CLASS 4 NOTE
New York, New York
May 12, 1997
FOR VALUE RECEIVED, the undersigned, ANDOVER TOGS, INC., a Delaware
corporation, (the "Maker") hereby promises to pay to the order of the Collateral
Trustee under and as defined in the Plan referred to below (the "Payee";
capitalized terms used and not otherwise defined herein having herein their
respective meanings as set forth in the Plan), for the benefit of the Class 4
Creditors (as defined in the Note Agreement), at the office of the Payee located
at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place(s) as
may be designated in writing by the holder hereof (the "Holder"), a principal
amount equal, at all times, to the amount, by which (x) the sum of all Allowed
General Unsecured Claims allowed from time to time at any time exceeds (y) the
aggregate amount of Class 4 Cash paid to the holders of such Allowed General
Unsecured Claims (such excess, the "Note Portion"), which Note Portion is in the
aggregate principal amount as of the date hereof as set forth on Schedule A
attached hereto, in lawful money of the United States, in twenty (20)
consecutive quarterly installments (or earlier as hereinafter provided)
commencing June 30, 1997 and on the last day of each calendar quarter
thereafter, of which the first nineteen (19) installments shall each be in the
amount of one fortieth (1/40th) of the Note Portion of such Allowed General
Unsecured Claims, and the last and twentieth (20th) installment of which shall
be in the amount of the entire unpaid balance hereof, if any, which last and
20th installment shall be due and payable on March 31, 2002.
The Maker further promises to pay interest to the order of the Payee at
said office or place(s), in like money, on the unpaid principal amount of this
Class 4 Note (this "Note") quarterly in arrears on the last day of each calendar
quarter commencing June 30, 1997 at a rate of six percent (6%) per annum from
the date hereof until paid in full.
In addition to the quarterly installments of principal and interest
payable hereunder, the Maker further promises to pay to the order of the Payee
on the last day of March of each year, commencing on the last day of March,
1998, an amount equal to fifty percent (50%) of the Maker's Excess Cash Flow, if
any, for the immediately preceding fiscal year of the Maker, each such payment
(each an "Excess Cash Flow Payment" and collectively, the "Excess Cash Flow
Payments") to be applied to the payment of the unpaid principal balance of this
Note in the inverse order of the maturity of the quarterly principal
installments hereof.
At such time as a Disputed Claim becomes, in whole or in part, an Allowed
General Unsecured Claim (the "Allowance Date"), then, after the Allowance Date,
in addition to the pro rata share of the quarterly installments of principal and
interest and of the Excess Cash Flow
Payments, if any, due and payable hereunder, the Maker further promises to pay
to the Payee with respect to such Allowed General Unsecured Claim, on the
quarterly Distribution Date next following the Allowance Date, an amount equal
to the aggregate amount of all principal and interest which would have been due
and payable hereunder with respect to such Allowed General Unsecured Claim from
and after the Effective Date through and including the Allowance Date if such
Allowed General Unsecured Claim had been an Allowed General Unsecured Claim on
the Effective Date.
This Note has been issued pursuant to the Joint Plan of Reorganization,
dated January 30, 1997, of the Maker and its subsidiaries, Springdale Fashions,
Inc., Tortoni Manufacturing Corp. and Stonehenge Financial Corp. (each a
"Subsidiary" and collectively, the "Subsidiaries") under chapter 11 of the
United States Bankruptcy Code, confirmed by order of the United States
Bankruptcy Court for the Southern District of New York (Case Nos. 96 B 41437
(TLB) through 96 B 41440 (TLB), inclusive) (as amended, supplemented or
modified, the "Plan").
The rights of each holder of an Allowed General Unsecured Claim to receive
its ratable share of payments of the Note Portion of Allowed General Unsecured
Claims pursuant to this Note shall be evidenced by a certificate of beneficial
interest in this Note in this Note in a principal amount equal to the amount by
which such holder's Allowed General Unsecured Claim exceeds the Class 4 Cash
received by such holder.
This Note is secured by a second priority lien upon and security interest
in certain of the assets of the Maker and its subsidiaries which secure the Exit
Financing Facility, as set forth in the Class 4 Security Agreement of even date
herewith, and is subject to the terms of the Intercreditor Agreement, dated on
or about the date hereof, between CIT and the Payee (the "Intercreditor
Agreement").
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and with respect to payment of principal, interest thereon shall
be payable at the then applicable rate during any such extension.
Upon the occurrence of any of the following events (each an "Event of
Default"):
(a) the Maker fails to pay when due any principal or interest
payable hereunder or any of the other Obligations, and such
failure shall continue unremedied for more than four (4)
Business Days;
(b) any representation or warranty of the Maker contained herein
or of the Maker or any Subsidiary contained in any other Class
4 Document (as defined in the Note Agreement) shall prove to
have been false in any
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material respect when made, unless the fact resulting in such
breach of representation or warranty is capable of cure and is
cured within ten (10) days of the occurrence of an Event of
Default arising from such breach;
(c) breach by the Maker of any covenant contained in this Note or
by the Maker or any Subsidiary contained in any other Class 4
Document (other than the covenants referred to in
sub-paragraph (a) above) or any written agreement entered into
in connection with this Note between the Maker or any
Subsidiary and the Payee, or delivered by the Maker or any
Subsidiary to the Payee in connection herewith, if such breach
shall not have been remedied within thirty (30) days after the
occurrence of an Event of Default arising from such breach;
(d) for any reason (other than as a result of an act or failure to
act on the part of the Payee relating to the continuation of
perfection of the security interest of the Payee in the
Collateral) any Class 4 Document shall cease to be in full
force and effect or any security interest intended or
purported to be created thereby with respect to any part of
the Collateral shall cease to be or is not valid and perfected
(to the extent such security interest can be perfected by
filing), or if, for any reason, any such security interest or
obligations shall not have the priority contemplated by the
Class 4 Documents and the Intercreditor Agreement, or the
Maker or any Subsidiary shall assert any of the foregoing;
(e) the occurrence of an "Event of Default" under and as defined
in the Amended and Restated Financing and Security Agreement,
dated on or about the date hereof, by and among CIT, as Agent,
and as a Lender, and Andover Togs, Inc., as Borrower, as the
same may now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated, or replaced (the
"Financing Agreement"), which Event of Default shall not have
been cured or waived by the appropriate Lenders under and in
accordance with the terms of the Financing Agreement;
(f) an involuntary case under any applicable bankruptcy,
insolvency or similar law now or hereafter in effect shall be
commenced against the Maker of any Subsidiary and the petition
shall not be dismissed within thirty (30) days after the
commencement of the case, or a court having jurisdiction in
the premises shall enter a decree or order for relief in
respect of the Maker or any Subsidiary in an involuntary case,
under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or any other similar relief
shall be granted under any applicable federal or state law, or
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a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator,
trustee, custodian or other officer having similar powers over
the Maker or any Subsidiary or over all or a substantial part
of the property of the Maker or any Subsidiary shall be
appointed or a warrant of attachment, execution or similar
process against any substantial part of the property of the
Maker or any Subsidiary shall be issued and any such event
shall not be stayed, dismissed, bonded or discharged within
thirty (30) days of entry, appointment or issuance; or
(g) the Maker or any Subsidiary shall have an order for relief
entered with respect to it or commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or shall consent to the entry of an
order in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial
part of its property; or the Maker or any Subsidiary shall
make an assignment for the benefit of creditors or shall admit
in writing its inability generally to pay its debts as such
debts become due; or the Board of Directors of the Maker or
any Subsidiary (or any Committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of
the foregoing;
then, and in any such event, in addition to all the rights and remedies of the
Payee under the Collateral Documents (as defined in the Note Agreement),
applicable law and otherwise, the Payee, may, subject to the provisions of the
Note Agreement and the Intercreditor Agreement, declare the unpaid principal
balance of this Note together with all interest accrued thereon, and all other
Obligations of the Maker to the Payee, to be due and payable, whereupon the
unpaid balance hereof, together with all interest accrued thereon, and all such
other Obligations, shall forthwith become due and payable, together with
interest accruing thereafter at the then applicable rate as stated above, until
the indebtedness evidenced by this Note is paid in full; provided, however, that
if the Event of Default is one of the events listed in subparagraph (f) or (g)
of this paragraph, then, upon the occurrence thereof, all Obligations shall
automatically and immediately become due and payable without demand or notice of
any kind, which are expressly waived by Maker.
If this Note is not paid when due and if it is placed with an attorney for
collection, the Maker agrees to pay all costs of collection, including
reasonable attorneys' fees which shall be added to the amount due under this
Note.
The Maker waives presentment, notice of dishonor, protest and any other
notice or formality with respect to this Note. The Holder may extend the time of
payment of this Note,
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postpone the enforcement hereof, grant any other indulgences, add or release any
party primarily or secondarily liable hereon and/or permit substitutions,
exchanges or releases of Collateral, in whole or in part, and the Holder may do
any or all of the foregoing without affecting or diminishing the Holder's right
of recourse against the Maker, which right is expressly reserved.
The Holder shall not be required to look to any collateral security for
this Note and may proceed against the Maker in such manner as it deems
desirable. No right or remedy of the Holder hereunder is to be deemed waived or
affected by any failure or delay to exercise the same.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS NOTE, THE MAKER WAIVES
(TO THE EXTENT PERMITTED BY LAW) THE RIGHT TO A TRIAL BY JURY, ALL RIGHTS OF
SETOFF AND RIGHTS TO INTERPOSE COUNTERCLAIMS AND CROSS-CLAIMS (UNLESS SUCH
SETOFF, COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE
FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER
ACTION) AND THE DEFENSES OF FORUM NON CONVENIENS AND IMPROPER VENUE AS TO ANY
ACTION OR PROCEEDING BROUGHT IN ANY FEDERAL OR NEW YORK STATE COURT SITTING IN
THE CITY OF NEW YORK.
THE MAKER HEREBY IRREVOCABLY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF
THE STATE OF NEW YORK AND OF ANY FEDERAL COURT LOCATED IN THE CITY OF NEW YORK
IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
NOTE. IN ANY SUCH ACTION OR PROCEEDING, THE MAKER WAIVES (TO THE EXTENT
PERMITTED BY LAW) PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS
AND AGREES THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL.
THE MAKER HEREBY WAIVES (TO THE EXTENT PERMITTED BY LAW) THE DEFENSES OF FORUM
NON CONVENIENS AND IMPROPER VENUE.
The execution and delivery of this Note has been authorized by the Board
of Directors of the Maker and by any necessary note or consent of the
stockholders of the Maker.
This Note may not be modified or amended except by an agreement in writing
signed by the party to be charged.
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This Note shall be governed by, and interpreted in accordance with, the
laws of the State of New York and shall be binding upon the successors and
assigns of the Maker and inure to the benefit of the Payee and its successors,
endorsees and assigns.
ATTEST: ANDOVER TOGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
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/s/ Xxxxxx X. Xxxxxxxx Title: President
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Assistant Secretary
By:
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Title:
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[Corporate Seal]
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Schedule A
Original Principal
Date Amount
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5-12-97 (Effective Date) $3,317,532.06
