EXHIBIT 10.11
SUBORDINATED NOTE AGREEMENT
THIS SUBORDINATED NOTE AGREEMENT (the "Agreement") is made and entered
into as of this 30th day of April, 1998 by and among GENERAL TEXTILES, a
California corporation (the "Company"), AMERICAN ENDEAVOUR FUND LIMITED, a
Jersey corporation ("Endeavour"), and LONDON PACIFIC LIFE & ANNUITY
COMPANY, a North Carolina joint stock life insurer ("London Pacific").
Endeavour and London Pacific shall sometimes be referred to herein
collectively as the "Noteholders."
RECITAL
The Company and the Noteholders have entered into a Note Exchange
Agreement in which they have agreed that the Company will issue $3,250,000
principal amount of Notes to the Noteholders in exchange for $4,900,000
principal amount of the Company's Subordinated Reorganization Notes.
AGREEMENT
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any extension of credit by the Noteholders to or on behalf
of the Company heretofore, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties,
intending to be legally bound, hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
"ACTUAL KNOWLEDGE" means the actual knowledge of any executive officer
of the Company; PROVIDED, HOWEVER, that each executive officer of the
Company shall be deemed to have actual knowledge of any fact that would
have come to such officer's attention if he or she had exercised reasonable
care in performing his or her duties, given the nature of his or her duties
and the Company's business and organization.
"AFFILIATE" means (i) any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company,
(ii) any spouse, immediate family member or other relative, provided such
individual has the same principal residence, of any Person described in
clause (i) above, (iii) any trust in which any Person described in clauses
(i) or (ii) above has a beneficial interest, and (iv) any corporation or
other organization of which the Persons described in clauses (i) or (ii)
above individually or collectively own a general partnership interest or
equity securities or trust certificates with more than five percent (5%) of
the total voting power for the election of directors or persons exercising
similar authority of such corporation or other organization; PROVIDED,
HOWEVER, that the term Affiliate shall not include any wholly owned
subsidiary of the Company. For this purpose, "control" means possession,
directly or indirectly, of the power to direct or cause the direction of
the management or policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or
any committee of the Board authorized to act for it.
"BUSINESS DAY" means any day other than a Legal Holiday.
"COMPANY" means General Textiles, a California corporation, and its
successors and assigns.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or
similar official under any Debtors' Laws.
"DEBTORS' LAWS" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, fraudulent conveyance, arrangement, receivership,
insolvency, reorganization or similar laws or general equitable principles
from time to time in effect affecting the rights of creditors generally.
"DEFAULT" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"ENDEAVOUR" means American Endeavour Fund Limited, a Jersey
Corporation.
"EVENT OF DEFAULT" has the meaning assigned to such term in Section
5.01 hereof.
"FACTORY 2-U" means Factory 2-U, Inc., a Delaware corporation which,
at the date of this Agreement, is wholly owned by Family Bargain.
"FAMILY BARGAIN" means Family Bargain Corporation, a Delaware
corporation which, at the date of this Agreement, is the sole stockholder
of the Company.
"INDEBTEDNESS" means, with respect to any Person and without
duplication, all: (i) liabilities or obligations, direct and contingent,
matured or unmatured, liquidated or unliquidated, including, without
limitation, trade debt; (ii) liabilities or obligations of others for which
such Person is directly or indirectly liable, by way of guaranty (whether
by direct guaranty, suretyship, discount, endorsement, take-or-pay
agreement, agreement to purchase or advance or keep in funds or other
agreement having the effect of a guaranty) or otherwise; (iii) liabilities
or obligations secured by liens on any assets of such Person, whether or
not such liabilities or obligations shall have been assumed by it; and (iv)
liabilities or obligations of such Person, direct or contingent, with
respect to letters of credit issued for the account of such Person and
bankers' acceptances created for such Person, whether now in existence or
hereafter incurred; and (v) the Notes and the Junior Subordinated Notes.
"IRS" means the United States Internal Revenue Service.
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"JUNIOR SUBORDINATED NOTES" means the Company's Junior Subordinated
Notes in the aggregate principal amount of $17,335,097.65.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in New York, New York or San
Diego, California.
"LONDON PACIFIC" means London Pacific Life & Annuity Company, a North
Carolina joint stock life insurer.
"MATURITY DATE" means May 28, 2003.
"NOTEHOLDERS" has the meaning assigned to such term in the preamble to
this Agreement.
"NOTES" means the Company's Subordinated Notes due 2003, which Notes
shall be substantially in the form set forth in EXHIBIT A attached hereto
and made a part hereof, and "Note" shall mean any one of the Notes.
"OFFICER" means the Chairman of the Board, the President, any Vice-
President, the Treasurer or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer or an Assistant Secretary of the
Company.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization, or government or any agency or political subdivision thereof.
"SENIOR INDEBTEDNESS" means the principal of and premium, if any, on
all Indebtedness of the Company, whether outstanding on the date hereof or
hereafter incurred or created, for money borrowed from banks, insurance
companies or other companies engaged in lending money as a regular part of
their business, other than (i) the Notes, (ii) the Junior Subordinated
Notes, and (iii) any indebtedness of Family Bargain which becomes
Indebtedness of the Company solely because of a merger of Family Bargain
and the Company.
ARTICLE 2.
THE NOTES
SECTION 2.01 THE SUBORDINATED NOTES DUE 2005. The Company is
authorized to execute and deliver Subordinated Notes due 2005 (each a
"Note" and collectively the "Notes"), substantially in the form of EXHIBIT
A attached hereto and made a part hereof. The Notes shall have an
aggregate principal amount of not more than Three Million Two Hundred Fifty
Thousand Dollars ($3,250,000).
SECTION 2.02 INTEREST. If the entire principal of the Notes is paid by
May 28, 1998, the Notes will not bear interest. After May 28, 1998, the
Notes will bear interest, payable quarterly in arrears not later than the
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fifteenth (15th) day after the end of each calendar quarter. Between May
29, 1998 and March 31, 1999, the Note shall bear interest at the rate of
nine and two-tenths percent (9.2%) per annum from May 28, 1998. If any
principal balance remains outstanding on April 1, 1999, the interest rate
on the Note will increase on such date, and on the first day of each
successive calendar quarter thereafter (i.e., April 1, July 1, October 1
and so forth) by one hundred (100) basis pints (i.e., so that the per annum
interest rate on the Notes shall increase by one full percent (1%) of the
principal of the Notes as of the first day of each calendar quarter
commencing April 1, 1999); PROVIDED, HOWEVER, that the interest rate on the
Notes shall not exceed thirteen and two-tenths percent (13.2%) per annum.
Interest on the principal amounts of the Notes outstanding shall be
computed on the basis of the actual days elapsed in a year of 360 days from
the last day on which interest has been paid (or, if no interest has been
paid from the day on which interest began to accrue) a 360 day year, actual
days elapsed, from the date accrued until paid. The Company shall allocate
all payments on the Notes (including payments of interest) pro rata as
nearly as practicable among the Notes based on the outstanding principal
balances thereof. Payments on the Notes shall be applied first to accrued
but unpaid interest and then to principal.
SECTION 2.03 PAYMENTS OF PRINCIPAL. The Company will be required to
pay the principal of each Note in installments as follows:
Principal Payment Percentage of Original
DATE PRINCIPAL AMOUNT TO BE PAID
----------------- ---------------------------
December 31, 1999 5.768644%
December 31, 2000 5.768644%
December 31, 2001 11.537287%
December 31, 2002 11.537287%
Maturity Date 65.388138%
-----------
100.000000%
The Notes will mature on the Maturity Date and all principal and interest
which has not been paid prior to the Maturity Date will be due and payable
on the Maturity Date.
SECTION 2.04 PREPAYMENT. The Company may prepay all or any portion of
the principal of the Notes at any time without prepayment penalty or
premium. Each prepayment will be accompanied by all accrued but unpaid
interest on the principal amount being prepaid to the date of the
prepayment. If fewer than all of the Notes are to be prepaid, the Company
shall allocate the total principal amount to be prepaid pro rata as nearly
as practicable among the Notes based on the outstanding principal balances
thereof. Any Note which is to be prepaid only in part shall be surrendered
to the Company (with, if the Company so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company duly
executed by, the holder of such Note or its attorney duly authorized in
writing), and the Company shall execute for the holder of such Note a new
Note equal in principal amount to the unprepaid portion of the Note
surrendered and identical to the Note surrendered in all other respects.
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SECTION 2.05 OVERDUE PAYMENTS; BUSINESS DAYS. If any principal or
interest of any of the Notes is not paid when due, then interest shall
accrue on the entire principal amount of the Notes outstanding from the
date such overdue principal or interest is due until it is paid at the rate
which is 300 basis points higher than the interest rate which would
otherwise apply to the Notes under Section 2.02, compounded quarterly, or
at the maximum rate permitted by law, whichever is less. Whenever any
payment of principal or interest on any of the Notes shall be stated to be
due, or whenever any date specified in this Agreement or in any of the
Notes would otherwise occur on a Legal Holiday, such payment shall be made,
and such other date shall occur, on the next succeeding Business Day. Any
such extension of time shall be included in the computation of interest
payable.
ARTICLE 3.
SUBORDINATION OF NOTES
SECTION 3.01 AGREEMENT TO SUBORDINATE. The Company agrees, and each
holder of Notes, by accepting Notes, agrees, that all Notes shall be issued
subject to the provisions of this Article 3 and each holder of a Note,
whether upon original issue or upon transfer or assignment thereof, accepts
and agrees to and shall be bound by such provisions.
All Notes, to the extent and in the manner set forth in this Article
3, shall be subordinated and subject in right of payment to the prior
payment in full of the principal of, premium, if any, on and interest on
all Senior Indebtedness.
SECTION 3.02 NO PAYMENT ON NOTES IF SENIOR INDEBTEDNESS IN DEFAULT. In
addition to the restrictions set forth in Section 2.03 hereof, no payment
on account of the principal of, or interest on, the Notes shall be made if,
at the time of such payment or immediately after giving effect thereto, (a)
there shall exist a default in the payment of principal, premium, if any,
sinking funds, or interest with respect to any Senior Indebtedness, or (b)
there shall have occurred any other event of default (of which the Company
shall have received notice from any holder or trustee with respect to any
Senior Indebtedness) relating to any Senior Indebtedness, as defined
therein or in the instrument under which the same is outstanding,
permitting the holders thereof to accelerate the maturity thereof, and such
event of default shall not have been cured or waived or shall not have
ceased to exist. In the event that the Notes are declared due and payable
before their expressed maturity because of the occurrence of an Event of
Default, the holders of Senior Indebtedness shall be entitled to receive
payment in full of all principal (and premium, if any) and interest with
respect to such indebtedness before the holders of the Notes shall be
entitled to receive any payment on account of principal or otherwise.
SECTION 3.03 PRIORITY OF SENIOR INDEBTEDNESS UPON DISTRIBUTION OF
ASSETS. Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors in
the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Company or to its property, or upon
any such payment in the event of proceedings for voluntary or involuntary
liquidation, dissolution or other winding up of the Company, whether or not
involving insolvency or bankruptcy, all principal, premium, if any, and
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interest due or to become due upon all Senior Indebtedness shall first be
paid in full, or payment thereof duly provided for, before any payment is
made on account of the Indebtedness evidenced by the Notes. Upon any such
proceedings (but subject to the power of a court of competent jurisdiction
to make other equitable provision with respect to the rights of the holders
of any Senior Indebtedness and the holders of the Notes pursuant to a
lawful plan of reorganization under applicable Debtors' Laws) any payment
or distribution of assets of the Company of any kind or character, whether
in cash, property or securities, to which the holders of the Notes would be
entitled, except for the provisions of this Article 3, shall be paid or
delivered by the Company or by any Custodian or other Person making such
payment or distribution, or by the holders of the Notes if received by them
or it, directly to the holders of Senior Indebtedness (pro rata to each
such holder on the basis of the respective amounts of Senior Indebtedness
held by such holder) or their representatives to the extent necessary to
pay all Senior Indebtedness in full after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness,
before any payment or distribution is made to the holders of the Notes.
In the event that, notwithstanding the foregoing provisions of this
Section 3.03, any such payment or distribution of property or securities,
shall be received by the holders of the Notes before all Senior
Indebtedness is paid in full, or provision made for such payment, in
accordance with its terms, such payment or distribution shall be held for
the benefit of, and shall be paid over or delivered to, the holders of such
Senior Indebtedness or their representatives, as their respective interests
may require, ratably as aforesaid, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all
such Senior Indebtedness in full in accordance with its terms, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
SECTION 3.04 NOTICE TO HOLDERS OF NOTES OF SPECIFIED EVENTS; RELIANCE
ON CERTIFICATE OF LIQUIDATING AGENT. The Company shall give prompt written
notice to the registered holders of the Notes of any proceedings of the
type specified in Section 3.03. The holders of the Notes shall be entitled
to assume that no such event has occurred unless the Company or any one or
more holders of Senior Indebtedness or any trustee therefor or any other
Person has given such notice to the registered holders of the Notes. Upon
any payment or distribution of assets of the Company referred to in this
Article 3, the registered holders of the Notes shall be entitled to rely
upon a certificate of the Custodian or other Person making such payment or
distribution, delivered to such holders, for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of
the Senior Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 3. In the
event that any holder of the Notes determines, in good faith, that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payments or distribution pursuant
to this Article 3, such holder may request such Person to furnish evidence
to the reasonable satisfaction of such holder as to the amount of Senior
Indebtedness held by such Person, as to the extent to which such Person is
entitled to participate in such payment or distribution, and as to other
facts pertinent to the rights of such Person under this Article 3, and if
such evidence is not furnished, such holder may defer any payment to such
Person pending judicial determination as to the right of such person to
receive such payment.
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SECTION 3.05 SUBROGATION OF NOTES. Subject to the payment in full of
the principal of, premium, if any, on and interest on all Senior
Indebtedness, the holders of the Notes shall be subrogated to the rights of
the holders of Senior Indebtedness to receive payments or distributions of
assets of the Company made on the Senior Indebtedness paid in full. For
the purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness of any cash, property, or securities to
which the holders of the Notes would be entitled except for the provisions
of this Article 3 shall, as between the Company and the holders of the
Notes or of the Junior Subordinated Notes be deemed to be a payment by the
Company to or on account of Senior Indebtedness, it being understood that
the provisions of this Article 3 are and are intended solely for the
purpose of defining the relative rights of the holders of the Notes, on the
one hand, and the holders of the Senior Indebtedness, on the other hand.
SECTION 3.06 OBLIGATION TO PAY NOT IMPAIRED. Except as provided in
Section 2.03 hereof, nothing contained in this Article 3 or elsewhere in
this Agreement, or in the Notes, is intended to or shall impair as among
the Company and the holders of the Notes, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Notes the
outstanding principal amount of the Notes, as and when the same shall
become due and payable in accordance with their terms, or to affect the
relative rights of the holders of the Notes nor shall anything herein or
therein prevent the holders of the Notes from exercising, subject to the
terms hereof, all remedies otherwise permitted by applicable law upon the
occurrence of an Event of Default under this Agreement, subject to the
rights, if any, under this Article 3 of the holders of the Senior
Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
ARTICLE 4.
COVENANTS
SECTION 4.01 CORPORATE EXISTENCE. The Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence; PROVIDED, HOWEVER, that the Company shall not be
required to preserve any right or privilege if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the holders of the Notes.
SECTION 4.02 PAYMENT OF TAXES. The Company will pay or discharge or
cause to be paid or discharged, (i) all taxes, assessments and governmental
charges levied or imposed upon the Company or upon the income, profits or
property of the Company; PROVIDED, HOWEVER, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such
tax, assessment or charge which is being contested in good faith by
appropriate proceedings.
SECTION 4.03 LIMITATION ON DIVIDENDS. Until the Notes are paid in
full, the Company will not pay dividends or make other distributions with
regard to its outstanding stock of any class, unless the holders of two-
thirds in aggregate principal amount of the Notes outstanding consent.
This Section 4.03 will not prevent the Company from making payments to a
parent which files a consolidated Federal or state income tax return for an
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affiliated group which includes the Company equal to the Federal or state
income taxes the Company would have had to pay if it had filed a separate
return, and those payments will not be treated as dividends or other
distributions to stockholders.
SECTION 4.04 COMPLIANCE CERTIFICATE. The Company shall deliver to the
holders of the Notes within 105 days after the end of each fiscal year of
the Company an Officers' Certificate stating that, after a review of the
activities of the Company during such period and of the Company's
performance under this Agreement, whether or not, to the best knowledge of
the signers thereof based on such review, there has been any Default or
Event of Default by the Company in performing any of its obligations under
this Agreement or the Notes. If they do know of any such Default or Event
of Default, the certificate shall describe the Default or Event of Default
and its status.
SECTION 4.05 NOTICE OF DEFAULT. In the event that any Default under
this Agreement shall occur, the Company will give prompt written notice of
such Default to each registered holder of the Notes, specifying the nature
and status of such default and the steps which the Company has taken or
proposes to take in order to cure such Default.
SECTION 4.06 REPORTS. The Company shall (i) within forty-five (45)
days of the close of each fiscal quarter of the Company cause to be
furnished to each registered holder of the Notes a copy of its consolidated
balance sheet, income statement and cash flow statement for the preceding
fiscal quarter, each prepared in accordance with generally accepted
accounting principles applied on a consistent basis and (ii) if the Company
becomes required to file reports with the Securities and Exchange
Commission, within ten (10) days after the Company files a report with the
Securities and Exchange Commission, the Company will furnish a copy of that
report to each registered holder of Notes.
ARTICLE 5.
DEFAULTS AND REMEDIES
SECTION 5.01 EVENTS OF DEFAULT. An "Event of Default" occurs if:
(a) the Company defaults in the payment of any installment of
the principal or interest of any Note when the same becomes due and
payable;
(b) the Company fails to observe or perform in any material
respect any of its covenants or agreements in the Notes or this
Agreement, which failure continues for a period of 60 days after the
earlier of (i) the date on which written notice of such failure,
requiring the Company to remedy the same, shall have been given to the
Company by the holders of at least twenty-five percent (25%) in
aggregate principal amount of the Notes at the time outstanding or
(ii) the date on which the Company had Actual Knowledge of such
failure;
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(c) the Company commits a default under any Senior
Indebtedness and as a result the obligation of the Company to pay
principal or interest with regard to any of that Senior Indebtedness
is accelerated so that it becomes due and payable prior to the date on
which it would otherwise have been due and payable, and that
acceleration is not rescinded or annulled within 30 days after the
date on which the Company had Actual Knowledge of the acceleration;
PROVIDED that if an event of default under Senior Indebtedness is
cured or waived, any Event of Default under this Section 5.01(c)
relating to the event of default under the Senior Indebtedness, and
any Event of Default under Section 5.01(a) because of failure to make
an accelerated payment of principal or a payment of interest which
becomes due solely because of the Event of Default under this Section
5.01(c), will be deemed to have been cured at the same time the event
of default under the Senior Indebtedness is cured or waived, without
any action by any holders of Notes.
(d) the entry of an order for relief under any Debtors' Laws
against the Company by any bankruptcy court of competent jurisdiction
which shall
(i) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition;
(ii) appoint a Custodian for any part of its property;
or
(iii) order the dissolution of the Company or the
winding up or liquidation of its affairs and such order remains
unstayed and in effect for a period of thirty (30) consecutive
days;
(e) the appointment of a Custodian for all or any substantial
part of the property of the Company, and such appointment shall
continue unstayed and in effect for a period of thirty (30)
consecutive days; and
(f) the entry of judgment by a court of competent jurisdiction
against the Company and the scheduling of a sale of any substantial
part of the Company's property which is not stayed prior to the
scheduled date of such sale.
SECTION 5.02 ACCELERATION. If an Event of Default occurs and is
continuing or has occurred and has continued for a period of not less than
three (3) months without having been waived, remedied or cured, the holders
of not less than two-thirds in principal amount of the Notes, or, in the
case of an Event of Default specified in Section 5.01(a) hereof, the holder
of any of the Notes, by notice to the Company, may declare the principal of
the Notes to be due and payable, and upon such declaration, the principal
of the Notes shall be due and payable immediately; PROVIDED that with
regard to an Event of Default of the type described in Section 5.01(c) or
(d) the principal of the Notes will become immediately due and payable when
the Event of Default occurs, without the passage of three (3) months' time
and, as to an Event of Default of the type described in Section 5.01(d),
without notice from, or any other action on the part of, the holders of the
Notes. The holders of not less than two-thirds of the principal amount of
the Notes may rescind an acceleration and its consequences by notice to the
Company if the rescission would not conflict with any judgment or decree
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and if each outstanding Event of Default has been cured or waived except,
unless theretofore cured, nonpayment of principal that has become due
solely because of the acceleration. No such rescission shall affect any
subsequent Default or impair any right or remedy with respect thereto.
SECTION 5.03 OTHER REMEDIES. Notwithstanding any other provision of
this Agreement, if an Event of Default occurs and is continuing and the
Notes have been accelerated in accordance with Section 5.02 above, the
holder of any of the Notes may pursue any available remedy by proceeding at
law or in equity to collect the payment of the principal of the Notes or to
enforce the performance of any provision of the Notes or this Agreement.
The holder of any of the Notes may maintain a proceeding even if it
does not possess any of the Notes or does not produce any of them in the
proceeding. A delay or omission by any or all of the holders of the Notes
in exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or acquiescence in
the Event of Default. No remedy is exclusive of any other remedy. All
remedies are cumulative.
In case any or all of the holders of the Notes shall have proceeded to
enforce any rights under this Agreement and such proceedings shall have
been discontinued or abandoned because of rescission or annulment or for
any other reason or shall have been determined adversely to the holders who
participated in such proceedings, then in every such case the Company and
the holders of the Notes shall, subject to any determination in such
proceeding, be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company and the
holders of the Notes shall continue as though no such proceeding had been
taken.
ARTICLE 6.
MISCELLANEOUS
SECTION 6.01 SUCCESSORS AND ASSIGNS IN GENERAL. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign
or transfer its rights hereunder or any interest herein or delegate its
duties hereunder (other than in a merger or other combination of the type
described in Section 4.01) without the prior written consent of the holders
of the Notes. Each holder of the Notes may assign, pledge or transfer all
or any portion of its Notes or its rights hereunder to the extent permitted
by law, including state and federal securities laws. In the event of any
such assignment, pledge or transfer, such assignee shall, to the extent
provided in such assignment, pledge or transfer, be entitled to exercise
the rights of the holder of a Note making such assignment, pledge or
transfer and shall be deemed a holder of a Note under this Agreement.
SECTION 6.02 FURTHER ASSURANCE. The Company shall, from time to time
at the request of any holder of a Note, execute and deliver to such holder
or to such Person or Persons as such holder may designate, any and all
further instruments as may in the reasonable opinion of such holder be
necessary to give full force and effect to any transfer or assignment
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contemplated by Section 6.01, and shall provide to such holder or to such
Person or Persons as such holder may designate, all such information as
such holder may reasonably request.
SECTION 6.03 NO WAIVER. No delay, failure or discontinuance of any
holder of any of the Notes, in exercising any right, power or remedy under
this Agreement or any of the Notes shall affect or operate as a waiver of
such right, power or remedy; nor shall any single or partial exercise of
any such right, power or remedy preclude, waive or otherwise affect any
other or further exercise thereof or the exercise of any other right, power
or remedy. Any waiver, permit, consent or approval of any kind by any
holder of any of the Notes, of any breach of or default under this
Agreement or any of the Notes must be in writing and shall be effective
only to the extent set forth in such writing.
SECTION 6.04 SET-OFF. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such
rights, upon the first occurrence and during the continuance of any Event
of Default (after the giving of any notice and the expiration of any grace
period contained in the definition thereof), any holder of any of the Notes
is hereby authorized by the Company at any time or from time to time,
without notice to the Company, or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply
to any and all Indebtedness at any time held or owing by such holder to or
for the credit or the account of the Company, against and on account of the
obligations and liabilities of the Company to such holder under this
Agreement and the Notes, including, but not limited to, all claims of any
nature or description arising out of or connected with this Agreement or
the Notes irrespective of whether or not (a) such holder shall have made
any demand hereunder, or (b) such holder shall have declared the principal
of and interest on the Notes and other amounts due hereunder to be due and
payable, and although said obligations and liabilities, or any of them, may
be contingent or unmatured.
SECTION 6.05 NOTICES. Any notice or other communication provided for
or permitted hereunder, in order to be effective, shall, unless otherwise
stated herein, be in writing or by telex, telegram, telecopy or cable and
mailed or sent or delivered, as to each party hereto, at its address set
forth in this Section 6.05 or at such other address as shall be designated
by such party in a written notice to the other parties hereto as provided
hereunder. All notices and communications shall be effective, in the case
of written notice, (i) when delivered by hand, (ii) five days after having
been given by certified mail, return receipt requested, (iii) when
delivered to the telegraph company in the case of telegraphic notice, (iv)
when sent in the case of telex or telecopied notice, or (v) three Business
Days after deposit with a recognized overnight delivery service. The
addresses of the parties hereto are as follows:
THE COMPANY: GENERAL TEXTILES
0000 Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Telecopier: (000) 000-0000
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NOTEHOLDERS: AMERICAN ENDEAVOUR FUND LIMITED
c/o Kleinwort Xxxxxx (US) Asset Managers LLC
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxxxx Traurig Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx
MetLife Building
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
LONDON PACIFIC LIFE & ANNUITY COMPANY
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
WITH COPIES TO:
BERKELEY INTERNATIONAL CAPITAL CORPORATION
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
Any notice delivered to an address outside the United States of America
shall be duplicated by counterpart telex or telecopy.
SECTION 6.06 COST, EXPENSES AND ATTORNEY'S FEES. The Company shall
promptly reimburse each holder of the Notes for all out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys' fees
expended or incurred by such holder in the enforcement of this Agreement or
any of the Notes, actions for declaratory relief in any way related to this
Agreement or any holder of the Notes or the collection of any sum which
becomes due to such holder on any of the Notes or pursuant to this
Agreement.
SECTION 6.07 ENTIRE AGREEMENT, AMENDMENT. The Notes and this Agreement
constitute the entire agreement between the Company and the persons who
from time to time are holders of Notes with respect to the subject matter
hereof and thereof; supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof and
thereof; and may be amended or modified, or any provision hereof may be
waived, or any acceleration rescinded, only with the written consent of the
holders of two-thirds of the principal amount of the Notes then
outstanding, except that no such amendment or modification shall become
effective if it extends the maturity or reduces the rate of interest
payable with respect to the Notes, alters the terms of payment of the
principal or interest under the Notes, or reduces the percentage of holders
of principal amount of the Notes necessary to approve modifications or
amendments to this Agreement without the consent of each holder of the
Notes affected thereby.
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SECTION 6.08 TIME. Time is of the essence of each and every provision
of this Agreement and the Notes.
SECTION 6.09 GOOD FAITH AND FAIR DEALING. The Company agrees to
perform its obligations under this agreement and the Notes in good faith
and in the spirit of fair dealing.
SECTION 6.10 SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or any
remaining provisions of this Agreement.
SECTION 6.11 GOVERNING LAW. This Agreement and the Notes shall be
governed by and construed in accordance with the substantive laws of the
State of New York.
SECTION 6.12 COUNTERPARTS. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument. All counterparts shall be
considered an original of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Subordinated Note
Agreement to be executed as of the date first above written.
THE COMPANY: GENERAL TEXTILES, a California
corporation
By:/s/ Xxxxxxxx X. Xxxxx
_____________________________________
Its: Executive Vice President
ENDEAVOUR: AMERICAN ENDEAVOUR FUND
LIMITED, a Jersey corporation
By:_____________________________________
Its: Liquidator
LONDON PACIFIC: LONDON PACIFIC LIFE & ANNUITY
COMPANY, a North Carolina joint
stock life insurer
By:/s/ Xxxxx X. Xxxxxxx
_____________________________________
Its: Treasurer
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