-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QcYkNc5ITl6R0P8VyXkhgbJoKtYUpHGbHFHEqUGlcQPVTWsbkPi++tUEQsp81Eq0 wH0+VZt0In7F2rqWIKKpPg== 0000070855-96-000002.txt : 19960216 0000070855-96-000002.hdr.sgml : 19960216 ACCESSION NUMBER: 0000070855-96-000002 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19960215 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NCC INDUSTRIES INC CENTRAL INDEX KEY: 0000070855 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', CHILDREN'S & INFANTS' UNDERGARMENTS [2340] IRS NUMBER: 620643336 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-03305 FILM NUMBER: 96521056 BUSINESS ADDRESS: STREET 1: 165 MAIN ST CITY: CORTLAND STATE: NY ZIP: 13045 BUSINESS PHONE: 6077562841 MAIL ADDRESS: STREET 1: JOHN E DAILEY STREET 2: 165 MAIN STREET CITY: CORTLAND STATE: NY ZIP: 13045 FORMER COMPANY: FORMER CONFORMED NAME: NCC LEASING INC DATE OF NAME CHANGE: 19701102 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL CREDIT CORP DATE OF NAME CHANGE: 19681126 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 (MARK ONE) FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended September 30, 1995 _________ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _______ Commission file number 0-3305 NCC INDUSTRIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 62-0643336 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 165 MAIN STREET, CORTLAND, NEW YORK 13045 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (607) 756-2841 Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No At September 30, 1995, there were outstanding 4,375,492 shares of registrant's Common Stock, par value $1.00 per share. NCC INDUSTRIES, INC. FORM 10-Q INDEX PART I. FINANCIAL INFORMATION: Item 1. Financial Statements: Consolidated Balance Sheets Consolidated Statements of Income and Retained Earnings Consolidated Statements of Cash Flows Notes to Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K SIGNATURES PART I - FINANCIAL INFORMATION Item 1. Financial Statements. NCC INDUSTRIES, INC. AND SUBSIDIARY BALANCE SHEETS (UNAUDITED) September 30, December 31, 1995 1994 ASSETS Current assets Cash and cash equivalents $ 3,113,013 $1,034,820 Accounts receivable, net 16,072,800 16,448,704 Inventories (Note 2) 48,661,684 39,104,654 Other current assets 2,438,408 2,002,917 Total Current Assets 70,285,905 58,591,095 Property, plant and equipment at cost, net 10,524,060 11,186,318 Bond issuance cost 63,430 78,578 Other assets 1,437,299 1,732,012 $82,310,694 $71,588,003 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable $ - $12,000,000 Due to Majority Shareholder 16,202,835 - Accounts payable and accrued expenses 21,610,943 10,997,312 Current portion of long-term debt 445,000 445,000 Total Current Liabilities 38,258,778 23,442,312 Long term debt, less current portion 1,916,415 9,361,415 Other liabilities 2,749,377 2,800,628 Shareholder's equity 39,386,124 35,983,648 $82,310,694 $71,588,003 See notes to financial statements. NCC INDUSTRIES, INC. AND SUBSIDIARY STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED) Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, 1995 1994 1995 1994 STATEMENTS OF INCOME Net Sales $30,671,583 $32,895,829 $92,542,402 $94,528,993 Cost and expenses Cost of sales, shipping, selling, general and administrative expenses 28,424,587 29,752,270 87,078,946 86,335,904 Interest expense 552,121 400,576 1,405,4271,332,480 28,976,708 30,152,846 88,484,373 87,668,384 Income before taxes 1,694,875 2,742,983 4,058,029 6,860,609 Income taxes Current 124,575 853,580 997,817 1,764,285 Deferred ( 117,204) 168,842 ( 342,264) 254,363 Net Income $1,687,504 $1,720,561 $3,402,476 $ 4,841,961 Income per common share $.39 $.39 $.78 $1.11 Weighted average shares used in computing per share amounts 4,375,492 4,375,492 4,375,492 4,375,587 Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, 1995 1994 1995 1994 STATEMENTS OF RETAINED EARNINGS Retained earnings, beginning $30,436,896 $26,011,562 $28,721,924 $22,890,162 Net income 1,687,504 1,720,561 3,402,476 4,841,961 Retained earnings, ending $32,124,400 $27,732,123 $32,124,400 $27,732,123
See notes to financial statements. -5- NCC INDUSTRIES, INC. AND SUBSIDIARY STATEMENTS OF CASH FLOWS (UNAUDITED) Nine months Ended September 30, October 1, 1995 1994 Cash flows from operating activities Net income $3,402,476 $ 4,841,961 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 1,138,783 1,086,753 Amortization 15,148 17,572 Provision for losses on accounts receivable 81,000 101,250 Loss from retirement of equipment 17,449 23,493 Transactions with Majority Shareholder 2,113,214 - Net change in operating assets and liabilities (Increase) decrease in accounts receivables 294,904 ( 5,261,545) (Increase) decrease in inventory ( 9,557,030) 7,148,642 Increase in accounts payable and accrued expenses 10,613,631 1,955,191 (Increase) decrease in other assets 294,713 ( 12,690) Increase (decrease)in other liabilities ( 51,251) 138,034 (Increase) decrease in other current assets ( 435,491) 256,410 Net cash provided by operating activities 7,927,546 10,295,071 Cash flows from investing activities Purchase of plant & equipment ( 493,974) ( 693,271) Decrease in investments - ( 26,064) Net cash used in investing activities ( 493,974) ( 719,335)
See notes to financial statements. -6- NCC INDUSTRIES, INC. AND SUBSIDIARY STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED) Nine months Ended Nine months Ended September 30, October 1, 1995 1994 Cash flows from financing activities Long term debt repayments ( 445,000) ( 445,000) Net repayments under notes payable, and bank overdrafts - (7,848,630) Treasury stock purchases - (3,100) Repayment of Majority Shareholder advances ( 4,910,379) - Net cash used in financing activities ( 5,355,379) (8,296,730) Net increase in cash 2,078,193 1,279,006 Cash, beginning of year $ 1,034,820 442,085 Cash, end of quarter $ 3,113,013 $1,721,091 Supplemental disclosure of cash flow information Cash paid during the nine months for interest $ 766,333 $1,414,623 Cash paid during the nine months for income taxes $ 169,445 $1,189,035
See notes to financial statements. -7- NCC INDUSTRIES, INC. AND SUBSIDIARY NOTES TO FINANCIAL STATEMENTS 1. Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 1995 are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. The balance sheet at December 31, 1994 has been derived from the audited balance sheet at that date. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994. 2. Inventory: a) Inventories at September 30, 1995 are stated at the lower of cost (first-in, first-out) or market (generally realizable net amount), and are obtained from the perpetual inventory records of the Company. No physical inventory was taken. b) Inventories consist of: September 30, December 31, 1995 1994 (unaudited) Raw Materials $ 7,524,616 $7,744,328 Work in process 10,679,278 9,091,219 Finished goods 30,457,790 24,132,194 Total $ 48,661,684 $40,967,741 3. Net income per share: Per share amounts are based on the weighted average number of shares outstanding during the period. 4.Related party transactions: Registrant's majority shareholder remitted to Registrant's banks $22,000,000 plus interest on April 26, 1995 in satisfaction of certain outstanding indebtedness of Registrant and Registrant recorded a current liability to Registrant's majority shareholder for this amount. Registrant recorded this transaction as a non-cash reduction of Notes Payable-Banks (long and short term). During the period, the liability to Registrant's majority shareholder was reduced by cash payments and other non- cash transactions, principally relating to sales to the Registrant's majority shareholder. -8- ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Net sales for the third quarter of 1995 were 6.8% lower than the third quarter of 1994 due to reduced demand for Registrant's unbranded styles, some of which have been discontinued. Net sales for the first nine months of 1995 were 2.1% lower than the first nine months of 1994 due to reduced shipments of unbranded styles. Unit volume decreased by 3.6% in the third quarter of 1995 as compared to the third quarter of 1994. Unit volume was generally consistent for the first nine months of 1995 as compared to the first nine months of 1994. Cost of sales as a percentage of sales increased in the third quarter and the first nine months of 1995 as compared to the third quarter and first nine months of 1994, because of increased production costs. Shipping, selling, advertising, general and administrative costs were consistent as a percentage of sales in the third quarter and the first nine months of 1995 as compared to the third quarter and the first nine months of 1994. As a result of additional profits generated by the operations of Registrant's subsidiary, Registrant's tax liability dropped in the third quarter of 1995 by approximately $526,000 ($.12 per share). Registrant anticipates that its effective tax rate for 1995 will be approximately 25% as compared to 37% for 1994. As a result of the aforementioned items, net income for the third quarter of 1995 decreased slightly from the third quarter of 1994, and is approximately 30% lower for the first nine months of 1995 as compared to the first nine months of 1994. Financial Condition Net cash flows provided by operating activities decreased by approximately $2,368,000 during the first nine months of 1995 as compared with the first nine months of 1994, primarily due to reduced net income and increased inventory partially offset by increases in accounts payable and accrued expenses as a result of continued vendor support and increases in transactions with majority shareholder. Inventories at September 30, 1995 were approximately $9,557,000 higher than at December 31, 1994 due in part to lower than anticipated shipments in the second and third quarter of 1995. Net cash flows from operating activities during the first nine months of 1995 were primarily used to repay majority shareholder working capital advances. -9- Registrant is a party to a $120,000,000 revolving credit facility along with Registrant's majority shareholders and its subsidiaries. At September 30, 1995, approximately $19,000,000 of the aforementioned facility was available to Registrant and Registrant's majority shareholder and its subsidiaries. The availability of such sources of funds is conditioned upon the Registrant's business and the business of its majority shareholder achieving certain financial results. There can be no assurance, however, that such financial results will be achieved. In order to finance its capital and other corporate expenditures, Registrant expects to continue to use cash from operations and amounts available to Registrant under the revolving credit facility described above. Registrant's management believes that Registrant's sources of funds are sufficient for its foreseeable needs. Part II - Other Information Item 6. Exhibits and Reports on Form 8-K Exhibits No. Description (a) 10 Employment Agreement dated April 26, 1995 between Maidenform, Inc. and Frank Magrone (Confidentiality has been requested for portions of this exhibit.) 27 Financial Data Schedule (b) Reports on Form 8-K A Report on Form 8-K was filed on September 25, 1995. EXHIBIT INDEX Title of Document Page Employment Agreement dated April 26, 1995 between Maidenform, Inc. and Frank Magrone 14 (Confedentiality has been requested for portions of this Exhibit.) Financial Data Schedule 26 SIGNATURES Pursuant to the requirements to the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NCC INDUSTRIES, INC. Date 11-14-95 By: /s/ Peter Muehlbauer Peter Muehlbauer Vice President, Finance Date 11-14-95 By: /s/ Ira Glazer Ira Glazer Executive Vice President - Chief Operating Officer EMPLOYMENT AGREEMENT AGREEMENT, dated April 26, 1995, by and between MAIDENFORM, INC., a New York corporation having its principal offices at 90 Park Avenue, New York, New York 10016 ("Maidenform") and FRANK MAGRONE, residing in Cortland, New York, (the "Employee"). W I T N E S S E T H : WHEREAS, Employee has been employed as the chief executive officer of NCC Industries, Inc. ("NCC") and certain of its subsidiaries; WHEREAS, concurrent with the execution of this Agreement, Maidenform, together with its parent Maidenform Worldwide, Inc. ("Worldwide") has acquired approximately 92.4% of the issued and outstanding stock of NCC; WHEREAS, Maidenform desires to continue the services of the Employee in a senior executive capacity with Maidenform on the terms and conditions hereinafter set forth; NOW, THEREFORE, it is agreed as follows: 1. Employment and Term. (a) Maidenform hereby employs the Employee, and the Employee hereby agrees to serve, as the Executive Vice- President - NCC/Lilyette. In addition, the Employee shall serve as one of the executive vice-presidents of Worldwide and a director and/or officer of one or more of the other Affiliated Companies (as hereinafter defined), if so elected, without any additional salary or other compensation. The Employee shall perform such duties to the best of his ability and in a diligent and proper manner. The term "Affiliated Companies" shall mean all companies that are directly or indirectly Controlled by Worldwide. "Control" and "Controlled" shall mean ownership of such number of shares of the outstanding stock of the corporation involved as shall entitle the owner(s) to cast 51% or more of the total number of votes which may be cast by owners of all of the shares of outstanding stock of such corporation of all classes entitled to vote. (b) The term of the Employee's employment hereunder shall commence on the date hereof and shall, unless sooner terminated as hereinafter provided, end on April 25, 1998, provided that so long as the Employee has not received notice from Maidenform that he is in material default hereunder, the Employee shall have the right, upon written notice to Maidenform given at least six months prior to the expiration of the initial term, to extend such term for a period of one year upon the terms and conditions hereof, and provided further that so long as the Employee has not received notice from Maidenform that he is in material default hereunder, the Employee shall have the right, upon written notice to Maidenform given within six months prior to the expiration of such one year extension, to extend the term for an additional year upon the terms and conditions hereof (such initial term, together with any extended term, being hereinafter referred to as the "Term"), provided that the failure of Maidenform to have given any notice of material default to the Employee prior to any election by the Employee to extend the Term pursuant to this paragraph 1(b) shall in no way limit the right of Maidenform to terminate this Agreement pursuant to paragraph 8(a). 2. Duties. (a) Subject to the ultimate control and responsibility of the Board of Directors of Maidenform, any committees thereof and of the chief executive officer of Maidenform, the Employee shall have such powers and duties with respect to the operations of NCC and if NCC is merged into Maidenform or an Affiliated Company, the division or subsidiary resulting therefrom as generally pertain to executive vice presidents of Maidenform or its Affiliated Companies who have primary day- to-day responsibility for operation of a division. In addition, the Employee shall have such other specific responsibilities or duties as are consistent with the Employee's position, as may be assigned to him from time to time by the Board of Directors, any committee thereof or the chief executive officer of Maidenform. (b) During the Term, the Employee shall devote substantially all of his business time and attention to his obligations hereunder, subject to vacations with pay aggregating five weeks per calendar year and normal holidays. Unused vacation days shall not be carried forward to another year without the prior consent of the Board of Directors or chief executive officer of Maidenform. The Employee shall be free to engage in other activities which do not interfere and are not in conflict with his duties and responsibilities hereunder and/or the business of any Affiliated Company. 3. Base Salary. During the Term, Maidenform shall cause the Employee to receive a total base salary (the "Base Salary") at the rate of three hundred ninety thousand ($390,000) dollars per calendar year, payable in accordance with present payroll practices; with an annual increase, commencing on the first Monday of each calendar year during the Term, of five (5%) percent of his prior year's Base Salary (which increased amount shall then be the Employee's Base Salary). It is understood that nothing herein contained shall prevent the Board of Directors of Maidenform, in its sole and absolute discretion, from, at any time, increasing the compensation herein provided to be paid to the Employee, either permanently or for a limited period, or from providing additional compensation to the Employee based upon the earnings or business of Maidenform, in the event the Board of Directors in its sole discretion, evidenced by a resolution duly adopted by said Board, shall deem it advisable to do so in order to recognize and fairly compensate the Employee for the value of his services to Maidenform and its Affiliated Companies; provided that this paragraph 3 shall not in any manner obligate the Board of Directors to make any such increase or provide any such additional compensation or benefits. 4. Bonus. The Employee shall be entitled to participate to the same extent as other executive vice-presidents of Maidenform in such bonus plans as shall be developed by Maidenform for the benefit of executive vice-presidents of Maidenform. 5. Automobile. Maidenform agrees to make or cause an Affiliated Company to continue to make monthly lease payments with respect to the 1995 Mercedes Benz S500 automobile, vehicle identification number WDBGA51E8SA212210 (the "Automobile") presently leased by NCC for the Employee's personal use. Maidenform agrees that upon the expiration of the present lease for the Automobile, it will (i) exercise the purchase option contained in such lease in the manner and within the time specified therein, (ii) purchase the Automobile, and (iii) upon consummation of such purchase, transfer to the Employee good title to the Automobile as a bonus and, except as hereinafter provided, without cost to the Employee. Such bonus shall be in addition to, and not in lieu of, any other bonus to which the Employee may become entitled. The Employee shall be responsible for any transfer costs in connection with such transfer and for any federal, state or local taxes of any kind or nature whatsoever, including income taxes, in connection with such transfer. 6. Working Facilities; Expenses. (a) Maidenform shall furnish or cause to be furnished to the Employee suitable offices in New York, New York and so long as Maidenform or NCC maintains an office there, in Cortland, New York; and such other facilities and services as are suitable to his position and are adequate for the performance of his duties hereunder. Maidenform agrees promptly to reimburse the Employee, or cause the Employee to be reimbursed, for all reasonable expenses paid or incurred by the Employee in connection with the performance of his duties hereunder upon presentation of expense reports and receipts as are generally required from other senior executive officers of Maidenform. (b) Maidenform agrees that during the Term the Employee shall be entitled to continue to use the co-op apartment owned by NCC at 211 East 53rd Street, New York, New York (the "Apartment") when he is in New York City. The Employee understands and agrees that the Apartment may also be used by other employees or guests of Maidenform or its Affiliated Companies, provided that in the event of a conflict between any planned use by another employee or guest, the Employee shall have the first right to use the Apartment. The Employee agrees to cooperate with Maidenform with regard to the use of the Apartment and to reasonably accommodate any conflicting need for use of the Apartment which Maidenform may have. It is agreed that the Employee shall be responsible for scheduling the use of the Apartment. In the event Maidenform desires to use the Apartment for another employee or a guest, it will notify the Employee and arrange for scheduling with the Employee. 7. Additional Benefits. (a) The Employee shall be entitled to participate on the same basis as all other senior executive officers of Maidenform in all employee benefits generally available to such officers, including without limitation, all group life, long-term disability and medical benefit, any pension plan (whether defined benefit, defined contribution or 401(k)) and other programs generally available to senior executive officers of Maidenform; it is specifically understood that, except as to benefits which accrued prior to the date hereof, the Employee will not participate in benefits payable to NCC employees which are not payable to Maidenform employees. The Employee shall also be entitled to accrue benefits under the non-qualified Executive Pension Plan for Certain Designated Employees of Maidenform, Inc. (the "Executive Plan") as amended to provide that the Employee shall accrue an annual benefit payable for the Employee's life, commencing at age sixty-five (65) equal to one (1%) percent of his "Final Average Compensation" (as hereinafter defined) for each year (and a prorated portion thereof for each partial year) the Employee is employed by Maidenform, commencing with the date of this Agreement. For purposes of the computation pursuant to this paragraph, compensation shall include Base Salary and bonus. Notwithstanding the five years of service requirement for vesting under the Executive Plan, the Employee shall be deemed vested with respect to all accrued benefits thereunder. The monthly benefit under the Executive Plan payable to the Employee shall be reduced by (i) the actuarial equivalent of any pension benefit (excluding any amount (x) attributable to contributions by the Employee, (y) attributable to NCC contributions for the period prior to the date hereof, and (z) interest accruing prior to or after the date hereof on any amounts included in clauses (x) or (y) hereof) received under any other pension plans of NCC which accrues after the date of this Agreement and (ii) any benefit (excluding any amount attributable to contributions by the Employee) under any qualified plan of Maidenform. The Employee acknowledges that the Executive Plan is non-qualified and is an unfunded plan and that the benefits thereunder will be paid out of the general assets of Maidenform. In accordance with the Executive Plan, the Employee will be permitted to commence to receive benefits prior to his attainment of age sixty-five, if he retires, at an amount which is reduced to an actuarial equivalent annual benefit for the Employee's life. Such Executive Plan permits the election of a joint and survivor one hundred percent annuity which will result in a further reduction to provide for an actuarial equivalent amount to be paid for the lives of the Employee and his spouse. For purposes hereof, "Final Average Compensation" shall mean the annual average of the highest sixty (60) months of compensation in the last one hundred and twenty (120) months of employment or, if less than sixty (60) months, the annual average for the period of employment. (b) The parties recognize that prior to the date hereof NCC has reimbursed the Employee for life insurance premiums of approximately $42,000 per year payable by an insurance trust created by the Employee with respect to a $1,000,000 life insurance policy (the "Policy") on the life of the Employee. Said reimbursement was taken into account in fixing the Employee's Base Salary hereunder. In the event this Agreement is terminated for any reason (other than pursuant to paragraph 8(a)(i), (iii) or (iv)) prior to December 31, 1999, Maidenform agrees to pay to the Employee, in each calendar year through the 1999 calendar year, at least ten (10) days prior to the due date of any premium on the Policy, the sum of $42,000 less in the calendar year of termination the product of (i) the number of months, if any, during such calendar year preceding the due date for which the Employee received a payment with respect to his Base Salary, and (ii) $3,500). The Employee represents that premiums are payable annually on September 1st of each year. (c) Without limiting any other perquisites, the Employee is entitled to the use of an automobile leased by Maidenform (and payment or reimbursement of maintenance expenses), to the extent and on the same terms as Maidenform makes leased automobiles available to senior executives (vice-presidents and above) of Maidenform generally. 8. Termination of Employment. Notwithstanding any other provision of this Agreement, the Employee's employment under this Agreement may be terminated prior to the expiration of the Term only as follows: (a) at the option of Maidenform, only in the event of: (i) the death of the Employee; (ii) the Employee's permanent disability, which shall mean the Employee's inability for a period of one hundred and eighty (180) consecutive days, or for a total of two hundred and seventy (270) days in any consecutive five hundred and forty (540) day period, because of a physical or mental condition substantially to render the services required hereunder; (iii)the commission by the Employee of a felony or an act of dishonesty or willful malfeasance in the course of his employment by Maidenform or any Affiliated Company; or (iv) the Employee's material breach of the terms of this Agreement, which breach continues uncured for a period of thirty (30) days after written notice from Maidenform to the Employee. (b) at the option of the Employee, only: (i) in the event of any attempt by Maidenform to terminate the Employee's employment for any reason not expressly set forth in paragraph 8(a); (ii) for "Good Reason" upon not less than thirty (30) days written notice from the Employee to Maidenform or such shorter notice as is reasonable under the circumstances. For purposes hereof, Good Reason shall mean the occurrence of a material adverse change, beyond the Employee's control, in his personal life (such as, but not limited to, the serious illness of the Employee or a member of his immediate family) as a result of which the Employee no longer desires to work and desires to terminate this Agreement with no contemplation of working for any other party or becoming engaged in any activity which would violate the provisions of paragraph 11 hereof; (iii)for "Constructive Termination". For purposes hereof, Constructive Termination shall mean (x) the Assignment to the Employee of any duties inconsistent in any material respect with the Employee's positions (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by paragraph 2 of this Agreement or (y) any other action by Maidenform which results in a material diminishment in the Employee's duties or responsibilities, other than action or inaction which is remedied by Maidenform prior to the date of termination specified in a written notice from the Employee of termination of employment by the Employee for Constructive Termination given at least thirty (30) days prior to the proposed date of termination; or (iv) Maidenform's material breach of the terms of this Agreement, which breach continues uncured for a period of thirty (30) days after written notice from the Employee to Maidenform. (c) Upon the termination of the Employee's employment for any reason, the Employee or his legal representatives shall be entitled to receive promptly any Base Salary and bonus accrued to the date of such termination. If such termination is for any reason other than pursuant to paragraphs 8(a) or 8(b)(ii), the payments pursuant to the preceding sentence shall be in addition to any other rights the Employee may have. 9. Indemnification. Maidenform will indemnify the Employee to the fullest extent permitted by law and the existing certificate of incorporation and by-laws of Maidenform and its Affiliated Companies, and the Employee shall also be entitled to the full protection of any insurance policy which Maidenform or any other Affiliated Company may elect to maintain generally for the benefit of its directors and officers, against all costs, charges, and expenses whatsoever incurred or sustained by him or his legal representatives in connection with any action, suit, or proceeding to which he may be made a party by reason of his being or having been at any time a director or officer of Maidenform or any of its Affiliated Companies or by reason of any action at any time taken by him in good faith on behalf of Maidenform or any of its Affiliated Companies. 10. Stock Repurchase. The Employee and, by its execution of this Agreement, Worldwide, agree that: (a) Upon (i) expiration of the Term; or (ii) termination of this Agreement by Maidenform pursuant to paragraphs 8(a)(i) or (ii) for other reason other than pursuant to paragraphs 8(a)(iii) or (iv); or (iii) termination hereof by the Employee pursuant to paragraph 8(b) (each event described in clauses (i) through (iii) is hereinafter referred to as a "Purchase Event"): * (x) if the Purchase Event shall occur prior to the "IPO Date", (as said term is defined in the "Shareholders' Agreement" dated the date here of by and among Worldwide and its shareholders), Worldwide shall purchase and the Employee or his personal representative shall sell all of the shares of Class A Common Stock obtained by the Employee on the date hereof pursuant to the Stock Purchase Agreement dated the date hereof between Worldwide, the Employee and certain other stockholders of NCC (the "Acquisition Shares") at a price equal to the greater of the fair market value of such shares (as determined in paragraph 10(c) below) and * xxxxxxxxxx, payable in cash on a date, specified by Worldwide, which shall be within sixty (60) days after the occurrence of any Purchase Event, unless any such purchase would (i) be prohibited by, or result in a default (after the giving of notice or the passage of time or otherwise) or a mandatory payment under any loan agreement ("Loan Agreement") to which Worldwide is a party or by which it is bound * Confidential portions have been omitted and filed separately with the Commission pursuant to a request for confidential treatment. or (ii) would violate any applicable law (each such event being referred to herein as a "Blocking Event"), in which event payment would be made to the extent, if any, then permitted under such Loan Agreement or by law (with the proportional number of shares sold and delivered to Worldwide upon such payment). The balance of the payment shall be made (and corresponding shares delivered) within five (5) business days after the cessation of any applicable Blocking Event. Notwithstanding anything contained in this paragraph 10(a), the Employee or his personal representative shall have the right to elect by written notice to Worldwide at least thirty (30) days prior to the expiration of the Term or within fifteen (15) days after the occurrence of any other Purchase Event to retain the Acquisition Shares in which case Worldwide shall have no obligation to buy and the Employee shall have no obligation to sell hereunder; or (y) if the Purchase Event shall occur after the IPO Date, and if within eighteen (18) months after the occurrence of such Purchase Event, the * Employee or his personal representative has sold all of the Acquistion Shares in the public market (or for any reason consented to by Worldwide (which consent shall not be unreasonably withheld) has been unable to sell all of such shares) for less than * xxxxxxxxxx, the Employee or his personal representative shall have the right, by written notice to Worldwide given not later than ten (10) days after the expiration of such eighteen (18) month period to require Worldwide to pay to the Employee the amount by which * xxxxxxxxxx exceeds the amount realized by the Employee or his personal representative upon such sales and the Employee or his personal representative shall concurrently deliver to Worldwide the unsold Acquisition Shares. The closing of such sale shall take place on a date specified by Worldwide, which shall be within sixty (60) days after the earlier to occur of (a) the sale of all of the Acquisition Shares and the delivery of evidence thereof by the Employee or his personal representative to Worldwide, and (b) the expiration of such eighteen (18) month period, unless any such purchase would be prevented by a Blocking Event in which event payment would be made to the extent, if any, then permitted under such Loan Agreement or by law (with the proportional number of shares sold and delivered to Worldwide upon such payment, to the extent that the payment includes a payment for shares which Worldwide is obligated to buy hereunder). * Confidential portions have been omitted and filed separately with the Commission pursuant to a request for confidential treatment. The balance of the payment shall be made (and corresponding shares delivered) within five (5) business days after cessation of any applicable Blocking Event. (b) Upon termination of this Agreement for any reason other than a Purchase Event (such other reasons are each hereinafter referred to as an "Additional Purchase Event"): * (x) if the Additional Purchase Event shall occur prior to the IPO Date, the Employee or his personal representative shall have the right to elect, by written notice to Worldwide at least sixty (60) days prior to date on which this Agreement would have expired if such Additional Purchase Event had not occurred, to sell to Worldwide, and Worldwide shall be obligated to purchase, the Acquisition Shares at a price equal to * xxxxxxxxxx, payable in cash on a date specified by Worldwide, which shall be within sixty (60) days following the date on which this Agreement would have expired if such Additional Purchase Event had not occurred, unless any such purchase would be prevented by a Blocking Event, in which event payment would be made to the extent, if any, then permitted under such Loan Agreement or by law (with the proportional number of shares sold and delivered to Worldwide upon such payment). The balance of the payment shall be made (and corresponding shares delivered) within five (5) business days after the cessation of any applicable Blocking Event; or * (y) if the Additional Purchase Event shall occur after the IPI Date, and if within eighteen (18) months after the occurrence of such Additional Purchase Event, the Employee or his personal representative has sold all of the Acquisition Shares in the public market (or for any reason consented to by Worldwide (which consent shall not be unreasonably withheld) has been unable to sell all of the shares) for less than * xxxxxxxxxx, the Employee or his personal representative shall have the right, by written notice to Worldwide within thirty (30) days after such eighteen (18) month period, to require Worldwide to pay to the Employee or his personal representative the amount by which * xxxxxxxxxx exceeds the amount realized by the Employee or his personal representative upon such sales and the Employee or his personal representative shall concurrently deliver to Worldwide the unsold Acquisition Shares. * Confidential portions have been omitted and filed separately with the Commission pursuant to a request for confidential treatment. The closing of such sale shall take place on a date specified by Worldwide which shall be within the later to occur of sixty (60) days (i) after the delivery of such notice and (ii) following the date this Agreement would have expired if such event had not occurred, unless any such purchase would be prevented by a Blocking Event, in which event payment would be made to the extent, if any, then permitted under such Loan Agreement or by law (with the proportional number of shares sold and delivered to Worldwide upon such payment, to the extent that the payment includes a payment for shares which Worldwide is obligated to buy hereunder). The balance of the payment shall be made (and corresponding shares delivered) within five (5) business days after cessation of any applicable Blocking Event. (c) As used herein, "Fair Market Value" shall mean such amount as the Employee and Worldwide may agree upon, or if the Employee and Worldwide shall be unable to agree, then the price that would be paid for Acquisition Shares in a sale by a willing seller under no compulsion to sell and a willing buyer under no compulsion to buy and shall be determined by an investment banking firm of nationally recognized standing mutually acceptable to and selected by the Employee and Worldwide within ten days after either shall give notice to the other of a request for the determination of such amount by an investment banking firm, provided however, if the Employee and Worldwide cannot agree upon a mutually acceptable investment banking firm within such ten (10) day period, the Employee and Worldwide shall, within such ten day period, each choose one investment banking firm of recognized standing and the respective chosen firms shall, within five (5) days after the latter of such firms is chosen, agree on another investment banking firm which shall be engaged to make the determination of Fair Market Value. The determination by the engaged firm shall be made as soon as practicable but not later than thirty (30) days after the date such firm is engaged. The cost of the investment banking firm or firms selected pursuant to this provision shall be equally divided by the Employee and Worldwide. (d) In the event the Employee determines to dispose of any of the Acquisition Shares under circumstances where the provisions of paragraph 10(a)(y) or (b)(y) might apply, in order to maintain an orderly market for Worldwide's publicly traded shares, the Employee agrees to consult with Worldwide as to the method of sale and further agrees to adhere to any reasonable requirements Worldwide may impose upon the Employee with respect to such sales. * Confidential portions have been omitted and filed separately with the Commission pursuant to a request for confidential treatment. It is understood and agreed that if as a result of complying with any such request of Worldwide, the Employee is unable to dispose of all of the Acquisition Shares, Worldwide shall be deemed to have consented to such failure to sell. (e) Worldwide agrees that from and after the accrual of any obligation to the Employee pursuant to this paragraph 10, it will not make nor will it permit any of its subsidiaries to make, any payment or distribution to any of its shareholders (in their capacity as such), which if made would inhibit the ability of Worldwide to make any payment which may be due to the Employee pursuant to this paragraph 10. 11. Covenant Not to Compete; Confidentiality. (a) The Employee agrees that, except as provided below, during the Term hereof and for a period of two years thereafter, the Employee shall not, without the prior written approval of Maidenform, directly or indirectly, become an officer or director of, or become employed by, or render consulting, advisory or other services to, or engage or participate in, or make any financial investment in, any firm, corporation or business enterprise, wherever located, which is engaged, directly or indirectly, in competition with any of the business operations or activities of Maidenform or the Affiliated Companies as conducted on the date this Agreement is terminated. Nothing herein shall prohibit the Employee from owning (i) not more than 2% of the outstanding amount of any class of stock or other securities of any corporation any of whose stock or other securities are publicly held and traded on a national securities exchange or on a generally recognized over-the- counter market, or (ii) a passive noncontrolling investment interest in a private company which was not in competition with the business of Maidenform or that of any Affiliated Company as conducted on the date this Agreement is terminated. In addition, nothing herein shall prevent the Employee from owning approximately five (5%) percent of the outstanding stock of the Marietta Corporation ("Marietta"), and from serving as a member of its board of directors, provided that the Employee's duties as a director of Marietta do not interfere with the Employee's duties and responsibilities hereunder and further provided that Marietta does not become involved or associated in any way with any business in competition with the business of Maidenform or that of any Affiliated Company. (b) The Employee further agrees that, during the Term and thereafter, he will not disclose (except he may disclose to Triumph International Overseas, Limited ("Triumph") and its affiliates so long as Triumph is entitled pursuant to the terms of the Shareholders' Agreement to designate any member of the Board of Directors of Worldwide) or use any confidential or proprietary information pertaining to (i) the business of Maidenform or any Affiliated Company or (ii) the past, present, planned or considered business activities of Maidenform or any Affiliated Company ("Information") of which he learned or learns while an officer, director or employee of Maidenform or any Affiliated Company; provided, however that Information shall not include any information that at the time of disclosure is generally available to and known by the public or in the foundation garment industry (other than as a result of a breach by the Employee of this paragraph 11(b)). (c) If a court finds any provision of this paragraph 11 to be unreasonable, the parties authorize the court to reformulate the provisions so that they would be deemed reasonable. (d) The Employee represents and admits that, as of the date hereof, the Employee's experience and capabilities are such that he can obtain employment in a business engaged in other lines and/or of a different nature, and that the enforcement of this paragraph 11 by way of injunction will not prevent the Employee from earning a livelihood. (e) In the event the Employee terminates this Agreement pursuant to paragraphs 8(b)(i), (iii) or (iv) hereof, paragraph 11(a) hereof, Section 5.13 of the Stock Purchase Agreement and Section 15 of the Stockholders' Agreement shall terminate and be of no further force or effect with respect to the Employee. 12. Relief Available to Employers for Certain Breaches. The Employee acknowledges that in the event of a breach by him of any of Employee's agreements contained in paragraph 11, Maidenform or any of the Affiliated Companies shall be entitled to immediate relief enjoining such violations in any court or before any judicial body having jurisdiction over such a claim. 13. Entire Agreement; Amendment. This Agreement contains the entire agreement between Maidenform and the Employee with respect to the subject matter hereof. This Agreement may not be amended, waived, change, modified, or discharged except by an instrument in writing executed by or on behalf of the party or parties against whom any amendment, waiver, change, modification, or discharge is sought to be enforced. 14. Notices. All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered or mailed by certified mail, return receipt requested, as follows: (a) To Maidenform or any of the Affiliated Companies: Maidenform, Inc. 90 Park Avenue New York, New York 10016 Attention: Steven N. Masket with a copy to: Baer Marks & Upham 805 Third Avenue New York, New York 10022 Attention: Stanley E. Bloch, Esq. (b) To the Employee: Mr. Frank Magrone Cosmos Heights, R.D. 4 Cortland, New York 13045 with a copy to: Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza New York, New York 10112 Attention: Barry A. Adelman, Esq. and/or to such other persons and addresses as any party shall have specified in writing to the other by notice as aforesaid. 15. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts executed and to be entirely performed within said State. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. ATTEST: MAIDENFORM, INC. /s/Jodi Perlman /s/Steven N. Masket Jodi Perlman Steven N. Masket By: WITNESS: /s/Gregg Lerner /s/Frank Magrone Gregg Lerner Frank Magrone Agreed to as to Paragraph 10: MAIDENFORM WORLDWIDE, INC. By: GUARANTY MAIDENFORM WORLDWIDE, INC. (the "Parent") hereby unconditionally guarantees the full and timely performance of the foregoing Employment Agreement by its wholly owned subsidiary, Maidenform, Inc. (the "Company"). This is a guarantee of performance and payment, not of collection, and shall be binding upon the Parent's successors and assigns. If any event or circumstance, other than the bankruptcy or insolvency of the Company, arising out of any action or inaction of Frank Magrone ("Event") should occur which under any statute or case law doctrine would constitute a legal or equitable discharge of or defense to a guarantor's obligations, but which Event does not constitute a legal or equitable discharge of or defense to the Company's (as principal) obligations, then the obligations of the Parent hereunder shall not be affected, modified or in any other manner impaired in whole or in part (other than to give the Parent the benefit of any waiver, modification or other Event to which the Company as principal would be entitled). MAIDENFORM WORLDWIDE, INC. By:/s/Steven N. Masket Steven N. Masket Executive Vice President EX-27 2 ART. FDS FOR 3RD QUARTER 10-Q
5 9-MOS DEC-31-1995 SEP-30-1995 3,113,013 0 16,072,800 0 48,661,684 70,285,905 10,524,060 0 82,310,694 38,258,778 0 4,866,841 0 0 34,519,283 82,310,694 92,542,402 92,542,402 87,078,946 87,078,946 0 0 1,405,427 4,058,029 655,553 3,402,476 0 0 0 3,402,476 .78 .78
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