such other Bank's DIP Loans or
L/C Participating Interests, as the case may be, or interest thereon, such
benefitted Bank shall purchase for cash from the other Banks such portion of
each such other Bank's DIP Loans or L/C Participating Interests, as the case may
be, or shall provide such other Banks with the benefits of any such collateral,
or the proceeds thereof, as shall be necessary to cause such benefitted Bank to
share the excess payment or benefits of such collateral or proceeds ratably with
each of the Banks; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Bank, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. The Company agrees that each
Bank so purchasing a portion of another Bank's DIP Loans and/or L/C
Participating Interests may exercise all rights of payment (including, without
limitation, rights of setoff) with respect to such portion as fully as if such
Bank were the direct holder of such portion. The Agent shall promptly give the
Company notice of any set-off, provided that the failure to give such notice
shall not affect the validity of such set-off.
11.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrowers and the Agent. This Agreement shall become
effective with respect to the Borrowers, the Agent and the Banks when the Agent
shall have received copies of this Agreement executed by the Borrowers and the
Banks, or, in the case of any Bank, shall have received telephonic confirmation
from such Bank stating that such Bank has executed counterparts of this
Agreement or the signature pages hereto and sent the same to the Agent.
11.9 Governing Law; No Third-Party Rights. This Agreement and the
rights and obligations of the parties under this Agreement, including, without
limitation, the DIP Loans and the Letters of Credit, shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York,
except to the extent governed by the Bankruptcy Code. This Agreement is solely
for the benefit of the parties hereto and their respective successors and
assigns, and, except as set forth
-66-
<PAGE>
in Section 11.6, no other Persons shall have any right, benefit, priority or
interest under, or because of the existence of, this Agreement.
11.10 Additional Grant of Lien. All loans, advances and any other
indebtedness or obligations, contingent or absolute (including, without
limitation, the principal thereof, interest thereon, and costs and expenses
owing in connection therewith) which may now or from time to time hereafter be
owing by the Borrowers to the Agent or the Banks under any of the DIP Financing
Documents shall be secured as set forth in the Orders.
-67-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
MAIDENFORM WORLDWIDE, INC., 154 Avenue E
a Delaware corporation Bayonne, New Jersey 07002
Telephone:
Facsimile: (201) 436-9506
By______________________ Attn: President
Name:
Title:
MAIDENFORM, INC., 90 Park Avenue
a New York corporation New York, New York 10016
Telephone:
Facsimile: (212) 983-5834
By_______________________ Attn:
Name:
Title:
NCC INDUSTRIES, INC., 90 Park Avenue
a Delaware corporation New York, New York 10016
Telephone:
Facsimile: (212) 983-5834
By_______________________ Attn:
Name:
Title:
CORESTATES BANK, N.A., as Agent 1339 Chestnut Street
13th Floor, FC 1-8-13-2
Philadelphia, PA 19107
By_________________________ Telephone: (215) 786-7273
Name: Facsimile: (215) 786-7657
Title: Attn: C.B. Cook
CORESTATES BANK, N.A. 1339 Chestnut Street
13th Floor, FC 1-8-13-2
Philadelphia, PA 19107
By_______________________ Telephone: (215) 786-7273
Name: Facsimile: (215) 786-7657
Title: Attn: C.B. Cook
[Debtor-In-Possession Credit Agreement Signature Pages]
<PAGE>
NATIONSBANK, N.A. 101 S. Tryon Street
NC1-002-31-31
Charlotte, NC 28255
By_______________________ Telephone: (704) 386-8535
Name: Facsimile: (704) 386-1759
Title: Attn: Charles Kerr
NATIONSBANK NationsBanc Capital Markets
100 N. Tryon St., 6th Floor
Charlotte, NC 28255
By_______________________ Telephone: (704) 386-3195
Name: Facsimile: (704) 386-9268
Title: Attn: Peter Santry
SWISS BANK CORPORATION, London Branch 222 Broadway
New York, New York 10038
Telephone: (212) 574-5700
By_______________________ Facsimile: (212) 574-5745
Name: Attn: James Cullinane
Title:
WHIPPOORWILL/MAIDENFORM OBLIGATIONS 11 Martine Avenue
TRUST 1997 White Plains, New York 10606
WHIPPOORWILL ASSOCIATES, INC., Telephone: (914) 574-5700
its investment advisor Facsimile: (914) 574-5745
Attn: Pamela Lawrence
By_______________________
Name:
Title:
FOOTHILL CAPITAL CORPORATION 11111 Santa Monica Boulevard
Suite 1500
Los Angeles, CA 90025
By_______________________ Telephone: (310) 996-7157
Name: Facsimile: (310) 478-8785
Title: Attn: Karen Sandler
Nik Aggarwill
[Debtor-In-Possession Credit Agreement Signature Pages]
<PAGE>
OAKTREE CAPITAL MANAGEMENT, LLC, 550 South Hope Street
as agent and on behalf of 22nd Floor
certain funds and accounts Los Angeles, CA 90071
Telephone: (213) 694-1508
Facsimile: (213) 694-1592
By_______________________ Attn: Patty Wachtell
Name:
Title: Telephone: (213) 694-1522
Facsimile: (213) 694-1599
Attn: Kenneth Liang
CITIBANK, N.A. 399 Park Avenue
11th Floor/Zone 1
New York, New York 10043
By_______________________ Telephone: (212) 291-1430
Name: Facsimile: (212) 291-5917
Title: Attn: John Abate
Mark Unferth
DK ACQUISITION PARTNERS, L.P. 885 Third Avenue
Suite 3302
New York, New York 10022
By_______________________ Telephone: (212) 371-3000
Name: Facsimile: (212) 371-4318
Title: Attn: Michael J. Leffel
BANK OF AMERICA 231 S. LaSalle Street, 17Q
Chicago, Illinois 60697
Telephone: (312) 828-3406
By_______________________ Telephone: (312) 828-5423
Name: Attn: Susie Pinsky
Title:
DLJ CAPITAL FUNDING, INC. 277 Park Avenue
9th Floor
New York, New York 10172
By_______________________ Telephone: ( ) _________
Name: Facsimile: (212) 892-5286
Title: Attn: Lisa Fuder
[Debtor-In-Possession Credit Agreement Signature Pages]
<PAGE>
ADDRESS FOR NOTICES:
NOMURA ________________________
________________________
________________________
By_______________________ Telephone: ( ) _________
Name: Facsimile: ( ) _________
Title: Attn: _________________
MERRILL LYNCH, PIERCE, FENNER 250 Vesey Street
& SMITH, INC. World Financial Center
North Tower
New York, New York 10281
By_______________________ Telephone: (212) 449-4969
Name: Facsimile: (212) 449-4965
Title: Attn: John Humphrey
[Debtor-In-Possession Credit Agreement Signature Pages]
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-28-1997
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