FOURTH AMENDMENT TO CREDIT AGREEMENT dated as of September 30, 1996 by and
among Mothers Work, Inc., a Delaware corporation ("MWI") on its own behalf and
as successor, by merger, to Motherhood Maternity Shops, Inc., a Delaware
corporation ("Motherhood"), Cave Springs, Inc., a Delaware corporation ("Cave"),
The Page Boy Company, Inc., a Delaware corporation ("Page Boy") and Mothers Work
(R.E.), Inc., a Pennsylvania corporation ("MW-RE") (each, a "Borrower", and
collectively, jointly and severally, the "Borrowers"), and CoreStates Bank,
N.A., successor to Meridian Bank ("Bank").
BACKGROUND
The Borrowers and the Bank are parties to a Credit Agreement dated as of
August 1, 1995, as first amended September 1, 1995 as second amended January 25,
1996, and as third amended May 31, 1996 (the "Credit Agreement") pursuant to
which the Bank established, in favor of the Borrowers, a credit facility in an
aggregate principal amount of $24,094,684.93 subject to the terms and conditions
set forth therein. Borrowers have requested the Bank to modify certain of the
financial covenants set forth in the Credit Agreement, and to consent to the
transfer, from MWI, Motherhood and MW-RE to Cave, of certain trademarks or
tradenames held by the transferors, which the Bank is willing to do, all on the
terms and conditions set forth herein. Capitalized terms used herein, and not
otherwise defined, shall have the meanings ascribed to them in the Credit
Agreement.
AGREEMENTS
The parties hereto, intending to be legally bound, hereby agree:
1. Section 7.07 of the Credit Agreement shall be amended by
deleting the language found therein in its entirety, and by
substituting therefor the following:
"SECTION 7.07. Total Senior Funded Debt to Operating Cash Flow
Ratio. Permit, at any time, the ratio of (x) Total Senior
Funded Debt of MWI and its Subsidiaries on a Consolidated
basis, to (y) Operating Cash Flow of MWI and its Subsidiaries
on a Consolidated basis for the four most recent consecutive
fiscal quarters ending on or immediately preceding such date
of determination to be greater than the respective amounts set
forth below for the periods indicated:
Period Ratio
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During the Fiscal Quarter
ending Sept. 30, 1996 4.35:1.00
During the Fiscal Quarter
ending Dec. 31, 1996 4.00:1.00
During the Fiscal Quarter
ending March 31, 1997 4.00:1.00
During the Fiscal Quarter
ending June 30, 1997 3.75:1.00
During the Fiscal Quarter
ending Sept. 30, 1997 3.50:1.00
During the Fiscal Quarter
ending Dec. 31, 1997,
and thereafter; 3.30:1.00
provided, however, that for purposes of these calculations, any charges incurred
in fiscal year 1996 resulting from the application of FASB 121 (Accounting for
the Impairment of Long-Lived Assets, and Long-Lived Assets to be Disposed Of)
shall not be included for purposes of determining Net Income.
2. Section 7.08 of the Credit Agreement shall be amended by deleting the
language found therein in its entirety, and by substituting therefor the
following:
SECTION 7.08. Interest Coverage Ratio. Permit the Interest
Coverage Ratio of MWI and its Subsidiaries on a Consolidated
basis at the end of any fiscal quarter to be less than the
respective amounts set forth below for the periods indicated.
Period Ratio
------ -----
Fiscal Quarter ending Sept. 30, 1996 1.15:1.00
Fiscal Quarter ending Dec. 31, 1996, 1.25:1.00
Fiscal Quarter ending March 31, 1997 1.25:1.00
Fiscal Quarter ending June 30, 1997 1.45:1.00
Fiscal Quarter ending Sept. 30, 1997 1.65:1.00
and thereafter;
provided, however, that for purposes of these calculations, any charges incurred
in fiscal year 1996 resulting from the application of FASB 121 (Accounting for
the Impairment of Long-
Lived Assets, and Long-Lived Assets to be Disposed Of) shall not be
included for purposes of determining EBIT.
3. The Bank acknowledges that, effective this date, Motherhood has merged
with and into MWI, and consents, in this instance, to such merger,
notwithstanding the fact that the ten day notice, required by Section 7.05 of
the Agreement, was not timely given.
4. The Bank hereby consents to the transfer, from MWI, Motherhood and MW-RE
to Cave, of the trademarks and tradenames set forth on Schedule 4 attached
hereto, subject to the Bank's security interest in such trademarks and
tradenames. Within fifteen days of the execution hereof, the Borrowers shall
execute and deliver to the Bank such documents or instruments, suitable for
filing, as the Bank shall deem necessary or appropriate to continue the secured
and perfected position of the Bank with respect to such trademarks and
tradenames.
5. As a condition to the execution and delivery of this Fourth Amendment to
Credit Agreement, the Borrowers shall deliver to the Bank, in form and content
satisfactory to the Bank and its counsel, the following documents, instruments
or payments:
a. A certified copy of resolutions adopted by the Board of Directors
of each of the Borrowers authorizing the execution, delivery and
performance of this Agreement, and all of the documents and instruments required
by the Bank for the implementation of this Agreement; and
b. Such financing statements, or amendments to financing statements as
the Bank shall require as a result of the merger of Motherhood with and
into MWI.
6. The Borrowers hereby:
(a) acknowledge and agree that all of their representations,
warranties and covenants contained in the Credit Agreement and/or in the Loan
Documents, as amended hereby, are true, accurate and correct on and as of the
date hereof as if made on and as of the date hereof, except as set forth on
Schedule 6(a) attached to this Fourth Amendment; provided, however, that with
respect to the dates set forth in certain representations, such dates shall be
updated as follows:
(i) in Section 4.05, the referenced date shall be September 30,
1995;
(ii) in Section 4.07(a), the referenced date for consolidated
balance sheet shall be September 30, 1995;
(iii) in Section 4.07(b), the referenced date shall be 1996; and
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(iv) in Section 4.07(c), the referenced 1995 Fiscal Year and 1996
Fiscal Year shall be changed to 1996 Fiscal Year and 1997 Fiscal Year,
respectively.
(b) acknowledge and agree that they have no defense, set-off,
counterclaim or challenge against the payment of any sums owing under the Credit
Agreement or the Loan Documents or the Obligations, or the enforcement of any of
the terms of the Credit Agreement or the Loan Documents, as amended hereby; and
(c) represent and warrant that no Event of Default, as defined in the
Credit Agreement, exists or will exist upon the delivery of notice, passage of
time or both.
7. The Borrowers will pay all of Bank's out-of-pocket costs and expenses
incurred in connection with the review, preparation, negotiation, documentation
and closing of this Fourth Amendment and the consummation of the transactions
contemplated herein, including, without limitation, fees, expenses and
disbursements of counsel retained by Bank and all fees related to filings,
recording of documents and searches, appraisal costs, whether or not the
transactions contemplated hereunder are consummated.
8. All other terms and conditions of the Credit Agreement and of the Loan
Documents, not inconsistent with the terms hereof, shall remain in full force
and effect and are hereby ratified and confirmed by the Borrowers.
IN WITNESS WHEREOF, the Borrowers and the Bank have caused this Fourth
Amendment to Credit Agreement to be executed by their respective authorized
officers as of the day and year first above written.
MOTHERS WORK, INC.
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
CAVE SPRINGS, INC.
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
(signatures continued on next page)
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(signatures continued from previous page)
THE PAGE BOY COMPANY, INC.
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
MOTHERS WORK (R.E.), INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
CORESTATES BANK, N.A.
By: /s/ Xxxxxx X. Southern
-------------------------------
Name: Xxxxxx X. Southern
Title: Vice President-Retailer
Group
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QUALIFICATIONS, EXCEPTIONS
TO REPRESENTATIONS
NONE
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