Exhibit 10.1
AGREEMENT TO PURCHASE STOCK OF
EMBROIDERY LEASING CORPORATION
AGREEMENT, made and entered into as of the 27th day of November, 1996, by
and among XXXXXXX XXXXXXX ("Xxxxxxx") and WG APPAREL, INC., a Delaware
corporation ("WG"), a wholly owned subsidiary of Xxxxxxx & Xxxxx, Inc., a
Delaware corporation ("Xxxxxxx"), relating the purchase by WG of all of the
outstanding capital stock of Embroidery Leasing Corporation, a Georgia
corporation (the "Company").
WITNESSETH:
WHEREAS, Xxxxxxx holds two hundred and fifty (250) shares of common stock,
par value $1.00 per share, of the Company (the "Shares"), and
WHEREAS, after the consummation of the transactions contemplated by a
Redemption Agreement of even date herewith (the Redemption Agreement") between
Xxxx X. Xxxxxxxxxx ("Macpherson") and the Company, Xxxxxxx will own all of the
outstanding capital stock of the Company; and
WHEREAS, subject to the terms and conditions of this Agreement, Xxxxxxx
desires to sell all of the Shares, to WG, and WG desires to purchase all of the
Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter forth, the parties agree as follows:
1. PURCHASE OF THE SHARES. Subject to the terms and conditions or this
Agreement, Xxxxxxx agrees to sell to WG, and WG agrees to purchase from Xxxxxxx,
the Shares.
2. PURCHASE PRICE AND PAYMENT. WG agrees to pay to Xxxxxxx an aggregate
purchase price of Five Hundred Seven Thousand Three Hundred Fifty Six and 18/100
Dollars ($507,356.18) for all of the Shares. WG shall pay said purchase price by
delivering to Xxxxxxx a promissory note bearing interest at the rate of six
percent (6%) per annum (the "Promissory Note") in the form set forth in Exhibit
A hereto at Closing (as defined below). As a additional consideration for the
purchase of the Shares,:
(a) WG shall pay Xxxxxxx a cash payment at thie Closing equal to the
total cash held in the Company as of December 31, 1996, net of all
outstanding trade payables and other indebtedness of the Company as of
that date; and
(b) The net income of the Company, after distributions to
shareholders for taxes ("as provided in Section 3(c) of the Redemption
Agreement), attributable to each lease managed by the Company pursuant to
that certain Leasing and Management Agreement, dated as of March 1, 1996
(the "Management Agreement"), among the Company, Nationwide Capital
Corporation ("Nationwide"), and Macpherson Meistergram, Inc. ("Macpherson
Meistergram"), which was approved by funding sources prior to January 1,
1997, but was not funded until after December 31, 1996 and before the
Closing Date, shall be distributed to Xxxxxxx at the Closing, and said
distribution shall include an assignment of any purchase option contained
in such lease; and
(c) the net income of the Company, before taxes, attributable to
each lease managed by the Company pursuant to the Management Agreement,
which was approved by funding sources prior to January 1, 1997, but was
not funded until after the Closing Date, shall be distributed to Xxxxxxx
on the day each such lease is funded, and said distribution shall include
an assignment of any purchase option contained in such lease; and
3. CONDITIONS PRECEDENT TO THE CLOSING. The obligations of Xxxxxxx and WG
to effect the Closing of the transactions contemplated by this Agreement are
subject to the satisfaction of the following conditions:
(a) The sale of all of the outstanding capital stock of Macpherson
Meistergram beneficially owned by Macpherson and the members of his
immediate family to WG, pursuant to a Stock Purchase Agreement, dated as
of November 26, 1996, shall have been consummated (the "Macpherson
Meistergram Closing");
(b) The Company, Nationwide, and Macpherson Meistergram shall have
entered into a First Amendment to the Management Agreement, in
substantially the form of Exhibit B hereto;
(c) The Company shall have acquired all of the shares of capital
stock of the Company owned by Macpherson pursuant to the Redemption
Agreement; and
(d) Pursuant to an agreement entered into prior to December 31,
1996, Southwick Capital, L.L.C. ("Southwick") shall have acquired by
assignment all of the purchase options held by the Company relating to
leases approved and funded prior to January 1, 1997, in exchange for
delivery of that certain promissory note between Southwick as maker and
the Company as holder in the original principal amount of $200,000 (the
"Southwick Note") to the Company, which assignment shall have occurred
only after Xxxxxxx becomes the sole shareholder of the Company.
4. CLOSING.
(a) The closing of the transactions provided for in this Agreement
(the "Closing") shall be held at a place, date and time as mutually agreed
by the parties but not later than the later of (i) forty (40) days after
the Macpherson Meistergram Closing or February 14, 1997 (the "Closing
Date"). All references herein to the "Closing" or the "Closing Date" are
references to such terms as defined in this Section 4.
(b) At the Closing, subject to all of the terms and conditions of
this Agreement:
(i) Xxxxxxx shall deliver to WG the certificates evidencing
the Shares, duly endorsed to WG or with duty executed stock powers
affixed thereto;
(ii) WG shall deliver the Promissory Note as payment for the
Shares to Xxxxxxx, as provided in Section 2 hereof; and
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(iii) The parties shall execute such other agreements,
instruments and documents, and shall take such other action, as may
be necessary or appropriate in order to consummate the transactions
provided for herein in accordance with the terms and conditions
hereof.
(c) WG covenants and agrees that it shall cause the Company to make
an election under Section l377(a)(2) of the Internal Revenue Code of
1986, as amended, to close the Company's books on the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF XXXXXXX. To induce WG to enter into
this Agreement and to consummate the transactions provided for herein, Xxxxxxx
represents and warrants to WG that:
(a) Ownership of Shares. Xxxxxxx has, or will have upon consummation
of the transactions contemplated by the Redemption Agreement, good and
marketable title to the Shares to be sold to WG pursuant to this
Agreement, free and clear of all restrictions on transfer, liens, security
interests and other encumbrances, which Shares constitute all of the
issued and outstanding capital stock of the Company;
(b) No Other Shares or Options. Xxxxxxx does not own any shares of
the capital stock of the Company other than the Shares to be sold to WG
pursuant to this Agreement, and Xxxxxxx is not the holder of, or a party
to, any option, contract, warrant or right, written or otherwise, for the
purchase or other acquisition of any shares of the capital stock of the
Company; and
(c) Power and Authority. Xxxxxxx has full right, power, legal
capacity and authority to enter into this Agreement and to consummate the
transactions provided for herein.
6. REPRESENTATIONS AND WARRANTIES OF WG. To induce Xxxxxxx to enter into
this Agreement and to consummate the transactions provided for herein, WG
represents and warrants to Xxxxxxx that WG has full right, power, legal capacity
and authority to enter into this Agreement and to consummate the transactions
provided for herein.
7. DIVIDENDS AND DISTRIBUTIONS. Xxxxxxx hereby agrees that he will not
cause the Company to pay any dividends or make any distributions to its
shareholders prior to Closing other than as contemplated by the Redemption
Agreement, nor will he accept any such dividends or distributions. If the
Company retains its S corporation status after December 31, 1996, WG shall pay
Xxxxxxx a cash payment at the Closing in an amount mutually agreed, based On the
parties' best good faith estimate of the "Taxable Income" of the Company as such
term is defined in that certain Shareholders' Agreement among Xxxxxxx,
Macpherson and the Company, dated as of March 1, 1996) for the period of January
1, 1997 through the Closing Date, multiplied by an assumed "Applicable Maximum
Tax Rate" of forty two percent (42%).
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, and agreements herein contained shall survive the Closing Date and
shall remain operative and in full force and effect thereafter, and shall not be
merged by reason of the consummation of the transactions provided for herein.
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9. GENERAL PROVISI0NS.
(a) This Agreement shall be binding upon, and shall inure to the
benefit of, and be enforceable by, the parties hereto and their successors
and assigns; provided, however, that this Agreement shall not be assigned
by any party hereto without the prior written consent of the other
parties.
(b) This Agreement constitutes the entire contract among the parties
with respect to the subject matter hereof, and neither this Agreement nor
any exhibit hereto may be changed, modified or amended, except by an
instrument in writing signed by the party against whom enforcement of any
such change, modification or amendment is asserted. This Agreement may not
be terminated except pursuant to the written consent of each of the
parties hereto.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Georgia
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on a day and year first above written.
/s/ Xxxxxxx Xxxxxxx (SEAL)
-------------------------
Xxxxxxx Xxxxxxx
WG APPAREL. INC
(Corporate Seal)
Attest: By: /s/ [ILLEGIBLE]
---------------------
President
/s/ [ILLEGIBLE]
------------------------------
Secretary
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PROMISSORY NOTE
$507,356.18 Atlanta, Georgia
__________, 1997
FOR VALUE RECEIVED, the undersigned, WG APPAREL, INC., a Delaware
corporation (hereafter referred to as "Maker"), promises to pay to the order of
XXXXXXX X. XXXXXXX, an individual resident of the State of Georgia (hereinafter
referred to as "Payee"; Payee and any subsequent holder hereof being hereinafter
referred to collectively as "Holder"), without grace, at the office of Payee at
Atlanta, Georgia, or at such other place as Holder may designate to Maker in
writing from time to time, the principal sum of FIVE HUNDRED SEVEN THOUSAND
THREE HUNDRED FIFTY SIX AND 18/100 DOLLARS ($507,356.18), together with interest
thereon or on so much thereof as is from time to time outstanding and unpaid,
from the date hereof, at the rate of six percent (6%) per annum, in lawful money
of the United States of America, which shall at the time of payment be legal
tender in payment of all debts and dues, public and private; and all payments
hereunder shall be made in accordance with the following terms of this Note.
For purpose of this Note, the following terms and phrases shall have the
meanings herein set forth:
"Maturity Date" shall mean September 30, 1999. Notwithstanding the
foregoing, the Maturity Date shall mean such earlier date on which the
indebtedness evidenced hereby shall become due and payable through acceleration
or otherwise.
From and after the date hereof, installments of principal and interest in
the amount of $50,000.00 shall be payable by Maker to Holder, commencing on the
last day of March, 1997, and continuing on the last day of each and every
calendar quarter thereafter (i.e., June 30, September 30, December 31 and March
31) to and including the last day of June, 1999; and the outstanding principal
balance, together with all accrued but unpaid interest shall be due and payable
on September 30, 1999. The installments abovesaid shall be applied, first, to
accrued but unpaid interest and, second, to principal.
The entire, outstanding principal balance of the indebtedness evidenced by
this Note, together with all accrued but unpaid interest thereon, shall be due
and payable on the Maturity Date.
This Note may be prepaid in whole, but not in part, provided such
prepayment includes a "prepayment penalty" equal to the remaining interest which
would have been paid by Maker had Maker continued to pay all installments due
hereunder until the Maturity Date. Said prepayment penalty shall also be due
Holder in the event Holder exercises its right to accelerate the principal
amount as set forth herein.
It is hereby expressly agreed that, should any default be made in the
payment of principal or interest as stipulated above, and should any such
default continue uncured for a period of ten (10) days after written notice of
nonpayment, or if that certain Leasing and Management Agreement, as amended,
dated as of March 1, 1996, among Macpherson Meistergram, Inc., a North Carolina
corporation, Nationwide Capital Corporation, a Georgia corporation, and
Embroidery Leasing Corporation, a Georgia corporation, terminate for any reason,
then and in such event the principal amount and any other sums advanced
hereunder, together with all unpaid interest accrued thereon, shall, at the
option of Holder and without further notice to Maker, become due and may be
collected forthwith. Interest shall accrue on the outstanding principal amount
from the date of any default hereunder and for so long as such default
continues, regardless of whether or not there has been an acceleration of the
principal amount as set forth herein or a cure of the default, at the rate equal
to four percent (4%) per annum in excess of the interest rate which would
otherwise be applicable to this Note. All such interest shall be paid at the
time of and as a condition precedent to the curing of any such default. If
Holder shall have proceeded to enforce any remedy as a result of a default and,
thereafter, if Holder shall discontinue or abandon its exercise of such remedy
as a result of the curing of such default by Maker or otherwise, then in every
such case Holder and Maker shall be restored to their former positions and
rights; and all rights, powers, and remedies of Holder shall continue as if no
such action had been taken. Time is of the essence of this Note. In the event
this Note or any part thereof is collected by or through an attorney-at-law,
Maker agrees to pay all costs of collection, including, but not limited to,
reasonable attorneys' fees.
Presentment for payment, protest, notices of demand, protest and
non-payment, and all other notices are hereby waived by Maker. No failure to
accelerate the debt evidenced hereby by reason of default hereunder, acceptance
of a past due installment, or indulgences granted from time to time shall be
construed as a novation of this Note or as a reinstatement of the indebtedness
evidenced hereby or as a waiver of such right of acceleration or of the right of
Holder thereafter to insist upon
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strict compliance with the terms of this Note or to prevent the exercise of such
right of acceleration or any other right granted hereunder or by the laws of the
State of Georgia; and Maker hereby expressly waives, to the extent possible, the
benefit of any statute or rule of law or equity now provided or which may
hereafter be provided which would produce a result contrary to or in conflict
with the foregoing. No extension of the time for the payment of this Note or any
installment due hereunder made by agreement with any person now or hereafter
liable for the payment of this Note or any installment due hereunder made by
agreement with any person now or hereafter liable for the payment of this Note
shall operate to release, discharge, modify, change, or affect the original
liability of Maker under this Note, either in whole or in part, unless Holder
specifically and expressly agrees otherwise in writing. This Note may not be
changed orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification, or discharge is sought.
Maker hereby waives and renounces, to the extent same may be waived and
renounced, for itself, its legal representatives, successors, and assigns, all
rights to the benefits of any statute of limitations and any moratorium,
reinstatement, marshaling, forbearance, valuation, stay, extension, redemption,
appraisement, exemption, and homestead now provided or which may hereafter be
provided by the Constitution and laws of the United States of America and of any
state thereof, both as to itself and in and to all of its property, real and
personal, against the enforcement and collection of the obligations evidenced by
this Note. To the extent Maker has the power to do so, Maker hereby transfers,
conveys, and assigns to Holder a sufficient amount of such homestead or
exemption as may be set apart in bankruptcy, to pay this Note in full, with all
costs of collection, and does hereby direct any trustee in bankruptcy having
possession of such homestead or exemption to deliver to Holder a sufficient
amount of property or money set apart as exempt to pay the indebtedness
evidenced hereby or any renewal thereof and does, to the extent possible, hereby
appoint Holder the attorney-in-fact for Maker to claim any and all homestead
exemptions allowed by law.
This Note is executed and delivered in the State or Georgia and is
intended as a contract under and shall be construed and enforceable in
accordance with the laws of the State of Georgia.
As used herein, the terms "Maker," "Payee," and "Holder" shall be deemed
to include their respective successors, legal representatives, and assigns,
whether by voluntary action of the parties or by operation of law.
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If from any circumstances whatsoever fulfillment of any provision of this
Note or of any other instrument evidencing or securing the indebtedness
evidenced hereby, at the time performance of such provision shall be due, shall
involve transcending the limit of validity presently prescribed by any
applicable usury statute or any other applicable law, with regard to obligations
of like character and amount, then, ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity, so that in no event shall any
exaction that is in excess of the current limit of such validity be possible
under this Note or under any other instrument evidencing or securing the
indebtedness evidenced hereby, but such obligation shall be fulfilled to the
limit of such validity.
IN WITNESS WHEREOF, Maker has executed this Note under seal on the date
first above written.
WG APPAREL, INC.
By:
------------------------
President
ATTEST:
-----------------
Corporate Secretary
(CORPORATE SEAL)
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EXHIBIT B
FIRST AMENDMENT
TO
LEASING AND MANAGEMENT AGREEMENT
This First Amendment, dated as of January 3, 1997, to that certain Leasing
and Management Agreement, by and by and among Macpherson Meistergram, Inc., a
North Carolina corporation ("Macpherson"), Nationwide Capital Corporation, a
Georgia corporation ("Nationwide"), and Embroidery Leasing Corporation, a
Georgia corporation ("ELC"), dated as of March 1, 1996 (the "Original
Agreement").
W I T N E S S E T H:
WHEREAS, Macpherson, Nationwide and ELC are parties to the Original
Agreement, which establishes a contractual relationship among them pursuant to
which Macpherson sells certain equipment to ELC or one of its designated funding
sources, ELC or its designated funding source leases such equipment to
Macpherson's customers and Nationwide manages ELC's leasing operations and
remarket ELC's interests in such leases and the purchase options, if any,
associated with such leases, all in accordance with the terms and conditions set
forth in the Original Agreement; and
WHEREAS, all of the outstanding capital stock of Macpherson has been sold
to WG Apparel, Inc., a Delaware corporation ( "WG"), which is a wholly owned
subsidiary of Xxxxxxx & Xxxxx, Inc., a Delaware corporation ("Xxxxxxx"),
pursuant to a Stock Purchase Agreement, dated as of November 27, 1996 (the
"Macpherson/WG Agreement"); and
WHEREAS, all of the outstanding capital stock of ELC owned by Xxxx X.
Xxxxxxxxxx has been redeemed by ELC, pursuant to a Stock Redemption Agreement,
dated as of November 27, 1996 (the "Redemption Agreement"); and
WHEREAS, Xxxxxxx Xxxxxxx, the sole remaining shareholder of ELC
("Xxxxxxx"), and WG have entered into an agreement, dated as of November 27,
1996 (the "Xxxxxxx/WG Agreement"), which provides for a sale of all of the
capital stock of ELC from Xxxxxxx to WG effective as of the date of this
Agreement; and
WHEREAS, in view of the change in ownership of Macpherson and ELC effected
by the Macpherson/WG Agreement, the Redemption Agreement, and the Xxxxxxx/WG
Agreement, the parties to the Original Agreement desire to amend the Original
Agreement as provided herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree that the Original Agreement
shall be amended as follows:
1. Add a new Section 1.10 to the Agreement, which reads as follows:
"1.10 TFC Reserve Account. ELC acknowledges that ELC has no
right, title or interest in any monies presently held in that
certain reserve account maintained by Textron Financial Corporation
("TFC"), and that to the extent any sums are refunded to ELC,
Nationwide or Macpherson from the Reserve Account, twenty five
percent (25 %) of such refund shall be disbursed to Nationwide and
seventy five (75%) of such refund shall be disbursed to Macpherson.
In the event that further monies are paid into such reserve account
after the date hereof as a result of a charge to such account for a
defaulted lease, the amounts to be refunded shall be adjusted
proportionately to take into account the relative contributions to
such account by ELC, Nationwide and Macpherson. In the event TFC
inadvertently pays any monies from the Reserve Account to ELC, ELC
covenants that it will distribute the proportionate share of such
monies to the appropriate party immediately upon ELC's receipt of
same."
2. Add the following sentence to the end of Section 2.1(c) of the Original
Agreement:
"In the event that ELC ceases to be treated as an S
corporation under the Internal Revenue Code of 1986, as amended,
ELC's accounting records will be kept on an accrual basis."
3. Section 2.7(a) of the Original Agreement shall be deleted in its
entirety and the following substituted therefore:
"(a) Nationwide Management Fee. For its services under this
Agreement, Nationwide shall receive from ELC and ELC shall pay to
Nationwide, the following:
(i) a monthly management fee of Thirty Four Thousand
Dollars ($34,000) to be payable out of the ELC's Net Revenues.
For the purposes of this Agreement, Net Revenues of ELC shall
mean total revenues of ELC, including without limitation, all
lease payments, proceeds from resale of leases and other
revenue derived in anyway from operation of ELC, less all
operating expenses of ELC; and
(ii) An annual management bonus, to be determined and
paid by March 31st of each year, for the prior calendar year,
equal to one percent (1 %) of the total dollar value of leases
funded by ELC as of the end of such calendar year in excess of
fifteen million dollars ($15,000,000); and
(iii) An annual profitability bonus, to be determined
and paid by March 31st of each year, for the prior calendar
year, equal to two percent ( 2%) of the net income of ELC for
such prior year, as calculated by ELC's regular independent
public accountants, based on generally accepted accounting
principles, consistently applied. For purposes of this
Section, the term "net income" shall mean the gross revenues
of ELC for the relevant period, reduced by the following
amounts: (A) management fees payable to Nationwide for the
relevant period, (B) commissions payable to sales
representatives and sales managers of Macpherson, and (C)
expenses payable to unrelated third parties for the relevant
period; and
(iv) Upon receipt of the principal payment under that
certain nonnegotiable promissory note between Southwick
Capital, L.L.C. ("Southwick") as maker and the Company as
holder in the original principal amount of $200,000 (the
"Southwick Note"), the Company shall pay such amount to
Nationwide as an additional management bonus (the "Additional
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Management Bonus"). In order to secure the full and prompt
payment of the Additional Management Bonus, ELC does hereby
grant Nationwide a lien upon, security interest in and
security title to and hereby assigns, transfers and
contemporaneously herewith will pledge to Nationwide the
Southwick Note, and any and all renewals, replacements,
extensions, modifications or substitutions thereof or
therefor.
The management fee set forth above shall be the responsibility of
ELC, and in no event shall Macpherson be liable for any portion of the
management fee. ELC acknowledges that the monthly management fee set out
in subsection 2.7(a)(i) hereof is based upon the assumption that
Nationwide shall be responsible for managing an annual volume of business
in the range of fifteen million dollars ($15,000,000). In the event the
value of leases funded by ELC exceeds fifteen million dollars
($15,000,000) in any calendar year, ELC agrees to negotiate in good faith
an increase in Nationwide's monthly management fee which will fairly
compensate Nationwide for the additional costs it incurs in managing a
larger volume of business. In the event the parties are unable to agree on
a revised monthly management fee, Nationwide shall have the right to
terminate this Agreement upon one hundred and eighty (180) days' advance
written notice."
4. Section 3.1(a) and (b) of the Original Agreement shall be deleted in
its entirety and the following substituted therefore:
"4.1 TERM OF AGREEMENT.
(a) This Agreement shall become effective as of the day
and year first above written and, unless earlier terminated in
accordance with the terms and provisions hereof, shall
continue in effect until December 31, 1999. All lease
applications relating to Equipment, dated as of February 19,
1996, or thereafter, procured by Nationwide, shall be deemed
to be covered by this Agreement and shall be ELC leases. After
expiration of the original term, this Agreement shall be
automatically renewed for successive three (3) year periods
unless any party hereto shall give written notice to the other
party hereto, not less than twelve (12) months prior to the
end of such period." No termination of this Agreement shall
effect Nationwide's entitlement to management fees owed by ELC
for any period prior to such termination pursuant to Sections
2.7(a)(ii) and 2.7(a)(iii) hereof, or for any and all payments
due under Section 2.7(a)(iv) hereof.
(b) Upon any of the following events prior to the
termination of this Agreement as provided in this Section,
without notice to ELC, Nationwide shall have the right to
immediately terminate this Agreement and shall be entitled to
"Liquidated Damages" as hereinafter defined:
(i) ELC fails to pay any amount due hereunder
within ten (10) days after ELC and the Parent
Corporation receives notice of nonpayment from
Nationwide;
(ii) Fifty percent or more of the voting capital
stock of ELC is transferred to any person or persons
other than the Parent
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Corporation, or a wholly owned subsidiary of the Parent
Corporation; or
(iii) All or substantially all of the assets of
ELC are sold or transferred.
For purposes of this Section, the term "Liquidated
Damages" shall mean an amount equal to the product obtained by
multiplying the number of months remaining under the then
current term of the Agreement by thirty three thousand dollars
($33,000.00)".
5. Add a new Article III to the Agreement, which provides as follows:
"III. COMMITMENT OF PARENT CORPORATION.
3.1 PARENT CORPORATION AS PARTY TO AGREEMENT. Pursuant to an
agreement dated as of November 27, 1996, by and among Xxxxxxx
Xxxxxxx ("Xxxxxxx") and WG Apparel, Inc., a Delaware corporation (
"WG"), WG has purchased all of the outstanding capital stock of ELC
from Xxxxxxx. Xxxxxxx & Xxxxx, Inc., a Delaware corporation ("Parent
Corporation"), as the parent corporation of WG, hereby joins in this
Agreement for the sole purpose of making the commitments in support
of WG and ELC set forth in this Article III.
3.2 FINANCIAL INVESTMENT IN ELC. Parent Corporation hereby
agrees that it will make a capital investment in ELC, not later than
December 31, 1997, of not less than Five Million Dollars
($5,000,000), contingent upon the requirements of ELC for the cash
infusion and the successful completion and closing of a Rule 144A
securities offering to, among other things, raise a minimum of
$85,000,000 in cash through the issuance of Senior Unsecured Notes
to refinance the existing debt of Parent Corporation and to finance
the transactions contemplated herein and in a certain Stock Purchase
Agreement, dated as of November 27, 1996, providing for the purchase
of all of the outstanding capital stock of Macpherson by WG (the
"Rule 144A Financing"). The terms, provisions and requirements of
such Rule 144A Financing and the securities offering in connection
with same shall be exclusively determined by Parent Corporation, WG,
their attorneys, accountants and underwriters in their sole
discretion. Such capital investment shall not be used by ELC for any
purpose other than the funding of leases pursuant to this Agreement
without the prior approval of a majority of the Board of Directors
of ELC.
3.3 ADDITIONAL LEASING PROGRAMS. Parent Corporation hereby
agrees that it will take such action as is necessary to cause its
wholly owned subsidiary corporations, namely the Sun brand Division
of WG Apparel, Inc., Lattice Systems, Inc. and Clinton Machinery
Corp., to join in this Agreement and to utilize the leasing program
established pursuant to this Agreement as the leasing program for
equipment sold by such subsidiaries. In addition, Parent Corporation
hereby agrees to use its best efforts to obtain the agreement of its
affiliated corporations, if and when created, to join in this
Agreement and to utilize the leasing program established pursuant to
this Agreement as the leasing program for equipment sold by such
affiliates."
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3.4 GUARANTY OF PARENT CORPORATION. The Parent Corporation
hereby agrees to guaranty the payment of obligations of ELC to
Nationwide pursuant to the Contract of Guaranty attached hereto as
Schedule 3.4 hereto."
6. Renumber Article III of the Original Agreement as "Article IV" and
renumber Sections 3.1, 3.2 and 3.3 of the Original Agreement as Sections 4.1,
4.2 and 4.3.
7. Add to the end of Section 3.3(e) of the Original Agreement (Section 4.3
of the Agreement, as amended) the following:
"If to WG or the Parent Corporation:
Xxxxxxx & Xxxxx, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copy (which will not constitute notice) to:
Waters, McPherson, McNeill, P.C.
000 Xxxxxxxx Xxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000"
8. Effect of Amendment. Except as expressly amended hereby, all terms and
conditions of the Original Agreement shall be and remain in full force and
effect.
9. Successors and Assigns. This First Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the date first stated above.
MACPHERSON MEISTERGRAM, INC.
By:
-----------------------------------
Its:
-----------------------------------
NATIONWIDE CAPITAL CORPORATION
By:
-----------------------------------
Its:
-----------------------------------
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EMBROIDERY LEASING CORPORATION
By:
-----------------------------------
Its:
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Xxxxxxx & Xxxxx, Inc., hereby executes this First Amendment for the sole
purpose of acknowledging its agreement to be bound by the provisions of Article
III of the Agreement, as added by this First Amendment.
XXXXXXX & XXXXX, INC.
By: /s/ Xxxx X. Xxxxxxx
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Its: Chairman & Chief Executive Officer
6
