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Exhibit 10.1
JERI-JO KNITWEAR, INC.
(formerly JJ Acquisition Corp.)
McNAUGHTON APPAREL GROUP INC.
(formerly Norton McNaughton, Inc.)
463 Seventh Avenue
New York, NY 10018
August 29, 2000
Susan Schneider
Leslie Schneider
Scott Schneider
c/o Currants
1407 Broadway
Suite 2909
New York, NY 10018
Re: Agreement of Purchase and Sale dated as of April 15, 1998, as
amended (the "Agreement"), by and among JJ Acquisition Corp. (now
Jeri-Jo Knitwear, Inc.), Norton McNaughton, Inc. (now McNaughton
Apparel Group Inc.), Jeri-Jo Knitwear Inc., Jamie Scott, Inc. and
the Stockholders of Jamie Scott, Inc.
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Ladies and Gentlemen:
Reference is made to the Agreement. Capitalized terms used and
not defined below shall have the meanings assigned to such terms in the
Agreement. For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby amend the Agreement as
set forth below.
1. Section 2.02(d)(A)(i)(1) of the Agreement is amended by deleting the
reference therein to "$95,000,000 (the "Initial Payment")" and replacing it with
a reference to "$65,000,000 (the "First Initial Payment")".
2. Section 2.02(d)(A)(ii) of the Agreement is hereby deleted in its
entirety and amended to read as follows:
"(ii) as a condition to the Purchaser's and Norton's obligations under
clause (A)(iii) below, simultaneously with the delivery of the Second
Initial Payment (as defined in clause (A)(iii) below), the Stockholder
Representative shall deliver the Earn Out Letter of Credit to Norton for
cancellation."
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3. Section 2.02(d) of the Agreement is amended to add thereto a new
subclause (A)(iii) as follows:
"(iii) At or before 3:00 p.m. on October 2, 2000 (time being of the
essence), the Purchaser and Norton shall pay $30,000,000 (the "Second
Initial Payment"; the Second Initial Payment, together with the First
Initial Payment, collectively, the "Initial Payment"), together with
interest on the unpaid amount of the Second Initial Payment until paid at
a rate per annum equal to 8.25% computed for the actual number of days
elapsed during the period from and including August 29, 2000 to but
excluding the date of the payment and on the basis of a 360-day year, to
the Designees by wire transfer of immediately available funds to a bank
account(s) designated by the Designees."
4. Each of Section 2.02(d)(B)(i)(i) and Section 2.02(d)(C)(i)(i) of the
Agreement is hereby amended to delete from each such Section the phrase
"subsection (A)(i)(1) above" and replacing it in each such Section with a
reference to "subsections (A)(i)(1) and (A)(iii) above".
5. Paragraph 10 of the Amendment to the Agreement dated as of August 3,
2000 (the "August Amendment") is hereby deleted in its entirety and shall be of
no further force or effect. The parties hereto acknowledge and agree that the
Earn Out Payment under the Agreement (as amended by the August Amendment and
hereby) is $190,000,000, which shall be payable by the Purchaser and Norton, and
shall be fully satisfied by the payment by the Purchaser and Norton, as provided
in Section 2.02(d)(B)(i) (on a discounted basis) or Section 2.02(d)(C)(i), as
applicable, of the Agreement (as amended by the August Amendment and hereby).
The parties acknowledge and agree that, in the event that the Purchaser and
Norton default in their obligations under Section 2.02(d)(A)(iii) of the
Agreement (as amended by the August Amendment and hereby), in addition to any
other rights of the Designees upon default by the Purchaser and Norton under the
Agreement, (A) the cash amount payable under Section 2.02(d)(A)(iii) of the
Agreement (as amended by the August Amendment and hereby) shall constitute, and
be deemed and construed for all purposes to be, an "Earn Out Payment in excess
of the Stock Earn Out Amount," (B) no dispute exists with respect thereto (other
than any non-payment that may occur as and when due), (C) in the event of any
non-payment of such amount as and when due the beneficiary under that certain
Letter of Credit No. 933394 dated June 18, 1998, as amended, issued by Bank of
America, N.A. (formerly known as NationsBank, N.A.), shall be entitled to draw
thereunder in the overdue amount (subject to the maximum amount of such Earn Out
Letter of Credit), and (D) such non-payment would be properly described by
checking the second certification box (in respect of the "Second Amount") in
submitting the Irrevocable Letter of Credit Certificate substantially in the
form of Exhibit B to such Earn Out Letter of Credit. Notwithstanding anything to
the contrary contained herein, in the Agreement or in the August Amendment,
provided that the Purchaser and Norton comply with each of the provisions of
Section 2.02(d)(A)(i) of the Agreement (as amended by the August Amendment and
hereby), each of the Designees and the Stockholder Representative (as the
beneficiary under the Earn Out Letter of Credit) hereby acknowledge and agree
with the Purchaser and Norton that the Stockholder Representative (as the
beneficiary under the Earn Out Letter of Credit) is not entitled to draw, and
accordingly agree not to draw, and the Designees agree to cause the Stockholder
Representative not to draw, any amount under the Earn Out Letter of Credit
unless and until there has occurred a default by the Purchaser and Norton
pursuant to Section 2.02(d)(A)(iii) of the Agreement (as amended by the August
Amendment and hereby).
6. Except as amended by this amendment, the Agreement and the August
Amendment are hereby ratified and confirmed in all respects. Nothing in this
amendment shall confer or deemed to confer any right, remedy, benefit or
entitlement to any third party (other than the Designees). This amendment shall
be construed pursuant to and in accordance with the laws of the State of New
York, without regard to conflict of law principles, and may be executed in
counterparts, including by telecopy, each of which shall be deemed an original,
and all of which taken together shall constitute one and the same amendment.
* * *
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Very truly yours,
JERI-JO KNITWEAR, INC.
MCNAUGHTON APPAREL GROUP INC.
By: /s/ Amanda J. Bokman
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Name: Amanda J. Bokman
Agreed as of the date first above written:
/s/ Susan Schneider
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Susan Schneider, for herself
and as the beneficiary under the
Earn Out Letter of Credit
/s/ Leslie Schneider
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Leslie Schneider
/s/ Scott Schneider
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Scott Schneider
