THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THE ACT, THE RULES
AND REGULATIONS PROMULGATED THEREUNDER AND ANY APPLICABLE STATE SECURITIES LAWS.
PAYMENT OF ALL SUMS DUE UNDER THIS NOTE IS SUBJECT TO SUBORDINATION PROVISIONS
SET FORTH IN A SUBORDINATED NOTE AGREEMENT AMONG GENERAL TEXTILES, AMERICAN
ENDEAVOUR FUND LIMITED AND LONDON PACIFIC LIFE & ANNUITY COMPANY DATED APRIL 30,
1998. A COPY OF THE SUBORDINATED NOTE AGREEMENT IS ON FILE AT THE CORPORATION'S
PRINCIPAL OFFICE.
$1,698,636.67 April 30, 1998
SUBORDINATED NOTE DUE 2003
FOR VALUE RECEIVED, General Textiles, a California corporation (the
"Corporation") hereby promises to pay to the order of London Pacific Life &
Annuity Company, or its registered assigns (the "Holder"), the principal sum of
one million six hundred ninety-eight thousand six hundred thirty-six dollars and
sixty-seven cents ($1,698,636.67) which shall be due and payable to the Holder,
as follows:
------------------------ -------------------------
Percentage of Original
Principal Amount Plus
Principal Payment Interest Added to
Date Principal to be Paid
------------------------ -------------------------
------------------------ -------------------------
December 31, 1999 5.768644%
December 31, 2000 5.768644%
December 31, 2001 11.537287%
December 31, 2002 11.537287%
May 28, 2003 65.388138%
----------
100.000000%
------------------------ -------------------------
All principal and interest which is not paid prior to May 28, 2003 will
be due and payable on that day.
If the entire principal of the Notes is paid by May 28, 1998, the Notes
will not bear interest. After May 28, 1998, this Note will bear interest,
payable quarterly in arrears not later than the fifteenth (15th) day after the
end of each calendar quarter. Between May 29, 1998 and March 31, 1999, this 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 this Note on
April 1, 1999, the interest rate on this Note will increase on such date, and
thereafter 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
points (i.e., so that the per annum interest rate on this Note shall increase by
one full percent (1%) of the principal of the Note as of the first day of each
calendar quarter commencing April 1, 1999); provided, however, that the interest
rate on this Note shall not exceed thirteen and two-tenths percent (13.2%) per
annum. If any principal or interest of any of the Notes is not paid when due,
61
the entire principal amount of this Note will bear interest from the date the
overdue principal or interest is due until it is paid at the rate which is 300
basis points higher than the rate which would otherwise apply. Interest on the
principal amount of this Note shall be computed on the basis of the actual
number of 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). Payments on this Note shall be applied first to accrued but
unpaid interest and then to principal.
Each payment with regard to this Note will be made in U.S. Dollars in
cash or by wire transfer of funds which are immediately available at the place
of payment to the account of the Holder set forth in Attachment 1 to this Note
or at any other place of payment that may be designated by the Holder in the
manner described in the Note Purchase Agreement at least two Business Days
before the day on which the payment is due.
This Note is one of the "Subordinated Notes due 2003" referred to in,
and the Holder is entitled to all the rights, preferences and privileges set
forth in and other benefits of, that certain Subordinated Note Agreement of even
date herewith by and among the Corporation, American Endeavour Fund Limited and
London Pacific Life & Annuity Company (the "Subordinated Note Agreement").
Capitalized terms used without definition in this Note shall have the meanings
given to them in the Subordinated Note Agreement.
The Corporation may prepay all or any portion of the principal of this
Note at any time without prepayment penalty or premium. If this Note is to be
prepaid only in part, this Note shall be surrendered to the Corporation (with,
if the Corporation so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Corporation duly executed by, the Holder or
its attorney duly authorized in writing), and the Corporation shall execute for
the Holder 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.
The Holder may assign, pledge or transfer all or any portion of this
Note or such Holder's rights hereunder to the extent permitted by law, including
state and federal securities laws. In the event of any such assignment, pledge
or transfer, the assignee of this Note shall, to the extent provided in such
assignment, pledge or transfer, be entitled to exercise the rights of a Holder.
Upon any transfer of all or any portion of this Note, the Holder shall present
this Note to the Corporation, accompanied by an executed form of assignment. The
Corporation shall thereupon issue a new Note or Notes to the transferee or
transferees having a principal equal to the amount of this Note so transferred,
but otherwise in all other respects identical to this Note, and shall issue to
the Holder a new Note having a principal equal to the amount of this Note not so
transferred, which Note shall otherwise be identical to this Note in all other
respects.
Except as otherwise expressly provided in the Subordinated Note
Agreement, the Corporation waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note and the Subordinated Note
Agreement. In any action on this Note, the Holder or its assignee need not
produce or file the original of this Note, but need only file a photocopy of
this Note certified by the Holder or such assignee to be a true and correct copy
of this Note.
The Corporation agrees to pay all costs and expenses, including
reasonable attorneys' fees and expenses, expended or incurred by the Holder in
connection with the enforcement of this Note, the collection of any sums
hereunder, any actions for declaratory relief in any way related to this Note,
or the protection or preservation of any rights of the Holder hereunder.
62
IN WITNESS WHEREOF, the Corporation has caused this Subordinated Note
due 2003 to be executed by its duly authorized officer as of the date set forth
above.
GENERAL TEXTILES, a California corporation
By: /s/ Xxxxxxxx X. Xxxxx
Its: Executive Vice President
63
Attachment 1
Place of Payment
Wire transfer payments should be made to the account of the Holder at:
Bank: NationsBank Customer Connection
Dallas, Texas
ABA Number: 000000000
Account Name: London Pacific Life & Annuity Company
Account Number: 3750326028
Reference: General Textiles