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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 8)*
SIGNAL APPAREL COMPANY, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
9460486
- --------------------------------------------------------------------------------
(CUSIP Number)
Mr. Paul R. Greenwood
Walsh, Greenwood & Co.
One East Putnam Avenue
Greenwich, Connecticut 06830
(203) 863-8400
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 17, 1996
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |_|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- --------------------------------------------------------------------------------
CUSIP No. 9460486 Page 2 of __ Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Walsh, Greenwood & Co. (IRS No. 13-2994695)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
7,418,049
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 7,418,049
PERSON --------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,418,049
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
N/A
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
BD-PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------------------------------------------------------------------
CUSIP No. 9460486 Page 3 of __ Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Stephen Walsh
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
7,418,049
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 7,418,049
PERSON --------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,418,049
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
N/A
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE 13D
- --------------------------------------------------------------------------------
CUSIP No. 9460486 Page 4 of __ Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Paul R. Greenwood
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
7,418,049
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 7,418,049
PERSON --------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,418,049
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
N/A
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE 13D
CUSIP No. 9460486 Page 5 of __ Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WG Partners, L.P. (IRS No. 13-3518669)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
2,700,149
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 2,700,149
PERSON --------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,418,049
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
N/A
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
<PAGE>
SCHEDULE 13D
- --------------------------------------------------------------------------------
CUSIP No. 9460486 Page 6 of __ Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WG Trading Limited Partnership (IRS No. 52-1697237)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
3,454,600
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 3,454,600
PERSON --------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
77,418,049
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
N/A
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
<PAGE>
Item 1. Security and Issuer
Item 1 of the Schedule 13D is hereby restated in its entirety by
substituting the following:
This Amendment No. 8 ("Amendment No. 8") to the Schedule 13D originally
filed by the Reporting Persons (as defined in the Schedule 13D, as hereinafter
defined), with the Securities and Exchange Commission on February 1, 1994 (the
"Schedule 13D"), as amended by Amendment No. 1 filed on August 22, 1994,
Amendment No. 2 filed on December 8, 1994, Amendment No. 3 filed on January 20,
1995, Amendment No. 4 filed on May 10, 1995, Amendment No. 5 filed on December
20, 1995, Amendment No. 6 filed on February 10, 1996 ("Amendment No. 6"), and
Amendment No. 7 filed on April 11, 1996 ("Amendment No. 7") relates to the
Common Stock, par value $.01 per share (the "Common Stock"), of Signal Apparel
Company, Inc., an Indiana corporation (the "Issuer" or "Signal"), the principal
executive offices of which are located at 537 Market Street, Suite 403,
Chattanooga, Tennessee 37402. Unless otherwise indicated, all terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Schedule 13D.
Item 2. Identity and Background
Item 2 of the Schedule 13D is hereby restated in its entirety by
substituting the following:
(a) This Statement is being filed by Walsh, Greenwood & Co., a New York
limited partnership ("Walsh Greenwood"), Stephen Walsh ("Walsh"), Paul R.
Greenwood ("Greenwood"), WG Trading Company Limited Partnership, a Delaware
limited partnership ("WG Trading"), and WG Partners, L.P., a Delaware limited
partnership ("WG Partners"). Walsh Greenwood, WG Trading and WG Partners are
referred to herein collectively as the "Partnerships"; Walsh and Greenwood are
referred to herein collectively as the "General Partners"; and the Partnerships
and the General Partners are referred to herein collectively as the "Reporting
Persons".
(b-c)
Walsh Greenwood
Walsh Greenwood, a New York limited partnership, is a broker-dealer
whose principal business consists of effecting transactions in securities for
others and for its own account. The principal business address of Walsh
Greenwood, which also serves as its principal office, is One East Putnam Avenue,
Greenwich, Connecticut 06830. The Amended and Restated Agreement (the "Walsh
Greenwood Partnership Agreement") provides that, with certain exceptions, the
authority to make the management, operation and policy decisions of Walsh
Greenwood is vested exclusively in its general partners and that all decisions
as to the management, operation and policy of Walsh Greenwood shall be made by
the vote of a majority in interest of the general partners. Notwithstanding the
foregoing, any decision as to the purchase or sale of a security may be made by
one general partner, so long as such transaction falls within policies
established by a majority in interest of the general partners. Pursuant to
Instruction C to Schedule 13D of Regulation 13D-G of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), information with respect to the General Partners of Walsh Greenwood is
set forth herein.
Walsh
Walsh is a general partner of Walsh Greenwood and maintains a business
address at 3333 New Hyde Part Road, North Hills, New York 11040.
Greenwood
33511-1
1
<PAGE>
Greenwood is a general partner of Walsh Greenwood and maintains a
business address at One East Putnam Avenue, Greenwich, Connecticut 06830.
WG Trading
WG Trading is a Delaware limited partnership created in October 1990.
Its general partners are Walsh and Greenwood. WG Trading does not maintain a
separate business address or office (other than the office of its registered
agent in Delaware) and its operations are managed by Walsh and Greenwood at
Walsh Greenwood's address.
WG Partners
WG partners is a Delaware limited partnership created in 1989. Its
general partner is Walsh Greenwood. WG Partners does not maintain a separate
business address or office (other than the office of its registered agent in
Delaware) and its operations are managed by Walsh Greenwood at Walsh Greenwood's
address.
(d) None of the Reporting Persons has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) None of the Reporting Persons has, during the last five years, been
a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or State securities laws or finding any
violations with respect to such laws.
(f) Each of the natural persons identified in this Schedule 13D is a
citizen of the United States of America.
Item 3. Source and Amounts of Funds or Other Consideration.
Item 3 of the Schedule 13D is hereby restated in its entirety by substituting
the following:
Information concerning the acquisition of beneficial ownership of
4,115,749 shares of Common Stock by the Reporting Persons, as a group, has been
reported in a Statement on Schedule 13D, as amended in amendments numbered 1
through 22 and heretofore filed on behalf of the Reporting Persons, together
with certain other reporting persons named in such Statement, as a group. The
relationship between such group consisting of the Reporting Persons and such
other reporting persons was terminated effective December 31, 1993.
Prior to January 25, 1994, Walsh Greenwood purchased 188,800 shares of
Common Stock on behalf of certain investment managed accounts (the "Managed
Accounts") controlled by Walsh Greenwood in which Walsh Greenwood has no
pecuniary interest, WG Partners acquired 2,700,149 shares of Common Stock and WG
Trading acquired 477,100 shares of Common Stock. All of the shares of Common
Stock were purchased out of the working capital of each acquiring entity.
The following narrative describes certain transactions affecting
beneficial ownership of Common Stock by the Reporting Persons in connection with
the consummation of the Restructuring Agreement (hereinafter defined) and the
Settlement Agreement (hereinafter defined).
Pursuant to a Restructuring Agreement, dated as of August 13, 1993 and
executed on November 19, 1993, among the Issuer, FS Signal Associates
partnership I ("FS Signal I") and Walsh Greenwood (the "Restructuring
Agreement"), a copy of which is attached as Exhibit A, Walsh Greenwood, among
other things, agreed on behalf of itself and its affiliates (including WG
Partners and WG Trading) to cancel and extinguish certain warrants to acquire
500,000 shares of Common Stock (formerly Class A Common Stock) and the certain
warrants to acquire 175,000 shares of Common Stock (formerly Class A Common
Stock). In consideration thereof, Walsh Greenwood received a warrant to purchase
675,000 shares of Common Stock at an exercise price of $7.06 per share (the "WG
1993 Warrant"), a copy of the Warrant Certificate is attached as Exhibit B,
which warrants are immediately exercisable. Walsh Greenwood designated WG
Trading as its assignee to hold of record the WG 1993 Warrant. In addition, as
described in the Restructuring Agreement, Walsh Greenwood agreed to cancel
$7,500,000 of subordinated debt owed to it by the Issuer pursuant to a Credit
Agreement, dated as of October 23, 1991 as amended, in exchange for 75 shares of
the Issuer's newly created non-convertible Series B Preferred Stock, no par
value (the "Series B Preferred Stock"), plus 1.969 additional shares upon
cancellation of accrued interest under such subordinated debt. Further, in
exchange for cancelling certain fees owed to Walsh Greenwood by the Issuer in
the aggregate amount of $1,037,500 Walsh Greenwood received 10.375 shares of
Series B Preferred Stock. Pursuant to the Restructuring Agreement, the Issuer
has agreed to make available until September 30, 1995 up to 150 additional
shares of Series A Preferred Stock for purchase by the Issuer's shareholders at
a price of $100,000 per share.
Pursuant to a Settlement Agreement, dated December 29, 1993 (the
"Settlement Agreement"), a copy of which is attached as Exhibit C, Walsh
Greenwood transferred ownership of 1,185,799 shares of Common Stock and 9.375
shares of Series B Preferred Stock (collectively, the "Settlement Transfer
Shares") to FS Signal Associates Partnership II ("FS Signal II") in settlement
of certain obligations of Walsh Greenwood and of Walsh and Greenwood as
described in the Settlement Agreement. In connection therewith, pursuant to a
Guarantee, Standby Commitment and Put Option Agreement, dated December 29, 1993
(the "Guarantee Agreement"), a copy of which is attached as Exhibit D, Walsh and
Greenwood agreed to guarantee to FS Signal II a minimum value of $6,750,000 for
the Settlement Transfer Shares. In addition, pursuant to the Guarantee
Agreement, FS Signal II shall have the right to require Walsh and Greenwood (or
either of them) to purchase the Settlement Transfer Shares on December 31, 1996.
Pursuant to an Agreement dated as of June 21, 1994 among the Issuer, FS
Signal I and Walsh Greenwood (the "Stock Exchange Agreement"), a copy of which
is attached as Exhibit F, the Issuer, among other things, agreed to (i) create a
new series designated as Series C Preferred Stock (the "Series C Preferred
Stock"), and (ii) issue 70 shares of its Series C Preferred Stock to Walsh
Greenwood in exchange for a $7,000,000 investment made in the Issuer by Walsh
Greenwood. In addition, all of the holders of the existing Series B Preferred
Stock agreed to exchange their shares of Series B Preferred Stock for shares of
Series C Preferred Stock on a one-for-one basis. As a result, Walsh Greenwood
exchanged the 77.969 shares of Series B Preferred Stock it held for 77.969
shares of Series C Preferred Stock.
On October 1, 1994, Walsh Greenwood sold to WG Trading all of Walsh
Greenwood's right, title and interest in and to 70 shares of Series C Preferred
Stock owned by Walsh Greenwood in consideration for a payment form WG Trading to
Walsh Greenwood of $7,000,000. As a result, Walsh Greenwood owns 77.969 shares
of Series C Preferred Stock and WG Trading owns 70 shares of Series C Preferred
Stock.
Pursuant to a Credit Agreement, dated as of March 31, 1995 and executed
on April 3, 1995, among the Issuer, The Shirt Shed, Inc. ("SSI"), American
Marketing Works, Inc. ("AMW") and Walsh Greenwood (the "Credit Agreement") (the
Issuer, SSI and AMW are referred to collectively herein as the "Company"), a
copy of which is attached hereto as Exhibit H, Walsh Greenwood agreed, among
other things, to lend the Issuer up to $15,000,000. The Issuer may borrow under
the Credit Agreement (each borrowing a "Loan") during the term of the Credit
Agreement on any business day upon two business days' notice to Walsh Greenwood.
Pursuant to the Credit Agreement, in consideration of Walsh Greenwood's
agreement to make the Loans, Walsh Greenwood received the following warrants:
(i) warrants to purchase 1,500,000 shares of Common Stock at an exercise price
of $2.25 per share (the "Fixed Rate Warrants"), which Warrants will vest and
become exercisable at the rate of 100,000 Warrants for each $1,000,000 in Loans
borrowed by the Issuer and (ii) warrants to purchase 1,500,000 shares of Common
Stock at an exercise price equal to a 25% discount to the twenty day average
trading price in December, 1996 (the "Discount Rate Warrants"), which Warrants
vested on April 3, 1995 upon the execution of the Credit Agreement and the
agreement by Walsh Greenwood to make the Loans, and which will be exercisable
during a period of three years commencing January 1, 1997. Copies of the warrant
certificates representing the Fixed Rate Warrants and the Discount Rate Warrants
are attached hereto as Exhibit I and Exhibit J, respectively.
As of April 30, 1995, the Issuer had drawn $11,000,000 under the Credit
Agreement from Walsh Greenwood, thus causing 1,100,000 of the Fixed Rate
Warrants to vest and become immediately exercisable. The remaining $4,000,000
available to the Issuer under the Credit Agreement may be drawn by the Issuer on
two days' notice to Walsh Greenwood by the Issuer. If such remaining amount is
drawn in full, all of the then unexercisable Fixed Rate Warrants would vest,
resulting in the immediate exercisability of all 1,500,000 Fixed Rate Warrants.
In connection with the purchase of thirty shares of the Issuer's Series C
Preferred Stock by WG Trading on January 5, 1995, WG Trading received a warrant
certificate for 300,000 shares of Common Stock (the "Pfd. C Warrant"), a copy of
which is attached hereto as Exhibit L.
Pursuant to a First Amendment to Credit Agreement, dated as of August 10,
1995 (the "First Amendment to Credit Agreement"), among the Issuer, The Shirt
Shed, Inc., American Marketing Works, Inc. and Walsh Greenwood, a copy of which
is attached hereto as Exhibit M, Walsh Greenwood agreed, among other things, to
increase the maximum principal amount of Loans available to the Issuer to $20,
000,000. In consideration of Walsh Greenwood's agreement to make such additional
Loans, Walsh Greenwood received the following: (i) a warrant certificate for an
additional 500,000 Fixed Rate Warrants, a copy of which is attached hereto as
Exhibit N, and (ii) a warrant certificate for an additional 500,000 Discount
Rate Warrants, a copy of which is attached hereto as Exhibit C. As a result,
Walsh Greenwood held a total of 2,000,000 Fixed Rate Warrants and a total of
2,000,000 Discount Rate Warrants.
As previously reported, Walsh Greenwood transferred all its right, title
and interest in the WG 1993 Warrant to WG Trading. A copy of the Warrant
Certificate for the WG 1993 Warrant transferred to WG Trading is attached hereto
as Exhibit P.
Pursuant to an Assignment of Credit Agreement and Assignment of Note,
dated December 1, 1995, a copy of which is attached hereto as Exhibit O, Walsh
Greenwood transferred all its right, title and interest in the 2,000,000 Fixed
Rate Warrants and the 2,000,000 Discount Rate Warrants to WG Trading. Copies of
the Warrant Certificates for 1,500,000 and 500,000 Fixed Rate Warrants
transferred to WG Trading are attached hereto as Exhibit R and Exhibit S,
respectively. Copies of the Warrant Certificates for 1,500,000 and 500,000
Discount Rate Warrants are attached hereto as Exhibit T and Exhibit U,
respectively.
The 2,500 shares of common Stock purchased by WG Trading as indicated in
Item 5(c) were purchased for a total of $9,262.50 from WG Trading's working
capital.
Item 4. Purpose of Transaction.
Item 4 of the Schedule 13D is hereby restated in its entirety by
substituting the following:
The purchases described herein were made by the Reporting Persons solely
for investment purposes. Except as otherwise described below or in Item 3 above,
the Reporting Persons do not have any present plans or proposals that relate to
or would result in the following: the acquisition by any person of additional
securities of the Issuer or the disposition of securities of the Issuer; an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Issuer or any of its subsidiaries; a sale or transfer
of a material amount of assets of the Issuer or any of its subsidiaries; a
change in the present Board or management of the Issuer; any other material
change in the Issuer's business or corporate structure or its present
capitalization or dividend policy; changes in the Issuer's charter or by-laws or
other actions that might impede the acquisition of control of the Issuer by any
person; a class of securities of the Issuer to be delisted from a national
securities exchange or cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association; causing
securities of the Issuer to be eligible for termination of registration pursuant
to Section 12(g)(4) of the Exchange Act or any other similar action.
The Reporting Persons have advised the Issuer that they intend to purchase
additional shares of Common Stock in the open market, from time to time, as
market conditions warrant.
Notwithstanding anything contained herein, the Reporting Persons reserve
the right to change their intention with respect to any and all of the matters
referred to in this Item 4.
Walsh Greenwood entered into the Credit Agreement described herein and
agreed to make the Loans provided for therein to provide the Issuer with cash to
use for its working capital funds.
Walsh Greenwood entered into the First Amendment to Credit Agreement
described herein and agreed to make the additional Loans provided for therein to
provide the Issuer with additional cash to use for its working capital funds.
The purchases described herein were made by the Reporting Persons solely
for investment purposes.
The purchases described in Item 5(c) of this Amendment No. 8 were made
solely for investment purposes.
Item 5. Interest in Securities of the Issuer.
Item 5(a) of the Schedule 13D is hereby restated in its entirety by
substituting the following:
(a) As of the date hereof, the Reporting Persons may be deemed to be the
beneficial owners of 7,418,049 shares of Common Stock(1), constituting
approximately 51.2% of the
- --------
(1) Such 7,418,049 shares of Common Stock consist of (i) 2,700,149 shares
of Common Stock directly owned by WG Partners; (ii) 1,263,300 shares of Common
Stock owned directly by Walsh Greenwood (all of which are held in the Managed
Accounts); (iii) 2,000,000 shares of Common Stock issuable upon exercise of the
Fixed Rate Warrants held by WG Trading; (iv) 675,000 shares of Common Stock
issuable upon exercise of the WG 1993 Warrant held by WG Trading; (v) 479,600
shares of Common Stock owned directly by WG Trading; and (vi) 300,000 shares of
Common Stock issuable upon exercise of the Pfd. C
<PAGE>
14,477,402 shares of Common Stock which were outstanding as of March 29, 1996 as
reported by the Issuer to the Reporting Persons(2).
As of the date hereof, Walsh Greenwood, and Walsh and Greenwood,
individually, may be deemed to beneficially own 7,418,049 shares of Common
Stock(3), constituting approximately 51.2% of the 14,477,402 shares of Common
Stock outstanding(4).
As of the date hereof, WG Partners is the beneficial owner of 2,700,149
shares of Common Stock, constituting approximately 23.5% of the 11,502,402
shares of Common Stock outstanding.
As of the date hereof, WG Trading is the beneficial owner of 3,454,600
shares of Common Stock(5), constituting approximately 23.8% of the 14,477,402
shares of Common Stock outstanding(6).
- --------
Warrant held by WG Trading. Walsh Greenwood, Walsh, Greenwood, WG Partners and
WG Trading disclaim beneficial ownership of the other Reporting Persons' shares
and such other Reporting Persons disclaim beneficial ownership of their shares.
(2) 675,000, 2,000,000 and 300,000 shares of Common Stock are added to the
11,502,402 shares of Common Stock reported by the Issuer as outstanding as of
March 29, 1996 in order to reflect the assumed exercise of the WG 1993 Warrant,
the Fixed Rate Warrants and the Pfd. C Warrant respectively, which are
exercisable within 60 days.
(3) Such 7,418,049 shares of Common Stock consists of (i) 2,700,149 shares
of Common Stock directly owned by WG Partners; (ii) 1,263,300 shares of Common
Stock directly owned by Walsh Greenwood (all of which are held in the Managed
Accounts); (iii) 2,000,000 shares of Common Stock owned by WG Trading pursuant
to the Fixed Rate Warrants; (iv) 675,000 shares of Common Stock owned by WG
Trading pursuant to the WG 1993 Warrant; (v) 479,600 shares of Common Stock
directly owned by WG Trading; and (vi) 300,000 shares of Common Stock owned by
the WG Trading pursuant to the Pfd. C Warrant.
(4) 675,000, 2,000,000 and 300,000 shares are added to the 11,502,402
shares of Common Stock reported by the Issuer as outstanding as of March 29,
1996 in order to reflect the assumed exercise of the WG 1993 Warrant, the Fixed
Rate Warrants and the Pfd. C Warrant respectively, which are exercisable within
60 days.
(5) Such 3,454,600 shares consists of the 479,600 shares of Common Stock
directly owned by WG Trading, the 675,000 WG 1993 Warrant Shares, the 2,000,000
Fixed Rate Warrants Shares and the 300,000 Pfd. C Warrant Shares.
(6) 675,000, 2,000,000 and 300,000 shares are added to the 11,502,402
shares of Common Stock reported by the Issuer as outstanding as of March 29,
1996 in order to reflect the assumed exercise of the WG 1993 Warrant, the Fixed
Rate Warrants and the Pfd. C Warrant respectively, which are exercisable
within 60 days.
<PAGE>
Item 5(b) of the Schedule 13D is hereby restated in its entirety by
substituting the following:
(b) Walsh Greenwood has the sole power to vote and dispose of the
1,263,300 shares of Common Stock it directly owns, (which shares are held by
Walsh Greenwood on behalf of the Managed Accounts over which Walsh Greenwood has
the power to vote and dispose of but does not have a pecuniary interest
therein). WG Trading has the sole power to vote and dispose of (i) the 479,600
shares of Common Stock it directly owns, (ii) the 675,000 shares of Common Stock
owned by it directly pursuant to the WG 1993 Warrant upon exercise thereof,
which power is exercisable by its general partners Walsh and Greenwood, (iii)
the 2,000,000 shares of Common Stock owned by it directly pursuant to the Fixed
Rate Warrants upon exercise thereof, which power is exercisable by its general
partners Walsh and Greenwood, and (iv) the 300,000 shares of Common Stock owned
by it directly pursuant to the Pfd. C Warrant upon exercise thereof, which power
is exercisable by its general partners Walsh and Greenwood. WG Partners has the
sole power to vote and dispose of the 2,700,149 shares of Common Stock owned by
it directly, which power is exercisable by its sole general partner Walsh
Greenwood. Each of Walsh and Greenwood, in his capacity as a general partner of
Walsh Greenwood and WG Trading, would share in the power to vote and direct the
disposition of the shares of Common Stock owned by each of Walsh Greenwood, WG
Trading and WG Partners.
Item 5(c) of the Schedule 13D is hereby restated in its entirety by
substituting the following:
(c) Since the filing of Amendment No. 7 to the Schedule 13D, the following
purchases of Common Stock have been effected by WG Trading all in open market
transactions:
DATE NO. OF SHARES PRICE
---- ------------- -----
9/9/96 1000 $3.625
9/9/96 800 $3.750
9/12/96 600 $3.750
9/12/96 100 $3.875
Item 6. Contracts, Arrangements, Understandings or Relationships with respect to
Securities of the Issuer.
Item 6 of the Schedule 13D is hereby restated in its entirety by
substituting the following:
In addition to the information set forth in Item 3 above, the Reporting
Persons have the contracts, arrangements, understandings and relationships with
respect to securities of the Issuer which are set forth below.
Pursuant to the 1995 Restructuring Agreement (as defined below), FS
Signal II agreed to transfer up to $3,375,000 in face value of shares of the
Series C Preferred Stock owned by it to Walsh Greenwood, to be used solely by
Walsh Greenwood for the payment of the exercise price stipulated in the Fixed
Rate Warrants and the Discount Rate Warrants.
In connection with the Credit Agreement and Walsh Greenwood's agreement
to make the Loans, the Issuer, WG Trading, Walsh Greenwood, FS Signal I and FS
Signal II entered into an agreement, dated as of March 31, 1995 and executed on
April 3, 1995 (the "1995 Restructuring Agreement"), a copy of which is attached
hereto as Exhibit K. Pursuant to the 1995 Restructuring Agreement, Walsh
Greenwood agreed, among other things, to grant the Issuer the right, upon
payment in full by the Issuer of the Loans and the satisfaction by a subsidiary
of the Issuer of a $6,500,000 obligation which has been guaranteed by the
Issuer, to redeem on or before June 30, 1998 all of the then outstanding Series
C Preferred Stock in exchange for shares of Common Stock priced at $7.00 per
share, subject to certain conditions.
Pursuant to an Agreement of Loan Transfer, dated as of August , 1996 (the
"Agreement of Loan Transfer"), among NationsCredit Commercial Corporation,
formerly known as Greyrock Capital Group Inc. ("NationsCredit"), and WG Trading,
a copy of which is attached hereto as Exhibit V, WG Trading agreed to buy
NationsCredit's interest as agent and lender under (i) the Credit Agreement,
dated as of February 16, 1993, between American Marketing Works, Inc. and
NationsCredit, a copy of which is attached hereto as Exhibit W, and (ii) the
Intercreditor
Agreement, dated as of March 31, 1995, among BNY Financial Corporation,
NationsCredit, as agent, Walsh Greenwood, Issuer, and The Shirt Shed, Inc.,a
copy of which is attached hereto as Exhibit X. WG Trading shall pay to
NationsCredit $500,000 in cash and deliver a promissory note in the principal
amount of $500,000, of which $250,000 is payable on October 15, 1996 and
$250,000 is payable on December 16, 1996, a copy of the form of which is
attached hereto as Exhibit Y. NationsCredit will deliver to WG Trading an
Assignment of Interest, a copy of the form of which is attached hereto as
Exhibit Z.
Item 7. Material to be Filed as Exhibits.
Item 7 of the Schedule 13D is hereby restated in its entirety by
substituting the following:
Exhibit A. Restructuring Agreement by and among the Issuer, FS Signal
and Walsh Greenwood.
Exhibit B. Warrant Certificate for 675,000 shares of Common Stock of
the Issuer, issued to Walsh Greenwood in connection with the Restructuring
Agreement.
Exhibit C. Settlement Agreement by and among Walsh, Greenwood, Walsh
Greenwood, FS Signal II, the Ruby Trust, Topaz Trust and the Comet Trust.
Exhibit D. Guarantee, Standby Commitment and Put Option Agreement by
and among Walsh, Greenwood, Walsh Greenwood, FS Signal II, the Ruby Trust, Topaz
Trust and the Comet Trust.
Exhibit E. Joint Filing Agreement and Power of Attorney.
Exhibit F. Agreement, dated June 21, 1994, by and among the Issuer, FS
Signal I and Walsh Greenwood.
Exhibit G. Press Release of the Issuer issued on November 23, 1994.
Exhibit H. Credit Agreement dated as of March 31, 1995 among the
Issuer, The Shirt Shed, Inc., American Marketing Works, Inc. and Walsh
Greenwood.
Exhibit I. Warrant Certificate for 1,500,000 shares of Common Stock of
the Issuer, issued to Walsh Greenwood in connection with the Fixed Rate Warrants
granted pursuant to the Credit Agreement.
Exhibit J. Warrant Certificate for 1,500,000 shares of Common Stock of
the Issuer, issued to Walsh Greenwood in connection with the Discount Rate
Warrants granted pursuant to the Credit Agreement.
Exhibit K. Agreement dated as of March 31, 1995 between the Issuer, WG
Trading, Walsh Greenwood, FS Signal I and FS Signal II.
Exhibit L. Warrant Certificate for 300,000 shares of Common Stock of
the Issuer, issued to WG Trading in connection with the Purchase of 30 shares of
the Issuer's Series C Preferred Stock.
Exhibit M. First Amendment to Credit Agreement dated as of August 10,
1995 among the Issuer, The Shirt Shed, Inc., American Marketing Works, Inc. and
Walsh Greenwood.
Exhibit N. Warrant Certificate for 500,000 shares of Common Stock of
the Issuer, issued to Walsh Greenwood in connection with the additional 500,000
Fixed Rate Warrants granted pursuant to the First Amendment to Credit Agreement.
Exhibit O. Warrant Certificate for 500,000 shares of Common Stock of
the Issuer, issued to Walsh Greenwood in connection with the additional 500,000
Discount Rate Warrants granted pursuant to the First Amendment to Credit
Agreement.
Exhibit P. Warrant Certificate for the WG 1993 Warrant issued to WG
Trading in connection with the assignment of the WG 1993 Warrant by Walsh
Greenwood to WG Trading.
Exhibit Q. Assignment of Credit Agreement and Assignment of Note, dated
as of December 1, 1995 by Walsh Greenwood to WG Trading.
Exhibit R. Warrant Certificate for 1,500,000 Fixed Rate Warrants issued
to WG Trading in connection with the Assignment of Credit Agreement and
Assignment of Note.
Exhibit S. Warrant Certificate for 500,000 Fixed Rate Warrants issued
to WG Trading in connection with the Assignment of Credit Agreement and
Assignment of Note.
Exhibit T. Warrant Certificate for 1,500,000 Discount Rate Warrants
issued to WG Trading in connection with the Assignment of Credit Agreement and
Assignment of Note.
Exhibit U. Warrant Certificate for 500,000 Discount Rate Warrants
issued to WG Trading in connection with the Assignment of Credit Agreement and
Assignment of Note.
Exhibit V. Agreement of Loan Transfer, dated as of August __, 1996,
among NationsCredit and WG Trading.
Exhibit W. Credit Agreement, dated as of February 16, 1993, between
American Marketing Works, Inc. and NationsCredit.
Exhibit X. Intercreditor Agreement, dated as of March 31, 1995, among
BNY Financial Corporation, NationsCredit, as agent, Walsh Greenwood, Issuer, and
The Shirt Shed, Inc.
Exhibit Y. Form of Promissory Note for $500,000 from WG Trading to
NationsCredit.
Exhibit Z. Assignment of Interest, dated as of August __, 1996, between
NationsCredit and WG Trading.
<PAGE>
Signatures
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/s/ Paul R. Greenwood
________________________________________
Paul R. Greenwood, on his own behalf and
as attorney-in-fact for each of the
other Reporting Persons named in this
Amendment
Dated: September 26, 1996
<PAGE>
Exhibit V
AGREEMENT OF LOAN TRANSFER
THIS AGREEMENT OF LOAN TRANSFER (the "Agreement") is made as of the _th
day of August, 1996, among NationsCredit Commercial Corporation., a Delaware
corporation ('Seller"), and WG Trading Company Limited Partnership, a limited
partnership ("Buyer").
RECITALS
A. Seller has previously entered into a certain Credit Agreement, dated as
of February 16, 1993 (as amended, the "Credit Agreement"), between American
Marketing Works, Inc., (the "Company") and Seller, formerly known as Greyrock
Capital Group Inc., as Lender and Agent (capitalized terms undefined herein
being used with the respective meanings set forth in the Loan Agreement).
B. Seller subsequently entered into a certain Intercreditor Agreement
dated as of March 31, 1995 among BNY Financial Corporation, Seller, as agent,
Walsh Greenwood & Co.. Signal Apparel Company. Inc., the Company, and The Shirt
Shed. Inc. (as amended, the "1995 Intercreditor Agreement").
C. Seller desires to sell its interest as Agent and Lender under (i) the
Credit Agreement, (ii) each of the Financing Documents and (iii) the
Intercreditor Agreement; provided, that such interest under the Credit Agreement
and the other Financing Documents is expressly subject to the terms of (x) the
Intercreditor Agreement which is one of the Financing Documents and (y) the 1995
Intercreditor Agreement (the "Assigned Interest").
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Sale of Interest as Agent and Lender. Subject to the terms and
conditions hereof, on a date mutually agreeable to Buyer and Seller on or before
August 29, 1996 (the "Closing Date"), the Seller shall sell to the Buyer, and
the Buyer shall buy from the Seller, the Assigned Interest by making the
following deliveries and payments:
(a) Seller shall deliver to Buyer (i) an Assignment of Interest in the
form of Exhibit A hereto, (ii) the original, executed Financing Documents,
including the Company's Note, (iii) the 1995 Intercreditor Agreement and (iv) a
copy of Seller's articles of incorporation, bylaws and an incumbency certificate
evidencing the signature and office of the person signing this Agreement and the
Assignment of Interest on its behalf.
(b) Buyer shall (i) pay in immediately available funds to Sellers account
designated at the end of this Agreement on or before 1:00 PM (New York City
time) on the Closing Date the amount of $500,000, (ii) deliver its duly executed
promissory note in the form of Exhibit B
<PAGE>
hereto (the "Deferral Note") in the principal amount of $500,000 evidencing its
obligation to pay the deferred installments of the purchase price and (iii)
deliver a copy of Buyer's limited partnership agreement and an incumbency
certificate evidencing the signature and office of the person signing this
Agreement and the Deferral Note on its behalf.
2. Representations and Warranties of Seller. The Seller represents and
warrants to the Buyer as follows:
(a) The Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of organization.
(b) The execution, delivery and performance of this Agreement and the
Assignment have been duly authorized and approved on behalf of the Seller by all
requisite corporate action, and this Agreement and the Assignment have been duly
authorized by the Seller pursuant to such authorization, and constitute the
valid and binding obligations of Seller enforceable in accordance with their
respective terms, except as enforcement thereof may be limited by applicable
bankruptcy laws generally affecting creditor's rights and equitable remedies.
(c) The Notes are the only Notes outstanding under the Credit Agreement,
Seller has valid and marketable title to the Notes free and clear of any
security, interests or liens and Seller has the right, power, authority and
capacity to sell its interest as Agent and Lender.
(d) The documents delivered by Seller under Section l(a)(ii) above are
true, correct and complete counterparts of the Financing Documents and the
Intercreditor Agreement.
3. Representations and Warranties of Buyer. The Buyer represents and
warrants to the Seller as follows:
(a) The Buyer is a limited partnership duly formed, validly existing and
in good standing under the laws of its jurisdiction of organization.
(b) The execution, delivery and performance of this Agreement and the
Deferral Note have been duly authorized and approved on behalf of the Buyer by
all requisite corporate action, and this agreement and the Deferral Note have
been duly authorized by the Buyer pursuant to such authorization, and constitute
the valid and binding obligations of Buyer enforceable in accordance with their
respective terms, except as enforcement thereof may be limited by applicable
bankruptcy laws generally affecting creditor's rights and equitable remedies.
(c) Buyer is a sophisticated and knowledgeable participant with respect to
investments of this type, has received the opportunity to review and evaluate,
and in fact has reviewed and evaluated, the Assigned Interest and all documents
evidencing the same together with such financial and other information relating
to the Company, the Loans and the guarantors and collateral for the Loans, has
made that review without any written or oral representation of
<PAGE>
any kind from the Seller, and has made its purchase under this Agreement for its
own account, and has no present intent to sell, assign, participate or otherwise
transfer the Assigned Interest or any part thereof.
4. Limitation on Representations and Warranties. EXCEPT AS EXPRESSLY SET
FORTH IN SECTION 3 ABOVE, SELLER HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE
MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ASSIGNED
INTEREST. Neither Seller nor any of its officers, directors, agents or employees
shall be liable to Buyer for the Company's solvency, financial condition or
ability to repay any obligation relating to the Assigned Interest. Not by way of
limitation of the foregoing, Seller shall not be deemed to have made any
representation or warranty, assumed any liability or responsibility or offered
any advice or analysis with respect to (i) any recital, representation, recital,
warranty or undertaking by the Company, any guarantor or any other party to the
Assigned Interest, (ii) the value, validity, enforceability or effectiveness of
the Assigned Interest or any Collateral or any part thereof, (iii) the existing
or future financial condition of the Company or any guarantor, or (iv) the
likelihood that the Loan will be repaid.
5. Survival. Representations and warranties made with respect hereto shall
survive the execution and delivery of this Agreement.
6. Binding. This Agreement shall be binding upon and inure to the benefit
of the respective successors and assigns of the parties hereto.
7. Severability. If any provision of this Agreement shall contravene or be
invalid under applicable law, such contravention or invalidity shall not affect
this entire Agreement, the provisions held to be invalid shall be deemed deleted
or modified, and this Agreement shall be interpreted and construed as though
such invalid provision or provisions were not part hereof or modified so as to
be conformed to such law.
8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original. and all of which
together shall constitute the same instrument.
9. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York in all respects, including
all matters of construction, validity and performance, without regard to the
choice of law provisions thereof. Any judicial proceeding brought by or against
Buyer or Seller in connection herewith may be brought in any court of competent
jurisdiction in the State of New York and the Buyer and Seller accept the
non-exclusive jurisdiction of the aforesaid courts and irrevocably agree to be
bound by any final judgment rendered thereby in connection with this Agreement
Each party hereby waives any objection to jurisdiction and venue of any action
instituted in connection herewith and shall not assert any defense based on lack
of jurisdiction or venue or based upon forum non conveniens.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective duly authorized officers as of the date set forth
above.
WG TRADING COMPANY LIMITED
PARTNERSHIP
By:___________________________
Name:
Title:
[address/fax]
NATIONSCREDIT COMMERCIAL
CORPORATION, formerly known as
Greyrock Capital Group Inc.
By:___________________________
Name: Ronald S. Cohn
Title: Authorized Signatory
One Canterbury Green
P.O. Box 120013
Stamford, CT 06912-0013
Telecopy: (203) 352-4102
First Chicago National Bank
Chicago, Illinois
ABA Number: 071000013
Account Number: 52-56933
Account Name: NationsCredit Commercial
Corporation
Reference: American Marketing Works, Inc.
<PAGE>
Exhibit W
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
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms...................................1
SECTION 1.02. Accounting Terms and Determinations.....................8
SECTION 1.03. Other Definitional Provisions...........................9
ARTICLE II
TRANCHE A LOANS
SECTION 2.01. Tranche A Loans.........................................9
SECTION 2.02. Tranche A Notes.........................................9
SECTION 2.03. Interest on the Tranche A Loans.........................9
SECTION 2.04. Repayments and Prepayments of Tranche A Notes..........10
ARTICLE III
TRANCHE B LOANS
SECTION 3.01. Tranche B Loans........................................10
SECTION 3.02. Tranche B Notes........................................10
SECTION 3.03. Interest on the Tranche B Loans........................11
SECTION 3.04. Repayments and Prepayments of Tranche B Notes..........11
ARTICLE IV
CONDITIONS TO EFFECTIVENESS
SECTION 4.01. Conditions to Effectiveness............................11
SECTION 4.02. Consequences of Effectiveness; Transitional Provisions.13
i
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Corporate Existence and Power..........................14
SECTION 5.02. Corporate and Governmental Authorization; No
Contravention .......................................14
SECTION 5.03. Binding Effect; Liens of Security Documents............14
SECTION 5.04. Financial Information..................................14
SECTION 5.05. Litigation.............................................15
SECTION 5.06. Ownership of Property Liens............................15
SECTION 5.07. No Default.............................................15
SECTION 5.08. No Burdensome Restrictions.............................16
SECTION 5.09. Labor Matters..........................................16
SECTION 5.10. Subsidiaries; Other Equity Investments.................16
SECTION 5.11. Investment Company Act.................................16
SECTION 5.12. Margin Regulations.....................................16
SECTION 5.13. Taxes..................................................17
SECTION 5.14. Compliance with ERISA..................................17
SECTION 5.15. Related Transactions...................................17
SECTION 5.16. Employment, Shareholders and Subscription Agreements...17
SECTION 5.17. Representations and Warranties Incorporated
from Other Operative Documents......................17
SECTION 5.18. Private Offering.......................................18
SECTION 5.19. Compliance with Environmental Requirements;
No Hazardous Materials..............................18
ARTICLE VI
AFFIRMATIVE COVENANTS
SECTION 6.01. Financial Statements and Other Reports.................20
SECTION 6.02. Payment of Obligations.................................22
SECTION 6.03. Conduct of Business and Maintenance of Existence.......23
SECTION 6.04. Maintenance of Property; Insurance.....................23
SECTION 6.05. Compliance with Laws...................................24
SECTION 6.06. Inspection of Property, Books and Records..............24
SECTION 6.07. Use of Proceeds........................................24
SECTION 6.08. Further Assurances.....................................24
SECTION 6.09. Lenders' Meetings......................................25
SECTION 6.10. Consummation of the Acquisition........................25
SECTION 6.11. Hazardous Materials; Remediation.......................25
ii
<PAGE>
SECTION 6.12. Enforcement of Covenants Not to Compete................25
SECTION 6.13. Landlord and Warehouseman Waivers......................26
ARTICLE VII
NEGATIVE COVENANTS
SECTION 7.01. Debt...................................................26
SECTION 7.02. Negative Pledge........................................27
SECTION 7.03. Capital Stock..........................................27
SECTION 7.04. ERISA..................................................28
SECTION 7.05. Consolidations, Mergers and Sales of Assets............28
SECTION 7.06. Purchase of Assets, Investments........................28
SECTION 7.07. Transactions with Affiliates...........................29
SECTION 7.08. Amendments or Waivers..................................29
SECTION 7.09. Fiscal Year............................................29
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default......................................29
ARTICLE IX
FEES, EXPENSES AND INDEMNITIES;
GENERAL PROVISIONS RELATING TO PAYMENTS
SECTION 9.01. Computation of Interest................................32
SECTION 9.02. General Provisions Regarding Payments..................32
SECTION 9.03. Expenses...............................................33
SECTION 9.04. Indemnity..............................................33
SECTION 9.05. Taxes..................................................34
SECTION 9.06. Maximum Interest.......................................34
iii
<PAGE>
ARTICLE X
THE AGENT
SECTION 10.01. Appointment and Authorization.........................35
SECTION 10.02. Agent and Affiliates..................................35
SECTION 10.03. Action by Agent.......................................35
SECTION 10.04. Consultation with Experts.............................35
SECTION 10.05. Liability of Agent....................................35
SECTION 10.06. Indemnification.......................................36
SECTION 10.07. Credit Decision.......................................36
SECTION 10.08. Successor Agent.......................................36
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Survival..............................................37
SECTION 11.02. No Waivers............................................37
SECTION 11.03. Notices...............................................37
SECTION 11.04. Severability..........................................37
SECTION 11.05. Amendments and Waivers................................37
SECTION 11.06. Successors and Assigns; Registration..................38
SECTION 11.07. Collateral............................................40
SECTION 11.08. Headings..............................................40
SECTION 11.09. Governing Law; Submission to Jurisdiction.............40
SECTION 11.10. Notice of Breach by Agent or Lender...................40
SECTION 11.11. WAIVER OF JURY TRIAL..................................41
SECTION 11.12. Counterparts; Integration.............................41
iv
<PAGE>
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
v
<PAGE>
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.
<PAGE>
"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.
2
<PAGE>
"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.
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"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
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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.
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"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.
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"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
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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
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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
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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.
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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 Sections 2.02 and 3.02 hereof;
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(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
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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.
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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.
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(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.
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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
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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
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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 Environmental 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, discharged, 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 Environmental 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.
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(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, investigation, administrative order, consent order
and agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination 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
transportation 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 investigation, 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.
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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
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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;
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(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
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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.
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(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 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.
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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.
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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);
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(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.
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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.
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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) Without 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;
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(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
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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;
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(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
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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
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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.
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(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
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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.
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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
37
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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
38
<PAGE>
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
39
<PAGE>
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
40
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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:__________________________________
Title:
Address: 228 Manhattan Beach Blvd.
Suite 305
Manhattan Beach, CA 90266
Telecopy number:
Company Account Designation:
Manufacturers Bank
ABA No.: 122226076
Account No.: 90048806
Account Name: American Marketing Works, Inc.
41
<PAGE>
GREYROCK CAPITAL GROUP INC.
as Lender and Agent
By:__________________________________
Title:
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.
42
<PAGE>
EXHIBIT A
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.
AMERICAN MARKETING WORKS, INC.
TRANCHE A NOTE
$4,750,000.00 February 16, 1993
AMERICAN MARKETING WORKS, INC., a Delaware corporation (together
with its successors, the "Company"), for value received, promises to pay
GREYROCK CAPITAL GROUP INC. (the "Lender"), or registered assigns, an aggregate
principal amount of FOUR MILLION SEVEN HUNDRED AND FIFTY THOUSAND DOLLARS
($4,750,000), or the aggregate outstanding principal amount of the Tranche A
Loans made by such Lender, whichever is less, on June 30, 1995 (or if such day
is not a Business Day, on the next succeeding Business Day) (the "Maturity
Date"), and to pay, in arrears on the first day of each calendar month (or, if
such day is not a Business Day, on the next succeeding Business Day), commencing
with December 1, 1994, until the Maturity Date and on the Maturity Date,
interest (computed on the basis of the actual number of days elapsed over a year
of 360 days) on the aggregate unpaid principal amount hereof from time to time
at a rate equal to the sum of 4.75% per annum plus the Commercial Paper Rate (as
hereinafter defined) (but not at a rate higher than the highest rate permitted
by applicable law), and to pay on demand interest at a rate equal to the sum of
6.75% per annum plus the Commercial Paper Rate (but not at a rate higher than
the highest rate permitted by applicable law) on any overdue principal, premium
and interest from the due date thereof to the date of actual payment (after as
well as before judgment and during bankruptcy). Changes in the rate of interest
applicable hereto shall occur as of the opening of business on any day on which
the Commercial Paper Rate changes.
1
<PAGE>
"Commercial Paper Rate" means for any day in any calendar month, the
rate of interest equivalent to the money market yield for the Interest
Determination Date falling in such month on the one month Commercial Paper Rate
for dealer-placed commercial paper of issuers whose corporate bonds are rated
"AA" or its equivalent by a nationally recognized rating agency, as such rate is
made available on a discount basis or otherwise by the Federal Reserve Bank of
New York and published weekly by the Board of Governors of the Federal Reserve
System in its H.15 report, or any successor publication published by the Board
of Governors of the Federal Reserve System or, if such rate for such date is not
yet published in such statistical release, the rate for that date will be the
rate set forth in the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. "Interest Determination Date" means November 1, 1994 and the
first Business Day of each calendar month thereafter.
This Note is one of the Tranche A Notes referred to in the Amended
and Restated Credit Agreement dated as of February 16, 1993 (as amended from
time to time, the "Credit Agreement") among the Company, the lenders referred to
therein and Greyrock Capital Group Inc. (as successor to U S WEST Financial
Services, Inc.), as Agent. The Credit Agreement and the Security Documents
referred to therein contain additional rights of the holder of, and the security
for, this Note. Capitalized terms used but not defined herein have the meanings
assigned thereto in the Credit Agreement.
If an Event of Default shall occur and be continuing, the unpaid
balance of the principal of this Note together with all accrued but unpaid
interest hereon may become or be declared forthwith due and payable in the
manner and with the effect provided in the Credit Agreement.
This Note also may and must be prepaid as provided in the Credit
Agreement, together with any premiums set forth therein, under the circumstances
therein described.
Payments of principal hereof and interest and premium hereon shall
be made in lawful money of the United States of America.
This Note shall be governed by, and construed in accordance with,
the laws of the State of New York in all respects, including all matters of
construction, validity and performance, without regard to the choice of law
provisions thereof.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the day and year first above written .
AMERICAN MARKETING WORKS, INC.
By:__________________________________
Title:
3
<PAGE>
EXHIBIT B
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.
AMERICAN MARKETING WORKS INC.
TRANCHE B NOTE
$1,750,000.00 February 16, 1993
AMERICAN MARKETING WORKS, INC., a Delaware corporation (together
with its successors, the "Company"), for value received, promises to pay
GREYROCK CAPITAL GROUP INC. (the "Lender"), or registered assigns, an aggregate
principal amount of ONE MILLION SEVEN HUNDRED AND FIFTY THOUSAND DOLLARS
($1,750,000), or the aggregate outstanding principal amount of the Tranche B
Loans made by such Lender, whichever is less, on June 30, 1995 (or if such day
is not a Business Day, on the next succeeding Business Day) (the "Maturity
Date"), and to pay, in arrears on the first day of each calendar month (or, if
any such day is not a Business Day, on the next succeeding Business Day),
commencing with December 1, 1994, until the Maturity Date and on the Maturity
Date, interest (computed on the basis of the actual number of days elapsed over
a year of 360 days) on the aggregate unpaid principal amount hereof from time to
time at a rate equal to the sum of 7.65% per annum plus the Commercial Paper
Rate (as hereinafter defined) (but not at a rate higher than the highest rate
permitted by applicable law), and to pay on demand interest at a rate equal to
the sum of 9.65% per annum plus the Commercial Paper Rate (but not at a rate
higher than the highest rate permitted by applicable law) on any overdue
principal, premium and interest from the due date thereof to the date of actual
payment (after as well as before judgment and during bankruptcy). Changes in the
rate of interest applicable hereto shall occur as of the opening of business or
any day on which the Commercial Paper Rate changes.
1
<PAGE>
"Commercial Paper Rate" means for any day in any calendar month, the
rate of interest equivalent to the money market yield for the Interest
Determination Date falling in such month on the one month Commercial Paper Rate
for dealer-placed commercial paper of issuers whose corporate bonds are rated
"AA" or its equivalent by a nationally recognized rating agency, as such rate is
made available on a discount basis or otherwise by the Federal Reserve Bank of
New York and published weekly by the Board of Governors of the Federal Reserve
System in its H.15 report, or any successor publication published by the Board
of Governors of the Federal Reserve System or, if such rate for such date is not
yet published in such statistical release, the rate for that date will be the
rate set forth in the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. "Interest Determination Date" means November 1, 1994 and the
first Business Day of each calendar month thereafter.
This Note is one of the Tranche B Notes referred to in the Amended
and Restated Credit Agreement dated as of February 16, 1993 (as amended from
time to time, the "Credit Agreement") among the Company, the lenders referred to
therein and Greyrock Capital Group Inc. (as successor to U S WEST Financial
Services, Inc.), as Agent. The Credit Agreement and the Security Documents
referred to therein contain additional rights of the holder of, and the security
for, this Note. Capitalized terms used but not defined herein have the meanings
assigned thereto in the Credit Agreement.
If an Event of Default shall occur and be continuing, the unpaid
balance of the principal of this Note together with all accrued but unpaid
interest hereon may become or be declared forthwith due and payable in the
manner and with the effect Provided in the Credit Agreement.
This Note also may and must be prepaid as provided in the Credit
Agreement, together with any premiums set forth therein, under the circumstances
therein described.
Payments of principal hereof and interest and premium hereon shall
be made in lawful money of the United States of America.
This Note shall be governed by, and construed in accordance with,
the laws of the State of New York in all respects, including all matters of
construction, validity and performance, without regard to the choice of law
provisions thereof.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the day and year first above written.
AMERICAN MARKETING WORKS, INC.
By:__________________________________
Title:
3
<PAGE>
Exhibit X
INTERCREDITOR AGREEMENT
Agreement dated as of March 31, 1995 among BNY Financial Corporation, a
New York corporation, ("BNY"), Greyrock Capital Group, Inc. (f/k/a Nations
Financial Capital Corporation), as agent, a Delaware corporation ("Greyrock"),
Walsh Greenwood & Co. ("Walsh Greenwood"), (BNY, Greyrock and Walsh Greenwood
jointly and severally "Lender" or "Lenders"), Signal Apparel Company, Inc., an
Indiana corporation ("Signal"), American Marketing Works, Inc., a Delaware
corporation ("AMW"), and the Shirt Shed, Inc., a Delaware corporation ("SSI"),
(Signal, AMW and SSI jointly and severally "Borrower" or "Borrowers").
BACKGROUND
BNY has entered into working capital financing and factoring arrangements
with each of Signal, SSI and AMW pursuant to certain Factoring Agreements and
related documents which provide for security interests in certain personal and
real property of each Borrower. Greyrock has extended a $6.5MM term loan with
AMW pursuant to a certain Credit Agreement and related documents which provide
for such loan made by Greyrock to AMW to be secured by a security interest in
certain personal property of each Borrower. Walsh Greenwood is entering a Credit
Agreement with Borrowers by which it has committed to loan up to $15MM, to be
secured by a security interest in certain of the personal and real property of
Borrowers. As an inducement to each Lender to provide such secured credit
facilities and make loans and advances to the applicable Borrowers, and to set
forth certain agreements with respect to the respective security interests of
each Lender in the Collateral, Lenders have agreed to enter into this
intercreditor agreement to set forth their respective rights with respect to
their "Liens" in the assets of each Borrower.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
I. DEFINITIONS
1.1 General Terms. For purposes of this Agreement, the following terms
shall have the following meanings:
"Accounts" shall mean all of the applicable Borrower's now owned or
hereafter acquired or arising Accounts, Instruments, Documents, and Chattel
Paper (as each of those four terms are defined in the UCC).
"AMW Equipment" shall mean all Equipment of AMW.
<PAGE>
"AMW Pledged Stock" shall mean the Pledged Stock (as such term is
defined in the Signal Pledge Agreement) of AMW.
"BNY Agreements" shall mean the Factoring Agreements, security
agreements and other related agreements between BNY and Signal dated May 23,
1991, the Factoring Agreement, security agreements and related documents between
BNY and SSI dated July 25, 1991, and the Factoring Agreement, security agreement
and related documents between BNY and AMW, dated November 22, 1994, each as
amended, modified and supplemented creating Obligations as defined in the
foregoing agreements, plus any interest thereon (including all interest accruing
after the date of the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of such Borrower under
the Code or any similar federal or state statute), including reasonable
attorneys, and paralegals' fees, and any prepayment penalties.
"BNY Collateral" all inventory, accounts (whether or not factored),
documents, general intangibles, instruments, chattel paper and equipment (all as
defined in the UCC) and certain real property of Signal and SSI and any other
Collateral in which BNY has a security interest to secure the BNY Obligations,
whether now existing or hereafter arising, including BNY's security interests in
Accounts, Equipment and Inventory which attach after the date hereof pursuant to
after acquired property provisions of the BNY Agreements; provided, any future
grants of security interests that are in violation of the terms of either the
Greyrock Agreements or the Walsh Greenwood Agreements shall not fall within this
definition of BNY Collateral.
"BNY/Greyrock Agreement" means the Intercreditor Agreement, dated
November 22, 1994, between BNY and Greyrock which agreement, among other things,
establishes priority between BNY and Greyrock as to assets of Signal, AMW and
SSI.
"BNY Obligations" shall mean all Obligations of Signal, SSI and AMW
under the BNY Agreements and all other obligations of Signal arising from
financial accommodations heretofore or hereafter extended by BNY to Signal, SSI
and AMW.
"BNY Senior Collateral" means all BNY Collateral in which BNY's
interest is senior to that of Greyrock under the BNY/Greyrock Agreement.
"Books and Records" shall mean all books and records, whether now
owned or hereafter acquired or arising, including, but not limited to, customer
lists, credit files, computer programs, printouts and other computer materials
and records of the applicable Borrower pertaining to any Collateral.
"Collateral" shall mean all the property or interests in property
real or personal, tangible or intangible, now owned or hereafter acquired by
applicable Borrower in or upon which any of the Lenders now or hereafter has a
Lien, and all proceeds of such property (including,
<PAGE>
without limitation, insurance and condemnation proceeds and escrow accounts
covering any such property).
"Code" shall mean the United States Bankruptcy Code.
"Credit Agreement" shall mean the Credit Agreement, dated as of
March 31, 1995 among Walsh Greenwood & Co., Signal, AMW and SSI.
"Enforcement Action" shall mean, collectively or singly, for one or
more of the Lenders, to (i) declare an Event of Default and make demand for
payment, and/or accelerate the indebtedness of the applicable Borrower to such
Lender, (ii) take possession of any material amount of Collateral, or (iii)
exercise any Secured Lender Remedies.
"Enforcement Notice" shall mean a written notice delivered at a time
when an Event of Default has occurred and is continuing, by any Lender to the
other Lenders, (i) specifying the relevant Event of Default, and (ii) stating
that an Enforcement Action shall commence or has commenced.
"Equipment" shall mean all of the applicable Borrower's now owned or
hereafter acquired Equipment (as such term is defined in the UCC), including,
without limitation, equipment, furniture, machinery, vehicles, and trade
fixture, together with any and all accessions, parts and appurtenances thereto.
"Event of Default" when used throughout this Agreement shall mean
any default, event of default, or any event which, with notice or passage of
time (or both) would constitute a default or an event of default under any of
the Lending Agreements.
"General Intangibles" shall mean all of the applicable Borrower's
now owned or hereafter acquired or arising General Intangibles (as such term is
defined in the UCC).
"Greyrock Agreements" shall mean any and all agreements, documents
or instruments evidencing or securing the Greyrock Obligations, including but
not limited to the Amended and Restated Credit Agreement, dated as of February
16, 1993, between Greyrock, as agent for certain lenders, and AMW and the Signal
Guaranty and Security Agreement and the Shirt Shed Guaranty and Security
Agreement, each dated November 22, 1994, by Signal and SSI guaranteed the
obligations of AMW under such Amended and Restated Credit Agreement.
"Greyrock Collateral" means all Collateral in which Greyrock has a
Lien, whether now existing or hereafter arising; provided, any future grants of
security interests that are in violation of the terms of either the BNY
Agreements or the Walsh Greenwood Agreements shall not fall within this
definition of Greyrock Collateral.
<PAGE>
"Greyrock Obligations" shall mean all obligations or indebtedness
contingent or otherwise of any of Signal, AMW or SSI to Greyrock at any time, in
an amount of up to $6.5MM, plus any interest thereon (including all interest
accruing after the date of the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of such Borrower
under the Code or any similar federal or state statute), any costs of collection
or enforcement, including but not limited to reasonable attorneys, and
paralegals, fees, and any prepayment penalties.
"Greyrock Senior Collateral" means all Greyrock Collateral in which
Greyrock's interest is senior to that of BNY under the BNY/Greyrock Agreement.
"Inventory" shall mean all of the applicable Borrower's now owned or
hereafter acquired Inventory (as such term is defined in the UCC).
"Junior Lender" shall mean (a) BNY with respect to the interest of
Greyrock in the Greyrock Senior Collateral, (b) Greyrock with respect to the
interest of BNY in the BNY Senior Collateral, and (c) Walsh Greenwood (i) with
respect to the interest of BNY in the BNY Collateral and the Greyrock Collateral
and (ii) with respect to the interest of Greyrock in the Greyrock Collateral and
the BNY Collateral.
"Lender" or "Lenders" shall mean each of BNY, Greyrock and Walsh
Greenwood and their respective successors and assigns.
"Lending Agreements" shall mean collectively, the BNY Agreements,
the Greyrock Agreements and the Walsh Greenwood Agreements, each as from time to
time in effect.
"Liens" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, security interest, encumbrance
(including, but not limited to, easements, rights of way and the like), lien
(statutory or other), security agreement or transfer intended as security,
including without limitation, any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, or any financing
lease having substantially the same economic effect as any of the foregoing.
"Person" shall mean an individual, a partnership, a corporation
(including a business trust), a joint stock company, a trust, an unincorporated
association, a joint venture, or other entity or a government or any agency,
instrumentality or political subdivision thereof.
"Secured Lender Remedies" means any action which results in the
sale, foreclosure, realization upon, or a liquidation of any Collateral,
including without limitation, the exercise of any remedies or rights of a
"Secured Party" under Article 9 of the UCC, such as, without limitation, the
notification of account debtors and voting and receiving distributions with
respect to pledged stock.
<PAGE>
"Senior Lender" shall mean BNY and Greyrock vis a vis Walsh
Greenwood with respect to the BNY Collateral and Greyrock Collateral, BNY and
Greyrock as their respective rights and interests are defined in the
BNY/Greyrock Agreement.
"UCC" shall mean Article 9 of the Uniform Commercial Code, as in
effect on the date hereof in the State of New York.
"Walsh Greenwood" shall mean Walsh Greenwood & Co., a limited
partnership.
"Walsh Greenwood Agreements" shall mean the Credit Agreement, and
all Loan Documents as defined in the Credit Agreement, as the same may be
amended, modified or supplemented.
"Walsh Greenwood Collateral" shall mean all Collateral in which
Walsh Greenwood has a Lien, whether now existing or hereafter arising; provided,
any future grants of security interests that are in violation of the terms of
either the Greyrock Agreements or the BNY Agreements shall fall within this
definition of Walsh Greenwood Collateral.
"Walsh Greenwood Obligations" shall mean the unpaid principal amount
of, and interest (including, without limitation, interest accruing after the
maturity of the Loans, as defined in the Credit Agreement, and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization of like proceeding, relating to the Borrowers,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) on the Note (as defined in the Credit Agreement), and all other
obligations and liabilities of the Borrowers to Walsh Greenwood, whether direct
of indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Walsh Greenwood Agreements, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees and disbursements of counsel to Walsh Greenwood) or
otherwise.
1.2 Certain Matters of Construction. The terms "wherein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statues and regulations. All references to any
instruments or agreements, including, without limitation, references to any of
the Lending Agreements shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof.
II. PRIORITIES, SUBORDINATIONS AND RELATED MATTERS.
2.1 Priority of Rights in Collateral
<PAGE>
(a) Walsh Greenwood agrees and acknowledges that regardless of the time or
order or attachment, or the time, order, or manner of perfection, or the time or
order of filing of financing statements, or any provisions of the UCC or
applicable law, BNY shall have a prior Lien in the BNY Collateral and any Lien
Greyrock shall have in the BNY Collateral shall be governed by the BNY/Greyrock
Agreement but shall be senior to Walsh Greenwood's Lien in such Collateral.
(b) Walsh Greenwood agrees and acknowledges that regardless of the time or
order of attachment, or the time, order, or manner of perfection, or the time or
order of filing of financing statements, or any provision of the UCC or
applicable law, Greyrock shall have a prior Lien in the Greyrock Collateral and
any Lien BNY shall have in Greyrock collateral shall be governed by the
BNY/Greyrock Agreement but shall be senior to Walsh Greenwood's Lien in such
Collateral.
(c) The Junior Lender with respect to any Collateral shall be subordinate
to each Senior Lender with respect to that Collateral and, without the necessity
of demand or request, with respect to the BNY Senior Collateral, each of
Greyrock and Walsh Greenwood and, with respect to the Greyrock Senior
Collateral, each of BNY and Walsh Greenwood shall turn or pay over to the Senior
Lender with respect thereto, until the satisfaction of all obligations of the
applicable Borrowers with respect to the BNY Obligations or the Greyrock
Obligations then outstanding, the proceeds of any disposition of such
Collateral, or any such Collateral received by or coming into the possession,
custody or control of, the Junior Lender with respect to such Collateral, and
until such time, the Junior Lender shall hold such proceeds of Collateral in
trust for the benefit of the Senior Lender.
(d) The subordination and priorities specified in this Section 2.1 are
expressly conditioned upon the nonavoidability and perfection of the Lien to
which another Lien is subordinated and, if the Lien to which another Lien is
subordinated is not perfected or is avoidable, for any reason, then the
subordinations and relative priority agreements provided for herein shall not be
effective as to the particular Collateral (and only as to such particular
Collateral) which is the subject of the unperfected or avoidable Lien. The
subordination and priorities provided in this Section 2.1 shall not be altered
or otherwise affected by any amendment, modification, supplement, extension,
renewal, restatement or refinancing of the indebtedness payable under any
Lending Agreement, nor by any action or inaction which any Lender may take or
fail to take in respect of any Collateral.
2.2 Perfection. Each Lender shall be solely responsible for perfecting and
maintaining the perfection of its Lien in and to each item constituting the
Collateral in which such Lender has been granted a Lien. The foregoing
provisions of this Agreement are intended solely to govern the respective Lien
priorities as between the Lenders and shall not impose on the Lenders any
obligation in respect of the disposition of proceeds of foreclosure on any
Collateral which would conflict with prior perfected claims therein in favor of
any other Person. Each
<PAGE>
Lender agrees that it will not contest the validity, perfection, priority or
enforceability of the Liens of the other Lender upon its respective Collateral
and that, as between the Lenders, the terms of this Agreement shall govern even
if part or all of the indebtedness owed to such Lender under the respective
Lending Agreements are avoided, disallowed, set aside or otherwise invalidated
in any judicial proceeding or otherwise.
2.3 Management of Collateral. Subject to the terms hereof, each Lender
shall have the exclusive right to manage, perform and enforce the terms of the
Lending Agreements with respect to its collateral and to exercise and enforce
all privileges and rights thereunder according to its discretion and the
exercise of its business judgment, including, without limitation, the exclusive
right to enforce or settle insurance claims, take or retake control or
possession of such Collateral and to hold, prepare for sale, process, sell,
lease, dispose of, or liquidate such Collateral. In connection with the
foregoing, each Lender as Junior Lender waives any and all rights to affect the
method or challenge the appropriateness of any action by each Lender as Senior
Lender with respect to any Collateral.
2.4 Use of Collateral. Notwithstanding anything to the contrary contained
in any of the Agreements, only a Senior Lender shall have the right to permit or
approve the sale, transfer or other disposition of its Senior Collateral,
whether by any Borrower or otherwise. Walsh Greenwood will, immediately upon the
request of BNY with respect to BNY Senior Collateral, but provided that BNY and
Greyrock simultaneously therewith release their Liens upon such Collateral,
release or otherwise terminate Walsh Greenwood's Liens upon such BNY Senior
Collateral, to the extent such Collateral is sold or otherwise disposed of by
BNY or by any Borrower with the consent of BNY, and Walsh Greenwood will
immediately deliver such release documents (the "Release Documents") as BNY or
may require in connection therewith. Notwithstanding the foregoing, in the event
any Borrower or any affiliate of any Borrower grants to BNY and Greyrock, as an
inducement for BNY's or Greyrock's release of its Liens upon any BNY Collateral
in accordance with the provisions of this Section 2.4 and the BNY/Greyrock
Agreement, a security interest in collateral not constituting BNY Collateral
("Replacement Collateral"), then Walsh Greenwood shall not be obligated to
deliver the Release Documents until such time as the applicable Borrower or
affiliate shall have granted to Walsh Greenwood, if Walsh Greenwood so requests,
a Lien on such Replacement Collateral junior to BNY's Lien on such Replacement
Collateral, and to both BNY's and Greyrock's Lien should Greyrock have elected
to accept a Lien on Replacement Collateral for BNY Senior Collateral pursuant to
the terms of the BNY/Greyrock Agreement, on such terms as are set forth herein.
2.5 Distribution of Proceeds of Collateral. All proceeds of BNY Senior
Collateral shall be paid to BNY for application to the BNY Obligations with any
residual proceeds after satisfaction of the BNY Obligations first being paid to
Greyrock to the extent of Greyrock's interest therein (otherwise to Walsh
Greenwood to the extent of its interest therein) and, upon payment of the
Greyrock Obligations, to Walsh Greenwood. All proceeds of Greyrock Senior
Collateral shall be paid to Greyrock for application to the Greyrock Obligations
with any residual proceeds after satisfaction of the Greyrock Obligations first
being paid to BNY to the extent of BNY's interest therein (otherwise to Walsh
Greenwood to the
<PAGE>
extent of its interest therein) and, upon payment of the BNY Obligations, to
Walsh Greenwood.
2.6 Enforcement Action.
(a) BNY shall use reasonable efforts not to commence any Enforcement
Action with respect to BNY Senior Collateral Constituting Inventory until an
Enforcement Notice has been given to Greyrock and Walsh Greenwood.
Notwithstanding the foregoing, the failure of BNY to give such Enforcement
Notice shall in no way affect the validity of any Enforcement actions or limit
BNY's rights to commence Enforcement Action.
(b) So long as the Greyrock Obligations or Walsh Greenwood Obligations are
outstanding, BNY shall not take any action to enforce its Secured Lender
Remedies with respect to Greyrock Senior Collateral without giving Greyrock and
Walsh Greenwood one hundred eighty (180) days notice thereof. If, and to the
extent, any such notice concerns the occurrence and continuation of an Event of
Default which can be cured by the payment of money, Walsh Greenwood shall have
the right, without any obligation, to cure such Event of Default within a period
not to exceed (x) the time period, if any, provided to the applicable Borrower
under the BNY Agreements or (y) ten (10) business days after receipt of such
notice from BNY, whichever is the greater, and thereby cause the BNY Agreements
to be reinstated (if such agreement has been terminated) by virtue of effecting
such cure; provided, however, that in no event may Walsh Greenwood cure any
Event of Default for a period of in excess of three (3) consecutive months.
Walsh Greenwood waives any rights to a commercially reasonable disposition of
BNY Collateral under the UCC. Nothing contained herein shall be deemed to
prohibit Walsh Greenwood from intervening or participating in any judicial
proceeding to the extent necessary to preserve or protect its interests.
(c) So long as the BNY Obligations or Walsh Greenwood Obligations are
outstanding, Greyrock shall not take any action to enforce its Secured Lender
Remedies with respect to any BNY Senior Collateral consisting of the Accounts,
Inventory and General Intangibles of AMW or the Accounts, Inventory and General
Intangibles and Equipment of Signal and SSI without giving BNY and Walsh
Greenwood one hundred eighty (180) days notice thereof. Greyrock shall not take
any action to enforce its Secured Lender Remedies with respect to Greyrock
Senior Collateral constituting AMW Equipment without giving BNY and Walsh
Greenwood one hundred eight (180) days notice of the Event of Default which is
the basis of such action, which notice period shall be extended for the time
period during which BNY is prevented from completing the work-in-progress with
respect to the applicable Borrower's Inventory due to the existence of any
automatic stay arising out of such Borrower's bankruptcy; provided, in addition,
Greyrock shall not take any action to enforce its Secures Lender Remedies with
respect to any BNY Senior Collateral or Greyrock Senior Collateral, as provided
in this subsection (b), until such time as Greyrock shall have complied with the
requirements of Paragraph 2.6(b) of the BNY/Greyrock Agreement. If, and to the
extent, any such notice concerns the occurrence and continuation of an Event of
Default which can be cured by the
<PAGE>
payment of money, BNY and Walsh Greenwood shall have the right, without any
obligation, to cure such Event of Default within a period not to exceed (x) the
time period, if any, provided to the applicable Borrower under the Greyrock
Agreements or (y) ten (10) business days after receipt of such notice from
Greyrock, whichever is greater, and thereby cause the Greyrock Agreements to be
reinstated (if such agreement has been terminated) by virtue of effecting such
cure; provided, however, that in no event may BNY or Walsh Greenwood cure any
Event of Default for a period of in excess of three(3) consecutive months. BNY
and Walsh Greenwood waive any rights to a commercially reasonable disposition of
Greyrock Senior Collateral under the UCC. Nothing contained herein shall be
deemed to prohibit BNY or Walsh Greenwood from intervening or participating in
any judicial proceeding to the extent necessary to preserve or protect their
interests.
(d) So long as the Greyrock Obligations or BNY Obligations are
outstanding, Walsh Greenwood shall not take any action to enforce its Secured
Lender Remedies with respect to Greyrock collateral or BNY Collateral the
without giving Greyrock and BNY one hundred eight (180) days notice thereof. If,
and to the extent, any such notice concerns the occurrence and continuation of
an Event of Default which can be cured by the payment of money, BNY and Greyrock
shall have the right, without any obligation, to cure such Event of Default
within a period not to exceed (x) the time period, if any, provided to the
applicable Borrower under the Walsh Greenwood Agreement or (y) ten (10) business
days after receipt of such notice from Walsh Greenwood, whichever is the
greater, and thereby cause the Walsh Greenwood Agreements to be reinstated (if
such agreement has been terminated) by virtue of effecting such cure; provided,
however, that in no event may BNY or Greyrock cure any Event of Default for a
period of in excess of three (3) consecutive months. Nothing contained herein
shall be deemed to prohibit BNY or Greyrock from Intervening or participating in
any judicial proceeding to the extent necessary to preserve or protect its
interests.
(e) BNY may, at its option take any action to accelerate or demand payment
of the BNY Obligations and to foreclose or realize upon or enforce any of its
rights with respect to BNY Senior Collateral, without the prior written consent
of Greyrock or Walsh Greenwood, Walsh Greenwood and Greyrock hereby waiving any
rights to commercially reasonable disposition or collection of any BNY Senior
Collateral under the UCC. Greyrock and Walsh Greenwood may, at the option of
each, take any action to accelerate or demand payment of the Greyrock
Obligations or Walsh Greenwood Obligations, without the prior written consent of
BNY or each other. Nothing contained herein shall be deemed to prohibit Greyrock
or Walsh Greenwood from intervening or participating in any judicial proceeding
to the extent necessary to preserve or protect its interests. Each Senior Lender
acknowledges that it shall advise Walsh Greenwood of the liquidation of the
Walsh Greenwood Collateral.
(f) Any Lender may enter upon one or more of any Borrower's premises,
whether leased or owned, without force or process of law and without obligation
to pay rent or compensation to the other party.
<PAGE>
2.7 Information Sharing. Upon the occurrence and continuance of an
Enforcement Action, in the event that any Lender shall, in the exercise of its
respective rights under the Lending Agreements, receive possession or control of
any Books and Records which contain information identifying or pertaining to any
of the property of any Borrower in which any other Lender has been granted a
Senior Lien, it shall notify the other party that is has received such Books and
Records and shall, as promptly as practicable thereafter, make available to the
other party duplicate copies of such Books and Records in the same form as the
original. All expenses incurred by such Lender in performing its obligations
under this paragraph shall be borne by the applicable Borrower and shall
constitute indebtedness under the such Lender's agreements with such Borrower.
The failure of either Lender to share information shall not create a cause of
action against the party failing to share information or create any claim on
behalf of Borrower or any third party.
2.8 Notices of Default and Certain Events. Each Lender hereby undertakes
in good faith to notify the other of the occurrence of any of the following as
applicable:
(a) occurrence or existence of an Event of Default (simultaneously
with the sending of such notice to the applicable Borrower) under the respective
Lending Agreements;
(b) payment in full by each Borrower (whether as a result of
refinancing or otherwise) of all obligations under the respective Lending
Agreements; or
(c) the exercise of any Secured Lender Remedies.
Each Lender agrees to use its best efforts to give to the other such notice, but
the failure to do so shall not affect the validity of such notice or create a
cause of action against the party failing to give such notice or create a claim
or right on behalf of any third party. The sending of such notice shall not
oblige the other Lender to cure such Event of Default.
2.9 Agreement Absolute. This Agreement shall be and remain absolute and
unconditional under any and all circumstances, and no act or omission on the
part of any Lender shall affect or impair the agreement of any other Lender
hereunder. A Senior Lender as to any Collateral may exercise all of its rights
with respect to such Collateral as to which it has priority under this
Agreement, subject to the terms hereof, and may take or release any other party
as Collateral without any obligation to the Junior Lender with respect thereto
until there has been full payment and performance of the obligations in favor of
such Senior Lender. A senior Lender shall be entitled to make any election of
the application of Section 1111 (b) (2) of the Code.
2.10 Bailee for Perfection. Each Lender hereby appoints the others as
agents for purposes of perfecting their respective Liens in and on the
Collateral. To the extent that any Lender obtains possession of any other
Lender's Senior Collateral, the Lender having possession shall notify the other
Lender of such fact and, at the expense of the Senior Lender (unless the
<PAGE>
taking of possession was willful in which event the Junior Lender shall bear the
expense), shall deliver such Collateral to the Senior Lender upon request of the
Senior Lender. Each Lender is allowed to be a bailee for any other Lender (or
for any of them) with respect to Collateral in the first Lender's possession,
subject to its (the first Lender's) rights herein, if any. The bailee Lender
shall, after all obligations and indebtedness of Borrower to it have been fully
paid and performed, deliver the remainder of Collateral in its possession to the
other Lenders.
2.11 Bankruptcy Financing Issues. This Agreement shall continue in fully
force and effect after the filing of any petition ("Petition") by or against any
Borrower under the Code and all converted or succeeding cases in respect
thereof. All references herein to any Borrower shall be deemed to apply to a
trustee for such Borrower and such Borrower as debtorin-possession. If BNY shall
desire to permit the use of cash collateral or to provide financing to any
Borrower under either Section 363 or Section 364 of the Code, without obtaining
a priority Lien under Section 364(d) on the Greyrock Senior Collateral, Greyrock
and Walsh Greenwood agree as follows: (1) adequate notice to Greyrock and Walsh
Greenwood shall be deemed to have been provided for such post-petition financing
if Greyrock and Walsh Greenwood receive notice thereof at least one (1) business
day prior to the earlier of (a) any hearing on a request to approve such
post-petition financing, or (b) the date of entry of an order approving the
same; and (2) no objection will be raised by Greyrock or Walsh Greenwood to any
such use of cash collateral or such post-petition financing by or from BNY on
the grounds of a failure to provide "adequate protection" for Greyrock's or
Walsh Greenwood's Liens on their Collateral, provided that Greyrock shall
continue to have a first lien on the Greyrock Senior Collateral (notwithstanding
any post-petition financing by BNY).
III. PRIORITY OF PAYMENTS
Walsh Greenwood hereby subordinates payment of the Walsh Greenwood
Obligations to full payment of the BNY Obligations and the Greyrock Obligations.
All notes and other evidence of the Walsh Greenwood Obligations shall bear a
legend at all times in form and substance acceptable to BNY and Greyrock
relating to this Intercreditor Agreement. Notwithstanding the foregoing,
provided no default or event of default shall have occurred under the BNY
Agreements or the Greyrock Agreements, and provided such payment does not cause
the occurrence of such a default or event of default, Borrowers may make
scheduled payments of interest under that certain promissory note dated March
31, 1995 in the principal amount of $15,000,000 from Borrowers to Walsh
Greenwood (the "Note"). Further, Borrowers may make payments of principal under
the Notice provided (i) no default or event of default nor any event which with
the passage of time or giving of notice, or both, might become a default or
event of default shall have occurred under any of the BNY Agreements or the
Greyrock Agreements and further provided, that such payment will not result in
the occurrence of such default or event of default and (ii) all outstanding
Obligations (as such is defined in the BNY Agreements) of each of the Borrowers
shall be within the applicable Borrowing Base set forth in the applicable BNY
Agreements and such payments will not result, directly or indirectly, in any of
the outstanding Obligations of any of the Borrowers being in excess of the
applicable Borrowing Base. This
<PAGE>
paragraph is intended to reflect the agreements of the Lenders with regard to
the priority of payments, and nothing herein shall affect in any way any
obligations of Borrowers to any of the Lenders under the Lending Agreements.
IV. MISCELLANEOUS
4.1 Notices. Any notice or other communication required or permitted
pursuant to this Agreement shall be deemed given (a) when personally delivered
to any officer of the party to whom it is addressed, (b) on the earlier of
actual receipt thereof or three days following posting thereof by certified or
registered mail, postage prepaid, or (c) upon actual receipt thereof when sent
by a recognized overnight delivery service or (d) upon actual receipt thereof
when sent by telecopier to the number set forth below with telephone
communication confirming receipt and subsequently confirmed by registered,
certified or overnight mail to the address set forth below, in each case
addressed to each party at its address set forth below or at such other address
as has been furnished in writing by a party to the other by like notice:
If to BNY:
BNY Financial Corporation
1290 Avenue of the Americas
New York, NY 10104
Attn: Wayne Miller
Telephone: (212) 408-4284
Telecopier: (212) 408-7372
If to Greyrock:
Greyrock Capital Group, Inc.
One Canterbury Green
Stamford, CT 06912
Attn: Vice President - Corporate Finance
Telephone: (203) 352-4000
Telecopier: (203) 353-4102
If to Walsh Greenwood:
Walsh Greenwood & Co.
One East Putnam Avenue
Greenwich, CT 06830
Attn: Paul Greenwood
Telephone: (203) 863-8400
Telecopier: (203) 625-2654
4.2 Insurance. Proceeds of the Collateral include insurance proceeds, and
therefore the priorities set forth in Section 2.1(a) and (b) govern the ultimate
disposition of casualty insurance proceeds. The Lender having a senior Lien on
any Collateral insured shall,
<PAGE>
subject to such Lender's rights under its agreement with each Borrower, have the
sole and exclusive right, as against the other Lenders, to adjust settlement of
insurance claims in the event of any covered loss, theft or destruction of such
Collateral. All proceeds of such insurance shall inure to the Lender named in
any applicable loss payable endorsement and having a senior claim, and the other
Lenders shall cooperate (if necessary) in a reasonable manner in effecting the
payment of insurance proceeds to the senior Lender.
4.3 Dealings with Borrowers: Agreement Continues. The subordination and
Agreements as to relative priority as set forth above shall remain in full force
and effect, regardless of whether either Lender in the future seeks to rescind,
amend, terminate or reform by litigation or otherwise such Lender's agreement
with any Borrower.
4.4 No Additional Rights For Borrowers Hereunder. If any Lender shall
enforce its rights or remedies in violation of the terms of this Agreement, each
Borrower agrees that it shall not use such violation as a defense to any action
by any Lender, nor assert such violation as a counterclaim or basis for set off
or recoupment against any Lender.
4.5 Section 9-504 Notice and Waiver of Marshaling. Lenders acknowledge
that this Agreement shall constitute notice of their respective interests in the
Collateral as provided by Section 9-504 of the UCC. Each Lender hereby waives
any and all rights to compel the marshaling of any of the Collateral.
4.6 Independent Credit Investigations. None of the Lenders nor any of
their respective directors, officers, agents or employees shall be responsible
to any other Lender or to any other person, firm or corporation for any
Borrower's solvency, financial condition or ability to repay the BNY
Obligations, the Greyrock Obligations or the Walsh Greenwood Obligations, or for
statements of any Borrower, oral or written, or for the validity, sufficiency or
enforceability of the BNY Obligations, the Greyrock Obligations or the Walsh
Greenwood Obligations, or any Liens granted by any Borrower to the Lenders in
connection therewith. Each Lender has entered into its respective financing
agreements with the applicable Borrowers based upon its own independent
investigation, and makes no warranty or representation to the other Lenders nor
does it rely upon any representation of the other Lenders with respect to
matters identified or referred to in this paragraph.
4.7 Amendments to Financing Arrangements or to this Agreement. Nothing
contained in this Agreement shall in any manner limit or restrict the ability of
any Lender from increasing or changing the terms of the loans under their
respective Lending Agreements, or otherwise to waive, amend or modify the terms
and conditions of their respective Lending Agreements, in such manner as such
Lender and Borrowers shall mutually determine, and each Lender agrees that none
of such actions shall in any manner affect or impair the relative Lien
priorities and subordination established by this Agreement in respect of the
indebtedness payable under the Lending Agreements; provided, that no such
amendment or modification shall, without the prior written consent of Walsh
Greenwood, (a) increase the dollar amount specified
<PAGE>
in item "(A)" in paragraph 4(a) (i) of the respective Factoring Agreements
between BNY and Signal, SSI and AMW which amount is compared with the "Formula
Amount" (as defined in such agreements) to determine the "Borrowing Base" amount
(notwithstanding the foregoing, it shall not be a violation of the terms of this
Agreement and neither Walsh Greenwood nor Greyrock shall have a cause of action
against BNY in the event that outstanding Obligations (as defined in the BNY
Agreements) at any time exceed such dollar amount as a result of the making of
advances in excess of the "Formula Amount"), or (b) increase the stated
principal amounts of the Tranche A Loans or the Tranche B Loans as defined in
the Amended and Restated Credit Agreement, dated as of February 16, 1993, among
AMW, Greyrock and certain other lenders. Walsh Greenwood consents to the
amendments to the Greyrock Obligations contemplated by the letter agreement,
dated April 3, 1995 between Greyrock and Signal. Upon reasonable request of the
Lender, the other Lender shall provide copies of all such modifications or
amendments to their respective Lending Agreements and copies of all other
documentation relevant to the Collateral. All waivers to, and modifications or
amendments of, this Agreement must be in writing and duly executed by an
authorized officer of each Lender to be binding and enforceable, but shall not
require any agreement or consent by the applicable Borrower thereto.
4.8 Binding Effect; Successors and Assigns. Replacement Financing. This
Agreement shall be a continuing agreement, shall be binding upon and shall inure
to the benefit of the parties hereto from time to time and their respective
successors and assigns, shall be irrevocable and shall remain in full force and
effect until all indebtedness and other obligations under the Lending Agreements
shall have been satisfied or paid in full in cash and the Lending Agreements
shall have been irrevocably terminated, but shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any amount paid by or on behalf of any Borrower with regard to the
indebtedness and other obligations under the respective Lending Agreements is
rescinded or must otherwise be restored or returned upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Borrower, or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or trustee, custodian, or similar officer, for any Borrower or any substantial
part of its property, or otherwise, all as though such payments had not been
made. This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any Borrower or any other person not a party to this
Agreement. In the event any Borrower's obligations to the other Lenders are to
be refinanced in full by an institutional lender it will, at the request of such
other Lender or refinancer, enter into an intercreditor agreement with such
refinancer substantially in the form hereof.
4.9 Survival. Wherever possible, each provision of this Agreement shall be
interpreted in such manner to be effective and valid under applicable law, but
if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement. The right of any Lender to
enforce the provisions of this Agreement shall not be prejudiced or impaired by
any act or omitted act of any Borrower or such Lender including forbearance,
waiver, consent, compromise,
<PAGE>
amendment, extension, renewal, or taking or release of security in respect of
any obligations or noncompliance by Borrower with such provisions, regardless of
the actual or imputed knowledge of such holder of the obligations.
4.10 Governing Law; Proceedings. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT, GIVING
EFFECT TO ITS CONFLICTS OF LAWS PROVISIONS. ANY JUDICIAL PROCEEDING BROUGHT BY
OR AGAINST ANY LENDER WITH RESPECT TO THIS OR ANY RELATED AGREEMENT MAY BE
BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, UNITED
STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
LENDER, AND EACH BORROWER, ACCEPT FOR THEMSELVES AND IN CONNECTION TM THEIR
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY AGREEMENT. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
ANY JUDICIAL PROCEEDING BY ANY PARTY HERETO INVOLVING, DIRECTLY OR INDIRECTLY,
ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTION WITH
THIS AGREEMENT OR ANY RELATED AGREEMENT, SHALL BE BROUGHT ONLY IN A COURT
LOCATED IN THE CITY OF NEW YORK, STATE OF NEW YORK; PROVIDED THAT
NOTWITHSTANDING THE FOREGOING, IF IN ANY JUDICIAL PROCEEDING BY OR AGAINST ANY
PARTY HERETO THAT IS BROUGHT IN ANY OTHER COURT SUCH COURT DETERMINES THAT ANY
OTHER PARTY HERETO IS AN INDISPENSABLE PARTY, SUCH OTHER PARTY MAY BE JOINED OR
INCLUDED IN SUCH PROCEEDINGS IN SUCH OTHER COURT. EACH PARTY HERETO WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND SHALL
NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON
FORUM NON CONVENIENS.
4.11 Waiver of Jury Trial. EACH LENDER HEREBY AND EACH BORROWER EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION WITH, OR (B) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF EACH LENDER WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH LENDER HEREBY AGREES AND
CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY
COURT TRIAL WITHOUT JURY, AND THAT ANY OF THEM MAY FILE AN ORIGINAL
<PAGE>
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF
THEIR CONSENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
4.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
4.13 Headings. The headings in this Agreement are for convenience of
reference only, and shall not alter or otherwise affect the meaning hereof.
4.14 Representations and Warranties. Each Lender represents and warrants
to the others that it is the holder of the Liens which secure or will secure the
indebtedness payable under its respective loan agreements with Borrowers. Each
Lender agrees that it shall not assign or transfer any of its Liens without (i)
notice being given to the other Lenders and (ii) such assignment or transfer
being made expressly subject to the terms of this Intercreditor Agreement. Each
Lender warrants to the other Lieners that it has full right, power and authority
to enter into this Intercreditor Agreement.
4.15 Consent to Walsh Greenwood Liens. BNY and Greyrock hereby consent to
the granting by Borrowers to Walsh Greenwood of Liens in and to the Walsh
Greenwood Collateral specified in the Credit Agreement as of the date hereof and
waive any event of default under their respective agreements with Borrowers
which otherwise might have been caused solely by the granting of such Liens.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the day and date first above written.
BNY FINANCIAL CORPORATION
BY:__________________________
Name:________________________
GREYROCK CAPITAL GROUP, INC.
BY:____________________________
Name:__________________________
WALSH GREENWOOD & CO.
<PAGE>
BY:____________________________
Name:__________________________
SIGNAL APPAREL COMPANY, INC.
BY:____________________________
Name:__________________________
THE SHIRT SHED, INC.
BY:____________________________
Name:__________________________
AMERICAN MARKETING WORK, INC.
BY:_______________________________
Name:_____________________________
<PAGE>
Exhibit Y
EXHIBIT B
[FORM OF DEFERRAL NOTE]
PROMISSORY NOTE
$500,000 August , 1996
FOR VALUE RECEIVED, WG TRADING COMPANY LIMITED PARTNERSHIP, a
limited partnership (together with its successors, the "Obligor"), for value
received, promises to pay to the order of NATIONSCREDIT COMMERCIAL CORPORATION,
a Delaware corporation ("Payee"), or any subsequent holder hereof (together with
Payee, sometimes referred to herein as the "Holder"), an aggregate principal
amount of FIVE HUNDRED THOUSAND DOLLARS ($500,000). Such aggregate principal
amount shall be repaid in lawful money of the United States of America in two
equal installments as follows:
October 15, 1996 $250,000
December 16, 1996 $250,000
Obligor shall not be required to pay interest on such aggregate principal
amount; provided, however, that any principal amount not paid on the due date as
aforesaid shall accrue interest at the Overdue Rate. The Obligor may prepay all
or part of the principal amount hereof at any time without penalty or premium,
any such prepayment of less than all of the principal being applied to reduce
the remaining payments in inverse order of their maturity.
For the purposes of this Promissory Note, the following terms shall have
the respective meanings set forth below:
"Account" shall mean the following bank account:
First Chicago National Bank
Chicago, Illinois
ABA Number: 071000013
Account Number: 52-56933
Account Name: NationsCredit Commercial Corporation
Reference: American Marketing Works, Inc.
"Overdue Rate" shall mean an annual rate of interest, computed over the
actual number of days principal is overdue and a 360-day year, equal to 2% plus
the rate of interest announced from time to time by NationsBank of North
Carolina, N.A. as its prime rate, but not a rate higher than the highest rate
permitted by applicable law.
<PAGE>
This Promissory Note is the Deferral Note referred to in the Agreement of
Loan Transfer (the "Agreement") dated as of the _th day of August, 1996 between
Obligor and Payee (capitalized terms undefined herein being used with the
respective meanings set forth in the Agreement). Any payment required hereunder
shall be made in immediately available funds to Payee's Account or to such other
address as Holder may from time to time advise Obligor. Such payments shall be
absolute and unconditional and shall not be affected by any event or
circumstance, including, without limitation, any event or circumstance regarding
the Company, the Loans, the guarantors or the Collateral for the Loans.
Obligor waives presentment, demand, notice and protest hereunder.
This Promissory Note shall be governed by, and construed in accordance
with the laws of the State of New York in all respects, including all matters of
construction, validity and performance, without regard to the choice of law
provisions thereof.
IN WITNESS WHEREOF, the Obligor has caused this Promissory Note to be duly
executed by its duly authorized officer as of the date set forth above.
WG TRADING COMPANY LIMITED
PARTNERSHIP
By:_______________________
Name:
Title:
<PAGE>
Exhibit Z
ASSIGNMENT OF INTEREST
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment") ") is made as
of the _th day of August, 1996, between NationsCredit Commercial Corporation
("Assignor"), and WG Trading Company Limited Partnership ("Assignee").
RECITALS
A. This Assignment is entered into pursuant to a certain Agreement of Loan
Transfer (the "Agreement") dated as of the _th day of August, 1996 between
Assignor and Assignee (capitalized terms undefined herein being used with the
respective meanings set forth in the Agreement).
B. Pursuant to the Agreement, Assignor has agreed to transfer to the
Assignee, and Assignee has agreed to acquire from Assignor, all rights and
obligations of Assignor, both as Agent and as Lender, under (i) the Credit
Agreement, (ii) each of the Financing Documents and (iii) the Intercreditor
Agreement; provided, that such interest under the Credit Agreement and the other
Financing Documents is expressly subject to the terms of (x) the Intercreditor
Agreement which is one of the Financing Documents and (y) the 1995 Intercreditor
Agreement (the "Assigned Interest").
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Assignor and the Assignee hereby agree as
follows:
1. Assignment and Acceptance of Assigned Interest. The Assignor hereby
transfers, conveys and assigns to the Assignee all of the Assigned Interest,
together with all rights, powers, privileges, options, obligations and benefits
of Assignor related thereto, and the Assignee accepts such assignment. This
Assignment is made without recourse and without representation except for the
representations and warranties set forth in the Agreement.
TO HAVE AND TO HOLD the Assigned Interest, together with all rights,
powers, privileges, options, obligations and benefits of Assignor related
thereto, unto Assignee and the successors and assigns of Assignee forever.
2. Binding. This Assignment shall be binding upon and inure to the benefit
of the respective successors and assigns of the parties hereto.
3. Severability. If any provision of this Assignment shall contravene or
be invalid under applicable law, such contravention or invalidity shall not
affect this entire Assignment, the provisions held to be invalid shall be deemed
deleted or modified, and this Assignment shall be
<PAGE>
interpreted and construed as though such invalid provision or provisions were
not part hereof or modified so as to be conformed to such law.
4. Counterparts. This Assignment may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute the same instrument.
5. Governing Law. This Assignment shall be governed by, and construed in
accordance with, the laws of the State of New York in all respects, including
all matters of construction, validity and performance, without regard to the
choice of law provisions thereof.
IN WITNESS WHEREOF, the parties have caused this Assignment to be duly
executed by their respective duly authorized officers as of the date set forth
above.
WG TRADING COMPANY LIMITED
PARTNERSHIP
By:____________________________
Name:
Title:
NATIONSCREDIT COMMERCIAL
CORPORATION, formerly known as
Greyrock Capital Group Inc.
By:____________________________
Name: Ron Cohn
Title: Authorized Signatory
