EXHIBIT 10.1
FOURTH AMENDMENT
TO
AMENDED AND RESTATED FINANCING AGREEMENT
Fourth Amendment, dated as of July 29, 1999 to the Amended and
Restated Financing Agreement, dated as of June 18, 1998, as amended through the
date hereof (the "Financing Agreement"), by and among XxXxxxxxxx Apparel Group
Inc., a Delaware corporation, formerly known as Norton XxXxxxxxxx, Inc. (the
"Company"), Norton XxXxxxxxxx of Xxxxxx, Inc., a New York corporation
("Squire"), Miss Xxxxx, Inc., a Delaware corporation ("Miss Xxxxx"), Xxxx-Xx
Knitwear, Inc., a Delaware corporation formerly known as JJ Acquisition Corp.
("Xxxx-Xx" and together with Squire and Miss Xxxxx, each a "Borrower" and
collectively, the "Borrowers"), the lenders party thereto (each a "Lender" and
collectively the "Lenders"), NationsBanc Commercial Corporation, as collateral
agent for the Lenders (in such capacity, the "Collateral Agent"), The CIT
Group/Commercial Services, Inc., as administrative agent for the Lenders (in
such capacity, the "Administrative Agent") and Fleet Bank NA, as documentation
agent for the Lenders (in such capacity, the "Documentation Agent" and together
with the Collateral Agent and the Administrative Agent, each an "Agent" and
collectively, the "Agents").
The Company and the Borrowers have advised the Lenders and the Agent
that (i) the Company has formed XxXxxxxxxx Apparel Holdings Inc., a South
Carolina corporation and a wholly-owned Subsidiary of the Company, (ii) the
Company and Miss Xxxxx propose to enter into the Amendment to Agreement of
Purchase and Sale dated as of June 30, 1999 (the "Miss Xxxxx Amendment") by and
among Old ME Corp., Terbem Limited, a British Virgin Islands corporation, Bobst
Investment Corp., a British Virgin Islands corporation, TCRI Offshore Partners
C.V., a Netherlands Antilles corporation, TCR International Partners L.P., a
Delaware limited partnership, Triumph Capital II, L.P., a Delaware limited
partnership, Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxxxxx
Xxxxxxx, Miss Xxxxx and the Company, and (iii) the Company and Xxxx-Xx have
entered into the Amendment to the Agreement of Purchase and Sale dated as of
June 17, 1999 (the "Xxxx-Xx Amendment"), by and among Xxxxx Xxxxxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xxxx-Xx and the Company.
The Company, the Borrowers, the Lenders and the Agents desire to amend
certain terms and conditions in the Financing Agreement as hereafter set forth.
Accordingly, the Company, the Borrowers, the Agents and the Lenders hereby agree
as follows:
1. Definitions. All capitalized terms used herein and not otherwise
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defined herein are used herein as defined in the Financing Agreement.
2. Amendments to Definitions. (a) The definition of the term "Miss
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Xxxxx Acquisition Agreement" in Section 1.01 of the Financing Agreement is
hereby amended in its entirety to read as follows:
"'Miss Xxxxx Acquisition Agreement' means the Agreement of
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Purchase and Sale dated as of the 29th day of August, 1997, as
amended through September 25, 1997 by and among Old ME Corp.,
Terbem Limited, a British Virgin Islands corporation, Bobst
Investment Corp., a British Virgin Islands corporation, TCRI
Offshore Partners C.V., a Netherlands Antilles corporation, TCR
International Partners L.P., a Delaware limited partnership,
Triumph Capital II, L.P., a Delaware limited partnership, Xxxxxx
Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxxxxx Xxxxxxx,
Miss Xxxxx and the Company, provided that, on and after the Miss
Xxxxx Effective Date, Miss Xxxxx Acquisition Agreement shall
include the Amendment to the Agreement of Purchase and Sale dated
as of June 30, 1999."
(b) The definition of the term "Xxxx-Xx Purchase Agreement" in Section
1.01 of the Financing Agreement is hereby amended in its entirety to read as
follows:
"'Xxxx-Xx Purchase Agreement' means the Agreement of Purchase and
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Sale dated as of the 15th day of April, 1998, as amended through
June 18, 1998 and by the Amendment to the Agreement of Purchase
and Sale dated as of June 17, 1999, by and among Xxxxx Xxxxxxxxx,
Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xxxx-Xx and the Company."
(c) The definition of the term "Indenture" in Section 1.01 of the
Financing Agreement is hereby amended in its entirety to read as follows:
"'Indenture' means the Indenture, dated as of June 18, 1998 as
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supplemented by the second supplemental indenture entered into by
reason of the joinder of Apparel Holdings to the Indenture, among
the Company, the Borrowers, Norty's Inc., Apparel Holdings and
United States Trust Company of New York, as trustee, provided
that, on and after the Indenture Effective Date, Indenture shall
include the first supplemental indenture entered into by reason
of the Miss Xxxxx Amendment (as defined in the Fourth Amendment)
and the limitation on the cash amount of the Xxxx-Xx Earnout
Payment."
(d) Section 1.01 of the Financing Agreement is hereby amended by
adding the following new defined terms, in the correct alphabetical order
thereof, each of which shall read in its entirety as follows:
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"'Apparel Holdings' means XxXxxxxxxx Apparel Holdings Inc., a
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South Carolina corporation and a wholly-owned Subsidiary of the
Company."
"'Consent Solicitation' means the revised consent solicitation
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statement dated July 20, 1999.
"'Fourth Amendment' means the Fourth Amendment to the Agreement
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dated as of July 29, 1999 by and among the Company, the
Borrowers, the Lenders, the Collateral Agent, the Administration
Agent and the Documentation Agent."
"'Indenture Effective Date' means the date on which the Agents
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shall have received a fully executed copy of the first supplement
to the Indenture referred to in Section 8(d)(ii) hereof the terms
of which shall be consistent with those set forth in the Consent
Solicitation or otherwise in form and substance reasonably
satisfactory to the Required Lenders."
"'Miss Xxxxx Effective Date' means the date on which the Agents
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shall have received a fully executed copy of the Miss Xxxxx
Amendment the terms of which shall be consistent with those set
forth in the Consent Solicitation or otherwise in form and
substance reasonably satisfactory to the Required Lenders.
"'Railroad Effective Date' means the date on which the Agents
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shall have received a fully executed copy of the Railroad
Enterprises Agreement the terms of which shall be consistent with
those set forth in the July 6, 1996 memorandum from Xxxxxx X.
Xxxxxx of the Company to the Lenders or otherwise in form and
substance reasonably satisfactory to the Required Lenders."
"'Railroad Enterprises Agreement' means the Agreement by and
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among Squire, Railroad Enterprises, Inc. and Cutting Edge
Services, Inc."
"'Railroad Enterprises Assets' has the meaning specified for the
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term "Assets" in the Railroad Enterprises Agreement."
"'Railroad Enterprises Purchase' means the purchase by Squire of
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the Railroad Enterprises Assets from Railroad Enterprises, Inc.
and Cutting Edge Services, Inc. pursuant to the Railroad
Enterprise Agreement."
3. Key Man Life Insurance. The second sentence of Section 7.01(k)
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of the Financing Agreement is hereby amended in its entirety to read as follows:
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"Maintain at all times such key man or other life insurance
policies on the lives of Xxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxx and
Xxxxx Xxxxxxxxx or their successors for so long as such
individuals or their successors are employed by the Company or
any Borrower from a responsible and reputable life insurance
company each in an amount of not less than $3,000,000, $1,500,000
and $1,500,000, respectively, together with an assignment of such
life insurance policies to the Collateral Agent for the benefit
of the Lenders."
4. Liens. Section 7.02(a) of the Financing Agreement is hereby
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amended to (a) delete the word "and" at the end of clause (x) thereof, (b)
delete the period at the end of clause (xi) thereof and replace it with "; and"
and (c) add a new clause (xii) thereto to read in its entirety as follows:
"(xii) on and after the Railroad Effective Date, Liens granted by
Squire in favor of Railroad Enterprises, Inc. and Cutting Edge Services, Inc.
solely on funds not to exceed $2,500,000 held by Squire or in escrow in
connection with the purchase price payments for the Railroad Enterprises Assets
and in respect of other amounts owed to Railroad Enterprises, Inc., in each
case, pursuant to the terms of the Railroad Enterprises Agreement."
5. Indebtedness. Section 7.02(b) of the Financing Agreement is
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hereby amended to (a) delete the word "and" at the end of clause (x) thereof,
(b) renumber clause (xi) thereof as clause (xii) thereof, (c) replace the
reference to clause "(x)" in renumbered clause (xii) thereof with "(xi)", and
(d) add a new clause (xi) thereto to read in its entirety as follows:
"(xi) on and after the Railroad Effective Date, Indebtedness of
Squire owed to Railroad Enterprises, Inc. and Cutting Edge Services, Inc. in
connection with the purchase price payments due for the Railroad Enterprises
Assets and in respect of other amounts owed to Railroad Enterprises, Inc., in
each case, pursuant to the terms of the Railroad Enterprises Agreement; and"
6. Sale of Assets. Section 7.02(d)(ii) of the Financing Agreement
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is hereby amended to (a) delete the word "and" before clause (F) thereof and (b)
add the following at the end of such Section (ii) "and (G) the Borrowers may
transfer all of their right, title and interest in the registered trademarks
that they own to Apparel Holdings.", provided that (x) Apparel Holdings has
taken all action requested by the Collateral Agent to grant the Collateral Agent
a perfected, first priority security interest in such trademarks and (y) the
Collateral Agent's rights in such trademarks, including, without limitation, the
existence, perfection and priority of the security interests created in favor of
the Collateral Agent in such trademarks are not adversely affected thereby and
(z) the terms of any such transfer and any licenses of the trademarks have to be
reasonably satisfactory to the Collateral Agent and its counsel.
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7. Investments. (a) Section 7.02(f)(ii) of the Financing Agreement
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is hereby amended by adding the phrase ", and investments in Apparel Holdings"
at the end of the first clause thereof.
(b) Section 7.02(f) of the Financing Agreement is hereby further
amended to (i) delete the word "and" at the end of the first of clause (xi)
thereof, (ii) renumber the second of clause (xi) thereof as clause (xiii)
thereof, and (iii) add a new clause (xii) thereto to read in its entirety as
follows:
"(xii) on and after the Railroad Effective Date, the Railroad
Enterprises Purchase; and"
8. Waivers and Consents.
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(a) Effective on the Miss Xxxxx Effective Date, the Required Lenders
hereby consent to the terms of the Miss Xxxxx Amendment, pursuant to which,
among other things, the parties thereto will modify the terms of the earn out
obligation under the Miss Xxxxx Acquisition Agreement, such that 64.3% of the
earn out obligation shall be discounted and paid in cash on or about August 6,
1999, as more fully described in the revised consent solicitation statement
dated July 20, 1999 (the "Consent Solicitation").
(b) The Required Lenders hereby consent to the terms of the Xxxx-Xx
Amendment, pursuant to which, among other things, the parties thereto have
agreed to permit the full face value of the Letter of Credit ($30,000,000) which
secures the payment of the earnout obligations under the Xxxx-Xx Purchase
Agreement to be available for all drawings under the Letter of Credit.
(c) Pursuant to Section 12.03 of the Financing Agreement and in
reliance on the representations and warranties set forth in Section 10, the
Required Lenders hereby waive any Event of Default that would otherwise arise
under Section 10.01(c) of the Financing Agreement from any non-compliance by the
Company and the Borrowers with the provisions of Section 7.01(b) of the
Financing Agreement by reason of the failure of the Loan Parties to execute and
deliver to the Collateral Agent, in respect of Apparel Holdings, within 15 days
after its formation (i) a guaranty, (ii) a security agreement, (iii) a written
opinion of counsel in form and substance reasonably satisfactory to the
Collateral Agent, and (iv) an amendment to the Pledge Agreement with respect to
the pledge of the stock of such new Subsidiary together with stock
certificate(s) representing all of the outstanding capital stock of such new
Subsidiary and an executed and undated stock power; provided, that, all of the
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items listed in clauses (i), (ii) and (iv) are executed and delivered, as
appropriate, to the Collateral Agent on or prior to the Amendment Effective Date
(as defined in Section 9 below) and the items listed in clause (iii) above are
delivered to the Collateral Agent, within 30 days after the date hereof.
(d) Pursuant to Section 12.03 of the Financing Agreement and in
reliance on the representations set forth in Section 10, the Required Lenders
hereby waive any Event of Default that would otherwise arise under Section
10.01(c) of the
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Financing Agreement, in the case of clause (ii) below effective on the Indenture
Effective Date, from any non-compliance by the Company and the Borrowers with
the provisions of (i) Section 7.02(f) of the Financing Agreement by reason of
the Company's formation of and initial capital contribution in Apparel Holdings;
provided that, as of the Amendment Effective Date, such initial contribution did
not exceed $10,000 and (ii) Section 7.02(r) of the Financing Agreement by reason
of the first supplemental indenture to be entered into by and among the Company,
the Borrowers, Norty's Inc., and United States Trust Company of New York, as
trustee, by reason of the Miss Xxxxx Amendment and the limitation on the cash
amount of the Xxxx-Xx Earn Out Payment.
(e) The Waivers and Consents in this Section 8 shall be effective only
in this specific instance and do not allow any other or further departure from
the terms of the Financing Agreement or the other Loan Documents, which terms
shall continue in full force and effect.
9. Conditions to Effectiveness. This Amendment shall be effective
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as of the date hereof provided that the following conditions have been satisfied
in full (the "Amendment Effective Date").
(a) The representations and warranties contained in this Amendment and
in Article VI of the Financing Agreement shall be true and correct in all
material respects on and as of the Amendment Effective Date and the date hereof
as though made on and as of each of such dates (except where such
representations and warranties relate to an earlier date in which case such
representations and warranties shall be true and correct as of such earlier
date); no Event of Default or Default shall have occurred and be continuing on
the Amendment Effective Date or on the date hereof, or result from this
Amendment becoming effective in accordance with its terms.
(b) The Agents shall have received counterparts of this Amendment
which bear the signatures of the Company, the Borrowers and each of the Required
Lenders.
(c) The Collateral Agent shall have received a fully executed copy of
the items referred to in clauses (i), (ii) and (iv) of Section 8(c) hereof.
(d) The Agents shall have received a fully executed copy of the Xxxx-
Xx Amendment certified as a true and correct copy thereof by an authorized
officer of the Company.
(e) The Administrative Agent shall have received in immediately
available funds, for the ratable benefit of the Lenders in accordance with their
Pro Rata Shares, a non-refundable amendment fee equal to $110,000.
(f) All legal matters incident to this Amendment shall be satisfactory
to the Agents and their counsel.
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10. Representations and Warranties. Each of the Company and the
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Borrowers represents and warrants to the Lenders as follows:
(a) The Company and each Borrower (i) is duly organized, validly
existing and in good standing under the laws of the state of its organization
and (ii) has all requisite power, authority and legal right to execute, deliver
and perform this Amendment, all other documents executed by it in connection
with this Amendment, and to perform the Financing Agreement, as amended hereby.
(b) The execution, delivery and performance by each of the Company and
the Borrowers of this Amendment and all other documents executed by each of them
in connection with this Amendment and the performance by the Company and the
Borrowers of the Financing Agreement as amended hereby (i) have been duly
authorized by all necessary action, (ii) do not and will not violate or create a
default under the Company's or any Borrower's organizational documents, any
applicable law or any contractual restriction binding on or otherwise affecting
the Company or any Borrower or any of the Company's or such Borrower's
properties, and (iii) except as provided in the Loan Documents, do not and will
not result in or require the creation of any Lien upon or with respect to the
Company's or any Borrower's property.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or other regulatory body is required
in connection with the due execution, delivery and performance by the Company or
any of the Borrowers of this Amendment and all other documents executed by it in
connection with this Amendment and the performance by the Company and the
Borrowers of the Financing Agreement as amended hereby.
(d) This Amendment and the Financing Agreement, as amended hereby, and
all other documents executed in connection with this Amendment constitute the
legal, valid and binding obligations of the Company and the Borrowers party
thereto, enforceable against such Persons in accordance with their terms except
to the extent the enforceability thereof may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect affecting generally the enforcement of creditors' rights and
remedies and by general principles of equity.
(e) The representations and warranties contained in Article VI of the
Financing Agreement are true and correct on and as of the Amendment Effective
Date and as of the date hereof as though made on and as of the Amendment
Effective Date and the date hereof (except to the extent such representations
and warranties expressly relate to an earlier date), and no Event of Default or
Default has occurred and is continuing on and as of the Amendment Effective Date
or on the date hereof after giving effect to this Amendment.
(f) As of the Amendment Effective Date, the aggregate amount of the
capital contribution made by the Company in Apparel Holdings did not exceed
$10,000.
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11. Continued Effectiveness of Financing Agreement. Each of the
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Company and the Borrowers hereby (i) confirms and agrees that each Loan Document
to which it is a party is, and shall continue to be, in full force and effect
and is hereby ratified and confirmed in all respects except that on and after
the Amendment Effective Date of this Amendment all references in any such Loan
Document to "the Financing Agreement", "thereto", "thereof", "thereunder" or
words of like import referring to the Financing Agreement shall mean the
Financing Agreement as amended by this Amendment, and (ii) confirms and agrees
that to the extent that any such Loan Document purports to assign or pledge to
the Collateral Agent, or to grant to the Collateral Agent a Lien on any
collateral as security for the Obligations of the Company and the Borrowers from
time to time existing in respect of the Financing Agreement and the Loan
Documents, such pledge, assignment and/or grant of a Lien is hereby ratified and
confirmed in all respects.
12. Miscellaneous.
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(a) This Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which shall be
deemed to be an original, but all of which taken together shall constitute one
and the same agreement.
(b) Section and paragraph headings herein are included for convenience
of reference only and shall not constitute a part of this Amendment for any
other purpose.
(c) This Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York.
(d) The Borrowers will pay on demand all reasonable out-of-pocket
costs and expenses of the Agents in connection with the preparation, execution
and delivery of this Amendment, including, without limitation, the reasonable
fees, disbursements and other charges of Xxxxxxx Xxxx & Xxxxx LLP, counsel to
the Agents.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.
XXXXXXXXXX APPAREL GROUP INC.
By: __________________________________
Title: _______________________________
NORTON XXXXXXXXXX OF XXXXXX, INC.
By: __________________________________
Title: _______________________________
MISS XXXXX, INC.
By: __________________________________
Title: _______________________________
XXXX-XX KNITWEAR, INC.
By: __________________________________
Title: _______________________________
AGENTS AND LENDERS
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THE CIT GROUP/COMMERCIAL SERVICES,
INC., as Administrative Agent
By: __________________________________
Title: _______________________________
NATIONSBANC COMMERCIAL
CORPORATION, as Collateral Agent
By: __________________________________
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Title: _______________________________
FLEET BANK NA, as Documentation Agent
By: __________________________________
Title: _______________________________
FLEET BUSINESS CREDIT CORPORATION
By: __________________________________
Title: _______________________________
ISRAEL DISCOUNT BANK OF NEW YORK
By: __________________________________
Title: _______________________________
SUNROCK CAPITAL CORP.
By: __________________________________
Title: _______________________________
PNC BANK, NATIONAL ASSOCIATION
By: __________________________________
Title: _______________________________
XXXXXX FINANCIAL, INC.
By: __________________________________
Title: _______________________________
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ACKNOWLEDGED AND AGREED:
NORTY'S INC.
By: __________________________________
Title: _______________________________
XXXXXXXXXX APPAREL HOLDINGS INC.
By: __________________________________
Title:
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