Exhibit 4.24
Form of Amended and Restated Subordinated Note
dated November 1, 1995 by Apparel America, Inc.
AMENDED AND RESTATED SUBORDINATED NOTE
$600,000 November 1, 0000
Xxx Xxxxx, Xxxxxxxxxxx
FOR VALUE RECEIVED, APPAREL AMERICA, INC., a Delaware
corporation (the "Maker"), hereby promises to pay to ALJAB Corp.,
a New York corporation, (the "Payee"), the principal sum of SIX
HUNDRED THOUSAND DOLLARS ($ 600,000) in lawful money of the United
States of America, with interest thereon as set forth herein. The
principal amount hereof shall be payable as follows: (i) $50,000 on
February 9, 1996, (ii) to the extent of up to 40% of "Excess Cash
Flow" (as defined in the Credit Agreement referred to below),
$50,000 on June 30, 1996 and $50,000 on June 30, 1997 and (iii) the
balance, and all accrued and unpaid interest thereon shall be paid
in full to the Payee on June 30, 1998 (the "Maturity Date").
1. NOTE. This Amended and Restated Subordinated Note
(the "Note") supersedes and replaces that certain Amended and
Restated Subordinated Note in the original principal amount of
$1,000,000 dated December 15, 1993 (the "Prior Note") made by the
Maker to Xxxxxxx, Inc. This Note is the "Xxxxxxx Subordinated
Note" referred to and as defined in the Fifth Amended and Restated
Credit Agreement (the "Credit Agreement") dated as of July 31, 1994
among the Maker, Connecticut Development Authority, Binghamton
Savings Bank and A.I. Associates, Inc. and Binghamton Savings Bank,
as Agent.
2. INTEREST. Interest shall accrue on the outstanding
principal amount hereof at the simple interest rate of eight and
one half percent (8 1/2%) per annum, and, shall be payable quarterly
on each June 30, September 30, December 31 and March 31 (or next
business day if not a business day) commencing March 31, 1996. An
additional four percent (4%) shall accrue, on a simple interest
basis, on the outstanding principal balance hereof and be payable
on the Maturity Date.
3. PREPAYMENTS. The Maker may prepay any interest on
or principal of this Note at any time or from time to time to the
extent permitted by its Senior Debt (as hereinafter defined).
4. PLACE AND MANNER OF PAYMENT. All payments under
this Note shall be made in lawful money of the United States of
America and in immediately available funds, and, subject to the
last sentence of this paragraph, shall be made to the Payee at the
offices of the Maker, 0000 Xxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx
00000, or to any subsequent address of the Maker. Payments shall
be applied first to interest on and then to principal of this Note.
5. SUBORDINATION.
(a) NO PAYMENTS. Notwithstanding any contrary
provisions of this Note or any other instruments or agreements now
or hereafter evidencing or relating to the indebtedness hereunder
(hereinafter sometimes referred to as the "Subordinated Debt"), the
Maker covenants and agrees, and the Payee and each holder of this
Note, by its acceptance of this Note (for purposes of this Section
5, "Payee" shall include any holder of this Note) likewise
covenants and agrees, for the benefit of the lenders, and the
Agent, party to the Credit Agreement and their respective
successors and assigns (collectively, the "Senior Creditor"), in
order to induce the Senior Creditor to extend or continue financial
accommodations to the Maker, that all Subordinated Debt shall be
subject and subordinate in right of payment, in accordance with the
provisions hereof, to the prior payment in full in cash of the Bank
Debt. As used herein, "BANK DEBT" means, collectively, all
indebtedness of the Maker to the Senior Creditor under the Credit
Agreement in respect of the Term Notes, including, without
limitation, all principal, interest, fees and other amounts payable
with respect thereto. Subject to the terms of Section 5(b) below,
the Maker shall make no payment to the Payee of any Subordinated
Debt until the Bank Debt has been indefeasibly paid in full in cash
PROVIDED, HOWEVER, that so long as there exists no payment default
under the Bank Debt, the Maker may make interest payments of 8 1/2% of
the outstanding principal amount as provided in Section 2 above,
and may make the principal payments referred to in the first
paragraph of this Note.
(b) PROCEEDING. The Maker shall not make any
payments or prepayments under or in respect of this Note in the
event of (i) any insolvency or bankruptcy case or proceeding or any
receivership, liquidation, reorganization or other similar case or
proceeding relative to the Maker or its creditors, as such, or all
or any substantial portion of its assets, (ii) any liquidation,
dissolution or other winding up of the Maker or (iii) any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Maker ((i) through (iii), a
"Proceeding"), and in the event of a Proceeding all Bank Debt shall
first be paid in full in cash before the holders of Subordinated
Debt shall be entitled to receive any payment or distribution of
assets or securities of any kind or character (other than
securities of the Maker (collectively, "Subordinated Securities")
provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in
these subordination provisions with respect to Subordinated Debt,
to the prior payment in full in cash of all Bank Debt or any
securities issued in exchange for Bank Debt under any such plan of
reorganization or readjustment.
(c) NO SECURITY. The Maker hereby covenants and
agrees that it has not and will not directly or indirectly or
indirectly grant to the Payee any security interest in or lien upon
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any of its property, interest or assets as collateral security for
this Note, and the Payee hereby likewise covenants and agrees by
acceptance of this Note that this Note is not secured by an
property, interest or assets of the Maker and that the Payee will
not accept any collateral security to secure the Maker's
obligations under this Note; PROVIDED THAT in the event the Maker
makes a public offering of its common stock under the Securities
Act, the Maker may grant to the holders of the Subordinated Debt,
pari passu with the Secured Debt, a security interest in the
proceeds of such public offering. The proviso above shall not be
construed to permit the grant of any security interest to the
holders of Subordinated Debt except in the instance provided above.
(d) DEFAULT UNDER SECURED DEBT. The Maker shall
not make any payments under this Note in the event of the
occurrence for any reason of a "Default" or "Event of Default"
under the Credit Agreement (including, without limitation a default
in the payment, whether regularly scheduled, at final maturity,
upon acceleration, on the date fixed for any mandatory prepayment,
or otherwise, of any Secured Debt) unless Senior Creditor shall
have delivered to the Payee a written notice of waiver of the
benefits of this sentence.
(e) TURNOVER. In the event that, notwithstanding
the foregoing provisions prohibiting such payment or distribution,
the Payee shall have received any payment or distribution under or
in respect of this Note (i) before all Bank Debt shall have been
indefeasibly paid in full in cash or (ii) otherwise not in
accordance with this Section 5, then and in any such event, such
payment or distribution shall be received and held in trust for the
holders of Secured Debt and shall be forthwith paid over or
delivered (duly endorsed, if appropriate) to the Agent under the
Credit Agreement on behalf of the holders of Secured Debt remaining
unpaid, to the extent necessary, to pay all Bank Debt in full in
cash.
(f) NO IMPAIRMENT. Subject to the express terms
and conditions of this Section 5, no right of any present or future
holder of any Secured Debt to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Maker, the Payee or
any other Person, including, without limitation, any defect in the
execution or delivery of any instrument or agreement creating,
evidencing or relating to any Secured Debt, any renewal,
extension, modification, amendment, compromise or release of any
Secured Debt, any taking, release, surrender or enforcement of, or
failure to enforce or perfect, any lien, collateral security or
guaranty (or similar agreement) relating thereto, any settlement or
compromise of any liability of the Maker or any application of any
sums by whomsoever paid and howsoever realized to any liability of
the Maker, by any invalidity, unenforceability, avoidance or
subordination of any Secured Debt, by any election of the
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application of Section 1111 (b) (2) of the Bankruptcy Code, by any
borrowing or grant of a security interest by the Maker, as debtor-
in-possession under Section 364 of the Bankruptcy Code, by the
disallowance of any claim for repayment of any Secured Debt, by
non-compliance by the Maker or the Payee with any provision of this
Section 5 regardless of any knowledge thereof which any holder of
Secured Debt may have or with which any such holder may otherwise
be charged or by any other circumstance that might otherwise
constitute a legal or equitable discharge or defense of a guarantor
or subordinated creditor. The payee will not, while any Secured
Debt is outstanding, subordinate any Subordinated Debt to any debt
other than Secured Debt.
(g) PROOF OF CLAIM. If the Payee does not file a
proper claim or proof of debt or other document or amendment
thereof in the form required in any Proceeding prior to fifteen
(15) days before the expiration of the time to file such claims or
proofs or other documents or amendments thereof, then each holder
of Secured Debt has the right (but not the obligation) to demand,
xxx for, collect, receive and receipt for the payments and
distributions in respect of this Note which are required to be paid
or delivered to the holders of Secured Debt as provided in this
Section 5, and to file and prove all claims therefor and to take
all such other action in the name of the Payee, or otherwise, as
any such holder of Secured Debt may determine to be necessary or
appropriate for the enforcement of this Section 5.
(h) WAIVER OF NOTICE; NO REPRESENTATIONS. By
acceptance of this Note, the Payee waives any and all notice of (i)
the receipt and acceptance of the provisions of this Section 5 by
Senior Creditor or any other present or future holders of Secured
Debt or (ii) the creation, renewal, extension or modification of
any Secured Debt. The Payee acknowledges that the holders of
Secured Debt have not made to the Payee, nor do they hereby or
otherwise make to the Payee, any representations or warranties,
express or implied, nor do they assume any liability to the Payee
with respect to any event or condition.
(i) SCOPE OF PROHIBITION OF PAYMENT. Any
prohibition of payment pursuant to this Section 5 shall encompass
any direct or indirect payment (whether in cash, property or
securities or by way of set-off, counterclaim, or otherwise) of
this Note, whether by the Maker, through any of its subsidiaries or
other affiliates or otherwise.
(j) AMENDMENTS. No provision of this Section 5 may
be amended, supplemented or waived in any respect, by course of
dealing, orally or otherwise, except in a writing duly executed and
delivered by each holder of Secured Debt at the time outstanding.
(k) POSTPETITION INTEREST; CERTAIN CLAIMS.
"Subordinated Debt" and "Secured Debt" shall each include (i)
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interest calculated during any Proceeding, whether or not the
principal obligation is undersecured or oversecured or the interest
obligation is deemed allowable or provable or interest is deemed to
be accruing against Maker and (ii) any liability (in tort,
contract, or otherwise) to the holder(s) of such Debt arising out
of any claim for rescission of the purchase of such debt, any
untrue statement of any fact or any omission to state any fact in
connection with such Debt, or any other claims for monetary damages
in connection with such Debt.
6. EVENTS OF DEFAULT AND REMEDIES. If any of the
following Events of Default (each, an "Event of Default") shall
occur:
(a) The Maker shall fail to make payment when due
of any principal of or interest on this Note and such failure shall
have continued for a period of ten (10) days after written notice
by the Payee to the Maker that such payment is due and unpaid; or
(b) The Maker shall default under the Credit
Agreement, the Term Notes the maturity of the Bank Debt shall have
been accelerated; or
(c) A Proceeding shall occur, or the maker shall
take appropriate action for the purpose of commencing any
Proceeding;
then, and so long as such Event of Default is continuing, the Payee
may declare the entire unpaid principal of and unpaid interest on
this Note immediately due and payable and exercise any other
remedies the Payee may have at law, all of which shall be
cumulative and not exclusive of any other remedy; PROVIDED HOWEVER,
that the Payee hereby agrees by acceptance of this Note that it may
not exercise any of its remedies until the Bank Debt has been
indefeasibly paid in full in cash, unless Senior Creditor Shall
have delivered to the Payee a written notice of waiver of the
benefits of this sentence.
7. MISCELLANEOUS.
(a) Notices. Any notices, demand or communication
hereunder shall be given in writing (including facsimile
transmission or telex) and mailed or delivered to each party at its
address (or telecopies number) set forth below, or, as to each
party, at such other address (or telecopier number) as shall be
designated by such party by a prior notice to the other party in
accordance with the terms of this Section:
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If to:
(i) Maker to:
Apparel America, Inc
0000 Xxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attn: Xxxxxxxx Xx Xxxx, President
Xxxxxxxxx X'Xxxxx, Vice President
If to:
(ii) Payee to:
ALJAB Corp.
0000 Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
(b) All notices hereunder shall be effective
upon receipt.
(c) AMENDMENTS, WAIVERS. Subject to Section
5(1), this Notice may not be amended or waived except in a writing
executed by the Maker, Payee and the Agent.
(d) BINDING EFFECT; ASSIGNMENT. This Note
shall be binding upon the Maker and the successors of the Maker.
This Note shall inure to the benefit of (i) the Payee and the
successors and assigns of the Payee and each subsequent holder of
this Note and (ii) the Senior Creditor and the successors and
assigns of Senior Creditor and each subsequent holder of the Term
Notes. The Maker may not assign any of its duties or liabilities
under this Note.
(e) SUBSTITUTION OF NOTE. This Note is issued
in substitution and replacement for the Prior Note, the Payee
hereby agrees that no interest or principal is payable under the
Prior Note and hereby irrevocably waives payment of all accrued and
unpaid interest thereunder.
(f) GOVERNING LAW. THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF CONNECTICUT WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF
LAWS.
(g) EXPENSES. Subject to the subordination
provisions herein, The Maker hereby promises to pay to the Payee
all costs of collection or enforcement of this Note, including,
without limitation, any reasonable legal fees incurred in
connection therewith.
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(h) JURISDICTION, SERVICE, WAIVERS, ETC. ANY
ACTION OR PROCEEDING IN CONNECTION WITH THIS NOTE MAY BE BROUGHT IN
A COURT OF RECORD OF THE STATE OF NEW YORK, COUNTY OF NEW YORK OR
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, THE MAKER HEREBY CONSENTING TO THE JURISDICTION THEREOF, AND
SERVICE OF PROCESS MAY BE MADE UPON THE MAKER BY MAILING A COPY OF
THE SUMMONS AND ANY COMPLAINT TO THE MAKER, BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS TO BE USED
FOR THE GIVING OF NOTICES UNDER THIS NOTE. THE PAYEE, BY
ACCEPTANCE HEREOF, AND THE MAKER EACH HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OR MAINTAINING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS. IN ANY ACTION TO ENFORCE THIS NOTE, THE
PROVISIONS OF THIS NOTE (INCLUDING BUT NOT LIMITED TO SECTIONS
7(E)) SHALL, TO THE EXTENT PERMITTED BY LAW, PREVAIL
NOTWITHSTANDING ANY PROVISION OF APPLICABLE LAW RESPECTING THE
RECOVERY OF COSTS, DISBURSEMENTS AND ALLOWANCES TO THE CONTRARY.
(i) WAIVER OF JURY TRIAL. THE PAYEE, BY
ACCEPTANCE HEREOF, AND THE MAKER EACH HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM ARISING IN CONNECTION
WITH, OUT OF OR OTHERWISE RELATING TO THIS NOTE.
APPAREL AMERICA, INC.
By: /s/ Xxxxxxx Xxxxxxx
------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
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