EXHIBIT 10.48
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of February 16, 1993
among
AMERICAN MARKETING WORKS, INC.
THE LENDERS REFERRED TO HEREIN
and
GREYROCK CAPITAL GROUP INC.
as Agent
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations. . . . . . 10
SECTION 1.03. Other Definitional Provisions. . . . . . . . . 10
ARTICLE II
TRANCHE A LOANS
SECTION 2.01. Tranche A Loans. . . . . . . . . . . . . . . . 11
SECTION 2.02. Tranche A Notes. . . . . . . . . . . . . . . . 11
SECTION 2.03. Interest on the Tranche A Loans. . . . . . . . 11
SECTION 2.04. Repayments and Prepayments of
Tranche A Notes. . . . . . . . . . . . . . . 11
ARTICLE III
TRANCHE B LOANS
SECTION 3.01. Tranche B Loans. . . . . . . . . . . . . . . . 12
SECTION 3.02. Tranche B Notes. . . . . . . . . . . . . . . . 12
SECTION 3.03. Interest on the Tranche B Loans. . . . . . . . 13
SECTION 3.04. Repayments and Prepayments of
Tranche B Notes. . . . . . . . . . . . . . . 13
ARTICLE IV
CONDITIONS TO EFFECTIVENESS
SECTION 4.01. Conditions to Effectiveness. . . . . . . . . . 13
SECTION 4.02. Consequences of Effectiveness;
Transitional Provisions. . . . . . . . . . . 16
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Corporate Existence and Power. . . . . . . . . 16
SECTION 5.02. Corporate and Governmental
Authorization; No Contravention. . . . . . . 17
SECTION 5.03. Binding Effect; Liens of Security
Documents. . . . . . . . . . . . . . . . . . 17
SECTION 5.04. Financial Information. . . . . . . . . . . . . 17
SECTION 5.05. Litigation . . . . . . . . . . . . . . . . . . 18
SECTION 5.06. Ownership of Property, Liens . . . . . . . . . 18
SECTION 5.07. No Default . . . . . . . . . . . . . . . . . . 19
SECTION 5.08. No Burdensome Restrictions . . . . . . . . . . 19
SECTION 5.09. Labor Matters. . . . . . . . . . . . . . . . . 19
SECTION 5.10. Subsidiaries; Other Equity
Investments. . . . . . . . . . . . . . . . . 19
SECTION 5.11. Investment Company Act . . . . . . . . . . . . 20
SECTION 5.12. Margin Regulations . . . . . . . . . . . . . . 20
SECTION 5.13. Taxes. . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.14. Compliance with ERISA. . . . . . . . . . . . . 20
SECTION 5.15. Related Transactions . . . . . . . . . . . . . 21
SECTION 5.16. Employment, Shareholders and
Subscription Agreements. . . . . . . . . . . 21
SECTION 5.17. Representations and Warranties
Incorporated from Other Operative
Documents. . . . . . . . . . . . . . . . . . 21
SECTION 5.18. Private Offering . . . . . . . . . . . . . . . 21
SECTION 5.19. Compliance with Environmental
Requirements; No Hazardous
Materials. . . . . . . . . . . . . . . . . . 22
ARTICLE VI
AFFIRMATIVE COVENANTS
SECTION 6.01. Financial Statements and Other
Reports. . . . . . . . . . . . . . . . . . . 24
SECTION 6.02. Payment of Obligations . . . . . . . . . . . . 28
SECTION 6.03. Conduct of Business and Maintenance
of Existence . . . . . . . . . . . . . . . . 28
SECTION 6.04. Maintenance of Property; Insurance . . . . . . 28
SECTION 6.05. Compliance with Laws . . . . . . . . . . . . . 29
SECTION 6.06. Inspection of Property, Books and
Records. . . . . . . . . . . . . . . . . . . 30
SECTION 6.07. Use of Proceeds. . . . . . . . . . . . . . . . 30
SECTION 6.08. Further Assurances . . . . . . . . . . . . . . 30
SECTION 6.09. Lenders' Meetings. . . . . . . . . . . . . . . 30
SECTION 6.10. Consummation of the Acquisition. . . . . . . . 31
SECTION 6.11. Hazardous Materials; Remediation . . . . . . . 31
SECTION 6.12. Enforcement of Covenants Not to
Compete. . . . . . . . . . . . . . . . . . . 32
SECTION 6.13. Landlord and Warehouseman Waivers. . . . . . . 32
ARTICLE VII
NEGATIVE COVENANTS
SECTION 7.01. Debt . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.02. Negative Pledge. . . . . . . . . . . . . . . . 33
SECTION 7.03. Capital Stock. . . . . . . . . . . . . . . . . 34
SECTION 7.04. ERISA. . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.05. Consolidations, Mergers and Sales of
Assets . . . . . . . . . . . . . . . . . . . 35
SECTION 7.06. Purchase of Assets, Investments. . . . . . . . 35
SECTION 7.07. Transactions with Affiliates . . . . . . . . . 35
SECTION 7.08. Amendments or Waivers. . . . . . . . . . . . . 36
SECTION 7.09. Fiscal Year. . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default. . . . . . . . . . . . . . . 36
ARTICLE IX
FEES, EXPENSES AND INDEMNITIES;
GENERAL PROVISIONS RELATING TO PAYMENTS
SECTION 9.01. Computation of Interest. . . . . . . . . . . . 40
SECTION 9.02. General Provisions Regarding
Payments . . . . . . . . . . . . . . . . . . 40
SECTION 9.03. Expenses . . . . . . . . . . . . . . . . . . . 41
SECTION 9.04. Indemnity. . . . . . . . . . . . . . . . . . . 41
SECTION 9.05. Taxes. . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.06. Maximum Interest . . . . . . . . . . . . . . . 43
ARTICLE X
THE AGENT
SECTION 10.01. Appointment and Authorization. . . . . . . . . 44
SECTION 10.02. Agent and Affiliates . . . . . . . . . . . . . 44
SECTION 10.03. Action by Agent. . . . . . . . . . . . . . . . 44
SECTION 10.04. Consultation with Experts. . . . . . . . . . . 44
SECTION 10.05. Liability of Agent . . . . . . . . . . . . . . 44
SECTION 10.06 Indemnification. . . . . . . . . . . . . . . . 45
SECTION 10.07. Credit Decision. . . . . . . . . . . . . . . . 45
SECTION 10.08. Successor Agent. . . . . . . . . . . . . . . . 45
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Survival . . . . . . . . . . . . . . . . . . . 46
SECTION 11.02. No Waivers . . . . . . . . . . . . . . . . . . 46
SECTION 11.03. Notices. . . . . . . . . . . . . . . . . . . . 46
SECTION 11.04. Severability . . . . . . . . . . . . . . . . . 46
SECTION 11.05. Amendments and Waivers . . . . . . . . . . . . 47
SECTION 11.06. Successors and Assigns;
Registration . . . . . . . . . . . . . . . . 47
SECTION 11.07. Collateral . . . . . . . . . . . . . . . . . . 50
SECTION 11.08. Headings . . . . . . . . . . . . . . . . . . . 50
SECTION 11.09. Governing Law; Submission to
Jurisdiction . . . . . . . . . . . . . . . . 50
SECTION 11.10. Notice of Breach by Agent or Lender. . . . . . 50
SECTION 11.11. WAIVER OF JURY TRIAL . . . . . . . . . . . . . 51
SECTION 11.12. Counterparts; Integration. . . . . . . . . . . 51
EXHIBIT A - Tranche A Note
EXHIBIT B - Tranche B Note
EXHIBIT C - Opinion of counsel to the Company
EXHIBIT D - Opinion of counsel to the Signal
SCHEDULE 1.01 - Security Documents
SCHEDULE 5.02 - Required Consents and
Defaults
SCHEDULE 5.04 (c) - Financial Information
SCHEDULE 5.05 - Legal Proceedings
SCHEDULE 5.07 - Defaults
SCHEDULE 5.10 - Subsidiaries
SCHEDULE 5.13 - Taxes
SCHEDULE 5.16 - Compensation Arrangements
SCHEDULE 5.19 - Environmental Matters
SCHEDULE 6.04 - Required Insurance
SCHEDULE 7.01 - Outstanding Debt
AMENDED AND RESTATED
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of February 16, 1993
among AMERICAN MARKETING WORKS, INC. (as successor to AMW
Acquisition Corp.), the LENDERS listed on the signature
pages hereof and GREYROCK CAPITAL GROUP INC. (as successor
to U S West Financial Services, Inc.), as Agent.
WHEREAS, the Company, the Lenders and the Agent
are party to a Credit Agreement (as heretofore amended, the
"Original Credit Agreement") dated as of February 16, 1993;
WHEREAS, the parties hereto desire to further
amend the Original Credit Agreement to (i) change the
amortization schedule of the Tranche A Loans and the
maturity date of the Tranche A Loans and Tranche B Loans,
(ii) terminate the Working Capital Commitments and the
Market Opportunity Commitments and provide for the payment
in full of all outstanding Working Capital Loans and (iii)
make a number of other changes therein, all as hereinafter
set forth; and
WHEREAS, in order to set forth in one document,
for the convenience of the parties, the text of the Original
Credit Agreement as heretofore amended and as amended by the
amendments to be made upon the effectiveness hereof, the
Original Credit Agreement as heretofore amended will, upon
satisfaction of the conditions set forth in Section 4.01
hereof, be amended and restated to read in full as set forth
herein;
NOW THEREFORE, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. The
following terms have the following meanings:
"Acquisition" means the acquisition by Signal of
all of the capital stock of the Company and all other
transactions contemplated by the Acquisition Documents to be
consummated on or before the Effective Date.
"Acquisition Documents" means the Stock Purchase
Agreement and all agreements, documents and instruments
executed and delivered pursuant thereto or in connection
therewith.
"Affiliate" means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the
Company (a "Controlling Person") or (ii) any Person (other
than the Company or any of its Subsidiaries) which is
controlled by or is under common control with a Controlling
Person. As used herein, the term "control" of a Person
means the possession, directly or indirectly, of the power
to vote 10% or more of any class of voting securities of
such Person or 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.
"Affiliate Transaction" has the meaning specified
in Section 7.08.
"Agent" means Greyrock Capital in its capacity as
agent for the Lenders hereunder, and its successors in such
capacity.
"Agreement" means the Original Credit Agreement,
as amended by this Amended Agreement and as the same may be
further amended from time to time in accordance with the
terms hereof.
"Amended Agreement" means this Amended and
Restated Credit Agreement dated as of February 16, 1993
among the Company, the Lenders listed in the signature pages
hereof and the Agent.
"Benefit Arrangement" means at any time an
employee benefit plan within the meaning of Section 3(3) of
ERISA which is not a Plan or a Multiemployer Plan and which
is maintained or otherwise contributed to by any member of
the ERISA Group.
"Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York
City are authorized by law to close.
"Capital Lease" of any Person means any lease of
any property (whether real, personal or mixed) by such
Person as lessee which would, in accordance with GAAP, be
required to be accounted for as a capital lease on the
balance sheet of such Person.
"Casualty Insurance Policy" means any insurance
policy maintained by the Company or any of its Subsidiaries
covering losses with respect to tangible real or personal
property or improvements or losses from business
interruption.
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C.
Sections 9601 et seq.), as amended from time to time, and
regulations promulgated thereunder.
"Class" refers, with respect to Loans, to whether
such Loans are Tranche A Loans or Tranche B Loans and, with
respect to Commitments, to whether such Commitments are
Tranche A Commitments or Tranche B Commitments.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" means all property mortgaged, pledged
or otherwise purported to be subjected to a Lien pursuant to
the Security Documents.
"Commitment" means a Tranche A Commitment or
Tranche B Commitment or any combination of the foregoing, as
the context may require.
"Company" means American Marketing Works, Inc., a
Delaware corporation, together with its successors.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Company in its consolidated
financial statements if such statements were prepared as of
such date.
"Debt" of a Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all Capital
Leases of such Person, (v) all obligations of such Person to
purchase securities (or other property) which arise out of
or in connection with the sale of the same or substantially
similar securities (or property), (vi) all non-contingent
obligations of such Person to reimburse any bank or other
Person in respect of amounts paid under a letter of credit
or similar instrument, (vii) all Debt secured by a Lien on
any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person, and (viii) all Debt
of others Guaranteed by such Person.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or
waived, become an Event of Default.
"Effective Date" means the date on which this
Amended Agreement becomes effective in accordance with
Section 4.01.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental
restrictions, whether now or hereafter in effect, relating
to human health, the environment or to emissions, discharges
or releases of pollutants, contaminants, Hazardous Materials
or wastes into the environment, including ambient air,
surface water, ground water or land, or otherwise relating
to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Materials or wastes or
the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, or any
successor statute.
"ERISA Group" means the Company, any Subsidiary
and all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under
common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section
414 of the Code.
"Event of Default" has the meaning set forth in
Section 8.01.
"Financing Documents" means this Agreement, the
Notes and the Security Documents.
"First Spring" means FS Signal Associates I, a
general partnership and its successors.
"Fiscal Year" means a fiscal year of the Company.
"GAAP" has the meaning set forth in Section 1.02.
"Greyrock Capital" means Greyrock Capital Group,
Inc., a Delaware corporation, and its successors.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other
manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the
term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" means (i) any "hazardous
substance" as defined in CERCLA; (ii) asbestos; (iii)
polychlorinated biphenyls; (iv) petroleum, its derivatives,
by-products and other hydrocarbons; and (v) any other toxic,
radioactive, caustic or otherwise hazardous substance
regulated under Environmental Laws.
"Hazardous Materials Contamination" means levels
of contamination (whether now existing or hereafter
occurring) of the improvements, buildings, facilities,
personalty, soil, groundwater, air or other elements on or
of the relevant property by Hazardous Materials, or any
derivatives thereof, or on or of any other property as a
result of (i) Hazardous Materials, or any derivatives
thereof, disposed of in connection with the relevant
property or (ii) the migration of Hazardous Materials, or
any derivatives thereof, generated on or emanating from the
relevant property onto such other property .
"Indemnitees" has the meaning set forth in Section
9.05.
"Insurance Account" has the meaning set forth in
the Security Agreement.
"Investment" means any investment in any Person,
whether by means of share purchase, capital contribution,
loan, time deposit or otherwise.
"Key-Man Life Insurance Policy" has the meaning
set forth in Section 6.04(c).
"KKE" means Kidd, Kamm Equity Partners, L.P., a
Delaware limited partnership, and its successors.
"Lender" means Greyrock Capital and each other
Person that becomes a registered holder of a Note pursuant
to Section 11.06, and their respective successors, and
"Lenders" means all of the foregoing.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, or any other type of preferential
arrangement that has the practical effect of creating a
security interest, in respect of such asset. For the
purposes of this Agreement and the other Financing
Documents, the Company or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loans" means the Tranche A Loans and the Tranche
B Loans, or any combination of the foregoing, as the context
may require.
"Margin Stock" has the meaning assigned thereto in
Regulation G of the Federal Reserve Board, as the same may
be amended, supplemented or modified from time to time.
"Material Plan" means at any time a Plan having
Unfunded Liabilities.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section
4001(a)(3) of ERISA to which any member of the ERISA Group
is then making or accruing an obligation to make
contributions or has within the preceding five plan years
made contributions, including for these purposes any Person
which ceased to be a member of the ERISA Group during such
five year period.
"MW Holdings" means MW Holdings, L.P., a
California limited partnership.
"Notes" means the Tranche A Notes and the Tranche
B Notes or any combination of the foregoing, as the context
may require.
"Officers' Certificate" means a certificate
executed on behalf of a Person by its chairman of the board
(if an officer), chief executive officer or president or one
of its vice presidents and by its chief financial officer or
treasurer.
"Operative Documents" means the Financing
Documents, the Acquisition Documents and the Working Capital
Facility.
"Original Closing Date" means February 16, 1993.
"Original Credit Agreement" has the meaning
specified in the recitals hereto.
"Payment Account" means, with respect to each
Lender, the account specified on the signature pages hereof
into which all payments from the Company shall be made, or
such other account as such Lender shall from time to time
specify by notice to the Company.
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Permitted Contest" means a contest maintained in
good faith by appropriate proceedings promptly instituted
and diligently conducted and with respect to which such
reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made;
provided that compliance with the obligation that is the
subject of such contest is effectively stayed during such
challenge.
"Permitted Liens" means Liens permitted pursuant
to Section 7.02.
"Person" means any natural person, corporation,
limited partnership, general partnership, joint stock
company, joint venture, association, company, trust, bank,
trust company, land trust, business trust or other
organization, whether or not a legal entity, and any
government agency or political subdivision thereof.
"Plan" means at any time an employee pension
benefit plan (other than a Multiemployer Plan) which is
covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and either
(i) is maintained, or contributed to, by any member of the
ERISA Group for employees of any member of the ERISA Group
or (ii) has at any time within the preceding five years been
maintained, or contributed to, by any Person which was at
such time a member of the ERISA Group for employees of any
Person which was at such time a member of the ERISA Group.
"RCRA" means the Resource Conservation and
Recovery Act of 1976 (42 U.S.C. Sections 6901 et seq.) as
amended from time to time and regulations promulgated
thereunder.
"Required Lenders" means at any time Lenders
holding Notes evidencing at least 51% of the aggregate
unpaid principal amount of the Loans or, if no Loans are
outstanding, having at least 51% of the aggregate amount of
the Commitments.
"Securities Act" means the Securities Act of 1933,
as amended from time to time, and the rules and regulations
promulgated thereunder.
"Security Agreement" has the meaning set forth on
Schedule 1.01.
"Security Documents" means the documents and
agreements listed on Schedule 1.01 hereto and any other
agreement pursuant to which the Company or any of its
Subsidiaries, Affiliates or stockholders provides a Lien on
its assets in favor of the Agent for the benefit of the
Lenders, and all supplementary assignments, security
agreements, pledge agreements, acknowledgments or other
documents delivered or to be delivered pursuant to the terms
hereof or of any other Security Document.
"Shirt Shed Agreement" has the meaning specified
in Section 1.01.
"Signal" means Signal Apparel Company, Inc., an
Indiana corporation, and its successors.
"Stock Purchase Agreement" means the Stock
Purchase Agreement dated as of October 6, 1994 among
the Company, KKE, MW Holdings, the other shareholders of the
Company named therein and Marvin and Sherri Winkler and
Signal.
"Subsidiary" means any corporation or other entity
of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are
at the time directly or indirectly owned by the Company.
"Temporary Cash Investment" means any Investment
in (i) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or
any agency thereof, (ii) commercial paper rated at least A-1
by Standard & Poor's Corporation and P-1 by Moody's
Investors Service, Inc., (iii) time deposits with, including
certificates of deposit issued by, any office located in the
United States of any bank or trust company which is
organized under the laws of the United States or any State
thereof and has capital, surplus and undivided profits
aggregating at least $500,000,000 and which issues (or the
parent of which issues) certificates of deposit or
commercial paper with a rating described in clause (ii)
above, or (iv) repurchase agreements with respect to
securities described in clause (i) above entered into with
an office of a bank or trust company meeting the criteria
specified in clause (iii) above, provided in each case that
such Investment matures within one year from the date of
acquisition thereof by the Company or any of its
Subsidiaries.
"Tranche A Commitment" means, for Greyrock Capital
as Lender, an amount equal to $6,500,000.
"Tranche A Loan" has the meaning set forth in
Section 2.01.
"Tranche A Note" has the meaning set forth in
Section 2.02.
"Tranche B Commitment" means, for Greyrock Capital
as Lender, an amount equal to $2,750,000.
"Tranche B Loan" has the meaning set forth in
Section 3.01.
"Tranche B Note" has the meaning set forth in
Section 3.02.
"Unfunded Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the value
of all benefit liabilities under such Plan, determined on a
plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii)
the fair market value of all Plan assets allocable to such
liabilities under the Title IV of ERISA (excluding any
accrued but unpaid contributions), all determined as of the
then most recent valuation date for such Plan, but only to
the extent that such excess represents a potential liability
of a member of the ERISA Group to the PBGC or any other
Person under Title IV of ERISA.
"Working Capital Facility" means (a) the Factoring
Agreement dated as of November __, 1994 between the Company
and BNY Financial Corporation or (b) any successor or
replacement factoring agreement or other type of working
capital facility entered into by the Company, in each case
as amended from time to time.
SECTION 1.02. Accounting Terms and
Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder
shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time
("GAAP"), applied on a basis consistent (except for changes
concurred in by the Company's independent public
accountants) with the most recent audited consolidated
financial statements of the Company and its Consolidated
Subsidiaries delivered to the Lenders; provided that, if the
Company notifies the Lenders that the Company wishes to
amend any covenant in Article VII or any related definition
to eliminate the effect of any change in GAAP on the
operation of such covenant (or if the Agent notifies the
Company that the Required Lenders wish to amend Article VII
or any related definition for such purpose), then the
Company's compliance with such covenant shall be determined
on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such
notice is withdrawn or such covenant is amended in a manner
satisfactory to the Company and the Required Lenders.
SECTION 1.03. Other Definitional Provisions.
References in this Agreement to "Articles", "Sections",
"Schedules" or "Exhibits" shall be to Articles, Sections,
Schedules or Exhibits of or to this Agreement unless
otherwise specifically provided. Any of the terms defined
in Section 1.01 may, unless the context otherwise requires,
be used in the singular or plural depending on the
reference. "Include", "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not
they are in fact followed by such words or words of like
import. "Writing", "written" and comparable terms refer to
printing, typing and other means of reproducing words in a
visible form. References to any agreement or contract are
to such agreement or contract as amended, modified or
supplemented from time to time in accordance with the terms
hereof and thereof. References to any Person include the
successors and assigns of such Person. References "from" or
"through" any date mean, unless otherwise specified, "from
and including" or "through and including", respectively.
ARTICLE II
TRANCHE A LOANS
SECTION 2.01. Tranche A Loans. Upon the terms
and subject to the conditions set forth in the Original
Credit Agreement, Greyrock Capital made a senior floating
rate loan to the Company on the Original Closing Date
pursuant to this Section 2.01 in a principal amount equal to
its Tranche A Commitment (such loan, or any portion thereof
assigned to any other Lender in accordance with Section
11.06, being referred to as a "Tranche A Loan"). Subsequent
to the Original Closing Date, the Company repaid the Tranche
A Loans in the aggregate principal amount of $1,500,000 and
as a condition to the effectiveness of this Amended
Agreement the Company shall repay the Tranche A Loans in an
aggregate principal amount of $250,000, leaving a balance of
$4,750,000 outstanding. Tranche A Loans are not revolving
in nature and amounts of such Loans repaid or prepaid may
not be reborrowed.
SECTION 2.02. Tranche A Notes. On the Effective
Date, Greyrock Capital shall exchange the "Tranche A Note"
currently outstanding under the Original Credit Agreement
for a new Tranche A Note complying with the terms of this
Section 2.02. From and after the Effective Date, each
Tranche A Loan shall be evidenced by a Tranche A Note of the
Company substantially in the form of Exhibit A (each such
note, a "Tranche A Note"), dated the Original Closing Date,
in a principal amount equal to the outstanding principal
amount of such Tranche A Loan, duly executed and delivered
by the Company and payable to the Lender of such Tranche A
Loan.
SECTION 2.03. Interest on the Tranche A Loans.
Each Tranche A Loan shall bear interest on its principal
amount outstanding from the Original Closing Date at the
rate determined as set forth in the Tranche A Note in
respect thereof. On the Effective Date, the Company shall
pay all unpaid interest that has accrued on the Tranche A
Notes to (but excluding) the Effective Date. From and after
the Effective Date, interest shall be payable monthly in
arrears, commencing December 1, 1994, as set forth in the
Tranche A Note.
SECTION 2.04. Repayments and Prepayments of
Tranche A Notes. (a) Maturity. There shall become due
and payable and the Company shall repay on June 30, 1995 (or
if such day is not a Business Day, on the next succeeding
Business Day), the entire outstanding principal amount of
each Tranche A Note, together with accrued and unpaid
interest on the principal amount being repaid to and
including the date of payment.
(b) Optional Prepayments. The Company may prepay
the Tranche A Notes in whole or in part (in principal
amounts of $100,000 or in any integral multiple of $10,000
in excess thereof) at any time, upon at least 10 days' prior
irrevocable notice to the Lenders (and such amounts
specified in such notice shall become due and payable on the
date so specified), by paying an amount equal to the
aggregate principal amount being prepaid together, in each
case, with accrued and unpaid interest on the principal
amount being prepaid to and including the date of payment.
(c) Application of Payments. Each repayment or
prepayment of less than all the outstanding aggregate
principal amount of the Tranche A Notes shall be applied pro
rata to all the Tranche A Notes according to their
respective outstanding principal amounts.
ARTICLE III
TRANCHE B LOANS
SECTION 3.01. Tranche B Loans. Upon the terms
and subject to the conditions set forth in the Original
Credit Agreement, Greyrock Capital made a floating rate loan
to the Company on the Original Closing Date pursuant to this
Section 3.01 in a principal amount equal to its Tranche B
Commitment (such loan, or any portion thereof assigned to
any other Lender in accordance with Section 13.06, being
referred to as a "Tranche B Loan"). Subsequent to the
Original Closing Date, the Company repaid Tranche B Loans in
the aggregate principal amount of $1,000,000, leaving a
balance of $1,750,000 outstanding. Tranche B Loans are not
revolving in nature and amounts of such Loans repaid or
prepaid may not be reborrowed.
SECTION 3.02. Tranche B Notes. On the Effective
Date, Greyrock Capital shall exchange the "Tranche B Note"
currently outstanding under the Original Credit Agreement
for a new Tranche B Note complying with the terms of this
Section 3.02. From and after the Effective Date, each
Tranche B Loan shall be evidenced by a Tranche B Note of the
Company substantially in the form of Exhibit B (each such
note, a "Tranche B Note"), dated the Original Closing Date,
in a principal amount equal to the outstanding principal
amount of such Tranche B Loan, duly executed and delivered
by the Company and payable to the Lender of such Tranche B
Loan.
SECTION 3.03. Interest on the Tranche B Loans.
Each Tranche B Loan shall bear interest on its principal
amount outstanding from the Original Closing Date at the
rate determined as set forth in the Tranche B Note in
respect thereof. On the Effective Date, the Company shall
pay all unpaid interest that has accrued on the Tranche B
Notes to (but excluding) the Effective Date. From and after
the Effective Date, interest shall be payable monthly in
arrears, commencing December 1, 1994, as set forth in the
Tranche B Notes.
SECTION 3.04. Repayments and Prepayments of
Tranche B Notes. (a) Maturity. There shall become due and
payable and the Company shall repay on June 30, 1995 (or, if
such day is not a Business Day, on the next succeeding
Business Day) the entire outstanding principal amount of
each Tranche B Note, together with accrued and unpaid
interest on the principal amount being repaid to and
including the date of payment.
(b) Optional Prepayments. From and after the
date on which the Company has paid the Tranche A Notes in
full, the Company may prepay the Tranche B Notes in whole or
in part (in principal amounts of $100,000 or in any integral
multiple of $10,000 in excess thereof) at any time, upon at
least 10 days' prior irrevocable notice to the Lenders (and
such amounts specified in such notice shall become due and
payable on the date so specified), by paying an amount equal
to the aggregate principal amount being prepaid together, in
each case, with accrued and unpaid interest on the principal
amount being prepaid to and including the date of payment.
(c) Application of Payments. Each repayment or
prepayment of less than all the outstanding aggregate
principal amount of the Tranche B Notes shall be applied pro
rata to all the Tranche B Notes according to their
respective outstanding principal amounts.
ARTICLE IV
CONDITIONS TO EFFECTIVENESS
SECTION 4.01. Conditions to Effectiveness. This
Amended Agreement shall become effective upon the
satisfaction of the following conditions:
(a) receipt by the Agent of counterparts hereof
signed by each of the parties hereto (or, in the case
of any party as to which an executed counterpart shall
not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a
counterpart hereof by such party);
(b) receipt by Greyrock Capital of a duly
executed Tranche A Note and Tranche B Note in exchange
for the "Tranche A Note" and the "Tranche B Note"
currently outstanding under the Original Credit
Agreement, all in accordance with Section 2.02 and 3.02
hereof;
(c) receipt by the Agent of duly executed
counterparts each Security Document listed on Schedule
1.01 (including Amendment No. 2 to the Security
Agreement), together with evidence satisfactory to it
in its sole good faith discretion of the effectiveness
of the security contemplated thereby;
(d) receipt by Greyrock Capital of evidence
satisfactory to it in its sole good faith discretion of
the satisfaction (without waiver) of all conditions to
the closing of the Acquisition on the Effective Date,
and that all transactions contemplated by the Operative
Documents to be consummated on the closing date of the
Acquisition will take place prior to or simultaneously
with the transactions hereunder contemplated to take
place on the Effective Date, and satisfaction of
Greyrock Capital in its sole good faith discretion with
the terms and conditions of the Acquisition Documents;
(e) receipt by Greyrock Capital of evidence
satisfactory to it in its sole good faith discretion of
the effectiveness of all other Operative Documents,
each of which shall be in form and substance
satisfactory to Greyrock Capital in its sole good faith
discretion;
(f) receipt by Greyrock Capital of (i) payment in
full of the principal of all "Working Capital Loans"
outstanding under the Original Credit Agreement,
together with accrued and unpaid interest thereon to
(but excluding) the Effective Date, (ii) payment in
full of all unpaid interest accrued on the Tranche A
Notes and the Tranche B Notes to (but excluding) the
Effective Date, (iii) payment of $250,000 in aggregate
principal amount of Tranche A Loans and (iv)
reimbursement in full for certain consulting fees paid
by Greyrock Capital in an amount equal to $48,075;
(g) receipt by the Agent of opinions of Weil,
Gotshal & Manges, counsel for the Company,
substantially in the form of Exhibit C, and of counsel
for Signal, substantially in the form of Exhibit D, and
covering such additional matters relating to the
transactions contemplated hereby as Greyrock Capital
may reasonably request (by its execution and delivery
of the Operative Documents to which it is a party, the
Company and Signal authorize and direct such counsel to
deliver such opinions to the Agent);
(h) receipt by Greyrock Capital, including in its
capacity as Agent, of all fees and any other amounts
due and payable hereunder of which the Company has
received notice (including the fees of Davis Polk &
Wardwell, special counsel to the Agent);
(i) receipt by Greyrock Capital of any
information it may request concerning the financial
condition, results of operations, liabilities
(contingent and otherwise, including with respect to
environmental liabilities and employee and retiree
benefits) and prospects of, and the financial reporting
and accounting systems and the management information
systems of, the Company; and confirmation satisfactory
to Greyrock Capital, after consultation with management
of the Company, independent public accountants for the
Company, and any independent environmental consultant
or independent accountant retained by Greyrock Capital,
of all such information; and satisfaction of Greyrock
Capital in its sole good faith discretion with all such
information;
(j) satisfaction of Greyrock Capital in its sole
good faith discretion as to the absence of any material
adverse change in any aspect of the business,
operations, properties, prospects or condition
(financial or otherwise) of the Company or of Signal,
or any event or condition which is reasonably likely to
result in such a material adverse change;
(k) receipt by Greyrock Capital of a certificate
signed by the chief financial officer, controller or
treasurer of the Company to the effect that, after
giving effect to the consummation of the Acquisition
and the other transactions contemplated to take place
on the Effective Date, (i) no Default shall have
occurred and be continuing and (ii) the representations
and warranties of the Company made in or pursuant to
the Operative Documents are true;
(l) receipt by Greyrock Capital of evidence
satisfactory to it in its sole good faith discretion
that all outstanding obligations of the Company under
all factoring agreements with Republic Factors Corp. or
its affiliates have been paid, all commitments
thereunder shall have been terminated and all Liens
created thereunder or in connection therewith shall
have been released; and
(m) receipt by the Agent of all documents it may
reasonably request relating to (i) the existence of the
Company, Signal and the other parties to the Operative
Documents, (ii) the corporate or other authority for
and the validity of the Financing Documents and the
other Operative Documents, and (iii) any other matters
relevant hereto, all in form and substance satisfactory
to the Agent in its sole good faith discretion;
The documents referred to in this Section shall be delivered
to the Agent no later than the Effective Date. The
certificates and opinions referred to in this Section shall
be dated the Effective Date.
Section 4.02. Consequences of Effectiveness;
Transitional Provisions. Upon the effectiveness of this
Amended Agreement:
(a) The Original Credit Agreement will be
automatically amended and restated in its entirety to read
as set forth herein. On and after the Effective Date, the
rights and obligations of the parties hereto shall be
governed by this Amended Agreement; provided that rights and
obligations of the parties to the Original Credit Agreement
with respect to the period prior to the Effective Date shall
continue to be governed by the provisions of the Original
Credit Agreement.
(b) The "Working Capital Commitment" and the
"Market Opportunity Commitment" of each Lender under the
Original Credit Agreement shall automatically terminate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
SECTION 5.01. Corporate Existence and Power. The
Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of
Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted
and as will be conducted after the Acquisition. The Company
is qualified to do business as a foreign corporation in the
State of California.
SECTION 5.02. Corporate and Governmental
Authorization; No Contravention. Except as described in
Schedule 5.02, the execution, delivery and performance by
the Company of the Operative Documents to which it is a
party are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, require
no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene,
or constitute a default under, any provision of applicable
law or regulation or of the certificate of incorporation or
by-laws of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon
the Company or any of its Subsidiaries or result in the
creation or imposition of any Lien (other than the Liens
created by the Security Documents) on any asset of the
Company or any of its Subsidiaries.
SECTION 5.03. Binding Effect; Liens of Security
Documents. (a) Each of the Operative Documents to which
the Company is a party (other than the Notes) constitutes a
valid and binding agreement of the Company, and each of the
Notes, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of
the Company.
(b) The Security Documents create valid security
interests in the Collateral purported to be covered thereby,
which security interests are and will remain perfected
security interests, prior to all other Liens other than
Permitted Liens. Each of the representations and warranties
made in the Security Documents is true and correct.
SECTION 5.04. Financial Information.
(a) The audited consolidated balance sheet of the
Company and its Consolidated Subsidiaries as of December 31,
1993 and the related consolidated statements of operations,
stockholders' equity and cash flows for the twelve months
then ended, reported on by Deloitte & Touche LLP, copies of
which have been delivered to each of the Lenders, fairly
present, in conformity with GAAP, the consolidated financial
position of the Company and its Consolidated Subsidiaries as
of such date and their consolidated income, stockholders'
accumulated deficit and cash flows for such period.
(b) The unaudited consolidated balance sheet of
the Company and its Consolidated Subsidiaries as of
September 30, 1994 and the related unaudited consolidated
statement of operations for the nine months then ended,
copies of which have been delivered to each of the Lenders,
fairly present, in conformity with GAAP applied on a basis
consistent with the financial statements referred to in
Section 5.04(a), the consolidated financial position of the
Company and its Consolidated Subsidiaries as of such date
and their consolidated results of operations for the nine
months then ended (subject to normal year-end adjustments).
(c) Except as described in Schedule 5.04(c),
since December 31, 1993, there has been no material adverse
change in the business, operations, properties, prospects or
condition (financial or otherwise) of the Company and its
Consolidated Subsidiaries, taken as a whole.
SECTION 5.05. Litigation. Except as described in
Schedule 5.05, there is no action, suit or proceeding
pending against, or to the knowledge of the Company
threatened against or affecting, the Company or any of its
Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could
materially adversely affect the business, consolidated
financial position or consolidated results of operations of
the Company and its Consolidated Subsidiaries or which in
any manner draws into question the validity of any of the
Operative Documents. To the knowledge of the Company, there
is no action, suit or proceeding pending against, or
threatened against or affecting, any party to any of the
Operative Documents (other than the Company) before any
court or arbitrator or any governmental body, agency or
official which in any manner draws into question the
validity of any of the Operative Documents.
SECTION 5.06. Ownership of Property, Liens. On
and as of the Effective Date, after giving effect to the
Acquisition, the Company is the lawful owner of, has good
and marketable title to and is in lawful possession of, or
has valid leasehold interests in, all properties and other
assets (real or personal, tangible, intangible or mixed)
purported to be owned or leased (as the case may be) by the
Company on the balance sheet referred to in Section 5.04(a),
and none of its properties and assets is subject to any
Liens, except Permitted Liens. The Company and its
Subsidiaries conduct their business without infringement or
claim of infringement of any material license, patent,
trademark, trade name, service mark, copyright, trade secret
or other intellectual property right of others and there is
no infringement or claim of infringement by others of any
material license, patent, trademark, trade name, service
mark, copyright, trade secret or other intellectual property
right of the Company or any of its Subsidiaries.
SECTION 5.07. No Default. Except as described in
Schedule 5.07 and after giving effect to the effectiveness
of this Amended Agreement, no Default has occurred and is
continuing and neither the Company nor any of its
Subsidiaries is in default under or with respect to any
material contract, agreement, lease or other instrument to
which it is a party or by which its property is bound or
affected.
SECTION 5.08. No Burdensome Restrictions. No
contract, lease, agreement or other instrument to which the
Company or any of its Subsidiaries is a party or by which
any of its property is bound or affected, no charge,
corporate restriction, judgment, decree or order and no
provision of applicable law or governmental regulation is,
in the reasonable good faith judgment of the management of
the Company, reasonably likely to have a material adverse
effect on the business, operations, properties, prospects or
condition (financial or otherwise) of the Company and its
Consolidated Subsidiaries, taken as a whole.
SECTION 5.09. Labor Matters. There are no
strikes or other labor disputes pending or, to the best
knowledge of the Company, threatened, against the Company or
any of its Subsidiaries. Hours worked and payments made to
the employees of the Company and its Subsidiaries have not
been in violation of the Fair Labor Standards Act or any
other applicable law dealing with such matters. All
payments due from the Company or any of its Subsidiaries, or
for which any claim may be made against any of them, on
account of wages and employee health and welfare insurance
and other benefits have been paid or accrued as a liability
on their books, as the case may be. The consummation of the
transactions contemplated by the Financing Documents and the
other Operative Documents will not give rise to a right of
termination or right of renegotiation on the part of any
union under any collective bargaining agreement to which it
is a party or by which it is bound.
SECTION 5.10. Subsidiaries; Other Equity
Investments. Other than the Subsidiaries listed on Schedule
5.10, the Company has no Subsidiaries on the date hereof.
Other than as set forth in Schedule 5.10, each such
Subsidiary is, and, in the case of any additional corporate
Subsidiaries formed after the Effective Date, each of such
additional corporate Subsidiaries will be at each time that
this representation is made or deemed to be made after the
Effective Date, a wholly-owned Subsidiary that is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and
approvals required to carry on its business as now
conducted. Other than as disclosed in Schedule 5.10,
neither the Company nor any of its Subsidiaries is engaged
in any joint venture or partnership with any other Person.
SECTION 5.11. Investment Company Act. The
Company is not an "investment company" as defined in the
Investment Company Act of 1940, as amended. The
consummation of the transactions contemplated by the
Financing Documents do not and will not violate any
provision of such Act or any rule, regulation or order
issued by the Securities and Exchange Commission thereunder.
SECTION 5.12. Margin Regulations. None of the
proceeds from the Loans have been or will be used, directly
or indirectly, for the purpose of purchasing or carrying any
Margin Stock, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or
carry any Margin Stock or for any other purpose which might
cause any of the loans under this Agreement to be considered
a "purpose credit" within the meaning of Regulation G, U or
X of the Federal Reserve Board.
SECTION 5.13. Taxes. Except as described in
Schedule 5.13, all Federal, state and local tax returns,
reports and statements required to be filed by the Company
and its Subsidiaries have been filed with the appropriate
governmental agencies in all jurisdictions in which such
returns, reports and statements are required to be filed,
and all taxes (including real property) and other charges
shown to be due and payable have been timely paid prior to
the date on which any fine, penalty, interest, late charge
or loss may be added thereto for nonpayment thereof. All
state and local sales and use taxes required to be paid by
the Company or any of its Subsidiaries have been paid. All
Federal and state returns have been filed by the Company and
its Subsidiaries for all periods for which returns were due
with respect to employee income tax withholding, social
security and unemployment taxes, and the amounts shown
thereon to be due and payable have been paid in full or
adequate provision therefor have been made.
SECTION 5.14. Compliance with ERISA. Each member
of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Code with respect
to each Plan and is in compliance in all material respects
with the presently applicable provisions of ERISA and the
Code with respect to each Plan. No member of the ERISA
Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Code in respect of any
Plan, (ii) failed to make any contribution or payment to any
Plan or Multiemployer Plan or in respect of any Benefit
Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the
imposition of a Lien or the posting of a bond or other
security under ERISA or the Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to
the PBGC for premiums under Section 4007 of ERISA.
SECTION 5.15. Related Transactions. The closing
of the Acquisition will occur simultaneously with the
effectiveness of this Amended Agreement pursuant to Section
4.01. True and complete copies of all of Acquisition
Documents have been delivered to each of the Lenders,
together with a true and complete copy of each document to
be delivered at the closing of the Acquisition.
SECTION 5.16. Employment, Shareholders and
Subscription Agreements. Except for the Acquisition
Documents and the other agreements described in Schedule
5.17, true and complete copies of which have been delivered
to the Lenders, there are no (i) employment agreements
covering the management of the Company and its Subsidiaries,
(ii) collective bargaining agreements or other labor
agreements covering any employees of the Company, (iii)
agreements for managerial, consulting or similar services to
which the Company is a party or which it is bound or (iv)
agreements regarding the Company, its assets or operations
or any investment therein to which any of its stockholders
is a party or by which it is bound.
SECTION 5.17. Representations and Warranties
Incorporated from Other Operative Documents. As of the
Effective Date, each of the representations and warranties
made in the Operative Documents by the Company, and to the
best of the Company's knowledge, each of the other parties
thereto (other than any, if any, made by the Agent or any
Lender) is true and correct in all material respects, and
such representations and warranties are hereby incorporated
herein by reference with the same effect as though set forth
in their entirety herein, as qualified therein.
SECTION 5.18. Private Offering. Neither the
Company nor any Person acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited
any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person
other than the Lenders and not more than twenty other
institutional investors. Neither the Company nor any Person
acting on its behalf has taken, or will take, any action
which would subject the issuance or sale of the Notes to
Section 5 of the Securities Act.
SECTION 5.19. Compliance with Environmental
Requirements; No Hazardous Materials. After giving effect
to the Acquisition and except as provided on Schedule 5.19:
(a) Other than (i) generation, (ii) use in the
production process and maintenance and cleaning
activities all in the ordinary course of business and
(iii) storage prior to any such generation or use, in
each case in compliance with all applicable Environ-
mental Laws, no Hazardous Materials are located on any
properties now or previously owned, leased or operated
by the Company or any of its Subsidiaries or have been
released into the environment, or deposited, dis-
charged, placed or disposed of at, on or under any of
such properties. No portion of any such property is
being used, or has been used at any previous time, for
the disposal, storage, treatment, processing or other
handling of "hazardous wastes" as defined in RCRA
(other than processing or handling incidental to the
generation of hazardous wastes or storage of such
hazardous wastes for a period of less than 90 days, in
each case in compliance with all applicable Environ-
mental Laws), nor is any such property affected by any
Hazardous Materials Contamination.
(b) No asbestos or asbestos-containing materials
are present on any of the properties now or previously
owned, leased or operated by the Company or any of its
Subsidiaries other than nonfriable asbestos and
asbestos-containing materials in any of the buildings
located on the properties, the retention of which is
permitted by Environmental Laws.
(c) No polychlorinated biphenyls are located on
or in any properties now or previously owned, leased or
operated by the Company or any of its Subsidiaries, in
the form of electrical transformers, fluorescent light
fixtures with ballasts, cooling oils or any other
device or form other than non-leaking polychlorinated
biphenyls within a transformer, capacitor or other
piece of equipment or a fluorescent light fixture, the
retention of which is permitted by Environmental Laws.
(d) No underground storage tanks are located on
any properties now or previously owned, leased or
operated by the Company or any of its Subsidiaries, or
were located on any such property and subsequently
removed or filled.
(e) No notice, notification, demand, request for
information, complaint, citation, summons, investiga-
tion, administrative order, consent order and agree-
ment, litigation or settlement with respect to
Hazardous Materials or Hazardous Materials Contamina-
tion has been received by the Company or any Subsidiary
nor, to the Company's knowledge, is any such notice,
notification, demand, request for information,
complaint, investigation or order proposed, threatened
or anticipated with respect to or in connection with
the operation of any properties now or previously
owned, leased or operated by the Company or any of its
Subsidiaries. All such properties and their existing
and prior uses comply and at all times have complied,
in all material respects, with any applicable
governmental requirements relating to environmental
matters or Hazardous Materials. There is no condition
on any of such properties which is in violation of any
applicable material governmental requirements relating
to Hazardous Materials, and neither the Company nor any
of its Subsidiaries has received any communication from
or on behalf of any governmental authority that any
such condition exists. None of such properties nor any
property to which the Company has, directly or
indirectly, transported or arranged for the transporta-
tion of any material is listed or, to the Company's
knowledge, proposed for listing on the National
Priorities List promulgated pursuant to CERCLA, on
CERCLIS (as defined in CERCLA) or on any similar
federal, state or foreign list of sites requiring
investigation or cleanup, nor, to the knowledge of the
Company, is any such property anticipated or threatened
to be placed on any such list.
(f) There has been no environmental investiga-
tion, study, audit, test, review or other analysis
conducted of which the Company has knowledge in
relation to the current or prior business of the
Company or any property or facility now or previously
owned, leased or operated by the Company or any of its
Subsidiaries which has not been delivered to the
Lenders at least five days prior to the date hereof.
(g) For purposes of this Section 5.19, the terms
"Company" and "Subsidiary" shall include any business
or business entity (including a corporation) which is,
in whole or in part, a predecessor of the Company or
any Subsidiary.
(h) For purposes of this Section 5.19, any
representations or warranties made with respect to
properties not presently owned, leased or operated by
the Company or any of its Subsidiaries (other than the
representations and warranties made in the first and
last sentences of clause (e) of this Section 5.19 and
in clause (f) of this Section 5.19) are made only with
respect to conditions existing, activities occurring or
compliance with governmental requirements, as the case
may be, during the period of such ownership, leasing or
operation.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company agrees that, so long as any Lender has
any Commitment hereunder or any amount payable under any
Note remains unpaid:
SECTION 6.01. Financial Statements and Other
Reports. The Company will maintain a system of accounting
established and administered in accordance with sound
business practices to permit preparation of financial
statements in accordance with GAAP, and will deliver to each
of the Lenders:
(a) as soon as practicable and in any event
within 30 days after the end of each month of the
Company, a consolidated balance sheet of the Company
and its consolidated subsidiaries as at the end of such
month and the related consolidated statements of
operations and cash flows for such month, and for the
portion of the Fiscal Year ended at the end of such
month setting forth in each case in comparative form
the figures for the corresponding periods of the
previous Fiscal Year, all in reasonable detail and
certified by the chief financial officer of the Company
as fairly presenting the financial condition and
results of operations of the Company and its
Consolidated Subsidiaries and as having been prepared
in accordance with GAAP applied on a basis consistent
with the audited financial statements of the Company,
subject to changes resulting from audit and normal
year-end adjustments;
(b) as soon as available and in any event within
120 days after the end of each Fiscal Year, a
consolidated and consolidating balance sheet of Signal
Apparel Company, Inc. and its consolidated subsidiaries
as of the end of such Fiscal Year and the related
consolidated and consolidating statements of
operations, stockholders' equity and cash flows for
such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal
Year, certified in the case of said consolidated
financial statements without qualification by Deloitte
& Touche LLP, or other independent public accountants
of nationally recognized standing;
(c) (i) together with each delivery of financial
statements pursuant to (a) and (b) above, an Officers'
Certificate of the Company stating that the officers
executing such certificate have reviewed the terms of
this Agreement and have made, or caused to be made
under their supervision, a review in reasonable detail
of the transactions and condition of the Company during
the accounting period covered by such financial
statements and that such review has not disclosed the
existence during or at the end of such accounting
period, and that such officers do not have knowledge of
the existence as at the date of such Officers'
Certificate, of any Default, or, if any such Default
existed or exists, specifying the nature and period of
existence thereof and what action the Company has taken
or is taking or proposes to take with respect thereto;
and (ii) together with each delivery of financial
statements for each month and Fiscal Year, a compliance
certificate of the chief financial officer or treasurer
of the Company (x) providing details of all Affiliate
Transactions during the period covered by such
financial statements and (y) if not specified in the
financial statements delivered pursuant to (a) or (b)
above, as the case may be, specifying the aggregate
amount of interest paid or accrued and the aggregate
amount of depreciation and amortization charged, during
such accounting period;
(d) together with each delivery of financial
statements pursuant to (b) above, a written statement
by the independent public accountants giving the report
thereon stating that in connection with their audit
nothing came to their attention that caused them to
believe that a default existed under Article VIII of
this Agreement, insofar as they relate to financial and
accounting matters;
(e) promptly upon receipt thereof, copies of all
reports submitted to the Company by independent public
accountants in connection with each annual, interim or
special audit of the financial statements of the
Company made by such accountants, including the comment
letter submitted by such accountants to management in
connection with their annual audit;
(f) promptly upon their becoming available,
copies of (i) all financial statements, reports,
notices and proxy statements sent or made available
generally by the Company to its security holders, (ii)
all regular and periodic reports and all registration
statements and prospectuses filed by the Company with
any securities exchange or with the Securities and
Exchange Commission or any governmental authority
succeeding to any of its functions and (iii) all press
releases and other statements made available generally
by the Company to the public concerning material
developments in the business of the Company;
(g) promptly upon any officer of the Company
obtaining knowledge (i) of the existence of any
Default, or becoming aware that the holder of any Debt
of the Company has given any notice or taken any other
action with respect to a claimed default thereunder,
(ii) of any change in the Company's certified
accountant or any resignation, or decision not to stand
for re-election, by any member of the Company's board
of directors, (iii) that any Person has given any
notice to the Company or taken any other action with
respect to a claimed default under any material
agreement or instrument (other than the Financing
Documents) to which the Company or any of its
Subsidiaries is a party or by which any of their assets
are bound or (iv) of the institution of any litigation
or arbitration involving an alleged liability of the
Company or any of its Subsidiaries equal to or greater
than $250,000 or any adverse determination in any
litigation or arbitration involving a potential
liability of the Company or any of its Subsidiaries
equal to or greater than $250,000, an Officers'
Certificate of the Company specifying the nature and
period of existence of any such condition or event, or
specifying the notice given or action taken by such
holder or Person and the nature of such claimed default
(including any Default), event or condition, and what
action the Company has taken, is taking or proposes to
take with respect thereto;
(h) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV
of ERISA, or knows that the plan administrator of any
Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such
reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice
that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title
IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA)
in respect of, or appoint a trustee to administer any
Plan, a copy of such notice; (iv) applies for a waiver
of the minimum funding standard under Section 412 of
the Code, a copy of such application; (v) gives notice
of intent to terminate any Plan under Section 4041(c)
of ERISA, a copy of such notice and other information
filed with the PBGC; (vi) gives notice of withdrawal
from any Plan pursuant to Section 4063 of ERISA, a copy
of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has
resulted or could result in the imposition of a Lien or
the posting of a bond or other security, a certificate
of the chief financial officer or the chief accounting
officer of the Company setting forth details as to such
occurrence and action, if any, which the Company or
applicable member of the ERISA Group is required or
proposes to take;
(i) simultaneously with the financial statements
referred to in (a) above, amendments, if any, to the
budgets and forecasts most recently delivered pursuant
to Section 6.01(k);
(j) copies of any reports or notices related to
taxes and any other material reports or notices
received by the Company from, or filed by the Company
with, any Federal, state or local governmental agency
or body regulating the activities of the Company;
(k) within 30 days after the start of each Fiscal
Year, the Company's annual operating and capital
expenditure budgets and cash flow forecast for the
following Fiscal Year presented on a monthly basis,
which shall be in a format reasonably consistent with
projections, budgets and forecasts theretofore provided
to the Lenders; and
(l) with reasonable promptness, such other
information and data with respect to the Company as
from time to time may be reasonably requested by any
Lender.
SECTION 6.02. Payment of Obligations. The
Company (i) shall pay and discharge, and will cause each of
its Subsidiaries to pay and discharge, at or before
maturity, all of their respective material obligations and
liabilities, including tax liabilities, except where the
same may be the subject of a Permitted Contest, (ii) shall
maintain, and cause each of its Subsidiaries to maintain, in
accordance with GAAP, appropriate reserves for the accrual
of any of the same and (iii) shall not breach or permit any
of its Subsidiaries to breach, in any material respect, or
permit to exist any material default under, the terms of any
material lease, commitment, contract, instrument or
obligation to which it is a party, or by which its
properties or assets are bound.
SECTION 6.03. Conduct of Business and Maintenance
of Existence. The Company will continue, and will cause
each of its Subsidiaries to continue, to engage in business
of the same general type as now conducted by the Company and
its Subsidiaries, and will preserve, renew and keep in full
force and effect, and will cause each Subsidiary to
preserve, renew and keep in full force and effect their
respective corporate existence and their respective rights,
privileges and franchises necessary or desirable in the
normal conduct of business; provided that nothing herein
shall prevent the merger and dissolution of any Subsidiary
of the Company into the Company so long as the Company is
the surviving corporation.
SECTION 6.04. Maintenance of Property; Insurance.
(a) The Company will keep, and will cause each of its
Subsidiaries to keep, all property useful and necessary in
its business in good working order and condition, ordinary
wear and tear excepted.
(b) The Company will maintain, and will cause
each of its Subsidiaries to maintain, (i) physical damage
insurance on all real and personal property on an all risks
basis, covering the repair and replacement cost of all such
property and consequential loss coverage for business
interruption and extra expense, covering such risks, for
amounts not less than those, and with deductible amounts not
greater than those, set forth in Part I of Schedule 6.04,
(ii) public liability insurance (including
products/completed operations liability coverage) covering
such risks, for amounts not less than those, and with
deductible amounts not greater than those, set forth in Part
II of Schedule 6.04 and (iii) such other insurance coverage
in such amounts and with respect to such risks as the
Required Lenders may reasonably request. All such insurance
shall be provided by insurers having an A.M. Best
policyholders rating of not less than A or such other
insurers as the Required Lenders may approve in writing;
provided that workers' compensation liability insurance may
be provided by Golden Eagle Insurance Company so long as its
A.M. Best policyholders rating is not less than B. On or
prior to the Effective Date, the Company shall cause the
Agent to be named as an insured party and loss payee on each
insurance policy required to be maintained pursuant to this
Section 6.04(b). The Company will deliver to the Lenders
upon the request of any Lender through the Agent from time
to time full information as to the insurance carried,
(i) within five days of receipt of notice from any insurer,
a copy of any notice of cancellation, nonrenewal or material
change in coverage from that existing on the date of this
Agreement and (ii) forthwith, notice of any cancellation or
nonrenewal of coverage by the Company. Any proceeds in
excess of $100,000 from any Casualty Insurance Policy which
are payable to the insured in respect of any claim, or any
condemnation award or other compensation in respect of a
condemnation (or any transfer or disposition of property in
lieu of condemnation) for which the Company or any of its
Subsidiaries receives a condemnation award or other
compensation in excess of $100,000, shall be paid to the
Agent to be held, applied or released in accordance with
Section 5 of the Security Agreement.
(c) The Company shall maintain a term life
insurance policy in form and substance and issued by a life
insurance company, in each case acceptable to the Agent in
its sole good faith discretion, with respect to Marvin
Winkler in an amount not less than $5,000,000 (the "Key-Man
Life Insurance Policy"). Any proceeds payable to the
Company under the Key-Man Life Insurance Policy shall be
paid to the Agent for application in accordance with Section
5 of the Security Agreement and the Company will, at the
time of issuance of the Key-Man Life Insurance Policy,
deliver to the Agent a duly executed instrument of
assignment assigning such policy to the Agent.
SECTION 6.05. Compliance with Laws. The Company
will comply, and cause each of its Subsidiaries to comply,
in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of
governmental authorities (including Environmental Laws and
ERISA and the rules and regulations thereunder).
SECTION 6.06. Inspection of Property, Books and
Records. The Company will keep, and will cause each of its
Subsidiaries to keep, proper books of record and account in
which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and
activities; and will permit, and will cause each of its
Subsidiaries to permit, representatives of any Lender at
such Lender's expense to visit and inspect any of their
respective properties, to examine and make abstracts or
copies from any of their respective books and records, to
conduct a collateral audit and analysis of their respective
inventories and accounts receivable and to discuss their
respective affairs, finances and accounts with their
respective officers, employees and independent public
accountants, all at such reasonable times and as often as
may reasonably be desired.
SECTION 6.07. Use of Proceeds. None of the
proceeds of the Loans have been be used in violation of any
applicable law or regulation.
SECTION 6.08. Further Assurances. The Company
will, at its own cost and expense, cause to be promptly and
duly taken, executed, acknowledged and delivered all such
further acts, documents and assurances (x) as may from time
to time be necessary or as the Required Lenders may from
time to time request in order to carry out the intent and
purposes of the Financing Documents and the transactions
contemplated thereby, including all such actions to
establish, preserve, protect and perfect the estate, right,
title and interest of the Lenders to the Collateral
(including Collateral acquired after the date hereof),
including first priority Liens thereon, subject only to
Permitted Liens and (y) as the Required Lenders may from
time to time request, to establish, preserve, protect and
perfect first priority Liens in favor of the Lenders on any
and all assets of the Company and its Subsidiaries, now
owned or hereafter acquired, that are not Collateral on the
date hereof. The Company shall promptly give notice to the
Agent of the acquisition after the Effective Date by the
Company or any Subsidiary of any real property (including
leaseholds in respect of real property), trademark,
copyright or patent.
SECTION 6.09. Lenders' Meetings. Upon the
request of the Lenders, the Company will conduct a meeting
with the Lenders to discuss the financial condition of the
Company at which shall be present the chief executive
officer and the chief financial officer of the Company and
such other officers of the Company as the Company's chief
executive officer shall designate. Such meetings shall be
held at a time and place convenient to the Lenders and to
the Company; provided that any such meeting may be held
telephonically unless the Required Lenders request
otherwise.
SECTION 6.10. Consummation of the Acquisition.
The Company will cause the closing of the Acquisition to
occur prior to the making of the Loans on the Effective
Date, and will not without the prior written consent of the
Required Lenders waive any condition to its obligations to
consummate the Acquisition.
SECTION 6.11. Hazardous Materials; Remediation.
The Company will (i) promptly give notice to the Lenders in
writing of any complaint, order, citation, notice or other
written communication from any Person with respect to, or if
the Company becomes aware of, (x) the existence or alleged
existence of a violation of any applicable Environmental Law
or the incurrence of any liability, obligation, loss,
damage, cost, expense, fine, penalty or sanction or the
requirement to commence any remedial action resulting from
or in connection with any air emission, water discharge,
noise emission, Hazardous Material or any other
environmental, health or safety matter at, upon, under or
within any of the properties now or previously owned, leased
or operated by the Company or any of its Subsidiaries, or
due to the operations or activities of the Company, any
Subsidiary or any other Person on or in connection with any
such property or any part thereof or (y) any release on any
of such properties of Hazardous Materials in a quantity that
is reportable under any applicable Environmental Law; (ii)
promptly comply with any governmental requirements requiring
the removal, treatment or disposal of such Hazardous
Materials or Hazardous Materials Contamination and provide
evidence satisfactory to the Required Lenders of such
compliance except where such compliance is the subject of a
Permitted Contest, provided that no such contest shall
subject (x) the Company or any of its Subsidiaries to any
risk of any criminal liability or additional civil
liability, (y) the Lenders to any risk of any liability or
(z) the property in question to any risk of the imposition
of a Lien; and (iii) provide the Lenders, within 30 days
after demand therefor by the Required Lenders, with a bond,
letter of credit or similar financial assurance evidencing
to the satisfaction of the Required Lenders that sufficient
funds are available, or otherwise establish to the
satisfaction of the Required Lenders that sufficient funds
are available, to pay the cost of removing, treating and
disposing of such Hazardous Materials or Hazardous Materials
Contamination and discharging any assessment which may be
established on any such property as a result thereof.
SECTION 6.12. Enforcement of Covenants Not to
Compete. The Company shall preserve, protect and defend, to
the extent permitted by applicable law, all of its rights,
if any, with respect to any covenant not to compete
contained in any of the material contracts of the Company or
contained in any employment agreement with any employee
whose annual salary and other compensation payable by the
Company and its Subsidiaries is $100,000 or more.
SECTION 6.13. Landlord and Warehouseman Waivers.
The Company shall use its best efforts to deliver to the
Agent waivers of contractual and statutory landlord's,
landlord's mortgagee's and warehouseman's Liens in form and
substance reasonably satisfactory to the Agent under each
existing lease, warehouse agreement or similar agreement to
which the Company or any Subsidiary is a party; provided
that such waivers will in any event be incorporated when the
existing lease, warehouse agreement or similar agreement is
amended, renewed or extended and the Company will obtain
waivers of both contractual and statutory landlord's,
landlord's mortgagee's and warehouseman's Liens in form and
substance reasonably satisfactory to the Agent in connection
with each new lease, warehouse agreement or similar
agreement entered into by the Company or any Subsidiary.
ARTICLE VII
NEGATIVE COVENANTS
The Company agrees that so long as any amount
payable under any Note remains unpaid:
SECTION 7.01. Debt. The Company will not, and
will not permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee or otherwise
become or remain directly or indirectly liable with respect
to, any Debt, except for:
(a) Debt of the Company outstanding on the date
of this Agreement as set forth in Schedule 7.01;
(b) Debt of the Company under the Financing
Documents;
(c) Debt of the Company or any of its
Subsidiaries incurred or assumed for the purpose of
financing all or any part of the cost of acquiring any
asset (including through Capital Leases), in an
aggregate principal amount at any time outstanding not
greater than $350,000;
(d) Debt of the Company or any Subsidiary
incurred for the purpose of refinancing Debt permitted
under Section 7.01(c) above; provided that (i) the
aggregate principal amount of such Debt does not exceed
the then outstanding principal amount of Debt being
refinanced and (ii) no Subsidiary is an obligor with
respect thereto that was not an obligor with respect to
the Debt being refinanced.
(e) Debt of the Company or any of its
Subsidiaries to a wholly-owned Subsidiary of the
Company, or of any Subsidiary of the Company to the
Company;
(f) Debt of the Company under the Purchase Notes
(as defined in the Stock Purchase Agreement);
(g) Debt of the Company in respect of letters of
credit and guarantees issued for the account of the
Company; provided that the aggregate outstanding amount
of such Debt shall at no time exceed $1,000,000;
(h) Debt of the Company under the Working Capital
Facility in an aggregate principal amount outstanding
at no time in excess of the sum (i) the sum of (x) 85%
of "Eligible Receivables" (as defined in the Working
Capital Facility) plus (y) 50% of "Eligible Inventory"
(as defined in the Working Capital Facility) at such
time plus (ii) $5,000,000; and
(i) Debt of the Company not otherwise permitted
by clauses (a) through (h), inclusive, of this Section
7.01 in an aggregate principal amount outstanding at no
time in excess of $500,000.
SECTION 7.02. Negative Pledge. Neither the
Company nor any Subsidiary will create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired
by it, except:
(a) any Lien on any asset securing Debt permitted
under Section 7.01(c) incurred or assumed for the
purpose of financing all or any part of the cost of
acquiring such asset, provided that such Lien attaches
to such asset concurrently with or within 90 days after
the acquisition thereof;
(b) Liens securing Debt under the Working Capital
Facility;
(c) Liens arising in the ordinary course of its
business which (i) do not secure Debt, (ii) do not
secure any obligation in an amount exceeding $50,000
and (iii) do not in the aggregate materially detract
from the value of its assets or materially impair the
use thereof in the operation of its business;
(d) Liens created by the Security Documents; and
(e) Liens securing Debt permitted under Section
7.01(d); provided that such Debt is not secured by any
assets other than the assets which secured the Debt
being refinanced.
SECTION 7.03. Capital Stock. (a) The Company
shall not permit any of its Subsidiaries to issue any shares
of capital stock except shares of capital stock issued by
any Subsidiary to the Company.
(b) The Company shall not issue any capital stock
unless arrangements satisfactory to the Agent have been made
to cause such capital stock to be pledged to it under the
Security Documents and for the holder of such capital stock
to be bound thereby.
SECTION 7.04. ERISA. The Company will not, and
will not permit any of its Subsidiaries to:
(a) engage in any transaction in connection with
which the Company or any of its Subsidiaries could be
subject to any material liability arising from either a
civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Code;
(b) terminate any Plan in a manner, or take any
other action, which could result in any material
liability of any member of the ERISA Group to the PBGC;
(c) fail to make full payment when due of all
amounts which, under the provisions of any Plan, it is
required to pay as contributions thereto, or permit to
exist any accumulated funding deficiency, whether or
not waived, with respect to any Plan;
(d) permit the present value of all benefit
liabilities under all Plans to exceed the fair market
value of the assets of such Plans; or
(e) fail to make any payments to any
Multiemployer Plan that it may be required to make
under any agreement relating to such Multiemployer Plan
or any law pertaining thereto.
SECTION 7.05. Consolidations, Mergers and Sales
of Assets. The Company will not, and will not permit any of
its Subsidiaries to, (i) consolidate or merge with or into
any other Person (other than mergers of Subsidiaries into
the Company as permitted by Section 6.03) or (ii) sell,
lease or otherwise transfer, directly or indirectly, any of
its or their assets, other than (x) sales of inventory in
the ordinary course of their respective businesses and sales
of accounts receivable pursuant to the Working Capital
Facility and (y) dispositions for cash and fair value of
assets that the board of directors of the Company determines
in good faith are no longer used or useful in the business
of the Company and its Subsidiaries, provided that
immediately after any such disposition, the aggregate fair
market value of all such assets disposed of pursuant to this
clause (y) during the Fiscal Year in which such disposition
is made does not exceed $50,000.
SECTION 7.06. Purchase of Assets, Investments.
The Company will not, and will not permit any Subsidiary to,
acquire any assets other than in the ordinary course of
business. The Company will not, and will not permit any
Subsidiary to, make, acquire or own any Investment in any
Person other than (a) Temporary Cash Investments and (b)
Investments in Subsidiaries made after the date hereof in an
aggregate amount not exceeding $5,000. Without limiting the
generality of the foregoing, the Company will not, and will
not permit any Subsidiary to, (i) acquire or create any
Subsidiary without (x) the consent of the Required Lenders
and (y) arrangements satisfactory to the Required Lenders
for a pledge of the stock of such Subsidiary to the Agent
for the benefit of the Lenders and a guaranty by such
Subsidiary of the obligations of the Company hereunder or
(ii) engage in any joint venture or partnership with any
other Person.
SECTION 7.07. Transactions with Affiliates. The
Company will not, and will not permit any Subsidiary to,
directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any
Affiliate of the Company or stockholder of the Company or
any affiliate of any such stockholder (an "Affiliate
Transaction") on terms that are less favorable to the
Company or such Subsidiary, as the case may be, than those
which might be obtained at the time from a Person who is not
an Affiliate of the Company or stockholder of the Company or
an affiliate of such stockholder, as the case may be;
provided that (i) if and for so long as the Signal Agreement
shall be in full force and effect and the security interests
created thereby are valid and perfected security interests,
then transactions between the Company or any of its
Subsidiaries and Signal shall not be "Affiliate
Transactions" for purposes hereof and (ii) if and for so
long as The Shirt Shed Agreement shall be in full force and
effect and the security interests created thereby are valid
and perfected security interests, then transactions between
the Company or any of its Subsidiaries and The Shirt Shed,
Inc. shall not be "Affiliate Transactions" for purposes
hereof.
SECTION 7.08. Amendments or Waivers. (a) With-
out the prior written consent of the Required Lenders, the
Company will not, and will not permit any Subsidiary to,
agree to any amendment to or waiver of or in respect of the
certificate of incorporation of the Company or any Operative
Document or any other material amendment to or waiver of any
material contract constituting a part of the Collateral in
any manner which could adversely affect the Company or the
rights of the Lenders under the Financing Documents or their
ability to enforce the same.
(b) The Company shall immediately notify the
Agent if the Company or any other Person gives any notice of
its intent to, or takes any other action to, terminate the
Working Capital Facility.
SECTION 7.09. Fiscal Year. The Company shall not
change its fiscal year from a fiscal year ending December
31.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default. If any one or
more of the following events (hereinafter called "Events of
Default") shall occur and be continuing for any reason
whatsoever (whether voluntary or involuntary, by operation
of law or otherwise):
(a) the Company shall fail to pay any principal
when due or shall fail to pay any interest or premium
on any Note, or any fees or any other amount payable
hereunder within three Business Days of the date when
due;
(b) the Company shall fail to observe or perform
any covenant contained in Section 6.04, or Article VII
hereof, or Section 5 or Sections 4(A), (E) or (I) of
the Security Agreement;
(c) the Company or any of its Subsidiaries,
stockholders or Affiliates shall fail to observe or
perform any covenant or agreement contained in the
Financing Documents (other than those covered by clause
(a) or (b) above) for 30 days after notice thereof has
been given to the Company by the Agent;
(d) any representation, warranty, certification
or statement made by the Company in any Financing
Document or in any certificate, financial statement or
other document delivered pursuant to the Financing
Documents shall prove to have been incorrect in any
respect (or in any material respect if such
representation, warranty, certification or statement is
not by its terms already qualified as to materiality)
when made (or deemed made);
(e) the Company or any of its Subsidiaries shall
fail to make any payment in respect of any Debt (other
than the Notes) arising in one or more related or
unrelated transactions, in an aggregate principal
amount exceeding $50,000;
(f) any event or condition shall occur which
results in the acceleration of the maturity of any Debt
(other than the Notes) of the Company or any of its
Subsidiaries arising in one or more related or
unrelated transactions, in an aggregate principal
amount exceeding $50,000, or enables (or, with the
giving of notice or lapse of time or both, would
enable) the holder of such Debt or any Person acting on
such holder's behalf to accelerate the maturity
thereof;
(g) the Company or any of its Subsidiaries shall
commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or any substantial part of its property,
or shall consent to any such relief or to the
appointment of or taking possession by any such
official in an involuntary case or other proceeding
commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the
foregoing;
(h) an involuntary case or other proceeding shall
be commenced against the Company or any of its
Subsidiaries seeking liquidation, reorganization or
other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its
property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of
60 days; or an order for relief shall be entered
against the Company or any of its Subsidiaries under
the federal bankruptcy laws as now or hereafter in
effect;
(i) any member of the ERISA Group shall fail to
pay when due an amount or amounts aggregating in excess
of $50,000 which it shall have become liable to pay
under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV
of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or
to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated;
or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current payment
obligation in excess of $50,000;
(j) a judgment or order for the payment of money
in excess of $50,000 shall be rendered against the
Company or any of its Subsidiaries and such judgment or
order shall continue unsatisfied and unstayed for a
period of 20 days;
(k) Signal (and/or its wholly-owned Subsidiaries)
shall cease to be the registered and beneficial owner
of 100% of the capital stock of the Company;
(l) the auditor's report or reports on the
audited statements delivered pursuant to Section 6.01
shall include any material qualification (including
with respect to the scope of audit) or exception;
(m) the Lien created by any of the Security
Documents shall at any time fail to constitute a valid
and perfected Lien on all of the Collateral purported
to be secured thereby, subject to no prior or equal
Lien except Permitted Liens, or the Company, any
Subsidiary, Signal or any stockholder or Affiliate of
the Company or Signal shall so assert in writing;
(n) the Company shall be prohibited or otherwise
materially restrained from conducting the business
theretofore conducted by it by virtue of any
determination, ruling, decision, decree or order of any
court or regulatory authority of competent jurisdiction
and such determination, ruling, decision, decree or
order remains unstayed and in effect for any period of
20 days beyond any period for which any business
interruption insurance policy of the Company shall
provide full coverage to the Company of any losses and
lost profits;
(o) Signal or any of its subsidiaries,
stockholders or affiliates or KKE shall fail to observe
or perform any of their respective obligations under
the Security Documents to which they are a party for a
period of 30 days or more after notice thereof has been
given by the Agent;
(p) an "Event of Default" under the Working
Capital Facility shall occur; or
(q) any of the Operative Documents shall for any
reason fail to constitute the valid and binding
agreement of any party thereto, or any such party
(other than the Lenders or the Agent) shall so assert
in writing or the Agent shall for any reason not have
(for the benefit of the secured parties as set forth in
the Security Documents) as collateral security for the
Notes and the other obligations of the Company, or of
Signal, or any of its subsidiaries, stockholders or
affiliates, or of KKE under the Financing Documents, a
valid and perfected Lien on the property, rights and
revenues intended to be covered by the Security
Documents;
then, and in every such event and at any time thereafter
during the continuance of such event, the Agent shall if
requested by the Required Lenders, by notice to the Company
declare the Notes (together with accrued interest thereon)
to be, and the Notes shall thereupon become, immediately due
and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the
Company; provided that in the case of any of the Events of
Default specified in clause (g) or (h) above with respect to
the Company, without any notice to the Company or any other
act by the Agent or the Lenders, all of the Notes (together
with accrued interest thereon) shall become immediately due
and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the
Company.
ARTICLE IX
FEES, EXPENSES AND INDEMNITIES;
GENERAL PROVISIONS RELATING TO PAYMENTS
SECTION 9.01. Computation of Interest. All
interest hereunder and under the Notes shall be calculated
on the basis of a 360-day year for the actual number of days
elapsed.
SECTION 9.02. General Provisions Regarding
Payments. (a) All payments (including prepayments) to be
made by the Company under any Financing Document, including
payments of principal of and premium and interest on the
Notes, fees, expenses and indemnities, shall be made without
set-off or counterclaim and in immediately available funds.
(b) If any payment hereunder becomes due and
payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest thereon
shall be payable at the then applicable rate during such
extension. The Company shall make all payments in
immediately available funds to each Lender's Payment Account
before 1:00 P.M. (New York City time) on the date when due.
Each payment (including prepayments) by the Company on
account of principal of and interest on any Loans shall be
made pro rata according to the respective outstanding
principal amounts of such Class of Loans held by each
Lender. All amounts payable by the Company hereunder or
under any other Financing Document not paid when due (other
than payments of principal and interest on the Notes, which
shall bear interest as set forth therein) shall bear
interest, payable on demand, for each day until paid at a
rate per annum equal to 5% plus the rate announced by
Nations Bank of North Carolina, N.A. from time to time as
its prime rate (calculated on the basis of a 360-day year
for the actual number of days elapsed).
SECTION 9.03. Expenses. Whether or not the
transactions contemplated hereby shall be consummated, the
Company agrees to pay on demand (i) all costs and expenses
of preparation of this Agreement, the other Financing
Documents and of the Company's performance of and compliance
with all agreements and conditions contained herein and
therein, (ii) the reasonable fees and expenses and
disbursements of counsel (including the reasonable
allocation of the compensation, costs and expenses of
in-house counsel, based upon time spent) to, and independent
appraisers and consultants retained by, the Lenders in
connection with the negotiation, preparation, execution and
administration of this Agreement, the other Financing
Documents and any amendments hereto or thereto and waivers
hereof and thereof, (iii) all costs and expenses of
creating, perfecting and maintaining Liens pursuant to the
Financing Documents, including filing and recording fees and
expenses, the costs of any bonds required to be posted in
respect of future filing and recording fees and expenses,
title investigations and fees and expenses of such local
counsel as the Agent shall request and (iv) if an Event of
Default occurs, all out-of-pocket expenses incurred by the
Agent and each Lender, including reasonable fees and
disbursements of counsel (including the reasonable
allocation of the compensation, costs and expenses of
in-house counsel, based upon time spent), in connection with
such Event of Default and collection, bankruptcy, insolvency
and other enforcement proceedings resulting therefrom;
provided that the fees and reasonably estimated expenses and
disbursements of counsel to the Lenders incurred in
connection with negotiation, preparation and execution of
the Operative Documents and the consummation of the
transactions contemplated thereby to occur on the Effective
Date shall be paid by the Company on the Effective Date
(with payment for expenses and disbursements to be adjusted
subsequent to the Effective Date if the foregoing estimates
exceed or fall short of the actual amounts).
SECTION 9.04. Indemnity. Whether or not the
transactions contemplated hereby shall be consummated, the
Company agrees to indemnify, pay and hold harmless the Agent
and each Lender and any subsequent holder of any of the
Notes, and the officers, directors, employees and agents of
the Agent, each Lender and such holders (collectively called
the "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including the fees and disbursements
of counsel for such Indemnitee in connection with any
investigative, administrative or judicial proceeding,
whether or not such Indemnitee shall be designated a party
thereto, and the expenses of investigation by engineers,
environmental consultants and similar technical personnel),
which may be imposed on, incurred by or asserted against
such Indemnitee as a result of or in connection with the
transactions contemplated hereby or by the other Operative
Documents (including (i)(A) as a direct or indirect result
of the presence on or under, or escape, seepage, leakage,
spillage, discharge, emission or release from, any property
now or previously owned, leased or operated by the Company
or any of its Subsidiaries of any Hazardous Materials or any
Hazardous Materials Contamination, (B) arising out of or
relating to the offsite disposal of any materials generated
or present on any such property or (C) arising out of or
resulting from the environmental condition of any such
property or the applicability of any governmental
requirements relating to Hazardous Materials, whether or not
occasioned wholly or in part by any condition, accident or
event caused by any act or omission of the Company or any of
its Subsidiaries, and (ii) proposed and actual extensions of
credit under this Agreement) and the use or intended use of
the proceeds of the Notes, except that the Company shall
have no obligation hereunder to an Indemnitee with respect
to any liability resulting from the gross negligence or
wilful misconduct of such Indemnitee. To the extent that
the undertaking set forth in the immediately preceding
sentence may be unenforceable, the Company shall contribute
the maximum portion which it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all
such indemnified liabilities incurred by the Indemnitees or
any of them. Without limiting the generality of any
provision of this Section, to the fullest extent permitted
by law, the Company hereby waives all rights for
contribution or any other rights of recovery with respect to
liabilities, losses, damages, costs and expenses arising
under or relating to Environmental Laws that it might have
by statute or otherwise against any Indemnitee.
SECTION 9.05. Taxes. The Company agrees to pay
all governmental assessments, charges or taxes (except
income or other similar taxes imposed on any Lender or any
holder of a Note), including any interest or penalties
thereon, at any time payable or ruled to be payable in
respect of the existence, execution or delivery of this
Agreement, the other Financing Documents, or the issuance of
the Notes, and to indemnify and hold each Lender and each
and every holder of the Notes, harmless against liability in
connection with any such assessments, charges or taxes.
SECTION 9.06. Maximum Interest. (a) In no event
shall the interest charged with respect to the Notes or any
other obligations of the Company under the Financing
Documents exceed the maximum amount permitted under the laws
of the State of New York or of any other applicable
jurisdiction.
(b) Notwithstanding anything to the contrary
herein or elsewhere, if at any time the rate of interest
payable for the account of any Lender hereunder or under any
Note or other Financing Document (the "Stated Rate") would
exceed the highest rate of interest permitted under any
applicable law to be charged by such Lender (the "Maximum
Lawful Rate"), then for so long as the Maximum Lawful Rate
would be so exceeded, the rate of interest payable for the
account of such Lender shall be equal to the Maximum Lawful
Rate; provided, that if at any time thereafter the Stated
Rate is less than the Maximum Lawful Rate, the Company
shall, to the extent permitted by law, continue to pay
interest for the account of such Lender at the Maximum
Lawful Rate until such time as the total interest received
by such Lender is equal to the total interest which such
Lender would have received had the Stated Rate been (but for
the operation of this provision) the interest rate payable.
Thereafter, the interest rate payable for the account of
such Lender shall be the Stated Rate unless and until the
Stated Rate again would exceed the Maximum Lawful Rate, in
which event this provision shall again apply.
(c) In no event shall the total interest received
by any Lender exceed the amount which such Lender could
lawfully have received had the interest been calculated for
the full term hereof at the Maximum Lawful Rate with respect
to such Lender.
(d) In computing interest payable with reference
to the Maximum Lawful Rate applicable to any Lender, such
interest shall be calculated at a daily rate equal to the
Maximum Lawful Rate divided by the number of days in the
year in which such calculation is made.
(e) If any Lender has received interest hereunder
in excess of the Maximum Lawful Rate with respect to such
Lender, such excess amount shall be applied to the reduction
of the principal balance of its Loans or to other amounts
(other than interest) payable hereunder, and if no such
principal or other amounts are then outstanding, such excess
or part thereof remaining shall be paid to the Company.
ARTICLE X
THE AGENT
SECTION 10.01. Appointment and Authorization.
Each Lender irrevocably appoints and authorizes the Agent to
enter into each of the Security Documents on its behalf and
to take such action as agent on its behalf and to exercise
such powers under the Financing Documents as are delegated
to the Agent by the terms thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 10.02. Agent and Affiliates. Greyrock
Capital Group Inc. shall have the same rights and powers
under the Financing Documents as any other Lender and may
exercise or refrain from exercising the same as though it
were not the Agent, and Greyrock Capital Group Inc. and its
affiliates may lend money to and generally engage in any
kind of business with the Company or any Subsidiary or
affiliate of the Company as if it were not the Agent
hereunder.
SECTION 10.03. Action by Agent. The obligations
of the Agent hereunder are only those expressly set forth
herein and under the other Financing Documents. Without
limiting the generality of the foregoing, the Agent shall
not be required to take any action with respect to any
Default, except as expressly provided in Article VIII.
SECTION 10.04. Consultation with Experts. The
Agent may consult with legal counsel (who may be counsel for
the Company), independent public accountants and other
experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or
experts.
SECTION 10.05. Liability of Agent. Neither the
Agent nor any of its directors, officers, agents, or
employees shall be liable for any action taken or not taken
by it in connection with the Financing Documents (i) with
the consent or at the request of the Required Lenders or
(ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors,
officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection
with any Financing Document or any borrowing hereunder; (ii)
the performance or observance of any of the covenants or
agreements of the Company; (iii) the satisfaction of any
condition specified in Article IV, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness, sufficiency or genuineness of any Financing
Document or any other instrument or writing furnished in
connection therewith. The Agent shall not incur any
liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a
bank wire, telex or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
SECTION 10.06 Indemnification. Each Lender
shall, ratably indemnify the Agent (to the extent not
reimbursed by the Company) against any cost, expense
(including counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from the
Agent's gross negligence or willful misconduct) that the
Agent may suffer or incur in connection with the Financing
Documents or any action taken or omitted by the Agent
hereunder or thereunder.
SECTION 10.07. Credit Decision. Each Lender
acknowledges that it has, independently and without reliance
upon the Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action
under the Financing Documents.
SECTION 10.08. Successor Agent. The Agent may
resign at any time by giving notice thereof to the Lenders
and the Company. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent gives notice of
resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a
commercial bank, finance company, insurance company or other
financial institution organized or licensed under the laws
of the United States of America or of any State thereof
having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of its appointment as
Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Survival. All agreements,
representations and warranties made herein shall survive the
execution and delivery of this Agreement, the other
Operative Documents and the execution, sale and delivery of
the Notes. The indemnities and agreements set forth in
Articles IX and X shall survive the payment of the Notes and
the termination of this Agreement.
SECTION 11.02. No Waivers. No failure or delay
by the Agent or any Lender in exercising any right, power or
privilege under any Financing Document shall operate as a
waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The
rights and remedies herein and therein provided shall be
cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.03. Notices. All notices, requests
and other communications to any party hereunder shall be in
writing (including prepaid overnight courier, telex,
facsimile transmission or similar writing) and shall be
given to such party at its address or telecopy or telex
number set forth on the signature pages hereof (or, in the
case of any such Lender who becomes a Lender after the date
hereof, in a notice delivered to the Company and the Agent
by the assignee Lender forthwith upon such assignment) or at
such other address or telecopy or telex number as such party
may hereafter specify for the purpose by notice to the Agent
and the Company. Each such notice, request or other
communication shall be effective (i) if given by telex or
telecopy, when such telex or telecopy is transmitted to the
telex or telecopy number specified in this Section and the
appropriate answerback is received (in the case of telex) or
telephonic confirmation of receipt thereof is obtained (in
the case of telecopy) or (ii) if given by mail, prepaid
overnight courier or any other means, when received at the
address specified in this Section or when delivery at such
address is refused.
SECTION 11.04. Severability. In case any
provision of or obligation under this Agreement or the Notes
or any other Financing Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
SECTION 11.05. Amendments and Waivers. Any
provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in
writing and is signed by the Company and the Required
Lenders (and, if the rights or duties of the Agent are
affected thereby, by the Agent); provided that no such
amendment or waiver shall, unless signed by all the Lenders,
(i) subject any Lender to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or
fees hereunder, (iii) postpone the date fixed for any
payment of principal of any Loan pursuant to Section 2.04(a)
or 3.04(a), or of interest on any Loan or any fees hereunder
or (iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes which shall
be required for the Lenders or any of them to take any
action under this Section or any other provision of this
Agreement.
SECTION 11.06. Successors and Assigns;
Registration. (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns
(including any transferee of any Note or Warrant), except
that the Company may not assign or otherwise transfer any of
its rights under this Agreement without the prior written
consent of all Lenders.
(b) The terms and provisions of this Agreement
shall inure to the benefit of any transferee or assignee of
any Note and, in the event of such transfer or assignment,
the rights and privileges herein conferred upon the
assigning Lender shall automatically extend to and be vested
in such transferee or assignee, all subject to the terms and
conditions hereof. Any assignment shall be for an equal
percentage of each Class of such assignor Lender's Loans,
and any such assignee Lender shall, upon its registration in
the Note Register referred to below, become a "Lender" for
all purposes hereunder. No such assignment by Greyrock
Capital shall result in Greyrock Capital holding less than
51% of the aggregate unpaid principal amount of the Loans,
or, if no Loans are outstanding, having less than 51% of the
aggregate amount of the Commitments; provided that Greyrock
Capital may assign or otherwise transfer all or any portion
of its Loans and Commitments if at any time it shall, in the
judgment of Greyrock Capital, become unlawful under, or
violate, any statute, regulation, judgment, order or decree
applicable to Greyrock Capital for Greyrock Capital to make,
maintain or fund its Loans, such determination by Greyrock
Capital Group Inc. to be conclusive.
(c) Upon any assignment of any Note(s), the
assigning Lender shall surrender its Note(s) to the Company
for exchange or registration of transfer, and the Company
will promptly execute and deliver in exchange therefor new
Note(s) of the same tenor and registered in the name of the
assignor Lender (if less than all of such Lender's Notes are
assigned) and the name of the assignee Lender.
(d) The Company shall maintain a register (the
"Note Register") of the Lenders and all assignee Lenders
that are the holders of all the Notes issued pursuant to
this Agreement. The Company will allow any Lender to
inspect and copy such list at the Company's principal place
of business during normal business hours. Prior to the due
presentment for registration of transfer of any Note, the
Company may deem and treat the Person in whose name a Note
is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and premium and
interest on such Note and for all other purposes whatsoever,
and the Company shall not be affected by notice to the
contrary.
(e) Each Lender (including any assignee Lender at
the time of such assignment) represents that it (i) is
acquiring its Notes solely for investment purposes and not
with a view toward, or for sale in connection with, any
distribution thereof, (ii) has received and reviewed such
information as it deems necessary to evaluate the merits and
risks of its investment in the Notes, (iii) is an
"accredited investor" within the meaning of Rule 501(a)
under the Securities Act and (iv) has such knowledge and
experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment
in the Notes, including a complete loss of its investment.
(f) Each Lender understands that the Notes are
being offered only in a transaction not involving any public
offering within the meaning of the Securities Act, and that,
if in the future such Lender decides to resell, pledge or
otherwise transfer any of the Notes, such Notes may be
resold, pledged or transferred only (i) to the Company, (ii)
to a person who such Lender reasonably believes is a
qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional
buyer to whom notice is given that such resale, pledge or
transfer is being made in reliance on Rule 144A under the
Securities Act or (iii) pursuant to an exemption from
registration under the Securities Act.
(g) Each Lender understands that the Notes will,
unless otherwise agreed by the Company and the holder
thereof, bear a legend to the following effect:
THIS SECURITY IS NOT BEING REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT
OF THE ISSUER THAT THIS SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) TO THE
COMPANY, (2) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER THAT IS AWARE
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR (3) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT.
(h) If any Note becomes mutilated and is
surrendered by the Lender with respect thereto to the
Company, or if any Lender claims that any of its Notes has
been lost, destroyed or wrongfully taken, the Company shall
execute and deliver to such Lender a replacement Note, upon
the affidavit of such Lender attesting to such loss,
destruction or wrongful taking with respect to such Note and
receipt of indemnity or security satisfactory to the Company
(it being understood and agreed that if such Lender is
Greyrock Capital, then a written agreement of indemnity
given by Greyrock Capital alone shall be satisfactory to the
Company and no further security shall be required), and such
lost, destroyed, mutilated, surrendered or wrongfully taken
Note shall thereupon be deemed to be canceled for all
purposes hereof. Any costs and expenses of the Company in
replacing any such Note shall be for the account of such
Lender.
(i) Notwithstanding any other provision hereof or
of any other Operative Document, if the Company or any
Affiliate purchases any Note or any interest in any Loan,
such Note or interest shall thereupon be canceled, no new
Note or interest shall be substituted therefor and the
Company or such Affiliate, as the case may be, shall not be
a "Lender" for purposes of any of the Operative Documents or
be assigned the rights of any Lender.
SECTION 11.07. Collateral. Each of the Lenders
represents to the Agent and each of the other Lenders that
it in good faith is not relying upon any Margin Stock as
collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 11.08. Headings. Headings and captions
used in the Financing Documents (including the Exhibits and
Schedules hereto and thereto) are included herein and
therein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or
be given any substantive effect.
SECTION 11.09. Governing Law; Submission to
Jurisdiction. This Agreement and each Note shall be
governed by and construed in accordance with the laws of the
State of New York. The Company hereby submits to the
nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New
York State court sitting in New York City for purposes of
all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The
Company irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to
the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought
in such a court has been brought in an inconvenient forum.
Each of the parties hereto irrevocably consents to service
of process in the manner provided for notices in Section
11.03 (except that process may not be served by telecopy).
Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner
permitted by law.
SECTION 11.10. Notice of Breach by Agent or
Lender. The Company agrees to give the Agent and the
Lenders notice of any action or inaction by the Agent or any
Lender or any agent or attorney of the Agent or any Lender
in connection with this Agreement or any other Financing
Document or the obligations of the Company under this
Agreement or any other Financing Document that may be
actionable against the Agent or any Lender or any agent or
attorney of the Agent or any Lender or a defense to payment
of any obligations of the Company under this Agreement or
any other Financing Document for any reason, including
commission of a tort or violation of any contractual duty or
duty implied by law. The Company agrees, to the fullest
extent that it may lawfully do so, that unless such notice
is given promptly (and in any event within 60 days after the
Company has knowledge, or with the exercise of reasonable
diligence could have had knowledge, of any such action or
inaction), the Company shall not assert, and the Company
shall be deemed to have waived, any claim or defense arising
therefrom to the extent that the Agent or any Lender could
have mitigated such claim or defense after receipt of such
notice.
SECTION 11.11. WAIVER OF JURY TRIAL. EACH OF THE
COMPANY, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT
PERMITTED BY LAW WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM
OR RECEIVE CONSEQUENTIAL OR SPECIAL DAMAGES IN CONNECTION
WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE
FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
SECTION 11.12. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same
instrument. This Agreement, the other Financing Documents,
the Investors Agreement and the Warrants constitute the
entire agreement and understanding among the parties hereto
and supersede any and all prior agreements and
understandings, oral or written, relating to the subject
matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Amended Agreement to be duly executed by their
respective authorized officers as of the day and year first
above written.
AMERICAN MARKETING WORKS, INC.
By: /s/ Marvin Winkler
Title: President
Address: 228 Manhattan Beach Blvd.
Suite 305
Manhattan Beach, CA 90266
Company Account Designation:
Manufacturers Bank
ABA No.: 122226076
Account No.: 90048806
Account Name: American Marketing
Works, Inc.
GREYROCK CAPITAL GROUP INC.
as Lender and Agent
By: /s/ Ron Cohn
Title: Authorized Signatory
One Canterbury Green
P.O. Box 120013
Stamford, CT 06912-0013
Telecopy: 203-352-4102
Payment Account Designation:
First Chicago National Bank
Chicago, Illinois
ABA Number: 071000013
Account Number: 52-56933
Account Name: Greyrock Capital Group
Inc.
Reference: American Marketing Works,
Inc.
Agent Payment Account:
First Chicago National Bank
Chicago, Illinois
ABA Number: 071000013
Account Number: 52-56933
Account Name: Greyrock Capital Group
Inc.
Reference: American Marketing Works,
Inc.
LIST OF OMITTED EXHIBITS AND SCHEDULES
Exhibit A - Tranche A Note (included as Exhibit 10.49 to Form 10-
K for the year ended December 31, 1994)
Exhibit B - Tranche B Note (included as Exhibit 10.50 to Form 10-
K for the year ended December 31, 1994)
Exhibit C - Opinion of counsel to the Company
Exhibit D - Opinion of counsel to the Company
Schedule 1.01 - Security Documents
Schedule 5.02 - Required Consents and Defaults
Schedule 5.04 (c) - Financial Information
Schedule 5.05 - Legal Proceedings
Schedule 5.07 - Defaults
Schedule 5.10 - Subsidiaries
Schedule 5.13 - Taxes
Schedule 5.16 - Compensation Arrangements
Schedule 5.19 - Environmental Matters
Schedule 6.04 - Required Insurance
Schedule 7.01 - Outstanding Debt