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 2,200O
(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 29,200O 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)(l) above" and replacing it in each such
Section with a reference to "subsections (A)(i)(l)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 181998, 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
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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.
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 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
